Written Answers Nos. 80 to 94
80. Deputy Michael D'Arcy asked the Minister for Finance if, in the circumstances in which a person has claimed tax back under the incapacitated tax scheme, the person can also apply via the HTB for an additional tax credit; and if he will make a statement on the matter. [34159/16]
Amharc ar fhreagraI assume the Deputy is referring to the provision in section 267 of the Taxes Consolidation Act (TCA) 1997 in relation to a repayment of Deposit Interest Retention Tax (DIRT) in the case of an incapacitated individual and whether such an individual may also be entitled to avail of the Help to Buy incentive which is provided for in section 8 of the recently published Finance Bill. However, it is not fully clear as to which part of the tax code as it relates to incapacitated individuals, the Deputy refers.
The Help to Buy incentive, as proposed, will provide for a refund of income tax, including DIRT, paid in any or all of the 4 tax years preceding the year in which an individual makes an application under the incentive. This refund will be used to help fund the purchase or construction of a new house or apartment.
An individual who otherwise satisfies the conditions necessary to avail of Help to Buy will not be precluded from making a claim for the relief, as a consequence of having availed of a refund of DIRT under Section 267. However, any amounts of DIRT already refunded under section 267 will not be available for inclusion in the Help to Buy amount, but if such an individual has paid sufficient income tax in the relevant four years he or she may be still in a position to avail of the maximum amount of relief available under the Help to Buy scheme.
Alternatively, the Deputy could be referring to section 465 of the TCA, with regard to the incapacitated child tax credit. In this case, the Deputy should be aware that if such an individual has paid sufficient income tax (including DIRT) in the relevant four years, after deductions and credits (including the incapacitated child tax credit), he or she may be in a position to avail of the maximum amount available under Help to Buy.
As a general rule, individuals cannot reclaim more income tax than they have paid through the cumulative use of various tax relief and credits. Should the Deputy wish to pose a more specific query, I will be in a position to provide a more definitive response.
81. Deputy Joan Burton asked the Minister for Finance the detail of projects here supported by the European Investment Bank specifically in relation to housing, education, health and broadband; and if he will make a statement on the matter. [34091/16]
Amharc ar fhreagraThe European Investment Bank (EIB) is the long-term financing institution of the European Union. Its mission is to help implement the EU's policy objectives by providing financing to projects that address these objectives. The EIB may lend to Governments, public sector bodies, commercial semi-state bodies or private sector entities.
The Deputy will find in the table a breakdown of private and public sector (including commercial semi-state) projects in Ireland to which the European Investment Bank (EIB) has provided financing. The table sets out the project name, the sector involved, the date of contract signature and amount for each project for the period 2011-2016 (to date). Projects from the Housing, Education, Health and Broadband sectors are highlighted in italics and bold.
The Deputy should note that the amounts listed in the table below refer to the EIB contribution to a particular project, which is normally limited to no more than 50% of the project cost. In addition, the timing of the actual financing drawn down from the EIB is determined within individual financing contracts which is a matter for the EIB and each project promoter.
The Deputy may also wish to be aware that information on the projects signed between the EIB and project promoters in Ireland is also publicly available on the EIB website. A link to the relevant section of the site is available here: http://www.eib.org/projects/loans/index.htm
|
Project |
Sector |
Signature Date of contract |
Amount (€m) Signed |
|
2016 |
|||
|
Irish School Programme III |
Education |
17-Oct-2016 |
200 |
|
University College Cork Campus Development |
Education |
19-July-2016 |
100 |
|
Malin Corporation Life Sciences Investments |
Services |
22-June-2016 |
40 |
|
Fineos (MGF) |
Industry |
22-June-2016 |
15 |
|
Primary Care Centres PPP |
