Michael McGrath
Ceist:71. Deputy Michael McGrath asked the Minister for Finance the estimated net cost per annum of USC changes announced in budget 2017 in 2017 and 2018; and if he will make a statement on the matter. [22539/17]
Amharc ar fhreagraUniversal Social Charge
Ceisteanna (71, 72)
Michael McGrath
Ceist:72. Deputy Michael McGrath asked the Minister for Finance if his Department is reassessing the total cost of USC cuts announced in budget 2017; the estimated impact that this will have on the fiscal space in 2017 and 2018; if such a reassessment will impact on the State's compliance with EU fiscal obligations; and if he will make a statement on the matter. [22540/17]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 71 and 72 together.
The estimated first year (i.e. 2017) cost of the USC measures contained in Budget 2017 was €335 million, and the estimated full-year cost of the USC measures was €390 million, with 2018 being the first full year in which the measures are in effect.
While overall income tax receipts are currently below profile, down 3.1% or €198 million at end-April 2017, it should be noted that we were in a similar position at the same point in 2016, when one-off payments, c. €100 million are excluded, revenues were down 1.5% or €94 million against profile. However, due to a pick-up in receipts throughout the remainder of year, income tax finished 2016 ahead of target.
It is important to point out that income tax encompasses a broad range of elements, some of which are not directly impacted by employment or wage developments. These include Deposit Interest Retention Tax, Life Assurance Exit Tax, Dividend Withholding Tax, Professional Services Withholding Tax and Back Duty. These payments can be 'lumpy' in nature and the timing of payments can vary from year to year. I am informed by the Revenue Commissioners that the majority of these specific components are having a drag on overall income tax receipts in the first four months of 2017. In relation to income tax (PAYE), the most significant component of overall income tax, it closed the first third of the year, broadly in-line with profile, down just 0.6% or c. €25 million.
Notwithstanding this, the performance of USC is lower-than-expected, and my Department is currently reviewing the performance of income tax in 2017, in conjunction with the Revenue Commissioners. The initial indications are that Revenue is satisfied that the overall estimate of the Budget 2017, Universal Social Charges (USC) changes of €335 million in 2017, were costed accurately.
At the time of Budget 2017, the apportionment of the total USC package between PAYE and Schedule D was allocated by my Department at €263 million and €72 million respectively, in line with previous norms. However, subsequent analysis by Revenue, indicates that the allocation of the USC package between PAYE and Schedule D should have been €311 million and €24 million in favour of PAYE and Schedule D respectively, due to the dynamics of the USC package. While, this is helping to explain the current under-performance against profile, it is important to point out that this reapportionment should have no adverse impact on the overall collection of USC receipts as this should equalise later in the year.
However, my Department along with the Revenue Commissioners will continue to examine this issue and consider all relevant developments.
Finally, with regards to State's compliance with EU fiscal obligations, Government policy as outlined in the recently published Stability Programme Update, still remains oriented to achieve our medium term objective of a structural budget balance, which we are projected to achieve in 2018.
Motor Insurance
Ceisteanna (73)
Michael McGrath
Ceist:73. Deputy Michael McGrath asked the Minister for Finance the number of persons that applied on an annual basis to the declined cases agreement for motor insurance since its establishment; the number of applications that proved successful; the average premium per successful application; and if he will make a statement on the matter. [22553/17]
Amharc ar fhreagraFreagraí scríofa
At the outset, the Deputy should note that as Minister for Finance, I am not responsible for the operation of the Declined Cases Agreement and therefore do not have direct access to the data that is being requested.
As you are aware, under the Declined Cases Agreement, the insurance market undertakes not to refuse to provide third party motor insurance to an individual where they have approached at least three insurers. This is necessary given the mandatory nature of third party motor insurance in Ireland. Insurance Ireland operates the Declined Cases Agreement on a voluntary basis as a means of ensuring that persons seeking motor insurance will obtain cover. The Agreement is only triggered if an individual is unable to obtain a quotation in the open market, i.e. a person has to have approached at least three insurers without being able to obtain cover from them.
