Written Answers Nos. 151-167
151. Deputy Noel Rock asked the Minister for Finance if any oversight is being conducted to ensure that mortgage approvals, which have jumped by 42%, are being made in a cautious and responsible manner to prevent another housing bubble crisis; and if he will make a statement on the matter. [16806/17]
Amharc ar fhreagraThe Central Bank is the macro prudential authority in Ireland and it has a range of policy instruments available to it, including the macro prudential measures for residential mortgage lending and the counter-cyclical capital buffer (CCyB) and the other systemically important institution (O-SII) buffer, to help ensure the stability of the financial system.
The residential mortgage lending measures, which provide for certain loan to value and loan to income restrictions on mortgage lending, have the objective of increasing the resilience of the banking and household sectors to the property market and reducing the risk of bank credit and housing price spirals from developing in the future. The CcyB is a time varying capital requirement and is designed to make the banking system more resilient and less pro-cyclical; essentially the CCyB will increase the capital requirement of banks when credit growth is "excessive".
The Central Bank's framework for macro prudential policy elaborates the aims of such policies, which are to:
- strengthen the resilience of the financial system so that it can withstand adverse movements in credit and property cycles or the impact of other economic shocks;
- reduce the potential for vulnerabilities that could lead to the accumulation of financial distress. (Many of the vulnerabilities arise through the pro-cyclicality of the credit cycle).
Both of these aims are key priorities of the Central Bank in its dual mission to 'safeguard stability and protect consumers'.
The Central Bank keeps credit conditions in the Irish economy and it macro prudential policy instruments under review, and calibrates them as considered appropriate. The Central Bank reviews its mortgage lending measures on an annual basis (details are available at www.centralbank.ie/financial-system/financial-stability/macro-prudential-policy/mortgage-measures and the most recent changes to the lending rules came into effect from the start of this year) and it calibrates its CCyB on a quarterly basis (its quarterly assessments are available at www.centralbank.ie/financial-system/financial-stability/macro-prudential-policy/countercyclical-capital-buffer).
These measures are also complementary to existing micro prudential supervision, and to lenders' own risk management practices. The introduction of the Single Supervisory Mechanism (SSM) in November 2014 brought about a fundamental change to the supervision of banking in Ireland and in other participating Member States. The SSM approach to supervision is risk-based. It takes into account both the degree of damage which the failure of an institution could cause to financial stability and the likelihood of such a failure occurring. Where the SSM judges that there are increased risks to a credit institution or group of credit institutions, those credit institutions will be supervised more intensively until the relevant risks decrease to an adequate level. The SSM approach to supervision is based on qualitative and quantitative approaches, and involves judgment and forward-looking critical assessment. In this context it can be noted that credit risk is a key priority for the SSM in 2017.
152. Deputy Sean Fleming asked the Minister for Finance if capital gains tax is payable on the surplus compared with the original cost of land that would have been purchased in 1989 in circumstances (details supplied); the rate of capital gains tax that would be payable for such a transaction in 2017; if relief is available; and if he will make a statement on the matter. [18177/17]
Amharc ar fhreagraI am advised by Revenue that capital gains tax (CGT) is chargeable on the increase in the value of an asset from the time it was acquired to the time of its disposal. Costs relating to the purchase and disposal of an asset are allowed in calculating the amount of CGT due. In addition, indexation relief is available up to and including the year 2002. This relief ensures that gains that relate to inflation up to the end of 2002 are not charged to CGT.
CGT is chargeable in the situation outlined where individuals sell a portion of their farm to build a family home for themselves. The first €1,270 of gains made by an individual in a tax year is exempt from CGT. The rate of CGT is currently 33%.
There is insufficient information provided in order to give a view as to whether a relief may be available. However, depending on the circumstances of the individuals concerned, a relief known as CGT retirement relief may apply to them. This relief applies where individuals owned and used land for farming purposes for a minimum period of 10 years up to the time that the land is sold. In certain situations, land which was let can qualify for relief provided that, immediately before the land was first let, it was owned and used for farming purposes by the individuals selling the land. Where the individual disposing of the land is aged between 55 and 65 and the disposal is to a person other than his or her child, full relief from CGT applies where the market value of the land does not exceed €750,000. In the case of individuals aged 66 or over, the threshold is reduced to €500,000. Marginal relief may apply where the market value of the land does not greatly exceed either €500,000 or €750,000, as the case may be.