Health |
25-May-2016 |
70 |
|
N25 New Ross Bypass PPP |
Transport |
26-Jan-2016 |
21.805 |
|
Total (to date in 2016) |
446.805 |
||
|
2015 |
|||
|
DCU Campus Development |
Education |
21-Dec-15 |
76 |
|
Dublin Port |
Transport |
21-Dec-15 |
100 |
|
Irish Flood Prevention Programme |
Water |
17-Dec-15 |
200 |
|
Strategic Bank Corporation Ireland (SBCI) |
SMEs |
22-Oct-15 |
200 |
|
M11 Gorey to Enniscorthy Motorway PPP |
Transport |
14-Oct-15 |
109 |
|
Trinity College Dublin |
Education |
25-Jun-15 |
70 |
|
Total |
755 |
||
|
2014 |
|||
|
Open Access (GFI) |
Broadband |
19-Dec-14 |
12 |
|
HFA - Irish Social Housing Development Programme |
Urban Development |
18-Dec-14 |
150 |
|
NUI Maynooth |
Education |
17-Dec-14 |
76.765 |
|
ESB Network - Renewable Connection |
Energy |
30-Oct-14 |
100 |
|
Irish Water Investment Programme |
Water |
29-Oct-14 |
100 |
|
Strategic Bank Corporation Ireland (SBCI) |
SMEs |
28-Oct-14 |
200 |
|
N17-N18 Gort to Tuam PPP Motorway |
Transport |
30-Apr-14 |
143.033 |
|
Dublin Luas Cross City |
Transport |
03-Mar-14 |
150 |
|
Total |
931.798 |
||
|
2013 |
|||
|
ESB Renewable Connection |
Energy |
09-Dec-13 |
100 |
|
Vodafone Mobile Limited |
Corporate |
27-Nov-13 |
118 |
|
University of Limerick |
Education |
26-Nov-13 |
100 |
|
Irish School Programme II |
Education |
19-Jun-13 |
100 |
|
N11/N7 Motorway PPP |
Infrastructure |
30-Apr-13 |
72 |
|
AIB Loan for SMEs and Midcaps |
SMEs |
26-Apr-13 |
100 |
|
Bord Gáis Onshore Wind Programme |
Energy |
23-Apr-13 |
90 |
|
Total |
680 |
||
|
2012 |
|||
|
AIB Loan for SMEs and Midcaps |
SMEs |
21-Dec-12 |
100 |
|
Bord Gáis Onshore Wind Programme |
Energy |
28-Nov-12 |
155 |
|
Irish Water Investment Programme |
Energy |
28-Nov-12 |
100 |
|
Irish Schools Investment Programme (PPP) |
Education |
09-Nov-12 |
50 |
|
Irish School Programme |
Education |
06-Jul-12 |
100 |
|
Total |
505 |
||
|
2011 |
|||
|
AIB Loan for SMEs II |
SMEs |
21-Dec-11 |
150 |
|
University College Dublin |
Education |
17-Nov-11 |
90 |
|
ESB Network and E-Cars Infrastructure |
Energy |
17-Nov-11 |
235 |
|
Total |
475 |
82. Deputy Joan Burton asked the Minister for Finance if he and the Minister for Transport, Tourism and Sport have received initial recommendations following a review of rising motor insurance compensation; the status on the review of policy in the insurance sector, which his Department is currently undertaking in consultation with the Central Bank; the reforms he is considering to tackle the problem of motor insurance premiums that are rising at an annual rate of as much as 35%; if he will update the book of quantum; and if he will make a statement on the matter. [34092/16]
Amharc ar fhreagraAs the Deputy is aware, the Cost of Insurance Working Group, which I established in my Department and which is chaired by Minister of State Eoghan Murphy, is examining factors that are contributing to the cost and availability of motor insurance and identifying what short-term, medium-term and long-term measures can be introduced to help consumers and businesses. A broad range of issues affecting the cost and availability of motor insurance are being examined by the Working Group.
The Working Group brings together all the relevant Departments and Offices involved with the process, including the Central Bank of Ireland. As well as identifying immediate and longer term measures which can address increasing costs, account is being taken of the need to maintain a stable insurance sector. The initial focus of the Working Group is on rising motor insurance premiums.
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
The Cost of Insurance Working Group has met nine times to date and will continue to meet until the end of the year. The work is being progressed through four subgroups. These subgroups have been meeting on a weekly basis since their establishment on 1st September 2016.
At the end of October 2016, the Working Group provided me with an initial set of emerging recommendations. Since then, the Working Group has been working to finalise the Report and developing an action plan to enable the relevant Government Departments and Offices to commence the implementation of agreed priority actions. The report and action plan will detail any legislative or regulatory changes that may be required and will include a detailed timeline for implementation. It should be noted that whilst the Book of Quantum has recently been updated, it does feature in the emerging recommendations.