In order to be as helpful as I can, my officials contacted Insurance Ireland about your information request. In response they have provided me with statistics on the number of cases they have dealt with which are set out in the table below. In relation to these cases Insurance Ireland has informed me that they secured a quotation for the applicants in question through the Agreement and that they therefore consider all of these applications to have been successful. With regard to information on the average premium per successful application, I am informed that this is a matter for individual insurers and that this information is therefore not recorded by Insurance Ireland.
|
Year |
No. of Cases |
|
2016 |
1941 |
|
2015 |
1164 |
|
2014 |
669 |
|
2013 |
308 |
|
2012 |
178 |
|
2011 |
169 |
|
2010 |
130 |
|
2009 |
115 |
|
2008 |
53 |
|
2007 |
72 |
|
2006 |
152 |
|
2005 |
246 |
|
2004 |
310 |
|
2003 |
379 |
|
2002 |
393 |
|
2001 |
478 |
|
2000 |
328 |
|
1999 |
329 |
|
1998 |
297 |
|
1997 |
306 |
|
1996 |
348 |
|
1995 |
350 |
It should be noted that the Cost of Insurance Working Group examined the issue of the Declined Cases Agreement, on foot of receiving a number of submissions and queries from individuals about its operation. In light of feedback from members of the public, the Working Group recommended that the Declined Cases Agreement process should be made more transparent. In this regard, Insurance Ireland are scheduled to provide a report by the end of June and annually thereafter to my Department on the operation of the Agreement, including on the cases submitted and resolved, and also on cases where a premium and/or terms are so excessive as to be tantamount to a refusal. The Working Group also recommended that Insurance Ireland should provide further information on its website with regard to the recourse a consumer should have in cases where there is not a satisfactory outcome through the Declined Cases Agreement. The first quarterly report on the implementation of the CIWG’s recommendations has reported that Insurance Ireland has made the necessary alterations to its website in order to provide more prominent information in respect of the Declined Cases Agreement on the home page and that work has commenced on their first annual report on the operation of the agreement.
Tax Credits
Ceisteanna (74)
Bernard Durkan
Ceist:74. Deputy Bernard J. Durkan asked the Minister for Finance if arrangements will be made to transfer tax credits to a person (details supplied); and if he will make a statement on the matter. [22612/17]
Amharc ar fhreagraFreagraí scríofa
I am advised by Revenue that the person concerned has been previously informed by Revenue of what needs to be done to transfer the tax credits concerned. This information has been provided in recent days again. Once the necessary steps are completed, Revenue will be able to complete its consideration of the matter.
Banking Sector Remuneration
Ceisteanna (75)
Michael McGrath
Ceist:75. Deputy Michael McGrath asked the Minister for Finance the position regarding the remuneration cap in place for bank executives; the nature of the cap; his future plans in this area; and if he will make a statement on the matter. [22648/17]
Amharc ar fhreagraFreagraí scríofa
The previous Government put in place a policy which restricts remuneration in the banks in which the State had to inject capital during the financial crisis. This policy has been in place since mid-2011. In brief, remuneration in State supported banks is capped at €500,000 (excluding normal pension entitlements) and no form of remuneration with any variable pay component(s), can be awarded or paid. This policy remains in place and I have no immediate plans to alter it.
However, as I indicated recently, given the State's minority shareholding in Bank of Ireland, should the bank's preferred candidate for CEO be an external individual of the required calibre and with the necessary experience for the role, I would be willing to consider an exception to the pay cap consistent with the terms of the outgoing CEO's remuneration package.
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. This includes a number of changes to the framework that applies to bonus payments (including salaries and discretionary pension benefits) to staff of relevant institutions. The introduction of the framework in 2014 and enforced by the relevant competent authorities across Europe is designed to ensure that the excessive risk taking culture and short term focus on targets seen prior to 2008 is not repeated.
Banking Sector Investigations
Ceisteanna (76)
Michael McGrath
Ceist:76. Deputy Michael McGrath asked the Minister for Finance further to the regulatory breaches that led to the Central Bank’s recent fine of €2.275 million against a bank (details supplied), if specific breaches have been referred to An Garda Síochána; and if he will make a statement on the matter. [22650/17]
Amharc ar fhreagraFreagraí scríofa
The Central Bank has various reporting obligations in circumstances where the information obtained by it at any stage prior to, during, or after an Investigation, gives rise to a suspicion of a criminal offence, a breach of company law, or a breach of competition law. In such circumstances, the Central Bank has an obligation to refer the matter to the relevant authority, as prescribed under Section 33AK(3) of the Central Bank Act 1942, as amended. Relevant authorities include An Garda Síochána, the Revenue Commissioners, the Director of Corporate Enforcement, the Competition Authority, and the National Consumer Agency.
