Tuesday, 4 Jul 2017

Written Answers Nos. 94-115

Tax Rebates

Ceisteanna (94)

Seán Sherlock

Ceist:

94. Deputy Sean Sherlock asked the Minister for Finance the status of a tax refund for a person (details supplied) in County Kildare. [30969/17]

Freagraí scríofa

Minister for Finance

I am advised by Revenue that a refund of tax for 2016 was made by direct credit to the nominated bank account of the authorised agent of the person concerned on 16 February, 2017.

Tax Agreements

Ceisteanna (95)

Alan Farrell

Ceist:

95. Deputy Alan Farrell asked the Minister for Finance the status of any agreement reached with Taiwan regarding the avoidance of double taxation; and if he will make a statement on the matter. [30984/17]

Freagraí scríofa

Minister for Finance

It is my policy to treat plans or negotiations for double taxation agreements as confidential until they are signed, at which point they are published on Revenue's website. This is a normal practice for most jurisdictions, which respects the confidential nature of the negotiation process.

Ireland, along with all EU partners, adheres to the "One China" policy and as a result does not have diplomatic relations with Taiwan. This does not, however, preclude the development of economic and trade relations. Ireland, together with our EU partners, sees the benefit of encouraging trade with Taiwan and will continue to explore all appropriate opportunities which arise.

Since Taiwan is not recognised as a State by Ireland we cannot enter into a legally enforceable agreement which would be governed by international law. However a number of other EU countries have negotiated commercial agreements with Taiwan along the lines of Double Taxation Agreements. Section 79 of Finance Act 2015 does make it possible to negotiate such an agreement with Taiwan.

While there has been contact with the Taiwanese authorities on potentially entering into such a commercial agreement, no negotiations have taken place with any representatives of Taiwan in relation to a potential agreement.

VAT Rate Increases

Ceisteanna (96)

Barry Cowen

Ceist:

96. Deputy Barry Cowen asked the Minister for Finance the estimated cost to the Exchequer of increasing VAT on commercial construction to the standard rate. [30999/17]

Freagraí scríofa

Minister for Finance

I am informed by the Revenue Commissioners that it is tentatively estimated the additional yield from changing the rate of VAT on commercial construction to the standard rate would be in the region of €240m.

As the information provided to Revenue on tax returns does not require traders to identify the yield generated from specific transactions or types of activities, this estimate involves a significant element of approximation.

NAMA Operations

Ceisteanna (97)

Mick Wallace

Ceist:

97. Deputy Mick Wallace asked the Minister for Finance the rationale to appoint a second auditor to NAMA with regard to the recent announcement by NAMA of the appointment of a company (details supplied) as statutory auditor; the advice sought regarding this decision, by both NAMA and his Department; if legal advice was sought from the Attorney General; if the decision is in breach of section 57(1) of the National Asset Management Agency Act 2009 regarding the role of the Comptroller and Auditor General; and if he will make a statement on the matter. [31156/17]

Freagraí scríofa

Minister for Finance

The pending implementation of the 2014 revised EU Audit Directive and Regulations underpinning the Deputy’s question was first brought to the attention of my officials in the Department of Finance in respect of the potential impact for NAMA in May 2016 by officials within the Department of Jobs, Enterprise and Innovation (DJEI) responsible for transposing this directive into Irish law. DJEI made contact with my Department and the Office of Comptroller and Auditor General ("C&AG") regarding the implementation of statutory audit obligations in the 2014 revised EU Audit Directive and Regulations prior to their transposition into Irish law via SI 312 of 2016 and the Companies Act 2014.

My Department engaged over a number of months with DJEI, the Office of the C&AG and NAMA on this matter. My Department also sought legal advice from the Office of the Attorney General regarding this Directive. The Directive requires that certain companies, including NAMA, must be audited by a Statutory Auditor within the meaning of the Directive. This audit requirement is separate from and in addition to the audit requirements set out in the NAMA Act which remain in effect. It was also confirmed that the C&AG was not a Statutory Auditor within the meaning of the Directive.

I understand that both NAMA and the Office of the C&AG each obtained separate legal advice which concurs with this position. Hence, the C&AG's audit of the statutory financial statements of the NAMA Group entities from the financial year ended 31 December 2016 onwards does not fulfil the requirements of the Directive.

I am advised that the C&AG believes that, at a minimum, a change in legislation would be required in order to become a 'statutory auditor'.

In this regard, cognisance would also need to be given to the particular features of the Constitution which safeguard the independence of the role.

As a consequence, the NAMA Group entities were required to appoint a Statutory Auditor to satisfy the Directors’ obligations under Section 333 of the Companies Act 2014 for the year ended 31 December 2016 and all years thereafter. NAMA launched a tender for the services of a statutory auditor and, arising from this, Mazars were appointed by the NAMA Board in May 2017. I am advised that the tender documentation for this appointment are publicly available on the e-tenders website, should the Deputy wish to review them in detail.

The appointment of a statutory auditor does not override, nor breach, the C&AG's obligation to audit NAMA and NAMA Group Entities for each year end in accordance with Section 57 of the NAMA Act. However, it does mean that there will be a dual audit of NAMA’s accounts –by both its statutory auditor, Mazars, and separately by the C&AG.

