Written Answers Nos. 80-92
80. Deputy James Browne asked the Minister for Finance if contracts signed on or before 10 October 2017 will be subject to the increased stamp duty rate of 6% on farmland sales; and if he will make a statement on the matter. [44780/17]
Amharc ar fhreagraI am advised by Revenue that, in the absence of consanguinity relief (i.e. for property transferred between certain relatives) or the exemption on transfers of land to young trained farmers, stamp duty on a sale of farmland is treated as a transfer of non-residential property. A transfer of such property is charged at 6% of the consideration for conveyances executed on or after 11 October 2017.
The transitional measures referred to in my Budget speech will come into effect on the enactment of the Finance Bill. This means that where a binding contract was in place before 11 October 2017 and the subsequent deed of conveyance or transfer is executed before 1 January 2018, stamp duty will be chargeable at the lower rate of 2%.
Anyone who is affected by this measure and makes a stamp duty return to Revenue in relation to a transfer or conveyance of farmland before the enactment of the Finance Bill will be liable to pay the 6% rate of stamp duty introduced from Budget night, but will be able to claim a refund of the difference between the 2% and 6% rates after the Finance Bill is enacted. In the normal course of events, the Finance Bill is usually enacted before the end of December.
81. Deputy James Browne asked the Minister for Finance the stage of a sale agreement at which stamp duty becomes payable; and if he will make a statement on the matter. [44781/17]
Amharc ar fhreagraI am advised by Revenue that stamp duty is chargeable on a conveyance or transfer on sale of a property. This happens when the interest in a property is transferred to or vested in a purchaser. The stamp duty is payable to Revenue 30 days after the execution of the instrument of sale or transfer. Execution of the instrument would be expected to happen at the final stage of the sale when the purchaser pays the full consideration to the seller.
82. Deputy James Browne asked the Minister for Finance if he will address a matter (details supplied) regarding the 6% stamp duty rate on farmland sales; and if he will make a statement on the matter. [44782/17]
Amharc ar fhreagraThe Finance Bill 2017 provides that the age limit applying to consanguinity relief for qualifying land transfers will be removed, allowing for greater freedom when transferring a family farm. Subject to enactment, this means that it will be possible for all gifts and sales of farmlands to closely related family members to benefit from consanguinity relief at a stamp duty rate of 1%. I can also confirm that the consanguinity relief is being extended for a further three years, this will further the policy objective of encouraging the early transfer of farms to younger generations. These measures should be of interest to the individuals referenced by the Deputy.
83. Deputy Joan Burton asked the Minister for Finance the value of assets held in Irish collective asset management vehicles, ICAVs; the average value of such assets; the tax contribution that has been realised or estimated arising to date from ICAVs; and if he will make a statement on the matter. [44786/17]
Amharc ar fhreagraI am advised by Revenue that the profits of these regulated fund vehicles are taxed on a gross roll-up basis. That is, taxation is not levied at the fund level but at the investor level. Such funds may be subject to:
1. the Irish Real Estate Fund regime, which applies to distributions to non-residents made by funds who invest in Irish property, or
2. the exit-tax regime, which applies to all distributions.
Revenue does not currently have data on the matters raised, therefore it is not possible to respond to the issues raised at this point in time.
84. Deputy Joan Burton asked the Minister for Finance his views on the ESRI analysis of budget 2018 by a person (details supplied) that all households have lost income due to the lack of indexation of budget changes in both tax and welfare; and if he will make a statement on the matter. [44787/17]
Amharc ar fhreagra85. Deputy Joan Burton asked the Minister for Finance his plans for reforms to improve household incomes to ensure indexation of budget changes in taxation changes in future budgets; and if he will make a statement on the matter. [44788/17]
Amharc ar fhreagraI propose to take Questions Nos. 84 and 85 together.
I take it that the Deputy is referring to an article by the Economic and Social Research Institute (ESRI) assessing the distributional impact of Budget 2018 which was published in the Irish Times on Thursday, 12th October 2017. This analysis of the Budget is undertaken and published every year by the ESRI. The article this year was headlined “Budget 2018 leads to small losses in income at all levels”. I believe that this headline – which I assume the Deputy is referring to in her question - is both incorrect in its own right and is unreflective of the full article written by the ESRI.
It is important to clarify that the ESRI analysis reflects a specific modelling approach rather than the direct impact of tax and welfare measures on people’s incomes, which is the basis on which Budgets are set. Their analysis relies on the SWITCH (Simulating Welfare and Income Tax Changes) model, a model also used by Government departments, to assess the distributional impact of the Budget. The SWITCH model is a tax-benefit micro-simulation model which allows users to analyse the impact of discretionary tax and social welfare policy in a way that is representative of the full population of households in Ireland. However, the methodology applied to the SWITCH model by the ESRI differs from the methodology used by Government departments.
