Tuesday, 14 Oct 2014

Written Answers Nos. 40-54

Environmental Policy

Ceisteanna (40)

Joan Collins

Ceist:

40. Deputy Joan Collins asked the Minister for Finance the tonnage of toxic chemical marker that has been added to the fuel supply which, when burned, can be released into the environment. [39020/14]

Freagraí scríofa

Minister for Finance

I am advised by the Revenue Commissioners, who are responsible for the collection of mineral oil tax, that a chemical marker prescribed under the EU law must be added to diesel and kerosene taxed at a lower rate of mineral oil tax. Not more than 4.5 kilograms of the chemical marker are added to every half million litres of gas oil or kerosene.

Prior to the selection of the chemical marker, a study conducted by the EU found that the inclusion of the marker caused no variation in the pollutant emissions that were measured in the exhaust gases of a diesel engine.

Tax Reliefs Application

Ceisteanna (41)

Mary Mitchell O'Connor

Ceist:

41. Deputy Mary Mitchell O'Connor asked the Minister for Finance the reason no tax relief is in place for donations in support of sports development projects aimed at increasing participation or for the support of high-performance or developing athletes, when there is a relief in place in respect of sports facilities capital projects and sport is the only area of the not for profit sector not to benefit from such a relief; and if he will make a statement on the matter. [39029/14]

Freagraí scríofa

Minister for Finance

As the Deputy will appreciate, in general,  any new tax relief should only be considered if there is a clear evidence of market failure and if there are compelling reasons why an intervention through the tax system would be more effective than a direct exchequer grant or subsidy.

Any new proposal for a potentially significant tax expenditure should be subject to an ex-ante cost benefit analysis and evaluation process.

It is important that evaluations endeavour, where possible, to take account of the following effects:

- Deadweight (or additionality);

- Displacement; and,

- Opportunity costs.

Deadweight is an economic concept that attempts to capture the amount of activity that would have taken place anyway in the absence of the incentive or scheme.

Displacement refers to a situation where some of the benefits associated with the scheme occur at the expense of other, non-beneficiaries.

A fundamental principle of economics is that all resources (capital, labour, public funds) have an opportunity cost reflecting their value in an alternative use. These costs must be taken into account in evaluations. In particular, for tax expenditure evaluations two types of opportunity costs should be considered:

- The opportunity cost of labour; and,

- The opportunity (or marginal) cost of public funds.

In relation to the specific proposal, I would point out that there are a number of other reliefs available for sports, including the capital projects you mention in your question and retirement relief for certain sportspersons which was introduced in Finance Act 2002. The categories of sportspersons that can avail of tax relief are listed in Schedule 23A of the Taxes Consolidation Act 1997, (TCA). These categories originally included athletes, badminton players, boxers, cyclists, footballers, golfers, jockeys, motor racing drivers, rugby players, squash players, swimmers and tennis players.

There is scope for me, as Minister for Finance, to add to this list by regulation after consultation with the Minister for Transport, Tourism and Sport if a justifiable case is made on behalf of categories of sportspersons with direct earnings that are excluded.

I have no plans to introduce tax relief for donations to sports development projects at this time.

Tax Code

Ceisteanna (42)

Robert Dowds

Ceist:

42. Deputy Robert Dowds asked the Minister for Finance his views on scrapping the legal framework of relevant contracts tax agreements in the construction sector in view of the manner in which workers may be left open to exploitation by being forced to enter such agreements to secure employment rather than be employed as PAYE workers with the accompanying employment protections involved; and if he will make a statement on the matter. [39117/14]

Freagraí scríofa

Minister for Finance

It is not the function of the Tax Code or the Oireachtas to determine the employment relationship between parties. If the true relationship between parties is that of an employer/employee then the employer is required, under the Tax Code, to operate PAYE on payments made to the employee. If, however, the true relationship is not that of an employer/employee then, where the relationship relates to construction operations, as defined within the Tax Code, there is a requirement to operate the relevant RCT provisions. These provisions were placed on an electronic platform with effect from 1 January 2012.  I am informed by the Revenue Commissioners that the eRCT system is working efficiently and that it has removed substantially the vulnerabilities for fraud, mainly from bogus documentation, that attached to the previous paper based relevant contracts tax system. It is not proposed to abolish Relevant Contracts Tax.

