Thursday, 30 Nov 2017

Written Answers Nos. 1-35

Corporation Tax Regime

Ceisteanna (10)

Seán Haughey

Ceist:

10. Deputy Seán Haughey asked the Minister for Finance if he will report on the future of Ireland's corporation tax rate; if it has been discussed at recent EU Council meetings. [50539/17]

Freagraí scríofa

Minister for Finance

Ireland's tax rate has not been discussed at recent ECOFIN meetings, and will not be discussed at upcoming meetings.  Corporation tax rates are a matter of national sovereignty and therefore entirely up to each Member State to decide the appropriate level of its own rate. 

Ireland has a stable and competitive corporation tax system, which is internationally recognised as one of the most transparent in the world. As I confirmed in the recent Budget, the 12.5 per cent corporate tax rate is, and will remain, a core part of our offering.

Ireland’s reputation for stability has been earned over a long period of time, and I intend to plan for the future in that same spirit. We have a tax system with a broad base, which is designed for businesses that want to innovate and create employment. By adopting and sticking to a corporation tax system that is sustainable and which meets the highest international standards, we are in a position to offer certainty. With the current changing environment internationally, certainty has become a valuable commodity.

As a small open economy, connected to Europe, the US and the wider world, we are of course affected by changes in the international environment. I do believe, however, that change also brings opportunities. The right choice for Ireland is to continue our commitment to a competitive, transparent and stable corporation tax system with a 12.5 per cent rate.

In regards to direct taxation discussion at EU level, the matters currently on the ECOFIN Council agenda are the EU list of non-cooperative jurisdictions for tax purposes and the challenges of taxation of profits of the digital economy.  Both of these items will be discussed at the next ECOFIN meeting on 5 October.

Banking Sector

Ceisteanna (11)

Willie Penrose

Ceist:

11. Deputy Willie Penrose asked the Minister for Finance the status of his Department’s work with the Department of Rural and Community Development on the public banking investigation; and if he will make a statement on the matter. [50876/17]

Freagraí scríofa

Minister for Finance

My Department and the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs, now the Department of Community and Rural Development, are tasked with fulfilling the Programme for Government Commitment to "thoroughly investigate the German Sparkassen model for the development of local public banks that operate within well-defined regions".

Local public banking is where a state, or other public body, has ownership of a financial institution. The investigation of local public banking has consisted of a consultation process with stakeholders and interested parties. There has also been analysis of a detailed proposal on the Sparkassen model and its possible implementation in Ireland that was put forward by Irish Rural Link and the Savings Banks Foundation for International Cooperation (SBFIC), the international development wing of the Sparkassen group.  Officials from my Department have met with their representatives a number of times.

In Germany, Sparkassen can only operate in specified regions and their aim is not profit maximisation but rather promoting economic development and financial inclusion in the area in which they operate. A similar model has been proposed for Irish local public banks.

Officials in my Department have been working jointly with colleagues in the Department of Community and Rural Development in order to prepare a report of the findings of their investigation. The purpose of the consultation process and report is to assist the Government in its analysis of local public banking in an Irish context. Officials have finalised the report which I have received and am currently considering.

This report will outline the current banking environment in Ireland, describe the Sparkassen business model, analyse a proposal for local public banking in Ireland, summarise the view of respondents to the public consultation process and set out findings in relation to the potential for a local public banking model in Ireland.

Along with my colleague, Minister for Rural and Community Development, Michael Ring T.D., I will bring the report to Government, for approval. I would like to advise the Deputy that I expect we will be in a position do so before Christmas. Once it has gone before Cabinet, I will also provide the report to the FINPERT Committee.

Question No. 12 answered with Question No. 9.

