Written Answers Nos. 118-133
118. Deputy Eoghan Murphy asked the Minister for Finance if he has considered any vendor financing options for the implementation of new infrastructural projects here as an alternative to new borrowing or the use of national investments funds for same given that major international companies maintain capital reserves for investment in such projects. [55533/13]
Amharc ar fhreagraAs the Deputy is no doubt aware, in July 2012 the Minister for Public Expenditure and Reform, Brendan Howlin T.D., announced on behalf of the Government a €2.25 billion Infrastructure Stimulus Programme aimed at promoting jobs and growth.
It is intended that projects in the Stimulus Programme to a value of €1.4 billion will be provided through Public Private Partnerships (PPPs). The funding of the PPPs is expected to come from the European Investment Bank (EIB), Ireland’s National Pensions Reserve Fund (NPRF), domestic banks and other sources of funding such as institutional investors, and is additional to the existing Exchequer-funded investment programme. The planned PPP investment will be directed towards projects that meet key infrastructural needs and are in line with the priorities identified in the Government’s Investment Framework, covering education, health, justice and transport.
In relation to the funding to be made available to PPPs by the NPRF, the Government has announced the creation of the Ireland Strategic Investment Fund (ISIF) to channel investment from the NPRF towards productive investment in sectors of strategic importance to the Irish economy. Within its existing statutory investment policy and in line with the ISIF announcement, the NPRF has undertaken a number of investments and initiatives under which NPRF capital will be invested on a commercial basis in Ireland. The NPRF has in particular committed to invest in infrastructure (€250 million) and PPP projects (€118 million). Legislation to establish the ISIF which will absorb the resources of the NPRF is being prepared and I expect to be in a position to bring it before the Oireachtas in the first quarter of this year.
The Deputy raised the use of vendor financing to fund infrastructure projects, a form of financing in which the vendor lends money to be used by the purchaser to buy the vendor's products or property. This is a model being adopted by the National Asset Management Agency (NAMA) who have announced plans to advance, over the years 2012 to 2016, at least €2 billion in vendor finance to purchasers of commercial property securing its loans. NAMA has agreed to fund six transactions with a combined value of €375 million through the vendor finance initiative and a number of other vendor finance transactions are at an advanced stage. NAMA has published an information guide on vendor finance, which is available on the NAMA website, http://www.nama.ie/?wpfb_dl=282. Clearly, vendor financing is an option particularly suited to NAMA’s function in selling off the property on its books. However, I am happy to confirm that the Government remains committed to exploring alternative means of financing capital projects, including vendor financing.
119. Deputy Michael McGrath asked the Minister for Finance the total cost incurred by his Department as part of the recent balance sheet assessments of the banks, which advisers were engaged as part of the process; the amount each of the advisers were paid; the person who will incur the cost of the balance sheet assessment; if a similar exercise will have to be carried out again as part of the euro area stress tests in 2014; and if he will make a statement on the matter. [55543/13]
Amharc ar fhreagraThe Department of Finance did not incur any costs in relation to the recent Balance Sheet Assessments (BSA).
As the Deputy will be aware, the Central Bank (CBI) undertook the BSA exercise. Boston Consulting Group (BCG) was contracted by the CBI as independent assessors and to provide project management resources. Ernst & Young was contracted to conduct the loan file and impairment model reviews of AIB and PTSB. KPMG was contracted for the same work in Bank of Ireland.
The CBI has informed me that the BSA was intended to meet the requirements of the ECB assessment, however this will not be known until the SSM BSA process begins (expected Q1 2014), following the finalisation of the ECB comprehensive assessment methodology, as announced on 23 October.
Third party costs for the BSA have yet to be finalised. The CBI is responsible for paying for these services as the contractee, however the approach (or otherwise) to apportioning same to the participating banks has yet to be finalised or decided.
