Written Answers Nos 309-329
309. Deputy Michael McGrath asked the Minister for Finance the professional and consultancy fees incurred to date in 2017 in respect of the planned initial public offering of a bank (details supplied); the estimated overall cost of professional and consultancy fees likely to be incurred as part of the initial public offering; and if he will make a statement on the matter. [28353/17]
Amharc ar fhreagraThe Deputy should be aware that in line with the State agreements with AIB, all fees incurred by the State in relation to an IPO transaction will be paid by the bank.
Fees are only payable to the selling syndicate of nine investment banks on the completion of a successful transaction, and are proportional to the value of the transaction. As such it is not possible to provide an exact quantum of fees payable as no transaction has occurred yet. However the fees that have been negotiated by my officials are approximately 0.4% of the total transaction size. This is very competitive by reference to comparable transactions in Europe. The fee is split across all appointed syndicate banks and as such the number of firms involved (also within precedent), does not affect the overall fee level payable.
The prospectus published by AIB estimates the potential fee with the assumption that the shares are listed at the mid-point of the published price range, which gives an indicative figure of €12 million.
Fees will also be payable to our independent financial advisor, Rothschild & Sons, communications advisers Gordon MRM and Citigate Dewe Rogerson and our legal advisers, William Fry. Together with some other seller related and underwriter expenses, these fees are estimated in the prospectus to be approximately €4m.
As is normal practice, details of the fees paid by my Department to such parties are disclosed on an ongoing basis under the procurement section of the Department's website:
http://www.finance.gov.ie/who-we-are/financials/consultancy/consultancy/
In addition to the above, AIB will also incur its own fees and expenses in relation to the initial public offering which include broker, corporate advisory, accounting and legal fees. These fees and expenses amount to €25m, are a matter for the board and management of AIB, and are borne by the company directly. Full details are disclosed as part of their published prospectus on p661. The prospectus is available on the AIB Investor Relations website at the following link:
https://aib.ie/investorrelations/ipo-information .
310. Deputy Michael McGrath asked the Minister for Finance the amount of losses incurred by ordinary individual investors in various funds (details supplied); his plans to address this; and if he will make a statement on the matter. [28354/17]
Amharc ar fhreagraI am aware of the matters relating to certain property investment funds that the Deputy has raised, which my officials will continue to monitor.
However, as litigation relating to a number of funds, including those identified by the Deputy, are currently before the courts, it would be inappropriate for me to comment at this time.
311. Deputy Michael McGrath asked the Minister for Finance the number of projects utilising and the amount of tax relief claimed under section 481 film relief for each of the years 2010 to 2016 and to date in 2017; and if he will make a statement on the matter. [28355/17]
Amharc ar fhreagraI am advised 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. The information in respect of the tax cost and number of investors who claimed relief under section 481 for the years 2004 to 2014 is available on the Revenue Commissioners webpage at
http://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/costs-expenditures.aspx.
With effect from 2015, the scheme provides direct support to film producer companies in the form of a tax credit. However, where an application was received up to and including 14 December 2014, it was processed under the previous scheme. Investors availing of the old scheme can choose the year in which to claim their relief. The provisional number of claimants of the tax credit in 2015 is 1,102 with a cost to the Exchequer of €69.7 million.
The following numbers of companies were granted relief during 2015, 2016 and 2017:
- 2015: 32 companies in respect of 43 films
- 2016: 54 companies in respect of 74 films
- 2017: 15 companies in respect of 21 films (to end Quarter 1 2017).
The information relating to the beneficiaries under the current scheme can be found at:
- 2015 beneficiaries: http://www.revenue.ie/en/companies-and-charities/documents/beneficiaries-tax-relief-2015.pdf
- 2016 beneficiaries: http://www.revenue.ie/en/companies-and-charities/documents/beneficiaries-tax-relief-2016.pdf
- 2017 (to Quarter 1) beneficiaries: http://www.revenue.ie/en/companies-and-charities/documents/beneficiaries-tax-relief-2017.pdf
312. Deputy Michael McGrath asked the Minister for Finance the amount of non-bank lending to the property sector in recent years; his plans to bring such non-bank lenders fully into the ambit of regulation; and if he will make a statement on the matter. [28356/17]
Amharc ar fhreagraI have been informed by the Central Bank that it does not track data relating to unregulated non-bank lenders. However, the SME Credit Demand Survey, conducted on behalf of the Department, monitors the credit requirements of SMEs. The latest survey indicates that non-bank finance for SMEs is considerably lower than bank finance. For the period April to September 2016, the survey indicates that 8% of SMEs sought non-bank finance, this represented an increase of 1% on the previous period.
