Tuesday, 10 Feb 2015

Written Answers Nos. 219 to 236

Universal Social Charge Application

Ceisteanna (219)

Dan Neville

Ceist:

219. Deputy Dan Neville asked the Minister for Finance if a person (details supplied) in County Limerick is being charged universal social charge at a reduced rate. [5750/15]

Freagraí scríofa

Minister for Finance

I have been advised by the Revenue Commissioners that details of the 2015 tax credits and of the reduced rates of Universal Social Charge payable were issued to the person's pension provider in December 2014.

Mortgage Lending

Ceisteanna (220)

John Paul Phelan

Ceist:

220. Deputy John Paul Phelan asked the Minister for Finance when he will introduce the necessary regulations to implement the recent guidelines for mortgage lending issued by the Central Bank of Ireland; and if he will make a statement on the matter. [5752/15]

Freagraí scríofa

Minister for Finance

I wish to advise the Deputy that the Governor of the Central Bank of Ireland has signed the macro prudential regulations on residential mortgage lending.  The signed regulations were received by my Department yesterday (9 February) and will, as soon as possible, be laid before the Houses of the Oireachtas.    

Question No. 221 answered with Question No. 216.

Strategic Banking Corporation of Ireland

Ceisteanna (222)

Gabrielle McFadden

Ceist:

222. Deputy Gabrielle McFadden asked the Minister for Finance when the Strategic Banking Corporation of Ireland will be fully operational; the total amount of funds available from the Strategic Banking Corporation of Ireland; the retail banks it will have a relationship with; and if he will make a statement on the matter. [5789/15]

Freagraí scríofa

Minister for Finance

The Strategic Banking Corporation of Ireland (SBCI) will be operational in Q1 2015 and this is a key deliverable as detailed in the Government's Action Plan for Jobs 2015.

I incorporated the SBCI in September 2014 and since then the SBCI has made considerable progress in building relations with lending partners and in constructing the complex operational capability required to bring products to market. These include establishing operational capability with funders and lending partners, building internal systems and business processes, and establishing a team to safely and effectively manage the funding provided on behalf of the State.  In that regard, it is worth pointing out that both the CEO of KfW and the President of the European Investment Bank have complimented the Government's work on the establishment of the SBCI noting that the project from concept to establishment was achieved much more promptly than similar initiatives in other countries. 

Both Bank of Ireland and Allied Irish Banks Plc. are the first SBCI's lending partners.  The SBCI will leverage these banks' extensive distribution networks to reach as many prospective SME borrowers as possible.  The SBCI is also working with other traditional banks as well as non-bank providers of finance such as providers of invoice discounting, leasing and asset based finance to broaden the funding options available to the SME sector through the availability of SBCI monies.  

The SBCI is funded to the value of €800m, of which €150m is from KfW, €400m from the European Investment Bank and €250m sourced from the National Pension Reserve Fund, which has since become the Ireland Strategic Investment Fund - [ISIF]. The ISIF funds are broken down further into a repayable loan from the ISIF of €240m and an equity investment in the name of the Minister for Finance to the value of €10m. After the initial period of operations, the SBCI in conjunction with its funders, will review its funding requirements for its further development. 

The SBCI drew down €200m of its funding from the European Investment Bank during December 2014 so that funds could be borrowed by its lending partners to be distributed to SMEs. 

The SBCI is preparing for a nationwide launch of its products shortly.  The Government's aim for the SBCI is to change the range and profile of SME finance providers in Ireland.  The SBCI are achieving this by working with existing and new providers to develop enhanced products and by supporting new entrants to the SME lending market.

VAT Exemptions

Ceisteanna (223)

Finian McGrath

Ceist:

223. Deputy Finian McGrath asked the Minister for Finance his views on a matter (details supplied) regarding musicians; and if he will make a statement on the matter. [5794/15]

Freagraí scríofa

Minister for Finance

I am informed by the Revenue Commissioners that a business providing services, including a musician, is obliged to register for VAT only where the annual turnover of that business exceeds €37,500.  In instances where the annual turnover of a business is less than that, there is no obligation to register for VAT. 