120. Deputy Lucinda Creighton asked the Minister for Finance the total original book value loans in euro amount that were acquired by the National Asset Management Agency for a consideration of zero euro or some similar low arbitrary nominal value; and if he will make a statement on the matter. [55553/13]
Amharc ar fhreagraI am advised by NAMA that the total nominal or par value of loans acquired for a nominal consideration was of the order of €3.5bn. NAMA advises that there were a number of reasons why this occurred but that the main reason related to defective legal security, meaning that the security was not fully enforceable or, in some cases, entirely unenforceable as some were unsecured loans. In all cases where defective security was identified as a problem, it was NAMA’s practice to allow the participating institutions sufficient time to perfect security – this extended to a period of twelve/eighteen months in some instances. A zero or low acquisition value was only applied where protracted efforts by the original financial institutions to perfect security proved to be unsuccessful.
121. Deputy Michael Healy-Rae asked the Minister for Finance the reason the only people who can get write-offs from the Irish Bank Resolution Corporation are those with large property portfolios; and if he will make a statement on the matter. [1035/14]
Amharc ar fhreagraI have been advised by the Special Liquidators that they are not writing off the debts of borrowers with large portfolios but are engaged in a sales process which is designed to achieve the maximum return for all creditors in the liquidation including the State.
The sales process plan and timeline has been developed following professional advice and in light of requirements of a robust and credible sales process. The Special Liquidators have also corresponded with all IBRC borrowers providing them with an opportunity to make written representations on the method of disposal of their loans and the criteria for determining who may bid for loan assets. Consideration was given to Borrower representations and the Special Liquidators have responded to these Borrower representations.
The IBRC loan books have been divided into portfolios and subsequently subdivided into tranches depending on the professional advice obtained for ensuring that the maximum value is obtained for the sale of the Loan Assets. All loans are being valued and then sold.
I am advised by the Special Liquidators that the decision to offer the residential mortgage book in portfolios was arrived at having regard to the scale of the process and size of the IBRC loan book. Furthermore the Special Liquidators have confirmed that the decision to sell these loans as part of a portfolio is the most efficient method of disposal and the one which is most likely to maximise ultimate sales realisations for the Special Liquidators having regard to the public interest. The decision concerning how the loans will be packaged for sale and what bidders constitute qualifying bidders for the purposes of the sales process is to be made by the Special Liquidators and I will not intervene in this matter.
The Special Liquidators are continuing the orderly and efficient wind-down of IBRC in accordance with the provisions of the IBRC Act 2013 and instructions that have been provided to the Special Liquidators by me under the IBRC Act 2013.
122. Deputy Róisín Shortall asked the Minister for Finance the process by which the single person child carer tax credit is relinquished by a primary carer; if the credit will automatically transfer to a qualifying secondary carer in cases where the primary carer is not availing of it; and if he will make a statement on the matter. [1077/14]
Amharc ar fhreagraAs you are aware the One-Parent Family Tax Credit (OPFTC) has been replaced with a new Single Person Child Carer Tax Credit from 1 January 2014. The restructured credit is of the same value i.e. €1,650 per annum as the OPFTC and also carries the same entitlement to the additional €4,000 extended standard rate band, which increases it to €36,800 per annum, before liability to the higher rate of income tax arises. However, the credit will be more targeted, in that it will in the first instance, only be available to the principal carer of the child.
The person who receives the child benefit payment is being used as the initial indicator by the Revenue Commissioners to identify the individuals who are most likely to qualify for the new credit. However, eligibility for the credit will in the first place be determined by who cares for the child for most of the year. Agreement as to who will be the principal carer of a child is a matter for parents or guardians.
Notwithstanding the above, as a result of an Amendment which I brought forward at the Committee Stage of the Finance Bill, a primary carer may relinquish the credit such that it can be claimed by a non-primary carer. However, it is not possible for more than one carer to have access to the new credit at any one time. Decisions on whether to claim or relinquish the credit can be taken by carers on an annual basis. The credit cannot be transferred automatically.
Details on the operation of the new credit, including the necessary forms to make a claim and a series of frequently asked questions are available on the Revenue Commissioners website at;
http://www.revenue.ie/en/tax/it/credits/single-person-child-carer-credit.html.
