Stephen Donnelly
Ceist:176. Deputy Stephen S. Donnelly asked the Minister for Finance the assets being offered for sale by Permanent TSB, PTSB; and if he will make a statement on the matter. [37997/14]
Amharc ar fhreagraState Banking Sector
Ceisteanna (176)
Freagraí scríofa
Permanent TSB ("PTSB") confirmed that there were €680 million of loans 'Held for Sale' as at 30 June 2014, comprising of the Springboard Mortgages loan book and a tranche of CHL. The information is available on page 14 of their interim results presentation (http://www.permanenttsbgroup.ie/~/media/Files/I/Irish-Life-And-Permanent/Attachments/pdf/presentations/2014-half-year-results-slides.pdf). PTSB subsequently announced the sale of the CHL tranche on the 26th September last.
I would also like to highlight to the Deputy that the wind-down and/or sale of its non-core loan books is an integral part of the PTSB's Capital and Liquidity Plan and further sales may occur over time.
Under Clause 11 of the Relationship Framework, PTSB would be obliged to consult with me prior to a disposal, outside the ordinary course of business, of a loan/loans for an amount in excess of €50 million. In the Relationship Framework it is recognised that PTSB remains a separate economic unit with independent powers of decision and that its Board and management team retain responsibility and authority for determining PTSB's strategy and commercial policies and conducting its day-to-day operations. The consultation would carefully assess, at that particular point in time, the matter based on the facts and in particular the impact on PTSB's profit, capital and funding.
IBRC Loans
Ceisteanna (177)
Stephen Donnelly
Ceist:177. Deputy Stephen S. Donnelly asked the Minister for Finance his views on potential conflicts of interest with the special liquidators of Irish Bank Resolution Corporation, IBRC, acting as receivers on loans foreclosed upon by buyers of loans from the corporation, as recently happened in the case of loans to a Dublin cleaning company (details supplied); and if any concerns are heightened by ongoing sale by the special liquidators of IBRC of approximately €2 billion of par-value loans. [37998/14]
Amharc ar fhreagraFreagraí scríofa
Kieran Wallace and Eamonn Richardson were appointed by R3768723 Limited (a subsidiary of Alchemy Limited) as receivers and managers over Resource Facility Support Limited and not by any of the purchaser(s) of the loan assets of Irish Bank Resolution Corporation Limited (in Special Liquidation) ( IBRC ).
I am advised by the Special Liquidators that they are satisfied that no conflict of interest arises and that they can perform objectively or otherwise without bias, given that on this occasion the purchaser(s) of the loan assets of IBRC had already sold on their loan to an independent third party.
IBRC Loans
Ceisteanna (178)
Stephen Donnelly
Ceist:178. Deputy Stephen S. Donnelly asked the Minister for Finance further to Parliamentary Questions No. 195 of 15 July 2014 and No. 321 of 17 September 2014, the position regarding potential conflicts of interest with the special liquidators of Irish Bank Resolution Corporation, acting as decision makers on whether or not to default on loans which the special liquidators have previously sold; and if he will make a statement on the matter. [37999/14]
Amharc ar fhreagraFreagraí scríofa
As the Deputy is aware and further to Parliamentary Questions No. 195 of 15 July 2014 and No. 321 of 17 September 2014 relating to certain unspecified assets of the Irish Bank Resolution Corporation Assurance Company Limited, the Special Liquidators cannot comment on the assets of IBRC Assurance Company Limited as this is a separate legal entity to Irish Bank Resolution Corporation Limited (in Special Liquidation) and it is outside the control of the Special Liquidators.
Financial Services Regulation
Ceisteanna (179)
Stephen Donnelly
Ceist:179. Deputy Stephen S. Donnelly asked the Minister for Finance his plans to review the operation of loans to small and medium enterprises which have been sold by banks to non-traditional lenders in order to ensure that small and medium enterprises are not being unfairly or aggressively treated by organisations which traditionally target high returns on their investments; and if he will make a statement on the matter. [38000/14]
Amharc ar fhreagraFreagraí scríofa
Primary responsibility for the supervisory oversight and regulation of financial institutions, funds and insurance companies rests with the Central Bank of Ireland.
Where the new owners of the loan books are regulated entities, or become regulated entities, they are subject to regulation and oversight by the Central Bank of Ireland. They must comply with the various Central Bank Codes including the Code of Conduct on Mortgage Arrears and the Code of Conduct for Business Lending to Small and Medium Enterprises.
