Pearse Doherty
Ceist:83. Deputy Pearse Doherty asked the Minister for Finance when he expects the remaining claims from a company (details supplied) to be settled; and if he will make a statement on the matter. [40549/17]
Amharc ar fhreagraInsurance Industry
Ceisteanna (83)
Freagraí scríofa
Setanta Insurance was placed into liquidation by the Malta Financial Services Authority on 30 April 2014. As it was a Maltese incorporated company, the liquidation is being carried out under Maltese law.
As you are aware, the Supreme Court delivered its judgment on 25 May 2017 and overturned the previous decisions of the High Court and the Court of Appeal that the Motor Insurers’ Bureau of Ireland (MIBI) is liable in respect of third party motor insurance claims made against the policyholders of Setanta Insurance. The consequence of this is that the Insurance Compensation Fund (ICF) has been deemed responsible for the payment of such third party claims.
As the judgment has been delivered, the process of making payments in accordance with the provisions of the Insurance Act, 1964, as amended, has commenced. Payments can only be made out of the ICF, with the approval of the High Court and only if it appears to the High Court that it is unlikely that the claim can be met otherwise than from the ICF. If satisfied, the High Court can order payments out of the ICF up to 65% (or €825,000, whichever is the lesser) due to relevant claimants.
In this regard, an Order was granted in the High Court on Monday 24 July 2017 in relation to 324 claims which were subsequently paid by the Office of the Accountant of the Courts of Justice. The Liquidator has informed the Department that, as of 31 August 2017, there are 1,576 active claims, of which 573 claimants have been paid compensation from the ICF subject to the 65%/€825,000 limits.
The Liquidator is currently working on the next batch of claims to be included in the next application to the High Court scheduled to be made in February 2018 in accordance with the legislation. It is hoped that a significant proportion of the claims who have yet to receive any payment will be paid compensation subject to the ICF limits at this time. However, it is important to note that in some instances there may still be ongoing claim settlement discussions between the liquidator and third party claimants which means that such people will not be paid until the first scheduled payment date after formal sign off by both parties.
Over and above the 65% ICF payment, it is expected that a proportion of the balance of money due to third party claimants will be met from the proceeds of the distribution of Setanta’s assets on completion of the liquidation process. However, it is not possible to say definitively at this stage what proportion of the claims this will amount to. In this regard, a preliminary assessment was carried out by Towers Watson in 2014 who indicated that the Liquidator would not be in a position to meet more than 30% of claims out of the assets of the liquidation. The Liquidator has subsequently informed the Department that as the Supreme Court has now made its judgment, a new actuarial report is being commissioned. This is expected to be completed in Q4 2017.
Tax Exemptions
Ceisteanna (84)
Paul Murphy
Ceist:84. Deputy Paul Murphy asked the Minister for Finance the details of the exemption of Government securities where an owner is not ordinarily resident in Ireland, which is listed in a Revenue Commissioners' table called "Cost of Tax Allowances, Credits, Exemptions and Reliefs"; and if he will make a statement on the matter. [40569/17]
Amharc ar fhreagraFreagraí scríofa
Section 43 of the Taxes Consolidation Act 1997 provides that any securities issued by the Minister for Finance may contain a condition that neither the interest nor the capital on that security are liable to income tax or capital gains tax provided they are held by a non-resident. This is in keeping with the general scheme of the taxation of the returns on financial products where non-residents are not subject to Irish tax. For example deposit interest retention tax (DIRT) does not apply to deposit interest earned by non-residents and exit tax does not apply to non-residents who invest in investment undertakings.
In addition, under Ireland’s double tax treaties there is a restriction on the amount of tax that could be withheld on interest payments to residents of our double tax treaty partners. Some agreements provide for no withholding, while others provide for withholding up to a maximum of 5% to 15%.
I am advised by Revenue that the costing included in the “Cost of Tax Allowances, Credits, Exemptions and Reliefs” is the maximum cost of the exemption. It is calculated as 20% of the Central Bank of Ireland’s figures for interest payments. It therefore does not take account of the effect that double tax agreements would have on Ireland’s right to tax on those interest payments.