123. Deputy Michael McGrath asked the Minister for Finance the procedures that apply when the National Asset Management Agency or a NAMA debtor is appointing a selling agent to dispose of a particular property; if the selling agent is obliged to notify NAMA or the NAMA debtor of all offers that have been made for the property; if he will provide details of the nature of the commercial relationship, including the fee basis, that applies between the selling agent and NAMA or the NAMA debtor; and if he will make a statement on the matter. [1078/14]
Amharc ar fhreagraNAMA has published a detailed guidance note on the disposal of real estate assets by its debtors and receivers. This is available on its website at the following location http://www.nama.ie/about-us/step-by-step/developing-a-business-plan/. This makes clear both the commercial relationship that applies between selling agents, NAMA debtors and receivers and NAMA, in its role as a secured lender. It also addresses the other questions raised by the Deputy.
124. Deputy Martin Heydon asked the Minister for Finance the reason jobseeker's benefit payments are taxable while jobseeker's allowance payments are not; if this places an unfair disadvantage on those who are only recently unemployed, when they do eventually find work; and if he will make a statement on the matter. [1081/14]
Amharc ar fhreagraJobseeker's Benefit is a weekly payment from the Department of Social Protection (DSP) to individuals who are out of work and who are covered by social insurance (PRSI), regardless of any other income or assets they may have. Jobseeker's Allowance is payable to people who are out of work who don't qualify for Jobseeker's Benefit or who may have used up their entitlement to Jobseeker's Benefit. However, Jobseeker's Allowance is means-tested, meaning a potential recipient s assets and income must be below a certain level to qualify.
If Jobseeker s Allowance were taxable it would only serve to further reduce the means of recipients, potentially making it necessary to increase the payment to which an individual is entitled to from DSP, which could result in a circular series of payments with neither the recipient nor the State being better off.
Although Jobseekers Benefit is subject to income tax, recipients only actually pay tax when their income exceeds the same thresholds that apply to other taxpayers. While those who take up employment in a tax year having been in receipt of Jobseeker's Benefit for a part of that year may have a greater tax liability in that tax year than those individuals in similar circumstances who were in receipt of Jobseekers Allowance for a part of that year, the difference is justified by the different nature and qualifying conditions that apply to both payments.
125. Deputy Olivia Mitchell asked the Minister for Finance if the debt write-off by Allied Irish Banks to Independent News and Media was sanctioned by the Government; and if he will make a statement on the matter. [1093/14]
Amharc ar fhreagraAs the Deputy will be aware under the Relationship Framework the State does not intervene in the day to day operations of the bank or their management decisions regarding commercial matters.
I have been informed that for confidentiality reasons AIB is not in a position to discuss details of individual customer circumstances. AIB reviews each individual’s circumstances on a case by case basis and all customers are dealt with consistently in line with AIB’s current policies and procedures.
126. Deputy Patrick O'Donovan asked the Minister for Finance the reason a person (details supplied) in County Wexford is liable for PAYE and PRSI on their income from a community employment scheme; and if he will make a statement on the matter. [1134/14]
Amharc ar fhreagraI am advised by the Revenue Commissioners that the person concerned is liable for PAYE tax on any income over €317 per week. There is no additional tax credit due to the individual concerned in respect of dependant children. PRSI is chargeable where the individual's weekly income exceeds €352. Any further queries regarding this aspect of the enquiry should be directed to Department of Social Protection. Employees of community employment schemes are not liable to pay the Universal Social Charge.
127. Deputy Dara Calleary asked the Minister for Finance the position regarding talks with KfW Bank in relation to its proposals for small and medium enterprises lending; the number of meetings that have been held to date and at what official level within his Department and at KfW bank; the amount of money he expects KfW to lend in to the Irish market in 2014 and in 2015; the way this money will be structured and accessed by interested SMEs; and if he will make a statement on the matter. [1138/14]
Amharc ar fhreagraAs the Deputy will be aware, the Taoiseach mentioned in this House shortly before the recess that he had held discussions with Chancellor Merkel on finding ways to reinforce Ireland’s economic recovery by improving funding mechanisms for the real economy, including access to finance for Irish SMEs. The German Government has asked KfW, the German development bank, to work with the German and Irish authorities swiftly, in order to deliver on this initiative at the earliest possible date.
