Written Answers Nos. 179-203
179. Deputy Dara Murphy asked the Minister for Finance the code that was in place before the Central Bank of Ireland consumer protection code came into effect on 1 July 2007; and if he will make a statement on the matter. [29456/14]
Amharc ar fhreagraI have been advised by the Central Bank that the Consumer Protection Code 2006 was introduced in August 2006 by the Irish Financial Services Regulatory Authority, and came into effect fully on 1 July 2007.
Prior to the Consumer Protection Code 2006, a variety of conduct of business rules existed for the various financial sectors including: the Handbook for Authorised Advisors; the Handbook for Restricted Intermediaries; the Interim Code of Practice for Mortgage Intermediaries; the Interim Code of Practice for Insurance Undertakings; the Code of Conduct for Deposit Agents; and the Code of Practice for Credit Institutions. These requirements were withdrawn with effect from 1 August 2006.
The Bank has further advised me that the Handbook for Investment and Stockbroking Firms, the Code of Conduct for the Investment Business Services of Credit Institutions and Advertising Requirements applicable to Credit Institutions continued to apply to these regulated entities when providing services covered by EU Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments until 1 November 2007 (commonly referred to as MiFID).
180. Deputy Michael McGrath asked the Minister for Finance the circumstances of a house sale where a vendor has claimed an exemption of unfinished housing estate and it is subsequently discovered after the sale that the property was not covered by the areas listed in SI No. 91 of 2013, Finance (Local Property Tax) Regulations 2013; the person liable for the outstanding LPT liability and penalties on the property. [29457/14]
Amharc ar fhreagraI am advised by Revenue that in the absence of full details in regard to the property in question and the sale/purchase arrangements, a specific response can not be provided. However, by way of general comment, Section 10 of the Finance (Local Property Tax) Act 2012 (as amended) made provision for a number of exemptions from Local Property Tax (LPT). The exemptions include certain unfinished housing estates, which are prescribed (as unfinished) by the Minister for the Environment, Community and Local Government in Statutory Instrument (SI) No. 91 of 2013. The 'prescribed list' was published in March 2013 and can be viewed at www.environ.ie. It is important to be aware that, in line with Government policy, only properties appearing on the 'prescribed list' are entitled to exemption from LPT and Revenue has no discretion in this regard.
Also, it does not follow that properties, which are exempt from the Household Charge (HHC) are automatically included in the 'prescribed list' for LPT as the qualifying criteria in respect of both exemptions are not the same. For example, certain properties and estates that were listed as exempt from HHC on the basis of being 'unfinished' and which were subsequently further developed in the period up to March 2013 were excluded from the LPT 'prescribed list' by the Minister for the Environment, Community and Local Government. This had the effect of very significantly reducing the number of exemptions in respect of LPT in comparison to HHC.
In regard to the issue raised by the Deputy, the vendor of a residential property is obliged, in advance of any sale, to submit all LPT Returns and pay all liabilities due for the period/s that he/she was the liable person. The vendor must also correct any Return where there was an under-declaration of value, or where an exemption was incorrectly claimed and must provide the purchaser with full details of the declared valuation or exemption claimed. To assist vendors in ensuring LPT has been correctly applied, Revenue has developed an intuitive online system that allows self-correction and payment of any under-valuation errors in advance of a sale. This facility can be accessed through the LPT page on the Revenue website at www.revenue.ie using the relevant Property ID and PIN codes.
The purchaser on the other hand must ensure that he/she receives this information in advance of closing any sale and from it, be in a position to satisfy himself/herself that there are no outstanding LPT liabilities, including any interest or penalties. With regard to HHC (as distinct from LPT), where an exemption was in place on foot of an unfinished estate, then the vendor should have in his/her possession a 'Certificate of Discharge', which would have been provided by the relevant Local Authority and must be in a position to pass this 'confirmation of exemption' to the purchaser before the completion of sale. Where any purchaser who acquires a property and subsequently discovers that the vendor supplied Revenue with false information in regard to the valuation or the exemption, then he/she should immediately advise LPT Branch of the details. In such circumstances, assuming that the purchaser did not agree to pay any outstanding balance as part of the sale agreement, the vendor may be liable to a penalty equal to the amount of the outstanding LPT, in addition to paying the balancing amount, up to a maximum of €3,000. The purchaser could also become liable for the same penalty in circumstances where he/she is aware that the vendor supplied false information but fails to notify Revenue.
