Written Answers Nos. 62-67
62. Deputy Robert Dowds asked the Minister for Finance the reasons for his decision to scrap the 80% windfall tax on financial gains to persons arising from a change in the zoning of land in their possession; and if he will make a statement on the matter. [42340/14]
Amharc ar fhreagraThe windfall tax provisions are contained in Sections 644AB and 649B Taxes Consolidation Act (TCA) 1997, introduced by Section 240 National Asset Management Agency Act 2009 and amended by Section 25 Finance Act 2010, and apply an 80% rate of tax to the "windfall" profits or gains from land disposals or land development where those profits or gains are attributable to a relevant planning decision by a planning authority. Profits or gains from these activities that are not attributable to a relevant planning decision are taxed in the normal way. In Budget 2015, I announced the abolition of the windfall tax provisions from 1 January next and this is being provided for in the Finance Bill published last month.
The "Construction 2020 - a Strategy for a Renewed Construction Sector" Report published in May 2014 focuses on the steps that can be taken in the immediate future to ensure that necessary and sensible development can take place in the construction sector and that such development is not held back by unnecessary obstructions. One of the action points in the Report requires consideration of the tax code as it applies to the construction and property sector to establish if they are fit for purpose and otherwise to improve, abolish or replace them.
In that context, my Department and the Office of the Revenue Commissioners undertook a review of the windfall tax provisions as part of this year's Budget and Finance Bill process. In the course of that examination, the views of the Department of the Environment, Community and Local Government and of the National Asset Management Agency were sought on the provisions and the views on the windfall tax as expressed by bodies such as the Housing Finance and Sustainable Communities Agency were also considered. Arguments for the significant amendment or abolition of the windfall tax provisions were made in a number of pre-Budget submissions sent to me by various bodies, including the Construction Industry Federation, Dublin Chamber of Commerce, the Society of Chartered Surveyors, Property Industry Ireland and Chambers Ireland.
There are a number of reasons why, on foot of the review by my Department and the arguments made by others, that I decided to abolish the windfall tax provisions. No gains or profits to which the current provisions apply have been returned since their introduction in 2009. While this is due largely to the lack of activity in the property market over much of this time, there is considerable doubt that the provisions would operate in an effective way on the ground or could be amended to operate effectively. More significantly, however, the views which I have seen expressed by various parties in both the private and public sector with an interest in the proper development of the housing market, and with which I agree, is that the windfall tax provisions are acting and will act as an impediment to land rezoning, land development and redevelopment and to land sales for development.
The abolition of the windfall tax provisions should be seen in the context of other decisions and proposals announced recently, including those by my colleague the Minister for the Environment, Community and Local Government, which are focussed on encouraging increased activity in the residential construction sector to meet increasing demand for housing. I indicated in my Budget speech, however, that while the Government is doing its part to remove impediments to a fully functioning property market, there will be no return to the past where tax incentives for developers drove supply. I also announced in the Budget that there will be a consultation in the coming months on taxation measures that might be introduced to address the issue of land owners who do not develop zoned and serviced land.
63. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he expects the economic and fiscal position to improve or fluctuate over the next 12 months; and if he will make a statement on the matter. [42346/14]
Amharc ar fhreagra65. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the fundamental economic and fiscal indicators are now in positive mode; and if he will make a statement on the matter. [42348/14]
Amharc ar fhreagra72. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the economy here remains competitive; and if he will make a statement on the matter. [42373/14]
Amharc ar fhreagraI propose to take Questions Nos. 63, 65 and 72 together.
Following successful implementation of the EU-IMF programme, the Irish economy has emerged from the crisis and there are clears signs that the economic recovery is gathering momentum.
First estimates of economic activity for the second quarter of this year were very strong and were well ahead of consensus expectations with GDP growing by 1.5 per cent over the quarter and by 7.7 per cent year-on-year. Taken in conjunction with first quarter data, GDP grew by 5.8 per cent in the first half of this year. The increase in economic activity is broadly-based with both domestic sectors and exporting sectors performing strongly.
