Written Answers Nos. 186 - 201
186. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would accrue from increasing the air travel tax from €0 to €3 in 2018; his plans with regard to increasing the air travel tax in 2018 and 2019; and if he will make a statement on the matter. [9826/17]
Amharc ar fhreagraFrom 28 February 2012 to the 31 March 2014 the rate of Air Travel Tax (ATT) was charged at €3 per passenger departing from an Irish airport. The year 2013 was the last calendar year where this tax was collected, yielding €34.9m in the full year.
In the absence of any certainty on the number of passengers departing from Irish airports in 2018 and 2019, the revenue that the introduction of an ATT of €3 would yield is estimated to be of the order of between €45m - €50m per annum.
187. Deputy Michael Healy-Rae asked the Minister for Finance the status of a VAT registration application in respect of a company (details supplied); and if he will make a statement on the matter. [9835/17]
Amharc ar fhreagraI am advised by Revenue that the application for VAT registration by the company was refused by Revenue and the matter has been formally appealed to the Tax Appeals Commission (TAC) which is an independent statutory body established to deal with all tax appeals.
188. Deputy John McGuinness asked the Minister for Finance if he will establish a benevolent friendly fund supported by Government bonds or funding to allow the banks to transfer all distressed loans to the fund, in order that individual work outs can be achieved over a longer period of time based on affordability or whereby tenancy agreements can be put in place with the goal being that families would not be evicted or lose their houses; if the same discounts provided to vulture funds will be provided to this friendly vulture fund by the State owned banks; if he will ensure that family homes will not be part of the sale of debt to vulture funds; and if he will make a statement on the matter. [9839/17]
Amharc ar fhreagraThe Mortgage to Rent Scheme (MTR) is managed by the Department of Housing, Planning, Community and Local Government. The scheme is targeted at households with unsustainable long term mortgage arrears who qualify for social housing. Under the scheme borrowers can switch to renting their home as social tenants. Under the Action Plan for Housing and Homelessness it was committed to review the scheme. On 8 February 2017, the Minister Housing, Planning, Community & Local Government announced significant changes to the scheme. This MTR review covered issues such as changes to the eligibility criteria, the financing of the scheme, administration and communications. The review sets out a series of actions that will make MTR quicker, more transparent and more accessible for borrowers in mortgage distress. The changes are designed to increase the number of households availing of the scheme.
The MTR Review also announced the testing of alternative funding models for the scheme to deliver volume. The Housing Agency will work with a number of financial entities who have come forward with an interest in working with the MTR scheme to progress a minimum of 200 units based on the new arrangements. The objective is to explore what is available within the current market and to determine if this alternative model will benefit a greater number of households.
It is to be hoped that the test of the alternative MTR model will be positive and will result in a further scheme to aid as many distressed borrowers as possible to remain in their homes through a leasing arrangement.
In conclusion, I must point out that as Minister for Finance, I am unable to intervene directly in the commercial decision-making process of any financial institution, which is a matter for the management boards of each institution. Separately, however, I would refer the Deputy to the Central Bank Report on Mortgage Arrears, published on my Department's website on 16th December, which noted inter alia that:
- There is a broad range of available restructures offered and delivered by both bank and non-bank entities depending on the individual circumstances of the borrower;
- Since the June-2013 peak, considerable progress has been made in addressing mortgage arrears primarily through the use of restructures, rather than loss of ownership;
- The use of a range of restructuring options for distressed borrowers increases the potential for them to remain in the primary residence;
- Overall, there is strong evidence that banks and non-banks are looking to exhaust available options before moving into the legal process.
189. Deputy Colm Brophy asked the Minister for Finance if the mortgage interest relief will be retained beyond 2017 on a tapered basis, in view of the fact that a substantial number of homeowners are still in negative equity. [9844/17]
Amharc ar fhreagraThe Deputy will be aware that there is a commitment in the Programme for a Partnership Government to retain mortgage interest relief (MIR) beyond the current end date on a tapered basis. At present, Section 244 of the Taxes Consolidation Act 1997 provides for tax relief in respect of interest paid on qualifying home loans taken out on or after 1 January 2004 and on or before 31 December 2012, with relief being available until 31 December 2017. Mortgage interest relief was abolished for homes purchased on or after 1 January 2013. As the legislation currently provides for the relief to continue until the end of December 2017, it was not necessary to include legislation in Finance Bill 2016 to provide for the tapered extension of the relief. However in my Budget speech in October last I confirmed my intention to extend MIR beyond the current end date on a tapered basis to 2020 and that the details of the extension will be set out in Budget 2018.