Revenue has stressed to me the important role that solicitors, whether representing vendors or purchasers in the conveyancing process, must play in respect of LPT. It is incumbent on them to ensure that LPT has been correctly declared and paid on any property before it is sold/purchased thereby protecting their clients from the imposition of any additional costs including interest or penalties for non-compliance with LPT obligations. Finally, Revenue has advised me that it has published detailed guidelines on its website www.revenue.ie in regard to the obligations of vendors and purchasers in respect of Local Property Tax (LPT), which may be of assistance to the Deputy or the person in question. Alternatively, if the Deputy or the person in question wishes to provide specific details of the property in question then Revenue will be in a position to provide a more precise response.
181. Deputy Stephen S. Donnelly asked the Minister for Finance further to the report in a Sunday newspaper that the National Asset Management Agency sold a warehouse in Dublin, which is generating €750,000 in rent per annum from the Revenue Commissioners, for a price of between €2 million and €4 million, after NAMA obtained an assessed market value, if NAMA will confirm the terms on which it obtains assessed market valuations; the amount it pays for such valuations; the persons who provide such valuations; if such valuations adhere to valuing standards of the Royal Institution of Chartered Surveyors; and if he will make a statement on the matter. [29467/14]
Amharc ar fhreagra182. Deputy Stephen S. Donnelly asked the Minister for Finance further to the report in a Sunday newspaper that the National Asset Management Agency sold a warehouse in Dublin, which is generating €750,000 in rent per annum from the Revenue Commissioners, for a price of between €2 million and €4 million, if he has any concerns that the asset was sold for less than its open market value. [29468/14]
Amharc ar fhreagraI propose to take Questions Nos. 181 and 182 together.
Whilst I am precluded from discussing the detail of any individual transaction, I am advised by NAMA that the Deputy's information on the price at which this asset was sold is incorrect. To clarify, NAMA did not sell the property in question. The property was sold by its owner and NAMA, as secured lender, consented to the sale. The salient facts are that Dublin Port Company (DPC) had a shared legal interest in the property and built-in pre-emption rights in respect of the legal interests held. Given the existence of these legal rights and DPC's expressed interest in acquiring the property, the only commercially viable option was the sale of the property to DPC. I am advised that the final sale price was the result of extensive negotiations, was in line with market valuations at the time of the transaction and was the best price that could be achieved given the particular circumstances of the asset.
In addition, I am also advised that the sale proceeded in accordance with the NAMA Board commitment to give first option to State bodies (Government departments, local authorities, State agencies and other statutory bodies) on the purchase of NAMA-related property which may be suitable for their purposes. This is fully in line with Government policy. In accordance with that Board commitment, NAMA has accommodated the sale or lease of lands and properties for a range of public uses, including, for instance, for social housing, primary and secondary schools, primary healthcare and other step-down and community healthcare facilities, and for community and recreational amenity. I fully support the NAMA Board in this approach.
As a secured lender, before NAMA agrees to release its security it makes all necessary enquiries to ensure that full value is obtained in the interest of taxpayers. NAMA has published guidance on the 'Disposal of Real Estate Assets by NAMA Debtors and Insolvency Office Holders'. This is available on the NAMA website, www.nama.ie. I refer the deputy to PQ no. 206 of the 17th of June 2014 which outlines the valuation methodology applied by NAMA.
183. Deputy Stephen S. Donnelly asked the Minister for Finance further to the recent engagement by Permanent TSB of Morgan Stanley to assist with the disposal of over €2 billion of par value loan portfolios, if he is aware of Morgan Stanley acting on behalf of any organisation considering a merger with PTSB; and if so, if he is concerned at any conflicts of interest; and if he will make a statement on the matter. [29469/14]
Amharc ar fhreagra184. Deputy Stephen S. Donnelly asked the Minister for Finance further to the recent engagement by Permanent TSB of Morgan Stanley to assist with the disposal of over €2 billion of par value loan portfolios, if he has any concerns about the performance of Morgan Stanley with the recent disposal of loan portfolios of National Australia Bank group and the British Co-op group. [29470/14]
Amharc ar fhreagra186. Deputy Stephen S. Donnelly asked the Minister for Finance further to the recent engagement by Permanent TSB of Morgan Stanley to assist with the disposal of over €2 billion of par value loan portfolios, his views on the suitability of that company in view of its involvement in various transactions involving shares and contracts for difference controlled by a person (details supplied) at the former Anglo Irish Bank in 2008; and if he will make a statement on the matter. [29472/14]
Amharc ar fhreagraI propose to take Questions Nos. 183, 184 and 186 together.