I am further informed that given the wide variety of persons and entities (including musical bands) that are within the 'performing arts' category of trade descriptions, it is not possible to identify the number of musical bands that are registered for VAT.

If the Deputy has information relating to specific individuals or groups in the music industry who are operating within the shadow economy, he may pass this directly to Revenue. Revenue has provided a specific template on its website at http://www.revenue.ie/en/business/shadow-economy/index.html which facilitates anyone who wishes to report instances of shadow economy activity.

European Central Bank Interest Rates

Ceisteanna (224)

Robert Dowds

Ceist:

224. Deputy Robert Dowds asked the Minister for Finance the steps he is taking to compel the banks and financial institutions to pass on European Central Bank interest rate cuts to customers with standard variable rate mortgages; and if he will make a statement on the matter. [5814/15]

Freagraí scríofa

Minister for Finance

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. 

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.

However, 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. 

Tax Code

Ceisteanna (225, 227)

Terence Flanagan

Ceist:

225. Deputy Terence Flanagan asked the Minister for Finance his views on the effect the reduction in the threshold for capital acquisitions tax (details supplied) is having on persons' lives; and if he will make a statement on the matter. [5815/15]

Terence Flanagan

Ceist:

227. Deputy Terence Flanagan asked the Minister for Finance his plans to change the threshold for the capital acquisitions tax (details supplied) in County Dublin; and if he will make a statement on the matter. [5829/15]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 225 and 227 together.

Capital Acquisitions Tax (CAT) is the overall title for both Gift and Inheritance Tax. The tax is charged on the amount gifted to, or inherited by, the beneficiary of the gift or inheritance.

For the purposes of CAT, 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 life-time tax-free threshold known as the "Group threshold" below which gift or inheritance tax does not arise.

There are, in all, three separate Group thresholds based on the relationship of the beneficiary to the disponer:

The Group A tax-free threshold of €225,000 applies where the beneficiary is a child (including adopted child, stepchild 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.

The Group B tax-free threshold of €30,150 applies where the beneficiary is a brother, sister, nephew, niece or lineal ancestor or lineal descendant of the disponer.

The Group C tax-free threshold €15,075 applies in all other cases.

Where a person receives gifts or inheritances in excess of their relevant tax free threshold, CAT at a rate of 33% applies on the excess over the tax free threshold. It should also be noted that the thresholds apply on an individual basis so that, for example, where there are two children the current Group A threshold of €225,000 applies individually to each child in respect of gifts and inheritances from their parents.

The Group thresholds have been reduced over recent years, as asset prices have fallen, in order to maintain the yield from capital taxes as part of the effort to restore the public finances. Taxes on capital are less harmful from an economic perspective than taxes on employment.

The property market continues to improve with positive developments which had been restricted to the Dublin area now manifesting in other areas of the country though not to the same extent in terms of price rises. I recognise, of course, that there are supply issues in certain areas of the Dublin property market.

The Group tax-free thresholds are kept under review, in the same way as other relevant tax provisions, and in this regard I will bear the Deputy's comments and concerns in mind for the future.

In the details supplied with his first question, the Deputy refers to a constituent who is concerned about the CAT implications arising from being bequeathed the family home, in which I understand from the details that the constituent still resides. I would point out to the Deputy that Section 86 of the Capital Acquisitions Tax Consolidation Act 2003 provides for a specific exemption from CAT in respect of a gift or inheritance of a dwelling house.

