Billy Kelleher
Ceist:69. Deputy Billy Kelleher asked the Minister for Finance if he will include Blackpool, County Cork in the Living City scheme; and if he will make a statement on the matter. [22703/15]
Amharc ar fhreagraLiving City Initiative
Ceisteanna (69)
Freagraí scríofa
The Special Regeneration Areas for the Living City Initiative were designated following consultation with the relevant city councils and an independent review by a third party advisor. Specific criteria were set down in respect of the areas which should be included within the remit of the Living City Initiative which were required to be taken into account by the relevant city councils when putting forward the proposed Special Regeneration Areas for each city.
As the Living City Initiative is a very targeted urban regeneration incentive, the criteria to be met for the inclusion of an area in the scheme are more stringent than simply being located in the relevant city and constructed pre 1915. In particular, it was stated that the Special Regeneration Areas should be inner city areas which are largely comprised of dwellings built before 1915, where there is above average unemployment and which demonstrate clear evidence of neglect, dereliction and under-use. It was specified that areas which are generally regarded as affluent, have high occupancy rates and which do not require regeneration should not be included in the Special Regeneration Areas.
It is important to note that I do not see this as a wide-spread Initiative, as it is targeted at those areas which are most in need of attention. However, as is the case with all tax reliefs, the scheme will be kept under review.
Vehicle Registration
Ceisteanna (70)
Michael Healy-Rae
Ceist:70. Deputy Michael Healy-Rae asked the Minister for Finance his views on a matter (details supplied) regarding personalised number plates; and if he will make a statement on the matter. [22831/15]
Amharc ar fhreagraFreagraí scríofa
I am advised by the Revenue Commissioners that under the Finance Act 1992 they have responsibility for the legislation governing vehicle identification marks (registration numbers) in the State and that the format is prescribed in Statutory Instrument No. 318 of 1992, Vehicle Registration and Taxation Regulations (as amended).
There is provision that the Commissioners may assign to a vehicle a registration number reserved by the owner on payment of a fee of €1,000, but this registration number must also comply with the format prescribed in S.I. No. 318 of 1992. Apart from this facility to reserve a registration number, there is no scope within the current legislation to provide for a personalised number scheme. This issue has been raised a number of times over the years but the systems development required, including to registration plate recognition systems, would be likely to far outweigh the potential benefits to the Exchequer given the comparatively small national car population.
Pension Provisions
Ceisteanna (71)
Jack Wall
Ceist:71. Deputy Jack Wall asked the Minister for Finance if a person who received a lump sum payment in the course of employment as a consequence of a reorganisation of staff, and where pay-related social insurance and income tax were deducted from the lump sum payment, is entitled to have that lump sum payment included in the reckoning of that person's pension rights; and if he will make a statement on the matter. [22705/15]
Amharc ar fhreagraFreagraí scríofa
It is not possible, from the limited details set out in the question, to provide a definitive answer to the query posed. However, if the Deputy provides me with more complete details I will have officials of my Department consider the matter in conjunction with the Revenue Commissioners and advise him of the position.
Drugs Seizures
Ceisteanna (72)
Pearse Doherty
Ceist:72. Deputy Pearse Doherty asked the Minister for Finance the value of illegal drugs destroyed by the Customs and Excise for each of the past five years; and if he will make a statement on the matter. [22711/15]
Amharc ar fhreagraFreagraí scríofa
I am advised by the Revenue Commissioners that the values of the illegal drugs which have been seized in each of the past five years are set out in the table. The values are estimated at the time of seizure and before full forensic analysis is complete.
|
Year |
Value of Illegal Drugs Seized |
|
2010 |
€7,939,292 |
|
2011 |
€21,830,305 |
|
2012 |
€47,136,198 |
|
2013 |
€18,741,251 |
|
2014 |
€89,475,465 |
Illegal drugs seized by Revenue's Customs service are destroyed in consultation with An Garda Síochána and the Forensic Liaison Office of Forensic Science Ireland.
Drugs seized by Revenue that are required for evidence in criminal investigations are held until judicial proceedings are complete. In these circumstances the drugs may not be destroyed in the same year as they are seized.