As the Deputy will be aware there is a Relationship Framework in place with Permanent TSB ("PTSB"). Under the Relationship Framework PTSB is recognised as a separate economic unit with independent powers of decision. The Board and management team retains responsibility and authority for determining the bank's strategy and commercial policies and conducting its day-to-day operations. In accordance with Section 21 of the Relationship Framework I have been notified by PTSB that Morgan Stanley have been engaged to act on their behalf solely to facilitate the sale of the specified loan books only and not to advise on any other aspects of their strategy.
I have also been informed by PTSB that Morgan Stanley were chosen after a thorough competitive tender process taking into account their experience in similar transactions and their track record on previous transactions for PTSB. As the Deputy would expect I am acutely conscious of the potential for conflicts of interest when the State engages advisors to assist us in relation to our banking investments. Indeed the most recent invitation to tender relating to the appointment of financial consultants to the Department of Finance (and the accompanying draft Framework Agreement) contains extensive provisions relating to the declaration and management of conflicts of interests with which tenderers must comply. A copy of the invitation to tender may be accessed through the etenders website.
185. Deputy Stephen S. Donnelly asked the Minister for Finance in view of the €2 billion of par value loans currently being sold by the special liquidators of the Irish Bank Resolution Corporation, the €2.6 billion of par value mortgages and commercial real estate loans being sold by Permanent TSB and the sale by the National Asset Management Agency of various loans, his views that these disposals would benefit from centralised management; if sale costs could be reduced, and sale proceeds maximised from centralised management; and if he will make a statement on the matter. [29471/14]
Amharc ar fhreagraThe separate boards and management teams of IBRC (in Special Liquidation), Permanent TSB and the National Assets Management Agency retain the responsibility and the authority for determining the strategy and commercial decisions and conducting the day to day operations, including the sale of assets, and management of those legally separate institutions. In making such decisions the Board and management teams are highly conscious of ensuring that sale costs are minimised and that maximum proceeds are achieved in the sale of all loan portfolios. It would not be appropriate for me to interfere in the management decisions or the day to day operations of those institutions, none of which can be controlled by the State.
That said, the ongoing sales processes that are referred to are complex and specific to the various institutions. The portfolios concerned also involve considerably different asset types and classes in many cases. Centralised management of the various loan sales may be difficult given the complexities involved and the different strategic focuses of the institutions involved.
187. Deputy Stephen S. Donnelly asked the Minister for Finance the way his Department monitors Bank of Ireland and Allied Irish Banks in their adherence to the terms of the restructuring decisions for those two banks by the European Commission; and if he will make a statement on the matter. [29473/14]
Amharc ar fhreagra188. Deputy Stephen S. Donnelly asked the Minister for Finance the way in which Allied Irish Banks, a bank in which he controls practically all the shares, and Bank of Ireland, in which he controls 14% of the shares, monitor adherence to the terms of the restructuring decisions for those two banks; and if he will make a statement on the matter. [29474/14]
Amharc ar fhreagraI propose to take Questions Nos. 187 and 188 together.
It is a requirement of the EU Commission that, when a Restructuring Plan is agreed, an independent Monitoring Trustee is appointed. The role of the Monitoring Trustee is to ensure that each of the commitments included in the Restructuring Plan are being adhered to and within the agreed timelines, and to report to the EU Commission on a regular basis - typically quarterly. I can confirm for the Deputy that officials in my Department receive copies of the Monitoring Trustee's report prepared for the EU Commission.
Apart from this formal independent monitoring and reporting requirement, officials in my Department are in regular contact with the banks including monthly meetings with bank senior management. This communication line allows for ongoing dialogue regarding upcoming commitments and progress in this regard.