I am awaiting an update from the Central Bank on the case referred to here and I will let the Deputy know the outcome of this as soon as is appropriate.
Tracker Mortgages Examination
Ceisteanna (77)
Michael McGrath
Ceist:77. Deputy Michael McGrath asked the Minister for Finance the amounts paid out to date and the provisions made by each bank covered by the Central Bank’s tracker examination, in tabular form; and if he will make a statement on the matter. [22651/17]
Amharc ar fhreagraFreagraí scríofa
The Central Bank of Ireland published a report providing an update on the Examination of Tracker Mortgage Related Issues on 23 March.
As set out in the report/update, as at end February 2017,
- approximately 9,900 customer accounts have been identified as impacted by lenders, as part of the Examination;
- lenders have commenced contacting the identified impacted customers and have rectified the interest rates applied to such impacted customers’ accounts, thus stopping further detriment (as at the date of the Report, interest rates have been rectified on more than 90% of the accounts that require such rectification;
- approximately €78m has been paid in redress and compensation to approximately 2,600 impacted customers identified as part of the Examination.
The Central Bank has been publishing updates as the Examination progresses and a further update will be published in autumn 2017.
Due to statutory confidentiality requirements, the Central Bank has advised that it may not publicly disclose much of its supervisory engagement with individual firms. In particular, the Central Bank can, generally speaking, only disclose such information in summary or aggregate form, so that individual firms cannot be identified. The Central Bank has to be careful that any public disclosures made by it do not breach its statutory confidentiality requirements or prejudice any ongoing or possible future supervisory or enforcement actions. It is a matter for each individual lender to decide whether or not to disclose provisions made in respect of the Examination.
Tax Data
Ceisteanna (78)
Michael McGrath
Ceist:78. Deputy Michael McGrath asked the Minister for Finance the number and value of voluntary disclosures the Revenue Commissioners have received in respect of the offshore assets prior to the deadline; and if he will make a statement on the matter. [22652/17]
Amharc ar fhreagraFreagraí scríofa
In my Financial Statement to the House on 11 October 2016, I indicated that I would act to restrict the opportunity for tax defaulters to use the voluntary disclosure regime with effect from May 2017. In line with this undertaking, section 56 of the Finance Act 2016 provides that, as and from the voluntary disclosure deadline date, the making of a qualifying disclosure will not be possible where the tax liabilities involved relate to offshore matters.
The period during which qualifying disclosures could be made to Revenue in relation to offshore matters ended on Thursday 4 May 2017. Disclosures are still being processed and the final figure will not be available until next week. I am advised by Revenue that the number of disclosures processed exceeds 2,300, with a value of more than €70 million.
Anybody who has tax liabilities relating to offshore matters and who did not act to address them by 4 May 2017 now faces the prospect of substantially higher penalties, publication in the Quarterly List of Tax Defaulters and possible prosecution. Revenue has advised me that it is committed to making full and effective use of the considerable amounts of data on offshore accounts, structures and assets that will be available to them, through international arrangements for Automatic Exchange of Information, to pursue rigorously anybody who attempts to use such means to evade their tax obligations.
Money Laundering
Ceisteanna (79)
Michael McGrath
Ceist:79. Deputy Michael McGrath asked the Minister for Finance the level of engagement with inspectors from the financial action task force by officials from his Department and officials in the Central Bank as part of the task force’s investigation into money laundering and the financing of terrorism; and if he will make a statement on the matter. [22653/17]
Amharc ar fhreagraFreagraí scríofa
The Financial Action Task Force (FATF) is an inter-governmental body that sets global standards to assist its member countries to combat money laundering and terrorist financing activities. In a seven to ten year cycle, the FATF organises peer-reviews of its member countries Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) measures. As part of this process, it conducts an in-depth examination of all legal, regulatory and operational measures recommended by the standards at that particular time.
Ireland was reviewed in 2006 (3rd round evaluation), and was required to take a series of follow-up actions which were signed off by FATF in 2013. The focus of that review was on technical compliance, i.e. ensuring that our legislation was aligned with FATF standards.
Ireland is now undergoing a new ‘mutual evaluation review’ (“MER”) under the FATF’s 4th round. There is a significant change in emphasis in this round, and much more attention is being paid to the effectiveness of a country’s AML/CFT systems. The first step in the review process was to prepare both a technical compliance submission and an effectiveness one in order to provide FATF with a good understanding of our system and how it operates.