Banking Sector Regulation
Ceisteanna (73)
Seán Kyne
Ceist:73. Deputy Seán Kyne asked the Minister for Finance if, as principal shareholder in Allied Irish Banks, he can confirm that the bank is currently considering outsourcing work and staff from the application and development management teams within its information technology division to a third-party service provider; his views on the concerns of staff and customers regarding the outsourcing of such business, in view of the centrality of information technology in day-to-day banking as well as the security of sensitive information; and if he will make a statement on the matter. [22716/15]
Amharc ar fhreagraFreagraí scríofa
As the Deputy will be aware under the Relationship Frameworks the State does not intervene in the day to day operations of the banks in which it holds investments or their management decisions regarding commercial matters and hence any discussions around matters such as outsourcing are a matter for the bank, the relevant staff and their union representatives. Notwithstanding this position, my officials do take an active interest in how the bank's cost base evolves to ensure that the State's interests as shareholder are protected and to ensure that the Government's remuneration policy is enforced.
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. Any staff who transfer under outsourcing arrangements transfer under the TUPE regulations.
Property Tax Exemptions
Ceisteanna (74)
Billy Kelleher
Ceist:74. Deputy Billy Kelleher asked the Minister for Finance the number of home owners who have been contacted by the Revenue Commissioners informing them that they do not qualify for an exemption from the local property tax; his plans to simplify the co-ordinates of estates to allow home owners to establish if their homes are exempt; where a genuine error has been made owing to the confusing nature of the information online and the delay in the Revenue Commissioners contacting them, if any allowances or reduction will be provided to home owners; and if he will make a statement on the matter. [22727/15]
Amharc ar fhreagraFreagraí scríofa
I am advised by the Revenue Commissioners that in excess of 4,000 exemption claims in respect of Local Property Tax (LPT) have been received under the 'unfinished housing estate' qualifying criteria since the tax was introduced in 2013.
Of these, approximately 1,200 cases have been reviewed to date as part of Revenue's ongoing compliance programme. Where there was doubt as regards entitlement to the exemption and additional clarification was required to confirm the basis for the claim, Revenue has been in contact with the person concerned. 600 of the applications reviewed have been refused.
As previously advised to the Deputy, properties located in 'unfinished' housing estates must be included on a 'prescribed list' that is approved by the Minister for the Environment, Community and Local Government in order to qualify for an exemption from LPT. Revenue has no input to the compilation of the 'prescribed list' and has no authority to apply the exemption to any cases that are not included.
Any amendments or coordinate simplifications to the 'prescribed list' in the manner suggested by the Deputy are a question for my colleague the Minister for the Environment, Community and Local Government.
Revenue has assured me that no interest or penalties will apply in circumstances where a person incorrectly claimed an exemption from LPT on the genuine assumption that the property in question properly met the 'unfinished housing estate' criteria. However this concession only applies where immediate arrangements, including by phased arrangement, are made to pay the outstanding liability.
If the Deputy has a specific case in mind in the context of his Question, I strongly recommend that he advise the person concerned to immediately engage with Revenue to agree a mutually acceptable payment solution. This will avoid the risk of additional enforcement costs and the stress of dealing with debt collection sanctions. The person concerned can get further advice or assistance by contacting the LPT Helpline at 1890 200 255.
Tax Credits
Ceisteanna (75)
Michael McGrath
Ceist:75. Deputy Michael McGrath asked the Minister for Finance if an incapacitated child tax credit may be claimed in circumstances where a qualifying adult is not living with a surviving parent, but is supported to some extent by that parent; and if he will make a statement on the matter. [22790/15]
Amharc ar fhreagraFreagraí scríofa
The legislation governing entitlement to the incapacitated child tax credit is contained in section 465 of the Taxes Consolidation Act 1997, as amended. The legislation provides that an individual is entitled to the tax credit for a year if he or she proves that at any time during that year he or she had a child living who
- is under 18 years of age and is permanently incapacitated by reason of mental or physical infirmity, or
- if over the age of 18 years at the beginning of the year, is permanently incapacitated from maintaining himself/herself and had become so permanently incapacitated either before reaching 21 years of age or after that age while receiving full-time instruction at any university, college, school or other educational establishment.
A child under 18 is regarded as permanently incapacitated by reason of mental or physical infirmity only if that infirmity is such that, if the child were over 18, there would be a reasonable expectation that he/she would be incapacitated from maintaining himself/herself.
I am advised by the Revenue Commissioners that, on the basis of the limited facts provided, it is not possible to confirm whether or not an incapacitated child tax credit would be available. However if the Deputy wishes to supply the full facts and circumstances of a particular case, I will endeavour to provide a response appropriate to such facts and circumstances.