Mortgage interest relief operates as a tax relief at source, meaning that the relief is deducted by the bank from the mortgage payment due, and the homeowner pays only the net amount due. Therefore existing recipients of the relief could face a significant increase in their monthly mortgage payments when the tax relief at source is withdrawn (all other factors being equal). The purpose of the proposed tapered extension is to avoid a sudden significant increase in mortgage repayments for those losing the relief, but instead to withdraw the relief gradually, allowing the mortgage holder time to adjust to the change in mortgage repayments.
The Deputy will also be aware that, on foot of a change I introduced in Budget 2012, first time buyers who bought at the height of the property boom between 2004 and 2008 receive a rate of mortgage interest relief of 30%. This compares favourably to the rates available to other remaining recipients of MIR which reduce on a gradual basis from 25% in years 1 and 2 of the mortgage to 15% in the 8th and subsequent years.
Single individuals and married couples/civil partners that are first-time buyers qualify for mortgage interest relief for the first seven tax years of their mortgage up to a maximum ceiling of €10,000 and €20,000 respectively. Thereafter relief is restricted to ceilings of €3,000 and €6,000 respectively.
The system of mortgage interest relief is designed and targeted in such a way that the relief is of greater value in the early years of a qualifying loan, when interest represents a greater proportion of the repayment. Mortgage interest relief is of lesser value to individuals whose repayments are made up of a higher proportion of principal than interest, as would generally be the case for those who move in to the eighth and subsequent years of their loans. It is worth noting that the application of the annual ceilings on interest qualifying for relief, and the stepped reduction in the rate of relief available to remaining recipients other than those who purchased between 2004 and 2008, already work to reduce the relief in a gradual manner.
A review of policy considerations and potential costs of an extension of mortgage interest relief was contained in the Income Tax Reform Plan published by my Department in July last year and may be of interest to the Deputy. The plan is available at: www.finance.gov.ie/sites/default/files/Income%20Tax%20Reform%20Plan-FINAL_0.pdf.
I am conscious of the challenges that individuals continue to face notwithstanding the improving economic conditions. In relation to negative equity, I would point out that the position is improving with the number of primary dwelling home mortgages in negative equity as of December 2015 having reduced to 15 per cent, a decline of 5 per cent since December 2014.
190. Deputy Seán Haughey asked the Minister for Finance the amount of local property tax collected in the Fingal County Council area in 2016; the amount of proceeds from the local property tax allocated to Fingal County Council in 2016; the way this money was spent; and if he will make a statement on the matter. [9850/17]
Amharc ar fhreagraI am advised by the Revenue Commissioners that statistics relating to Local Property Tax (LPT) can be found on the statistics webpage of the Revenue website at www.revenue.ie/en/about/statistics/index.html. Specifically, the most recently available LPT information, including LPT collected in respect of the Fingal Local Authority area, is available at www.revenue.ie/en/about/statistics/local-property-tax-2016.html.
Allocations of LPT revenues to individual Local Authorities is a matter for my colleague the Minister for Housing, Planning, Community and Local Government. I understand the Department of Housing, Planning, Community and Local Government has published details of the 2016 LPT allocations to Local Authorities on its website at the following link: www.housing.gov.ie/sites/default/files/migrated-files/en/Publications/LocalGovernment/Administration/FileDownLoad%2C43581%2Cen.pdf.
191. Deputy Joan Burton asked the Minister for Finance the proposals he is currently considering to ensure that mortgage holders, tenants and SMEs that have loans or credit from non-bank lenders or vulture funds are fully protected; if consideration is being given to 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. [9931/17]
Amharc ar fhreagraAs the Deputy will be aware, the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 was enacted in July 2015. It was introduced by the previous Government 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 that is regulated by the Central Bank. The significant point is that the regulation is focussed 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.
The Central Bank is now the competent authority for the authorisation and supervision of credit servicing firms. Credit servicing firms must comply with all relevant requirements of financial services legislation, including the various codes and Regulations mentioned already and Fitness and Probity Standards (including minimum competency requirements).