In addition, a key aspect of the new assessment approach is that countries are required to have a much better understanding of the money laundering (ML) and terrorist financing (TF) risks they face. Consequently there was a requirement for Ireland to conduct an extensive national risk assessment (“NRA”) exercise in this area. The NRA of ML/TF risks was published in October 2016 and can be found at the following link:
-http://www.finance.gov.ie/sites/default/files/NRA%20FINAL%20for%20Publication.pdf.
The NRA was prepared under the auspices of the Anti-Money Laundering Steering Committee (AMLSC), a multi-agency body chaired by the Department of Finance. The AMLSC’s membership includes the Central Bank, the Department of Justice and Equality, the Financial Intelligence Unit (FIU) within the Garda National Economic Crime Bureau (GNECB), the Officer of the Revenue Commissioners, the Director of Public Prosecutions (DPP), the Criminal Assets Bureau (CAB), as well as a number of other relevant Departments and bodies.
The Department of Finance, in its capacity as chair of the AMLSC and head of the Irish delegation to the FATF, coordinated and hosted the FATF’s two week onsite assessment of Ireland’s AML/CFT framework in November 2016. During this time the main AMLSC members and representatives from the private sector, met with the FATF assessors in a series of meetings which covered issues such as our understanding of AML/CFT risk, supervision of the financial and non-financial areas for these risks including preventative actions been taken by ‘designated persons’ such as credit institutions, the practical application of our AML/CFT legislation etc.
The FATF’s MER, which will be formally signed off in June, seeks therefore to gain a holistic view of the effectiveness of the Irish AML/CFT regime. Once finalised the MER will be published on-line as an external assessment of Ireland’s AML/CFT systems.
Whilst the Department cannot comment on the results of the assessment or the contents of the draft MER in advance of finalisation at the June 2017 FATF Plenary meeting, we are satisfied with how the assessment has been conducted, and are confident that the report will be constructive for Irish AML/CFT policy going forward.
NAMA Investigations
Ceisteanna (80)
Michael McGrath
Ceist:80. Deputy Michael McGrath asked the Minister for Finance if he, in the course of a meeting he attended with NAMA on 5 February 2014, requested NAMA to consider whether it could advance the repayment schedule of senior bonds through accelerating asset disposals with a view to making bank assets more saleable; and if he will make a statement on the matter. [22655/17]
Amharc ar fhreagraFreagraí scríofa
The Deputy will be aware that I, as Minister, do not have a role in NAMA's commercial decisions. However, while respecting NAMA's independence, I and my officials regularly engage with NAMA regarding its performance and strategy.
I maintain a regular dialogue with the NAMA Chairman and receive appropriate updates regarding NAMA's ongoing progress and future plans. I also meet on occasion with the NAMA Board, which provides me with an opportunity to share my views and understand the Board's views.
Turning to the specific question, I assume the Deputy is referring to the article published on 16 April 2017 in the Sunday Times, referencing my attendance at a NAMA Board strategy day on 5 February 2014. That article makes reference to NAMA's memo of the away day, which was released by NAMA under the Freedom of Information Act 2014. I provide below the text of relevant section of NAMA's memo to which the Deputy refers:
"The Minister noted that following Ireland’s emergence from the Bailout Programme, one of the Government’s key priorities was to reduce Ireland’s debt to GDP ratio from the current 120% to the European average of 94%. The Minister noted the wider implications and impact of NAMA’s performance for the country and particularly for the banks. In this context he noted that the proceeds from a sale of Ireland’s bank shares could be used to reduce the national debt and requested that NAMA consider whether it could advance the repayment schedule of Senior Bonds through accelerating asset disposals with a view to making bank assets more saleable."
Though this is NAMA's note of the meeting and not my own, I do not disagree with their summary of the sentiment I expressed.
It is important to place these comments in the context of what was happening more broadly at the time. Ireland's debt to GDP was around 120%, excluding the State's contingent liabilities relating to NAMA and IBRC.
NAMA had achieved the major milestone of redeeming €7.5bn of its government guaranteed senior debt by YE2013 and had issued an additional €12.9bn of senior debt in support of the IBRC liquidation for which it had been directed to act as a backstop bidder.