In this regard, the Deputy will note that NAMA’s tender document requests that tenderers “should seek to maximise audit efficiency for NAMA and in this regard consideration should be given to making use of the working papers of the C&AG (if available) and similarly the Statutory Auditor should consider the provision of their working papers to the C&AG for their audit”.

I understand that NAMA and the C&AG have worked constructively together to address these changing audit requirements while remaining faithful to their respective obligations under various pieces of legislation.

Tax Compliance

Ceisteanna (98, 99, 100)

John Brassil

Ceist:

98. Deputy John Brassil asked the Minister for Finance further to the meeting with the Committee of Public Accounts and the commitment to deal expediently with a matter (details supplied), the progress to date; when he expects the committee to report; and if he will make a statement on the matter. [31195/17]

John Brassil

Ceist:

99. Deputy John Brassil asked the Minister for Finance when a case (details supplied) will be heard; the reason the Revenue Commissioners are contesting the proposed test appellant; and if he will make a statement on the matter. [31196/17]

John Brassil

Ceist:

100. Deputy John Brassil asked the Minister for Finance if the Revenue Commissioners are objecting to persons taking the test case in respect of a matter (details supplied); if so, the reason therefor; and if he will make a statement on the matter. [31197/17]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 98 to 100, inclusive, together.

I am assuming that the reference to the meeting with the Public Accounts Committee is in fact the meeting on Wednesday 7 December 2016 with the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach where Revenue participants discussed matters pertaining to the issue with that committee. I am not aware of whether the Committee will report further on the matter.

Revenue is statutorily independent in administering the tax code and is also statutorily required to maintain taxpayer confidentiality. The Deputy will therefore understand that I cannot be appraised of the circumstances of any individual case.

I understand tax assessments were raised on individuals affected by this matter and that these are under appeal. The forum to have these appeals resolved is the Tax Appeals Commission (TAC), an independent body tasked with hearing tax appeals.

I am advised it is proposed by the TAC to take a test case. There is a provision in Section 949AN of the Taxes Consolidation Act 1997, which allows the TAC, where cases involve common or related issues, to have regard to a determination made by them in one case, to determine other appeals without the necessity of holding a hearing for those other cases. It is a matter for the TAC to apply this provision. The timing of any appeal is also a matter for the TAC.

I am advised that agents acting on behalf of appellants have proposed a case they believe is suitable for application across all appellants. Revenue has expressed its view, on the request of the TAC, on the suitability of this proposed case as a representative case. The decision on whether to take the case as a representative case is one for the TAC. I am assured by Revenue that it remains committed to facilitating the proposal for a test case approach.

Central Bank of Ireland Staff

Ceisteanna (101, 102)

Clare Daly

Ceist:

101. Deputy Clare Daly asked the Minister for Finance the contact he has had with the Central Bank regarding its chronic staff shortages and its inability to fill 200 available positions; and if he will make a statement on the matter. [31199/17]

Clare Daly

Ceist:

102. Deputy Clare Daly asked the Minister for Finance the discussions he has had or knowledge within his Department regarding the statements by the Central Bank on its inability to attract appropriate applications for job vacancies and the contention that it is deliberately excluding anybody that worked for over ten years in an Irish bank pre-crisis or anyone that worked on the bank inquiry and instead is promoting internally. [31200/17]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 101 and 102 together.

The Central Bank periodically has an informal exchange of views with the Department of Public Expenditure and Reform on the resourcing issues facing the public sector.

I am informed by the Central Bank that while recruitment for positions across the Bank is challenging, and turnover in certain areas, including in Financial Regulation, is higher than optimal, it is not correct to imply that these challenges are having an impact on the operation of the Bank.

The Governor of the Central Bank has previously indicated that where further resources are necessary due to an expanded universe of regulated and supervised firms, the Bank will increase staff numbers as necessary.

The Central Bank has the ability to effectively re-prioritise to meet any increased level of demand and complexity, but where required to, the Central Bank will increase staff numbers as necessary.

The Bank has filled 189 positions in the first half of 2017. Latest figures available show a net increase of 20 FTEs to the end of May 2017. In 2016 the Bank attracted over 10,000 applications for roles and filled over 500 positions.

The Central Bank is not aware of a contention that it is deliberately excluding anybody that worked for over ten years in an Irish bank pre crisis or anyone that worked on the banking inquiry, and in response to this would point to the fact that over 50% (880 FTEs) of the staff employed in the Bank today joined post 2010; a significant number of whom would have joined from a financial services background.

The Central Bank is an equal opportunities employer, committed to diversity and inclusion and there is no policy to exclude applicants with prior experience within the Irish banking system. Roles are filled on the basis of experience and skills as set out in the role profile and many roles benefit from previous experience of working in the banking sector.