Economic Competitiveness

Ceisteanna (13)

Michael Lowry

Ceist:

13. Deputy Michael Lowry asked the Minister for Finance the potential effects of President Trump’s threatened big border tax on Irish companies in the United States if they expand manufacturing facilities abroad for products to be sold in the United States; the potential implications for jobs here; and if he will make a statement on the matter. [48519/17]

Freagraí scríofa

Minister for Finance

The international aspects of the US tax code are of course very relevant to Ireland and to any US business with operations here and those many Irish businesses that trade with the US.  The full implications of US tax reform for Ireland, and the rest of the world, will depend on the exact nature of any changes which are ultimately agreed by both Houses of Congress and President Trump.

The House and Senate have proposed different new anti-avoidance measures to protect the US tax base and it remains to be seen what final measures can be agreed on.  The original border adjustment tax proposal announced earlier this year has not been included in either legislative proposal.

In general, it is important that any anti-avoidance measures adopted by the US recognise that international trade between companies and countries is mutually beneficial and should be encouraged.  I am supportive of US measures that ensure tax is not artificially avoided through base erosion or profit shifting, but care is needed so that genuine commercial arrangements are not hit with double taxation which is damaging to economic activity, trade and investment. These are points I made to US legislators when I was in the US recently. 

Regardless of what happens with US tax reform, Ireland’s corporation tax regime will continue to be competitive while also offering long-term certainty to international business.  Ireland remains committed to long-term stability and to the 12.5% corporation tax rate.  As always, we will remain alert and responsive to any changes in the US or global tax environment. 

The level of investment from the US into Ireland cannot be attributed just to corporate tax policy – that is not a fair reflection of the many other reasons that companies choose to locate in Ireland.  Factors such as availability of physical and technological infrastructure, availability of skilled staff, access to the EU market as well as culture and quality of life are also significant and important considerations.  

Question No. 14 answered with Question No. 8.

Motor Insurance Costs

Ceisteanna (15)

Michael McGrath

Ceist:

15. Deputy Michael McGrath asked the Minister for Finance the status of the second phase of the cost of insurance working group in relation to employer liability and public liability; when the working group will come forward with recommendations; and if he will make a statement on the matter. [50796/17]

Freagraí scríofa

Minister for Finance

Following the publication of the Report on the Cost of Motor Insurance in January 2017, the Cost of Insurance Working Group, chaired by minister of State Michael D'Arcy, T.D., commenced its examination of the cost of business insurance, in particular employer liability (EL) and public liability (PL). This work is being done in parallel with the implementation of the motor report.

As part of its review, the Working Group has engaged in an extensive consultation process with a range of stakeholders including the Hotels Federation of Ireland, IBEC, ISME, the Vintners' Federation of Ireland, the Licensed Vintners' Association, the Retail Grocery Dairy & Allied Trades Association, Chambers Ireland, the Law Society of Ireland, the Health and Safety Authority and a number of insurers and brokers who cover this type of risk. In addition, submissions received from interested parties such as the Irish Farmers Association were considered as part of the process.

The issues that have been raised by stakeholders include:

- the significant increase in the cost of El and PL insurance

- the lack of competition in the EL and PL market

- frustration with inconsistency of awards

- huge costs in challenging claims through the court process

- prevalence of fraudulent and exaggerated claims and

- the need for the role of PIAB to be developed further

Following on from this consultation process, two sub-groups were formed to look in more detail at, respectively, legal-related matters and market-related issues and to come up with appropriate recommendations.

The Deputy should note that it had been initially envisaged that the second phase recommendations on EL and PL would take the form of an addendum to the Report on the Cost of Motor Insurance and would be published by the end of September. However, because of the complexity and the legal nature of some of the issues, it became clear that extra time would be required to properly examine the relevant issues in order to come up with effective and achievable recommendations.  Therefore, the Working Group decided that a full 'stand-alone' report will instead be finalised by the end of the year.  This report will follow a similar format to the Motor Report and include an action plan with associated actions and deadlines for implementation. 

I understand that the drafting phase of the report is nearing completion and that it will be submitted to me for approval by the end of the year, with its subsequent publication in January following approval by Government.

