Tuesday, 3 Mar 2015

Written Answers Nos. 211-226

Tax Rebates

Ceisteanna (211)

Jack Wall

Ceist:

211. Deputy Jack Wall asked the Minister for Finance if a person (details supplied) in County Kildare is due a tax refund; and if he will make a statement on the matter. [9050/15]

Freagraí scríofa

Minister for Finance

I am advised by the Revenue Commissioners that they do not have sufficient information in relation to the earnings of the person concerned to review his tax liability for 2014. They have contacted the person concerned requesting certain information to allow them to undertake the review.

Maintenance payments are allowed as a deduction for Income Tax purposes subject to certain conditions as set out on Revenue's website at www.revenue.ie/en/tax/it/leaflets/it3.html. In general, maintenance payments are only allowable in respect of payments made to a spouse or civil partner.

Tax Reliefs Costs

Ceisteanna (212, 213)

Michael McGrath

Ceist:

212. Deputy Michael McGrath asked the Minister for Finance the approximate cost of allowing persons whose personal circumstances require them to rent out their principal private residence and rent another home for themselves, to offset the cost of the rent they are paying against the rental income they receive, for income tax purposes; and if he will make a statement on the matter. [9113/15]

Michael McGrath

Ceist:

213. Deputy Michael McGrath asked the Minister for Finance the amount of income tax paid by landlords in 2013 and 2014 in respect of rental income; and if he will make a statement on the matter. [9114/15]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 212 and 213 together.

I am informed by the Revenue Commissioners that the amount of gross domestic rental income declared on Income Tax returns for 2012 was €4.0bn. Deductions and reliefs in respect of losses, expenses and capital allowances are allowable from gross rental income and the taxable rental income for 2012 was in the order of €1.2bn.

Returns for tax years 2013 or 2014 are not yet available. The Income Tax returns to Revenue do not distinguish between residential and commercial properties, these figures therefore include rental income from both. As rental income is aggregated with all other incomes for the purposes of the Income Tax assessment calculation, it is not possible to specify the yield from rental income alone.

In relation to the first Question, Revenue records do not directly or separately identify those renting out their principal private residences or those renting out another property for themselves. In addition, it would be necessary to have a clearer picture of how such a scheme might operate so as to confine the benefit to a specified group.  I am advised therefore that Revenue is not in a position to estimate the cost of this proposal.

Tax Code

Ceisteanna (214)

Michael McGrath

Ceist:

214. Deputy Michael McGrath asked the Minister for Finance if he has considered benchmarking the income tax rate paid by returning emigrants against typical rates they had been paying prior to returning to Ireland; the approximate cost of such a scheme; and if he will make a statement on the matter. [9115/15]

Freagraí scríofa

Minister for Finance

I assume the Deputy's question refers to Irish emigrants, who may be subject to lower income taxation in the countries in which they are now located and presumably working, compared to the amount of income taxation they would face on the same income if they returned to Ireland. My initial view is that the provision of a tax reduction to such individuals could have the potential to distort the labour market. It could allow employers to offer reduced gross salaries to returning emigrants, which could put existing Irish based individuals at a disadvantage when competing for employment opportunities.

To allow the benchmarking suggested by the Deputy, would require detailed information of the tax systems of many different jurisdictions, as well as information on the tax actually paid by an individual in a particular jurisdiction. Certain factors would need significant consideration including the following; (i) the minimum amount of time an individual would need to have worked outside the State, (ii) would the relief be solely related to the amount of tax paid outside the State or would social security contributions also be included, (iii) would the availability of other public benefits and services be also included in the relevant comparisons and (iv) would such a relief be available to all returning emigrants regardless of how high their incomes are. Given all the potential variables it is not possible to cost such a scheme.

Notwithstanding the above, it is likely that any benchmarking scheme would be in breach of the freedom of movement principles of the European Treaties, particularly if it were to be restricted to returning Irish emigrants.