Explicit data on entities who are not regulated by the Central Bank is not published routinely by the Central Bank and it is therefore not possible to provide the number and value requested by the Deputy.
I would however refer the Deputy to the Report on Mortgage Arrears which the Central Bank provided to the Minister for Finance in June 2016 http://www.finance.gov.ie/what-we-do/banking-financial-services/publications/reports-research/report-mortgage-arrears-2016
This provides details of the total number of loans/value of loans owned by unregulated entities as at the end of June 2016.
Loans can be sold by regulated entities to entities that are not regulated by the Central Bank. In July 2015, the Consumer Protection (Regulation of Credit Servicing) Act 2015 (“the 2015 Act”) was introduced to fill the consumer protection gap where loans are sold by the original lender to an unregulated firm.
Under the 2015 Act, if the firm which bought loans from the original lender is an unregulated firm, then the loans must be serviced by a ‘credit servicing firm’ (Credit Servicing Firms are typically firms that manage or administer credit agreements such as mortgages or other loans on behalf of unregulated entities). Credit Servicing Firms are required to obtain authorisation from the Central Bank in order to conduct credit servicing activities as defined in the 2015 Act. A register of those firms who have notified the Central Bank that they wish to avail of the transitional provisions provided for in the legislation (whereby, by virtue of the 2015 Act, they are taken to be authorised to carry on the business of a credit servicing firm pending a decision on their application by the Central Bank) and those firms that have been authorised to carry on the business of a credit servicing firm is available on the Central Bank website.
Credit servicing firms must act in accordance with the requirements of Irish financial services law that applies to ‘regulated financial service providers’. This ensures that consumers, whose loans are sold to another firm, maintain the same regulatory protections that they had prior to the sale, including under the various statutory Codes of Conduct issued by the Central Bank.
313. Deputy Michael McGrath asked the Minister for Finance if a bank (details supplied) has plans to sell a loan portfolio; the details of this portfolio; the timeframe for its sale; the details of other loan portfolio sales planned by the bank; and if he will make a statement on the matter. [28357/17]
Amharc ar fhreagraSignificant progress has been made across the Irish banking sector in reducing the level of NPLs since the financial crisis. This has been primarily achieved by customers engaging directly with their banks and agreeing a sustainable payment plan which allows the customer an achievable path out of arrears, as well as protecting the value of the loan for the bank. In the vast majority of cases this achieves the best outcome for all involved.
Despite this progress, the level of NPLs in the Irish banking sector remains well above the European average. Hence the Single Supervisory Mechanism, as regulator for larger European banks, has tasked the management and board of each institution with developing and implementing a strategy to address this challenge. In recent years Irish banks have introduced multiple engagement channels to facilitate those customers who are reluctant to engage directly with them. Having exhausted these initiatives, if meaningful engagement is not forthcoming from particular customers the bank may be left with no option but to look at alternative solutions which could, as a last resort, include the sale of the loan.
AIB has informed me that it has reduced its impaired loans to c. €8.6bn from a peak of c.€29bn over the past three years. The bank remains focused on reducing impaired loans to a level more in line with normalised European peer levels and will continue to implement sustainable solutions for customers who engage with the bank where feasible. AIB further informed me that the bank continues to review all options in relation to reducing impaired loans.
As the Deputy will be aware, as Minister for Finance I have no role in the day-to-day operations of any of the banks in which the State has a shareholding. The banks operate on an independent and commercial basis and therefore any decisions related to disposals or acquisitions of assets is a matter for the Board and management of each institution, under the terms set out in the relevant Relationship Frameworks.
314. Deputy Michael McGrath asked the Minister for Finance if it is no longer his plan to provide for a rainy day fund in the years 2019 to 2021; and if he will make a statement on the matter. [28386/17]
Amharc ar fhreagraAs part of the 2016 Summer Economic Statement, the Government announced its intention to establish a contingency reserve/rainy day fund with effect from 2019. The crisis years clearly demonstrated that volatility in the economic cycle can be much more pronounced due to the open nature of the Irish economy. As such, the rainy day fund would provide a prudent counter-cyclical buffer, with annual transfers from the Exchequer to the rainy day fund expected following the achievement of the Medium Term Budgetary Objective, projected to be next year.