NAMA Staff Data

Ceisteanna (16)

Mick Wallace

Ceist:

16. Deputy Mick Wallace asked the Minister for Finance the number of NAMA staff that have taken voluntary redundancy to date in 2017; the number of staff expected to take voluntary redundancy in 2018 and 2019; his views on the number of redundancies taken to date; and if he will make a statement on the matter. [50870/17]

Freagraí scríofa

Minister for Finance

As outlined in my response to Dáil Question No. 199 of 20 September 2017, the NAMA voluntary redundancy scheme, which includes a retention element, was established to help safeguard NAMA’s performance, aid the Agency in retaining its operational capabilities through the retention of key staff during the course of its disposal strategy, and allow NAMA to fulfil its objective of maximising value for the State.

I am advised that 41 staff in total departed NAMA under the scheme in 2017.  I am also advised that the 2018 scheme was advertised to NAMA staff in July 2017, and that the application process is still ongoing. I am advised that it is not possible to estimate the exact number of staff expected to take voluntary redundancy in the future as any schemes in 2018 or 2019 will take into account the ongoing business needs of the Agency at that time as determined by the NAMA Board’s objectives.

NAMA has advised that the retention portion of the scheme is being implemented in line with the stipulated parameters, agreed by the previous Minister for Finance and NAMA in March 2015, regarding the quantum of any payment under the scheme, the timing of any such payment and employee eligibility under the scheme.  To be eligible for the retention scheme a NAMA employee must:

- have been identified by the NAMA Board as essential to achieving NAMA’s objectives;

- be on a specified purpose contract

- not have a right of return to the NTMA and not be employed by any successor entity of NAMA;

- have a minimum of two year’s employment with NAMA at the time of redundancy;

- have maintained a “fully satisfactory” rating or greater for the duration of their employment with NAMA; and

- remain with NAMA as long as required.

The Deputy will be aware that as Minister, I have no role in respect of NAMA's commercial operations or decisions, including determining NAMA's staffing numbers and redundancies, which are internal considerations for the NAMA Chief Executive and Board.

Property Tax Administration

Ceisteanna (17)

Catherine Murphy

Ceist:

17. Deputy Catherine Murphy asked the Minister for Finance if the cross departmental group that is reviewing the local property tax is considering including demographic changes following the publication of the census of population in respect of local government funding; if workforce planning and asset deficiencies respectively will play a part in its remit; and if he will make a statement on the matter. [45094/17]

Freagraí scríofa

Minister for Finance

My Department will consider issues relating to the implementation of the outstanding recommendations in the 2015 Thornhill Review of LPT in due course in line with the 2019 timeline. The position of the Government will be made clear so that households will know well in advance what its plans are for LPT. I consider it very important that the principle that formed a central part of the terms of reference for the 2015 review of LPT i.e., achieving relative stability in LPT payments of liable persons both over the short and longer terms, will inform our consideration of this matter.

I expect the Department of Finance will commence work on this matter in the New Year in conjunction with the Departments of Public Expenditure & Reform, Housing, Planning & Local Government and Revenue.

Dr Thornhill made a number of recommendations in his 2015 report on his review of the Local Property Tax. His central recommendation was for a revised system whereby a minimum level of LPT revenues in each local authority area would be determined by Government, ideally having regard to the apportionment between local authority areas of the historic yield. This in turn would allow for the estimation of LPT rates for each local authority area and the application of these by taxpayers and Revenue. Local authorities could adjust this rate upwards by a factor of up to 15%. This new system was recommended by Dr Thornhill with a possible interim deferral of the next valuation date until November 2018 or November 2019.

My predecessor subsequently proposed to Government that the revaluation date for the LPT be postponed from 2016 to 2019. This postponement meant that home owners were not faced with significant increases in their LPT in 2017 as a result of increased property values. The postponement also gives sufficient time for the other recommendations in Doctor Thornhill's report to be considered fully by the Government.

The Finance (Local Property Tax) (Amendment) Act 2015 gave effect to the postponement of the revaluation date of residential property for LPT purposes, and also to two of the recommendations in Dr Thornhill's report, involving LPT relief for properties affected by pyrite and relief for properties occupied by persons with disabilities. 