Officials at my Department with assistance from staff of the NPRF have worked quickly to investigate ways to ensure that the benefit of this cooperation to Irish SMEs can be maximised.
A small party of my officials travelled to a meeting with their counterparts in Berlin in early December and a week later a similar meeting was held at KfW’s headquarters in Frankfurt. Officials from KfW and the German Ministry have also met with the project team from Ireland in Dublin for a further exchange shortly before Christmas. Both sides have been represented at senior management level for each engagement.
In addition, there have been regular conference calls between the parties.
As the Deputy may be aware, KfW channel their funding for SMEs in Germany through a system of on-lending using commercial banks in Germany as the distribution mechanism. Typically the SMEs can avail of KfW funding at different terms and conditions applicable to that offered directly by the financial institutions. This model is similar to the on lending arrangements available to Irish domestic institutions using funds from the European Investment Bank. The precise arrangements for the structure, level of funding and distribution options are the subject of the discussions between the relevant officials at present and will have to adhere to EU State Aid considerations. Experience in other countries suggests that any lending facilitated by a state investment institution like KfW is generally complementary to lending already taking place in an economy and can in fact assist commercial banks with access to more effective credit lines.
128. Deputy Dara Calleary asked the Minister for Finance if AIB has met its small and medium enterprise lending target of €4 billion as per Government target for 2013; the way this target was made with reference to totally new lending, to restructuring of existing facilities, to moneys advanced for the purchase of assets such as machinery, vehicles and so on, to commercial mortgages provided; and if he will make a statement on the matter. [1139/14]
Amharc ar fhreagra129. Deputy Dara Calleary asked the Minister for Finance if Bank of Ireland has met its small and medium enterprise lending target of €4 billion as per Government target for 2013; the way this target was made with reference to totally new lending, to restructuring of existing facilities, to moneys advanced for the purchase of assets such as machinery, vehicles and so on, to commercial mortgages provided; and if he will make a statement on the matter. [1140/14]
Amharc ar fhreagraI propose to take Questions Nos. 128 and 129 together.
As the Deputy is aware, the Government has imposed SME lending targets on AIB and Bank of Ireland for the three calendar years, 2011 to 2013. Each bank was required to sanction lending of at least €3 billion in 2011, €3.5 billion last year and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks have achieved their 2011 and 2012 targets.
The latest SME lending figures received from Bank of Ireland and AIB cover the period to end November 2013. Therefore I cannot provide the information required by the Deputy at present in relation to the banks meeting the €4 billion target.
For reasons of commercial sensitivity, I cannot provide a breakdown of the target as requested by the Deputy. However, the Credit Review Office (CRO) has previously noted that restructuring and refinancing is important in terms of sustaining the businesses and the associated jobs.
AIB and Bank of Ireland are expected to lend to viable businesses in all sectors of the economy and to address the needs of SMEs in financial difficulty. The CRO is available to assist businesses which have been refused credit. The CRO is currently overturning 55% of the refusal decisions referred to them and anyone who has been refused credit by the banks should avail of the services of the Office.
Access to finance for SMEs was a key aspect of the Action Plan for Jobs 2013 and will be a core element of this year’s Action Plan for Jobs. It is the Government’s vision that all viable businesses operating in Ireland should have the opportunity to access sufficient finance to meet their enterprise needs in a manner that supports growth and employment in the economy.
It is vital that the banks continue to make credit available to support economic recovery. However, it is not in the interest of the banks, businesses or the economy for finance to be provided unless the business is viable and has the capacity to meet the interest payments and repay the sum borrowed.
130. Deputy Dara Calleary asked the Minister for Finance the number of legal cases in which National Asset Management Agency has been involved in since its inception; the number of legal cases it is involved with at present; the number of cases NAMA has instigated; the number in which it is a defendant; the amount NAMA has spent on legal fees since its inception, broken down by year; the legal firms it has paid broken down by year; and if he will make a statement on the matter. [1141/14]
Amharc ar fhreagraNAMA has instigated 117 sets of proceedings. Of that number, 60 are complete. NAMA was successful in all 60 of those cases. The remaining 57 of those cases are ongoing through the Courts.