Following the recent change to the composition of the Government, the rainy day fund is currently under review. An update to the rainy day fund will be provided in the Summer Economic Statement 2017.
315. Deputy Niall Collins asked the Minister for Finance the approximate regulatory and administrative cost in addition to other potential costs of enabling the SBCI to lend directly to SMEs; and if he has explored the concept of relicensing the SBCI in order for it to develop branches for direct lending. [28399/17]
Amharc ar fhreagraThe strategic mission of the Strategic Banking Corporation of Ireland (SBCI) is to deliver effective financial supports to Irish SMEs that address failures in the Irish credit market, while driving competition and innovation and ensuring the efficient use of available EU resources. The SBCI achieves this aim through the provision of low cost liquidity and risk sharing activities supporting the provision of appropriately priced, flexible funding to SMEs.
The SBCI does not lend directly, rather, it lends through partner financial institutions, known as on-lenders. The SBCI currently has 8 on-lenders, 3 bank and 5 non-bank finance providers. Details of the SBCI on-lending partners are available at http://sbci.gov.ie/on-lenders/. To the end of March 2017, the SBCI has lent out €657 million to nearly 15,300 SMEs supporting the employment of over 67,000 people. SMEs in all sectors of the Irish economy benefit from SBCI finance. The majority of SBCI loans are used for investment purposes and SMEs supported by the SBCI are based in all regions of the country, with 85% of them outside Dublin.
The SBCI expects to announce further on-lenders in 2017. It also intends to build further on the risk-sharing aspect of its business model, allowing it to target new sections of the SME finance market and improve the risk appetite of partner finance providers. The SBCI will do this through its operation and management of the Credit Guarantee Scheme and through the use of European financial instruments, building on the success of the Agricultural Cashflow Support Loan Scheme, which was supported by a €100 million COSME facility from the EIF. This scheme has provided the SBCI with the proof of concept for risk sharing and now provides the opportunity to bring additional guarantee-backed products into the Irish market.
There would be significant cost implications associated with the SBCI changing its on-lending model to direct lending as well as regulatory, competition and resourcing issues that would need to be addressed. A suitable distribution model would also be required. From a policy perspective, the SBCI is not intended to be a bank and its role as a National Promotional Institution is quite different from a bank and does not require direct lending. The SBCI takes a market neutral approach; its activities are largely driven by market demands and needs that are not fully met by the private sector with the aim of improving competition. The SBCI is working to develop a more diverse range of on-lenders and innovative products to meet the evolving requirements of the SME finance market and contribute to a sustainable economy.
316. Deputy Michael McGrath asked the Minister for Finance his plans to update the classification of mortgage arrears cases by the number of days to provide more detail particularly for those in arrears up to 90 days and those in arrears over 720 days; and if he will make a statement on the matter. [28415/17]
Amharc ar fhreagraThe Central Bank publishes updates on the Mortgage Arrears and Repossession figures with a significant amount of detail. The most recent set of statistics was published on 8 June 2017.
https://www.centralbank.ie/news/article/residential-mortgage-arrears-and-repossessions-statistics-q1-2017
While the Central Bank collects some additional breakdown on the up to 90 days in arrears category, these breakdowns can be affected by technical issues, mainly to do with timing, which can cause volatility in the series (e.g. reporting for bank holiday weekends , reporting of loan transfer factors and clearing of arrears from longer-term categories). Therefore, the Central Bank does not publish breakdowns for less than 90 days.
It is important to note that these same factors can also feature for the up to 90 days in arrears category, albeit to a much more limited extent. The Central Bank does not have any further breakdown on over 720 days in arrears category.
317. Deputy Michael McGrath asked the Minister for Finance if a review is under way or planned by the European Commission on the European fiscal rules; if he has raised the possibility of such a review with the Council of European Finance Ministers; if the State has made submissions in this respect; and if he will make a statement on the matter. [28416/17]
Amharc ar fhreagraI am currently unaware of any review underway or planned by the European Commission on the European Fiscal Rules. Nor have I raised the possibility of such a review with the Council of European Finance Ministers.
However, changes are made on a regular basis to both the operation of the fiscal rules and the methodology used to assess compliance, particularly in relation to the expenditure benchmark. These changes result from the raising of issues by Member States or in response to proposals from the Commission on its own initiative. For instance, as the Deputy is aware and as outlined in Parliamentary Question number 72 of the 1st of June 2017, I sought and secured a major change from the Commission in achieving an annual update of the reference rate used in the expenditure benchmark. This change applied to all Member States.