Where the individual is aged between 55 and 65 and the disposal is to a child of that individual, full relief from CGT applies. Where the individual is aged 66 or over, relief is capped at €3m where the market value of the land disposed of exceeds that amount.
153. Deputy Noel Rock asked the Minister for Finance the actions he is recommending to rein in the price inflation that is slowing down the growth of the manufacturing industry; and if he will make a statement on the matter. [18212/17]
Amharc ar fhreagraThe Purchasing Managers Index (PMI) indicates that input costs have increased for manufacturers in Ireland in recent months. However, data published by the CSO show that manufacturing output prices increased by 2.4 per cent in February year-on-year, compared with a decrease of -0.7 per cent in 2016 as a whole. This suggests that manufacturing firms were able to offset some of their cost pressures by raising output prices. These price rises are lower than those for the euro area, where industrial producer prices increased by 4.5 per cent year-on-year in February. This producer price inflation reflects, inter alia, the impact of rising oil prices globally.
Nonetheless, price inflation can put pressure on the competitiveness of these firms which is not desirable over the long term. In this regard, it is important that, at firm level, overall costs do not get out of line with our competitors and that pay moves in line with productivity developments.
It is in this context that my Department continues to monitor Ireland's price and competitiveness developments closely and will continue to maintain competitiveness-oriented policies.
154. Deputy Noel Rock asked the Minister for Finance if he will consider criminalising the act of overcharging on a tracker mortgage with a stiff financial penalty for banks (details supplied); and if he will make a statement on the matter. [18215/17]
Amharc ar fhreagraThe Central Bank is the statutory supervisory and enforcement authority for regulated financial services providers in Ireland, and it is also responsible for protecting the consumer of financial services. As such, it is the independent responsibility of the Central Bank to ensure that financial institutions and individuals are held accountable for failings where there is sufficient evidence to support such action.
In respect of the Tracker Mortgage Examination, the Central Bank has advised that it will take appropriate supervisory action, including enforcement action against lenders and persons concerned in the management of those lenders where relevant, to ensure that fair outcomes are achieved for consumers where applicable regulatory standards are not met. In the area of tracker mortgages, the Central Bank has issued a reprimand and imposed a fine of €4.5m on Springboard Mortgages Limited and it has indicated that two other tracker mortgage related enforcement investigations are currently ongoing into Permanent tsb and Ulster Bank Ireland.
The Central Bank also 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. The Central Bank has indicated that, as its investigations proceed, it will keep matters under constant review and that, guided by the evidence, it will make reports to other bodies as necessary.
155. Deputy Noel Rock asked the Minister for Finance if a contingency plan is in place to minimise disruptions in the economy if President Trump were to start enacting some of the trade policies he has discussed; and if he will make a statement on the matter. [18224/17]
Amharc ar fhreagraIt is not yet clear what the impact of the new administration in Washington might be on the Irish economy. There is still considerable uncertainty around the specific trade policies which will be pursued and how successful the new administration will be in enacting these policies.
However, if US economic policy were to become more protectionist, this would likely have significant implications for Ireland given current levels of trade with the US. While the majority of our goods and services exports are to other EU Member States, with the Euro area accounting for around 34 per cent of exports and a further 16 per cent going to the UK, the US nevertheless accounts for some 16 per cent of total exports.
Ultimately, the potential impact will depend on the policies enacted by the new administration. My department is closely monitoring developments and will analyse any proposals in detail to assess the potential impact on Ireland.
Regarding mitigation, the best way to deal with such risks to the international outlook is through competitiveness oriented policies and prudent management of the public finances. That is what this Government will continue to do.