NAMA has had 31 actions taken against it. Of those, 16 are still active, and 15 are complete. Fourteen of those cases completed resulted in a favourable outcome for NAMA and NAMA was partially unsuccessful in one case.
NAMA is involved in 26 cases of post-judgment litigation. Of those, 13 are complete and NAMA was successful in each of these 13 cases. The remaining 13 post-judgment cases are ongoing.
NAMA has taken over 16 cases from the IBRC Special Liquidators. Of that number, 2 are complete with a favourable outcome to NAMA and the remaining 14 are ongoing.
Since its inception NAMA has incurred €18m in legal fees in respect of fees paid to professional service firms and legal counsel with respect to legal advice. In addition NAMA incurred €14m in respect of legal due diligence fees in connection with acquiring its loan portfolio from the participating institutions, the majority of which was recovered through a reduction in the consideration paid for the loans to the financial institutions.
NAMA has also incurred €36m in borrower recoverable costs. Borrower recoverable costs are principally legal fees which NAMA has incurred on behalf of borrowers; these costs are recoverable in turn from the borrowers as provided in the loan contract security documentation. Where the borrower has available funds and is in a position to repay such costs, NAMA will seek the repayment in cash. To the extent that the borrower does not have available funds and is not in a position to repay the costs, NAMA will add these costs to the borrower’s debt obligations to NAMA. A breakdown of these costs is set out below.
The tables is available as attachment Q130.docx at the top of the web page.
131. Deputy Dara Calleary asked the Minister for Finance the amount the National Asset Management Agency has spent on public relations and communications consultancy fees since its inception broken down by year; if he will detail the firms it has paid broken down by year; and if he will make a statement on the matter. [1142/14]
Amharc ar fhreagraNAMA does not maintain an internal press office. Instead, its internal communications resources are supported by an external service provider, Gordon MRM, (appointed following a public procurement process) in order to offer a full press office and communications service (including out-of-hours contacts for the media). This press office and communications service provides support across all the NTMA’s business areas: NAMA, Debt Management, National Pensions Reserve Fund, National Development Finance Agency, State Claims Agency and NewERA.
These arrangements were initially put in place during 2010 in light of a significant increase in the volume of domestic and international media queries being received by the NTMA and its associated bodies. In September 2012 the NTMA retendered for the provision of these services. Following the tender evaluation process, the NTMA awarded a new contract to Gordon MRM in December 2012.
The initial contract, in place to end 2012 was based on an hourly rate for services provided. During the term of this contract a 20% reduction in the hourly rate was agreed with effect from June 2011 until the end of the contract. The new contract, which commenced in January 2013, is based on a fixed fee.
NAMA reimburses the NTMA in respect of the press office and communications costs attributable to NAMA. The costs attributable to NAMA (ex VAT) are as follows:
2011 €112,353
2012 €142,653
2013 €78,926
In 2010 costs were not specifically attributed to NAMA. NAMA was charged a proportionate share of the NTMA’s third party service costs which included Gordon MRM. Total press office and communications service costs paid to Gordon MRM in respect of 2010, across all the NTMA’s functions, were €207,255.
132. Deputy Mattie McGrath asked the Minister for Finance further to Parliamentary Question No. 160 and response, if it is appropriate for the Revenue Commissioners to continue to provide a VAT rates section to their website; if he will confirm that the recipient of the VAT invoice is entitled to an input credit at a higher rate as this is the amount that Revenue intends to collect from the issuer of the invoice; if he will confirm that it is policy to advise individual limited companies, if requested in writing, of the risks that have been indicated or other information that has warranted intervention; if he will further indicate whether, in cases where risk indicators are present but not actioned in any way by the Revenue Commissioners as a result of available resources, it is appropriate to penalise the limited company with further penalties and interest; if he will indicate the legislative basis for distinguishing between supply of immovable goods or construction services for immovable goods; and if he will further elucidate his definition of immovable goods and immovable property and their basis in legislation or revenue policy. [1161/14]
Amharc ar fhreagraI gave detailed responses to the Deputy's previous questions. The VAT Rates Database is an integral part of the information provided on the Revenue website. A key element to supporting voluntary compliance is the provision of up to date information. As the Deputy is aware, the Irish VAT system has a number of rates and it is absolutely critical that Revenue provides the VAT Rates Database on their website.