Furthermore my Department is currently engaging, on a bilateral basis, with the European Commission to object to the retrospective application of the inclusion of one-offs in the calculation of compliance with the expenditure benchmark for 2016 and the 2016/2017 average. This update to the methodology, which was agreed in late 2016, was set out in the 2017 version of the Vade Mecum on the Stability and Growth Pact.
However the 2017 version of the Vade Mecum itself states that “in order to preserve Member States’ legitimate expectations, compliance with already adopted Council recommendations will continue to be assessed on the basis of methodologies described in the 2016 version of the Vade Mecum." My officials have raised this at European level and the Commission have admitted that there may be legal uncertainty with the approach taken its assessment methodology.
318. Deputy Michael McGrath asked the Minister for Finance the position regarding the financial position of the Insurance Compensation Fund; the insurance levy revenue for 2016 and 2017; the payouts from the fund in 2016 and to date in 2017; the deficit or surplus which is on the fund; the amount owed to the Exchequer by way of loans; and if he will make a statement on the matter. [28417/17]
Amharc ar fhreagraI am advised that the following represents the current financial position of the Insurance Compensation Fund:
|
- |
Amount |
|
Insurance levy revenue received in 2016 |
€73.28m |
|
Insurance levy revenue received to date in 2017 |
€20.75m |
|
Repayments of amounts advanced under Section 5(1) of the 1964 Insurance Act by the Minister of Finance on the recommendation of the Central Bank in 2016 |
€106.61m |
|
Section 3 Payments in respect of first party Setanta claimants in 2016 |
€608,085k |
|
The current deficit on the ICF |
€811.25m |
|
The amount owed to the exchequer by way of loans |
€833.74m |
There have been no repayments of amounts advanced under Section 5(1) of the 1964 Insurance Act by the Minister of Finance on the recommendation of the Central Bank to date in 2017.
There have been no Section 3 Payments in respect of first party Setanta claimants to date in 2017. However, a number of such payments are due to be made shortly.
319. Deputy Dara Calleary asked the Minister for Finance his plans to undertake a fiscal stress test as has been done in other jurisdictions such as the UK; the details of such a test; and if he will make a statement on the matter. [28421/17]
Amharc ar fhreagraMy Department prepares and publishes a risk and sensitivity analysis around the macroeconomic and fiscal forecasts on a biannual basis. The most recent sensitivity analysis was published as part of the 2017 Stability Programme Update (SPU) and included two illustrative scenarios:
1. The impact of a 1 per cent decrease in world output
2. The impact of a 1 per cent interest rate increase
The first scenario would worsen the deficit-to-GDP ratio with the effect reaching 0.2 pp relative to baseline after five years. The second scenario would worsen the deficit-to-GDP ratio with the effect reaching 0.3 pp relative to baseline after five years. Further details on the impact of these shocks can be found in the link below.
http://www.finance.gov.ie/sites/default/files/170502%20Final%20SPU%202017.pdf
Turning to debt developments the recently published Annual Report on Public Debt in Ireland indicates that subject to the baseline scenario of continued economic growth, Ireland’s debt-to-GDP ratio should be below the EU threshold of 60 per cent in the early part of the next decade.
http://www.finance.gov.ie/news-centre/press-releases/department-finance-annual-report-public-debt-ireland-2017
However in analysing our debt sustainability, a range of hypothetical shocks are applied to this baseline position, specifically a GDP shock; an interest rate shock and an extreme scenario involving a very sharp deterioration in the GDP growth rate together with a fiscal shock. The analysis suggests that the debt-to-GDP trajectory is very sensitive to nominal output growth.
Whilst on a headline basis our debt–to-GDP ratio is suggestive of an improving debt burden, this must be treated with caution due to the distortions in our GDP level. Accordingly, ensuring continued fiscal sustainability by reducing both the outstanding debt level and burden must remain a priority. Policy must be aligned to this objective and target a balanced budget along with using windfall gains to retire debt, as is Government policy.