156. Deputy Pat Casey asked the Minister for Finance the number and detail of section 481 film industry relief applications by year since 2011, in tabular form; and if he will make a statement on the matter. [18241/17]
Amharc ar fhreagraI am informed by Revenue that prior to 2015, the Film Relief scheme, provided for by Section 481 Taxes Consolidation Act (TCA) 1997, operated by giving relief to individuals and companies investing in the film industry. A table sets out the number of cases of relief in each of the years 2011, 2012, 2013 and 2014:
|
Year |
No. of cases |
|
2011 |
2,669 |
|
2012 |
3,372 |
|
2013 |
4,217 |
|
2014 |
4,124 |
Information on the number of investors who claimed relief under section 481 for the years 2011 to 2014 and the cost of the relief is available on the Revenue website at www.revenue.ie/en/about/statistics/costs-expenditures.html
With effect from 2015, the scheme provides direct support to film producer companies in the form of a tax credit. The following table sets out the numbers of companies and films were granted relief in each of the years 2015 and 2016:
|
Year |
No. of companies |
No. of films |
|
2015 |
32 |
43 |
|
2016 |
54 |
74 |
Further information relating to the beneficiaries under the current scheme is available on the Revenue website at:
- 2015 beneficiaries: www.revenue.ie/en/about/publications/beneficiaries-tax-relief.html
- 2016 beneficiaries: www.revenue.ie/en/about/publications/beneficiaries-tax-relief-2016.html.
157. Deputy Pearse Doherty asked the Minister for Finance his plans following the Central Bank's report of March 2017 expressing concern at the level of outsourcing within the funds industry; and if he will make a statement on the matter. [18267/17]
Amharc ar fhreagra160. Deputy Pearse Doherty asked the Minister for Finance if, with regard to the reported large reliance of Irish-based funds on outsourced service providers, his views on whether outsourced providers are regulated sufficiently; if the lack of or lower levels of regulation may expose the State to risks; the steps being taken to minimise or eliminate those risks; and if he will make a statement on the matter. [18270/17]
Amharc ar fhreagraI propose to take Questions Nos. 157 and 160 together.
Fund service providers are an important part of the investment fund sector and it is important that we have an appropriate regulatory framework in place for such entities.
The Central Bank of Ireland is responsible for the authorisation and supervision of fund service providers operating in Ireland The legislative framework that applies to these entities includes European and domestic legislation along with Central Bank regulations and guidance. Fund service providers are allowed to outsource certain activities, but the fund service provider ultimately remains responsible for those outsourced activities.
I have been informed by the Central Bank that when reviewing a Fund Service Provider's control environment, assessment of the governance and oversight of outsourcing arrangements is a key area of supervisory focus. The Bank robustly assesses and challenges governance and oversight of outsourcing arrangements. This is achieved by the Bank through regular engagement at individual firm level, industry thematic reviews on outsourcing and off-shore inspections of outsourcing services providers.
In a recent thematic review of outsourcing, the Bank found that outsourcing in larger fund service providers is extensive and observed good governance arrangements where risks were being managed adequately. The review also found some weaknesses and a letter has been sent to all Irish regulated Fund Administrators outlining examples of good practise and making a number of recommendations.
In addition to the letter, I have been informed by the Bank that it intends to issue guidance to supplement the Investment Firm Regulations (Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Investment Firms) Regulations 2017). The regulations and upcoming guidance will include provisions to further enhance fund service provider's oversight of outsourced activities. This will ensure that the Central Bank can subject fund service providers to a strong regulatory framework, and that the good practises found by the Bank in its recent review are more widely followed.
158. Deputy Pearse Doherty asked the Minister for Finance his views on the bespoke legal structures in place here for some investment funds that are being used by funds that are not tax liable and do not employ significant workers here; and if he will make a statement on the matter. [18268/17]
Amharc ar fhreagraThe normal tax treatment afforded to Irish collective investment funds is that the funds invested are allowed to grow on a tax-free basis within the fund. The income is then taxed at the level of the investor rather than the fund, as is standard international practice. The broad rationale for exempting such funds from direct taxation is to facilitate individuals to invest collectively, without suffering double taxation (that is, taxation both within the fund and in the hands of the investor on distribution) as the investor will pay tax as appropriate in the investor's country of residence or establishment. Most OECD countries now have a tax system that provides for neutrality between direct investments and investments through a Collective Investment Vehicle or Fund.