I wish to advise the Deputies that the 'Code of Practice for Determining Employment or Self-Employment Status of Individuals', which is available of my Department's website, was created to assist both parties to an engagement including an engagement in the construction sector - in determining if a contract of engagement is, by its nature, either a 'contract of service' (that is, an employer and employee arrangement) or a 'contract for service' (that is, not an employer and employee arrangement). The Code of Practice for Determining Employment or Self-Employment Status of Individuals' is not a Revenue Code but rather was compiled with the assistance of the Irish Congress of Trade Unions / Department of Jobs, Enterprise and Innovation / National Employment Rights Authority / Department of Social Protection / Department of Finance / Small Firms Association / Irish Business and Employers Confederation / Construction Industry Federation / Revenue Commissioners.

I am further informed by the Revenue Commissioners that they are committed to tackling all forms of shadow economy activity including that which is described as 'bogus self-employment status'.  Their staff carry-out visits to a wide range of businesses, including temporary places of business such as building sites, as part of their on-going compliance operations. In some instances, such visits are undertaken jointly with other State agencies such as the Department of Social Protection and the National Employment Rights Authority.

Banking Sector

Ceisteanna (43)

Thomas Pringle

Ceist:

43. Deputy Thomas Pringle asked the Minister for Finance his views on the Bank of Ireland's closure of the bank account of the Cuba Support Group due to a business relationship with a US bank; his further views on whether this is an appropriate action; and if he will make a statement on the matter. [37743/14]

Freagraí scríofa

Minister for Finance

The Deputy might be aware that I have responded to a number of recent Parliamentary Questions on  this same topic and, for the benefit of the Deputy I repeat my answer as follows:

I have no direct function in the relationship between banks and their customers.  Neither do I have a statutory function in relation to banking decisions made by individual lending institutions at any particular time as these decisions are taken by the Board and Management of the relevant institution. A Relationship Framework has been specified that defines the nature of the relation ship between the Minister for Finance and each bank. These Frameworks were published on 30 March 2012 and can be found at: http://banking.finance.gov.ie/presentations-and-latest-documents/.

Notwithstanding this, officials in my Department have referred the issue to Bank of Ireland and have received the following comment in this regard:

"The US Government has a restrictive trade embargo against Cuba. The US legislative and regulatory measures include an embargo on making or receiving payments from Cuba and/or facilitating the making or receiving of payments from Cuba.

Bank of Ireland depends on correspondent banks for the processing of our national, European and international transactions, including our SEPA (Single European Payment Area) transactions. We are reliant on our correspondent banks because they process and facilitate all such transactions on our behalf. The current issue has arisen as a result of the transition to SEPA. As it happens, our principal correspondent bank for SEPA transactions is a leading US bank who must comply with its own regulatory requirements and obligations to avoid a possible exposure to regulatory sanctions and penalties.

As a result, we are not in a position to process such transactions. This affects all international payments to or from Cuba and also any related SEPA payments."

I have also been asked previously if I, as Minister for Finance, would challenge relevant U.S. policy. My response, which has not changed, is to highlight that US policy in this regard is not restricted to Ireland and extends worldwide and accordingly I do not intend to challenge this policy as I would not expect a positive outcome to such an action.

Tax Code

Ceisteanna (44)

Lucinda Creighton

Ceist:

44. Deputy Lucinda Creighton asked the Minister for Finance the steps he will take to diffuse ongoing international concern over profit shifting among multinational companies based here and the use of the so-called double Irish tax regime; and if he will make a statement on the matter. [38864/14]

Freagraí scríofa

Minister for Finance

The ability of some multinationals to lower the amount of corporation tax they pay world-wide using international structures is an issue that has attracted a lot of public and media attention over the past 24 months.

The G20 have acknowledged that this is a global challenge that requires global action, and this is happening through the OECD Base Erosion and Profit Shifting ('BEPS') project.  Ireland is actively engaged in this process and it is anticipated that BEPS will result in changes being made to the international taxation rulebook which countries rely on for international trade.

At the same time, countries are increasingly competing for mobile foreign direct investment ('FDI').  The competitiveness of Ireland's overall corporate tax regime is important in that regard, and as I said in my Budget speech last October, Ireland will play fair, as we have always done, but play to win.