Fuel Sales
Ceisteanna (76)
John McGuinness
Ceist:76. Deputy John McGuinness asked the Minister for Finance the number of meetings he and his Department have had with the Solid Fuel Trade Group; if his Department has concluded an impact assessment of carbon tax on the fuel industry and on the cost of fuel to the end user; if there are cost forecasts with regard to regulation and the impact of such regulation on costs; his plans to establish a register of coal wholesalers, retailers and importers, between his Department and the Revenue Commissioners; the value of the shadow economy in this area; the actions being taken by his Department to reduce and eliminate such activity; and if he will make a statement on the matter. [22801/15]
Amharc ar fhreagraFreagraí scríofa
The introduction of Carbon Tax was about sending a price signal that there is a cost associated with the consumption of fossil fuels to the detriment of the environment. It should be noted that as solid fuels have the highest carbon content of all fossil fuels they are considered the dirtiest fuels and given the environmental impact it is important that they are taxed.
When introducing the carbon tax I was acutely aware of the impact it would have on the price of fuel. Taking the above into consideration I did not commence the application of carbon tax to solid fuels until a regulation was developed and introduced ensuring that all bituminous coal contained less than 0.7% sulphur. Further to allowing for the development of that arrangement when the carbon tax on solid fuel commenced it was introduced on a phased basis over 2 years.
My officials and officials from Revenue meet with the Solid Fuel Traders Group on a ongoing basis. More recently, these meetings have been largely to discuss the development of a relief from carbon tax on the biomass element of solid fuel.
The Revenue Commissioners, who are responsible for collecting solid fuel carbon tax (SFCT), advise me that while there is no reliable estimate of the value of the shadow economy in the solid fuel sector, they are very aware of the risk of such activity, particularly given the price differentials with Northern Ireland and the absence of controls for tax purposes on cross-border supplies. The application of the tax is heavily dependant on the regulatory regime for coal put in place by the Department of the Environment, Community and Local Government in 2011. This regulatory regime establishes higher environmental standards for coal supplied in the State compared with Northern Ireland, and provides for enforcement of those standards by the local authorities. Suppliers who produce or supply solid fuels in contravention of the coal regulations are subject to investigation and prosecution by local authorities and other State agencies charged with preventing such supply. Revenue liaises with these bodies, as required, to ensure that lawful supplies of solid fuels are properly taxed. The coal regulations provide also for the establishment of a register of coal suppliers by the Environmental Protection Agency.
I am advised by the Commissioners that solid fuel traders who make taxable supplies of solid fuel are obliged to register with them for tax purposes and SFCT is subject to the full range of compliance interventions and enforcement provisions for self-assessed taxes. In circumstances where there are grounds to believe that tax due has not been paid, Revenue investigates the suspect person's tax liabilities and collects any unpaid tax, including unpaid income tax, SFCT and VAT, together with any interest or penalties due.
As part of its work against the shadow economy, Revenue chairs the Hidden Economy Monitoring Group (HEMG) to facilitate the reporting of information by traders through their representative associations. Solid fuel traders who suspect, or have evidence, that illegal and/or untaxed solid fuel is being sold in their area should report any information to their local authority and Revenue. Revenue has held a number of meetings with suppliers on matters relating to untaxed supplies of solid fuel and, in common with all such reports, the information received is treated confidentially and is investigated fully for evidence of unpaid tax liabilities.
Tax Agreements
Ceisteanna (77)
Derek Nolan
Ceist:77. Deputy Derek Nolan asked the Minister for Finance the achievements secured by Ireland on international tax reform during our 2013 Presidency of the European Union; and if he will make a statement on the matter. [22823/15]
Amharc ar fhreagraFreagraí scríofa
During the Irish Presidency of the European Union in 2013, the following achievements were secured in relation to tax:
- An authorising decision was adopted on the Financial Transactions Tax.
- Agreement was reached with the European Parliament on a proposal for the FISCALIS 2020 programme.
- A negotiating mandate was adopted for third countries and agreement was reached on the Regulation amending Implementing Regulation (EU) No. 282/2011 regarding the place of supply of services.
- Agreement was also secured on a roadmap for the Common Consolidated Corporate Tax Base. Work has continued on CCCTB using the roadmap agreed under the Irish Presidency.
- Council Conclusions on the Commission Action Plan to tackle tax fraud and aggressive tax planning were adopted, as well as the associated Recommendations.
The Presidency also forged political agreement on three key VAT files the VAT Reverse Charge Mechanism Directive and the VAT Quick Reaction Mechanism, as well as implementing Regulation governing VAT rules for cross-border services.
Ireland continues to be committed to making ongoing progress on international tax issues both at OECD and EU level, and strives to engage constructively on all tax files.