320. Deputy Noel Rock asked the Minister for Finance if he will consider allowing old age pensioners to avail of the home renovation incentive scheme; if he will consider developing a similar scheme for old age pensioners to avail from to make improvements to their household; and if he will make a statement on the matter. [28520/17]
Amharc ar fhreagraThe Home Renovation Incentive (HRI) provides a tax relief by way of an income tax credit on repair, renovation or improvements works on principal private residences or rental properties carried out by tax compliant contractors. HRI came into operation on 25 October 2013, with rental properties being brought within its scope from 15 October 2014. The scheme is scheduled to run until 31 December 2018.
The incentive is already available to all taxpayers, including pensioners, but as is the nature of tax-based incentive schemes, the taxpayer in question needs to have a sufficient tax liability to obtain the benefit of the additional tax credit. The Deputy will be aware that those aged 65 and over are treated more favourably by the tax system with the availability of additional tax credits and increased exemption limits, which can act to reduce or nullify any tax liability.
The development of a similar measure that would benefit old-age pensioners who are outside the income tax net would involve direct expenditure and therefore would be outside the ambit of my Department's vote.
321. Deputy Peter Burke asked the Minister for Finance if the Strategic Banking Corporation of Ireland allocates money for renewable projects; and if he will make a statement on the matter. [28556/17]
Amharc ar fhreagraThe Strategic Banking Corporation of Ireland (SBCI) is Ireland’s National Promotional Institution for SMEs and its strategic mission is to deliver effective financial supports to Irish SMEs that address failures in the Irish credit market, while driving competition and innovation and ensuring the efficient use of available EU resources.
The SBCI began lending in March 2015 and it is very encouraging to note the SBCI’s strong lending figures. To the end of March 2017, the SBCI has lent out €657 million to 15,293 SMEs supporting the employment of over 67,000 people. SMEs in all sectors of the Irish economy benefit from SBCI finance, including manufacturing, agriculture, food, retail, healthcare, transport and construction. The majority of SBCI loans are used for investment purposes and SMEs supported by the SBCI are based in all regions of the country, with 85% of them outside Dublin.
The SBCI does not lend directly. Rather, the SBCI provides appropriately priced, flexible funding to SMEs via its partner finance providers, known as on-lenders, through the provision of low cost liquidity and risk sharing activities. The SBCI currently has three bank and five non-bank on-lenders: AIB; Bank of Ireland; Ulster Bank; Merrion Fleet; First Citizen Finance; Finance Ireland; Bibby Financial Services Ireland and FEXCO Asset Finance.
As SBCI lending is done through on-lenders, loan applicants must comply with the on-lenders credit policies and procedures. Where they meet the credit criteria of the SBCI’s on-lenders, renewable projects may be supported by SBCI funding. However, the SBCI does not specifically allocate money for renewable projects.
The SBCI’s lending to SMEs is largely driven by market demands and needs that are not fully met by the private sector. The Deputy can rest assured that the SBCI is working to develop a more diverse range of on-lenders and innovative products to meet the evolving requirements of the SME finance market and contribute to a sustainable economy.
322. Deputy Pearse Doherty asked the Minister for Finance the number of persons affected by the tracker mortgage investigation at each of the banks involved in specifying the numbers identified as possible victims; the number of customers to date contacted each bank; the number that have had their case closed with redress and compensation paid at each bank; the timeframe in which all affected persons will have their case closed; and if he will make a statement on the matter. [28616/17]
Amharc ar fhreagraThe Central Bank have advised that the information that the Deputy has requested is lender specific supervisory information and the Central Bank is not in a position to comment on individual lenders due to confidentiality requirements under Central bank legislation.
However, in the most recent update on the Examination published by the Central Bank on March 23, certain data in relation to the Examination was released. This included the following:
- approximately 9,900 accounts had been identified as impacted by lenders as part of the Examination as at end February 2017; and
- that lenders had commenced contacting impacted customers identified as at end February 2017 and rectified the interest rates on more than 90% of accounts requiring rectification.
The Central Bank also invoked its powers under Section 22 of the Central Bank (Supervision and Enforcement) Act 2013 to set specific timelines for lenders to complete Phase 2 of the Examination, the last of which will be completed by no later than end September 2017. By this date, the Central Bank expects all lenders to have identified all impacted accounts and have commenced engagement with most impacted customers. The Central Bank will be rigorously monitoring the completion of this work.
A further progress update on the Examination will be issued by the Central Bank in Autumn 2017.