From the emerging recommendations presented to the Minister for Finance and the consultations carried out since, it is likely that the report will address nine key areas, with in the region of 40 recommendations in total.
83. Deputy Joan Burton asked the Minister for Finance the proposals he is currently considering to ensure that mortgage holders and tenants and SMEs who have loans or credit from non-bank lenders or vulture funds are fully protected; if he is considering extending the provisions of the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 in this regard; and if he will make a statement on the matter. [34093/16]
Amharc ar fhreagra121. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he can ensure compliance with full Irish and European banking regulations by the purchasers of distressed or other loan books from the banking sector; and if he will make a statement on the matter. [34277/16]
Amharc ar fhreagraI propose to take Questions Nos. 83 and 121 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'.
Under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 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) issued by the Central Bank of Ireland and the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015 which came into operation on 1 July 2016.
Under the Act, purchasers of loan books must either be regulated by the Central Bank themselves or else the loans must be serviced by a credit servicing firm who is regulated by the Central Bank. In addition to compliance with Central Bank codes of conduct, credit servicing firms will have to demonstrate to the Central Bank that they have robust governance and adequate resources to ensure compliance with its obligations under Irish financial services legislation.
Nonetheless, my Department will continue to keep all relevant legislation under review in order to ensure that borrowers whose loans have been sold are properly protected and do not lose any protections which they previously enjoyed. In addition, the Department of Finance expect that the Central Bank, as regulator of credit servicing firms, will be vigilant in this area and raise any specific instances where they have found consumers have not had their protections upheld or that their positions have been disadvantaged. No such instances have as yet been brought to the attention of the Department.
Finally I would highlight that landlord-tenant relations are governed by multiple pieces of legislation mainly under the aegis of my colleague, the Minister for Housing, Planning, Community and Local Government.
84. Deputy Joan Burton asked the Minister for Finance the amount of funding which has been made available through the Ireland Strategic Investment Fund for social and affordable housing provision; if he has satisfied himself with the current rates of interest being charged to borrowers through the fund; if he is reviewing the operation of the mechanisms through which credit is accessed from the fund; and if he will make a statement on the matter. [34094/16]
Amharc ar fhreagraPolicy initiatives in the area of housing must seek to address the challenges faced by the various sectors of the market, including the private owner occupier market, the rental market, and the social and affordable housing sector. In line with its statutory mandate, the Ireland Strategic Investment Fund (ISIF) is examining opportunities to make, on a commercial basis, strategic investments that have the potential to support increased social and affordable housing output.
In the private market, the Fund is already involved in a number of important initiatives which cumulatively can make a contribution to increased housing output. This includes its investments in:
- Activate Capital - which is an innovative non-bank financing platform that has the potential to provide funding for substantial numbers of new homes in Dublin and the other major urban centres in which demand is most pronounced;
- Ardstone Residential Partnership - which is a residential equity investment fund that is focused on delivering residential units to the market over the short-to medium-term and
- Wilbur Ross Cardinal Commercial Real Estate Mezzanine Debt Fund - which has funded a number of residential developments in recent months.
Activate Capital, which has the potential to fund the delivery of up to 11,000 new housing units over the medium term, has already advanced funding for the construction of 1,200 new houses in the greater Dublin area, the first of which will come to the market in the next month or so. The Ardstone Fund has to-date acquired sites with the potential to deliver up to 1,800 new housing units which will be delivered over a 5-7 years' time frame and it is targeting a total delivery of up to 3,000 new units. The Wilbur Ross Cardinal Fund, which has a focus on multiple real estate sectors, providing both pure finance and development capital, has already advanced funding for 1,700 new residential units.
In the social and affordable market, in line with Rebuilding Ireland's commitment, the NTMA and the key Government Departments are examining the feasibility of establishing a funding vehicle in conjunction with the private sector, which could facilitate investment in social and affordable housing. Key factors which must be addressed to facilitate ISIF involvement in such projects include:
1. the commercial viability of the vehicle; and
2. the off-balance sheet structure of the vehicle.
ISIF informs me that whilst it has made progress in conjunction with other stakeholders in the State and private sectors in respect of potential social housing investment opportunities, there are still considerable hurdles to be overcome before any such proposals can be brought to a successful conclusion. These include the hurdles of commerciality and balance sheet treatment identified above and in Rebuilding Ireland. The Deputy will appreciate that whilst ISIF is working closely with all relevant stakeholders to help overcome hurdles to investment in social and affordable housing, many of these hurdles are outside the control of ISIF and require strong inputs from other stakeholders.