189. Deputy Stephen S. Donnelly asked the Minister for Finance further to the announcement by Bank of Ireland, a bank in which he controls 14% of the shares, that it has disposed of €250 million of par value mortgages presently controlled by the ICS Building Society, if there has been a waiver by the European Commission to the requirement set out in its restructuring decision for that bank; and if he will make a statement on the matter. [29475/14]
Amharc ar fhreagraIn accordance with its revised Restructuring Plan of July 2013, which allowed it to retain New Ireland, Bank of Ireland agreed to certain substitution measures including that relating to ICS. The specific ICS substitution measure required Bank of Ireland to sell the ICS distribution platform together with, at the option of the acquirer: Up to €1bn of mortgages; and Up to €1bn of matching deposits.
In accordance with the revised Restructuring Plan, Bank of Ireland had until 30th June 2014 to execute this transaction. As the Deputy is aware, Bank of Ireland made an announcement to the stock exchange on 26th June in this regard. The substance of this announcement was that Bank of Ireland had agreed to sell the ICS distribution platform together with a portfolio of €250m gross performing mortgage assets to Dilosk Limited. The full announcement can be found at: http://www.bankofireland.com/fs/doc/wysiwyg/eu-restructuring-plan-update-26-june-2014.pdf. The EU Commission had not granted a waiver to the Bank of Ireland in relation to its ICS commitment and the transaction announced on 26th June is in line with this commitment.
190. Deputy Stephen S. Donnelly asked the Minister for Finance if his Department has undertaken any study into the competitiveness of the retail banking sector here; the way competitiveness has decreased in the past six years; if he has concerns for the current level of competitiveness in the sector; and if he will make a statement on the matter. [29476/14]
Amharc ar fhreagraI accept that the level of competition in the Irish banking sector has reduced as a result of the decisions by ACC, Danske Bank and Bank of Scotland (Ireland) to withdraw from the market. As the Deputy may be aware, towards the end of last year, my Department undertook an assessment of banks' fee income relative to peers in selected other jurisdictions and carried out a review of the regulation of bank fees. The review concluded that it would not be appropriate to repeal Section 149 of the Consumer Credit Act 1995 now. Specifically, in relation to competition, the review found that the lack of competition in the banking sector means that the removal of section 149 would give unfettered price setting power to the incumbent banks. This issue should be revisited when competition in the banking sector has improved significantly.
As part of the conditions under which the Irish banks received state aid, Ireland made various 'sectoral commitments' to the European Commission in order to promote competition in the Irish banking sector. Among these commitments, Section 1.1 (b) of the approved State Aid for Bank of Ireland states: "Legislation will be enacted that will provide that Section 149 of the Consumer Credit Act, 1995 regarding price regulation and fees will not be applied to new entrants in their first 3 years of commencing business in Ireland". This exemption was provided for under the Central Bank Supervision and Enforcement Act 2013.
The Deputy may be aware that Bank of Ireland announced on 26 June last that it had agreed to sell the distribution platform, together with €250 million of mortgage assets at par, to Dilosk Limited. No deposits are transferring as part of the sale. That follows an amendment to the bank's restructuring plan which allowed the bank to retain its life assurance subsidiary, New Ireland. The bank committed to certain substitution measures including the sale of the ICS distribution platform together with, at the option of the acquirer of the platform, up to €l billion of mortgage assets and a similar quantum of matching deposits. The purpose of the ICS substitution measure is to support new entrants in the Irish mortgage market thereby increasing competition to the benefit of the consumer.
Dilosk Limited has confirmed that it has applied for authorisation from the Central Bank of Ireland to operate as a retail credit firm and once it is so authorised, it will be required to comply fully with all relevant consumer protection codes, including the Code of Conduct on Mortgage Arrears. Mortgage holders will therefore be afforded protection. Given the reduced number of lenders now operating in the mortgage market, this transaction is to be welcomed as it introduces a new entrant and should therefore contribute to greater competition.
