Written Answers Nos. 61-80
61. Deputy Michael McGrath asked the Minister for Finance his views on the latest set of common consolidated corporate tax base proposals from the European Commission; his further views on whether these proposals would have a significantly negative impact on Ireland; and if he will make a statement on the matter. [1728/17]
Amharc ar fhreagraThe European Commission's proposal for a common consolidated corporate tax base (CCCTB) was published at the end of October 2016. It is a highly complex and technical proposal and time will be needed for all Member States to fully consider and discuss the proposal. As with all EU files, Ireland will engage constructively on the CCCTB proposal while critically analysing whether it is in our long-term interests. Analysis of the proposal is now underway to assess what the impact of the proposal would be on Irish corporation tax revenue. The proposal is also likely to be subject to significant changes as discussions between Member States begin under the Maltese Presidency. As always, tax remains a matter of Member State competence and unanimity is required before any tax proposals can be agreed.
62. Deputy Pearse Doherty asked the Minister for Finance the legislative and regulatory steps he will take to ensure that the owners of mortgage credit are fully regulated as opposed to the credit servicers; and if he will make a statement on the matter. [1734/17]
Amharc ar fhreagra293. Deputy Joan Burton asked the Minister for Finance the proposals he is currently considering to ensure mortgage holders, tenants and SMEs that 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. [1668/17]
Amharc ar fhreagraI propose to take Questions Nos. 62 and 293 together.
As the Deputy will be aware, I have taken steps to ensure that borrowers whose loans are sold retain the same protections which they had prior to the sale. This was effected through the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015. It was introduced to fill the consumer protection gap where loans were sold by the original lender to an unregulated firm. The 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 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. The significant point is that we regulated at the point of contact with the customer. Therefore 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 in July 2016. It is also important to highlight that the transfer of a loan from one entity to another does not change the terms of the contract or the borrower's rights and obligations under the original contract.
In addition, to further enhance the protection of borrowers, the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 ensures that a regulated credit servicing firm cannot do something, or fail to do something, which would be a prescribed contravention if performed, or not performed, by a retail credit firm. The legislation also prevents the owner of credit from instructing a regulated credit servicing firm to perform such an action. Therefore the borrower is protected because the owner cannot give an instruction that would breach the rules but also the instruction cannot be implemented by the regulated credit servicer, over whom the Central Bank has oversight as a regulated entity.
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.
In relation to tenants, landlord-tenant relations are governed by multiple pieces of legislation (mainly under the aegis of my colleague, the Minister for the Housing, Planning, Community and Local Government). The landlord/owner of the property is restricted in what they can do in relation to removal of tenants from a property. These restrictions are the same whether the landlord bought the property, built the property themselves, became a landlord as a result of renting out what was formerly a principal dwelling house or acquired the property by other means such as enforcing loans secured on the property.
63. Deputy Thomas P. Broughan asked the Minister for Finance if he has made a complaint to the Garda Bureau of Fraud Investigation, the Director of Corporate Enforcement, the Central Bank and other relevant agencies regarding the alleged illegal transfer of mortgage payers from tracker to variable interest rate mortgages; the actions he has taken in this regard; and if he will make a statement on the matter. [1494/17]
Amharc ar fhreagraThe Central Bank is responsible for the regulation and supervision of financial service providers and for protecting the consumer of financial services. As the Deputy is aware, the Central Bank has commenced an industry wide examination of tracker mortgage related issues covering among other things transparency of communications with and contractual rights of tracker mortgage customers. The Examination is a key priority for the Central Bank and it continues to challenge lenders to ensure that progress is being made and fair outcomes are being achieved for customers.
I am informed by the Central Bank that while the Bank cannot comment on the specific details of the ongoing tracker mortgage examination or any enforcement investigations relating to this matter, in November 2016, it issued a reprimand and imposed a fine of €4.5m on Springboard Mortgages Limited in respect of serious failings in its obligations to tracker mortgage customer. The Central Bank has statutory reporting obligations to the Garda Síochána, and other agencies, where it suspects a criminal offence may have been committed by a supervised entity. The Central Bank takes these obligations very seriously and complies with them on an on-going basis as appropriate.
64. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied that the lending institutions are compliant with a code of conduct in respect of mortgage arrears that recognises the efforts made by borrowers who continue to make payments within their capacity now and over the period since the economic crash; if this is reflected in the manner in which they deal with customers, many of whom continue to make huge sacrifices to make repayments; his plans to introduce specific guidelines governing the repossession of the family home where lending institutions tend to resort to measures more protective of their own interests, often with tragic consequences; and if he will make a statement on the matter. [41581/16]
Amharc ar fhreagraThe Deputy will be aware that the Code of Conduct on Mortgage Arrears (CCMA) sets out statutory requirements for mortgage lenders and credit servicing firms dealing with borrowers in or facing arrears on the mortgage loan secured by their primary residence. Lenders may only commence legal proceedings for repossession of the borrower's primary residence after it follows a number of steps. The steps include:
- making every reasonable effort under the CCMA to agree an alternative restructure arrangement (ARA) with the borrower;
- time bound requirements to inform the borrower the regulated entity is not willing to offer an ARA and of his/her options;
- time bound requirements to inform a borrower, who is not willing to enter into an ARA, of his/her options; and
- a decision to classify the borrower as non-cooperating.
I am informed by the Central Bank that there is a broad range of available restructures offered and delivered by both bank and non-bank entities and there is strong evidence that both banks and non-banks look to exhaust available restructure options before moving to the legal process.
I would like to draw the Deputy's attention to the Mortgage Arrears and Restructures Data released by the Central Bank on 12 December, which shows that to end-Q3 2016, the number of mortgage accounts in arrears for principal dwelling houses (PDH) has declined for the last thirteen quarters. 121,140 PDH accounts were also classified as restructured, of which 88% were reported to be meeting the terms of their arrangement.
The Deputy may also be aware of the recent establishment of the Abhaile mortgage arrears resolution service, established to ensure that those either in mortgage arrears or at risk of going into mortgage arrears on their primary residence are able to access State-funded professional legal or financial advice on their resolution options. Where a borrower actively engages with their lender it is more likely that an equitable arrangement will be found and that the borrower will be able to remain in their family home. I would urge borrowers in arrears, who have not already done so, to contact their lender or MABS for an independent assessment of their situation and professional advice on available resolution options.
65. Deputy Bríd Smith asked the Minister for Finance the projected loss of tax revenue from the tax exemptions granted to REITs in the coming year; and if he will make a statement on the matter. [1653/17]
Amharc ar fhreagraThe Finance Act 2013 introduced the regime for the operation of Real Estate Investment Trusts (REIT) in Ireland. A REIT is a collective investment vehicle designed to hold properties in a tax neutral manner. In general, the trading profits of companies in Ireland are subject to Corporation Tax at 12.5%. Rental profits of companies are subject to Corporation Tax at 25%. Rental profits arising in a REIT are exempt from Corporation Tax. However, profits from any other activities are subject to Corporation Tax in the normal way.
As such, the estimated cost attached to the REIT relates not to an exemption from tax, but rather to the move from direct taxation of rental income to the taxation of dividends distributed from REIT profits arising from that rental income. The extent of any net tax cost of the REIT exemptions will therefore be the difference between the tax which would have arisen on the property income in non-REIT ownership, and the tax charged on the dividends paid out of that property income by the REIT to their investors. The REIT legislation requires that 85% of all property income profits be distributed annually to shareholders.