Last year I published a new International Tax Strategy statement in the Budget which sets out Ireland's objectives and commitments in relation to these issues.  In it, I was clear that the best way to address the issue of aggressive tax planning across borders is for countries to work together at an international level.  This is particularly important as we need to ensure a level playing field among countries, in order for Ireland to compete fairly.

Earlier this year my Department launched a public consultation to identify the risks and opportunities for Ireland from the BEPS project, and to get views on how Ireland should respond to the changing international tax environment.  This process has fed into my decisions on corporation tax policy which will be announced as part of Budget 2015.

As I said in the Dáil last month, I remain firmly of the view that the changes that are coming internationally present many opportunities for Ireland as a competitive location for FDI.

For example, one of the key concepts of BEPS is the better alignment of substance with taxing rights. The alignment of substance with a competitive rate of tax has been the cornerstone of our corporation tax policy since the 1950s so I believe that any change that may result from the BEPS process will lead to additional opportunities for Ireland.  Ireland has not been and will never will be a brass-plate location.  We only have and want real substantive FDI, the kind that brings real jobs and investment into Ireland. That policy will continue to bring success in the post-BEPS environment.

At 12.5%, Ireland has the most competitive headline corporate tax rate in the OECD, which is applied to a broad base.  Corporate tax rates are a matter of national sovereignty. This Government is committed to maintaining it.

Ireland's offering of a competitive corporate tax rate, the availability of skills, and a reputation for being business friendly is a huge advantage that other countries will struggle to match.  As international tax loopholes progressively get closed down, our low general corporation tax rate will become even more attractive.

Indeed as we continue to improve our offering for knowledge based investment, R&D and intellectual property, I believe over the coming years we can continue to grow our share of FDI-related investment.

Property Tax Data

Ceisteanna (45)

Lucinda Creighton

Ceist:

45. Deputy Lucinda Creighton asked the Minister for Finance if he will provide an assessment of the property tax system to date; the amount of tax that has been raised in each county; a breakdown of property tax revenue by postcode in Dublin; and if he will make a statement on the matter. [38865/14]

Freagraí scríofa

Minister for Finance

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 10 October 2014 on the Commissioners' website at: Local Property Tax Statistics October 2014.  I am also advised that the Commissioners do not break the LPT statistics down to post code level.

The Commissioners have confirmed that by the end of December 2013, €318m had been transferred by Revenue to the Exchequer in respect of LPT and the 2014 LPT Exchequer receipts to 30 September 2014 are €385m. Exchequer receipts for LPT also include payments of Household Charge.

The introduction of Local Property Tax, amounting, as it did, to the largest extension of the self-assessment system in the history of the State, represented a very significant administrative challenge for Revenue and it has handled this challenge extremely well.  LPT has now achieved a compliance rate of 95% in respect of 2013 and 94% in respect of 2014. The Commissioners have also successfully implemented the collection of Household Charge arrears which, to date, has yielded about €33m in respect of 181,000 properties.  I am also advised that Revenue's work on ensuring that the highest possible levels of LPT compliance for 2013 and 2014 and for the Household Charge is ongoing.

I want to again commend Revenue for the excellent work it has done in taking LPT from concept to a fully functioning tax in such a short period of time.  The work involved included the enacting of legislation, the building of a completely new residential property Register, the development of a secure online system for filing and paying LPT via the Revenue website, the provision of customer service to such a large volume of taxpayers and critically the lodgement of in excess of €700m to date to the Exchequer.

The Deputy may also be aware that the Commissioners launched their pay and file campaign for 2015 last Friday 10 October, which will be supported by a public communications campaign. Letters will issue between 20 October and 31 October to around 1 million property owners who paid their 2014 LPT charge in full, in a single payment or who made regular cash payments, requesting them to make arrangements for paying their 2015 LPT charge. As with 2014, no letters will issue to property owners who paid their 2014 LPT charge by direct debit or by deduction at source from their salary, occupational pension or from payments received from certain Government Departments, as these payment methods will automatically carry over into 2015.

