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Thursday, 6 Mar 2014

Written Answers Nos. 56-67

Property Tax Exemptions

Ceisteanna (56)

Eoghan Murphy

Ceist:

56. Deputy Eoghan Murphy asked the Minister for Finance if he will provide a list of all exemptions to the local property tax. [11406/14]

Amharc ar fhreagra

Freagraí scríofa

Part 2 of the Finance (Local Property Tax) Act 2012 (as amended) outlines the exemptions that are available from Local Property Tax (LPT).  I am advised by the Revenue Commissioners that details of these exemptions were also provided on page 10 of the Guide to LPT, which was issued to all property owners in March/April 2013.  The Deputy may also find the following link from the Revenue website helpful: http://www.revenue.ie/en/tax/lpt/exemptions.html as it provides additional details of the various exemptions from the tax.

Credit Unions

Ceisteanna (57)

Niall Collins

Ceist:

57. Deputy Niall Collins asked the Minister for Finance the number of judgments secured by a credit union (details supplied) against its members; if his attention has been drawn to the fact that this credit union has an overly active policy of debt collection; if this credit union has previously been brought to his or his Department's attention for any reason; and if he will make a statement on the matter. [11411/14]

Amharc ar fhreagra

Freagraí scríofa

The Registrar of Credit Unions at the Central Bank is responsible for the regulation of credit unions.  I have been informed that the Central Bank is subject to strict confidentiality requirements and cannot comment on individual credit unions.  Credit unions do not report the number of judgments secured against members where this arises to the Central Bank or to me as Minister for Finance. 

In relation to debt collection section 67(1)(b) of the Credit Union Act 1997 sets out that the board of directors shall appoint a credit control committee, which shall seek to ensure the repayment of loans by members of a credit union in accordance with their loan agreements.

The Central Bank issued a Guidance Note on Credit and Credit Control for credit unions in October 2007 that set out the following:

- All credit unions should have a written credit control policy which is approved by the board of directors.

- The purpose of this written policy is to ensure that borrowers repay their loans in accordance with the conditions of their loan agreements.

- The credit control policy should be appropriate to the scale and complexity of the lending undertaken by individual credit unions.

- The policy should be reviewed by the board of directors on an on-going basis but at least annually.  

I am satisfied that these measures are appropriate and proportionate to address credit control issues at credit union level.

Property Tax Administration

Ceisteanna (58)

Terence Flanagan

Ceist:

58. Deputy Terence Flanagan asked the Minister for Finance the position regarding the payment of local property tax (details supplied); and if he will make a statement on the matter. [11426/14]

Amharc ar fhreagra

Freagraí scríofa

The legislation governing the administration of Local Property Tax (LPT) provides for a number of exemptions from LPT, two of which are particularly relevant to those who purchased a residential property during 2013.  Firstly, under section 9 of the Finance (Local Property Tax) Act 2012 (as amended) any new and previously unused residential property that was purchased from a builder or property developer between 1 January 2013 and 31 October 2016 will be exempt from LPT up to the end of 2016.

The second relates to the exemption under section 8 of the 2012 Act (as amended), which was originally intended to only apply to first-time buyers, which is clear from the heading to the section: "Exemption for first-time buyers". The Deputy may recall that mortgage interest relief was phased out on mortgages taken out after 31 December 2012 and this measure was a transitional provision to help first-time buyers in the first year after the abolition of mortgage interest relief. However, as written, the exemption benefits any buyer, not just a first-time buyer. The result is that a person who purchased a second hand house in 2013 and occupies it as a sole or main residence is entitled to the exemption under section 8 regardless of whether she or he is a first-time buyer. The exemption will apply up to the end of 2016, provided the purchaser does not sell or otherwise transfer ownership of the property and continues to live in it as his or her sole or main residence.

I should also point out that the exemptions in question do not apply to residential properties purchased in 2012 as is suggested in the Details Supplied with the Question.