Any potential loss of tax relating to foreign investors is due to the difference between how company dividends are taxed in the hands of foreign investors compared to how profits from direct ownership of property are taxed. In order to ensure that Ireland retained taxing rights over property, dividend withholding tax on distributions from REIT to foreign investors was specifically legislated for. In the absence of any other provisions, foreign REIT shareholders would not have had any liability to Irish tax on REIT dividends, despite the fact that the REIT itself benefits from a tax exemption on qualifying profits of the rental business. Foreign investors from treaty resident countries may be able to reclaim some part of this DWT if the relevant tax treaty allows for this. The taxation of dividends varies from treaty to treaty, but commonly a source state would retain the right to approximately 15% tax on dividends paid from that state.
66. Deputy Joan Burton asked the Minister for Finance if he will provide an update on his Department's work with the Revenue Commissioners in tackling the tax evasion uncovered in the Panama Papers; and if he will make a statement on the matter. [1648/17]
Amharc ar fhreagraI am advised by Revenue that they have been to the forefront in acting against the use of offshore accounts, trusts and structures to evade tax liabilities, and that their approach has set the model for much of the work undertaken by other tax administrations in this area. Revenue's work in relation to offshore accounts and other financial product investigations has to date resulted in the recovery of €2.8 billion in tax, interest and penalties.
In line with their active approach to identifying and confronting those who try to escape their tax responsibilities, Revenue has advised me also they are examining the information that has become available through the "Panama Papers" revelations, and, in addition, that they have requested access to any elements of that documentation that could be of relevance to their work against tax evasion and avoidance. They are committed to making the fullest possible use of any available information in pursuing cases where it appears that tax liabilities have not been addressed.
Revenue continues to engage fully with the OECD Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC) Network to agree concrete actions that tax administrations can take in response to evidence of tax avoidance and evasion, and leading to a multilateral and coordinated approach to the "Panama Papers" data. Effective cooperation of this kind between countries is essential in tackling this worldwide problem, if the international community is to succeed in ensuring that there will be no hiding places for those who seek to escape their tax obligations.
I fully support the widespread move towards increased global financial and tax transparency, and Revenue is at the forefront of international developments for Automatic Exchange of Information. Key developments in this field are the OECD's Common Reporting Standard, the EU's Directives on Administrative Cooperation and the US Foreign Account Tax Compliance Act (FATCA) Initiative. Revenue has advised me that they are considering carefully how to make the best possible use of all data sources of this kind to identify any cases of tax evasion by Irish residents using offshore accounts or structures.
I am committed to supporting any legislative changes that are needed to tackle tax evasion using offshore structures or accounts and have, for that reason, included in Finance Act 2016 a measure that, as and from 1 May 2017, eliminates any possibility of a qualifying disclosure in cases of that kind. Anybody who has tax liabilities relating to offshore matters and who does not act now to address them will face the prospect of substantially higher penalties, publication in the Quarterly List of Tax Defaulters and possible prosecution.
68. Deputy Joan Burton asked the Minister for Finance the contact he has had with fellow EU colleagues regarding a tax case (details supplied). [39936/16]
Amharc ar fhreagraOn 30 August 2016, it was announced that the Commission had issued a negative decision in the Apple State Aid case.
The Government remains of the view that there was no breach of State Aid rules in this case and that the legislative provisions were correctly applied. By appealing the Decision the Government is taking the necessary course of action to vigorously defend the Irish position.
Member States have legal standing to intervene in all cases that go before the European courts and do so from time-to-time if it is considered that the case raises points of relevance for their country.
It is the view of the Government that our appeal is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign Member State competence of taxation.
I have updated fellow EU Finance Ministers on the case from an Irish perspective.
If other Member States found that the issues we are raising are of relevance for their tax system, I would welcome their support for the Irish appeal.
70. Deputy Eamon Ryan asked the Minister for Finance if he will provide an update on a tax case (details supplied); and if he will make a statement on the matter. [1722/17]
Amharc ar fhreagraThe European Commission published the Final Decision into the Apple State Aid case in December 2016. This had been sent to Ireland at the end of August 2016.
As I have reiterated previously, Ireland does not accept the Commission's analysis, which is why we have lodged an application with the General Court of the European Union to annul the whole Decision.