Where the purchaser of a loan book has not been a regulated entity in Ireland, the purchaser may voluntarily apply the codes when managing the loan books. Of course, voluntary compliance is not enforceable and ultimately it is the aim of this Government to ensure the same protections are available for all consumers, including SMEs, whose loans have been sold.
Therefore, as Minister for Finance, I am committed to bringing forward legislation that protects consumers, including SMEs, whose loans are sold to unregulated entities. The Government has reiterated this commitment on several occasions. In July and August of this year, my Department ran a public consultation seeking views on its proposed legislation to protect consumers whose loans are sold to unregulated entities.
The Department of Finance received 18 submissions from a range of respondents from the financial services industry, consumer groups, public representatives and individuals and other stakeholders. Officials in my Department are carefully considering the submissions and it is anticipated that legislation will be published by the end of this year.
Irish Fiscal Advisory Council
Ceisteanna (180)
Stephen Donnelly
Ceist:180. Deputy Stephen S. Donnelly asked the Minister for Finance the contribution made by the Irish Fiscal Advisory Council since it was created in July 2011; the planned cost of the council for 2014; his plans to abolish the council in view of the consistent rejection of its advice in the three years since it was created; and if he will make a statement on the matter. [38001/14]
Amharc ar fhreagraFreagraí scríofa
The Irish Fiscal Advisory Council was established in 2011, and became a statutory body when the Fiscal Responsibility Act 2012 came into force on 31 December 2012.
Since the establishment of the Irish Fiscal Advisory Council, the Council has published six Fiscal Assessment Reports, all of which can be found on the Fiscal Council's website. I respond to these reports, usually in my next fiscal policy publication or by letter if there is a large gap between the last Fiscal Assessment Report and my next fiscal policy publication. My responses can be found on the websites of the Council and my own Department. The establishment of the Council has strengthened the fiscal governance of the country and its reports have widened and deepened the debate on fiscal policy. The analytical work of the Council has been so far of a high quality and generally provides useful insights for policymakers. I have full confidence in the Fiscal Council and have no intention of abolishing it.
Furthermore, the Deputy should be aware that the Council fulfils a number of key statutory roles in Ireland's compliance with the Stability and Growth Pact (SGP) and the Fiscal Compact. In relation to the latter, it is the independent institution responsible at national level for monitoring our observance with the balanced budgetary rule. With regard to the SGP, it is responsible for considering and endorsing the macroeconomic projections upon which our fiscal planning is based. These functions have been given to the Council by the Oireachtas in the Fiscal Responsibility Acts 2012 and 2013.
The Fiscal Council have also published a number of other papers, including a Pre-Budget paper on 22 September which set out its opinion of what quantum of consolidation should underpin the Budget 2015 package. My position continues to be that the achievement of fiscal targets as set out in the Excessive Deficit Procedure (EDP) should remain the key anchor for fiscal policy. Since 2011 policy has been consistently framed in order to achieve these targets, and they have been met or exceeded for every year since. The overall fiscal stance to underpin Budget 2015 will be designed to ensure that the target is met in 2015 as well.
With regard to costs in 2014, there is a ceiling of €820,000 for the Fiscal Council, which is protected by legislation and is indexed to consumer prices. However, to facilitate payments from the Central Fund, the Fiscal Council provided projected costs for 2014 to my Department. The projected costs provided by the Council for 2014 are €732,020. This sum is broken down as follows; Pay - €384,955 and non-pay - €347,065.
NAMA Operations
Ceisteanna (181)
Stephen Donnelly
Ceist:181. Deputy Stephen S. Donnelly asked the Minister for Finance further to the recent statement by the chief executive officer of the National Asset Management Agency that it has a potential €4 billion to invest in Irish property development, including €1 billion already spent, the position regarding NAMA evolving from an asset manager into the State’s biggest property developer; his views that the agency has the necessary skillsets to adopt such a role; and if he will make a statement on the matter. [38002/14]
Amharc ar fhreagraFreagraí scríofa
The Deputy is incorrect to suggest that NAMA intends to evolve into a property developer. NAMA's mandate is to achieve the best financial return for the State from the loans acquired by it and the asset management of the underlying security. The provision of development finance to enhance the ultimate disposal value of assets securing its loans is entirely consistent with this mandate. There is clearly therefore no change in NAMA's strategy. NAMA has already provided €1bn in funding for Irish residential and commercial development projects since its acquisition of loans in 2010. To the extent that it makes commercial sense to fund the development of projects under the control of its debtors and receivers, NAMA is well placed to do so. Development projects, in any particular instance, will be managed by debtors, receivers or by third-party partners. I should also point out that NAMA does not own properties. Rather, NAMA, in its capacity as a secured lender, facilitates development via funding for viable commercial and residential projects under the control of its debtors and receivers. With emerging shortages in the Dublin residential and office sectors, it is reasonable that NAMA should seek to contribute, in so far as this is consistent with achieving the best financial return, to meeting those emerging shortages and it is this decision by the NAMA Board that I have endorsed in my recent S227 review.