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;
- Agreements with loan owners that enable the credit servicing firm to fully comply with its obligations under Irish financial services legislation; and
- Adequate and effective control of loan servicing in the State to enable Central Bank oversight.
In addition, 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 that they previously enjoyed. In addition, the Department of Finance expects 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.
192. Deputy Joan Burton asked the Minister for Finance the amount of funding that has been made available through the Ireland Strategic Investment Fund for social and affordable housing provision; if he is satisfied 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. [9932/17]
Amharc ar fhreagraAs the Deputy will be aware, in the social and affordable market, in line with Rebuilding Ireland commitments, the Ireland Strategic Investment Fund (ISIF) and a number of 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: the commercial viability of proposals; Eurostat treatment of fund structures which receive a substantial proportion of their revenue from Government sources; and the ability to create off-balance sheet vehicles outside of the existing PPP model. Engagement with the other stakeholders in both the public and private sector, including with Eurostat, is ongoing.
ISIF informs me that whilst it has made progress in conjunction with the other stakeholders in the public and private sectors in respect of this opportunity, as well as other potential social housing investment opportunities, there are still considerable hurdles including commerciality and balance sheet treatment as identified in Rebuilding Ireland. These hurdles must be overcome before any such proposals can be brought to a successful conclusion.
Separately, ISIF is making a very substantial contribution to new private housing supply which is critical in terms of meeting the pent up demand for housing across all sectors of the market. In line with its double bottom line mandate, ISIF has already invested in a number of significant financing platforms and projects in the construction sector, and is actively examining other investment opportunities.
ISIF has total investment commitments to housing investment vehicles of €404m comprising €325m in Activate Capital, €25m in the Ardstone Residential Partnership and €54m to student accommodation in DCU. In addition ISIF has committed €125m in total to more general real estate investment vehicles, including €75m to the Wilbur Ross Cardinal Commercial Real Estate Mezzanine Debt Fund and €50m to Quadrant Real Estate Advisors, both of which to date have completed some investment in housing. Through these ISIF-supported projects, a total of 8,400 housing units is expected to be delivered in the near term (a small portion of which has already been delivered).
In addition, ISIF's current near term pipeline of potential housing projects including in the build-to-rent sector and off-campus student accommodation as well as a smaller project that may have the ability to deliver some affordable housing, indicates potential to deliver a further 8,700 units in total.
ISIF is working with local authorities and private developers on the financing of housing-enabling infrastructure and its pipeline includes two pilot housing infrastructure financing projects which, if completed, will enable the development of a further 6,000 housing units.
ISIF is also currently engaging with a range of Higher Education Institutions ("HEIs") in respect of the provision by them of on-campus student accommodation.
ISIF invests on a risk adjusted basis in the various housing financing platforms and these platforms, in turn, provide finance, also on a risk adjusted basis, to developers, which can be equity or debt according to the business model of each platform. The interest rate applied to any individual debt financing arrangement therefore relates to the level of risk and other investment factors in the underlying housing development proposal.
193. Deputy Joan Burton asked the Minister for Finance his views on the recent comments made by the Dutch Minister for 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. [9933/17]
Amharc ar fhreagraAs the Deputy is aware and as stated in Parliamentary Question Number 295 of 17/01/2017 I would like to again reassert my belief in the importance of the principle of the fiscal rules, which are designed to promote budgetary discipline and underpin sustainable economic growth. Fiscal rules are all-the-more important in a monetary union, given the scope for spillovers among participating Member States.
Compliance with the fiscal rules underpins and facilitates the goals of sustainability and economic growth. Ireland's recent and continued economic recovery is testament to this.
It is evidently important that rules are implemented in a fair and consistent manner and that all Member States are treated equally concerning the application of the Stability and Growth Pact. This is essential for the continued credibility of these rules. Any perception that the rules are not being applied in an equitable manner could result in the undermining of the Stability and Growth Pact.
In Ireland we have defended and complied with the fiscal rules through difficult times. This defence becomes progressively more difficult if there is any suggestion that the rules are not being applied consistently, particularly when there are perceived differences between the treatment of small and large Member States. So I would have some sympathy with the view of Chairman Dijsselbloem that unequal application could undermine confidence in the rules and, in this regard, I would reiterate that the fiscal rules must be applied in a transparent, consistent and fair manner.