This exemption was introduced to cater for persons who had been living in the disponer's house for a substantial period prior to the gift or inheritance and who might otherwise be faced with having to sell the house (their home) to pay the CAT liability. This would apply in particular to children who continued to reside with their parents into their old age very often to care for them. The following are the main conditions to be satisfied in order to benefit from the dwelling house CAT exemption:

- The recipient must have occupied the dwelling house continuously as his or her only or main residence for a period of three years prior to the date of the gift or inheritance

- The recipient must not , at the date of the gift or inheritance, be beneficially entitled to any other dwelling house or have an interest in any other dwelling house

- The recipient must continue to occupy the dwelling house for a period of six years commencing on the date of the gift or inheritance, except where the recipient was aged 55 years at that date or dies in this period. 

The Deputy's constituent may wish to contact her local Revenue Office if she needs to clarify any issue in relation to this exemption.

Tax Credits

Ceisteanna (226)

Clare Daly

Ceist:

226. Deputy Clare Daly asked the Minister for Finance why a person (details supplied) in County Dublin was told that their full tax credits would be restored, but subsequent to that, their credits were actually reduced, as was initially indicated. [5820/15]

Freagraí scríofa

Minister for Finance

I am informed by the Revenue Commissioners that a certificate of tax credits issued to the person concerned on 28 January 2015, which incorrectly included a deduction from the tax credits entitlement.  This error was immediately rectified and a new certificate issued on 30 January 2015 restoring the person's full entitlement of tax credits.  The person concerned has been in direct contact with Revenue and the position has been explained to him.

Question No. 227 answered with Question No. 225.

National Debt

Ceisteanna (228)

Sean Fleming

Ceist:

228. Deputy Sean Fleming asked the Minister for Finance if he will provide, in tabular form, the amount of the national debt outstanding at the end of each year from 1970 to 2014; the amount of additional borrowing; the amount of debt repaid; the interest charged on the debt in respect of each year; the gross domestic product for each year; the percentage of debt to gross domestic product outstanding at the end of each of year; and if he will make a statement on the matter. [5896/15]

Freagraí scríofa

Minister for Finance

The data for 36 of the 45 years requested by the Deputy is included in the table following. Unfortunately, it was not possible to collate all the information required for this answer in the time allowed.

Audited data for 2014 will not be available until after the Office of the Comptroller and Auditor General completes the audit of the public finances and the Finance Accounts are published later this year. Provisional data is available from the end 2014 Exchequer Statement, which is published on my Department's website. The Budget 2015 forecast GDP for 2014 was €183,800 million. I will provide the Deputy with the remaining data in writing shortly.