Help-To-Buy Scheme Data
Ceisteanna (85)
Paul Murphy
Ceist:85. Deputy Paul Murphy asked the Minister for Finance the cost of the help-to-buy scheme on an annual basis; and if he will make a statement on the matter. [40570/17]
Amharc ar fhreagraFreagraí scríofa
The Help-to-Buy incentive aims to both assist those first-time buyers struggling to save for the deposit required to purchase a house, as well as incentivising additional building and the provision of extra housing stock. At the time of Budget 2017 my Department estimated that the Help-to-Buy incentive would cost €40 million per annum for 2018 and 2019 and €50 million in 2017 due to the back-dating of the relief in respect of properties which became eligible for the incentive between 19 July 2016 and the end of that year. Currently, these estimates remain valid.
To avail of the incentive involves two stages. Stage 1 is the application stage, wherein prospective applicants can query whether they qualify for the incentive. They can also get clarity on the maximum amount of rebate they could potentially benefit from, based on their tax paid in a four-year period. Stage 2 is the claims stage, wherein applicants that decide to proceed with purchasing or building a qualifying property must provide documentary evidence of the relevant property transaction or their mortgage draw down.
The estimates for the potential cost of the incentive that have featured in recent media reports are based on the number of applications received by Revenue to stage 1 of the scheme, rather than the number of claims to date. However, many of these applicants may never make a claim to stage 2 for a variety of reasons. These could include individuals who do not go on to obtain mortgage approval, who may decide to purchase a second-hand property, or who are not able to source the new home that they desire.
As of 31 August 2017 Revenue has received 9,629 applications to stage 1 of the Help-to-Buy incentive; of these, 6,626 have been approved. 3,625 stage 2 claims have been created to date; of these 2,998 have been approved. The total estimated cost to the Exchequer to date of the incentive is some €43 million of which some €14.4m relates to retrospective claims for 2016.
The Deputy may also wish to know that Revenue regularly publishes statistics on the Help-to-Buy incentive (including the estimated cost of the incentive) at http://www.revenue.ie/en/about/statistics/htb-incentive-stats.html.
Central Statistics Office
Ceisteanna (86)
Pearse Doherty
Ceist:86. Deputy Pearse Doherty asked the Minister for Finance the estimated effect of including universities on-balance sheet; the discussions that have taken place on this issue with EUROSTAT or other organisations; and if he will make a statement on the matter. [40586/17]
Amharc ar fhreagraFreagraí scríofa
Statistical classification issues are a matter for the Central Statistics Office (CSO).
At the request of Eurostat, the CSO is currently engaged in an assessment of whether the universities be included in, or excluded from, the general government sector. The CSO is engaging with Eurostat regarding the progress and outcome of these deliberations.
Should any university be re-classified within the general government sector (i.e. on balance sheet), then any liabilities to bodies outside the general government sector will clearly add to gross general government debt. Similarly, any revenue or expenditure associated with transactions between the university and bodies outside the general government sector will affect the general government balance.
My Department is awaiting the results of this assessment and will ensure that the fiscal forecasts of the general government sector are appropriately compiled.
Tax Code
Ceisteanna (87)
Michael Healy-Rae
Ceist:87. Deputy Michael Healy-Rae asked the Minister for Finance if he will address a matter (details supplied); and if he will make a statement on the matter. [40591/17]
Amharc ar fhreagraFreagraí scríofa
There are a number of tax incentives in place to encourage the adoption of alternative and electric vehicles which are an environmentally cleaner mode of transport. A relief from Vehicle Registration Tax is provided up to a maximum €5,000 for electric vehicles, €2,500 plug-in hybrid electric and €1,500 for hybrid electric vehicles. The annual rate of motor tax for electric vehicles is the lowest rate chargeable at €120. Further to this electric vehicles qualify for the Accelerated Capital Allowance (ACA) Scheme which is a tax incentive for companies paying corporation tax with the aim of encouraging investment in energy efficient equipment. The ACA Scheme allows for the write off of 100% of the purchase price of energy efficient equipment, including electric vehicles, in the year of purchase as opposed to the normal 8 year capital write-down.
The excise duty rate on natural gas, when used as a transport fuel, is at the minimum allowable under the Energy Tax Directive and will be sustained at that low level for a total period of 8 years.
It is the long-standing practice of Ministers for Finance not to comment on what may be contained in upcoming budgets.
