Josepha Madigan
Ceist:13. Deputy Josepha Madigan asked the Minister for Finance his plans to review the Thornhill report on property tax (details supplied); and if he will make a statement on the matter. [27541/16]
Amharc ar fhreagraProperty Tax
Ceisteanna (13)
Freagraí scríofa
Under the LPT legislation the initial valuation of a property on 1st May 2013 was valid until 31 October 2016, and would not have been affected by any increase or decrease in property prices or other changes, including repairs or improvements made, during this period. The next valuation date would have fallen on 1st November 2016. During the passage of the Finance Bill in 2014 I gave a firm commitment that my Department would examine the LPT and any impacts on LPT liabilities due to increasing property prices.
Accordingly, I asked Dr. Don Thornhill to conduct a review to consider and make recommendations on the operation of the Local Property Tax, in particular, any impacts on LPT liabilities due to property price developments.
Dr. Thornhill made a number of recommendations in his report on his review of the Local Property Tax. His central recommendation is for a revised system whereby a minimum level of LPT revenues in each local authority area would be determined by Government, ideally having regard to the apportionment between local authority areas of the historic yield. This in turn would allow for the estimation of LPT rates for each local authority area and the application of these by taxpayers and Revenue. Local authorities could adjust this rate upwards by a factor of up to 15%. This new system was recommended by Dr. Thornhill with a possible interim deferral of the next valuation date until November 2018 or November 2019.
In my Budget 2016 statement, I announced that I would be proposing to Government that the revaluation date for the LPT be postponed from 2016 to 2019. This postponement means that home owners will not be faced with significant increases in their LPT in 2017 as a result of increased property values. The postponement also gave sufficient time for the other recommendations in Dr. Thornhill's report to be considered. The Finance (Local Property Tax) (Amendment) Act 2015 gives effect to the postponement of the revaluation date of residential property for LPT purposes, and also to two of the recommendations in Dr. Thornhill's report, involving LPT relief for properties affected by pyrite and relief for properties occupied by persons with disabilities (recommendations numbers 11 and 12 respectively).
My Department will be considering issues relating to the implementation of other recommendations in the Report in due course in line with the 2019 timeline. I also note that the Programme for a Partnership Government provides for the preparation of a report by mid-2017 for Government and for the Oireachtas, on potential measures to boost local government leadership and accountability.
Tax Code
Ceisteanna (14)
Brendan Griffin
Ceist:14. Deputy Brendan Griffin asked the Minister for Finance if he will consider a farm management deposit scheme, as proposed by the Irish Creamery Milk Suppliers Association, ICMSA; and if he will make a statement on the matter. [27532/16]
Amharc ar fhreagraFreagraí scríofa
A comprehensive review of tax measures in the farming sector was announced in Budget 2014, as a joint initiative between the Department of Finance and the Department of Agriculture, Food and the Marine. The review focused on three key policy objectives for agri-taxation policy, including: increasing mobility and productive use of land; assisting succession; and complementing wider agriculture policies and schemes, such as supporting investment to enhance competitiveness, environmental sustainability, alternative farming models such as farm partnerships and responses to increasing income volatility.
Following on from this review, a significant number of measures were introduced, retained or refocused in the last two Finance Acts. These formed a comprehensive tax package to support the farming sector, including but not limited to: extension of income averaging from 3 to 5 years; broadening of CGT retirement relief so that, for example, individuals can now lease out their land for up to 25 years prior to disposal and still be eligible for CGT retirement relief; extension of stamp duty relief for non-residential land transfers between certain close relatives; extension of general stock relief, stock relief for certain young trained farmers and stock relief for registered farm partnerships; and extension of the stamp duty exemption for young trained farmers.
In addition, a new "succession transfer partnership" proposal was introduced in Finance Act 2015.
A public consultation was held as part of the agri-tax review. Proposals put forward from this consultation were considered and a number of meetings were held with stakeholders, including the ICMSA. A number of respondents suggested a tax deposit scheme similar to the farm management deposit scheme put forward by the ICMSA. Such a scheme is essentially a tax deferral scheme, where farmers lodge money tax free and pay tax on withdrawal after a number of years. The idea is based on similar schemes in Australia and New Zealand, which are not subject to EU State Aid rules and which do not have a system of direct payments.
The Agri-tax working group concluded that a scheme such as this would not be compatible with EU State Aid rules which preclude supports to falling farm incomes arising from low commodity prices in the market place.
Accordingly, it would not be possible to introduce such a scheme.
Motor Insurance Regulation
Ceisteanna (15, 71)
Robert Troy
Ceist:15. Deputy Robert Troy asked the Minister for Finance if he will provide an update on actions taken by his Department to reduce insurance costs for customers in the Irish market and the efforts being taken to increase competition across the market by his Department. [27627/16]
Amharc ar fhreagraRobert Troy
Ceist:71. Deputy Robert Troy asked the Minister for Finance the actions taken by his Department to reduce insurance costs for customers in the Irish market; and the efforts that have been made to increase competition across the market by his Department. [27798/16]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 15 and 71 together.
The Cost of Insurance Working Group, which I chair, is undertaking a review of the factors which are influencing the increased cost of motor insurance.
The Working Group brings together all the relevant Departments and Offices involved in the process. Its objective is to identify immediate and longer term measures which can address increasing costs, while bearing in mind the need to maintain a stable insurance sector.