Year	National Debt € m	Interest €m	Amount Borrowed €m	Amount Repaid €m	GDP €m	Debt to GDP %
1978	€6,561	€459	€3,553	€2,441	€9,316	70.42%
1979	€8,304	€571	€5,790	€4,411	€11,036	75.24%
1980	€10,026	€740	€6,549	€4,878	€13,097	76.55%
1981	€12,945	€1,010	€9,404	€7,089	€15,892	81.46%
1982	€14,817	€1,451	€13,261	€10,643	€18,853	78.59%
1983	€18,274	€1,689	€12,000	€9,612	€20,780	87.94%
1984	€21,358	€1,988	€15,761	€13,035	€23,013	92.81%
1985	€23,492	€2,320	€18,776	€15,551	€24,998	93.98%
1986	€27,440	€2,308	€17,084	€13,794	€26,625	103.06%
1987	€30,085	€2,457	€16,780	€13,955	€28,451	105.74%
1988	€31,250	€2,491	€19,384	€17,829	€30,389	102.83%
1989	€31,525	€2,484	€13,863	€12,692	€33,706	93.53%
1990	€31,849	€2,676	€15,066	€14,381	€36,541	87.16%
1991	€32,223	€2,722	€18,677	€17,762	€38,018	84.76%
1992	€33,450	€2,673	€26,803	€26,512	€40,489	82.61%
1993	€36,006	€2,636	€41,580	€39,757	€43,605	82.57%
1994	€37,111	€2,653	€46,071	€46,078	€46,864	79.19%
1995	€38,358	€2,656	€50,054	€49,163	€54,704	70.12%
1996	€37,980	€2,811	€120,978	€120,535	€60,072	63.22%
1997	€38,967	€3,136	€135,851	€135,325	€69,232	56.28%
1998	€37,509	€2,662	€127,244	€127,755	€80,084	46.84%
1999	€39,849	€2,351	€176,793	€178,383	€92,491	43.08%
2000	€36,511	€2,069	€85,336	€88,423	€107,799	33.87%
2001	€36,183	€1,875	€89,899	€90,619	€121,199	29.85%
2002	€36,361	€1,660	€145,411	€145,591	€135,179	26.90%
2003	€37,610	€1,764	€155,999	€154,825	€144,840	25.97%
2004	€37,846	€1,677	€216,213	€215,908	€155,470	24.34%
2005	€38,182	€1,721	€285,245	€284,625	€169,153	22.57%
2006	€35,917	€1,860	€234,647	€235,507	€183,759	19.55%
2007	€37,560	€1,619	€155,822	€153,304	€196,749	19.09%
2008	€50,398	€1,544	€214,454	€184,167	€186,870	26.97%
2009	€75,152	€2,535	€278,170	€253,773	€168,114	44.70%
2010	€93,445	€3,492	€172,614	€160,122	€164,928	56.66%
2011	€119,082	€4,548	€101,199	€74,153	€171,042	69.62%
2012	€137,632	€5,679	€268,580	€248,447	€172,755	79.67%
2013	€173,947	€7,324	€157,432	€121,144	€174,791	99.52%

From 1995 to 2013, GDP is calculated on an ESA 2010 basis.

Data prior to 2000 has been converted to euro.

The Deputy may wish to note that much of the data for recent years and other related data are available on my Department's website in the Budget and Economic Statistics publication and the Annual Finance Accounts.

Property Tax

Ceisteanna (229)

Dan Neville

Ceist:

229. Deputy Dan Neville asked the Minister for Finance his views on a matter (details supplied) regarding a property tax issue; and if he will make a statement on the matter. [5917/15]

Freagraí scríofa

Minister for Finance

I am advised by the Revenue Commissioners that Section 11 of the Finance Local Property Tax Act 2012 (as amended) sets out the rules for determining the person who is liable for the payment of Local Property Tax (LPT) in relation to a property.

Generally, the owner of the property, with the right of immediate possession, is deemed the person liable for LPT. However if a person, other than the owner, has an exclusive right of residence in a property, the Act provides that that person is the liable person.

The specific case to which the Deputy refers was previously dealt with in Revenue in 2014, when correspondence was received from the owner of the property seeking clarification regarding the liable person.  The owner was advised at that time that he is not liable for LPT in this instance. Revenue's records were adjusted accordingly and the occupier, as the liable person, received a payment reminder for LPT for 2015. Following receipt of the Deputy's Question, direct contact was made by the office of the Collector-General with the occupier of the property, and I am advised that she now understands and accepts that she is the person liable for LPT in respect of the property.

Tax Code

Ceisteanna (230)

Terence Flanagan

Ceist:

230. Deputy Terence Flanagan asked the Minister for Finance the reason self-employed persons are paying substantially more income tax than employees (details supplied); his plans to make changes to the income tax system to make it fairer for the self-employed; and if he will make a statement on the matter. [5924/15]

Freagraí scríofa

Minister for Finance

A fair, efficient and competitive income tax system is essential for economic growth and job creation. While the figures quoted by the Deputy are accurate, it is important to understand that PAYE workers and the self-employed are taxed in different ways to reflect their differing circumstances.