194. Deputy Joan Burton asked the Minister for Finance the 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. [9934/17]
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 through the ESRI-Department of Finance research programme study published in November 2015 titled 'Scoping the Possible Economic Implications of Brexit on Ireland'. This work was undertaken within the whole-of-Government framework established by the Department of the Taoiseach.
Following the result of the UK referendum and to prepare for the forthcoming negotiations, work has been intensified across the whole of Government including in the Department of Finance. 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.
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. As part of Budget 2017, the Department also published detailed analysis of sectoral exposure to Brexit across the economy. Utilising the sectoral exposure analysis, Budget 2017 included a number of measures to respond to the challenges of Brexit, to mitigate future risks, and to support any opportunities that might arise. These included measures to support SMEs, entrepreneurship, agri-food and Irish exporters. The Department also worked with the ESRI to deepen the macroeconomic analysis and a report entitled 'Modelling the Medium to Long Term Potential Macroeconomic Impact of Brexit on Ireland' was published in November 2016. Updated macroeconomic forecasts will be published by the Department as part of the Stability Programme Update in April 2017.
Important work is also ongoing in relation to financial services. In particular, on 23 January 2017, Minister of State Murphy launched the International Financial Services (IFS 2020) Action Plan 2017 which sets out the approach to Brexit for this sector.
The best and most immediate policy under the Government's control to counter the likely negative economic impacts of Brexit 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 an 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.
The work being done by the Department will be an important input to ensuring that Ireland will be in a position to counter any negative economic impact arising from Brexit and to ensure that Ireland's interests are protected in the upcoming negotiations at EU level. The Department will continue to monitor the economic impacts, to carry out relevant analysis and to frame budgetary policy advice in this new context.
195. Deputy Joan Burton asked the Minister for Finance the way in which the annual €150 million banking levy will be calculated as it extends to 2021; and if he will make a statement on the matter. [9935/17]
Amharc ar fhreagraAs I outlined in my response to the Deputy's question on 17th January last, in 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 was 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 the budget statement two years ago, 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 in early 2016. Following that review, I 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 review to ensure that the yield from the levy is not impacted from changes in interest rates and/or DIRT rates.
196. 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. [9936/17]
Amharc ar fhreagraAs the Deputy is aware, the Programme for Partnership Government allows for the sale of not more than 25% (plus over-allotment opion) of any bank before the end of 2018. The State's shareholding in AIB is a very valuable asset 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 any AIB shares will be to maximise the return for the State in a manner that is consistent with recovering our full €20.8bn investment over time.
The advice I have received confirms that an IPO is the optimal route to recouping value from this investment. Officials in my Department along with our Independent Financial Advisor, Rothschild, have done considerable preparatory work in this regard. In December of last year, following a competitive procurement process, three firms were appointed to act as Global Coordinators on a potential selling syndicate, in preparation for a possible IPO. These firms have been appointed for an 18 month period and additional firms will be appointed to fill out the selling syndicate at an appropriate future date.
I cannot predict what market conditions will be like for bank shares over the coming year, however it is our intention to be ready to execute a transaction if conditions allow and I have indicated that the earliest possible IPO window will be in the second quarter of 2017. Given the improved state of the national accounts, progress made in reducing our national debt and positive market sentiment towards Ireland, we are not under any pressure to monetise our banking investments. As a result we have some flexibility around when we time our disposals in the market.
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 at this time. This will depend both on the quantum of shares sold and the price arrived at in the market during the IPO process.
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.
197. 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. [9937/17]
Amharc ar fhreagraEnsuring the plausibility of potential output estimates remains a key priority for my Department, especially given their relevance in the fiscal surveillance process and calculation of fiscal space. The shortcomings of the EU's harmonised methodology have been previously highlighted by my Department.
As the Deputy is aware, substantial efforts have been undertaken by my Department to develop alternative models for estimating potential output for Ireland. Significant work has also been undertaken aimed at ensuring the rigour and stability of the alternative set of estimates. Progress on this work had been delayed by the distortions in the 2015 national accounts revisions. The intention is to detail this work in a forthcoming Department of Finance technical paper.