The ESRI analysis compares Budget 2018 to a hypothetical scenario where all tax bands, tax credits and welfare payments are increased by 3.1 percent, which is the ESRI’s forecast of wage growth for 2018. They refer to this hypothetical scenario in the article as a “neutral benchmark”. By comparing Budget 2018 to this hypothetical scenario, they estimate that the Budget results in relative income losses. In other words, the ESRI did not say in their article that Budget 2018 directly imposes income losses on households, but rather that the Budget imposes losses relative to the ESRI’s choice of benchmark.
I would like to emphasise that their method does not result in a measure of the actual change in people’s incomes by income group due to the budget. In contrast, my Department’s methodology compares a situation where the existing 2017 tax and welfare parameters remain in place in 2018, to an alternative situation where the Budget 2018 tax and welfare parameters are applied. This method reflects the actual change in people’s incomes resulting from the tax and welfare measures in Budget 2018, and I believe it is more informative than the ESRI approach when assessing the direct impact of the Budget on household incomes in 2018.
I further note that in the main text of the article the ESRI acknowledge that the assumption of indexing tax and social welfare parameters to wage growth is costly; they estimate it would cost in the region of €1.1 billion. The Budget Day Package, net of the €180 million allocated to the Public Service Stability Agreement, is approximately €1.2 billion. In line with the Programme for a Partnership Government and the Confidence and Supply arrangement, this is distributed on a 70:30 basis between expenditure and taxation measures, which exceeds the split outlined in the Programme for a Partnership Government. With this fiscal context in mind, the ESRI’s hypothetical scenario of wage indexation is not affordable in 2018 given the other key priorities for Government expenditure such as housing and education.
The elements of the Budget 2018 tax package relating to reductions to USC, increases to the income tax standard rate bands and increases to the Home Carer Tax Credit and the Earned Income Credit amount to a cost of €333 million on a first year and €397 million on a full-year basis.
No Government has followed a policy of strict indexation of tax bands and/or tax credits, as this does not allow flexibility to adapt spending as necessary to the level of resources available to the Government in any given Budget. It would also restrict the ability of the Government to target resources where the need is greatest.
The Department of Employment Affairs and Social Protection (DEASP) will produce and publish a Social Impact Assessment of Budget 2018 in the coming weeks. This will use the SWITCH model to consider the impact of the Budget on households across the income distribution. My Department provides inputs to DEASP when they are preparing the Social Impact Assessment. However, preliminary analysis carried out in advance of the Budget by my Department using the SWITCH model indicated that, in overall terms, households experience an average increase in the order of 1% in weekly disposable income as a result of Budget 2018. Gains are highest for the first (lowest income) quintile at over 2 per cent and lowest for the fifth (highest income) quintile at below 1 per cent, pointing to a progressive Budget package. These gains represent the actual change in people’s incomes resulting from the tax and welfare measures in Budget 2018, and I would point out that the percentage gains are greatest for the least well-off.
86. Deputy Joan Burton asked the Minister for Finance the estimated revenue anticipated from the increase in stamp duty in 2017 and each of the next three years; and if he will make a statement on the matter. [44789/17]
Amharc ar fhreagraThe Revenue Ready Reckoner (http://www.revenue.ie/en/corporate/information-about-revenue/statistics/ready-reckoner/index.aspx, on page 18) shows the effect of a 0.5% increase in the Stamp Duty rate on non-residential property (€47m). This is multiplied up to €94m for a 1% increase, or €376m for a 4% increase.
I am informed by Revenue that the estimated yield from the increase in Stamp Duty on non-residential property as announced in Budget 2018 measure is based on payments of Stamp Duty on the purchase of non-residential property in 2016 and an assessment of trends in payments in 2017. In the absence of any other forecast of transaction levels in the non-residential property market in 2018, trends from recent years provide the only reasonable basis on which to estimate future receipts. The estimated yield makes an assumption of no behavioural change.
87. Deputy Joan Burton asked the Minister for Finance the advice he received from the tax strategy group in advance of budget 2018; if he will publish the advice he received; and if he will make a statement on the matter. [44790/17]
Amharc ar fhreagraAs the Deputy will be aware, the Tax Strategy Group (TSG) is in place since the early 1990s and is chaired by the Department of Finance with membership comprising senior officials and political advisers from a number of Civil Service Departments and Offices.
Papers on various options for tax policy changes are prepared annually by Department of Finance officials. The TSG is not a decision making body and the papers produced by the Department are simply a list of options and issues to be considered in the Budgetary process. Papers relating to PRSI and social welfare issues are also prepared for the Group by the Department of Employment Affairs and Social Protection.
In line with the Government’s commitment to Budgetary reform including greater engagement with the Oireachtas, the Tax Strategy Group papers are now published in advance of the Budget to facilitate informed discussion. This year the papers were published on 31 July 2017 and are available on my Department’s website at www.finance.gov.ie/what-we-do/tax/the-tax-strategy-group/
88. Deputy Joan Burton asked the Minister for Finance the definition of commercial property transactions for stamp duty as increased in budget 2018; and if he will make a statement on the matter. [44791/17]
Amharc ar fhreagraI am advised by Revenue that the Stamp Duties Consolidation Act 1999 does not contain a definition of commercial property as such. Instead, the Act defines “residential property” and property either comes within this definition or is treated by default as ‘non-residential’ property. A residential property is essentially a dwelling house (including an apartment), or a partially constructed dwelling house, including curtilage of up to an acre.
