Michael McGrath
Ceist:100. Deputy Michael McGrath asked the Minister for Finance the number of residential mortgages currently held by non-bank entities; and if he will make a statement on the matter. [1730/16]
Amharc ar fhreagraMortgage Data
Ceisteanna (100)
Freagraí scríofa
The Deputy will be aware that the recently published Central Bank data on Residential Mortgage Arrears for Q3 2015 indicates that non-bank entities now hold 47,461 mortgage accounts for PDH and BTL combined. I have been informed by the Central Bank that it does not breakdown the data on mortgage accounts held by non-bank entities by type of mortgage for reasons of confidentiality. Of this number, 20,338 are in arrears of more than 90 days, with 13,050 of these in arrears over 720 days. This represents almost 25 per cent of all mortgage accounts in arrears of more than 720 days.
The Deputy will also be aware that all consumer and relevant SME loans sold by regulated financial institutions are covered by the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015. Therefore borrowers are now restored to the protections they previously had, such as the Code of Conduct on Mortgage Arrears (CCMA), the Consumer Protection Code and the Code of Conduct for Business Lending to Small and Medium Enterprises. Borrowers who previously had access to the Financial Services Ombudsman also have this right restored by this legislation.
Question No. 101 answered with Question No. 96.
Tax Code
Ceisteanna (102)
Bernard Durkan
Ceist:102. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which a pensioner is liable for income tax on foot of shares sold to the value of €8,000, given that the shares were purchased intermittently over the past number of years; and if he will make a statement on the matter. [1799/16]
Amharc ar fhreagraFreagraí scríofa
The sale of shares generally gives rise to a capital gains tax liability rather than an income tax liability. An Information Leaflet entitled "Guide to Capital Gains Tax" is available on the Revenue website at www.revenue.ie/en/tax/cgt/leaflets/cgt1.
If the individual concerned requires further information relating to the calculation of his or her capital gains tax liability, that individual should contact the tax district dealing with his or her tax affairs, with details regarding the various dates and costs of acquisitions, as well as the date(s) and proceeds of sale(s).
Code of Conduct on Mortgage Arrears
Ceisteanna (103, 104, 105)
Bernard Durkan
Ceist:103. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the guidelines he and the Central Bank of Ireland have laid down in relation to distressed mortgages continue to be followed to the letter by the various lending institutions, with particular reference to the need to accommodate those who have continued to make payments within their capacity or who have made reasonable offers which have not been accepted by the lending institutions, particularly where the lending and the borrowing were unsustainable in the first instance; and if he will make a statement on the matter. [1801/16]
Amharc ar fhreagraBernard Durkan
Ceist:104. Deputy Bernard J. Durkan asked the Minister for Finance the number of distressed mortgages still awaiting resolution; and if he will make a statement on the matter. [1802/16]
Amharc ar fhreagraBernard Durkan
Ceist:105. Deputy Bernard J. Durkan asked the Minister for Finance to indicate the extent to which he and the Central Bank of Ireland continue to monitor the degree to which lending agencies encourage voluntary sale or repossession, where borrowers are having difficulty meeting repayments, with particular reference to where the lending and borrowing in question was ill-advised or unsustainable; and if he will make a statement on the matter. [1803/16]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 103 to 105, inclusive, together.
The Deputy will be aware that the Central Bank of Ireland's (The Central Bank) Code of Conduct on Mortgage Arrears (CCMA) provides a strong consumer protection framework to ensure that each borrower who is struggling to keep up mortgage repayments is treated in a timely, transparent and fair manner by lenders. The CCMA recognises that it is in the interests of borrowers and lenders to address financial difficulties as speedily, effectively and sympathetically as circumstances allow.
I am informed by the Central Bank that in order to determine which options for alternative repayment arrangements are viable in each particular case, a lender must explore all of the options for alternative repayment arrangements that they offer. The CCMA also requires lenders to review an alternative repayment arrangement at appropriate intervals for the type and duration of the arrangement. The lender must also carry out a review of an alternative repayment arrangement at any time, if requested by the borrower.
The Central Bank monitors compliance with consumer protection requirements on an ongoing basis through themed inspections, reviews and research, mystery shopping and advertising monitoring. It provides feedback on themed inspections and publishes identified issues on the Central Bank website, so as to promote compliance.