 

Corporation Tax Regime

Ceisteanna (18, 23)

Mick Wallace

Ceist:

18. Deputy Mick Wallace asked the Minister for Finance his views on whether the legislation change which allowed the deferring of tax assets against future profits by banks is having a negative impact on the Exchequer; if his Department has carried out an analysis of the change since it was introduced in 2013; if he has considered reinstating legislation in the original rule that a bank could only write off 50% of these deferred tax assets against future profits; and if he will make a statement on the matter. [50873/17]

Joan Burton

Ceist:

23. Deputy Joan Burton asked the Minister for Finance if his attention has been drawn to remarks by a bank (details supplied) that it would pay no corporation tax as a result of accumulated tax losses; and if he will make a statement on the matter. [50719/17]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 18 and 23 together.

Under the Irish corporate tax regime, losses incurred in the course of a business are allowed to be taken into account in calculating the appropriate amount of tax due by companies.  Loss relief recognises the fact that business cycles run over a longer period than just a single year and that it would be inequitable to tax profits in one year and not allow loss relief in the next. 

Under the NAMA Act 2009 a new section – section 396C – was inserted into the Taxes Consolidation Act 1997. The provision limited the amount of prior-year losses that a NAMA participating institution could offset against trading profits to 50% of trading profit for each accounting period.  It should be noted that it did not disallow any tax losses from being utilised but instead lengthened the period over which they could be used.  

Reintroducing the previous restriction would mean the period of utilisation for the bank would be extended over a considerably longer timeframe. This would increase the likelihood that the bank’s auditors would seek a write down of the deferred tax assets, thereby reducing shareholders’ funds in the banks’ financial statements and its capital ratios.

Unfortunately it is not possible to estimate a precise value of this accounting write down, as it would be done on a bank-by-bank basis in agreement with the individual bank’s auditors. For the same reason we cannot estimate what the impact would be to capital ratios.

What we can estimate, however, is what the deferred tax asset represents as a percentage of each bank’s transitional core equity tier 1 ratio, as at 30 June 2017, before any such policy change.  For AIB it represents 3.7 percentage points of its ratio of 19.9%, for Bank of Ireland it represents 1.7 percentage points of 14.4%, and for PTSB it represents 2.3 percentage points of 17.1%.

If some or most of this benefit was removed from each bank’s capital ratio, I cannot say what the reaction would be from the regulator. That is a matter for the Single Supervisory Mechanism and it might vary by bank.  However at a minimum it might impact the quantum of dividends the State would expect to receive from these banks in the near term.

Rather than interfere with the deferred tax assets by changing tax policy, the Government has ensured a contribution from the sector by introducing a bank levy, payable since 2014, of approximately €150 million per annum. 

Universal Social Charge Application

Ceisteanna (19)

Richard Boyd Barrett

Ceist:

19. Deputy Richard Boyd Barrett asked the Minister for Finance his plans to correct the anomaly that sees pre-95 public sector pensioners pay the universal social charge on all their income while all other persons on the State pension are exempt from universal social charge on that portion of their income, resulting in the pre-95 pensioners being worse off than other persons that receive the State pension; and if he will make a statement on the matter. [47142/17]

Freagraí scríofa

Minister for Finance

The Universal Social Charge (USC) was introduced in Budget 2011 to replace the Income Levy and Health Levy.  It was a necessary measure to widen the tax base, remove poverty traps and maintain revenue to reduce the budget deficit.  It is a more sustainable charge than those it replaced and is applied at a low rate on a wide base. However, the base for USC does not include payments made by the Department of Social Protection, including the State pension.

As the Deputy may be aware, the USC was reviewed by my Department in 2011 and the issue of USC applying to occupational pensions of retired public servants who entered the public service before April 1995 was examined as part of that review.  Such individuals are (or were) liable to modified rate PRSI, which does not generate an entitlement to the State Pension.  In retirement, therefore, they receive an occupational pension only, and do not receive a separate State Pension unless as a result of PRSI contributions made in another employment during their working life.