323. Deputy Michael McGrath asked the Minister for Finance the reason additional funding to the Department of Transport, Tourism and Sport to enable recovery and repair on the road network in January 2016 was allowed under fiscal rules in view of the fact that it was initially his Department's position that such a request for additional funding arising from storm damage could not be catered for under the fiscal rules (details supplied). [28641/17]
Amharc ar fhreagraIn terms of the performance public expenditure management in 2016, it should be noted that the provisional outturn (adjusting for Capital Carryover) for total gross voted expenditure was €55,980 million compared to the projection in REV 2016. This represents an over profile amount of less than 0.25% of total gross voted expenditure, highlighting the strict control of the overall level of public expenditure in the course of 2016.
Within this a number of additional current and capital expenditure priorities were met. As the Deputy mentions, these included a larger capital allocation for road repairs in response to flooding damage at the beginning of 2016. This had been previously highlighted in both the Summer Economic Statement and Mid-Year Expenditure Report, and could be accommodated with the fiscal rules. This follows technical revisions to the 2015 expenditure base by Eurostat in relation to the statistical treatment of an AIB-related share transaction. This in turn provided an additional buffer for the calculation of Ireland’s compliance with the expenditure benchmark last year.
Eurostat's decision to classify the AIB transaction as expenditure was only taken in April 2016 during the clarification process on the end-March 2016 Maastricht Returns.
324. Deputy Sean Fleming asked the Minister for Finance if all State bodies under the aegis of his Department have furnished a report confirming the State body has complied with its obligations under tax law for 2015 and 2016 as required under the code of practice for the governance of State bodies; the action which was taken regarding those bodies that did not submit such requests; and if he will make a statement on the matter. [28669/17]
Amharc ar fhreagraIn response to the Deputy's question, there are eighteen bodies under the aegis of my Department of which I am advised that eleven are designated as State Bodies for the purpose of the 2016 Code of Practice for the Governance of State Bodies. With respect to these eleven bodies, please see the information requested in the following table:
|
Body
|
Report furnished confirming compliance with obligations under tax law for 2015 and 2016 as required under the Code of Practice for the Governance of State Bodies |
Action taken |
|
Credit Reviewer |
No. Enterprise Ireland (EI) processes all payments for the Credit Review Office (CRO).
EI are fully tax compliant with regard to all payments made on behalf of the CRO. |
N/A |
|
Credit Union Advisory Committee |
The Credit Union Advisory Committee does not have a tax obligation as its expenditure is accounted for by the Department of Finance. |
N/A |
|
Credit Union Restructuring Board (ReBo) |
2015 Report furnished to the Department of Finance. Awaiting Comptroller & Auditor General sign off on ReBo 2016 accounts. |
N/A |
|
Disabled Drivers Medical Board of Appeal |
The Disabled Drivers Medical Board of Appeal has no tax obligations of its own so there is no obligation on them to report their compliance. |
N/A |
|
Financial Services Ombudsman Bureau |
Yes |
N/A |
|
Financial Services Ombudsman Council |
Yes |
N/A |
|
Irish Fiscal Advisory Council |
Yes |
N/A |
|
National Asset Management Agency |
Yes |
N/A |
|
National Treasury Management Agency
|
The NTMA Tax Compliance Review Report in respect of 2015 has been provided to the Department of Finance.
The 2016 Report is currently being finalised and will be provided to the Department, once available. |
N/A |
|
Strategic Banking Corporation of Ireland |
Yes, 2015 report furnished to Department of Finance.
The 2016 report is not yet complete and will be furnished to the Department of Finance in due course. |
N/A |
|
Tax Appeals Commissioners |
The Tax Appeals Commission has not submitted a report confirming its obligations under tax law in respect of 2016. This matter will be raised at the upcoming Liaison Group meeting. |
The Tax Appeals Commission (TAC) was established in 2016 and there has been significant progress made during the transition period in terms of its governance arrangements. It has recently published its annual report and has submitted its appropriation accounts as required. It has also published its governance arrangements on its website. Consistent with the governance arrangements for bodies under the aegis of the Department of Finance, a liaison group has been established between the Department and the TAC and the first meeting took place in April 2017 with the second meeting due to take place later this week. |
325. Deputy Pearse Doherty asked the Minister for Finance the impact on the net fiscal space for 2018 of retaining mortgage interest relief; his plans for same; and if he will make a statement on the matter. [28684/17]
Amharc ar fhreagraIf the Government decides in Budget 2018 to retain Mortgage Interest Relief (MIR) on the same basis it currently applies, this would be neutral in fiscal space terms. However I should point out that in Budget 2017 the Government confirmed its intention to extend MIR beyond the current end-date of December 2017 on a tapered basis to 2020, in line with the commitment in the Programme for Government. This policy intention will be reviewed, along with the potential impact on fiscal space, as part of the Budget 2018 process.