Credit Union Regulation

Ceisteanna (103)

Micheál Martin

Ceist:

103. Deputy Micheál Martin asked the Minister for Finance if he will report on the commitments in the programme for Government regarding the credit unions; and if he will make a statement on the matter. [31255/17]

Freagraí scríofa

Minister for Finance

Commitments identified in the Programme for a Partnership Government relating to credit unions and their progress are as follows:

1. The rollout and extension of the Personal Microcredit Scheme, which is providing simple microloans to members and helping to combat the use of moneylenders.

The Personal Microcredit Scheme was commenced on a pilot basis in November 2015, involving 30 credit unions providing individual loans of between €100 and €2,000 with a maximum interest rate of 1% per month. The initiative is being led by the Department of Social Protection in conjunction with the Department of Finance and other interest groups. The It Makes Sense loan is designed to make short-term credit available on a low-cost basis to the people who need it most, and is designed specifically as an alternative to high-cost money-lenders.

As at 17 May 2017 there were 106 credit unions in 219 locations providing loans under the Personal Microcredit Scheme. Involvement in the scheme is voluntary and as such is a matter for individual credit unions themselves

2. Assisting credit unions in making successful applications to retain members' savings in excess of €100,000 (CP88), recognising the independence of the Registrar of Credit Unions.

The Central Bank implemented the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 (the Regulations) on 1 January 2016. It set out an individual member savings limit of €100,000. The Regulations also provided that credit unions could apply to the Central Bank to retain individual members’ savings in excess of €100,000, which were held at commencement of the Regulations and that Credit unions with total assets in excess of €100m could apply to the Central Bank for approval to increase individual member savings in excess of €100,000.

The Central Bank consulted with the Department of Finance on the application process and accepted the Department’s observations, making the application process less onerous. Separately, the Registrar met with the representative bodies to obtain their feedback on the application process.

The Central Bank developed application processes to facilitate credit unions in seeking the approvals as outlined above. As provided for in the Regulations, in order for approval to be granted an applicant credit union must demonstrate that the granting of such approval is consistent with the adequate protection of the savings of members and effective and proportionate having regard to the nature, scale and complexity of the credit union. The submission deadline for applications to retain savings in excess of €100,000 was 27 June 2016. The application form to increase savings in excess of €100,000 does not have a submission deadline and will be accepted on an ongoing basis.

Under the process, applications to retain individual members’ savings in excess of €100,000, which were held at commencement of the Regulations, were assessed primarily by reference to objective financial criteria related to the excess reserves and liquid assets held by the credit union. In addition, applicant credit unions were required to outline a rationale for seeking to retain such savings.

At commencement of the Regulations, there were 196 credit unions reporting on the Prudential Return (PR) that they held individual members’ savings in excess of €100,000 and the total amount of such savings held was c.€165 million. Just over one third of these credit unions applied for permission to retain the individual members’ savings in excess of €100,000. The Central Bank informs me that the majority of these applicants met the financial criteria (on reserves and liquidity levels set out in the application process) and have been approved to retain such savings.

For those credit unions not approved to retain individual member savings in excess of €100,000, transitional arrangements set out in the Regulations apply, meaning that all individual member savings in excess of €100,000 held by these credit unions had to be returned to individual members by 1 January 2017.

3. Asking the Central Bank of Ireland to instigate a review of the continued appropriateness of the savings limit within a year of the formation of the new Partnership Government.

The Central Bank committed to a review of the savings limit, three years from commencement of the regulations (1 January 2016). A letter issued to the Registrar of Credit Unions at the Central Bank from the Minister for Finance on 25 November 2016 requesting the Central Bank of Ireland to instigate a review of the continued appropriateness of the savings limit on credit union members.

4. Working with the Registrar of Credit Unions at the Central Bank to gradually lift current lending restrictions as appropriate, including for housing.

In February 2015 the Central Bank commenced a lending restriction review initiative, whereby credit unions that are subject to a lending restriction, but are satisfied that they have made the necessary improvements and have embedded these improvements in robust risk sensitive lending practices, could apply for a review of their lending restriction. The closing date for receipt of applications under this initiative was 30 September 2015. This review has reduced the number of credit unions with lending restrictions. Currently 60 credit unions, approximately 22% of credit unions by number, have a lending restriction compared with 52% of credit unions at the start of the review process. The Central Bank has informed the Department that there is ongoing engagement with credit unions to lift lending restrictions. The Department will continue to monitor the situation.

5. Credit unions' move towards more electronic and online services, including the rollout of debit cards and enhanced online banking services.

We continue to support credit union initiatives to develop services while protecting members’ savings. In certain circumstances, the provision of new services must be approved by the Registrar of Credit Unions at the Central Bank prior to their introduction.

The Central Bank informs me that in October 2016, a number of credit unions were approved for a new service Members Personal Current Account Services (MPCAS) which provides for a current account and a range of services which includes payment instruments such as debit cards. Approval was granted under additional services provisions (sections 48 to 52) within the Credit Union Act 1997 (as amended). There has been strong interest in this service and the Central Bank is currently processing a significant number of applications, which are at different stages of assessment with the majority currently at an advanced stage. Details and applications forms for the MPCAS service are available on the Central Bank website.

The Central Bank has also indicated that it is open to applications for alternative debit card proposals and recommends the MPCAS framework as a template for such alternative proposals.