For the reasons outlined, I am not minded to provide for a relief along the lines suggested. However, the Deputy will be aware of the tax package included in Budget 2015, which reduced the marginal rate of income tax for those on low and middle incomes, who are subject to the top rate of income tax. As stated previously, I believe that this change, as well as further iterations of this income tax reform plan, will act to make Ireland a more attractive proposition, from an income tax perspective, for those Irish emigrants that may wish to return home.

Fiscal Policy

Ceisteanna (215)

Michael McGrath

Ceist:

215. Deputy Michael McGrath asked the Minister for Finance the agreed deficit targets that Ireland must reach in 2016, 2017 and 2018; and if he will make a statement on the matter. [9158/15]

Freagraí scríofa

Minister for Finance

Once Ireland reduces the headline deficit below 3% of GDP we will be subject to the requirements of the preventive arm of the Stability and Growth Pact ('the Pact'). Unlike the corrective arm of the Pact which sets annual headline interim targets for the deficit each year until the excessive deficit procedure is lifted, the preventive arm does not prescribe a path for the headline or structural deficit.

Rather, it prescribes the annual rate of change in the structural budgetary position until the target - the country-specific medium term (budgetary) objective (MTO) - is met. In Ireland's case the MTO is a balanced budget position in structural terms. Under the preventive arm, the Pact requires Member States to make sufficient adjustment towards achievement of their respective MTO. The pace of correction in the structural budget balance must be at least 0.5 percentage points per annum in 'normal' economic times. This is defined as an output gap of between -1.5 and +1.5 per cent of potential GDP. Depending on the cyclical conditions experienced by the economy, this requirement can be modulated in accordance with the new provisions set out in the January Communication from the European Commission on 'Making the best use of the flexibility within the existing Stability and Growth Pact'.

The forthcoming April 2015 Stability Programme Update will set out the implied headline and structural deficit paths consistent with meeting these criteria from 2016 onwards.

Budget Targets

Ceisteanna (216)

Michael McGrath

Ceist:

216. Deputy Michael McGrath asked the Minister for Finance the date by which Ireland must achieve a balanced budget; and if he will make a statement on the matter. [9159/15]

Freagraí scríofa

Minister for Finance

As a member of the European Union, Ireland is subject to the requirements set out in the Stability and Growth Pact (SGP). One of these is that, until the headline deficit is reduced below 3% of GDP we will remain subject to the corrective arm of the SGP.

From 2016, onwards we will transit to the preventive arm of the Pact, whereby the rules require Member States to adjust sufficiently rapidly towards their medium term budgetary objective (MTO). For Ireland our MTO is to achieve a balanced budget in structural terms. There is no fixed date by which this objective must be met. Rather, the rules stipulate that we must deliver structural budgetary adjustment of at least 0.5 percentage point of GDP per annum until the MTO is achieved.

On the basis of Budget 2015 estimates, a position of structural budget balance is projected to be achieved by 2018. Estimates of the structural budgetary position are based on projections of potential output calculated using the harmonised methodology required by the European Commission.

Updated estimates of the structural budget balance will be published in the context of the forthcoming April 2015 Stability Programme Update.

Mortgage Arrears Rate

Ceisteanna (217)

Michael McGrath

Ceist:

217. Deputy Michael McGrath asked the Minister for Finance further to the Household Credit Market Report, published by the Central Bank of Ireland on 25 February 2015, if he will arrange for the county data on mortgages in default (details supplied) to be made available, in tabular form; and if he will make a statement on the matter. [9160/15]

Freagraí scríofa

Minister for Finance

I am informed by the Central Bank of Ireland (CBI) that the figures in Figure 11 of the Household Credit Market report, published on Wednesday 25 February, comes from the Central Bank's loan level data (LLD). The Figure outlines the percentage of loans that were in default by county in June 2014 from the Central Bank LLD. This dataset provides information from a limited number of banks and as such does not capture the full mortgage market.