In relation to interest rates charged by ISIF, ISIF invests on a risk adjusted basis. In this context, the interest rates applied by ISIF to any given investment relates to the level of risk and other investment criteria, including pricing, and reflects its mandate to act commercially and in a way that contributes to the local economy.
A review of ISIF's investment strategy, due to take place after 18 months from the time of ISIF's establishment, is underway. The review will include an appraisal of the success of ISIF's mandate to date. I am informed by ISIF that preparatory work in respect of this review has commenced and is due to be completed by end-2016. The NTMA (Amendment) Act 2014 provides that ownership of the Fund vests with the Minister for Finance. It also provides that the Fund shall, in reviewing its investment strategy, consult the Minister for Finance and the Minister for Public Expenditure and Reform. The review of the ISIF will be conducted in accordance with these provisions. In addition, the legislation provides that the Minister for Finance may consult with other Government Ministers as appropriate.
85. Deputy Joan Burton asked the Minister for Finance his views on the opinion expressed by the Dutch Minister of Finance and the chairman of the eurozone finance Ministers, Jeroen Dijsselbloem, that European Union finance Ministers are concerned that the European Commission is not applying budget laws in the same way to large and small countries and is undermining confidence in the rules; and if he will make a statement on the matter. [34095/16]
Amharc ar fhreagraAs I have indicated in a previous response to the Deputy's same question in June of this year, I am aware of Mr. Dijsselbloem's views on this matter.
I am also on record as stating my firm belief that in order to engender confidence in EU fiscal rules, all Member States should be treated equally concerning the application of EU budget laws, regardless of their size.
In my statement on Tuesday November 8th to the Economic and Monetary Affairs Committee of European Parliament, I affirmed the importance of fiscal rules, particularly in the context of monetary union, emphasising their role in helping to prevent excessively pro-cyclical policy choices. In this statement, I also highlighted the lack of transparency and predictability that currently characterise the rules. Fiscal rules have become extremely complex and difficult to communicate publicly. Moreover, predictability as to how compliance assessment will be performed is lacking.
I emphasised that although both democratic and political ownership of the fiscal rules in Ireland is strong, a robust defence of the benefit of such rules is becoming progressively more difficult, in particular where the perception arises that rules are being applied differently for small and large Member States. It is essential that these rules are applied fairly and in a sensible and predictable manner.
Nevertheless, my fellow Finance Ministers and I are of a shared view that a certain degree of flexibility within the rules of the Stability and Growth Pact is both necessary and should be permitted in certain limited circumstances to better align with country-specific economic circumstances and investment needs. Whilst recent reforms on flexibility within the rules are welcome, work needs to continue in this area.
86. Deputy Joan Burton asked the Minister for Finance the further preparations and contingency plans his Department has put in place in the event of a British exit from the European Union; and if he will make a statement on the matter. [34096/16]
Amharc ar fhreagraThe Department of Finance has been assessing and preparing for the impact of Brexit since well before the referendum on 23 June 2016. Work was carried out in the Department to assess the potential economic and financial sector implications arising, including the commissioning of an ESRI study published in November 2015, and ongoing liaison with the Central Bank. This work was undertaken within the whole-of-Government framework established by the Department of the Taoiseach.
Following the results of the UK referendum, this preparatory work has been intensified across the Department. A new Brexit Unit within the EU and International Division was established in July 2016 to oversee and coordinate this work and to act as a key liaison point with the Department of the Taoiseach, in particular. In addition, the Department of Finance staff complement in the Irish Permanent Representation to the EU in Brussels has been strengthened. Resourcing for Brexit is being kept under review.
As part of Budget 2017, the Department of Finance published the Economic and Fiscal outlook which presented a full macroeconomic projection including updated estimates of economic growth, the public finances and the fiscal space, taking account inter alia of the impact of Brexit. The Department also published 'Getting Ireland Brexit ready' which set out a number of measures to mitigate the initial impacts of Brexit. In addition, the Department published detailed analysis of sectoral exposure to Brexit across the economy. More recently, the Department has worked with the ESRI to deepen the macroeconomic analysis and a report titled 'Modelling the Medium to Long Term Potential Macroeconomic Impact of Brexit on Ireland' was published on 7 November 2016.
