Thursday, 14 Jan 2016

Written Answers Nos. 90-99

Home Renovation Incentive Scheme Eligibility

Ceisteanna (90)

Jim Daly

Ceist:

90. Deputy Jim Daly asked the Minister for Finance if a house that is more than 100 years old qualifies under the home renovation incentive scheme; and if he will make a statement on the matter. [1599/16]

Freagraí scríofa

Minister for Finance

Under the Home Renovation Incentive, there is no restriction relating to the age of a qualifying property.

A qualifying residential property must be either a homeowner's main home or a rental property, which must be occupied by a tenant and registered with the Private Residential Tenancies Board within 6 months of the completion of the works.

Property Tax Assessments

Ceisteanna (91, 92)

Michael McGrath

Ceist:

91. Deputy Michael McGrath asked the Minister for Finance if home owners who have been affected by recent flooding can submit a revised valuation of their property in respect of their local property tax liability for 2016 or if the May 2013 valuation continues to apply and therefore, the only relief available to them is a deferral; and if he will make a statement on the matter. [1585/16]

Michael McGrath

Ceist:

92. Deputy Michael McGrath asked the Minister for Finance the process by which a home owner can seek a reduction in local property tax liability for 2016 if that person has been affected by flooding; and if he will make a statement on the matter. [1586/16]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 91 and 92 together.

Section 13 of the Finance (Local Property Tax) Act 2012 (as amended) sets out how residential properties are to be valued for LPT purposes.

The current valuation date of 1 May 2013 is now valid until 31 October 2019 on foot of a recent legislative amendment (Finance (Local Property Tax) (Amendment) Act 2015). The declared valuation is not affected by any repairs or improvements made to a property or by any general increase or decrease in property prices that might occur over the course of the valuation period.

While the LPT Act does not provide for revised or reduced valuations on foot of occurrences such as the recent flooding, Revenue has advised that initial analysis indicates that the majority of properties situated on affected 'flood plains' are already valued in the lowest Valuation Band and the question of a reduction in value would therefore not arise. The annual LPT liability for properties in the lowest valuation band is €90.

Part 12 of the LPT Act provides for Deferral, and Partial Deferral (50%) schemes that can apply to liable property owners under certain conditions including, 'Income Level', 'Hardship', 'Personal Insolvency' and also to 'Personal Representative of a Deceased Person'. The deferred tax remains as a charge on the property and must be paid before a sale or transfer can be completed.  Interest is charged on the deferred amount at a rate of 4% per annum and the duration of the relief normally coincides with the valuation period (1 May 2013 to 31 October 2019).

Revenue recently announced that it is making the Deferral and Partial Deferral relief available to property owners, in respect of the 2016 liability, whose principal private residence was flooded during the recent bad weather. The relief is available to the people affected providing they are in receipt of assistance through the Department of Social Protection Humanitarian Relief Fund.

Property owners wishing to avail of the relief should contact the LPT Helpline at 1890 200 255 to make the necessary arrangements.  

Tax Collection

Ceisteanna (93)

Denis Naughten

Ceist:

93. Deputy Denis Naughten asked the Minister for Finance if he will intervene in a dispute between the Department of Education and Skills and the Revenue Commissioners on the tax treatment of home tutors; and if he will make a statement on the matter. [1696/16]

Freagraí scríofa

Minister for Finance

I assume the Deputy is referring to the tax position of home tutors who, prior to September 2015, were paid by parents from grants paid to them by the Department of Education and Skills. I am advised by the Revenue Commissioners that there is no dispute between that Department and their Office on the tax treatment of the home tutors. I am further advised by the Revenue Commissioners that, in the context of an audit over the last few years, it was determined that these home tutors are employed under a contract of service i.e. they are employees.  They are engaged by the parent(s) subject to satisfying criteria specified by the Department of Education and Skills.