191. Deputy Jim Daly asked the Minister for Finance the total number of local property tax returns filed under bands 1 and 2, that is, property value of €150,000 or less; the number of these returns that relate to principle private residences; and if he will make a statement on the matter. [29496/14]
Amharc ar fhreagra193. Deputy Stephen S. Donnelly asked the Minister for Finance if he will provide in tabular form the projected total and per capita local property tax takes for 2014 by local authority. [29595/14]
Amharc ar fhreagraI propose to take Questions Nos. 191 and 193 together.
I am informed by the Revenue Commissioners that compliance data in relation to the Local Property Tax (LPT) is available broken down by city and county councils nationally and the most up to date figures for LPT collected in 2013 and 2014 were published on 16 April 2014 on the Commissioners' website at: Local Property Tax Statistics April 2014 (PDF 192KB). The report also provides a breakdown of the percentage distribution of properties across the 20 valuation bands nationally (based on Returns filed for 2013) and shows that about 54% of all residential properties were valued on a self-assessment basis at €150,000 or less. This equates to about 886,000 properties. This figure does not include local authority (or similar) owned properties which are deemed to be valued, under LPT legislation, in LPT Valuation Band 1.
While the vast majority of Band 1 and 2 properties would be principal private residences, I am informed by the Commissioners that further analysis would be required to provide an exact figure. The Commissioners have confirmed that by the end of December 2013, €318m had been transferred by Revenue to the Exchequer in respect of LPT. Of this amount, €242m was in respect of LPT for 2013 and €76m relates to 2014 LPT. By the end of June 2014, a further €310m was transferred by Revenue to the Exchequer. The Commissioners advise that they do not have per capita figures as data are not held on that basis. Projected LPT for 2014, broken down by local authority, is not currently available. The Commissioners have also confirmed that more up-to-date data and analysis will be published shortly.
192. Deputy Michael McGrath asked the Minister for Finance if he will set out, in tabular form, the annual cost and the number of companies that benefited from the research and development, R and D, tax credit in each year from 2008 to 2013; and if he will make a statement on the matter. [29565/14]
Amharc ar fhreagraThe Deputy may wish to note that the R and D Tax Credit was comprehensively reviewed in 2013, and the results can be viewed on the Department of Finance website. I am informed by the Revenue Commissioners that the annual tax expenditure associated with research and development tax credits in each year from 2008 to 2012, the latest year available, is as set out in the following table. Data for the tax year 2013 are not yet available as the bulk of tax returns for 2013 are not due until later this year.
|
Year |
Number of Companies |
Cost €m |
|
2008 |
582 |
146 |
|
2009 |
900 |
216 |
|
2010 |
1,172 |
224 |
|
2011 |
1,409 |
261 |
|
2012 |
1,538 |
282* |
*The information shown for 2012 is provisional and may be revised. The cost shown includes €3.6 million research and development credit that was carried back against tax of earlier accounting periods.
194. Deputy Mary Lou McDonald asked the Minister for Finance if he will provide the name, position and annual salary awarded to each of his special advisers; if he will provide details of any request made for an increase above the special adviser pay cap set by the Department of Public Expenditure and Reform and the amount of the increase sought. [29603/14]
Amharc ar fhreagraNeither of the two special advisors appointed by me have salaries exceeding the relevant pay guidelines. Their salaries are in line with guidelines issued by the Department of Public Expenditure and Reform on the appointment of Ministerial staff.
|
Name |
Salary at 30 June 2013 |
Salary from 1 July 2013 (post implementation of the Haddington Road Agreement) |
|
Mary Kenny |
€89,898 |
€84,706 |
|
Eoin Dorgan |
€86,604 |
€81,676 |
195. Deputy Kevin Humphreys asked the Minister for Finance if his Department, agencies under his control or any staff received requests, proposals or submissions on the need for a mortgage indemnity scheme in particular for first-time buyers from any regulated financial institutions here; if so, from whom; and if he will make a statement on the matter. [29629/14]
Amharc ar fhreagraAs the Deputy will be aware, my Department receives numerous contacts and submissions each year relating to policy matters. These include correspondence from regulated financial service providers on mortgage related issues, including mortgage indemnity insurance, and are dealt with by my officials.