Notwithstanding our appeal, Ireland is obliged to comply with the binding Articles of the Final Decision. This requires that Ireland ensures that Apple is deprived of the benefit of the alleged aid.
Work has been on-going to ensure that the State complies with all our obligations as soon as possible and the Commission has confirmed that it is satisfied with Ireland's progress on this issue to date.
71. Deputy Maureen O'Sullivan asked the Minister for Finance the advances that have been made between his Department and Insurance Ireland regarding the problems faced by potential home buyers in areas that have been flooded and in which substantial prevention and remedial works have taken place but who are still denied insurance cover for flooding. [1729/17]
Amharc ar fhreagraThe provision of insurance cover and the price at which it is offered is a commercial matter for insurance companies and is based on an assessment of the risks they are willing to accept and then ensuring that they have adequate provisioning to meet those risks. Similarly, the demand by mortgage providers for flood insurance as an element of home insurance is also a commercial matter.
Insurance Ireland has informed me that its members, since 1 June 2014, have factored data on all completed flood defence schemes, provided by the OPW, into its assessment of flood risk within these areas. This information has been provided as part of an information sharing arrangement entered into between OPW and Insurance Ireland (Memorandum of Understanding). The nature of this arrangement is such that it should lead to a greater availability of flood cover in previously higher risk areas, and at better prices.
The most recent Insurance Ireland survey of approximately 85% of the property insurance market in Ireland indicates that of the 16 completed defence schemes, 90% of policies in areas benefitting from permanent flood defences include flood cover, while 77% of policies in areas benefitting from demountable defences include flood cover. The particular issues in relation to the remainder of policies is actively being explored with the insurance industry through a working group in which the OPW, the insurance industry and the Department of Finance participate. Further meetings of this group are scheduled this month.
Following a meeting last July between Minister of State Canney and Insurance Ireland it was agreed that information and data on the deployment protocols, warning systems and emergency response systems in place where demountable defences are utilised would be provided to industry. The purpose of this information is to enable the industry reassess the overall level of risk with demountable flood defences in this context. It is hoped that this data will provide the robust information required for industry to reduce the risk it has associated with demountable defences and increase the levels of cover for these areas. This is subject to ongoing discussions.
73. Deputy Michael McGrath asked the Minister for Finance if his attention has been drawn to the fact that the Central Bank has no record of the number of SME loans that have been sold on to unregulated loan owners; if he will discuss this matter with the Central Bank; and if he will make a statement on the matter. [1727/17]
Amharc ar fhreagraAs the Deputy will be aware, I have been informed by the Central Bank that while it does not maintain a record of the number of commercial loans sold on by the original underwriter, material portfolio sales are considered within banking supervision in terms of their impact on the banks' balance sheet and financial position. The Central Bank has also informed me that commercial loan sales will be reflected in the change in the value of outstanding loans to non-financial corporations in the Central Bank's monthly data. This data does not provide numbers of loans or breakdown by type of loan. My officials are currently liaising with the Central Bank to assess what level of data can be recorded in relation to this matter.
The Deputy will also be aware that the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015, enacted on 8 July 2015, 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, the Code of Conduct on Mortgage Arrears, the Code of Conduct for Business Lending to Small and Medium Enterprises and the Minimum Competency Code) issued by the Central Bank of Ireland.
Under the 2015 Act, therefore, 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. Furthermore, it is important to highlight that the transfer of a loan from one entity to another does not change the terms of the contract or the borrower's rights and obligations under the original contract.
Also, following a review in 2015, the Code of Conduct for Business Lending to Small and Medium Enterprises, has been strengthened in certain areas resulting in 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 for regulated lenders (other than credit unions) and, in the case of credit unions, on 1 January 2017.