Tax Agreements
Ceisteanna (78)
Derek Nolan
Ceist:78. Deputy Derek Nolan asked the Minister for Finance when he expects the spillover analysis commissioned by his Department to be completed and published; and if he will make a statement on the matter. [22824/15]
Amharc ar fhreagraFreagraí scríofa
The Spillover Analysis research project commenced by my Department in 2014 forms part of a commitment, contained in Ireland's International Tax Strategy (2013), to engage constructively and respectfully with developing countries in relation to tax matters, to support such countries in raising domestic tax revenues in ways that are more efficient, that promote good governance and equitable development and that can allow them to eventually exit from a dependence on official development assistance.
As part of this commitment, and in response to calls from the G-20 and from civil society groups for all countries to have an awareness of this issue in formulating tax policy, the aim of the Spillover Analysis is to research what impact, positive or negative, Ireland's tax system may have on the economies of developing countries.
This analysis consists of two elements:
1. A public consultation, which was completed in 2014, and
2. A detailed evaluation of the interaction of the Irish tax system with the economies of developing countries.
This second element is now reaching its conclusion, and I expect that the final report incorporating both elements of the project will be completed and published in the near future.
Tax Code
Ceisteanna (79)
Derek Nolan
Ceist:79. Deputy Derek Nolan asked the Minister for Finance if, and the way, his Department invokes human rights principles when assessing budgetary decisions, in particular as regards international taxation of corporate profits; and if he will make a statement on the matter. [22825/15]
Amharc ar fhreagraFreagraí scríofa
The Government's overarching priority in recent years has been to return stability to the public finances, while also ensuring that economic recovery is supported and the most vulnerable in society are protected. Indeed, it is quite obvious that stable and sustainable public finances are a pre-requisite for social cohesion. The Government's approach to economic and fiscal policy, through maintaining an acceptable social safety net and returning the unemployed to work, has been consistent with the ideals set out under the International Covenant on Economic, Social and Cultural Rights. I would also note that earlier this week, a delegation led by my colleague, Minister of State, Seán Sherlock T.D., travelled to Switzerland to discuss Ireland's performance in this regard.
Through the crisis, expenditure in critical economic and social sectors has been protected to the greatest extent possible; in 2015 some four-fifths of gross voted current expenditure is allocated to the Social Protection, Health and Education sectors. Government's continued prioritisation of these sectors has meant that primary social welfare rates have been maintained since this Government took office. Our commitment to protecting the most vulnerable in our society is also found in recent data published by Eurostat showing that Ireland's system of social transfers, the redistribution of wealth and income to those most in need, is among the most effective in Europe at reducing the 'at risk of poverty' rate.
Aside from social transfers, the fundamental reforms to labour market activation undertaken by this Government represent a significant modernisation of Ireland's approach to tackling unemployment through a two-pronged approach: Pathways to Work ensures that the unemployed are given a chance to up-skill and re-join the workforce; while the Action Plan for Jobs has directed its efforts towards boosting labour demand through key reforms.
I feel it is also important to highlight the progressive nature of the Irish taxation system when discussing Ireland's record of protecting people's rights and income in budgetary decision making. The fact that this Government has maintained such a progressive and redistributive tax and social welfare system during one of the most difficult fiscal consolidations in the history of the State demonstrates its commitment to equality and fairness. ESRI research shows that Budgets 2009-2015 in aggregate had neither a progressive nor a regressive pattern and that losses due to budgetary policy were highest for those in the top ten percent of the income distribution followed by those in the bottom ten percent.
Looking at the budgetary decision making process, the Cabinet handbook requires a statement on the likely effects of the decision sought on gender equality, people with disabilities and persons experiencing or at risk of poverty or social exclusion to be included in Memoranda to Government. Consequently, Government does consider each of these important issues at an individual policy or programme level.
With regard to the international taxation of corporate profits, this is something which is of concern to my Department who have been engaging on this issue at a supranational level through the BEPS initiative.
Finally, I would emphasise that the Department of Finance is committed to engaging with developing countries to assist them in increasing their domestic tax revenues in ways that are more efficient, fairer, and better promote good governance and equity was stated in October 2013 in "Ireland's International Tax Strategy". Further, Ireland's "One World, One Future" policy for international development commits to an all-of-government approach to international development. This project also reflects a growing international interest in the subject of how tax systems may impact on the economies of developing countries.