The Deputy will also be aware that the Central Bank publishes quarterly statistical bulletins of data on residential (PDH) and buy-to-let (BTL) mortgage arrears. The latest release published presents data to end-September 2015 and may be accessed at http://www.centralbank.ie/polstats/stats/mortgagearrears/Documents/2015q3_ie_mortgage_arrears_statistics.pdf. At end-September there were 92,291 PDH mortgage arrears cases outstanding and of these, 30,549 accounts were classified as restructured. Accounts in arrears include mortgages that have been restructured and are still in arrears, as well as mortgages in arrears that have not been restructured. Of the total restructured stock of all PDH loans, 86.6 per cent were 'Meeting the Terms of the Arrangement'.
The position with respect to BTL accounts at end-September is that there were 30,288 BTL accounts in arrears and of these, 7,213 were classified as restructured. Of the total restructured stock of all BTL loans, 83.6 per cent were 'Meeting the Terms of the Arrangement'.
Economic Data
Ceisteanna (106, 108)
Bernard Durkan
Ceist:106. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the economic indicators remain positive, with particular reference to the need to maintain long-term sustainable economic growth; and if he will make a statement on the matter. [1804/16]
Amharc ar fhreagraBernard Durkan
Ceist:108. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he is satisfied regarding the economic outlook for the next five years; and if he will make a statement on the matter. [1806/16]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 106 and 108 together.
In general, recent economic indicators have been positive, indicating that the recovery is strengthening in a more sustainable manner.
The latest data show that GDP increased by 7.0 per cent year-on-year in the third quarter of 2015. This comes on the back of an increase of 6.8 per cent in the second quarter and 7.3 per cent in the first quarter. As a result, GDP per capita is now above its pre-crisis peak. In Budget 2016, published in October 2015, my Department forecast that the economy would grow by 6.2 per cent in 2015 and 4.3 per cent in 2016.
Importantly, the recovery is now being felt in the domestic economy with consumption up almost 3.5 per cent in the first three quarters of 2015 and investment up over 25 per cent. In fact, based on latest available information in 2015 domestic demand made its strongest positive contribution to economic growth since the crisis began. This is very important as the domestic sectors are both jobs-rich and tax-rich. The external sector is also showing continuing signs of growth with exports increasing by over 13 per cent in the first nine months of 2015.
The economic recovery is also clearly evident in the labour market where we have now had thirteen successive quarters of solid annual employment growth. As a result, the unemployment rate has fallen by over 6 percentage points since its peak in early 2012.
Over the medium term, my Department expects that the economy can grow by around 3 per cent per annum on a sustainable basis. However, achieving a sustained economic recovery cannot be taken for granted and is contingent upon a number of factors including sustainable public finances, maintaining our competitiveness position and ensuring inflationary pressures remain in check over the medium term.
Substantial progress has been made in terms of improving Ireland's competitiveness in recent years. The European Commission in its autumn forecasts estimated that relative unit labour costs in Ireland declined by 0.8 per cent annually in 2015. This is one of the largest declines across all EU Member States. Competitiveness gains have been achieved through productivity improvements. In fact, according to Commission forecasts, Ireland experienced the fastest productivity growth in the EU in 2015. It is vitally important that this competitiveness is preserved and continues to support growth.
EU-IMF Programme of Support
Ceisteanna (107)
Bernard Durkan
Ceist:107. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he has, over the past five years, amended the agreement reached with the troika, resulting in savings to the economy and to taxpayers, including the extent of such savings; and if he will make a statement on the matter. [1805/16]
Amharc ar fhreagraFreagraí scríofa
There have been a number of improvements to the terms of our EU-IMF Programme loans since they were initially agreed in late 2010. These changes have included reductions of the interest rates and, in the case of the EU facilities, extensions of maturities. While not part of the EU-IMF Programme we have also negotiated the replacement of the Promissory Notes issued to the Irish Bank Resolution Corporation (IBRC) with a series of longer term, non-amortising floating rate Government bonds. In addition, we made an early repayment of the vast bulk of Ireland's IMF programme loans which resulted in considerable savings.
The savings arising from these measures are set out as follows:
When the programme was initially agreed in late 2010, the average interest rate on the €67.5 billion available to draw down from the external sources was estimated by the EU Commission to be 5.82% on the basis of market rates at that time. The average life of the borrowing was initially set at 7.5 years.