The Commissioners will also be implementing a range of reductions in the rate of LPT (known as the local adjustment factor) that were agreed by fourteen different local authorities during September.  This work will ensure that property owners pay the correct amount of LPT for 2015.

Further details about LPT liabilities, payment options and dates for 2015 are available on the Revenue website at: What do I need to do for 2015? and I am advised that briefing material was provided by Revenue directly to all members of the Oireachtas.

Tax Code

Ceisteanna (46)

Pat Deering

Ceist:

46. Deputy Pat Deering asked the Minister for Finance his plans to change the restrictions on interest relief for residential property whereby, since 2009, only 75% of the interest paid can be offset against rental income; his views on changing the restrictions to take account of accidental landlords where the residential property in question was once the landlord's primary residence; and if he will make a statement on the matter. [38869/14]

Freagraí scríofa

Minister for Finance

This question relates to the interest restriction applying to residential lettings, whereby the deductibility of interest in computing taxable rental income from residential property (insofar as it would otherwise be allowable) is limited to 75% of such interest.

Rental income for tax purposes from such property is the gross rental income less allowable expenses incurred in earning that rent, as specified in section 97(2) of the Taxes Consolidation Act 1997. The main deductible expenses are:

- any rent payable by the landlord in the case of a sub-lease;

- the cost to the landlord of any goods provided or services rendered to a tenant;

- the cost of maintenance, repairs, insurance and management of the property;

- the interest paid on borrowed money used to purchase, improve or repair the property (which, in the case of residential property, is restricted to 75% of the interest and is subject to compliance with PRTB registration requirements for all tenancies that existed in relation to the property in the relevant year); and

- payment of local authority rates.

In addition, wear and tear capital allowances are available in respect of the capital expenditure incurred on fixtures and fittings provided by a landlord for the purposes of furnishing rented residential accommodation. These allowances are granted at the rate of 12.5% per annum of the actual cost of the fixtures and fittings over a period of 8 years.

Where the aggregate of deductible expenses in any year exceed the gross rental income, the amount of the deficit is set against rental profits of the same year from other property. Where there are no other rental profits in the same year, the deficit is carried forward as a rental loss for offset against rental profits in future years.

The 75% restriction on interest on borrowed money used to purchase, improve or repair residential property was introduced in the April 2009 supplementary budget as part of an urgent revenue-raising package aimed at stabilising the public finances and I have no plans at this stage to amend it.

Vehicle Registration

Ceisteanna (47)

Pat Deering

Ceist:

47. Deputy Pat Deering asked the Minister for Finance if a daycare centre with charitable status may import a minibus from the United Kingdom without paying the full commercial rate of vehicle registration tax. [38870/14]

Freagraí scríofa

Minister for Finance

I am informed by the Revenue Commissions that a minibus with a minimum of 10 seats is liable to Vehicle Registration Tax (VRT) at a flat rate of €200 at registration.

There is no specific provision in the legislation for a relief from VRT for an organisation with charitable status.  However, in respect of disabled passengers, Statutory Instrument No. 353 of 1994 provides for relief for organisations that are primarily involved in the care and transport of disabled persons and not funded primarily by the State.  Further details of this scheme are available on the Revenue website at the following link: http://www.revenue.ie/en/tax/vrt/faqs-vrt.html#section10.

VAT Exemptions

Ceisteanna (48)

Patrick O'Donovan

Ceist:

48. Deputy Patrick O'Donovan asked the Minister for Finance his views on the eligibility of health supplements that enhance, maintain and protect a person's health to a 0% VAT rate; and if he will make a statement on the matter. [38899/14]

Freagraí scríofa

Minister for Finance

The EU VAT Directive generally provides that supplies of goods and services are chargeable to VAT at the standard rate but that lower rates are permitted in very limited circumstances.  Food products can only benefit from the zero rating in accordance with Article 110 of the VAT Directive which permits the retention of the zero rate where the products were liable to VAT at the zero rate on and from 1 January 1991.

A range of food supplements and vitamins that encourage the maintenance of health, through the sustenance derived from a normal, healthy diet, benefit from the zero rate.  However, a food supplement taken for the purposes of muscle growth or body mass increase, or for the purposes of weight reduction or bodily sculpture, cannot benefit from the zero rate.  I would draw the Deputy's attention to Revenue eBrief 70/2011 which contains additional detail in relation to the VAT rates of vitamins and food supplements.