I am satisfied that NAMA's professional and qualified staff, comprising finance, planning, property and legal specialists, are best placed to bring coherence, direction and drive to the development of secured assets by NAMA's debtors, receivers and third-party partners. The Deputy may be aware that NAMA has established dedicated Docklands SDZ and Residential Delivery teams to oversee the funding of these two important projects.
Tax Code
Ceisteanna (182)
Kieran O'Donnell
Ceist:182. Deputy Kieran O'Donnell asked the Minister for Finance the allowances in place to ensure a reduced inheritance tax liability for a disabled child who inherits money or possessions on the death of a sole living parent; and if he will make a statement on the matter. [38033/14]
Amharc ar fhreagraFreagraí scríofa
Capital Acquisitions Tax (CAT) is the overall name for both gift and inheritance tax.
For the purposes of CAT, the position is that the relationship between the person who provides the gift or inheritance (i.e the disponer) and the person who receives the gift or inheritance (i.e the beneficiary) determines the maximum tax-free threshold known as the "Group threshold" below which gift or inheritance tax does not arise.
There are, in all, three separate Group tax-free thresholds based on the relationship of the beneficiary to the disponer.
Group A: €225,000 - applies where the beneficiary is a child (including adopted child, step-child and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child.
Group B: €30,150 - applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer.
Group C: €15,075 - applies in all other cases.
Any prior gifts or inheritances received by a child from their parents since 5 December 1991 are aggregated for the purposes of determining whether any tax is payable on the current benefit.
A child can therefore receive gifts or inheritances from their parents up to the value of €225,000 without incurring any liability to CAT.
Apart from these tax-free thresholds, a number of exemptions and reliefs from CAT are provided in CAT legislation.
Section 82(4) Capital Acquisitions Tax Consolidation Act 2003 exempts from CAT money or money's worth provided by deceased parents for the benefit of a minor child (whether incapacitated or not) for normal support, maintenance or education.
Section 84 Capital Acquisitions Tax Consolidation Act 2003 provides that a gift or inheritance taken exclusively to discharge 'qualifying expenses' of an individual who is permanently incapacitated shall be exempt from CAT. 'Qualifying expenses' is defined as expenses relating to medical care, including the cost of maintenance in connection with such medical care. This would include all hospital charges, doctor's fees, medicines and other pharmaceutical fees, and also includes the cost of maintenance in connection with medical care.
In order for the exemption to apply there must be evidence from the disponer, either by will or otherwise, that he or she has provided the benefit exclusively for these purposes.
It is to be noted that any gifts or inheritances exempted from CAT under sections 82 or 84 Capital Acquisitions Tax Consolidation Act 2003 do not reduce the CAT tax-free threshold of a child of €225,000, which is preserved without reduction against the value of other gifts and inheritances taken by the child from their parents.
Exchequer Returns
Ceisteanna (183)
Pearse Doherty
Ceist:183. Deputy Pearse Doherty asked the Minister for Finance the amount of extra revenue that will be raised in 2015 by measures already announced or legislated for; and the details of these measures. [38035/14]
Amharc ar fhreagraFreagraí scríofa
In relation to carryover effects as a result of tax measures introduced in Budget 2014, it is estimated that there will be a small negative carryover into 2015 in the region of €2 million.
Separately, there are a number of measures, which were announced in previous Budgets and legislated for in the relevant Finance Acts, which are due to either cease or take effect in 2015. Of these, the most significant are:
- The stamp duty levy on pension fund assets of 0.6%, which was introduced in the Finance (No.2) Act 2011, as a measure to fund the Jobs Initiative. The pension levy rate of 0.6%, is estimated to yield €540 million in 2014 and is due to cease with effect from 31 December 2014.
- The previous Government, when they introduced the Universal Social Charge (USC), legislated for an exemption from the top rate of USC for those on medical cards. They also legislated for, a higher rate of USC of 10% for income in excess of €100,000 arising from self-employment. These USC measures were introduced in conjunction on a revenue neutral basis and are due to cease on 31 December 2014.