The core areas to be examined by the Working Group in this first phase are the motor insurance sector generally, at present and in recent years; the effects of legal costs and litigation processes on insurance costs; the current claims compensation arrangements and the cost of claims; insurance data and information; the impact of accident rates; the impact of unlawful activity on the insurance sector; and other market issues.
Because the issue of the cost of insurance is complex and in order to get to the heart of these issues as soon as possible, I have established four subgroups to review them in detail. Chairs have been appointed to these subgroups and work has commenced. The subgroups are meeting weekly and their outputs are feeding into the meetings of the Working Group.
Separate to the work of the Cost of Insurance Working Group, the Competition and Consumer Protection Commission (CCPC) has informed me that it has formally opened an investigation in August 2016 concerning suspected breaches of competition law in the motor insurance sector. The investigation relates to industry participants openly signalling up-coming increases in motor insurance premiums in the State.
The CCPC is the independent statutory body responsible for enforcement of competition and consumer protection legislation across the economy. Its investigation is separate from the issues being considered by the Cost of Insurance Working Group and does not interfere with the important work being undertaken there.
By the end of October the Working Group will provide the Minister for Finance with an update report which will set out the priority actions required. From November to December, the Working Group will then develop an action plan to enable the relevant Government Departments and Offices to commence the implementation of these priority actions. In this regard I will be consulting regularly with Government colleagues.
Corporation Tax Regime
Ceisteanna (16)
Maureen O'Sullivan
Ceist:16. Deputy Maureen O'Sullivan asked the Minister for Finance his plans to reform the corporate tax structure; and if he will consider introducing a financial transaction tax following the recent agreement on a commitment to the highest international standards in transparency in taxation of the corporate sector. [27556/16]
Amharc ar fhreagraFreagraí scríofa
On 2 September 2016, the Government decided that a motion would be put forward to the Dáil to support an appeal in the Apple State Aid case. At that time the Government also decided as follows: to commit to the highest international standards in transparency in the taxation of the corporate sector; to affirm its commitment to the 12.5% corporation tax rate, the Research and Development credit and Knowledge Development Box; and to commit to arrange for a review of Ireland's corporation tax code by an independent expert; the review will exclude any possibility of a change to the 12.5% corporation tax rate.
I am currently in the process of drawing up the terms of reference for the review. I expect that the terms of reference will be announced at Budget time.
It is good practice to undertake periodic reviews of key areas of Government policy. The last review of corporation tax policy took place in 2014. Since then a wide range of new international developments have emerged in international taxation, such as BEPS. We need to ensure that Ireland's corporation tax code meets these new standards while remaining competitive as the economy continues to grow.
Ireland continues to take an active role in global work to reform the international corporate tax system and will engage constructively with any measures to work towards international tax reform.
In relation to the financial transactions tax, on 17th June 2016 the ECOFIN Council discussed the current state of play with regard to the proposal of a number of Member States to introduce a financial transaction tax. In the context of this discussion, ten of the original eleven Member States (Estonia has indicated that it no longer supports the proposal), issued a statement setting out their agreement on the core design principles of an FTT. The statement indicates that further reassurances were needed on two issues in particular, for which two task forces will be immediately set up. First, taxation of derivatives should not have a negative impact on public borrowing costs. Second, tax collection should be cost-effective. The outcome of these two task forces was to be discussed in September. I understand the task forces have had some discussions but that significant differences of opinion remain.
Much uncertainty remains therefore as to the form the FTT might take and more detail would be needed on the final shape of the tax before a definitive conclusion could be reached about its impact on Irish taxation revenue.
Motor Insurance Regulation
Ceisteanna (17)
Seán Barrett
Ceist:17. Deputy Seán Barrett asked the Minister for Finance if he is satisfied with the licensing arrangements currently in place in relation to insurance companies transacting motor insurance; and if he will make a statement on the matter. [27540/16]
Amharc ar fhreagraFreagraí scríofa
Motor insurance companies are authorised under the European Union (Insurance and Reinsurance) Regulations 2015. This regulation transposes the EU regulatory framework for insurance and reinsurance known as Solvency II into Irish law.
It provides that the authorisation and the day-to-day responsibility for the supervision of insurance companies is a matter for the Central Bank of Ireland which is statutorily independent in the exercise of its regulatory functions.
The European Union (Insurance and Reinsurance) Regulations 2015 ensure that a rigorous and robust authorisation process takes place and they provide the appropriate safeguards to ensure that only companies that meet the necessary governance and capital requirements can be approved by the Central Bank. In this regard, the regulations clearly outline the information that must be provided by companies seeking an authorisation to conduct business in Ireland. In addition, the Central Bank has published guidelines to assist applicant firms and publishes a register of authorised non-life insurance firms in the Registers section of its website.
The Central Bank has advised that its Insurance Supervision Directorate is responsible for the prudential supervision of insurance and reinsurance undertakings authorised in Ireland. In carrying out this role, the Insurance Directorate monitors the risks posed by undertakings along with issuing standards, policies and guidance which undertakings are expected to meet.
In addition, the Solvency II Directive provides for the 'passporting' of services into Ireland from other European and EEA countries. 'Passporting', which is the establishment of a branch or operation by way of freedom of services, is a right of EU-authorised firms under the single market. Passporting is notified to the Central Bank by the home state regulator which is responsible for supervision of its foreign business.
In relation to such foreign business, it should be noted that the Central Bank has indicated that supervisory authorities across the European Union co-operate and share relevant information to achieve the objectives of insurance supervision and, in particular, financial stability and adequate protection of policyholders and other stakeholders.
Question No. 18 answered with Question No. 11.