75. Deputy Thomas P. Broughan asked the Minister for Finance when the escrow account to collect corporate taxes that the EU Commission has ruled are due to the Exchequer from a company (details supplied) is being established; the likely amount of funds the company will be required to pay into the account; and if he will make a statement on the matter. [1492/17]
Amharc ar fhreagra272. Deputy Pearse Doherty asked the Minister for Finance when the transfer of money from a company (details supplied), as per the EU state aid ruling, to an escrow account will take place; and if he will make a statement on the matter. [1178/17]
Amharc ar fhreagra273. Deputy Pearse Doherty asked the Minister for Finance the way in which the amount to be transferred from a company (details supplied) to an escrow account, as per the EU state aid ruling, will be calculated; and if he will make a statement on the matter. [1179/17]
Amharc ar fhreagra274. Deputy Pearse Doherty asked the Minister for Finance the amount to be transferred from a company (details supplied) to an escrow account, as per the EU state aid ruling; and if he will make a statement on the matter. [1180/17]
Amharc ar fhreagra334. Deputy Pearse Doherty asked the Minister for Finance the total amount of interest that will be applied by the State in relation to the European Commission's state aid penalty judgment against a company (details supplied); and if he will make a statement on the matter. [1931/17]
Amharc ar fhreagraI propose to take Questions Nos. 75, 272 to 274, inclusive, and 334 together.
Notwithstanding our appeal in the Apple State Aid case, Ireland is obliged to comply with the binding Articles of the Final Decision. This requires that Ireland ensures that Apple is deprived of the benefit of the alleged aid.
This involves two actions:
1. The calculation of the amount of aid
2. The process by which Apple are denied this amount of money
The amount is to be calculated using the methodology set out in the Decision, which is then subject to interest as set out in the EU Directive on the recovery of State Aid. This document is available at the following link:
http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52007XC1115%2801%29&from=EN
On process, I have already said that consideration is being given to placing these sums into an escrow fund. The terms of such an escrow fund are subject to confidential and commercially sensitive deliberations and will not be made public at this time.
Work has been ongoing to ensure that the State complies with all our obligations as soon as possible and the Commission have confirmed that they are satisfied with Ireland's progress on this issue to date.
76. Deputy Bríd Smith asked the Minister for Finance if he will consider revising the tax exemptions granted to REITs in the Finance Bill 2013; and if he will make a statement on the matter. [1654/17]
Amharc ar fhreagraSection 41 of the first Finance Act of 2013 introduced the regime for the operation of Real Estate Investment Trusts (REIT) in Ireland. A REIT is a quoted company, used as a collective investment vehicle to hold rental property. They generally have a diverse ownership requirement, so no one person or group of connected persons can control the REIT. REITs are a common structure used across a number of other countries. Approximately 35 other jurisdictions worldwide have REIT or REIT-equivalent structures including the UK, Germany, France, USA amongst others.
The function of the REIT framework is not to provide an overall tax exemption, but rather to facilitate collective investment in rental property by removing a double layer of taxation which would otherwise apply on property investment via a corporate vehicle.
A REIT is exempt from corporation tax on qualifying income and gains from rental property, subject to a high profit distribution requirement to shareholders. They provide the same after-tax returns to investors as direct investment in rental property, by eliminating the double layer of taxation at corporate and shareholder level which would otherwise apply.
As such, the estimated cost attached to the REIT relates not to an exemption from tax, but rather to the move from direct taxation of rental income to the taxation of dividends distributed from REIT profits arising from that rental income. The extent of any net tax cost of the REIT exemptions will therefore be the difference between the tax which would have arisen on the property income in non-REIT ownership, and the tax charged on the dividends paid out of that property income by the REIT to their investors. The Irish REIT legislation requires that 85% of all property income profits be distributed annually to shareholders.
77. Deputy Clare Daly asked the Minister for Finance the findings of any review he has ordered of the performance of the Financial Services Ombudsman; and if his attention has been drawn to any shortcoming in the system. [1646/17]
Amharc ar fhreagra88. Deputy Clare Daly asked the Minister for Finance the average effective tax rate on the income of farmers based in the south west; if he will provide an update on the impact on the average farmer on the Revenue Commissioners' treatment of patronage shares as income, assuming they sell the shares and pay capitals gain tax at 33%; and if he will make a statement on the matter. [1645/17]
Amharc ar fhreagraI propose to take Questions Nos. 77 and 88 together.