Separately, the Residential Mortgage Arrears and Repossessions Statistics are designed to capture all mortgage loans secured on properties located in the Republic of Ireland. However, the data are provided on a national level only, no regional breakdown is available.

I am informed by the Central Bank that as the reporting population  in the Household Credit market report covers only some institutions, there is a potential that commercially sensitive information could be extrapolated if total values of loans are provided. Therefore it is not possible to issue the total number of loans overall, and in arrears, underlying the percentages in Figure 11 of the Household Credit Market Report. Accordingly, the county data underlying Figure 11 is as follows:

County	Default Rate %	County	Default Rate %
CARLOW	14.20	LONGFORD	19.05
CAVAN	17.07	LOUTH	16.36
CLARE	12.18	MAYO	11.24
CORK	10.21	MEATH	16.97
DONEGAL	14.79	MONAGHAN	12.95
DUBLIN	11.37	OFFALY	14.70
GALWAY	11.56	ROSCOMMON	13.97
KERRY	11.68	SLIGO	12.03
KILDARE	12.39	TIPPERARY	11.34
KILKENNY	12.43	WATERFORD	13.30
LAOIS	16.25	WESTMEATH	15.21
LEITRIM	16.15	WEXFORD	13.09
LIMERICK	11.63	WICKLOW	12.33

Government Deficit

Ceisteanna (218)

Michael McGrath

Ceist:

218. Deputy Michael McGrath asked the Minister for Finance the impact on the nominal deficit, and the general Government deficit, of growth in gross domestic product exceeding projected levels in 2015 by 1%; and if he will make a statement on the matter. [9161/15]

Freagraí scríofa

Minister for Finance

In terms of economic growth underpinning the Budget 2015 forecast, real GDP is forecast to grow at 3.9% in 2015 while nominal GDP, which is a recognised proxy in relation to the growth of taxes and also the denominator used in the deficit/GDP ratio, is forecast to grow at 5.3%.

There is no simple answer with regard to the impact of different headline growth rates on the deficit as the exact impact would depend on the composition of growth.  For example, growth driven by exports does not have as significant an impact on the public finances as domestically driven growth.  However, as a general rule of thumb, assuming no change in tax policy, a one percentage point increase in nominal GDP would be expected to yield about one percentage point in additional tax revenue.  An increase in nominal GDP would also increase the denominator used to calculate the deficit ratio.

Therefore, on the assumption that all of the increased revenue was used for deficit reduction with no increase in expenditure, the following table illustrates the potential results of a one percent point increase in GDP growth on the nominal deficit and the general government deficit as a percentage of GDP compared to the Budget 2015 forecasts.

	Budget 2015	1% increase in GDP growth
	€m	€m
Tax Revenue	42,300	42,710
Underlying General Government Balance	-5,195	-4,785
% of GDP	-2.7%	-2.4%
Nominal GDP	193,475	195,375

Banking Sector

Ceisteanna (219)

Finian McGrath

Ceist:

219. Deputy Finian McGrath asked the Minister for Finance if he will examine the introduction of public banking, which operates on commercial principles, with the aim of maximising sustainable lending and not profits; and if he will make a statement on the matter. [9168/15]

Freagraí scríofa

Minister for Finance

Officials of my Department have met with representatives of the Public Banking Forum and have received presentations from them. While my Department is interested in the potential of the proposal from the Public Banking Forum, I understand that the Forum will be providing a more developed proposal to me in the coming weeks which can better articulate the role public banking can play in the Irish financial market. Following receipt of this additional information I am prepared to give the concept further consideration.

Departmental Legal Costs

Ceisteanna (220)

Billy Kelleher

Ceist:

220. Deputy Billy Kelleher asked the Minister for Finance if his Department or State bodies or agencies under the aegis of his Department use solicitors' firms (details supplied); the amount paid to these solicitors each year from 2011 to 2014 by his Department, or State bodies or agencies under the aegis of his Department; the date until which his Department, or State bodies or agencies under the aegis of his Department, is contracted to use these solicitors' firms; and if he will make a statement on the matter. [9194/15]

Freagraí scríofa

Minister for Finance

The information requested by the Deputy is set out as follows.