As the Deputy is aware, employees in the PAYE system benefit from a PAYE income tax credit worth €1,650 per annum, to which the self-assessed are not entitled. The PAYE allowance, as it was then, was introduced in 1980 to improve the tax progression of PAYE taxpayers and to take account of the fact that the self-employed generally then had the advantage of paying tax on a preceding year basis. The argument was also made at the time that the general scheme of allowances for expenses discriminated against employees and in favour of other taxpayers.

There have been some changes since 1980. For example, the self-employed now pay tax on a current year basis. In addition, the PAYE allowance has become a tax credit. However, there are other aspects to how the self-assessed are taxed which can be beneficial to them. For instance, there are significant timing benefits, depending on the accounting period used by the taxpayer, which are available to the self-assessed but which are not available to PAYE workers. In addition, the expenses regime for self-assessed taxpayers remains somewhat more liberal than that afforded to employees and therefore the self-employed can actually pay less tax when compared to a PAYE worker on the same income.

It is true that employees are exempt from the charge to PRSI if their income does not exceed €18,304. However, once PAYE income exceeds this threshold they are liable to pay PRSI on the full amount at 4%, thus equalising the treatment of personal PRSI contributions, on all of the income, for PAYE and self-assessed workers on incomes above that level.

In the case of employees, their employers are required to pay a PRSI charge in respect of each employee. Thus the contribution made to the Social Insurance Fund in respect of employees is usually higher than that made by a self-assessed individual. For instance, at an income level of €100,000, an employer would typically be required to pay PRSI of €10,750 in respect of the employee, in addition to the €4,000 payable by the employee. Total PRSI of €4,000 is payable in respect of a self-employed individual with the same income. Entitlement to social welfare benefits is primarily a matter for the Minister for Social Protection. However, it is worth pointing out that for individuals with incomes in excess of €18,304 the total PRSI payable in respect of an employee is 14.75% of salary, while the total payable by a self-employed individual is 4%.

It is important to note that the changes to the Income Tax system introduced in Budget 2015 will benefit all those who pay income tax and or USC equally, regardless of whether they are PAYE or self-assessed taxpayers.

Health Insurance

Ceisteanna (231)

Billy Kelleher

Ceist:

231. Deputy Billy Kelleher asked the Minister for Finance the action his Department is taking in view of the provisions of the Health Insurance (Amendment) Act 2014 which allows insurers discretion to provide a discount to young adults in the age 18 to 25 age range, but which has apparently resulted in a discrepancy; the level of tax relief at source which needs to be applied to those persons who receive the discount; if his attention has been drawn to the fact that if a person is a student, dependent on the policy holder, under 23 years of age and in receipt of a student discount, that person's tax relief is capped at the child rate of a maximum of €100, but that student rates will disappear with the introduction of young persons' discounts, but tax legislation has not been amended to reflect this; if his attention has been further drawn to a technical issue (details supplied) relating to an apparent discrepancy in health insurance payment plans; the guidance his Department or the Revenue Commissioners have provided to insurers in this regard; if his attention has been drawn to the issue that is now causing concern as systems need to be changed to accommodate this change and with renewals-new business being able to be bought six weeks in advance, this means there is just over a month to resolve the problem; if his attention has been further drawn to the fact that it also leaves the insurers open to regulatory problems with the Central Bank of Ireland, as insurers may not be providing the correct net premium to customers and that notifications will need to be made to the Health Insurance Authority on what premiums are correct 30 days in advance of 1 May 2015 and it is again not clear what net premium is correct or whether the intention is that two 20 year olds are to be treated differently, based on whether they are students or not; and if he will make a statement on the matter. [5952/15]

Freagraí scríofa

Minister for Finance

I can assure the Deputy I am fully aware of the provisions in the Health Insurance (Amendment) Act 2014, relating to premiums for young adults, which are due to come into effect on 1 May 2015.

The Deputy will be aware that tax law follows general law and that the Health Insurance (Amendment) Act 2014, was signed into law on 25 December 2014, at which stage the last Finance Bill had already been passed by the Oireachtas.

