Written Answers Nos 1-55
47. Deputy Pearse Doherty asked the Minister for Finance his views on whether the abolition of the USC is neither possible nor desirable in the current economic climate and in the context of the fiscal space allowable; and if he will make a statement on the matter. [10018/17]
Amharc ar fhreagraThe Programme for Government commitment to phase out the USC is not something that is being proposed in isolation but rather as part of a wider medium-term income tax reform plan focused on supporting economic growth. Tax revenues have grown by over 40% from €34 billion in 2011 to €48 billion in 2016. It is true that new taxes have been introduced but much of the increased revenue is driven by stronger growth and tax buoyancy. I have said on many occasions that I am cognisant of the high marginal income tax rates that apply to many people. We should be proud to have a highly progressive income tax system, but we must also appreciate the value of retaining the incentive to work, to enable those who work hard to provide for their families and generate further economic growth through increased employment and expenditure in the domestic economy.
Ireland is a small economy open to trade, open to the exchange of ideas and open to the movement of people. In order to provide the best opportunities for our citizens we must strive to make Ireland a fair and attractive place for people to live, to work and to build their futures. It is my view that this requires fairness at both ends of the income spectrum by reducing the tax burden on lower incomes while also having a top rate of tax that is internationally competitive.
The steady progress I have made in reducing the USC in the last three Budgets, allied to the many other factors at work in rebuilding our economy, is bearing fruit. When I took office in 2011 the unemployment rate was over 14% and went on to peak at 15.2%. It is now 6.6%. This is the 17th successive quarter of employment growth and more than 200,000 net jobs have been created since 2011. Employment levels have increased in all regions of Ireland and we've had net inward migration. For the past year or so people are coming home.
With regard to the feasibility of USC abolition, the forecasts contained in Budget 2017 set out the indicative net fiscal space over the 2018 to 2021 period of some €9.3 billion in cumulative terms. Abolition of the USC over this period would absorb approximately 40% of the currently available net fiscal space. Furthermore it is my view that the resulting reductions in marginal tax rates would support job creation and economic growth, and better enable us to address the challenges and opportunities arising in the global economy.
48. Deputy Michael McGrath asked the Minister for Finance if he is satisfied himself 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. [9989/17]
Amharc ar fhreagraI 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 Bank's information gathering and authorised officer powers.
I 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. This is properly in line with the 2013 Act and its revised provisions for potential enforcement actions.
On this matter, the Ulster Bank Chief Executive last week stated that RBS has announced a new complaints review process overseen by an independent third party, and, the automatic refund of complex fees to SME customers in Global Restructuring Group (GRG) in the United Kingdom and the Republic of Ireland between 2008 and 2013. It is a matter for the Central Bank to determine whether it is satisfied with this approach and whether it will utilise its extensive powers under the 2013 Act. I am sure that Deputies will note 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 loan owners, whose loans must be serviced by credit servicing firms under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015. These strengthened Central Bank 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.
49. Deputy Bernard J. Durkan asked the Minister for Finance if he has satisfied himself that Ireland's economic progress can continue into the future with particular reference to the need to maximise opportunities for economic expansion, foreign direct investment and indigenous investment, in view of the need to remain competitive on the international stage, notwithstanding Brexit or other global issues; and if he will make a statement on the matter. [9994/17]
Amharc ar fhreagra265. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied that continued economic progress remains attainable for the future notwithstanding Brexit or other geopolitical threats; and if he will make a statement on the matter. [10426/17]
Amharc ar fhreagra272. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which economic projections remain on target notwithstanding the impact of Brexit or other geopolitical developments; the degree to which the economy can overcome such challenges; and if he will make a statement on the matter. [10433/17]
Amharc ar fhreagra275. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he has satisfied himself regarding economic prospects over the next five years; and if he will make a statement on the matter. [10436/17]
Amharc ar fhreagraI propose to take Questions Nos. 49, 265, 272 and 275 together.
My Department's most recent economic forecasts were published with Budget 2017. Real GDP growth of 3.5% was projected for this year while growth is forecast to average 3% over the period 2018-2021.