Mortgage Indemnity Insurance is a proposal that is currently being analysed by my Department as part of its remit under action point 51 of the Construction Strategy. Since the analysis is not yet complete, no decision has been made on the next steps to be taken. My Department has recently been contacted by three insurance companies on the subject of mortgage indemnity insurance. The correspondence includes, interalia, descriptions of products offered in other jurisdictions and invitations to presentations on the topic. It would not be appropriate for me to identify these companies due to commercial sensitivities.
196. Deputy Kevin Humphreys asked the Minister for Finance if he will provide, in a spreadsheet format, the value in euro and punt of each individual transaction of punt to euro exchange at the Cental Bank of Ireland in 2012, 2013 and to date in 2014 respectively; total amounts for each of those years; and if he will make a statement on the matter. [29630/14]
Amharc ar fhreagraI have been informed by the Central Bank that, due to the manual nature of the legacy (Irish Pounds to EURO) exchange operations it is not possible to provide data per individual transaction. The transactions are bulked together prior to the posting of accounting entries.
Information on the aggregate daily posted values of EURO settled by the Central Bank in exchange for Irish notes/coin can be found at the following link:
197. Deputy Kevin Humphreys asked the Minister for Finance the losses the Central Bank of Ireland has made on the exchange of punts to euro since 2002 taking into account the original provision of €60 million in 2002 for future transactions; the total exchange of punt notes and coins, respectively, since that provision was made; and if he will make a statement on the matter. [29631/14]
Amharc ar fhreagraI am informed by the Central Bank that the total amount of Irish Pound notes and coins redeemed between 9 February 2002 - when they ceased to be legal tender - and 30 June 2014 is €730m, consisting of €489m in respect of banknotes and €241m in respect of coins. As of 31 December 2002, notes to the value of €299.7 million were outstanding. A provision of €60 million was created in respect of future redemptions of Irish Pound banknotes. The balance of €239.7 million, which it was estimated would not be presented for redemption, was accounted for through the Profit and Loss account. This windfall gain then formed part of the payment of Surplus Income to the Exchequer for 2002, as proposed by the Minister for Finance in December 2001.
Since 2002, the Central Bank has continued to redeem Irish pound banknotes which have been charged against the provision of €60 million. At end 2010 and 2012 amounts of €10 million in each case were transferred from profits to replenish this provision. At 31 December 2013 the provision stood at €11.6 million. The total amount of Irish Pound banknotes redeemed between end 2002 and end June 2014 is €69.2m.
In respect of coin, as of 2002, the net proceeds from the issue of coin are passed directly to the Exchequer on an annual basis in accordance with section 137 of the Finance Act 2002. This transfer is net of any amount of Irish pound coin redeemed by the Central Bank. Irish Pound coin to the value of €124 million is still in circulation and is redeemable by the Central Bank on behalf of the Minister for Finance. The value of the amount outstanding in respect of Irish pound banknotes and coin as at 30 June 2014 was as follows: Irish pound banknotes - €230.5 million; Irish pound coin - €124 million. The question of setting a date after which Irish Pound notes and coins would no longer be redeemed is being kept under review.
198. Deputy Kevin Humphreys asked the Minister for Finance when the advisory group on tax and social welfare will publish its report on increasing the incentives for persons to return to work; and if he will make a statement on the matter. [29632/14]
Amharc ar fhreagra199. Deputy Kevin Humphreys asked the Minister for Finance if the Revenue Commissioners have undertaken any estimate of the projected cost to the Exchequer of establishing the necessary administrative system to facilitate the refund of tax credits; if the Revenue Commissioners or his Department have carried out a study of the amount a refundable tax credit system for low paid workers would cost assuming a suitable qualification period of work; if not, if he will carry out such a study; and if he will make a statement on the matter. [29633/14]
Amharc ar fhreagraI propose to take Questions Nos. 198 and 199 together.
The Deputy is advised that the Advisory Group on Tax and Social Welfare (AGTSW) are considering a range of tax and social welfare issues, with a view to increasing the incentives for individuals to return to work. I understand that one of the issues the Group have examined relates to refundable tax credits. It is expected that the Group will publish its report later this summer and I anticipate its recommendations will a form useful addition towards informing upcoming budgetary deliberations.