Corporation Tax Regime
Ceisteanna (80)
Derek Nolan
Ceist:80. Deputy Derek Nolan asked the Minister for Finance the impact thus far of his announcement in budget 2014 that Irish-resident companies must also be tax resident here; the estimate of revenue lost due to the change; the estimated loss to the Exchequer of revenues that may arise when the scheme is fully abolished in 2020; and if he will make a statement on the matter. [22826/15]
Amharc ar fhreagraFreagraí scríofa
I would like to inform the Deputy that measures were introduced in Finance Act 2014 implementing the changes in tax residence rules that were announced in Budget 2014. A company incorporated in the State is regarded as resident for tax purposes in the State, unless it is treated as resident in a treaty partner country for the purposes of a double taxation treaty. The changes introduced in Finance Act 2014 do not prevent a foreign-incorporated company that is centrally managed and controlled in the State being resident in the State for tax purposes.
The change in Ireland's company residence rules applies directly to companies incorporated on or after 1 January 2015. For companies incorporated in the State before this date, the change will come into effect after 31 December 2020. This transition period was provided to give existing groups of companies that continue to have substantial operations in Ireland a reasonable timeframe within which to reorganise their business structures to take account of the change. However, where there is a change in ownership of a company before or after a major change in the conduct of the business of the company, the transition period will not apply and the new residence rules will apply from the date of the change of ownership of the company.
The new residence rules are expected to principally affect companies that do not have any Irish operations within the charge to corporation tax - their only link with Ireland being their incorporation here. There should not be any loss of corporation tax revenues in respect of such companies. Those companies may also be part of multinational groups of companies with associated companies which do have substantive operations in Ireland and which pay corporation tax. It is not anticipated that there will be any significant change in the activities which those associated companies undertake in Ireland.
The residence rules change is part of a package of measures which was announced on Budget day 2014 in the new Road Map for Ireland's Tax Competitiveness, which is intended to increase the substantive Irish operations of foreign-owned and indigenous companies. While it is not possible to predict how all individual companies will react to the company residence measure, it is unlikely to affect companies with substantive operations here and the broader Road Map will provide the foundations for Ireland to advance and prosper as a location for both indigenous and foreign corporate investment.
Knowledge Development Box
Ceisteanna (81)
Derek Nolan
Ceist:81. Deputy Derek Nolan asked the Minister for Finance his Department's progress on the creation of a knowledge box tax incentive for intellectual property; the estimated cost of such a measure in terms of revenue to be forgone; if his Department has evaluated, or will evaluate, the incentive in terms of international human rights principles; if so, the nature of such evaluation; and if he will make a statement on the matter. [22827/15]
Amharc ar fhreagraFreagraí scríofa
In Budget 2015, I introduced a new Road Map for Ireland's Tax Competitiveness to update the objectives set out in the 2013 International Tax Strategy, and to set out a clear path for this country's tax competitiveness into the future. The Road Map set out a comprehensive package of measures designed to reposition Ireland to reap the benefits of sustainable foreign direct investment in a changing international tax landscape.
The Knowledge Development Box or KDB which the Deputy has asked about was one of the measures announced in this Road Map.
I view the Knowledge Development Box as a positive measure for Ireland. It is recognised internationally that investment and growth in OECD economies is increasingly driven by knowledge-based investment, which is related to research and development and intellectual property. Putting in place an attractive tax offering for developing and commercially exploiting intellectual property is therefore important to encourage companies to develop their knowledge-based capital in Ireland, and for our continued success in attracting foreign direct investment into Ireland.
A public consultation to gather views on how the KDB should operate was held by my Department earlier this year. The consultation paper invited submissions from interested parties on their views of how the KDB should be designed to ensure that it meets the key objective of being the most competitive in class, within the agreed international parameters for fair tax competition in this area.
This consultation went well with active engagement and, as is the case with all public consultations that have been undertaken by my Department on corporation tax, input was welcomed from all sections of society. This process also included engagement with other Government agencies and Departments, including the Department of Jobs, Enterprise and Innovation and Enterprise Ireland. Nearly 40 written submissions were received, which will be published in due course.
The results of the consultation will feed into the broader development of the KDB which will be published as part of Finance Bill 2015 later this year.
Last year, my Department developed and published new guidelines that will determine the appropriate evaluation of tax expenditures and reliefs. This is the appropriate benchmark for the evaluation of the KDB. These guidelines can be viewed at the following link: http://www.budget.gov.ie/Budgets/2015/Documents/Tax_Expenditures_Oct14.pdf
Universal Social Charge Yield
Ceisteanna (82)
Róisín Shortall
Ceist:82. Deputy Róisín Shortall asked the Minister for Finance his estimate of the amount of revenue that would be raised by increasing the level of universal social charge paid by employees on the proportion of their salary over €100,000 to match the existing regime for the self-employed. [22880/15]
Amharc ar fhreagraFreagraí scríofa
I am informed by the Revenue Commissioners that the first and full year estimated yield to the Exchequer of raising the amount of Universal Social Charge paid by employees on the proportion of their salary over €100,000 to match the existing regime for the self-employed is in the order of €81 million and €102 million respectively.