A review of policy considerations relevant to a range of potential options for the tapered extension of the 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: http://www.finance.gov.ie/sites/default/files/Income%20Tax%20Reform%20Plan-FINAL_0.pdf
326. Deputy Pearse Doherty asked the Minister for Finance if the recently agreed public sector pay deal will be counted as investment in public spending under the confidence and supply agreement that there will be a two to one ratio between investment in public spending and tax cuts; and if he will make a statement on the matter. [28685/17]
Amharc ar fhreagraOn the 8 June 2017, the terms of a proposed agreement was reached between the public service unions and public service management officials representing the Government, regarding an extension to the Lansdowne Road Agreement.
If the proposed agreement is ratified by the unions and representative associations for public servants, then the expenditure will use fiscal space. However, I should point out that the confidence and supply arrangement specifies that the ratio in favour of expenditure is "at least" two to one. The Government will decide on budgetary policy for 2018 in the context of Budget 2018.
327. Deputy Niall Collins asked the Minister for Finance the estimated cost to the Exchequer of a suggested measure (details supplied). [28708/17]
Amharc ar fhreagra333. Deputy Niall Collins asked the Minister for Finance the cost to the Exchequer of a measure (details supplied), in tabular form. [28735/17]
Amharc ar fhreagraI propose to take Questions Nos. 327 and 333 together.
The cost to the Exchequer of an income tax, USC and/or PRSI relief on interest earned from the supply of crowdfunding finance to SMEs would depend on a number of factors, including the marginal USC rate and the PRSI Class of the individual investors concerned; the level of investment; the level of return received on the investment (i.e. the interest rate received); and the level of uptake of the relief. As such it is not possible to estimate an overall Exchequer cost for the measure proposed by the Deputy.
Should the Deputy wish to estimate a cost for such a measure using projections for uptake and return, the Exchequer cost per €10,000 of interest received of allowing an exemption from USC, PRSI and income tax at the standard rate (assuming that the individual’s total income is such that the interest income received would be subject to income tax and that PRSI at Class K or Class S would apply), would be as follows:
|
- |
Cost |
|
Investor with total income below €70,044 |
€2,900 (20% income tax, 5% USC, 4% PRSI) |
|
Investor with total income between €70,044 and €100,000 |
€3,200 (20% income tax, 8% USC, 4% PRSI) |
|
Investor with non-PAYE income exceeding €100,000 |
€3,500 (20% income tax, 11% USC, 4% PRSI) |
Deputy Collins will be aware that Crowdfunding is not currently a regulated activity in Ireland and, in June 2014, the Central Bank of Ireland issued an information notice that alerts consumers to this fact and highlights specific risks that potential investors should be aware of. There is no dedicated harmonised regulation for crowdfunding in the European Union and the existing European financial services legislation was not designed with crowdfunding in mind.
A number of EU Member States have either implemented domestic regulation for crowdfunding or are in the process of considering introducing regulation and my Department and the SME State Bodies Group are considering how to facilitate the development of crowdfunding in Ireland for the benefit of the economy while also ensuring adequate protection for small investors and consumers. As part of this process a public consultation was held in May/June seeking the views of interested parties on whether a regulatory regime would be appropriate for the crowdfunding sector, or if such a regime (or limited regime) with its inherent obligations and costs would be an impediment to the development of crowdfunding in Ireland.
328. Deputy Brendan Griffin asked the Minister for Finance his views on a matter (details supplied) regarding health insurance; and if he will make a statement on the matter. [28709/17]
Amharc ar fhreagraConsiderations relating to the cost of hospital admissions are a matter for my colleague the Minister for Health, Mr. Simon Harris T.D. With regard to tax relief for medical insurance premiums, income tax relief is provided at the standard rate of income tax, currently 20%, and is restricted to the first €1,000 per adult and the first €500 per child insured. Any portion of premium paid in excess of these ceilings no longer qualifies for tax relief.
The ceilings on the premium values qualifying for tax relief were introduced in Budget 2014 as the cost of the tax relief had increased significantly in the years leading up to this change. The Exchequer cost was €404 million in 2011, €448 million in 2012 and was projected to reach €500 million in 2013 if no policy change were made. Furthermore, despite the increasing cost of the relief, the numbers insured were estimated to have reduced by approximately 170,000 over the same period, while at the same time the level of medical cover decreased on some policies. Against this background the increase in costs was unsustainable.