Tax Code

Ceisteanna (59)

Terence Flanagan

Ceist:

59. Deputy Terence Flanagan asked the Minister for Finance his plans to review DIRT on savings as the present 41% on interest may not be an incentive for people to save; and if he will make a statement on the matter. [11443/14]

Amharc ar fhreagra

Freagraí scríofa

In recent years the DIRT rate has been increased to raise additional revenue.  The Government decided to increase the rate of Deposit Interest Retention Tax (DIRT) (previously 33%) to 41% in Budget 2014.  The higher rate of DIRT (previously 36%) for interest paid less frequently than annually was  abolished, and  all deposit interest is now liable to DIRT at the same rate (41%).

Up to 2009, individuals may have been taxable on other income at the higher rate of income tax but were only liable to pay tax on interest income at 20%.      Previous DIRT rates were below the higher rate of income tax, and this, in effect, incentivised saving. The decision to raise the rate of DIRT was taken to encourage spending in the economy with a view to stimulating growth and employment.

Certain exemptions apply from DIRT, the main ones include:

- Individuals aged over 65 (subject to income limits)

- Permanently Incapacitated Individuals

- Companies, Pension Funds and Charities (Irish resident companies pay tax on investment income at 25%)

- Non-Resident Account Holders

As the Deputy will be aware, it is the standard practice for the Minister for Finance to review all tax expenditures and reliefs in the run up to annual Budgets. It is also a long-standing practice of the Minister for Finance not to comment on any tax matters that could be the subject of Budget decisions.

VAT Rate Reductions

Ceisteanna (60)

Terence Flanagan

Ceist:

60. Deputy Terence Flanagan asked the Minister for Finance his plans to reduce VAT on building materials as tradespeople are struggling to meet the cost; and if he will make a statement on the matter. [11444/14]

Amharc ar fhreagra

Freagraí scríofa

I am advised by the Revenue Commissioners that the VAT rating of goods is subject to the requirements of the EU VAT Directive with which Irish VAT law must comply.  Under the EU VAT Directive and Irish VAT legislation the supply of building materials is liable to VAT at the 23% standard rate. However, by way of special derogation from the general rule Ireland is permitted to continue to apply the 13.5% reduced rate to the supply of ready-to-pour concrete and certain concrete blocks, but this reduced rate cannot be reduced below 12%.

I would point out that EU VAT Directive and Irish VAT law provides that building services that consist of the "renovation and repairing of private dwellings, excluding materials which account for a significant part of the value of the service supplied" can also benefit from the 13.5% reduced rate of VAT. This means that where a building contractor carries out home improvements and the materials cost does not exceed two-thirds of the cost of the improvements then the 13.5% applies to the total building service.  A consequence of this is that a VAT registered building contractor will generally be entitled to recover VAT at the 23% standard rate on most building materials purchased while the contractor is only liable to charge VAT at the 13.5% rate on the total supply (including the materials and the labour elements of the job) to the home owner.  The difference in rates between the 23% input VAT and the 13.5% output VAT should normally be reflected in the VAT-inclusive cost to the home owner. In this context, if EU VAT law permitted a reduction in VAT on building materials this would actually favour contractors working in the shadow economy and outside the VAT net as it would reduce their cost base compared to legitimate contractors.

I introduced the Home Renovation Incentive (HRI) to encourage homeowners to carry out a wide range of building work on their home using legitimate, tax compliant contractors. The HRI provides for an income tax credit for homeowners who carry out repair, renovation or improvement work on their only or main residence. Qualifying work must cost a minimum of €5,000 inclusive of VAT. The maximum qualifying cost for the purpose of the tax credit is €30,000 excluding VAT. Qualifying expenditure is generally services consisting of the construction, demolition, extension, alteration or reconstruction of any building: such services are liable to VAT at the reduced rate of 13.5% unless the value of goods exceeds two-thirds of the total amount charged by the contractor.  Where this happens, the contractor will charge VAT at the standard rate of 23% on the total amount and this total amount is excluded from relief under the Incentive.   Expenditure which is subject to the 23% rate of VAT does not qualify for relief. The effect of the scheme is to give an income tax credit equivalent to the VAT charged on jobs up to €30,000 excluding VAT.