These figures are estimates for 2015, from the Revenue tax forecasting model using the latest actual data for the year 2012, the latest year for which data are available, adjusted as necessary for income, self-employment and employment trends in the interim. They are provisional and may be revised.
Corporation Tax
Ceisteanna (83)
Róisín Shortall
Ceist:83. Deputy Róisín Shortall asked the Minister for Finance his estimate of the amount of revenue that would be raised if the effective rate of corporation tax was 12.5%. [22881/15]
Amharc ar fhreagraFreagraí scríofa
In relation to the effective rate of corporation tax, the Deputy may be aware that my Department last year published a comprehensive Technical Paper on Effective rates of Corporation Tax in Ireland. This report is published on the Department's website and can be viewed at the following link:
http://www.finance.gov.ie/sites/default/files/140407%20FINAL%20Technical%20Paper%20on%20Effective%20Rates%20of%20Corporation%20Tax%20in%20Ireland.pdf
In attempting to assess the effective corporate tax rate that is applied to the total of company profits in Ireland, the Paper concludes that the approach based on national aggregate statistics is the most suitable. Using that approach based on separate datasets from the Central Statistics Office and the Revenue Commissioners, the Report found that since 2003 the effective corporate tax rate has averaged 10.9% and 10.7% respectively with the two datasets.
It is not possible to accurately cost the proposal to increase the effective rate to 12.5%. While the effective rate is lower than the 12.5% headline rate, this can be attributed to the availability of double taxation relief and a small number of corporate tax incentives such as the Research and Development Tax Credit and the Tax Relief for New Start-Up Companies for example.
On the issue generally, some countries have a high headline rate of corporation which is then supplemented by a high number of tax reliefs which reduce the overall rate of tax paid. By contrast, the approach in Ireland is transparent: we have a competitive headline rate of corporation tax which is applied to a broad base.
We therefore only have a small number of tax incentives in Ireland, and we make sure that those we do have are specifically targeted. They are focussed:
- firstly on the creation of additional employment as is consistent with current government policy; and
- secondly on areas of innovation with a view to generating high value-added economic activity in the country.
We make sure that we review the few incentives that we have on a regular basis to ensure value for money for the Irish taxpayer. An example of this is the review of the R&D tax credit which took place in 2013. This review found that the tax credit meets these objectives, and is important for supporting jobs and innovation in Ireland.
In order to ensure the proper evaluation of such reliefs on an on-going basis, the Department of Finance developed and published new guidelines for the Evaluation of Tax Expenditures which can be viewed at the following link:
http://www.budget.gov.ie/Budgets/2015/Documents/Tax_Expenditures_Oct14.pdf
Tax Yield
Ceisteanna (84)
Róisín Shortall
Ceist:84. Deputy Róisín Shortall asked the Minister for Finance his estimate of the amount of revenue that would be raised for every 0.1% increase, up to a 2% increase, of Stamp Duty added to the rate payable on share transactions. [22882/15]
Amharc ar fhreagraFreagraí scríofa
I am advised by the Revenue Commissioners that the full year yield to the Exchequer for each increase of 0.1% on the current 1% Stamp Duty on share transactions, by reference to the expected 2015 outturn, is estimated to be in the region of an additional €38 million. This is calculated on a straightline basis and the estimated yields from the increases of 0.1% up to 2% as suggested by the Deputy are shown in the table.