Department of Finance:

A panel of three legal advisors novated from the NTMA to the Department of Finance with effect from 1 January 2012 and was in place until March 2014. This panel included only one of the solicitors firms referred to in the question. The procurement for legal advisors was carried out by the Banking Unit in the National Treasury Management Agency (NTMA) and concluded in March 2011. The Banking Unit in the NTMA was seconded into the Department of Finance in August 2011.

In April 2014 a new panel of 7 legal advisors was put in place following a public procurement by the Department of Finance. Both firms referred to in the question are on the current panel. The current panel is in place for three years (with an option to extend for 1 year) and is subject to annual review.

The Shareholding Management Unit (which includes dealing with the State's shareholding in banks within its remit) transferred from the NTMA to the Department of Finance in mid Aug 2011.

Year	Arthur Cox (€)	McCann FitzGerald
2011	1,373,060	Nil
2012	2,879,426.75	Not on legal panel in place.
2013	1,728,406.91	Not on legal panel in place.
2014	824,247.38	On legal panel since April 2014 but have not been engaged

Comptroller and Auditor General (C & AG):

The Comptroller and Auditor General (C & AG) did not use either of these solicitors firms for the period in question. 

Irish Financial Services Tribunal (IFSAT):

The Irish Financial Services Tribunal (IFSAT) did not use either of these solicitors firms for the period in question. 

Credit Union Restructuring Board (REBO):

The Credit Union Restructuring Board (REBO) did not use Arthur Cox for the period in question.

There was one assignment during the period 2011 - 2014 with McCann Fitzgerald. The value of this assignment was €3,327.50 (March 2014). There was no contractual commitment with either company. 

National Treasury Management Agency (NTMA):

Information in relation to the NTMA is not to hand. I will forward it to the Deputy as soon as possible. 

Revenue Commissioners:

I am advised by Revenue that fees as set out as follows were paid to Arthur Cox and McCann FitzGerald.

Arthur Cox	Insolvency/Legal (€)	Employment Law (€)	Total (€)
2011	2,922.15	14,616.02	17,538.17
2012	43,767.04		43,767.04
2013	37,103.66	13,478.99	50,582.65
2014	74,038.23	5,160.71	79,198.94
Total	157,831.08	33,255.72	191,086.80

McCann FitzGerald	Insolvency/Legal (€)
2011	28,414.52
2012	51,082.44
2013
2014	18,712.83
Total	98,209.79

I am advised by Revenue that it does not have a contractual relationship with either firm in respect of insolvency work; the contracts for insolvency work carried out on Revenue's behalf are with insolvency practitioners. It is the insolvency practitioners who instruct the legal firms, with Revenue underwriting the legal fees on behalf of those practitioners.

I am advised by Revenue that in relation to employment law it contracts advice, as required, on particularly complex cases. 

National Asset Management Agency (NAMA):

The National Asset Management Agency (NAMA) ran a tender process in 2013 to establish a panel of solicitor firms to provide legal services across various legal disciplines as and when they are needed. NAMA, in selecting a firm to act on its behalf for a particular piece of work, runs a mini-tender process between suitable panel members in order to determine which firm offers best value for money. The panel (of which Arthur Cox and McCann FitzGerald are members) will remain in place until October 2019.

The following are the details regarding total payments made to Arthur Cox and McCann FitzGerald solicitors.