It was decided not to exempt the occupational pensions of these individuals from the USC charge as an exemption would be very costly and difficult to achieve, and it could involve all income earners with the equivalent income benefiting from the exemption.  In addition, it would also undermine the principle of the USC being applied to income with few exceptions.  However, as a result of the review of the USC, in Budget 2012 the entry threshold to USC was increased from €4,004 to €10,036 per annum, and the threshold was subsequently increased further in Budgets 2015 and 2016, to the current threshold of €13,000.  This exemption threshold equalises the position for single individuals whose sole source of income is the State Contributory Pension with Public Service pensioners whose pension is at an equivalent level.

The Government has committed to continue the process of reducing the personal tax burden, with a particular focus on low and middle-income earners, subject to having the required fiscal space. Budget 2018 has continued the progress made in the three previous Budgets in reducing rates of USC at lower income levels.  The combined effect of Budgets 2015 to 2018 will see a reduction in the three lowest rates of USC from 2%, 4% and 7% to 0.5%, 2% and 4.75% respectively.

I have also stated on a number of occasions, including the recent Committee Stage of the Finance Bill in Dáil Éireann, that my long term view of the USC is to see its amalgamation with the existing PRSI system. This is a complex undertaking that will take time to plan and implement, and will require further consideration of all the distinct features of the USC and PRSI systems, including the taxation of pre-95 public servants. A working group will be established after the passage of the Finance Bill to examine and decide on the best method for the full amalgamation of USC and PRSI and it will consist of officials from all relevant Departments and agencies and others as appropriate. The amalgamation of these charges will help to ensure that vital public services will be well-funded into the future, as well as supporting the improvement of our social insurance system, for the benefit of all our citizens.

 

Legal Proceedings

Ceisteanna (20)

Jonathan O'Brien

Ceist:

20. Deputy Jonathan O'Brien asked the Minister for Finance if he has received a date for an appeal (details supplied); if the appeal will be withdrawn; and if he will make a statement on the matter. [50880/17]

Freagraí scríofa

Minister for Finance

The Government profoundly disagrees with the European Commission’s analysis in the Apple State Aid case.

An appeal is therefore being brought before the European Courts. Such an appeal takes the form of an application to the General Court of the European Union (GCEU), asking it to annul the Commission’s Final Decision.

The Attorney General prepared the legal grounds in support of the annulment proceedings and the application was lodged in the GCEU in 2016.  As is normal practice, a summary of these have been published in the Official Journal of the European Union. They were also published on the Department of Finance’s website in December 2016.

The case has been granted priority status and is progressing through the various stages of private written proceedings before the GCEU.  It is at the discretion of the Court to determine if there will be oral proceedings, either in public or in private.  It will likely be several years before the matter is ultimately settled by the European Courts. 

As this is the subject of open legal proceedings, it will not be possible to comment further, in particular on any of the individual elements of the State’s legal case in defence of our position. This is important to ensure that we do not prejudice our own legal case.

Notwithstanding the appeal, Ireland is obliged to comply with binding Articles of the Commission’s Decision regarding recovery. Officials and experts from across the State have been engaged in intensive work to ensure that Ireland complies with all its recovery obligations as soon as possible.

Economic Data

Ceisteanna (21)

Bernard Durkan

Ceist:

21. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which all economic indicators are positively aligned to maximum economic benefit for the State over the next five years; and if he will make a statement on the matter. [50833/17]

Freagraí scríofa

Minister for Finance

Recent economic indicators have generally been positive, indicating that the recovery is continuing in a sustainable manner.  

Real GDP grew by 5.8 per cent in the second quarter of this year on an annual basis. This follows annual growth of 5.2 per cent in the first quarter.

As part of Budget 2018, my Department is forecasting real GDP growth of 4.3 per cent for this year and 3.5 per cent for next year, with growth averaging close to 3 per cent in the following years.