The dataflow since the Budget has been encouraging indicating that the strong momentum has continued:
- The economy expanded by 6.9% year-on-year in the first three quarters of 2016.
- Exports are holding up well. Service exports have been particularly strong recording double-digit growth, year-on-year, in the third quarter.
- Employment in the fourth quarter of 2016 grew by 3.3% on an annual basis - an increase of over 65,000 jobs.
- Data for 2017 is likewise encouraging with the unemployment rate for January falling to 6.8%, down from 8.6% a year earlier.
On this basis, the economy remains on course for continued strong growth this year.
However, we do face considerable economic challenges, notably Brexit, the change in policy direction by the new US administration, and growing uncertainty in the global economy. This was explicitly recognised in the economic outlook published with the Budget, which detailed risks to the outlook and noted that these are firmly tilted to the downside.
Budget 2017 introduced a number of measures aimed at making Ireland Brexit ready, including a number of measures to assist exposed sectors. Regarding investment, a new 10-year National Capital Plan will be put in place. In addition, as part of the recently launched Action Plan for Jobs 2017, there's additional funding for Enterprise Ireland and IDA Ireland to help Irish business export more and to attract new investment.
In conclusion I should emphasise that the best way to deal with the challenges we face, and to support continued growth is through continuation of the competitiveness oriented policies along with prudent management of the public finances that have worked so well. That is what this Government will continue to do.
50. Deputy Joan Burton asked the Minister for Finance his plans to deter further increases in the cost of motor insurance; when he plans to implement such proposals; and if he will make a statement on the matter. [9985/17]
Amharc ar fhreagraThe Cost of Insurance Working Group, chaired by the Minister of State Eoghan Murphy, was established to examine the factors contributing to the increasing cost of insurance and to identify what measures could be introduced to help deter further increases for consumers and businesses. The initial focus of the Working Group was on rising motor insurance premiums and in this regard the Report on the Cost of Motor Insurance was published on January 10, 2017. The Report contains 33 recommendations and 71 actions including actions to:
- address the lack of transparency in the claims environment, through the establishment of a national claims information database which will be located in the Central Bank;
- provide enhanced guidance in how to determine compensation for personal injuries claims, through the establishment of a Personal Injuries Commission;
- address the increasing level of uninsured driving, through the establishment of a fully functioning database which will allow the Gardaí to check insurance compliance through the use of technology such as Automatic Number Plate Recognition; and
- address the issue of suspected fraud, through the establishment of a database that will be funded by industry but held by an independent body and that will take into account data protection concerns.
Work on the implementation of these recommendations has already commenced and I am confident that the 71 actions will be implemented by the end of 2018, with 45 due for completion this year.
While there is no simple solution to reduce the cost of motor insurance, I believe that with cooperation and commitment between all parties, fairer premiums for consumers can be delivered without unnecessary delay. This in turn should lead to greater stability in the pricing of motor insurance and should help prevent the volatility that we have seen in the market in the past. It should also better facilitate new entrants to the market. It should be noted that CSO statistics show that there was no month on month change in the cost of motor insurance between December 2016 and January 2017.
As part of its second phase, the Working Group is now examining issues related to Employer Liability and Public Liability insurance including the impact of the cost of insurance on the competitiveness of particular business sectors. The Working Group will continue to meet on a regular basis in 2017.
51. Deputy Martin Heydon asked the Minister for Finance the status of the work of the tax strategy group in 2017, with particular reference to a review of the current system of betting tax; and if he will make a statement on the matter. [10041/17]
Amharc ar fhreagraAs the Deputy is aware, during the Finance Bill Committee Stage Debates in both the Dáil and the Seanad, my colleague, Minister of State Eoghan Murphy TD, gave a commitment that betting duty would be examined as part of the Tax Strategy Group process in 2017. I can inform the Deputy that officials in my Department are in the early stages of examining the area with a view to completing a review for inclusion in the Excise TSG Paper 2017.
The Deputy will also be aware that the Tax Strategy Group (TSG) is in place since the early 1990s and is chaired by the Department of Finance with membership comprising senior officials and political advisers from a number of Civil Service Departments and Offices. Papers on various options for tax policy changes are prepared annually for the Group by Department of Finance officials. Papers relating to PRSI and social welfare issues are also prepared for the Group by the Department of Social Protection.