- Consanguinity relief from Stamp Duty on transfers of non-residential properties was retained in Budget 2012 for intra-family transfers to end-2014 and is estimated to cost €5 million in 2014.
- The 3 year tax relief for start-up companies was extended in Budget 2012 to include start-up companies which commenced a new trade in 2012, 2013 and 2014. This measure is estimated to cost €6 million in 2014.
I should point out that all of the above measures are already included in the Budget 2015 arithmetic. However, as the Deputy will appreciate, it is long stranding practice of the Minister for Finance to review all tax relief and exemption as part of the Budget process. In addition, it is also a long standing practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
Excise Duties
Ceisteanna (184)
Gabrielle McFadden
Ceist:184. Deputy Gabrielle McFadden asked the Minister for Finance his views on reversing the increase in excise duty on alcohol (details supplied); and if he will make a statement on the matter. [38060/14]
Amharc ar fhreagraFreagraí scríofa
It is not my practice to comment on what measures may or may not be introduced in advance of the Budget.
Mortgage Interest Rates
Ceisteanna (185)
Ciaran Lynch
Ceist:185. Deputy Ciarán Lynch asked the Minister for Finance the requirement placed on banks to pass on reductions in European Central Bank rates to the holders of standard variable rate mortgages; and if he will make a statement on the matter. [38103/14]
Amharc ar fhreagraFreagraí scríofa
Firstly, I must confirm to the Deputy that the lending institutions in Ireland - including those in which the State has a shareholding - are independent commercial entities. I have no statutory role in relation to regulated financial institutions passing on the European Central Bank interest rate change or in relation to the mortgage interest rates charged. It is a commercial matter for each institution concerned. It is not appropriate for me, as Minister for Finance, to comment on or become involved in the details of the accounts of mortgage holders.
The Central Bank has responsibility for the regulation and supervision of financial institutions in terms of consumer protection and prudential requirements and for ensuring ongoing compliance with applicable statutory obligations. The Central Bank has no statutory role in the setting of interest rates by financial institutions, apart from the interest rate cap imposed on the credit union sector in accordance with the provisions of the Credit Union Act, 1997 and the requirement to be notified of penalty or surcharge interest imposed in respect of arrears.
The mortgage interest rates that financial institutions operating in Ireland charge to customers are determined as a result of a commercial decision by the institutions concerned. This interest rate is determined taking into account a broad range of factors, including European Central Bank base rates, deposit rates, market funding costs, the competitive environment and an institution's overall funding.
As I stated in a previous Parliamentary Question, a previous Deputy Governor indicated that, within its existing powers and through the use of persuasion, the Central Bank would continue to engage with specific lenders which appear to have standard variable rates set disproportionate to their cost of funds and this is a course of action I expect the Central Bank to continually appraise.
As part of the Central Bank's work on mortgage arrears, lenders were asked to consider all avenues to help customers in arrears, including interest rate reductions.
Universal Social Charge Yield
Ceisteanna (186)
Michael McGrath
Ceist:186. Deputy Michael McGrath asked the Minister for Finance the yield from increasing - from 5% to 10% - the universal social charge surcharge on income covered by property-related reliefs; and if he will make a statement on the matter. [38172/14]
Amharc ar fhreagraFreagraí scríofa
As the Deputy will be aware, Finance Act 2012 introduced a surcharge of 5% on the amount of income sheltered by property reliefs in a given year. The surcharge is effective from 1 January 2012 and applied to individuals with gross incomes exceeding €100,000.
It is tentatively estimated that the yield from increasing the surcharge to 10% could be of the order of €6 million in a full year.
As a result of decreasing claims of legacy property incentives over recent years, the yield from the surcharge is estimated to be lower now than at the time the surcharge was announced in the 2012 Budget and will further reduce over time.
Tax Yield
Ceisteanna (187)
Michael McGrath
Ceist:187. Deputy Michael McGrath asked the Minister for Finance the yield that would be generated from standard rating tax relief for expenses allowable to employees under schedule E; and if he will make a statement on the matter. [38173/14]
Amharc ar fhreagraFreagraí scríofa
I am advised by the Revenue Commissioners that the full year yield to the Exchequer from confining relief for expenses allowable to employees to the standard rate of Income Tax, calculated with reference to tax returns made in respect of the year 2012, the most recent year for which the necessary data are available, would be of the order of €28m.