Tax Code
Ceisteanna (88)
Michael Healy-Rae
Ceist:88. Deputy Michael Healy-Rae asked the Minister for Finance if he will address a matter (details supplied) regarding changes in structure of the VRT, road tax or fuel duties; and if he will make a statement on the matter. [40592/17]
Amharc ar fhreagraFreagraí scríofa
As the Deputy will be aware, it is a long-standing practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
VAT Rate Reductions
Ceisteanna (89)
Michael Healy-Rae
Ceist:89. Deputy Michael Healy-Rae asked the Minister for Finance if he will reduce the VAT rate on servicing and repairs (details supplied); and if he will make a statement on the matter. [40616/17]
Amharc ar fhreagraFreagraí scríofa
I am advised by the Revenue Commissioners that the VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. The VAT Directive provides that Member States may apply either one or two reduced rates of VAT to certain goods and services listed in Annex III of the VAT Directive. In addition, the VAT Directive allows for historic VAT treatment to be maintained under certain conditions on certain goods and services not provided for in Annex III.
Ireland currently operates two lower rates of VAT, 13.5% and 9%, as permitted by the Directive. The VAT rate applicable to the servicing and repair of motor vehicles is the reduced rate 13.5% and under the Directive the rate applicable to such services cannot be reduced below 12%. As Ireland already applies the maximum allowable number of reduced rates, it is prohibited under the VAT Directive from introducing a third reduced rate of VAT of 12% to the servicing and repair of motor vehicles as proposed by the Deputy.
Tax Code
Ceisteanna (90)
Willie Penrose
Ceist:90. Deputy Willie Penrose asked the Minister for Finance if he is considering making changes to the forthcoming finance Bill to deal with past issues pertaining to other sectors of the agricultural industry, similar to those in the poultry industry (details supplied); and if he will make a statement on the matter. [40689/17]
Amharc ar fhreagraFreagraí scríofa
As the Deputy is aware a legislative measure was introduced in Finance Act 2016, which enables me to exclude by Ministerial Order, from the Flat Rate Scheme, any specified agricultural sector where the business structures or models employed result in a systematic excess of flat-rate addition payments over input costs borne by flat-rate farmers within that sector.
This legislative measure applies to all agricultural sectors. I can make an order for exclusion where the Revenue Commissioners has carried out a review on an agricultural sector and I am satisfied that, because of the business structures, contractual arrangements or models in place, the application of the flat-rate addition within that sector has resulted in, and would otherwise continue to result in, a systematic excess of flat-rate addition payments over input costs incurred by flat-rate farmers in that sector.
I am advised by Revenue that they are conscious of the risks and are actively looking for indications of the emergence of similar structures and contractual arrangements in other agricultural sectors. I am currently aware of claims concerning one particular agricultural sector, the poultry sector, but I am not aware of other such instances. I would encourage the Deputy to provide any information he has concerning such activities to Revenue.
Tax Data
Ceisteanna (91)
Willie Penrose
Ceist:91. Deputy Willie Penrose asked the Minister for Finance if he will release the microeconomic statistics for the relevant three-year timeframe pertaining to the calculation of the current flat-rate VAT repayment percentage of 5.4% with the calculation deriving therefrom; the amount of under or overpayment arising; if same was included separately in the economic accounts for European agriculture, EEA; and if he will make a statement on the matter. [40691/17]
Amharc ar fhreagraFreagraí scríofa
I am informed by the Revenue Commissioners that the farmer flat-rate methodology is based on detailed estimates across the major items of the Agricultural Accounts, and these are produced by the Central Statistics Office to meet both national and EU requirements and are part of the Economic Accounts of Agriculture (EAA) framework. The published estimates provide information such as output, input costs, gross and net value added and operating surplus. A breakdown of items of expenditure such as feed, electricity, fuel, maintenance and repair, etc. is estimated from the National Farm Survey (NFS) where the average expenses per farm is available by type and size of farm. This information is used to estimate the apportionment of expenditure across different expenditure types. Additional adjustments are made to account for VAT-registered farmers and VAT refunded to VAT-unregistered farmers.
The flat rate addition is designed to compensate VAT-unregistered farmers on an overall basis for the VAT charged to them on the purchases of goods and services. VAT-unregistered farmers add this percentage to their prices when selling to VAT-registered businesses (co-ops, meat factories, etc.) who treat the flat rate amount as a normal business input in their periodic VAT returns.