Separately, an Implementation Group consisting of members from the four main credit union representative bodies, the Central Bank and a CUAC member, chaired by the Department of Finance was established earlier this year to implement all recommendations in CUAC’s 2016 Report. This Implementation Group will review CUAC recommendations relating to business model development in credit unions.

6. Asking the Credit Union Advisory Committee (CUAC) to conduct a review, and report by the end of June 2016, on the implementation of the recommendations outlined in the Report of the Commission on Credit Unions.

In December 2015 the Minister for Finance invited the Credit Union Advisory Committee (CUAC) to carry out a review of the Implementation of the Recommendations set out in the Report of the Commission on Credit Unions. The review was presented to the Minister on 29 June 2016 and is available on the Department’s website. The Review of Implementation of the Recommendations in the Commission on Credit Unions Report made recommendations in a number of areas including: Tiered Regulation; Section 35; Consultation and Engagement; Governance; Restructuring; Business Model Development; and Additional Policy Matters. An Implementation Group has been established to oversee and monitor implementation of all recommendations.

As indicated above, an Implementation Group was established earlier this year to oversee, monitor and ensure implementation of all recommendations and has met five times to date.

Mortgage Interest Rates

Ceisteanna (104)

Micheál Martin

Ceist:

104. Deputy Micheál Martin asked the Minister for Finance if he will report on the commitments made in the confidence and supply arrangement on taking all necessary action to tackle high variable mortgage rates; and if he will make a statement on the matter. [31256/17]

Freagraí scríofa

Minister for Finance

The issue of mortgage rates is a significant one for this Government. The Government has initiated a number of important and practical initiatives which have the potential to improve the position of mortgage holders, including variable rate mortgage holders. Firstly the Government wishes to maintain and promote the level of competition in the supply of mortgage finance. To that end, the Competition and Consumer Protection Commission (CCPC) was asked to set out options to improve the degree of competition and consumer protection in the mortgage market. As the Deputy will be aware, the CCPC has recently produced its report and set out a number of short, medium and long term action points for consideration. My Department will now liaise closely with CCPC, the Central Bank and other relevant Departments/agencies as appropriate on these action points to further consider their practical potential to enhance competition.

Secondly, the Government considers that measures to encourage and promote a greater level of switching in the mortgage market would also boost the level of competition in the market for existing mortgages. This point was also recognised by the CCPC report and the Central Bank has also carried out work in this area. For example, last April the Central Bank published research on the experience of consumers in switching mortgage providers. That research found that many consumers who have switched had a positive experience. However, it also found that lenders could do more to facilitate mortgage switching. Dedicated mortgage switching staff, the ability to better compare mortgage products, a less time consuming process and clarity around timelines were highlighted as potential stimulants to mortgage switching.

Following on from this research, the Central Bank will publish a consultation paper in Q3 2017 proposing additional measures to facilitate mortgage switching for those consumers minded to switch. Specific proposals to be explored will include:

- lenders providing greater clarity to consumers on the switching process itself, including as to timeframes and potential costs of switching;

- the benefits of lenders having dedicated switching contact points;

- further disclosure rules at trigger points in the mortgage life cycle (e.g. end of a fixed interest-rate term); and

- the scope for increased co-operation amongst lenders during the mortgage switching process.

This will be an important development as previous Central Bank research had shown that borrowers could make savings by switching their mortgage. It should be noted that there has been some downward adjustment in mortgage rates. Recently published Central Bank data on retail interest rates indicated that, in respect of new standard variable rate PDH mortgage business, rates had declined by 19 basis points to 3.38 per cent over the year to March 2017. Fixed rate PDH mortgage rates also declined, with rates fixed for 1-3 years falling by 26 basis points over the same period.

In overall terms, therefore, the Government is of the opinion that increased competition rather than administrative controls is the best way to ensure that retail lending rates are driven down in a sustainable way for the market as a whole and to that end it will continue to advance measures which encourage greater competition and switching in the mortgage market.

Credit Unions

Ceisteanna (105)

Micheál Martin

Ceist:

105. Deputy Micheál Martin asked the Minister for Finance if he will report on the commitments made in the confidence and supply arrangement to develop a strategy for the growth and development of the credit union sector; and if he will make a statement on the matter. [31257/17]

Freagraí scríofa

Minister for Finance

Credit unions have a key role to play in providing access to credit and other important services in local communities throughout the country. The sector has undergone fundamental change since 2011, managing many complex and challenging issues. For example, following the establishment of the Credit Union Restructuring Board (ReBo), there have been 82 mergers involving 156 credit unions resulting in an overall reduction of credit unions from 406 at September 2011 to 277 now. Over the same period loan arrears have fallen from 18% to 9% and the number of credit unions with reserves less than 10% has fallen from 51 in September 2011 to 5 at September 2016. Average reserves now stand at 17%. Lending growth has recently returned with a 6% increase to €4.2 billion in the year to March 2017 which followed a large decrease from peak in 2008.