The work being done by the Department will be an important input to ensuring that Ireland's interests are protected in the upcoming negotiations at EU level. More generally, the Department will continue to monitor the economic impacts and to frame budgetary policy advice in this new context. The best and most immediate policy under the Government's control is to prudently manage the public finances in order to ensure that Ireland's economy continues to remain competitive in the face of future economic headwinds. In this context, Budget 2017 signalled a lower debt target of 45 per cent of GDP for the mid-to-late 2020s. This will help to provide additional fiscal 'shock absorber' capacity to the public finances to help withstand any shock including the impact of Brexit. This will complement the contingency or 'rainy day' fund to be established following the achievement of a balanced budget in 2018 which will help provide a further counter-cyclical buffer.
In relation to Financial Services, Minister of State Murphy T.D. has responsibility, and will continue to drive forward the IFS 2020 strategy in order to build on and compete for mobile international investment in the IFS sector. Additionally, the Government has made a public declaration of interest for the relocation of the European Banking Authority to Ireland.
87. Deputy Joan Burton asked the Minister for Finance the status of the proposed medium term tax strategy document; if it will be presented to the Houses of the Oireachtas by July 2017; and if he will make a statement on the matter. [34097/16]
Amharc ar fhreagra92. Deputy Joan Burton asked the Minister for Finance his plans for reforming the current tax arrangements for the self employed; and if he will make a statement on the matter. [34102/16]
Amharc ar fhreagraI propose to take Questions Nos. 87 and 92 together.
I understand following clarification with the Deputy's office, that the Deputy's first question relates to plans for future reforms of the income tax system, including USC, and to request an update on the income tax commitments in the Programme for a Partnership Government.
Budget 2017 is the third step in a long-term process of unwinding the USC. It is my intention to continue the process of reducing the USC in future Budgets, and the Deputy will be aware that this is not a measure that I have considered in isolation, but as part of a wider medium-term income tax reform plan.
Further to a commitment in the Programme for Government, my Department published, in July this year, a detailed overview of the policy considerations relevant to this reform, including the necessity to maintain the breadth of our income tax base, and retain appropriate levels of taxation for high earners.
The purpose of this Income Tax Reform Plan was to inform all members of the Oireachtas of the issues and options which will underpin future income tax reform, and it is my hope that all members of the Oireachtas will engage constructively in debating options for future reform in this area. In this regard the scope for change will be dependent on the level of available fiscal resources.
In relation to the commitments in the Programme for Government, the Deputy will be aware that there is a commitment in the Programme for a Partnership Government to increase the Earned Income Credit (EIC) to €1,650, and the Budget 2017 increase of €400 to the existing €550 credit introduced last year is a significant step in this direction. This is available to self-employed individuals who have an active trade or profession, and who do not have access to the PAYE credit. This will be a significant benefit to small business-owners right across the country including small retailers, publicans, farmers and tradesmen. The Programme for Government also committed to introduce a PRSI scheme for the self-employed, and the Deputy will be aware that my colleague Minister Varadkar has announced a number of enhancements to the social protection benefits available to self-employed individuals.
I accept that differences remain between the taxation of employees and the self-employed. However it must also be acknowledged that some of these differences are to the benefit of the self-employed. For instance, there are significant timing benefits, depending on the accounting period used by the taxpayer, which are available to the self-assessed but which are not available to PAYE workers. The self-employed also continue to benefit from a broader expense deduction regime than that available to employees.
The Deputy will be aware that the taxation of the self-employed is considered in some detail in the Income Tax Reform Plan, and the issues outlined therein will be borne in mind when deciding future reform of the income tax system as it relates to the self-employed.
With regard to other income tax commitments in the Programme for a Partnership Government, these included a commitment to support parents who choose to stay at home and care for their children, through an increase in the Home Carer Credit. In Budget 2017, I have provided for a €100 increase in the Home Carer Credit, bringing it to a value of €1,100.
Finally, the Programme also committed to explore mechanisms through which SMEs can reward key employees with share options in a tax-efficient manner. My Department held a public consultation on this subject earlier this year to which over 30 submissions were received and considered by my officials. In Budget 2017 I announced my intention to introduce a new, SME-focused, share-based incentive scheme, to be introduced in Budget 2018. Such an incentive will require the approval of the European Commission and my officials will commence engagement with the Commission to ensure that the incentive will comply with State Aid rules in advance of the next Budget.