In July 2011, the Euro Area Heads of State or Government (HOSG) agreed to reduce the cost of the European Financial Stability Facility (EFSF) loans, and similar reductions were subsequently agreed for the interest rates on the loans provided by the European Financial Stabilisation Mechanism (EFSM) and also by the three bilateral lenders (UK, Sweden and Denmark). It is estimated that the interest rate reductions on the EU funding mechanisms and the bilateral loans are worth of the order of €9 billion over the initially envisaged 7½ year term of these loans. The average maturity of the EFSM and the EFSF loans was extended to a planned 12.5 and 15 years respectively.
In April 2013, EU Finance Ministers agreed in principle to further extend the maximum weighted average maturities on our EFSF and EFSM loans by up to 7 years, over and above the extension agreed in 2011. This further maturity extension removes a refinancing requirement of some €20 billion for the Irish State in the years 2015 to 2022. This extension of maturities has a number of significant benefits for Ireland, including smoothing our redemption profile, improving long term debt sustainability and it also has a positive impact on the cost of Exchequer borrowing through creating further downward pressure on our borrowing costs. As of end-December 2015 the euro equivalent cost of our EU IMF programme loans is estimated by the NTMA to have been 2.2%.
While not part of the EU-IMF Programme, it is also worth mentioning that in February 2013, the Irish Government replaced the Promissory Notes issued to IBRC with a series of longer term, non-amortising floating rate Government bonds. This has resulted in significant benefits to the State, including increasing the weighted average life from c.7-8 years for the Promissory Notes to c.34-35 years for the floating rate notes.
The early repayment of some 81 per cent of IMF loans, which was completed in Quarter 1 of last year, will generate further interest savings, estimated at over €1.5 billion, over the original lifetime of these loans. The current interest rate on the residual IMF loan balance is just 1.05 per cent.
My Department, in conjunction with the National Treasury Management Agency (NTMA), will always seek to avail of any opportunity for savings on the cost of our EU-IMF programme loans.
Question No. 108 answered with Question No. 106.
Tax and Social Welfare Codes
Ceisteanna (109)
Bernard Durkan
Ceist:109. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the burden of extra taxation imposed on Irish taxpayers at the height of the economic downturn will be modified in future years; and if he will make a statement on the matter. [1809/16]
Amharc ar fhreagraFreagraí scríofa
In order to maintain the public finances on a sustainable footing, around €30 billion of consolidation measures, of which €11 billion were revenue measures, were implemented over a seven year period.
The policies successfully implemented by this Government have seen the restoration of a strongly growing economy and this has been reflected in both our improved fiscal position and strengthening labour market.
To underpin this recovery, to make it more attractive to return to work, to stay in work and to ensure work rewards individuals adequately, the Statement of Priorities issued by Government in July 2014, included a commitment for an income tax reform plan to be delivered over a number of budgets. This undertook to reduce the marginal tax rate on low and middle-income earners, in a manner that maintains the highly progressive nature of the Irish tax system. The first stage of the plan was given effect in Budget 2015, when a suite of Income Tax and Universal Social Charge (USC) measures were introduced.
The measures announced in Budget 2015 were the first steps to reducing the burden placed on Irish taxpayers, particularly for middle-income earners who have borne the greater share of the cost of the economic downturn, and this process continued in Budget 2016.
In Budget 2015, I reduced the top rate of income tax from 41% to 40% and extended the standard rate band on which income tax is chargeable at the lower 20% rate by €1,000. I also made a number of changes to USC, including reductions in the two lower rates of USC.
Budget 2016 continued this process of reducing the tax burden on low and middle income earners including, among other changes, a decrease in the three lowest rates of USC which took effect from January 2016. In total, Budgets 2015 and 2016 have reduced the three lowest rates of USC from 2%, 4% and 7% to 1%, 3% and 5.5% respectively. The changes to the income tax system included in these Budgets mean that individuals who paid Income Tax and / or USC in 2014 saw a reduction in their tax bill in 2015 and should see further reductions in 2016, where incomes remain unchanged year-on-year.
Ireland already has one of the most progressive income tax systems in the developed world. To preserve that progressivity, the 8% rate of USC introduced in Budget 2015 has acted to limit the benefits from the Budget 2015 and 2016 tax packages to income of up to €70,044 for any individual taxpayer, which means that those with very high incomes will only benefit to the same extent as those with more modest incomes.
Looking to the medium term, in order to enhance transparency, the Budget sets out the indicative amount of fiscal space which future governments can decide can be used for additional expenditure increases or to fund tax measures.