In December 2015 the Credit Union Advisory Committee (CUAC) was invited to carry out a review of the Implementation of the Recommendations set out in the Report of the Commission on Credit Unions. The final report was published on 6 July 2016. This was a significant report providing an in-depth analysis of the sector from a financial perspective and having met with a range of stakeholders also ensured a balanced report providing focused and effective recommendations.

The recommendations are provided under seven specific headings; tiered regulation, section 35, consultation and engagement with the Central Bank, governance, restructuring, business model development and additional matters.

An Implementation Group was established to oversee and monitor implementation of these recommendations, which will support Credit Unions in developing their business model. The Group consists of members from the four main credit union representative bodies: ILCU; CUDA; CUMA; and NSF as well as a CUAC member, a representative from the Central Bank and is chaired by the Department of Finance. It has met on five occasions since February 2017 and is focused on implementing all recommendations at the appropriate time.

CUAC's Report also fulfils one of the key credit union objectives as outlined in the Programme for Partnership Government which states that the Credit Union Advisory Committee (CUAC) conduct a review on the implementation of the recommendations outlined in the Report of the Commission on Credit Unions.

In addition my officials regularly engage with all key credit unions stakeholders in relation to credit union policy matters which are not part of the remit of the Implementation Group.

The Government recognises the important role of credit unions as a volunteer co-operative movement in this country. The Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall and it is determined to continue to support a strengthened and growing credit union movement.

Banking Sector Remuneration

Ceisteanna (106, 107)

John Brassil

Ceist:

106. Deputy John Brassil asked the Minister for Finance if bonuses were paid to persons (details supplied) in a bank prior to the sale of 28.8% of its shares by the State; and if he will make a statement on the matter. [31259/17]

John Brassil

Ceist:

107. Deputy John Brassil asked the Minister for Finance if a bonus or dividend will be paid to a person (details supplied) following the sale of 28.8% of State share interest in the bank; if so, the amount; and if he will make a statement on the matter. [31264/17]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 106 and 107 together.

As the Deputy will be aware, the previous Government placed restrictions on various types of remuneration in the Irish banks that were recapitalised by the State and these restrictions remain in place.

Hence there cannot be any bonus, dividend or incentive payments for AIB’s executives or staff linked to the IPO of AIB.

Brexit Data

Ceisteanna (108)

Joan Burton

Ceist:

108. Deputy Joan Burton asked the Minister for Finance if there is a senior official with designated responsibility for Brexit matters in his Department; if so, the grade of the designated official; the funding allocated to the said Brexit unit; the cost to date in 2017; the anticipated cost; and if he will make a statement on the matter. [31273/17]

Freagraí scríofa

Minister for Finance

I wish to inform the Deputy that the Assistant Secretary who heads the EU and International Division of my Department has been designated as the lead official in the Department for Brexit matters. A dedicated Brexit Unit within the EU and International Division was established in July 2016 to oversee and coordinate Brexit work across the entire Department and to act as a key liaison point, in particular with the Departments of the Taoiseach and of Foreign Affairs and Trade. There are currently four staff in the dedicated unit which is led at Principal Officer level. Also, an additional staff member has been assigned to the Permanent Representation to the EU in Brussels specifically to deal with Brexit.

We have appointed lead Brexit coordinators at Principal Officer level across all divisions of the Department. The challenges which we face as a result of Brexit are mainstreamed across all divisions of my Department and this is reflected in business planning.

Brexit resourcing has been managed within the existing paybill allocation. My Department will continue to monitor the resources needed to respond to specific policy challenges on an ongoing basis.

Fuel Prices

Ceisteanna (109)

Declan Breathnach

Ceist:

109. Deputy Declan Breathnach asked the Minister for Finance his plans to issue guidelines to petrol and diesel retailers here to reduce the cost to the consumer in view of the fact that oil prices worldwide continue to plunge; and if he will make a statement on the matter. [31307/17]

Freagraí scríofa

Minister for Finance

The price of petrol and diesel sold at the garage forecourt is determined by a number of factors including taxation, the price of the raw material, the prevailing exchange rates as well as the fact the different wholesalers can enter into forward contracts at different rates for the purchase of oil.

There are two elements of tax in the final price of a litre of fuel, the excise rate and VAT. The excise rates (including the carbon charge) in Ireland on motor fuels are 58.8 cent per litre of petrol and 47.9 cent per litre of auto-diesel. These rates do not vary throughout the country and have not changed since 2012. The other component of tax is the VAT, which is applied at 23%.

The price of fuel on the forecourt is set by the individual retailer and would likely take into account the costs associated with the retail of the product such as those mentioned above together with the cost of having oil delivered.

Other than setting tax rates I have no function in this area. My advice to consumers is to shop around and if possible use price comparison websites to ensure they receive the best value for money.

Insurance Industry Regulation

Ceisteanna (110)

Charlie McConalogue

Ceist:

110. Deputy Charlie McConalogue asked the Minister for Finance the regulations that are in place for monitoring house insurance prices; his views on a matter (details supplied); if he will ensure that measures will be taken to prevent house insurance costs from rising; and if he will make a statement on the matter. [31337/17]

Freagraí scríofa

Minister for Finance

As Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. Neither I nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept. This position is reinforced by the EU framework for insurance which expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products. Consequently, I am not in a position to review individual cases nor to direct insurance companies as to the pricing level or terms or conditions that they should apply in particular cases.