Motor Fuels Issues

Ceisteanna (49, 50)

Michelle Mulherin

Ceist:

49. Deputy Michelle Mulherin asked the Minister for Finance the checks in place to ensure the petrol purchased by consumers in filling station forecourts is fit for purpose and has not been contaminated; and if he will make a statement on the matter. [38922/14]

Michelle Mulherin

Ceist:

50. Deputy Michelle Mulherin asked the Minister for Finance if he will put adequate checks in place to ensure that the petrol consumers are purchasing at filling station forecourts is fit for purpose and has not been contaminated so as to avoid loss to motorists through damage to their vehicles from such petrol and to the Exchequer on account of excise duty fraud and to protect legitimate businesses in the oil and motor trade; and if he will make a statement on the matter. [38941/14]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 49 and 50 together.

I am advised by the Revenue Commissioners, who are responsible for tackling fuel fraud, that they are aware of the risks posed to consumers' vehicles, legitimate businesses and the exchequer by all forms of such fraud. Revenue had made great progress in tackling the problem of diesel laundering over the last three years, and reports now indicate the emergence of another form of fuel fraud, commonly known as petrol stretching. This involves the illegal addition of a low cost commodity to petrol to defraud the exchequer and the motorist.

I am advised by Revenue that they are investigating the recent reports concerning petrol stretching and that they have been in contact with the motor and oil trades. I understand also that they have taken samples from a number of filling stations that it has been claimed may have been sources of adulterated fuel, and that they will undertake any further enquiries and sampling that are required as a result of reports or information that they receive. These enquiries will seek to establish if there is evidence that petrol stretching has occurred, and whether there is evidence to support a prosecution. The analysis of petrol samples is time-consuming and results in respect of the samples recently taken are awaited.

Revenue and the oil sector have cooperated very successfully to tackle diesel laundering and I am confident that, with this cooperation, and with the supply chain information available to Revenue, any problems of petrol stretching can also be tackled successfully. It is essential that petrol distributors report any reduction in the pattern of legitimate supplies of fuel to the retail trade which may indicate that specific traders are shifting some of their sourcing to laundered or "stretched" fuel.

Motorists themselves should take care about where they source their petrol and report to Revenue any suspicions concerning the source of adulterated petrol that may have damaged their engines.  Revenue will investigate such reports and pursue prosecutions where possible. In that regard, Revenue has recently launched a dedicated section of its website specifically on the shadow economy and this includes an electronic reporting facility for anyone who has information about shadow economy practices including petrol stretching.

Banking Sector

Ceisteanna (51, 52, 53, 54)

Joe Higgins

Ceist:

51. Deputy Joe Higgins asked the Minister for Finance if he will report on discussions he and his officials have had with senior executives of Allied Irish Banks regarding the outsourcing of security, cleaning, buildings and other services and customer and staff support official roles to a company (details supplied); and if he will make a statement on the matter. [38942/14]

Joe Higgins

Ceist:

52. Deputy Joe Higgins asked the Minister for Finance if he will report on discussions he and his officials have had with senior executives of Allied Irish Banks regarding talks with SIPTU on the outsourcing of work to a company (details supplied); and if he will make a statement on the matter. [38943/14]

Joe Higgins

Ceist:

53. Deputy Joe Higgins asked the Minister for Finance his views on the terms and conditions of employment and pensions continuing without detriment for staff transferred from Allied Irish Banks to a company (details supplied). [38944/14]

Joe Higgins

Ceist:

54. Deputy Joe Higgins asked the Minister for Finance his views on the possible increased security risks associated with outsourcing security services from direct employment by banks to indirectly employed staff; and if he will make a statement on the matter. [38945/14]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 51 to 54, inclusive, together.

As the Deputy will be aware under the Relationship Frameworks the State does not intervene in the day to day operations of the banks or their management decisions regarding commercial matters.

In the case of AIB, the bank has previously indicated that as part of its restructuring plan to reduce costs and increase efficiencies, outsourcing of certain functions would be considered in consultation with unions and affected staff. I have also been informed by the bank that there have been no compulsory redundancies as a result of its recent outsourcing activities.