|
% Increase |
Additional Revenue €M |
|
0.1 |
38 |
|
0.2 |
76 |
|
0.3 |
114 |
|
0.4 |
152 |
|
0.5 |
190 |
|
0.6 |
228 |
|
0.7 |
266 |
|
0.8 |
304 |
|
0.9 |
342 |
|
1 |
380 |
|
1.1 |
418 |
|
1.2 |
456 |
|
1.3 |
494 |
|
1.4 |
532 |
|
1.5 |
570 |
|
1.6 |
608 |
|
1.7 |
646 |
|
1.8 |
684 |
|
1.9 |
722 |
|
2 |
760 |
Tax Code
Ceisteanna (85)
Denis Naughten
Ceist:85. Deputy Denis Naughten asked the Minister for Finance if he will review the registration thresholds for value added tax in view of an anomaly where a business selling physical goods can earn €75,000 before having to register for VAT but a service business can only earn €37,500 before having to register; and if he will make a statement on the matter. [22907/15]
Amharc ar fhreagraFreagraí scríofa
I am advised by the Revenue Commissioners that registration thresholds are provided for in the VAT Directive (Council Directive 2006/112/EC), with which Irish VAT legislation must comply. The Directive provides that the VAT exemption limits may only be raised to maintain their value in real terms, that is, they may only be increased in line with increases in the consumer price index. The thresholds were increased to their current values on 1 May 2008. The threshold for businesses supplying services is the seventh highest in the EU while our goods threshold is the third highest. A comparative table of VAT registration thresholds in the Member States as applicable on 15 April 2015 can be found on the Europa website at
http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/traders/vat_community/vat_in_ec_annexi.pdf
Different VAT registration thresholds for the supply of goods and services are a feature of the EU VAT Directive and Irish VAT legislation and reflect the profound difference between the two supplies; in general, the value added in relation to the supply of goods will be much smaller relative to turnover compared with a supply of services.
Fiscal Policy
Ceisteanna (86)
Michael McGrath
Ceist:86. Deputy Michael McGrath asked the Minister for Finance his views on the finding of the Irish Fiscal Advisory Council that the Stability Programme Update 2015 sets out a plan that lowers the budget deficit by just 0.3% of gross domestic product in 2016, thus falling short of requirements on a forward-looking basis; and if he will make a statement on the matter. [22921/15]
Amharc ar fhreagraFreagraí scríofa
I have noted the views of the Irish Fiscal Advisory Council (IFAC) as published in the Fiscal Assessment Report last week.
We are on track to correct the excessive deficit in line with the requirements of the corrective arm of the Stability and Growth Pact (SGP) this year. Indeed, I note that the ESRI in its Summer Quarterly Economic Commentary published yesterday confirms it too expects a 2015 headline deficit of 2.3 per cent, well inside the 3 per cent of GDP ceiling.
From 2016 onwards, the public finances in Ireland will therefore be subject to the requirements of the preventive arm of the SGP. The European Commission assesses compliance with the requirements of the preventive arm on the basis of two complimentary pillars. First is the minimum annual improvement in the structural balance and the second is compliance with the expenditure benchmark. The minimum improvement in the structural balance and the expenditure benchmark are in theory designed to be complementary, although differences between the two metrics can emerge from time-to-time.
The IFAC noted that the fiscal projections contained in the Stability Programme Update (SPU) did not show Ireland complying with our requirements under the SGP; in other words, that the improvement in our structural balance is below the required 0.6 per cent of GDP in 2016.
However, SPU estimates show that for Ireland compliance with the expenditure benchmark pillar is consistent with delivering a lower suggested quantum of structural adjustment in 2016. This somewhat counterintuitive outcome was explicitly addressed in the SPU, and emphasises the problems posed by some of the technical aspects of the rules.
Finally, it should be noted that compliance with the requirements of the SGP is ultimately assessed on the basis of analysis undertaken by the European Commission. In this context, the recent assessment of the SPU published by the European Commission as part of the European Semester process finds that 'on the basis of information in the 2015 Stability Programme Update re-calculated according to the common methodology, progress towards the MTO is in line with the requirements of the preventive arm of the [Stability and Growth] Pact'. The assessment by the Commission also finds that 'the rate of expenditure growth net of discretionary revenue measures, as planned in the SPU, is expected to be in line with the requirements of the expenditure benchmark pillar'.
In summary, therefore, the projections in the SPU are consistent with the requirements of the SGP.
Fiscal Policy
Ceisteanna (87, 90)
Michael McGrath
Ceist:87. Deputy Michael McGrath asked the Minister for Finance if projections for the deficit for 2017 and subsequent years in the Spring Economic Statement and the Stability Programme Update 2015 are based on anticipated neutral budgets post-2016, or if they incorporate promised tax and expenditure measures of up to €1.5 billion per annum; and if he will make a statement on the matter. [22922/15]
Amharc ar fhreagraMichael McGrath
Ceist:90. Deputy Michael McGrath asked the Minister for Finance the projected deficit in 2016, 2017 and 2018 on a no-policy-change basis and, separately, based on policies envisaged by the Government; and if he will make a statement on the matter. [22926/15]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 87 and 90 together.