The Deputy will note that the Cost of Insurance Working Group looked at this issue in the context of its work on motor insurance and made a recommendation about the need for insurers to inform consumers of the reasons for large increases in quotations. Notwithstanding that this will apply only to motor insurance business, it may also have an impact on other lines of business.

With regard to the cost of home insurance, the Central Statistics Office reports on price movements in relation to insurance connected with dwellings as part of their Consumer Prices Monthly Series. According to the official data from the Central Statistics Office, the cost of insurance connected with dwellings has remained largely stable over the last five years increasing and decreasing at various times. At the beginning of this year it was 6.2% higher than it had been at the beginning of 2012. February 2017 saw increases month-on-month of 2.5% and this has been followed by three months without a price movement. Comparably, for the same period the cost of motor insurance was 48% higher in January 2017 than it had been in January 2012, and at times early last year had been close to 60% higher. There is also anecdotal evidence that the cost of employer liability insurance and public liability insurance has risen at a significantly higher rate than that of home insurance.

In conclusion, therefore, on the basis that there is a need to prioritise the implementation of the cost of insurance motor report and also complete the public liability and employer liability review, I do not propose to look at the issue of the cost of home insurance at this point in time within the context of the Cost of Insurance Working Group's work.

Nevertheless, my Department will continue to monitor the cost of home insurance as part of its general oversight of the insurance sector.

Employment Data

Ceisteanna (111)

Maureen O'Sullivan

Ceist:

111. Deputy Maureen O'Sullivan asked the Minister for Finance his views on whether the increase in poor condition and short-term contracts and general insecurities in modern employment are contributing factors in the increase in employment figures and the stagnation of the tax base; and his plans to tackle this situation. [31357/17]

Freagraí scríofa

Minister for Finance

We are currently seeing very positive signs in the labour market. Total employment, which has passed the two million mark, is at its highest level since 2008.

Encouragingly, the labour market recovery remains broad based with gains recorded in all sectors and at all levels of occupational status last year. The composition of growth also remains strong driven by gains in full-time positions. In fact, according to the latest employment data released by the Central Statistics Office (CSO), annual increases in full-time employment of 5.5 per cent were seen in the first quarter of 2017, while over the same time period, part-time employment fell by 3.4 per cent.

As part of the Quarterly National Household Survey (QNHS) release, the CSO publishes a measurement of underemployment. The following criteria are used to derive underemployment:

1. Working part-time

2. Willing to work additional hours

3. Available to work additional hours

Using these criteria, the CSO data show that part-time underemployment has fallen by 6.4 per cent over the year to Q1 2017, representing less than 5 per cent of all employees while over three-quarters of people who work part-time do so by choice.

In parallel to these significant employment gains, unemployment continues to fall. The unemployment rate stood at 6.4 per cent in May, the lowest rate of unemployment since mid-2008. Crucially, the fall in unemployment is broad-based with substantial declines recorded in short-term, long-term and youth unemployment.

Both average hourly and average weekly earnings have also increased in the year to Q1 2017. Importantly, these increases are broad-based. In the first quarter of 2017, average hourly earnings increased in 9 of the 13 sectors reported by the CSO, year on year, while average weekly earnings increased in 11 of the 13 sectors.

The average number of hours worked over the same period also increased. Like earnings, the increase in the average number of hours worked is broad-based with increases in 9 of the 13 sectors. Importantly, the average number of hours worked increased in sectors such as the Accommodation and Food Services sector, which has a high concentration of part-time employment.

In relation to the tax base, I assume the Deputy is referring to income tax. Income tax has performed steadily in the first six months of 2017, up 3.1 per cent or €274 million on the same period last year. However, income tax receipts of €9,045 million were slightly behind profile, down 2.3 per cent or €214 million. This shortfall against target is across a range of income tax components.

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 and Back Duty. Some of these components are having a drag on overall income tax receipts in the first half of 2017.

However, it is worth pointing out that the key component, i.e. income tax (PAYE), which accounts for around €13 billion or 65 per cent of total income tax receipts is broadly in line with profile at end-June. This is consistent with the increases in employment and earnings in the labour market which we have witnessed in the year to date.

Overall, the continued momentum in the labour market of late is underlined by broad-based, full-time employment gains coupled with significant reductions in short-term, long-term and youth unemployment. The solid performance of PAYE receipts in the year to date is indicative of these positive trends.