In line with the Government's commitment to Budgetary reform including greater engagement with the Oireachtas, the Tax Strategy Group papers relating to Budget 2017 were published in July 2016. This was well in advance of Budget Day and helped to facilitate informed discussion. Decisions in relation to the TSG for Budget 2018 have yet to be finalised but I am satisfied that the approach adopted last year worked well and I do not expect to change it significantly.
It is important to note that the Tax Strategy Group is not a decision-making body and the papers produced are a list of options and issues. They are only one part of an overall Budgetary and Finance Bill process which now includes the National Economic Dialogue, the Budget Oversight Committee and the provision of pre-Budget submissions and engagement with specific groups and individuals.
52. Deputy Joan Burton asked the Minister for Finance his views regarding the incessant lobbying of representative groups for leading bankers to have pay rises and pay rise caps either raised or abolished; and if he will make a statement on the matter. [9984/17]
Amharc ar fhreagraAt meetings between myself, officials and senior representatives of the banks late last year, at which a broad range of topics were discussed, the banks commented on the current remuneration restrictions, which apply to the banks which the State had to rescue, and the potential impact these restrictions have on recruitment and retention. In addition, there is some reference in the banks' most recent annual reports in this regard. However, it would be unfair to characterise this as incessant lobbying.
In addition to the pay restrictions that are currently in place as part of Irish Government policy, it is important to acknowledge the wider European regulatory changes to bankers' remuneration that have been implemented since the banking crisis. These include a number of changes to the framework that applies to bonus payments (including salaries and discretionary pension benefits) to staff of relevant institutions. The aim of these changes is to prevent a re-emergence of the issues we have seen in the past of short-term targets being the focus of institutions due to the remuneration policies implemented for staff resulting in significant risk taking.
The Capital Requirements Directive IV (CRD IV) introduced a remuneration framework to deal with excessive risk taking which applies to individuals within a relevant entity whose professional activities have a material impact on their risk profile, known as 'material risk takers'. These material risk takers include senior management, risk takers, staff engaged in control functions and any employee receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers.
The introduction of the framework in 2014 and its enforcement by the relevant competent authorities across Europe is designed to ensure the excessive risk taking culture and short term focus on targets seen prior to 2008 are not repeated.
53. Deputy Martin Heydon asked the Minister for Finance the status of applications received and the processing of same for the help-to-buy scheme for first-time buyers; and if he will make a statement on the matter. [9030/17]
Amharc ar fhreagraThe Help to Buy incentive was initially announced on 19 July 2016 as part of the "Rebuilding Ireland: Action Plan for Housing and Homelessness." The design of the scheme was outlined in Budget 2017, and the full details were set out in Finance Act 2016.
The initiative aims to assist a first-time purchaser fund the deposit required to purchase or self-build a new house or apartment to live in as their home. The scheme is open to both those who are purchasing new builds from a developer, and those who self-build. By restricting it to new builds and new self-build homes only, it is anticipated that the resulting increase in demand for affordable new build homes should encourage the construction of an additional supply of such properties.
Broadly, the relief takes the form of a rebate of income tax, including DIRT, paid over the previous four tax years. The maximum possible rebate is 5% of the purchase price or valuation for a self-build up to a maximum of €400,000. There are additional conditions of the scheme that must be met, including that the property must have been purchased or built as the first-time buyer's principal private residence, and that the mortgage taken out to purchase or build the home must be a minimum of 70% of the purchase price or 70% of the value of the property in the case of a self-build.
I am advised by Revenue that the number of applications for the Help to Buy incentive received up to Friday 17 February 2017 was:
|
No. of Applications |
No. of Successful applications |
No. of Applications Pending* |
|
2,951 |
872 |
2,079 |
Revenue is encouraging prospective applicants to file any necessary tax returns and resolve any outstanding issues before making the HTB application.
Of the 872 successful applications there have been 307 claims, with 77 claims paid and 230 pending verification. Claims are verified by the qualifying contractor for first-time home purchases or by the solicitor for first-time self-built homes.