Exports rose by 13 per cent in the year to the second quarter of this year. This was the fastest rate of expansion since 2001 and there is growing evidence that the impact of the patent expiry issue in the pharmaceutical sector appears to have passed.
On the domestic front, personal consumption was up by 1.8 per cent year-on-year in the second quarter and investment increased by 18.5 per cent. Consumer spending has been strong in the first eight months of the year. Retail sales in the period January to September were up 6 per cent when compared with the same period in 2013. Core sales (excluding motor trades) were up 3 per cent over the same period. Investment is also growing with both building and construction and machinery and equipment spending on a rising path.
Recovery is perhaps most clearly evident in the labour market with employment increasing in each of the last seven quarters representing an increase of over 70,000 jobs since the low-point in mid-2012. In line with this, the standardised unemployment rate stood at 11.1 per cent in September, having fallen from a peak of 15.1 per cent in early 2012.
In terms of outlook, my Department is forecasting GDP growth of 4.7 per cent this year and 3.9 per cent in 2015. This is driven by a positive contribution from net exports on the back of economic growth in Ireland's trading partners. Domestic demand is set to contribute to growth as well, with growing employment and rising household incomes resulting in an increase in private consumption. Over the medium term, GDP growth of about 3½ per cent a year is anticipated.
Notwithstanding the current improvement, risks to the outlook remain for Ireland. These relate to the low inflation observed in many advanced economics, geo-political tensions as well as the underperformance of the euro area economy.
In terms of the public finances, policy measures implemented by the Government have resulted in a decline in the deficit in recent years. This decline has been in a phased manner, consistent with the dual needs of supporting domestic activity as well as repairing the public finances. All of Ireland's interim deficit ceilings under the Excessive Deficit Procedure have been met and Ireland is firmly on track to achieve a deficit of below 3 per cent in 2015. This has been important in restoring Ireland's credibility in the international markets - bond yields have fallen substantially since the high rates of mid-2011. The debt ratio has peaked and is now on a downward path. After 2015, fiscal policy will be set in line with the requirement to move towards Ireland's medium-term budgetary objective, which is for a balanced budget in structural terms.
Ireland's competitiveness has significantly improved in recent years. Relatively low consumer price inflation over the last five years has meant that Irish price levels have fallen considerably relative to the euro area. The Government remains focused on the need to continue to improve our competitiveness, including through up skilling of the workforce.
64. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he or his Department has continued to monitor policy pursued by the financial institutions that have purchased loan books from various lenders; if excessive pressure is being applied to home owners with the first objective being surrender or repossession, with obvious consequences leading to homelessness; and if he will make a statement on the matter. [42347/14]
Amharc ar fhreagra69. Deputy Bernard J. Durkan asked the Minister for Finance if he is satisfied that regulated and unregulated loan book purchasers are affording adequate opportunity to home owners to restructure repayments and retain the family home. [42370/14]
Amharc ar fhreagraI propose to take Questions Nos. 64 and 69 together.
The Central Bank has confirmed to me that if a loan book is transferred from one regulated entity to another the various Central Bank of Ireland codes continue to apply (i.e. Consumer Protection Code and Code of Conduct on Mortgage Arrears (CCMA)).
By virtue of an exemption in Part V of the Central Bank Act 1997, an unregulated entity to whom a cash loan is transferred by a regulated entity is not subject to Central Bank supervision.
The Central Bank has consistently advocated for the consumer protections set out in financial services legislation to extend to borrowers whose loans are sold to unregulated entities.
I am pleased to inform the Deputy that the Government is committed to bringing forward legislation that protects consumers whose mortgages are sold to unregulated entities and that my Department has recently published the submissions it received in response to a public consultation process seeking views on this legislation. The objective of the legislation is "To ensure that borrowers whose loans are sold by a regulated entity to a currently unregulated entity maintain the same regulatory protections as they had prior to the sale, including under various Central Bank Codes (including the Code of Conduct on Mortgage Arrears (CCMA)". The Government is currently considering options on how best to achieve this objective and I anticipate that this legislation will be published by the end of this year.