Tax Yield

Ceisteanna (112)

Pearse Doherty

Ceist:

112. Deputy Pearse Doherty asked the Minister for Finance the rate of duty on tobacco in each of the past ten years; the duty collected for each of those years; and if he will make a statement on the matter. [31359/17]

Freagraí scríofa

Minister for Finance

I am informed by Revenue that the rate of duty on tobacco products in each of the past ten years is provided in a table:

Year	Cigarettes	Cigars	Roll your own tobacco	Other smoking tobacco
2007	€151.37 per 1000 cigarettes plus 17.78% of the retail price.	€217.388 per kilogram	€183.443 per kilogram	€150.815 per kilogram
2008	€160.57 per 1000 cigarettes plus 17.92% of the retail price.	€229.917 per kilogram	€194.016 per kilogram	€159.507 per kilogram
2009	€175.30 per 1000 cigarettes plus 18.28% of the retail price.	€250.729 per kilogram	€211.578 per kilogram	€173.946 per kilogram
2009 (supp.)	€183.42 per 1000 cigarettes plus 18.25% of the retail price.	€261.066 per kilogram	€220.301 per kilogram	€181.117 per kilogram
2010	€183.42 per 1000 cigarettes plus 18.25% of the retail price.	€261.066 per kilogram	€220.301 per kilogram	€181.117 per kilogram
2011	€183.42 per 1000 cigarettes plus 18.25% of the retail price.	€261.066 per kilogram	€220.301 per kilogram	€181.117 per kilogram
2012	€192.44 per 1000 cigarettes plus 18.03% of the retail price. Rebalanced from 1st May 2012 to €233.11 per 1000 cigarettes plus 9.04% of the retail price, subject to a minimum of €268.14	€271.337 per kilogram	€228.968 per kilogram	€188.243 per kilogram
2013	€237.69 per 1000 cigarettes plus 8.83% of the retail price, subject to a minimum of €268.14	€275.342 per kilogram	€248.608 per kilogram	€191.022 per kilogram
2014	€241.83 per 1000 cigarettes plus 8.72% of the retail price subject to a minimum of €275.62	€279.345 per kilogram	€252.222 per kilogram	€193.799 per kilogram
2015	€255.69 per 1000 cigarettes plus 8.85% of the retail price subject to a minimum of €289.98	€295.350 per kilogram	€273.177 per kilogram	€204.902 per kilogram
2016	€271.96 per 1000 cigarettes plus 9.20% of the retail price subject to a minimum of €307.61	€315.359 per kilogram	€291.683 per kilogram	€218.783 per kilogram
2017	€288.22 per 1000 cigarettes plus 9.52% of the retail price or a minimum tax of €325.11	€335.368 per kilogram	€310.189 per kilogram	€232.664 per kilogram

The total duty collected from tobacco products for each of the last ten years is provided in a table:

Year	Excise (€ millions)
2007	€1,192
2008	€1,171
2009	€1,216
2010	€1,160
2011	€1,126
2012	€1,072
2013	€1,064
2014	€984
2015	€1,082
2016	€1,098

The deputy may note Revenue publishes statistical information on the tax receipts collected and the volume of product released across a range of Excise commodities. This can be sourced using the following link: http://www.revenue.ie/en/corporate/information-about-revenue/statistics/excise/receipts-volume-and-proce/excise-receipts-commodity.aspx.

Tax Code

Ceisteanna (113)

Michael McGrath

Ceist:

113. Deputy Michael McGrath asked the Minister for Finance the detail of the treatment of rental income from residential property situated here from a taxation point of view, including the rate of taxation that applies by different classes of recipients including private landlords domiciled and resident here, private landlords not resident here, Irish resident companies, non-Irish resident companies, partnerships, real estate investment trusts and so on; and if he will make a statement on the matter. [31424/17]

Freagraí scríofa

Minister for Finance

Under section 18 of the Taxes Consolidation Act (TCA) 1997, rental income earned by both Irish resident and non-Irish resident companies and individuals from a property situated in the State is taxable under Case V of Schedule D of the TCA 1997. This basis of taxation makes no distinction between rental income from property let for residential occupation and property let for commercial occupation.

While the same computational rules to calculate taxable rental income are generally applied to both individuals and companies, income earned by individuals from the letting of residential or commercial property situated in Ireland is taxable under self-assessment income tax, while rental income earned by companies is assessable for corporation tax.

Each property must have a separate tax computation in which the rental expenses for each property are deducted from the related rental income for the same property in order to arrive at a surplus (i.e. income greater than expenses) or a deficiency (i.e. expenses greater than income) of taxable rental income in respect of the property. The total of surpluses and deficiencies are then aggregated to arrive at Case V profits or gains arising in the year.

Rates of income tax

Rental income forms part of the landlord’s total taxable income for the relevant tax year and is liable to tax at the individual’s marginal rate of tax – the standard rate of 20% if total income is below the standard rate band and the higher rate of 40% if above. PRSI and USC are in general, also chargeable on rental income.

Rent-a-Room relief

Under the ‘Rent a Room’ scheme provided for in section 216A of the TCA 1997 an individual who lets a room (or rooms) in his or her sole or main residence as residential accommodation may be exempt from income tax, PRSI and USC in respect of income from the letting where the aggregate of the gross rents and any sums for meals or other services supplied in connection with the letting does not exceed the threshold for the year in question, which is €14,000 for 2017. Although the income is exempt it must be included in the individual’s tax return for the year in question.

This relief does not apply to companies or partnerships.

Non-resident individuals

As noted above, non-resident individuals are liable to Irish tax in respect of rental income from Irish property. Where rents are paid directly to a non-resident individual, the tenant is obliged to deduct income tax at the standard rate from the payment, as per section 1041 of the TCA 1997. Credit can be claimed for the tax withheld on the income tax return of the landlord.