88. Deputy Joan Burton asked the Minister for Finance if he will provide a full report on the way the annual €150 million banking levy will be calculated as it extends to 2021; and if he will make a statement on the matter. [34098/16]
Amharc ar fhreagraIn accordance with Section 126AA of the Stamp Duties Consolidation Act 1999, an annual levy was imposed on certain financial institutions for each of the years 2014, 2015 and 2016. The levy is charged at 35% of the Deposit Interest Retention Tax (DIRT) paid by a financial institution in 2011 and raises approximately €150 million annually for the Exchequer. In the case of a financial institution where the amount of DIRT in the base year does not exceed €100,000, the levy is not payable.
In last year's budget statement I announced that I intended to extend the levy for a further five years to 2021. I indicated that the overall yield from the levy would be maintained at €150 million annually but that I would undertake a review of the DIRT based methodology for calculating the levy.
That review, which included a public consultation on the issue, was undertaken by my Department earlier this year. Following that review, I have decided that the DIRT based formula should be retained but that the base year for calculating the levy in 2017 and 2018 would be changed from 2011 to 2015. I have also decided to introduce a rolling two-year series of base years which will introduce a new base year of 2017 for calculating the levy in 2019 and 2020 and a new base year of 2019 for calculating the levy in 2021.
The introduction of the rolling two-year series of base years has a twofold effect. Firstly, it ensures that financial institutions entering the market over the five further years for which the levy will apply will be subject to the levy and financial institutions exiting the market will cease to be subject to the levy. Secondly, it will help to correct, on an ongoing basis, any anomalies for individual institutions thrown up by prevailing market conditions, such as the interest rate offering, in any one year.
In order to maintain the annual yield from the levy at €150 million, I have to increase the rate at which the levy is charged from 35% to 59% for 2017. This is because the assessable amount, DIRT payments in 2015, have reduced significantly since 2011. This new rate, combined with the new 2015 base year, will preserve the existing contribution of €150 million paid by the affected financial institutions. That rate will be subject to an annual review to ensure that the yield from the levy is not impacted from changes in interest rates and/or DIRT rates.
89. Deputy Joan Burton asked the Minister for Finance when he envisages the help-to-buy scheme as proposed under the programme for Government will be launched; the amount the scheme will cost; the level of assistance that will be offered under the scheme; and if he will make a statement on the matter. [34099/16]
Amharc ar fhreagraSubject to the approval of the Oireachtas of the Finance Bill 2016, potential applicants for the Help to Buy scheme will be able to register online with Revenue from 1 January 2017. It is estimated that the scheme will cost the Exchequer €40 million per annum, but that the cost for 2017 will be €50 million due to the inclusion of the cost associated with the backdating of the incentive to 19 July 2016.
Subject to satisfying the full conditions of the scheme, as set out in the Finance Bill as published, a first time purchaser will be entitled to claim a refund of income tax and DIRT paid over the previous four years. The refund will be subject to a maximum of 5% of the purchase price of a new home, or in the case of a self-build 5% of the approved value of the dwelling, up to a maximum rebate value of €20,000. However, the Deputy will be aware that some elements of the scheme may be amended, during the progress of the Finance Bill through the Oireachtas, so details remain subject to change until the Bill is enacted.
90. Deputy Joan Burton asked the Minister for Finance the status of the ongoing review of the Central Bank mortgage lending limits as specified in the programme for Government; the role of his Department in the review process; and if he will make a statement on the matter. [34100/16]
Amharc ar fhreagra94. Deputy Joan Burton asked the Minister for Finance if he has requested the Central Bank to procure an independent assessment of the arrears and negative equity loan books of the banks as per the recent programme for Government commitment; when this process will begin and conclude; and if he will make a statement on the matter. [34104/16]
Amharc ar fhreagraI propose to take Questions Nos. 90 and 94 together.
The Central Bank has advised that the review of the macro prudential mortgage lending regulations is continuing and that it expects to publish the final outcome of that review by the end of November.
As part of this review process, the Central Bank initiated a public "call for evidence based submissions". The Department of Finance has engaged in this process and made a submission to the Central Bank. This submission is now available on the Department's website at the following link: http://www.finance.gov.ie/what-we-do/banking-financial-services/consultations/departments-submission-central-banks-review-0.