Firstly, I must point out that the Financial Services Ombudsman is independent in the performance of his statutory functions. I have no role in the day to day workings of the office.
The Financial Services Ombudsman's Bureau was established under the Central Bank and Financial Services Authority of Ireland Act, 2004. The legislation provides for an independent, impartial investigation and resolution of disputes between consumers and financial service providers. The Financial Services Ombudsman was set up to adjudicate on unresolved disputes between complainants and financial service providers.
The Central Bank and Financial Services Authority of Ireland Act 2004 also provided for the establishment of the Financial Services Ombudsman Council. One of the statutory functions of the Council is to keep under review the efficiency and effectiveness of the Bureau and advises the Minister for Finance, either at my request or on its own initiative, on any matter relevant to the operation of the Bureau.
I can confirm that I have not requested any reviews in relation to the performance of the Financial Services Ombudsman. However, the Deputy will be aware that legislation to amalgamate the Pensions Ombudsman and the Financial Services Ombudsman is currently before the House.
In advance of the amalgamation of the Financial Services Ombudsman Bureau (FSOB) and Office of the Pensions Ombudsman (OPO), the need to complete a review of the organisations was identified and agreed by both Ombudsmen and the Financial Services Ombudsman Council. Bearing Point undertook a detailed analysis of the operations of the Financial Services Ombudsman and Office of the Pensions Ombudsman in terms of their processes, strategies and objectives. Details of the Strategic and Operational Review are available on the Financial Services Ombudsman's website at https://financialombudsman.ie/publications/ .
Section 57BD of the 2004 Act states that one of the functions of the Council is to appoint the Financial Services Ombudsman and each Deputy Financial Services Ombudsman so his or her expertise is a matter for the Council to ascertain. However, I have no reason to doubt the expertise of the Ombudsman.
78. Deputy Michael Moynihan asked the Minister for Finance the average effective tax rate on the income of farmers based in the south west; if he will provide an update on the impact on the average farmer of the Revenue Commissioners' treatment of patronage shares as income, assuming they sell the shares and pay capital gains tax at 33%; and if he will make a statement on the matter. [1739/17]
Amharc ar fhreagraA taxpayer's average effective rate of income tax is the average rate of tax they pay on their income as a whole in any tax year. Due to the nature of the Irish tax system, incorporating tax credits and standard rate bands, this effective rate varies from person to person depending on both their income and their personal circumstances. For example, low income individuals can have a zero or very low effective tax rate where their income is largely sheltered from tax by personal tax credits, whereas individuals with higher incomes paying tax at the higher rate would have higher average effective rates of tax.
What may be of more relevance is the marginal rate of tax, which is the rate of tax paid on any additional income received by a taxpayer in a given tax year. Again, this would vary from person to person, based on their individual circumstances.
In the most recent analysis conducted by Revenue in relation to the farming sector, published in July 2016, there was no specific analysis of the average effective rate of tax. However the analysis did provide a breakdown of the average farming income by county. For the counties of Cork, Kerry and Limerick the average farm income, being the net farming profit subject to income tax, was respectively €32,398, €20,851 and €27,268. This report is available on Revenue's website, at the link set out at the end of this response.
I have been informed by Revenue that the average value received by farmers in respect of patronage shares in the years 2011 to 2013 was between €3,510 and €4,860. Based on these figures and the average farm incomes listed above, it is possible that the marginal rate of tax on this additional income may be the standard rate of tax for many farmers. Farmers whose other income in the relevant year has already exceeded their Standard Rate Band would be liable to income tax at the higher rate of tax.