The recipient of a VAT invoice has an entitlement to an input credit only for the VAT shown on the invoice and only where the goods or services are used by him or her for the purpose of VATable supplies.
The rate of VAT on the supply of non-residential immovable goods is provided for in paragraph 15(1) of Schedule 3 to the VAT Consolidation Act 2010; while the rate applicable to services consisting of the development of, and work on, non-residential immovable goods is provided for in paragraph 15(2) of Schedule 3. In both cases the rate of VAT is 13.5%, provided in the latter case that the value of the goods supplied does not exceed two thirds of the total consideration for the service, excluding VAT.
Tax legislation provides that Revenue may make such inquiries necessary to satisfy themselves as to the accuracy of statements or particulars submitted by taxpayers. I am advised by Revenue that their overall approach to tackling compliance is to make the appropriate intervention following careful appraisal of the risk factors in each case. The appropriate compliance intervention is the one considered to be the most effective in targeting the specific risk or risks identified, and to influence the compliance behaviour of the taxpayer. This targeted approach is greatly supported and enhanced with appropriate technology, including the Risk Evaluation Analysis and Profiling system REAP.
Revenue has advised me that they do not consider it appropriate to publish the risk rules, or to always tell taxpayers why they have been selected for intervention, as it would prejudice the effectiveness of their compliance programmes. All letters issued to a taxpayer or agent will, however, clearly indicate the nature of the Revenue intervention.
It is a fundamental principle of self-assessment tax systems that returns filed by compliant taxpayers are accepted as the basis for computing tax liabilities. Revenue facilitates taxpayers who discover errors after submission of the relevant tax returns and who wish to regularise the position. Chapter Two of the Code of Practice for Revenue Audit provides a suite of opportunities for taxpayers who wish to regularise their tax and duty affairs. These opportunities provide for very significant reduction in penalties and Revenue strongly recommends that taxpayers review their tax and duty affairs regularly.
Where arising from compliance interventions by Revenue, defaults are discovered, legislation provides for the assessment of the tax underpaid, interest chargeable and the level of any penalties to be charged. The mere presence of risk indicators in a case does not necessarily mean that there will be an additional tax lability. Some risk indicators can be easily explained and do not require detailed examination. Further information on the application of penalties is contained in Chapter Four of the Code of Practice for Revenue Audit. Where the taxpayer does not agree that there is an additional tax liability the assessment may be appealed to the independent Appeal Commissioners.
Lastly, Revenue has also advised that any taxpayer who is dissatisfied about how their particular case has been handled can avail of Revenue's Complaint and Review Procedures, details of which are set out in the attached http://www.revenue.ie/en/about/custservice/cs4.pdf.
133. Deputy Michael McGrath asked the Minister for Finance the amount granted by way of mortgage interest relief in respect of principal private dwellings in each of the years from 2010 to 2013; and the expected cost each year until the relief is withdrawn in 2017. [1174/14]
Amharc ar fhreagraI am informed by the Revenue Commissioners that the cost to the Exchequer of mortgage interest relief for principal private residences by way of tax relief at source (TRS) in the years 2010 to 2014 inclusive is as follows:
|
Tax Year |
Cost €m |
|
2010 |
375 |
|
2011 |
357 |
|
2012 |
411 |
|
2013* |
353 |
|
2014 (estimated) |
350 |
*This figure is provisional and subject to revision.
The estimate of €350 million for 2014 is a revision of a previous estimate of €400m based on firmer figures becoming available for 2013. The cost of mortgage interest tax relief for 2015 and later years in respect of principle private residences would depend on a variety of factors, including the numbers of mortgages, the monetary amount of the qualifying loans taken out; the rate of relief applying to those qualifying loans, the year the qualifying loans were taken out and the extent to which the ceilings for relief are impacted by changes in interest rates. Accordingly, it is not possible to provide an accurate estimate of the expected cost of the tax relief in 2015 and later years.