I have informed this House previously that the Government has developed a comprehensive cross-Departmental strategy in response to the mortgage arrears issue in line with the main recommendations of the 2011 Keane Report. The implementation of this strategy is overseen at Government level by the Construction 2020, Housing, Planning and Mortgage Arrears sub-committee, which is chaired by the Taoiseach, and at official level by a mortgage arrears steering group which is chaired by the Department of Finance.
Taken together, the overall strategy and framework is in place to enable banks to work with distressed homeowners to reach sustainable solutions for dealing with their personal indebted situations. The data published by my Department, as well as the Central Bank data, would appear to demonstrate some success by the lenders in addressing the accounts in mortgage arrears, as well as measures to prevent borrowers from going into arrears. Nevertheless, relevant Departments and agencies will continue to keep the position under review and can make any further adaptions to the overall framework, as considered appropriate. Early and effective engagement between borrowers and lenders remains key to resolving most cases of mortgage difficulty. Where there is effective and meaningful engagement by all parties regarding a mortgage difficulty, the data show that an increasing number of durable long term mortgage restructures can and are being put in place. However, increased engagement by the financial institutions with borrowers in long-term arrears will be necessary to appropriately address unsustainable mortgage loans.
66. Deputy Bernard J. Durkan asked the Minister for Finance the number of home repossessions effected by the various lending agencies on a monthly basis over the past 12 months, excluding the unpaid loan books purchased by third parties, regulated or unregulated; the number of repossessions or voluntary surrenders effected by the latter; and if he will make a statement on the matter. [42361/14]
Amharc ar fhreagraThe Central Bank of Ireland publishes a Mortgage Arrears and Repossessions statistical series on a quarterly basis, available at http://www.centralbank.ie/polstats/stats/mortgagearrears/Pages/releases.aspx . As at end-Q2 2014, there were 1,274 residential properties in possession.
Further information, including historical figures on property repossessions, is available in the spreadsheet below. The historical data clearly shows that the majority of primary residence property repossessions are effected on a voluntary basis, without recourse to a court order.
The Central Bank has informed me that for reasons of confidentiality they are precluded from publishing data on the number of mortgages held by unregulated entities at this time.
|
Repossessions Statistics 2009 - 2014 |
||||||
|
PDH |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 end Jun |
|
Properties repossessed on foot of a court order |
58 |
102 |
196 |
194 |
251 |
143 |
|
Properties voluntarily surrendered / abandoned |
153 |
260 |
412 |
410 |
515 |
437 |
The Central Bank continues to engage with all mortgage lenders in relation to lenders' mortgage arrears resolution strategies and approaches to dealing with borrowers in or facing arrears. Early and effective engagement between borrowers and lenders is key to resolving the majority of cases of mortgage difficulty. Where there is effective and meaningful engagement by all parties regarding a mortgage difficulty, the data show that an increasing number of durable long term mortgage restructures can and are being put in place. This is a positive development for both the lenders and borrowers and is to be encouraged.
67. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which lending requirements to small and medium enterprises have been met by each of the main lenders on a monthly basis over the past 12 months; and if he will make a statement on the matter. [42362/14]
Amharc ar fhreagraThe Government imposed SME lending targets on the two main domestic banks for the three calendar years, 2011 to 2013. Each bank was required to sanction lending of at least €3 billion in 2011, €3.5 billion in 2012 and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks achieved their targets. Having completed a process of deleveraging, both AIB and Bank of Ireland are now concentrating on growing their balance sheets. In this context, both banks recognise the need to increase business lending in the period up to 2016, and have put on record their commitment to the SME sector. Although the targets were a useful policy intervention, the focus is now shifting towards the collation and examination, on a monthly basis, of more granular data on the funding of the activities of SMEs from both AIB and Bank of Ireland, the wider banking sector and increasingly the non-bank funding sector.
The Government recognises that SMEs are the lifeblood of the economy and play a vital role in the continuing recovery of employment growth in our country. In this regard specific measures to promote access to finance for SMEs are a central feature of the Government's Action Plan for Jobs 2014.