Deputy Moynihan's question would appear to suggest that Revenue should conduct a tax yield analysis and use this to decide the tax treatment which should apply to a given transaction. As I have already stated, this is neither possible nor, I am sure the Deputies would agree, desirable. Revenue's role is to collect the taxes lawfully owing to the Exchequer, and they do so in accordance with the legislation enacted by these Houses. See www.revenue.ie/en/about/publications/farming-profile-2016.pdf
79. Deputy Pearse Doherty asked the Minister for Finance the way in which the Report on the Costs of Motor Insurance will help put an end to the boom-bust model underpinning motor insurance here; and if he will make a statement on the matter. [1738/17]
Amharc ar fhreagraThe Working Group on the Cost of Motor Insurance, chaired by Minister of State Eoghan Murphy, completed its Report in December 2016. The Report was approved by the Government on 10 January 2017 and subsequently published. The Report sets out a detailed set of 33 recommendations and 71 actions to tackle those factors that are influencing the increasing cost of motor insurance by introducing a comprehensive suite of reforms for the insurance sector. While there is no policy or legislative "silver bullet" to immediately reduce the cost of insurance, cooperation and commitment between all parties can deliver fairer premiums for consumers without unnecessary delay.
Going forward, prudent pricing and reserving practices will be key to avoiding such cycles in the future. In this respect, the introduction of Solvency II last year should mitigate these risks. The Deputy will be aware that Solvency II introduces an economic/risk based approach to the measurement of assets and liabilities and a much greater focus on qualitative issues such as governance and the role of the supervisor. The Central Bank will continue to play a crucial role in ensuring that companies satisfy these requirements. Directly related to this is that it is important that insurance companies do not become too dependent on investment income and use it to price their insurance products unsustainably. This has been a contributory factor in the past to these cycles.
Furthermore, a key issue identified by the Working Group related to a lack of clarity, certainty and transparency of motor insurance costs. Greater transparency through the creation of a national claims information database will enable the identification of these trends and should facilitate appropriate policy responses in order to help avoid these cycles in the future.
Finally, with the publication of this report and the successful implementation of its recommendations, fairer premiums can be delivered which will lead to greater stability in the pricing of motor insurance and will help prevent the volatility that we have seen in the market in the past that has led to these cycles. This will assist in putting to an end the sort of cycles that we have witnessed in recent years.
80. Deputy Michael McGrath asked the Minister for Finance if he is satisfied with the Central Bank's response to a bank's placing of 2,141 SME customers into a global restructuring group (details supplied); his views on whether a formal review is required by the Central Bank to assess whether any SME customers here were inappropriately treated; and if he will make a statement on the matter. [1725/17]
Amharc ar fhreagraI am informed by the Central Bank that, while it cannot generally comment on interactions with regulated firms, Ulster Bank Ireland D.A.C. is engaging with the Bank in relation to this matter.
I am confident that legislative changes since the financial crisis have equipped the Central Bank with an array of investigative, regulatory and enforcement powers to ensure that regulated financial service providers adhere to the requirements of financial services legislation. These changes include significantly enhanced powers for the Central Bank to gather information under the Central Bank (Supervision and Enforcement) Act 2013 which broadened the Banks' information gathering and authorised officer powers.
It is evident that the Central Bank is properly undertaking its enforcement role by the recent sizeable settlements in enforcement cases.
In addition to this enforcement role, the Deputy may be aware that the Central Bank is proactively regulating the financial system and has issued regulations aimed at protecting SMEs when dealing with regulated and unregulated firms as set out below. These strengthened regulations include the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015 which came into operation for regulated lenders (other than credit unions) on 1 July 2016 and, in the case of credit unions, on 1 January 2017. These revised SME Regulations introduce specific requirements for regulated lenders, including:
- Contacting SME borrowers who have been in arrears for 15 working days;
- Warning SME borrowers if they are in danger of being classified as not co-operating; and
- Expanding the grounds for appeal and setting up an internal appeals panel.
Under these SME Regulations, regulated financial services firms must have a complaints handling procedure in place. Any complaints against financial institutions should first be discussed with the institution concerned.