Partnerships

For the purposes of taxation each partner is regarded as individually carrying on a separate trade; this concept is referred to as the partner’s “several trade” and each partner is liable to income tax on his/her share of the partnership profits or gains, including Case V rental profits.

Companies

A company, whether resident or non-resident, is chargeable to tax in respect of rental income arising in the State. Such rental income is chargeable at the higher 25% rate of corporation tax. If the company is a “close company” (that is, a company under the control of 5 or fewer participators or participators who are directors) it may also be liable to the 20% close company surcharge on undistributed estate and investment income if the rental profits are retained within the company.

REITs

Finance Act of 2013 introduced the regime for the operation of Real Estate Investment Trusts (REITs) in Ireland. A REIT is a collective investment vehicle designed to hold properties in a tax neutral manner. The function of the REIT framework is to facilitate collective investment in rental property by removing a double layer of taxation which would otherwise apply on property investment via a corporate vehicle.

Rental profits arising in a REIT are exempt from corporation tax. However, profits from any other activities are subject to corporation tax in the normal way. A REIT is subject to strict conditions including an annual requirement to distribute 85% of its property income by way of property income dividend. It must not be a “close company” and it must be a listed company.

Dividend Withholding Tax (DWT) at the standard rate is withheld on distributions to an individual from a REIT. An Irish resident individual is taxable on the distribution received at their marginal rate of income tax, plus USC and PRSI, with credit for the DWT suffered. The tax treatment of the distribution for a non-resident individual will depend on where the individual is resident, whether Ireland has a Double Taxation Agreement with that country, and what the terms of the Double Taxation Agreement are.

Working Group on the Tax and Fiscal Treatment of Rental Accommodation Providers

As the Deputy may be aware, a working group was established in early 2017 to examine and report on the tax treatment of landlords (or rental accommodation providers) and to put forward options, where appropriate, for amendments to such treatment. The establishment of this group was one of the commitments contained in the ‘Strategy for the Rental Sector’ which was published by the Department of Housing, Planning, Community and Local Government in December 2016. The working group is chaired by the Department of Finance and its membership consists of officials from the Department of Finance; the Revenue Commissioners; the Department of Housing, Planning, Community and Local Government; and the Residential Tenancies Board. As part of the group’s work, a public consultation lasting for four weeks was conducted from March to April 2017 which received almost 70 written submissions from a wide range of interested parties, including individual landlords, representative bodies and charitable organisations. The report of the working group is due to be presented to me by the end of July 2017, to allow for consideration of any of the options put forward as part of my deliberations for Budget 2018.

Pyrite Issues

Ceisteanna (114)

Clare Daly

Ceist:

114. Deputy Clare Daly asked the Minister for Finance the projected loss to the Exchequer per annum of the abolition of the rule within the relevant legislation that provides that home owners with pyrite damage below the significant damage certification threshold who have not been accepted into the pyrite remediation scheme cannot avail of the LPT pyrite exemption. [31486/17]

Freagraí scríofa

Minister for Finance

I am advised by Revenue that statutory LPT return in 2013 did not require information in respect of pyrite damage below certification thresholds to be provided to Revenue and therefore the necessary data are not available to provide a basis for estimating the loss to the Exchequer from extending the pyrite exemption to such cases.

Exports Growth

Ceisteanna (115)

Joan Burton

Ceist:

115. Deputy Joan Burton asked the Minister for Finance if his attention has been drawn to the report published by an organisation (details supplied); if his officials have examined the report; his policy proposals to address the issues identified in the report; and if he will make a statement on the matter. [31490/17]

Freagraí scríofa

Minister for Finance

The report, 'A Future Tax Strategy to Grow Irish Indigenous Exports', commissioned by the Irish Tax Institute, has been examined by my officials in the Department of Finance.

Among the concerns raised were that the R&D Tax Credit has a low take-up among SMEs and that there are barriers to the administration process. This was identified by a survey of SMEs for the report.

The central purpose of the R&D Tax Credit is to encourage companies to undertake high-value add R&D activity in Ireland, thereby supporting jobs and investment here. The principal benefit of the R&D Tax Credit is that it provides a tax credit at a 25%, entailing that for every €4 spent on qualifying R&D, a tax credit of €1 will be provided to the company.

I would note that the R&D tax credit is a standard measure available to all companies. However, I am cognisant that the administration process may be an issue for some smaller companies. In this regard, the Revenue Commissioners, in conjunction with relevant stakeholders, have established an R&D discussion group which will look at the administrative burdens faced by those engaging with the R&D Tax Credit.

Furthermore, with a view to streamlining the audit of R&D claims for small businesses, the Revenue Commissioners have stated in a recent e-Brief that they will not challenge the claim under the "science test" in certain circumstances. The new practice will apply to small or micro businesses where:

- an IDA / Enterprise Ireland R&D grant has been approved in respect of the project;

- the credit claim in any year is no more than €50,000;

- the project is undertaken in a qualifying field of science or technology.