*Pending means that the applicants either have to file an outstanding return or address a compliance issue, the application is to be reviewed by Revenue or the applicant needs to finalise his or her application.
54. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he and his Department continue to monitor the policy of lending institutions that are set to repossess family homes even in instances in which the borrower has over the past number of years continued to make repayments to the extent of up to one third of income; if a protocol can be devised to facilitate such borrowers, in view of the fact that the lending institutions originally facilitated the borrower even when it was obvious that they should not have lent to the extent they did; if the lenders might now be expected to at least accept some responsibility in the issue by way of extending the terms of the mortgages or splitting such mortgages in a way to make it possible for the borrower to meet the demand; and if he will make a statement on the matter. [9995/17]
Amharc ar fhreagraThis Government is very committed to providing support for borrowers in mortgage arrears, as evidenced by the range of commitments contained in the Programme for A Partnership Government and the Action Plan on Housing and Homelessness.
The most recent Central Bank figures show that to date over 121,000 restructures have been put in place which reinforces the fact that engagement between borrowers and lenders works. At end September 2016, 88 per cent of the total restructured PDH accounts were deemed to be meeting the terms of their arrangement.
As part of the Mortgage Arrears Resolution Process (MARP) framework the completion of affordability assessments is a key step. In this regard a lender must examine each case on its individual merits and it must base its assessment on the full circumstances of the borrower, including, inter alia, the borrower's current repayment capacity. In order to determine which options for alternative repayment arrangements are viable in each particular case, a lender must explore all of the options for alternative repayment arrangements that they offer. The Code of Conduct on Mortgage Arrears (CCMA) also requires lenders to review an alternative repayment arrangement at appropriate intervals for the type and duration of the arrangement.
The CCMA is a key part of the Central Bank's mortgage arrears framework. It is a statutory code issued under Section 117 of the Central Bank Act, 1989 and applies to all regulated mortgage lenders operating in the State when dealing with borrowers facing or in mortgage arrears on their primary residence, including any mortgage lending activities outsourced by these lenders. Non-compliance with the CCMA is enforceable against regulated entities by the Central Bank.
The recent Central Bank report on Mortgage Arrears, published on the Department of Finance website on 16 December 2016, found that overall, there is strong evidence that banks and non-banks are looking to exhaust available options before moving into the legal process with regard to mortgage arrears on family homes. I would therefore urge those with mortgage debt to engage with their lender by completing a standard financial statement of their income and expenditure or contact MABS for independent professional and confidential advice.
55. Deputy Catherine Murphy asked the Minister for Finance the details of the 2010 facility deed between a bank (details supplied) and the Central Bank, which was guaranteed by his Department; and if he will make a statement on the matter. [10008/17]
Amharc ar fhreagraThe Bank of Ireland annual report for year ended 2010 provided the following details in relation to the facility deed:
On 23 December 2010, the Bank entered into a facility deed (the deed) with the Central Bank. This provides for an uncommitted facility to the Group, guaranteed by the Minister for Finance up to a maximum amount of €10 billion or such increased amount as the Central Bank may, in its absolute discretion determine. Its initial term was one month from the date of execution, which has been extended for a further three month period to 23 April 2011. In entering into the deed, the Bank entered into a counter indemnity agreement with the Minister for Finance. This agreement, dated 23 December 2010, indemnifies the Minister for Finance in respect of any payments made by him under the guarantee in favour of the Central Bank in respect of any indebtedness under the deed. It is co-terminous with payment of interest and prepayment of principal in full under the deed.
In relation to the expiry of the facility, the following details were provided in the bank's annual report for year ended 2012:
On 23 December 2010, the Bank entered into a facility deed (the deed) with the Central Bank, providing for an uncommitted facility to the Group, guaranteed by the Minister for Finance. In entering into the deed, the Bank also entered into a counter indemnity agreement with the Minister for Finance. At 31 December 2011, the amount of the facility was €10 billion which was subsequently reduced to €5 billion on 23 January 2012. This facility expired on 30 June 2012 and the indemnity was released.
The Bank of Ireland annual reports for both 2010 and 2012 can be found on the bank's website.