NAMA Loan Book

Ceisteanna (61, 63)

Lucinda Creighton

Ceist:

61. Deputy Lucinda Creighton asked the Minister for Finance further to Parliamentary Question No. 91 of 13 February 2014, to which he responded by letter on 20 February 2014, if he will confirm the split of the €3.5 billion of par value loans acquired for nil consideration by the National Asset Management Agency, for each of Bank of Ireland, Allied Irish Banks, Anglo Irish Bank, Irish Nationwide Building Society and the Educational Building Society; and if he will make a statement on the matter. [11446/14]

Amharc ar fhreagra

Lucinda Creighton

Ceist:

63. Deputy Lucinda Creighton asked the Minister for Finance further to Parliamentary Question No. 91 of 13 February 2014, to which he responded by letter on 20 February 2014, if either the National Asset Management Agency or the originating banks, Bank of Ireland, Allied Irish Banks, Anglo Irish Bank, Irish Nationwide Building Society and the Educational Building Society, have been investigated by the Central Bank of Ireland-Financial Regulator with respect of the €3.5 billion of loans acquired for nil consideration; and if he will make a statement on the matter. [11448/14]

Amharc ar fhreagra

Freagraí scríofa

I propose to take Questions Nos. 61 and 63 together.

I have been informed by NAMA that of the estimated €3.5 billion of par value loans acquired by NAMA for nil consideration €2.5billion was acquired from Anglo Irish Bank, €0.7 billion from Allied Irish Banks, €0.2 billion from Irish Nationwide Building Society, €0.1 billion from Bank of Ireland and €0.03 billion from the Educational Building Society.

I have been informed by NAMA that it acquired the €3.5 billion of loans for nil consideration in accordance with the defined valuation methodology which was agreed with the EU Commission. In accordance with this methodology where the security is not enforceable or the loans were unsecured, or the security was assessed to be defective no consideration was paid for the loans. NAMA is not subject to the regulation of the Central Bank of Ireland/Financial Regulator, however the acquisition of the loans by NAMA was reviewed by the Comptroller and Audit General who reported on the matter in its Special Report on NAMA dated October 2010, which is available on the NAMA website, www.nama.ie. I am not aware of any investigation into this matter by the Central Bank of Ireland/Financial Regulator in respect of the originating banks that issued the loans.

NAMA Loan Book

Ceisteanna (62)

Lucinda Creighton

Ceist:

62. Deputy Lucinda Creighton asked the Minister for Finance further to Parliamentary Question No. 91 of 13 February 2014, to which he responded by letter on 20 February 2014, if he will confirm the number of borrowers whose loans were acquired for nil consideration by the National Asset Management Agency, whose total of nil consideration loans fell in the following ranges, €500 million plus, €100 million-€500 million, €50 million-€100 million and less than €50 million; and if he will make a statement on the matter. [11447/14]

Amharc ar fhreagra

Freagraí scríofa

I have been informed by NAMA that the estimated €3.5 billion of nil consideration loans fell in the following ranges: 

Par Debt Acquired for Nil Consideration

Borrowers

< €50m

305

> €50m - €100m

10

> €100m - €500m

7

Question No. 63 answered with Question No. 61.

Insurance Costs

Ceisteanna (64)

Terence Flanagan

Ceist:

64. Deputy Terence Flanagan asked the Minister for Finance his plans to make public liability insurance more affordable for tradespeople; and if he will make a statement on the matter. [11451/14]

Amharc ar fhreagra

Freagraí scríofa

In my role as the Minister for Finance I have responsibility for the development of the legal framework governing financial regulation. The day to day responsibility for the supervision of financial institutions is a matter for the Central Bank of Ireland, which is statutorily independent in the exercise of its regulatory functions.