My officials in consultation with the Revenue Commissioners are considering advice from the Attorney General's office in this matter, with a view to assessing the options available to me in advance of the next Finance Bill.

I am aware of the time constraints under which insurers must operate and I hope to be in a position to make an announcement in the matter very soon.

NAMA Investigations

Ceisteanna (232, 233, 234)

Michelle Mulherin

Ceist:

232. Deputy Michelle Mulherin asked the Minister for Finance the amount being spent by the National Asset Management Agency, on a yearly basis to date, on surveillance of debtors both inside and outside this jurisdiction; and if he will make a statement on the matter. [5967/15]

Michelle Mulherin

Ceist:

233. Deputy Michelle Mulherin asked the Minister for Finance if the National Asset Management Agency or its agents have ever used the services of a private investigator (details supplied); and if he will make a statement on the matter. [6001/15]

Michelle Mulherin

Ceist:

234. Deputy Michelle Mulherin asked the Minister for Finance if the National Asset Management Agency or its agents have ever used the services of a private investigator (details supplied); and if he will make a statement on the matter. [6002/15]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 232 to 234, inclusive, together.

I am advised by NAMA that it carries out asset searches in certain circumstances with a view to compiling full information on a debtor's assets and liabilities and to maximising recovery for taxpayers on any assets that debtors may have failed to disclose in their Statement of Affairs to the Agency. NAMA operates a Credit Verification Services Panel, established after a public procurement exercise, from which it procures such asset search services. Details on the Credit Verification Services Panel, including the names of the appointed firms, are available on the NAMA website at https://www.nama.ie/about-us/our-work/procurement/. I am advised by NAMA that the firms referenced by the Deputy in her question are not on this panel and that, accordingly, NAMA has not engaged the services of either firm. 

NAMA has incurred the following asset search costs:

2014	€389,000
2013	€782,000
2012	€496,000
2011	€176,000

At 31 December 2014, through these asset searches, NAMA had identified previously undisclosed assets with a value in excess of €42 million.

Tax Code

Ceisteanna (235)

Jack Wall

Ceist:

235. Deputy Jack Wall asked the Minister for Finance the reason a person (details supplied) in County Kildare is being taxed as a married person even though that person is separated; and if he will make a statement on the matter. [6021/15]

Freagraí scríofa

Minister for Finance

I have been informed by the Revenue Commissioners that the person concerned is taxed as a married person on the basis of information provided to them by the person concerned. I am advised by Revenue that they have now written to the person concerned to confirm her status and if necessary will review her tax liability, as appropriate, in the light of any change in circumstances confirmed to them.

VAT Exemptions

Ceisteanna (236)

Áine Collins

Ceist:

236. Deputy Áine Collins asked the Minister for Finance if there is a value added tax exemption for charities who purchase medical equipment for children with cystic fibrosis. [6054/15]

Freagraí scríofa

Minister for Finance

I am advised by the Revenue Commissioners that VAT is a tax on consumption and is applied to supplies being made by a person and not to supplies received by them.  In this context, it is not possible under EU VAT law, with which Irish VAT law must comply, to introduce VAT exemption based on services received, nor to introduce an exemption based on the recipient of a service.

Non-profit groups engaged in non-commercial activity are exempt from VAT under the EU VAT Directive.  This means that they do not register for VAT and cannot recover VAT incurred on goods and services that they purchase.  This non-entitlement to VAT deductibility is a general feature of VAT exemption.

There is no provision in either European law or Irish VAT law to allow a zero-rating or exemption for supplies of this nature.  However, there is a specific VAT Refund Order (SI 58 of 1992) that provides VAT incurred on the purchase or importation of new medical instruments and appliances (excluding means of transport), which is purchased through voluntary donations, may be refunded to hospitals or donors, as appropriate, subject to conditions.  Further information on the Refund Order, its conditions and the refund claim form VAT 72 is available on the Revenue website www.revenue.ie.