Without any new policy decision or direction on this issue, Revenue has not undertaken any estimate of the projected cost to the Exchequer of establishing the necessary administrative system to facilitate the refund of tax credits. However, it should be borne in mind that under the terms of the Stability and Growth Pact, until Ireland has reached its objective of a balanced budget in structural terms, we may not introduce discretionary revenue reductions unless they are matched by other revenue increases or expenditure reductions. This means that Government must consider carefully any tax changes as any reductions will have to be offset elsewhere.
200. Deputy Kevin Humphreys asked the Minister for Finance if he will provide a list for each year since 1997 the applicable stamp duty rate on non-residential property; and if he will make a statement on the matter. [29634/14]
Amharc ar fhreagraThe rates of stamp duty which applied to non-residential property since 1997 are set out in the following tables. In Budget 2012 I introduced a single stamp duty rate of 2% in respect of non-residential property, which includes farmland as well as commercial and industrial buildings. This reduction was part of an overall budgetary strategy to encourage activity in the construction, development and property sectors as they recovered from the effects of the property downturn.
1 January 1997 to 31 December 2001
|
Aggregate Consideration |
Rate |
|
Up to £5,000 |
Exempt |
|
£5,001 to £10,000 |
1% |
|
£10,001 to £15,000 |
2% |
|
£15,001 to £25,000 |
3% |
|
£25,001 to £50,000 |
4% |
|
£50,001 to £60,000 |
5% |
|
Over £60,000 |
6% |
1 January 2002 to 3 December 2002 (This table is the same as the table above adjusted to take account of the changeover to Euros)
|
Aggregate Consideration |
Rate |
|
Up to €6,350 |
Exempt |
|
€6,351 to €12,700 |
1% |
|
€12,701 to €19,050 |
2% |
|
€19,051 to €31,750 |
3% |
|
€31,751 to €63,500 |
4% |
|
€63,501 to €76,200 |
5% |
|
Over €76,200 |
6% |
4 December 2002 to 15 October 2008
|
Aggregate Consideration |
Rate |
|
Up to €10,000 |
Exempt |
|
€10,001 to €20,000 |
1% |
|
€20,001 to €30,000 |
2% |
|
€30,001 to €40,000 |
3% |
|
€40,001 to €70,000 |
4% |
|
€70,001 to €80,000 |
5% |
|
€80,001 to €100,000 |
6% |
|
€100,001 to €120,000 |
7% |
|
€120,001 to €150,000 |
8% |
|
Over €150,000 |
9% |
16 October 2008 to 6 December 2011
|
Aggregate Consideration |
Rate |
|
Up to €10,000 |
Exempt |
|
€10,001 to €20,000 |
1% |
|
€20,001 to €30,000 |
2% |
|
€30,001 to €40,000 |
3% |
|
€40,001 to €70,000 |
4% |
|
€70,001 to €80,000 |
5% |
|
Over €80,000 |
6% |
7 December 2011 to date
2% flat rate on the entire consideration.
201. Deputy Kevin Humphreys asked the Minister for Finance if he will confirm that on current projections Ireland will have a primary budget surplus this year; and if he will make a statement on the matter. [29635/14]
Amharc ar fhreagraThe most recent fiscal forecast was contained in the Stability Programme Update published in April. This showed that, in broad terms, Ireland will run an underlying general government primary balance this year. The April 2014 SPU forecast a primary surplus in 2015. The next set of official forecasts will be published in the Budget book in October.
202. Deputy Kevin Humphreys asked the Minister for Finance the cost of servicing the national debt as projected in budget 2014; the outturn for the year to date; the savings that have been made; where have they arisen; the total projected saving on the budgeted amount of debt interest for 2014; and if he will make a statement on the matter. [29636/14]
Amharc ar fhreagraBudget 2014 projected the total cash cost of servicing the National Debt in 2014 at €8,926 million. The bulk of debt servicing costs is made up of National Debt interest. The Budget 2014 estimate of National Debt interest in 2014 was €8,154 million. The other items comprising debt servicing are sinking funds and debt management expenses. These were estimated in Budget 2014 at €633 million and €139 million respectively.
The end-June 2014 Exchequer Returns published last week reported National debt interest expenditure at €4,297 million in the first six months of the year, some €346 million or 7.5% below the Budget 2014 consistent profile. This is largely due to the €4.1 billion bond buy back in December 2013, which resulted in lower interest payments in January 2014, lower than expected costs from bond issuance so far this year and a more benign interest rate environment generally, including with respect to the interest rate reset on the floating rate bonds, reflected in the June payment.