Through concerted efforts across the economy, we had generated positive momentum around Ireland's recovery and recently had exited the EU-IMF Programme of Support in December 2013. We faced the challenge of sustaining and building upon that momentum in a way that allowed for continued debt reduction and productive investment in Ireland that facilitated not just a recovery of the FDI sector but a real recovery in the broader domestic economy. At that point we were all making decisions every day that would impact how and at what speed our underlying domestic economy would recover and we had an ongoing responsibility to remain vigilant for opportunities to lay the foundation to accelerate a sustainable recovery of the Irish economy.
NAMA played a key role in various aspects of that sustainable recovery. NAMA's ability to meet its objectives provided clear signals to the market evidencing Ireland's recovery. NAMA bonds also remained a significant contingent liability for the State and posed a challenge to the recovery of the banks as holders of significant amounts of NAMA debt.
It was in the context of NAMA's contribution to Ireland's broader recovery - including the recovery of our banking sector - that I would have challenged NAMA to take advantage of the buoyant market dynamics to accelerate bond redemptions without threatening its objectives under the Act. By achieving its objectives expeditiously, in line wit the NAMA Act, NAMA would assist in the normalisation of the Irish banks and the broader market.
These were entirely appropriate challenges to pose to the NAMA Board during its strategy day. It is important to note that my comments to the NAMA Board did not constitute an instruction nor a direction. These were challenges posed to the NAMA Board in the context of their overriding objectives as defined in the NAMA act.
It remained a matter for the Board to assess these challenges and to determine the most appropriate strategy for fulfilling NAMA's obligations.
As the Deputy is aware there were clear interdependencies between NAMA, the banks and the wider Irish economy. In this context, it is not surprising that such linkages were a matter of discussion between the Minister for Finance and the NAMA Board at a crucial period in establishing Ireland’s recovery.
The Deputy will also be aware that my officials were concurrently preparing a report under Section 227 of the NAMA Act in the period 2013-14. The report, published in July 2014, assessed the extent to which NAMA had made progress toward achieving its overall objectives and whether the continuation of NAMA was necessary for the purposes of the Act. The report concluded that NAMA had made significant progress in achieving its overall objectives, and based on its performance and financial projections in light of the strength of investor interest in Ireland, was well positioned to achieve its overall objectives and so continued to be necessary.
In the context of this report, consideration was given to various strategic alternatives that may facilitate NAMA achieving and ideally surpassing its objectives. The Section 227 Review is available on the Department of Finance website via the following link: www.finance.gov.ie/sites/default/files/NAMA_Section_227_Review_web2.pdf.
Following that review, I fully endorsed the view of the NAMA Board that, like any rational commercial operator, it should take advantage, to the greatest extent possible, of favourable Irish market conditions by increasing the flow of assets to the market while remaining faithful to its purpose and objectives under the NAMA Act.
Finally I would point out that, as this note relates to a meeting from over 3 years ago, I was referring to potential future sales of the State’s bank assets generally and not with any specific transaction in mind.
Banking Sector Data
Ceisteanna (81)
Michael McGrath
Ceist:81. Deputy Michael McGrath asked the Minister for Finance the amount of lending for development purposes, residential and commercial, by regulated financial entities and unregulated entities for each of the years 2014 to 2016 and to date in 2017. [22656/17]
Amharc ar fhreagraFreagraí scríofa
I have been informed by the Central Bank that the amount of net lending to business for development purposes in respect of residential and commercial property is as follows:
Residential
The amount of net lending for residential purposes was -€739 million in 2014. The total outstanding figure stood at €11.8 billion at the end of 2014.
The amount of net lending for residential purposes was -€898 million in 2015. The total outstanding figure stood at €4.8 billion at the end of 2015.
The amount of net lending for residential purposes was -€521 million in 2016. The total outstanding figure stood at €3.3 billion at the end of 2016.
Commercial
The amount of net lending for commercial purposes was -€657 million in 2014. The total outstanding figure stood at €12.5 billion at the end of 2014.
The amount of net lending for commercial purposes was -€962 million in 2015. The total outstanding figure stood at €10.1 billion at the end of 2015.
The amount of net lending for commercial purposes was -€762 million in 2016. The total outstanding figure stood at €8.9 billion at the end of 2016.
The data refers to lending to businesses by Irish resident banks for the purposes of ‘Property investment/development of residential real estate’ and ‘Property investment/development of commercial real estate’.
It is sourced from the following Business Credit and Deposits Statistics Table A.14. as published by the Central Bank of Ireland.
Please note that data for 2017 has yet to be released and is set to be released in mid-June.