In accordance with Article 298 of the EU VAT Directive the maximum level of the flat rate addition is calculated annually based on an average of the last three years rates. It is open to the Member State to decide what flat rate level to apply but it has been the policy of successive Governments in Ireland to grant full compensation. The flat rate statistics for each of the relevant three years pertaining to the 5.4% rate as calculated ahead of Budget 2017 were as follows:
|
Year |
Flat Rate % |
|
2014 |
5.34 |
|
2015 |
5.35 |
|
2016 |
5.53 |
|
Average |
5.4 |
The statistics which underpin these rates are continually subject to review in the context of annual reviews relating to VAT Own Resources. The percentages may increase or decrease upon review, but this does not change the legal method of calculating the flat-rate addition based on figures available at the time of calculation.
Customs and Excise Controls
Ceisteanna (92, 93)
Tony McLoughlin
Ceist:92. Deputy Tony McLoughlin asked the Minister for Finance the number of boats, vessels and trawlers that were searched by a customs drug dog unit at Sligo port in each of the years from 2014 to 2016 and to date in 2017; and if he will make a statement on the matter. [40708/17]
Amharc ar fhreagraTony McLoughlin
Ceist:93. Deputy Tony McLoughlin asked the Minister for Finance the number of boats, vessels and trawlers that were searched by a customs dog unit along the west coast in each of the years from 2014 to 2016 and to date in 2017; and if he will make a statement on the matter. [40709/17]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 92 and 93 together.
I am advised by Revenue that a broad range of data, intelligence and analytics is used to evaluate risk and to identify and target sea-going vessels for specific interventions, including rummage and other searches. The specific intervention, if any, in any particular instance will be informed by the risk assessment and the nature of any risk determined on foot of the assessment.
For operational reasons, I am advised by Revenue that they will not be providing details on the number or nature of interventions undertaken by them on foot of their risk assessments for specific locations. All relevant arrivals and traffic is subject to risk assessment and subsequent intervention where necessary. I am assured by Revenue that they carry out regular and ongoing monitoring of the western coastline, including patrols and physical checks at ports, harbours and piers. Revenue continues to actively engage with the coastal community to increase their awareness of the need to report any suspicious activity, suspicious vessels or movements in the area.
I am satisfied with the risk-focused approach adopted by Revenue.
GDP-GNP Levels
Ceisteanna (94)
Róisín Shortall
Ceist:94. Deputy Róisín Shortall asked the Minister for Finance if he will provide the figures for potential GDP growth in percentage terms for each of the years from 2002 to 2021; and if he will provide the actual and Government-assumed levels for 2015 in tabular form; and if he will make a statement on the matter. [40746/17]
Amharc ar fhreagraFreagraí scríofa
My Department’s estimates of potential output for the years 2002 to 2021 are set out in Table 1. These estimates were prepared in the context of SPU 2017 published in April. They are prepared using the EU’s harmonised methodology.
Table 1
|
Year |
Potential GDP Growth Rate (%)* |
|
2002 |
6.7 |
|
2003 |
5.6 |
|
2004 |
5.1 |
|
2005 |
4.6 |
|
2006 |
4.0 |
|
2007 |
2.9 |
|
2008 |
0.7 |
|
2009 |
-0.8 |
|
2010 |
-0.5 |
|
2011 |
0.1 |
|
2012 |
0.9 |
|
2013 |
1.9 |
|
2014 |
3.6 |
|
2015 |
4.3 |
|
2016 |
5.1 |
|
2017 |
4.2 |
|
2018 |
4.3 |
|
2019 |
3.5 |
|
2020 |
3.0 |
|
2021 |
2.8 |
The CSO’s National Income and Expenditure Annual Results (NIE) 2015 indicated a real GDP growth rate of 26.3%. Incorporation of the NIE 2015 figures into the harmonised methodology resulted in estimates of potential output growth of 24.8% in 2015.
On the basis that this unprecedented increase in potential GDP growth would not correspond to an increase in the revenue-generating capacity of the economy, the 2015 figure was adjusted for the purposes of calculating Ireland’s reference rate under the SGP expenditure benchmark pillar. The adjustment entailed replacing the 2015 potential growth rate with the average of the growth rates in 2014 and 2016. In terms of the estimated level of potential GDP, no adjustment was made to the 2015 figure of €226m. This approach was also followed by the Commission and favoured by IFAC.
My Department will publish updated macroeconomic forecasts in October this year, as part of the Budget 2018.