Tax Yield
Ceisteanna (188)
Michael McGrath
Ceist:188. Deputy Michael McGrath asked the Minister for Finance if he will provide, in tabular form, the revenue that would be raised from reducing the annual earnings limit along with age-related percentage limits for maximum tax relievable contributions for pension purposes from €115,000 to €100,000, €90,000, €80,000, €70,000 and €60,000, respectively, if tax relief is granted at the marginal rate; and if he will make a statement on the matter. [38174/14]
Amharc ar fhreagraFreagraí scríofa
I assume that the Deputy is referring to the current annual earnings cap of €115,000, which operates to limit the level of tax-relieved personal pension contributions in any one year. The annual earnings cap acts, in conjunction with age-related percentage limits of annual earnings, to put a ceiling on the annual amount of tax relief an individual taxpayer can obtain on pension contributions.
A breakdown of the cost of tax relief on employee contributions to occupational pension schemes is not available as tax returns by employers of employee contributions to such schemes are aggregated at employer level. An historical breakdown is available by tax rate of the tax relief claimed on contributions to personal pension plans Retirement Annuity Contracts (RACs) and Personal Retirement Savings Accounts (PRSAs) by the self-employed and others, to the extent that the contributions have been included in the personal tax returns of those taxpayers. There is, therefore, only a limited statistical basis for providing definitive figures.
However, by making certain assumptions using the available information, the Revenue Commissioners advise me that the impact on yield to the Exchequer may be tentatively estimated in respect of reducing the current annual earnings cap in respect of individual contributions to occupational pension schemes, RACs and PRSAs. Such estimates take no account of any behavioural impacts that may arise from the proposed changes and that could effect the scale of any yield.
On this basis, and based on the latest available information, it is tentatively estimated that the yield from the reduction of the annual earnings cap for pension contributions from €115,000 as suggested by the Deputy is set out in the following Table.
|
Revised Ceiling |
Estimated Yield |
|
€100,000 |
€28m |
|
€90,000 |
€52m |
|
€80,000 |
€78m |
|
€70,000 |
€110m |
|
€60,000 |
€149m |
Tax Yield
Ceisteanna (189)
Michael McGrath
Ceist:189. Deputy Michael McGrath asked the Minister for Finance the yield from increasing betting duty to 1.25% and 1.5%, respectively, while also extending it to online bets; and if he will make a statement on the matter. [38175/14]
Amharc ar fhreagraFreagraí scríofa
Based on a yield in 2013 of €25.4 million under the current betting duty regime, an increase in betting duty as set out by the Deputy would yield in the order of €30 million and €40 million, respectively.
The Finance Act 2011 provided for the application of 1% betting duty to the bets that remote bookmakers enter into with persons in the State and a 15% tax on the commission earned by betting exchanges. The Betting (Amendment) Bill, which was published in July 2013, will establish the regulatory framework for these remote operators. The tax changes provided for in the Finance Act can only be implemented once the Betting (Amendment) Bill is enacted. The Bill has completed Second Stage of the Seanad. Enactment of the Bill is expected by the end of the year.
It is estimated that the full year yield from the taxation of remote betting would be around €20 million at the current rate of 1%. An increase as set out by the Deputy would increase this to €25 million and €30 million respectively.
Tax Yield
Ceisteanna (190)
Michael McGrath
Ceist:190. Deputy Michael McGrath asked the Minister for Finance the yield that would be raised from a 20% tax on sugar-sweetened drinks as proposed by the Irish Heart Foundation; and if he will make a statement on the matter. [38176/14]
Amharc ar fhreagraFreagraí scríofa
The Irish Heart Foundation have proposed the introduction of volumetric tax on sugar sweetened drinks to increase prices by at least 20%. A volumetric tax, such as that applied by France and Finland to sugar sweetened drinks, is traditionally levied by reference to a particular volume of product, such as per hectolitre. Given retail prices are at the discretion of the retailer, and given the range of retail prices charged throughout the market, it is not possible to introduce a rate that would increase prices by 20% across the market.
Tax Yield
Ceisteanna (191)
Michael McGrath
Ceist:191. Deputy Michael McGrath asked the Minister for Finance the yield from increasing the excise duty on tobacco by €1 per packet; and if he will make a statement on the matter. [38177/14]
Amharc ar fhreagraFreagraí scríofa
Increasing the price of a packet of cigarettes by €1, with a pro-rata increase on all other tobacco products, would yield €123.5 million in a full year, and €19.5 million from Budget night to the end of the current year.
I would caution that this estimate assumes no exceptional change in consumer behaviour. Such a large increase could lead to consumers substituting from Irish duty paid tobacco products to non-Irish duty paid tobacco products, whether legally purchased in another jurisdiction or purchased illicitly, or indeed reducing their tobacco consumption.