Regarding the quality of the banks' loan books, as regulator, the Central Bank has an ongoing role in monitoring the level of arrears and negative equity on mortgage and other loan assets of regulated credit institutions. The Programme for a Partnership Government contains a range of commitments in the broad housing and banking area and my Department is regularly engaging with the Central Bank on all the Programme for Government commitments which will impact on the Central Bank and its role in relation to mortgages.
91. Deputy Joan Burton asked the Minister for Finance if he expects that the State will still move to sell off all or part of a bank (details supplied); the estimated timeframe for this; the expected yield to the Exchequer; if this yield will be ring fenced for a particular purpose; and if he will make a statement on the matter. [34101/16]
Amharc ar fhreagraThe State has a shareholding of 99.9% in AIB. This shareholding is a valuable asset to the State and it is the Government's intention that the State will exit this and our other banking investments in a measured and careful manner. My primary objective in the disposal of those assets will be recovering the maximum amount of money for the Irish taxpayer.
I have indicated in the past that an initial public offering, IPO, is likely to be the optimal route to recouping value from our investment in AIB. At the beginning of this year officials in my Department appointed an independent financial adviser, following a tender process, to assist with analysis and exit planning and much of the initial preparation has now been completed. The bank's CEO also indicated recently that much of the internal preparation that would be required in advance of launching an IPO process has also been completed. In addition, I welcome the bank's continued strong performance, demonstrating sustainable profitability and strong capital generation over a number of consecutive reporting periods.
Nonetheless, given the complex nature of an IPO process, the need to access certain IPO "windows" and the recent volatility seen in stock markets, we are now looking at 2017 for any disposal rather than this year. Fortunately given the strong state of the economy, progress made in reducing our national debt and positive market sentiment towards Ireland, we are not under any pressure to sell our shares and hence we can choose when to time any disposal. Clearly, in order for us to proceed with an IPO, we would need to be satisfied that the market is prepared to put a fair and reasonable value on the business, bearing in mind its current performance and future prospects. As you will appreciate a lot of preparatory work is involved in such a process and officials in my Department continue to plan such that when conditions do improve the State is ready to execute.
It would not be possible or prudent for me to estimate the amount which might be received from any future sale of shares in AIB. As the Deputy may be aware, the shares in AIB that are currently freely held amount to only a tiny proportion of the bank's total shares. It is therefore an illiquid share with a distorted valuation, and so cannot be considered a valid indicator of how the market would value AIB in an IPO.
As I have previously indicated, all capital returned from the State's investments in the Irish banks will be used to reduce the national debt. That is the prudent course of action as it reduces our ongoing borrowing costs and ensures the future strength and stability of the economy.
93. Deputy Joan Burton asked the Minister for Finance the status of the proposed development of alternative models for forecasting medium term potential growth as has been suggested by the Irish Fiscal Advisory Council as an additional safeguard for detecting overheating in the economy. [34103/16]
Amharc ar fhreagraEnsuring the plausibility of estimates of potential growth is a key priority given their significance in the application of the fiscal rules. As previously noted by both my own Department and the Fiscal Advisory Council, the Commonly Agreed Methodology (CAM) for estimating potential output is subject to limitations particularly when applied to Ireland. My Department continues to assess the merit of alternative models for estimating potential output for Ireland. Considerable work has been undertaken on this front to assess both the plausibility and importantly the stability of these alternative estimates. An outline of this work is set out in Box 1, page 24 of the Stability Programme Update 2016 (SPU), published in April. This work was further updated in the slides presented to the Budget Oversight Committee and to IFAC. Whilst the intention has been to publish this technical work revisions to national accounts data and data limitations in respect of the underlying current account have delayed this.
Notwithstanding the advance of alternatives models, for the purposes of assessing the cyclical position of the economy in the context of fiscal monitoring, the CAM remains the relevant legally binding metric. In addition to developing alternative models efforts continue to be undertaken at technical level in Europe to improve the performance of the CAM, to which Ireland continues to actively contribute.
In addition to these models, when assessing the cyclical position of the economy, my Department takes into consideration a wide range of other indicators beyond those considered as part of the CAM. My Department will remain vigilant to signs of overheating and the Government will continue to pursue sensible policies aimed at ensuring sustainable growth and public finances.