The more common examples of non-residential property include:
- land (agricultural and non-agricultural);
- sites (other than sites purchased with a connected agreement to build a house or apartment);
- commercial or business premises, including offices, factories, shops and public houses;
- options over land;
- interests in land (such as wayleaves or other rights to lay cables, pipes, wires or other conduits);
- easements (a right over someone's property such as a right of way);
- business assets like goodwill or book debts.
89. Deputy Joan Burton asked the Minister for Finance his plans to review household insurance policies in view of the losses suffered by businesses and households as a consequence of Storm Ophelia; and if he will make a statement on the matter. [44792/17]
Amharc ar fhreagraAs Minister for Finance, I am responsible for the development of the legal framework governing financial regulation, however I cannot 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 policies nor to direct insurance companies as to the pricing level or terms or conditions that they should apply in particular cases.
The Deputy should note that all insurers operating in the Irish market are regulated under conduct of business rules by the Central Bank of Ireland. Consequently, each is required to comply with the Consumer Protection Code which sets out the rights of consumers, including how claims are handled.
In relation to the bringing to the attention of policyholders their rights in relation to insurance claims arising from Storm Ophelia, the Competition and Consumer Protection Commission (CCPC) has updated its website accordingly and the information can be found at: https://www.ccpc.ie/consumers/2017/10/18/can-i-make-insurance-claim-storm-ophelia/.
In addition, my officials have been in touch with Insurance Ireland about this matter. In response they have indicated that business insurance policies will provide cover for storm damage to premises and stock. Such policies will also cover for business interruption which is triggered when there has been storm damage to the premises. They have advised, however, that it is important for businesses to contact their insurance company or broker after the event and guidance will be provided on making a claim.
With regard to household buildings and contents insurance, Insurance Ireland has also advised that policies will cover damage caused by storms. Insurers will usually pay for the cost of temporary repairs, so policyholders should keep receipts. Insurers will also usually pay for the cost of alternative accommodation, if the home has become uninhabitable. However, householders should check the full extent of their policies and contact their insurer or broker for further information.
Finally, in respect of household insurance generally, 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, with small increases and decreases at various times. At the beginning of this year it was 6.2% higher than it had been at the beginning of 2012. On a month-on-month basis, January and February 2017 saw increases of 2.7% and 2.5%, respectively, and this was followed by four months without a price movement. There were subsequently decreases of 2.5% and 0.1% for July and August, respectively, and then no price movement again in September.
91. Deputy Brendan Howlin asked the Minister for Finance the estimated fiscal space available in 2019 to 2021 following budget 2018; and if he will make a statement on the matter. [44806/17]
Amharc ar fhreagraThe current estimates of net fiscal space for the years 2019 to 2021 are set out below. It is important to stress that the figures, as always, are work-in-progress estimates and will evolve over time.
|
- |
2019 |
2020 |
2021 |
|
Net fiscal space (€ billions) |
3.2 |
3.5 |
3.6 |
I want to highlight, however, that the economy is now on a path towards full-employment. In these circumstances, I will not jeopardise our recovery by adopting pro-cyclical fiscal policies that overheat the economy and put our future livelihoods at risk. Instead I will focus on the appropriate stance of fiscal policy.
In other words, I will focus on what is right for the economy and not on what is legally permissible under the rules. In this regard, I want to assure the Deputy that the Government will not repeat the mistakes of the past by adopting inappropriate taxation and spending policies for short-term gain that have involve major long-term pain.
Steady, incremental and sustainable budgetary policy is the way to improve our living standards and that is how I intend to decide and implement policy.
92. Deputy Michael McGrath asked the Minister for Finance further to Parliamentary Question No. 151 of 27 June 2017, if progress has been made in discussions with Brazil on its decision in September 2016 to add Ireland to its tax blacklist; and if he will make a statement on the matter. [44827/17]
Amharc ar fhreagraEfforts are continuing to seek Ireland’s removal from the Brazilian black list. A technical delegation from the Department of Finance and Revenue met with Brazilian officials in March 2017 to seek a resolution to this issue.
Since March there has been continuing contact with the Brazilian authorities at official and diplomatic level. We continue to raise the issue with Brazil to seek Ireland's removal from the list.
Ireland has been included on this list on the basis that the 12.5% corporation tax rate is below 17%, the threshold set by Brazilian law. We believe that focusing on the statutory tax rate fails to reflect the realities of the Irish regime which focusses on substance and which also has a 25% rate for passive income and a 33% rate for capital gains. We continue to engage with the Brazilian authorities to seek a resolution to this issue.