€	2011	2012	2013	2014	Total
Arthur Cox	1,161,824.36	1,408,388.30	1,117,634.79	1,630,520.03	5,318,367.48
McCann FitzGerald	1,030,954.98	1,870,000.23	2,194,576.95	2,825,207.31	7,920,739.47
£(stg)	2011	2012	2013	2014	Total
Arthur Cox (Northern Ireland)	185,355.82	163,637.66	167,467.01	392,722.26	909,182.75

Central Bank:

Vendor	Value of payments made (€)
	2011	2012	2013	2014
McCann FitzGerald	1 - 1.5m	0.5 - 1m	1.5 - 2m	0.5 - 1m
Arthur Cox	0.5 - 1m	0 - 500k	0 - 500k	2.5 - 3m

For client confidentiality reasons the Central Bank does not disclose exact sums paid.

The Bank established a Framework Agreement for the Provision of Legal Services, compliant with the applicable procurement legislation, which will run until 30 September 2017. All routine legal services required by the Bank will be procured from this Framework Agreement. Arthur Cox Solicitors and McCann Fitzgerald Solicitors were among the firms appointed and are both on a number of panels with multiple suppliers on each. Framework Participants may be awarded call-off contracts on an as needs basis under the terms of these Framework Agreements, which require mini-competitions. Accordingly being a member of a Framework Agreement does not entitle either firm to be awarded business.

Tax Code

Ceisteanna (221)

Terence Flanagan

Ceist:

221. Deputy Terence Flanagan asked the Minister for Finance his plans to reduce capital gains tax (details supplied); and if he will make a statement on the matter. [9220/15]

Freagraí scríofa

Minister for Finance

The rate of capital gains tax (CGT) is 33% and has been increased four times since 2008 when it stood at 20%. These rate increases were necessary to protect the yield from CGT in the context of the required rebalancing of the public finances over that time. In the circumstances, increases in the taxation of capital were considered preferable from the point of view of the impact on the economy as compared to an increase in employment taxes such as income tax. The changes to income tax and to the Universal Social Charge which I announced in Budget 2015 and provided for in Finance act 2014 will benefit taxpayers (particularly those on low and middle incomes) and businesses, generally.

As regards the details supplied with the question, CGT does not apply to the revenue from a business but to any chargeable gain arising from its sale or disposal after deducting the costs associated with its acquisition and enhancement (which costs may be adjusted to take account of inflation). Allowable losses may also be taken into consideration and the first €1,270 of the net chargeable gains in any tax year is exempt from CGT. In addition, relief from CGT may apply where an individual, who is at least 55 years of age, disposes of the whole or part of his or her business assets.

In common with all taxes, CGT is subject to on-going review, including the rate of tax and all reliefs and exemptions are carefully considered. However, decisions concerning changes to taxes, generally, are taken in the course of the Budgetary and Finance Bill process and I will bear the Deputy's concerns in mind in that context.

Universal Social Charge Exemptions

Ceisteanna (222)

Terence Flanagan

Ceist:

222. Deputy Terence Flanagan asked the Minister for Finance if he will reduce the rate of employer universal social charge; and if he will make a statement on the matter. [9229/15]

Freagraí scríofa

Minister for Finance

There is no universal social charge payable by employers and thus there is no potential for a reduction in it.

Mortgage Arrears Rate

Ceisteanna (223)

Pearse Doherty

Ceist:

223. Deputy Pearse Doherty asked the Minister for Finance the number of primary dwelling homes in mortgage arrears, and in mortgage arrears for over 90 days, by county. [9239/15]

Freagraí scríofa

Minister for Finance

I am informed by the Central Bank of Ireland (CBI) that the CBI's Residential Mortgage Arrears and Repossession Statistics are published quarterly. The last publication was for end-Q3 2014 and is available here: http://www.centralbank.ie/polstats/stats/mortgagearrears/Documents/2014q3_ie_mortgage_arrears_statistics.pdf.

The Residential Mortgage Arrears and Repossessions Statistics are collected from a large number of reporting institutions and are designed to capture all mortgage loans secured on properties located in the Republic of Ireland. The data are provided on a national level only, no regional breakdown is available.