The essence of the regime is that there is no tax on the income and gains accruing to the fund but that an exit charge is imposed on chargeable events, i.e. payments to certain unitholders as distributions of income/capital gains and on gains realised by them on disposal of their units. In order to ensure that the appropriate tax is collected from Irish investors, funds are obliged to operate an exit tax regime and remit the tax deducted in this manner to Revenue. This charge to tax does not apply in the case of unit holders who are non-resident. In the case of non-resident investors, their liability to tax on gains from the fund will be determined in their home jurisdiction. Where the investor is not resident/ordinarily resident in Ireland no exit tax should be deducted provided appropriate declarations are in place.
Irish resident investors subject to the exit tax are also subject to an 8 year deemed disposal rule. If an Irish resident investor has invested in a fund, then every 8 years exit tax arises in respect of that investor. This prevents open ended funds rolling-up their profits indefinitely and ensures that the tax deferral cannot be indefinite.
I want to state that Ireland's corporate tax policies are designed to attract real and substantive operations to Ireland. We only want real and substantive FDI, the kind that brings real jobs and investment. Ireland has not been and will never be a brass plate location.
The OECD has made a series of recommendations, as part of the BEPS process, which are designed to give tax authorities the tools necessary to ensure that profits are correctly attributed to the country where the economic activity which generates them takes place. The BEPS recommendations will greatly enhance the ability of participating countries to ensure the correct alignment of tax and substance and Ireland is playing its part in the implementation of these recommendations. Ireland has been a strong supporter of the BEPS project and I believe it is the best approach for dealing with aggressive tax planning. Ireland will now play an active part in the work to implement the BEPS recommendations globally. The post-BEPS environment will see companies seek to better align the amount of tax that they pay with their substantive operations. The alignment of substance with a competitive rate of tax has long been the cornerstone of our corporation tax policy.
159. Deputy Pearse Doherty asked the Minister for Finance the consideration that has been given to the introduction of a levy on funds based on the Luxembourg model; and if he will make a statement on the matter. [18269/17]
Amharc ar fhreagraThe normal tax treatment afforded to Irish collective investment funds is that the funds invested are allowed to grow on a tax-free basis within the fund. The income is taxed at the level of the investor rather than the fund, as is standard international practice. The 'Gross Roll Up' regime is the term applied to the mechanism whereby investment funds are not subjected to taxation on their income and gains within the fund. That allows the income of the fund to 'roll up' on a gross basis within the fund. The fund may thus grow without deductions for taxation. The fund may, however, suffer withholding taxes on its income or gains and is investors will pay tax as appropriate in the investor's country of residence or establishment. I believe that this is a more appropriate model for taxing funds rather than through a levy.
The broad rationale for exempting such funds from direct taxation at fund level is to facilitate individuals to invest collectively, without suffering double taxation, that is, taxation both within the fund and in the hands of the investor on distribution. Most OECD countries now have a tax system that provides for neutrality between direct investments and investments through a Collective Investment Vehicle or Fund.
Ireland is one of the leading jurisdictions in the world for the establishment and servicing of internationally distributed investment funds. The international funds industry employs over 13,000 people in Ireland. It is a major element of the International Financial Services (IFS) industry which employs over 38,000 people in the State.
In the Finance Act 2016 I introduced the Irish Real Estate Fund (IREF) regime to address the issue of non resident investors, who had been investing in Irish property through fund structures. An IREF is an investment undertaking in which 25% or more of the value of the assets is derived from IREF assets or where it is reasonable to consider the main purpose or one of the main purposes of the investment undertaking is to acquire IREF assets or to carry on IREF business. The IREF must deduct a 20% withholding tax on certain property distributions.
161. Deputy Catherine Connolly asked the Minister for Finance the amount paid by a bank (details supplied) to a company for each of the years 2012 to 2016; and if he will make a statement on the matter. [18310/17]
Amharc ar fhreagra162. Deputy Catherine Connolly asked the Minister for Finance the number of loans and the value of those loans transferred by a bank (details supplied) for collection to a company for each of the years 2012 to 2016; and if he will make a statement on the matter. [18311/17]
Amharc ar fhreagra163. Deputy Catherine Connolly asked the Minister for Finance the number of student loans and the value of these student loans transferred for debt collection by a bank (details supplied) to a company for each of the years 2012 to 2016; and if he will make a statement on the matter. [18312/17]
Amharc ar fhreagraI propose to take Questions Nos. 161 to 163, inclusive, together.