Fiscal Data
Ceisteanna (95)
Róisín Shortall
Ceist:95. Deputy Róisín Shortall asked the Minister for Finance if he will provide figures for the reference rate used by his Department in the calculation of the available fiscal space for each of the years from 2010 to 2021. [40747/17]
Amharc ar fhreagraFreagraí scríofa
Having reduced the deficit below 3% of GDP in 2015, Ireland exited the corrective arm of the Stability and Growth Pact and became subject to the requirements of the preventive arm including the expenditure benchmark in 2016.
The annual reference rate over the period 2016-2021 is set out in the table, and is sourced from the Summer Economic Statement, July 2017.
|
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
|
|
Reference Rate % |
1.9 |
3.3 |
3.5 |
3.6 |
3.5 |
3.4 |
Fiscal Policy
Ceisteanna (96)
Róisín Shortall
Ceist:96. Deputy Róisín Shortall asked the Minister for Finance his views on the assertion made by an organisation (details supplied) in its recent pre-budget submission that the Government could increase the level of available fiscal space in the coming years while still meeting its targets under European fiscal rules. [40748/17]
Amharc ar fhreagraFreagraí scríofa
I am aware of the proposal referred to by the Deputy.
The analysis proposes that fiscal space estimates for the next number of years incorporate the extraordinary 26 per cent GDP growth figure recorded in 2015.
My Department has advised that this approach is inappropriate and risks repeating the pro-cyclical mistakes of the past. I agree with this advice - the 26 per cent growth rate was due to one-off factors which could easily be reversed. For instance, intellectual property can be moved off-shore as quickly and as easily as it was moved on-shore. If this happened, we would be left with a large gap, once again, in the public finances.
In the last Budget, my Department highlighted that it would adjust the fiscal space calculations to take this into account. This approach has been supported by the Irish Fiscal Advisory Council. Moreover, the European Commission has formally stated that it will ignore the 26 per cent growth rate when it (the Commission) assess Ireland’s compliance with the rules.
I would also point out that our public debt ratio is very high - on a per capita basis, we have one of the highest debt ratios in the developed world.
Finally, I want to stress that the economy is approaching full employment and it is imperative not to overheat the economy by adopting inappropriate budgetary policies. It is the fiscal stance that is more important than fiscal space.
In summary, I want to assure the Deputy that the Government will not jeopardise future living standards by adopting inappropriate policies.
Departmental Staff Allowances
Ceisteanna (97)
Catherine Martin
Ceist:97. Deputy Catherine Martin asked the Minister for Public Expenditure and Reform his views on whether the current system under which mileage is calculated for business journeys undertaken in a car creates an incentive to drive greater distance; his plans to undertake a review of this system; and if he will make a statement on the matter. [40215/17]
Amharc ar fhreagraFreagraí scríofa
The motor travel rates reimburse an officer only for the costs incurred in using their own cars for official business and are not deemed to be a source of emolument or profit. Officers are authorised to use their own cars on official business only where no suitable public transport (i.e., train or bus) is available or available only at equal or greater expense or where the use of public transport would result in the loss of official time which it is necessary to avoid. Where an officer is permitted to use a private car in a work setting it is incumbent on the line manger to ensure that travel is by the shortest practicable route while taking account of value for money.
Paragraph 2.28 of the Haddington Road Agreement provided for a review of Travel and Subsistence arrangements. In respect of mileage rates and with effect from 1 April 2017, a number of changes were introduced to the motor travel rates. The revised arrangements were agreed with Staff Side Representatives and were designed to reflect the changes in motoring technology, road conditions, commuter behaviour, and car ownership patterns.
The changes introduced include:
1. An increase in the number of distance bands from two to four allowing a more nuanced compensation regime focused on officers who do significant work related driving;
2. A lower recoupment rate for the first 1,500 km;
3. The formula for calculating mileage now assumes an officer replaces their car every four years rather than every three years.
The agreement with Staff Side Representatives means that the current system will remain in place for three years. At that stage the system will be further reviewed in light of the conditions then applying to business needs and motoring technology.
Office of Public Works Projects
Ceisteanna (98)
Jan O'Sullivan
Ceist:98. Deputy Jan O'Sullivan asked the Minister for Public Expenditure and Reform if applications have been received from County Louth by the Office of Public Works for works to be carried out at a location (details supplied); and if he will make a statement on the matter. [40272/17]
Amharc ar fhreagraFreagraí scríofa
The Office of Public Works has not received an application from Louth Council in respect of the Abbey of St. Mary D’Urso. Although the structure has some local historical significance, the building in question is not in the care of The Office of Public Works and it has no role in relation to it.