Insurance companies are required under law to price in accordance with risk. The decision to provide any specific form of insurance cover, including public liability insurance, and the price at which it is offered is a commercial matter based on the assessment an insurer will make of the risks involved and a need to ensure adequate provisioning for future losses.  Pricing for insurance products is not a matter that I, as Minister for Finance, or the Central Bank can interfere.

NAMA Operations

Ceisteanna (65)

Terence Flanagan

Ceist:

65. Deputy Terence Flanagan asked the Minister for Finance the date by which he expects the National Asset Management Agency to have finished its work; and if he will make a statement on the matter. [11462/14]

Amharc ar fhreagra

Freagraí scríofa

As indicated recently by its Chairman, the NAMA Board is currently reviewing its asset disposal projections and the timeframe over which it can expect to repay its liabilities. As the Deputy may be aware, the NAMA Board had set an original timeline for the completion of its work of 2020. However, depending on economic and market conditions, I am advised that there may be scope for NAMA to complete its work at an earlier stage. I am advised that this is currently under consideration by the Board.

In the context of my Departments review, I have asked NAMA to evaluate their disposal timing and strategy in the context of current market demand and explore the advantages and disadvantages of accelerating its disposal strategy. I welcome the recent acceleration in the repayment of Senior Bonds and the recent payment of a coupon on the subordinated debt and view them as a positive sign that economic and market conditions are improving.

Banking Sector

Ceisteanna (66)

Terence Flanagan

Ceist:

66. Deputy Terence Flanagan asked the Minister for Finance his plans to encourage a third pillar bank into the Irish market; and if he will make a statement on the matter. [11466/14]

Amharc ar fhreagra

Freagraí scríofa

Now that the Programme of Support is over, it has been succeeded by the Government's Medium Term Economic Strategy. One of the key planks of the MTES is making sufficient credit available and in this regard I am examining a whole series of options for both bank credit and non-bank credit. 

In addition to the many initiatives relating to non-bank credit I would like to see more competition in the domestic banking system to provide the lending required for our growing economy.  One option would be to continue to build up Permanent TSB, which has made considerable progress recently, particularly in new mortgage lending.  I would also welcome the participation of foreign banks in Ireland, possibly by way of  partnership with some of our domestic banks.  

I have not yet formed a view on the structure of a banking system which would support the needs of the Irish economy, and this will require further evaluation over the coming months and years, as the State and the banks currently operating in Ireland normalise and put the legacy banking issues, which were the priority when I came into office, behind them. 

Apprenticeship Programmes

Ceisteanna (67)

Michael McCarthy

Ceist:

67. Deputy Michael McCarthy asked the Minister for Education and Skills the position regarding the establishment of the apprenticeship council; the proposed role and function of the council; the date on which he expects to appoint a chairperson and sectoral sub-committees; and if he will make a statement on the matter. [11208/14]

Amharc ar fhreagra

Freagraí scríofa

The Apprenticeship Review Group's comprehensive report was submitted to my Department in December 2013. The report and its recommendations, which include the establishment of an Apprenticeship Council, are being progressed through engagement between my Department with stakeholders, including relevant Government Departments, agencies and representative groups.

The report suggested that the main functions of the Apprenticeship Council would be "to advise on the design, duration, entry levels, and ongoing provision of apprenticeships in line with national needs, ensuring optimum quality, efficiency and effectiveness. The Council will advise on the introduction of apprenticeships in new occupations, supported by evidence of sustainable demand, and promote progression pathways. It will advise on numbers of apprenticeship places to be provided in various occupations based on sound labour market intelligence and manpower forecasting, and carry out research, evaluation and data gathering necessary to inform the national programme. The Council will also be responsible for advising on a strategy to assist in providing alternative placements in the event of apprentices being made redundant during training."

While I am supportive of the broad recommendations outlined in the review group's report, I wish to see the outcome of discussions with stakeholders on implementation arrangements before moving towards putting in place any new governance framework for the apprenticeship system.

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