As a consequence of the Revenue audit, the Department of Education and Skills agreed to operate the PAYE system on payments to the home tutors. This facilitates ease of administration, as the payments originate from the Department, and also avoids placing the obligation to register as employer, and administer the PAYE system, on each individual parent.

Stability and Growth Pact

Ceisteanna (94)

Olivia Mitchell

Ceist:

94. Deputy Olivia Mitchell asked the Minister for Finance the public expenditure growth, net of discretionary revenue measures, as defined under the European Union's expenditure benchmark, in each of the budgets from 2003 to 2007; and if he will make a statement on the matter. [1717/16]

Freagraí scríofa

Minister for Finance

The Expenditure Benchmark was introduced as part of the European Council Directive 2011/85 of 8 November 2011 (the so-called six-pack). These changes reformed both the preventive and corrective arms of the Stability and Growth Pact. In 2016 Ireland will for the first time be subject to the reformed requirements of the preventive arm of the SGP including the expenditure benchmark.

Table 1 details the ex-ante estimate of the corrected expenditure aggregate net of discretionary revenue measures (DRM) for each Budget 2003-2007 and the implied expenditure growth. The corrected expenditure aggregate is the adjusted general government expenditure used to assess compliance with the expenditure benchmark rule.

As these budgets predate the six pack it should be noted that a number of the variables used in adjusting the general government expenditure were not detailed at the time and have been estimated using the most relevant available data. It should also be noted that the general government expenditure estimates used are those in the published Budget Books, which were compiled under the ESA 95 framework. Final general government expenditure outturns compiled under the ESA 2010 framework are published by the CSO in the government finance statistics.

Table 1

-	Budget 2003	Budget 2004	Budget 2005	Budget 2006	Budget 2007
€billions
Budget Year - 1
General Government Expenditure	43.2	44.7	47.8	53.1	57.7
A. Corrected expenditure aggregate	39.6	41.9	45.9	50.8	55.6
Budget Year
General Government Expenditure	46.2	48.0	53.0	57.6	63.9
B. Corrected expenditure aggregate	43.1	45.5	50.2	55.0	61.4
C. Net discretionary revenue measures (DRM)	0.2	0.2	-0.6	-0.7	-0.9
D. Corrected expenditure aggregate net of DRM (B/C)	42.9	45.3	50.8	55.7	62.4
Expenditure growth (D/A)	8.2%	8.1%	10.7%	9.6%	12.2%

Tax Code

Ceisteanna (95)

Lucinda Creighton

Ceist:

95. Deputy Lucinda Creighton asked the Minister for Finance if he will consider a report (details supplied) in the context of introducing a 23% flat tax rate; and if he will make a statement on the matter. [1718/16]

Freagraí scríofa

Minister for Finance

The report referenced by the Deputy, a KPMG report published in September 2015, contains a high-level discussion of possible benefits of a flat tax policy.  It estimates that a flat rate of income tax of 23%, with no tax credits or basic income allowances, would result in a decrease in tax receipts of some €257 million per annum when compared to the net yield under the existing income tax system at that time. The report does not specify the methodology used to calculate this figure, however I would note that the figures differ from estimates by the Revenue Commissioners in response to Question No. 51 of 13 October 2015, indicating that replacement of the income tax structure (including the Universal Social Charge) with a flat rate of 23% on all incomes and removing all tax credits would result in an increase in yield in the order of approximately €672 million in a full year.

It should also be noted that the introduction of a flat tax of this nature, with no tax credits or basic allowances, would result in significant tax increases for lower income earners.  The report also notes that a flat tax system would normally incorporate an Earned Income Tax Credit (EITC) for all income earners, in order to protect those on lower incomes, and suggests that a growth-driven flat tax system would include an EITC.  The report estimates that a break even Exchequer yield for a flat tax system incorporating a graduated EITC would be up to 29%.  In this context, it is worth noting that the average effective tax rate for the highest 10% of income earners under the current tax system is approximately 31% (calculated by the Revenue Commissioners, based on estimates for 2016, using the actual data for the year 2013 (the latest year for which data are available) adjusted as necessary for income, self-employment and employment trends in the interim).