Sinking Funds and debt management expenses were €600 million and €48 million respectively in the first six months of the year. National Debt service costs for the year are likely to be below the original Budget 2014 estimate. This was reflected in the April 2014 Stability Programme Update which projected total National Debt service costs interest, sinking funds and debt management expenses combined at €8,514 million in 2014, some €412 million below the Budget 2014 estimate. The next published estimate of National Debt service costs in 2014 will be in the context of Budget 2015 in October.
203. Deputy Kevin Humphreys asked the Minister for Finance if his attention has been drawn to the ESRI Bergin and Fitzgerald note on the structural balance for Ireland; the definition his Department uses for defining our structural balance; if his Department accepts the conclusion that the EU approach is inappropriate for calculating Ireland's structural balance; the action he is taking on same; if Ireland will reach structural balance next year as the paper argues; the implications this will have for Ireland and our EU treaty and commission commitments; and if he will make a statement on the matter. [29637/14]
Amharc ar fhreagraMy Department maintains an open dialogue on the issue of estimation of the output gap for Ireland (and its associated implications for estimation of the structural budget balance) with members of the economics community, including the ESRI. The recent Quarterly Economic Commentary Special Article by Bergin and FitzGerald outlining the limitations of the EU harmonised approach to estimating the output gap is a welcome addition to discussions on this important issue.
Definition used
As official publications from this Department have repeatedly highlighted, the harmonised EU approach is not well suited to capturing in full the dynamics of the Irish economy. For the purposes of assessing compliance with EU fiscal rules, however, all Member States must apply the standard methodology as outlined in detail in D'Auria et al. (2010), together with the recent modifications to how the level of structural unemployment is estimated (as outlined in the April 2014 Stability Programme Update). Official estimates of the structural budget balance submitted to the European Commission for assessment must comply with this definition. The definition used by my Department thus follows the above approach where potential output corresponds to the level of output consistent with price and labour market equilibrium. As the ESRI paper highlights, this approach does not directly incorporate imbalances in the goods market captured through the current account. Movements in terms of trade, however, do feature in how the level of structural unemployment is modelled under this approach. My Department shares the view that the requirement to deliver continued structural adjustment following this harmonised approach will imply sustaining a significant current account surplus over time.
Appropriateness of approach
There are a number of well-flagged limitations to this methodology: namely the implausibly high levels of structural unemployment the approach implies, and the tendency for these estimates to be revised over time. Whilst all estimates of the output gap are prone to revision (since they are, by definition, based on unobserved trends), the extent of these revisions remains a source of concern.
Actions taken
My Department continues to monitor the implications of applying this harmonised methodology in Ireland. At EU working group level, my staff have been closely involved in lobbying for and successfully implementing improvements in how structural unemployment is calculated under the harmonised approach. Notwithstanding these improvements, my Department still views the implied rate of the latter for Ireland as both implausibly high and overly cyclical in nature.
My Department will continue to lobby to improve the fit of the harmonised methodology for Ireland. In this regard, I welcome the forthcoming report by the European Commission to the European Parliament on the application of the EU governance framework in December 2014. At technical level, my Department will continue to engage actively in this report process.
Position of structural balance
Whilst my Department is of the view that the output gap is likely to be more negative than that currently implied by the standardised methodology, it does not share the view outlined in the paper that all of the 2014 deficit (-4.8% of GDP) is due to the effects of the economic cycle. For this to be the case - consistent with the harmonised methodology - this would imply an equally implausible negative output gap of 9 1/2 % of GDP.
Implications for EU commitments
Estimation of the structural balance has assumed a central role in the domestic conduct and European assessment of fiscal policy. It will become even more central to Irish policy decisions once we are subject to the preventive arm of the Stability and Growth Pact from 2016 onwards. Ireland will then be obliged to deliver a correction in the structural balance of at least 0.5 percentage points per annum from 2016 onwards, until we achieve a position of structural budget balance. Assessment of compliance with this requirement will be based on application of the harmonised EU method for calculating the output gap.