The figures in Figure 11 of the Household Credit Market report, published on Wednesday, comes from the Central Bank's loan level data (LLD). The Figure outlines the percentage of loans that were in default by county in June 2014 from the Central Bank LLD. I am informed by the Central Bank that this dataset provides information from a limited number of banks. It does not capture the full mortgage market, as in the Residential Mortgage Arrears and Repossessions Statistics.

The monthly mortgage arrears and restructures data published by my own Department is collected from the six main lenders, ACC, AIB, Bank of Ireland, KBC, Ulster Bank and PTSB, also on a national level and consequently no regional breakdown of this data is available.

Disabled Drivers and Passengers Scheme

Ceisteanna (224)

Denis Naughten

Ceist:

224. Deputy Denis Naughten asked the Minister for Finance his plans to review the disabled drivers and disabled passengers scheme, given the view of the Ombudsman that the criteria of the scheme may be discriminatory; and if he will make a statement on the matter. [9240/15]

Freagraí scríofa

Minister for Finance

I am aware that the Ombudsman wrote to the Secretary General of my Department and made comments regarding the eligibility criteria of the Disabled Driver and Disabled Passengers Scheme. The Ombudsman did not say that the criteria were discriminatory but that in his opinion they were narrowly focused and prescriptive.

The Scheme and qualifying criteria were designed specifically for those with severe physical disabilities and are, therefore, necessarily precise.

The Scheme represents a significant tax expenditure. Between the Vehicle Registration Tax and VAT foregone, and the assistance with fuel costs used by members of the Scheme, based on provisional figures the Scheme represented a cost of €48.6 million to the Exchequer in 2014, an increase of €5.1 million on the 2013 cost. This figure does not include the revenue foregone to the Local Government Fund in the respect of the relief from Motor Tax provided to members of the Scheme.

I recognise the important role that the Scheme plays in expanding the mobility of citizens with disabilities, and I have managed to maintain the relief at current levels throughout the crisis despite the requirement for significant fiscal consolidation. However, in the still challenging fiscal environment and given the scale and scope of the Scheme, I have no plans to expand the medical criteria beyond those currently provided for in the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1994.

Banking Sector Regulation

Ceisteanna (225)

Derek Nolan

Ceist:

225. Deputy Derek Nolan asked the Minister for Finance when he expects legislation to protect all mortgage holders, including those of unregulated entities, or so-called vulture funds, to be brought forward; if the legislation will apply retrospectively to mortgage holders, in particular to customers of the liquidated Irish Bank Resolution Corporation; and if he will make a statement on the matter. [9249/15]

Freagraí scríofa

Minister for Finance

The Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015 was published in January and second stage of the Bill was taken in the Dáil on 4 February. Since then, my officials have been in contact with the Central Bank and with the Office of the Attorney General to further progress the legislation. It remains my intention to ensure that borrowers whose loans are sold by a regulated entity to a currently unregulated entity maintain the same protections as they had prior to the sale. The Bill will continue its progress through the legislative process and I look forward to further discussion of the Bill at Committee Stage.

The legislation is not retrospective. However, it will apply to all loans as defined, regardless of when they were acquired, thus capturing loan books that have already been sold. A similar approach was used in 2013 in relation to debt management firms.

Mortgage to Rent Scheme Eligibility

Ceisteanna (226)

Clare Daly

Ceist:

226. Deputy Clare Daly asked the Minister for Finance regarding mortgage-to-rent arrangements currently being dealt with by the financial institutions, if he will raise the valuation level from €220,000 to €300,000 as many families who were approved for this scheme have now found themselves ineligible as a result of rising house prices. [9390/15]

Freagraí scríofa

Minister for Finance

The administration of the Mortgage To Rent (MTR) scheme falls under the responsibility of Mr Alan Kelly TD, Minister for the Environment, Community and Local Government. I have no role in setting the valuation of properties for the MTR Scheme. All MTR operators are bound by the existing MTR Scheme introduced by the Minister for the Environment in response to a recommendation in the Keane Report (2011).