The report further posits that the increase in net incomes for higher earners could have consequential increases in exchequer revenues of €493.5 million per annum, through economic growth associated with attracting high net worth individuals to remain in, or relocate to, Ireland.

I have said on many occasions that individuals in Ireland start to pay the higher rate of tax at too low an income level, and that I would seek to address this issue when the public finances would allow me to do so.  The changes I introduced the last two Budgets have begun the process of reducing the burden of income taxes for all taxpayers, not just those on higher incomes.  Furthermore, Budgets 2015 and 2016 have reduced the top tax rate on incomes of up to €70,044 from 52% to 49.5%, so in 2016 this rate has now fallen below 50% for the first time since supplementary Budget in 2009.  This will help to support consumer confidence, particularly for middle income earners who have borne the greater share of the cost of the economic downturn, and help to stimulate economic growth.  I have also stated my belief that the top rate of tax on all income should not exceed 50%, and that I would continue to work towards this objective in future Budgets, subject to being returned to Government in the next election.

Financial Services Regulation

Ceisteanna (96, 101)

Michael McGrath

Ceist:

96. Deputy Michael McGrath asked the Minister for Finance if he is satisfied with the operation of legislation to provide protection to persons whose mortgages are sold to third parties; and if he will make a statement on the matter. [1724/16]

Michael McGrath

Ceist:

101. Deputy Michael McGrath asked the Minister for Finance the number of firms which are regulated under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015; and if he will make a statement on the matter. [1731/16]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 96 and 101 together.

As the Deputy will be aware, the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 was enacted on 8 July 2015. It was introduced to fill the consumer protection gap where loans were sold by the original lender to an unregulated firm. The 2015 Act introduced a regulatory regime for a new type of entity called a 'credit servicing firm'.  Credit Servicing Firms are now subject to the provisions of Irish financial services law that apply to 'regulated financial service providers'. This ensures that relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale, including under the various statutory codes (such as the Consumer Protection Code, Code of Conduct on Mortgage Arrears, Code of Conduct for Business Lending to Small and Medium Enterprises and the Minimum Competency Code) issued by the Central Bank of Ireland.

The Central Bank is the competent authority in Ireland for the purposes of the Act. Following the conduct of a public consultation exercise, the Central Bank published Authorisation Requirements and Standards  for Credit Servicing Firms on 10 December 2015 which firms have to meet both in order to obtain an authorisation and on an ongoing basis.

As the Deputy will know, the Act also provides for transitional arrangements for existing Credit Servicing Firms who were conducting credit servicing prior to the enactment of the 2015 Act. Section 34F of the Act provides that a person carrying on the business of a Credit Servicing Firm immediately before the commencement of the 2015 Act is taken to be authorised to carry on the business of a Credit Servicing Firm until the Central Bank has granted or refused authorisation to the person, provided that the person applies to the Central Bank under section 30 of the Act for authorisation, in a form specified by the Central Bank, no later than 3 months after that commencement. Persons seeking to avail of these transitional arrangements were therefore required to have completed and submitted an application for authorisation to the Central Bank by 8 October 2015 in order to continue to provide such services.

The list of Credit Servicing Firms that have notified the Central Bank that they wish to avail of the Transitional Provisions under Section 34F of the Central Bank Act, 1997 is available at http://registers.centralbank.ie/.  Currently there are sixteen firms on this register.

Tax Credits

Ceisteanna (97)

Michael McGrath

Ceist:

97. Deputy Michael McGrath asked the Minister for Finance if he will amend the regulations for the single person child carer such that if the tax credit is not taken up in full by the primary claimant before the end of the tax year, the unused tax credit may be transferred to the secondary claimant; and if he will make a statement on the matter. [1726/16]

Freagraí scríofa

Minister for Finance

I recall that during the course of the debate on Finance Bill 2014 at Report Stage, the Deputy tabled an amendment proposing to extend the transferability of all or part of the Single Person Child Carer Credit (SPCCC) to the non-principal carer parent, where it has not been utilised in full by the principal carer.