As stated in the Stability Programme Update (SPU) and the Spring Economic Statement (SES), the 2016 forecast reflects a budgetary package of €1.2 billion, evenly split between revenue and expenditure measures. If this €1.2 billion package was not implemented, this would improve the general government deficit ratio, on a straight line basis, by about 0.6% of GDP, from 1.7% of GDP to 1.1% of GDP. The impact of this on outer years is broadly the same. It should be noted that this does not take estimates of second round economic effects into account. All things being equal, the projected straight line improvement in the deficit of 0.6% of GDP would be reduced somewhat.
The post-2016 forecasts in the SPU and SES reflect a no-policy change scenario other than an increase in expenditure of €300m per annum for demographic pressures and indexation of the income tax system at an estimated cost of €300m in a full year.
As outlined in the SES, initial estimates produced by my Department at that time suggest that there would be sufficient fiscal space to implement a budget along the lines planned for 2016 in each year from 2017 onwards, whilst complying with the rules and still achieve our MTO over the forecast horizon.
However, while Government has stated elsewhere its intention to reduce the marginal rate of tax and new expenditure priorities, the production of fiscal forecasts reflecting policy beyond 2016 requires specific decisions on the allocation of fiscal space for each year. Options include whether it should go wholly to expenditure (current/capital) or tax cuts or a combination of these and the iterative nature of forecasting over a four year period means that the range of potential fiscal projections is significant.
When Government has fully considered the appropriate use of the available fiscal space, it will set out its proposals.
Fiscal Policy
Ceisteanna (88)
Michael McGrath
Ceist:88. Deputy Michael McGrath asked the Minister for Finance his views on the finding of the Irish Fiscal Advisory Council that the Spring Economic Statement and the Stability Programme Update 2015 incorporate a further adjustment for tax buoyancy that goes against the letter and spirit of the expenditure benchmark rule; and if he will make a statement on the matter. [22923/15]
Amharc ar fhreagraFreagraí scríofa
The Irish Fiscal Advisory Council's report does state that the inclusion of tax buoyancy appears to go against the letter and spirit of the expenditure benchmark and it goes on to state that it sees no argument for the inclusion of a temporary demand effect in the calculation of expenditure benchmark compliance given the objective to match structural changes in spending and revenues.
I do not agree with the Council's conclusions. The European Commission has stated repeatedly that the idea behind the expenditure benchmark is to ensure that any plans for increases in expenditure are properly financed, without leading to a weakening of the underlying fiscal position. This is, for us, the letter and spirit of the expenditure benchmark and we are of the opinion that excluding tax buoyancy would go against that spirit and be inconsistent with the overall operation of the Stability and Growth Pact. For instance, the Budgetary Frameworks Directive requires Member States to ensure that fiscal planning is based on realistic macroeconomic and budgetary forecasts. It is, therefore, appropriate that we take the second round effects of budgetary measures into account when we forecast tax revenues because these are real effects with real impacts on revenue. In cases such as that set out in the Spring Economic Statement and the Stability Programme Update, where proposed budgetary measures will reduce the burden on taxpayers, the second round effects will lead to real and structural increases in tax revenue that partially reduce the costs of the proposed measures.
I am therefore of the view that the inclusion of additional revenue buoyancy as a result of policy measures should be included in the calculation of the expenditure benchmark.
Fiscal Policy
Ceisteanna (89)
Michael McGrath
Ceist:89. Deputy Michael McGrath asked the Minister for Finance his views on the Irish Fiscal Advisory Council's claim that the Stability Programme Update 2015 does not present a full picture of the likely costs of demographic ageing and cost pressures in delivering existing programmes; and if he will make a statement on the matter. [22924/15]
Amharc ar fhreagraFreagraí scríofa
As stated in the Stability Programme Update (SPU) and the Spring Economic Statement (SES), the 2016 forecast reflects a budgetary package of €1.2 billion, evenly split between revenue and expenditure measures. Such a package amounts to around 0.6 per cent of GDP.
Post 2016, the fiscal forecasts included in the SES and the SPU, and all related general government expenditure ratios, reflect a no-policy-change scenario. However, this no-policy-change scenario does provide for a €300 million increase in gross voted expenditure per annum to offset the demographic pressures. Funds will also be available to reallocate within expenditure arising from efficiency savings on policy measures and certain live register savings. The no-policy change scenario also provides for indexation of the income tax system at an estimated cost of €300 million.
This no-policy change scenario results in the pace of structural adjustment in the period 2017 to 2020 significantly exceeding the minimum requirement under the preventive arm of the Stability and Growth Pact (SGP).
Question No. 90 answered with Question No. 87.