Notwithstanding this progress on the development of alternative models, the harmonised methodology remains the binding methodology in the context of EU fiscal surveillance. However, progress also continues to be made at technical level - with participation in the relevant working group of all Member States - on improving this harmonised methodology, and Ireland continues to actively contribute on this front. Indeed, recognising the importance of this work from an Irish perspective, the relevant working group at a European level is chaired by a senior official in my Department.
Finally, I would stress that, in the assessment of the cyclical position of the economy, my Department takes into consideration a wide range of indicators, in addition to supply-side estimates.
198. 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. [9938/17]
Amharc ar fhreagraThe Deputy will be aware that the Central Bank has an ongoing role in monitoring the level of arrears and negative equity on mortgage and other loan assets. The Programme for a Partnership Government contains a range of commitments in the broad housing and banking area and my Department regularly engages 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.
In this context, the Central Bank has recently produced a report on mortgage arrears following my request to the Governor. This report provides a detailed assessment of mortgage arrears in banks and non-bank entities and includes analysis on mortgage restructuring activity and the range of solutions offered that may affect borrowers' capacity to remain in their primary residence. This report was published on 16th December 2016 and is available on www.finance.gov.ie/what-we-do/banking-financial-services/publications/reports-research/report-mortgage-arrears-2016. The report notes that progress on mortgage arrears is well established and clearly moving in the right direction.
Furthermore, the Central Bank publishes quarterly statistics on Residential Mortgage Arrears and Repossessions. In addition, the Central Bank's Household Credit Market Report contains data on negative equity. The latest report is available at www.centralbank.ie/publications/Documents/Household%20Credit%20Market%20Report%202016H2.pdf and table 7 in the report presents the percentage of loans in negative equity split by default status. The data in the Household Credit Market Report are for 2015 and do not reflect changes to loan balances and house prices since December 2015. The Central Bank estimates that 15 per cent of PDH loans and 26 per cent of BTL loans were in negative equity at end December 2015 of which 10 per cent of PDH and 14 per cent of BTL loans were deemed to be performing.
199. Deputy Joan Burton asked the Minister for Finance if he has ceased appointing new public interest directors to the banks; the reform of the procedures for the appointment of bank directors by the State that is currently being considered; and if he will make a statement on the matter. [9939/17]
Amharc ar fhreagraIn the Programme for a Partnership Government ('PPG') the Government has committed to, "Cease to appoint new Public Interest Directors to the banks, and reform the procedures for the appointment of bank directors by the State, with a view to increasing transparency in the process".
As the Deputy will be aware, the rights for the State to appoint public interest directors to the boards of the Covered Institutions were derived from the terms of the guarantee schemes introduced in 2008 and last for the period of the guarantee. The last of the guaranteed liabilities are due to mature between now and Spring 2018 and as such I do not expect to make any new appointments of Public Interest Directors to the board of the banks. Going forward however the State will have the ability to appoint directors to the banks in which it has large equity ownership positions. So in line with the commitment in the PPG, my officials have commenced a process to develop new procedures for any future appointments to bank boards.
Any new appointment procedure for bank directors needs to have due regard to the distinct differences which exist relative to appointments to State boards. These include the fact that the State is not the only shareholder in these banks, the requirements of the Central Bank/SSM Fitness and Probity Regime and the requirement to have a broad set of expertise relevant to large regulated entities in an ever more complex regulatory environment.
200. Deputy Joan Burton asked the Minister for Finance his plans to increase enforcement and sanctions for fuel laundering in view of the programme for Government commitment and the estimates in the British-Irish Parliamentary Assembly report on cross-Border crime of the loss to the Irish Exchequer by fuel fraud to be in the range of €140 million to €260 million per year; if he has met his Northern Irish counterpart on this issue; and if he will make a statement on the matter. [9940/17]
Amharc ar fhreagraIt is inherently difficult to estimate with confidence the extent of any illegal activity and it is not possible, therefore, to put a figure on the cost to the Exchequer of fuel laundering. Nevertheless, the serious threat that criminal activity of this kind poses to legitimate and compliant businesses, consumers and the Exchequer is recognised, and action against it has accordingly been a priority for Revenue over recent years.
Revenue has implemented a comprehensive strategy to tackle the illegal fuel trade, including the introduction of stringent new supply chain controls underpinning a rigorous programme of enforcement action and supported by a range of new legislative measures that I brought forward in Finance Acts. In addition, Revenue and HM Revenue and Customs in the United Kingdom undertook a joint initiative to find a new fiscal marker for use in marked fuels, which was introduced in Ireland and the United Kingdom from the beginning of April 2015.