The Deputy will be aware that I agreed that a review of the proposal would be undertaken by my officials and the full review was included in the Report on Taxation Expenditures, published on Budget day, which details the outcomes of Tax Expenditure Reviews completed between October 2014 and September 2015. This report can be accessed online at http://budget.gov.ie/Budgets/2016/Documents/Tax_Expenditures_Report_pub.pdf

The review of the SPCCC comprised of:

- A review of the rationale for the replacement of the One-Parent Family Tax Credit with the Single Person Child Carer Credit.

- An outline of proposals relating to the transfer of any unused part of the SPCCC to the non-principal carer parent.

- Consideration of relevant legal issues.

- Consideration of relevant administrative, operational and data protection issues, and,

- Consideration of relevant budgetary implications.

The review identified that a transferable credit could only be effectively administered by Revenue with the full co-operation of the primary claimant, as it would require the primary claimant to file a tax return, provide information on the other parent (or secondary claimant) and consent to the release of personal information to the other parent (or secondary claimant).

As the SPCCC currently allows for the credit to be transferred in full to a qualifying secondary claimant,  I am satisfied that the SPCCC provides for an appropriate level of transferability to secondary claimants, taking into account the various issues identified in the published review. 

Tax Settlements

Ceisteanna (98)

Michael McGrath

Ceist:

98. Deputy Michael McGrath asked the Minister for Finance the amount of tax, interest and surcharges that were payable but written off in settlements with persons or companies in each of the years 2011 to 2015; and if he will make a statement on the matter. [1727/16]

Freagraí scríofa

Minister for Finance

I am advised by the Revenue Commissioners that the primary function of Revenue is the timely collection of taxes and duties. Inevitably, circumstances will arise where despite the best efforts of Revenue and the intent of a business to meet its tax obligations in full, that business will fail sometimes owing significant debts to Revenue.  In these circumstances, arrangements are made to pass the tax as irrecoverable. This is commonly referred to as writing-off the tax and is a feature of the approach to debt management in all modern tax administrations.

I am also advised that the write-off of taxes and duties is subject to significant internal controls including formal approval and sign-off procedures within the Revenue Commissioners and in the overall context of Revenue's collection and enforcement function, the extent of recourse to write-off is relatively infrequent.  

The amount of debt written off in the years 2011 to 2015 is contained in the following table.  (It should be noted that the 2015 figure is provisional.)

Year	2011	2012	2013	2014	2015
Amount €m	321	287	263	228	170

I am further advised that Revenue assists in dealing with tax payment difficulties encountered by taxpayers by agreeing to phased payment arrangements in appropriate cases provided -

- the liabilities are fully quantified,

- there is early, positive and honest engagement by the taxpayer, and

- the fundamentals of the underlying business are sound.

Financial Services Ombudsman Data

Ceisteanna (99)

Michael McGrath

Ceist:

99. Deputy Michael McGrath asked the Minister for Finance the number of complaints, oral hearings and complainants being represented by a third party, including a member of the legal profession, handled by the Financial Services Ombudsman, in each of the years 2013 to 2015, in tabular form; and if he will make a statement on the matter. [1729/16]

Freagraí scríofa

Minister for Finance

At the outset, I must point out that the Financial Services Ombudsman is independent in the performance of his statutory functions.

However, the Financial Services Ombudsman has informed me that the information requested by the Deputy is as follows;-

Year	Number of Complaints received by FSOB:	Oral Hearings	Third Party Representation (Validated): **
2013	7,722	30	1,698
2014	4,477	38	919
2015	3,827*	13*	654*

* These are unaudited figures. 

** In the case of third party representation the figure is a snap shot in time and may change during the course of an investigation as the complainant may decide to no longer use a third party and may decide represent themselves or indeed may decide to use a third party.