I responded to written questions from the deputy on this topic, questions 119 and 120 on Wednesday 2nd March 2017, to which AIB offered the following clarification:
"AIB has not sold or transferred the ownership of student loans to any third parties. AIB engages with third parties to support the recovery and restructure of the debt where required."
The bank have also have provided the following response to the Deputy's additional queries:
"For commercial reasons AIB does not disclose the level of detail sought. However, the Bank can confirm that it uses a number of third parties in the activity of debt recovery across a number of products and portfolios. The cost of this activity is borne by the Bank and has no customer impact."
As the Deputy will be aware, under the relationship framework the State does not have a role in the day-to-day operations of the banks in which it holds investments or in their management decisions regarding commercial matters.
164. Deputy Catherine Connolly asked the Minister for Finance the number of staff made redundant by a bank (details supplied); the cost of those redundancies for each of the years 2012 to 2016; and if he will make a statement on the matter. [18313/17]
Amharc ar fhreagraAs the Deputy will be aware, under the relationship framework the State does not have a role in the day-to-day operations of the banks in which it holds investments or their management decisions regarding commercial matters. Hence, decisions around redundancies, appropriate staffing numbers and determining the skill sets required across each institution is a matter for each bank's executive management team and the relevant staff, in consultation with their union representatives.
With regard to AIB specifically, the bank have informed me that in the period July 2012 to December 2016, over 2,600 employees in Ireland and the UK left the organisation under the terms of the Voluntary Severance scheme.
The costs associated with the Voluntary Severance scheme in respect of the relevant period are detailed in the bank's annual reports, which can be found here: https://aib.ie/investorrelations/financial-information/results-centre/2016.
165. Deputy Sean Fleming asked the Minister for Finance the adjudications and the findings of the Workplace Relations Commission in respect of public bodies in each of the years 2015 to 2016 and to date in 2017 that have not been accepted by his Department, having consulted with the Department of Public Expenditure and Reform; the numbers involved and the reasons for this; and if he will make a statement on the matter. [18737/17]
Amharc ar fhreagraI understand the Deputy is referring to the bodies under the aegis of my Department. There are 18 bodies under the aegis of my Department, all of which have provided a nil response to the information sought.
166. Deputy Bobby Aylward asked the Minister for Education and Skills the supports available through his Department to assist a person in financing the cost of transporting a child with a learning disability to a school that specialises in assisting such children; and if he will make a statement on the matter. [17759/17]
Amharc ar fhreagraSchool transport is a significant operation managed by Bus Éireann on behalf of the Department.
Currently almost 116,000 children, including some 12,000 children with special educational needs, are being transported in over 4,000 vehicles on a daily basis to primary and post-primary schools throughout the country covering over 100 million kilometres annually.
The National Council for Special Education acts in an advisory role to the Department of Education and Skills on the suitability of placements for children with special educational needs.
When considering applications for school transport in respect of pupils with special needs the Department will consider the report of the Special Education Needs Organiser (SENO).
School transport is provided to children with special educational needs who are attending the nearest school to their place of residence that is or can be resourced to meet their educational needs, as identified by the SENO.
167. Deputy Catherine Murphy asked the Minister for Education and Skills if he will review the policy in which there is no provision or obligation to provide a general purpose hall when providing for renovations in a school, in view of the fact that it is provided for during new school builds; and if he will make a statement on the matter. [18193/17]
Amharc ar fhreagraI wish to advise the Deputy that my Department’s current priority, within the limited funding available, is the provision of essential classroom accommodation in areas where significant demographic need has been established to ensure that each child will have access to a physical school place. The Deputy will therefore appreciate that all applications for capital funding must be considered in the context of the existing challenging financial circumstances, where funding must of necessity, be prioritised for this purpose and to provide mainstream classroom accommodation where additional teachers are being appointed.
To divert funding which would otherwise be used to provide much needed classroom accommodation for GP rooms would mean insufficient funding being available to provide classroom accommodation for a growing population.