I understand that the industry view is that the measures implemented to date have been successful in curtailing fuel laundering in Ireland. This view is supported by a significant increase in tax revenues from road diesel over the past three years. I am also advised that Revenue conducted a National Random Sampling Programme in January 2016, with a view to obtaining an updated picture of the extent of the fuel laundering problem. The programme methodology entailed taking samples of road diesel from a randomly selected group of licensed traders and testing for the presence of the new marker. No evidence of the new fiscal marker was found in any of the samples tested. This provides very persuasive evidence that the strategy undertaken in recent years has been successful in addressing the laundering problem.
Revenue works closely with An Garda Síochána in acting against fuel fraud, and the relevant authorities in the State also work closely with their counterparts in Northern Ireland, through cross-border enforcement groups, to target the organised crime groups that are responsible for a large proportion of this criminal activity. This work is being supported and facilitated by the setting up earlier this year, in the framework of "A Fresh Start: the Stormont Agreement and Implementation Plan", of a Joint Agency Task Force, which includes Revenue as well as An Garda Síochána and their Northern Ireland counterparts. Revenue also works in close cooperation with the relevant authorities in other jurisdictions, the European Anti-Fraud Office and other international bodies and agencies in the ongoing programmes of action at international level to combat the illicit fuel trade. The Deputy may be interested to note that in an intelligence-led operation in December 2016, Revenue enforcement officers supported by the Garda Regional Support Unit, seized two oil tankers, 20,000 litres of laundered mineral oil, 140 bags of bleaching earth, ancillary equipment associated with oil laundering and cash, bank drafts and cheques in excess of €60,000 in the Castleblayney area. This is the first oil laundry detected in this jurisdiction since 2014.
The penalties for offences relating to fuel fraud are laid down in section 119 of the Finance Act 2001 and section 102 of the Finance Act 1999. On conviction following summary prosecution under these provisions, a court may impose a fine of €5,000, or a term of imprisonment not exceeding 12 months, or both. Where a person is convicted for an indictable offence, the court may impose a term of imprisonment not exceeding 5 years, or a fine not exceeding €126,970, or both. In addition, for an indictable offence under section 119 of the Finance Act 2001, if the value of the fuel concerned in the fraud exceeds €250,000, including duty and taxes, the court may impose a penalty of three times the value of the fuel, or a term of imprisonment not exceeding 5 years, or both. The current levels of fines were introduced by the Finance Act 2010 and represented significant increases over the previous amounts: for example, the fine on conviction for an indictable offence was increased from €12,695 to an amount not exceeding €126,970.
The Courts decide on the amount of the fine to be imposed in any particular case and, in practice, do not apply fines up to the existing limits. There are no proposals at present to increase the level of fines available to the courts. However, the position is kept under review taking account, among other considerations, of the practical experience of the fines imposed under the current provisions.
I am satisfied that Revenue's work against fuel laundering has achieved a considerable level of success, and I am assured that action against fuel fraud will continue to be a high priority.
201. Deputy Joan Burton asked the Minister for Finance the status of the preparations for budget 2017; if the upcoming budget will involve at least a 2:1 split between public spending and tax reductions; and if he will make a statement on the matter. [9941/17]
Amharc ar fhreagraI presume the Deputy is referring to the preparations for Budget 2018 which will be presented to Dail Eireann next October.
As part of the annual budgetary process, my Department will prepare the 2017 Stability Programme Update in April, updating the economic and fiscal outlook. Subsequently, the next milestone in the budgetary calendar will be the publication of the Summer Economic Statement in advance of the National Economic Dialogue. In line with the Government's commitment to ongoing budgetary reform, this will set out the framework for discussions on Budget 2018 and, together with the publication of the Tax Strategy Group papers and the Mid-Year Expenditure Report, will provide a valuable input to the budgetary deliberations.
The Oireachtas will have an opportunity for relevant engagement at each stage of the process.
The Programme for a Partnership Government indicates a baseline allocation of the available fiscal space on (at least) a 2:1 basis between public spending increases and tax reductions. The final position will be a matter for Government, taking into account the outcome of the various budgetary steps.