The ceilings introduced in Budget 2014 ensure a level of continuing support via the tax system for those who purchase medical insurance policies, while reducing Exchequer exposure to more expensive policies. The relief is provided at source, which ensures that individuals on lower incomes can receive the full benefit of the available relief.
The Commission on Taxation in its 2009 report recommended the retention of medical insurance relief but that it should be limited. I am satisfied that the introduction of an upper ceiling on the amount of a medical insurance premium that can qualify for tax relief achieves this recommendation, and it is not intended at this time to revert to a system of unlimited tax relief.
329. Deputy Mary Lou McDonald asked the Minister for Finance if his attention has been drawn to an issue (details supplied); and if he will make a statement on the matter. [28723/17]
Amharc ar fhreagra330. Deputy Mary Lou McDonald asked the Minister for Finance if adjustments companies such as a company (details supplied) are required to facilitate the special needs of the disabled; the State measures which exist to discourage excessively aggressive claim management by loss adjusters and insurers; and if he will make a statement on the matter. [28724/17]
Amharc ar fhreagraI propose to take Questions Nos. 329 and 330 together.
As Minister for Finance, I have responsibility for the development of the legal framework governing financial regulation in Ireland, including the regulatory environment for life and non-life insurance. The legal and regulatory framework for the provision of life insurance, non-life insurance and reinsurance in the European Economic Area (EEA), and the supervision of that activity, is prescribed by EU Directives. Insurance companies that operate in this jurisdiction must therefore operate under those requirements. Consequently, it would not be appropriate for me to provide a comment in relation to the companies in question. It should also be noted that requirements set out under equality legislation are a matter for my colleague, the Minister for Justice and Equality.
You should be aware that the Central Bank of Ireland has two specific mandates as regards insurance supervision. Firstly, it is responsible for the prudential supervision of insurance companies it has authorised by seeking to ensure that such firms remain solvent. Secondly, the Central Bank of Ireland is responsible for the supervision of conduct of business in Ireland, also referred to as consumer protection.
In relation to your question, the Central Bank has informed me that its Consumer Protection Code 2012 requires that regulated entities:
- must ensure that in all dealings with customers and within the context of their authorization, they act honestly, fairly and professionally in the best interests of their customers and the integrity of the market;
- must also act with due skill, care and diligence in the best interests of its customers, and must not exert undue pressure or undue influence on a customer;
- must ensure that in all its dealings with customers and within the context of its authorisation, it makes full disclosure of all relevant material information, including all charges, in a way that seeks to inform the customer;
- must ensure that any outsourced activity also complies with the requirements of the Code;
- must ensure that any claim settlement offer is fair, taking into account all relevant factors, and represents the regulated entity’s best estimate of the claimant’s reasonable entitlement under the policy; and
- must be available to discuss all aspects of the claim with the claimant, including assessment of liability and damages, during normal office hours, or outside of these hours if agreed with the claimant.
Furthermore, the Code requires that where a regulated entity engages the services of a loss adjustor and/or expert appraiser it must notify the claimant of the contact details of the loss adjuster and/or expert appraiser it has appointed to assist in the processing of the claim and the regulated entity must maintain a record of this notification.
In addition, Section 3.1 of the Code states that; “Where a regulated entity has identified that a personal consumer is a vulnerable consumer, the regulated entity must ensure that the vulnerable consumer is provided with such reasonable arrangements and/or assistance that may be necessary to facilitate him or her in his or her dealings with the regulated entity.” It defines a vulnerable customer as follows: A “vulnerable consumer” means a natural person who:
a) has the capacity to make his or her own decisions but who, because of individual circumstances, may require assistance to do so (for example, hearing impaired or visually impaired persons); and/or
b) has limited capacity to make his or her own decisions and who requires assistance to do so (for example, persons with intellectual disabilities or mental health difficulties).
Finally, although I am not in a position to comment on individual cases, if a policyholder is dissatisfied with the service received from an insurance company, he/she should, according to the Financial Services Ombudsman’s Bureau, initially submit a complaint in writing to the company itself and then go through its complaint handling process to conclusion – for more details see link below:
https://www.financialombudsman.ie/complaints-process/default.asp?m=1