The recovery is most clearly evident in the labour market. Employment increased at an annual rate of 2.4 per cent in the second quarter of 2017, representing the creation of over 48,000 additional jobs over the year. Since the low-point in 2012 there are now an additional 230,000 people in employment.

The continued growth in employment has seen the unemployment rate fall from over 15 per cent in 2012 to 6.0 per cent in October 2017 which is close to the level considered to represent full employment in Ireland.

The strong performance of the labour market is set to continue in the short term. As part of Budget 2018, my Department is projecting that an additional 48,000 jobs will be created next year. Strong employment growth is expected to further reduce the unemployment rate, to around 5 ½ per cent by the end of next year.

Other indicators including retail sales, purchasing managers’ indices and consumer sentiment all point to continued growth in the economy.

However, there are a number of risks at present including the UK’s decision to exit the EU and the possibility of significant tax reform in the US. In addition, the sharp appreciation of the euro-sterling rate is posing significant challenges, particularly for the traditional sector, tourism sector and areas sensitive to cross-border trade.

These sources of uncertainty highlight the importance of prudent management of the public finances and of competitiveness-oriented policies that would help the Irish economy to weather any global economic downturn that may emerge.

In summary, I am satisfied that the economic indicators remain stable although the level of uncertainty at present remains elevated. It is therefore critical that appropriate polices are implemented and that is what the Government will continue to do.

Strategic Banking Corporation of Ireland Funding

Ceisteanna (22)

Joan Burton

Ceist:

22. Deputy Joan Burton asked the Minister for Finance the amount of funding being provided by the Strategic Banking Corporation of Ireland; his plans to review the aims of the Strategic Banking Corporation of Ireland; if he has satisfied himself that the lending policies of this Government-funded institution are appropriate; and if he will make a statement on the matter. [50720/17]

Freagraí scríofa

Minister for Finance

The strategic mission of the SBCI is to deliver effective financial supports to Irish SMEs that address failures in the Irish credit market, while also encouraging competition and innovation. The SBCI achieves this aim through the provision of low cost liquidity and risk sharing activities.

The SBCI began lending in March 2015. To the end of June 2017, €855 million of SBCI funding has been provided to 21,132 Irish SMEs, supporting 106,728 jobs. It is encouraging to note that represents an increase of 57% in SBCI lending since the end of December 2016. The interest rate on SBCI loans is 1.15% lower than the average market interest rate on loans to SMEs and 85% of SBCI loans are to SMES based outside of Dublin. As the Deputy will appreciate, the SBCI’s lending is driven by market demands as well as needs that are not fully met by the private sector.

The SBCI has €1 billion of funding available from KfW, the EIB, the NTMA and the Council of Europe Development Bank, as well as a loan facility of €215 million available from ISIF. To date, €881 million of this funding has been committed to the SBCI’s seven on-lenders.

The SBCI is focusing on developing a diverse range of on-lenders, currently four of its on-lenders are non-bank finance providers. The SBCI has an independent board and risk management committee responsible for making the decision to enter in to an on-lending agreement. The SBCI's on-lender criteria are designed to mitigate risks to Irish taxpayers and European funding and to SME borrowers. They aim to ensure that all lending partners have the necessary financial strength and capability to provide the required level of service to SMEs alongside sufficient protections for the taxpayer. This requires both a robust due diligence process and a careful structuring of its lending facilities.

The SBCI is also working to develop more innovative products, such as the Agricultural Cashflow Support Loan Scheme and the Brexit Loan Scheme. The Deputy can rest assured that the SBCI is supporting the provision of appropriately priced, flexible funding to SMEs and improving finance providers’ willingness to lend to SMEs.

Question No. 23 answered with Question No. 18.

Motor Insurance Costs

Ceisteanna (24, 36)

Niamh Smyth

Ceist:

24. Deputy Niamh Smyth asked the Minister for Finance his plans to deal with the rising cost of motor insurance; and if he will make a statement on the matter. [50714/17]

Brian Stanley

Ceist:

36. Deputy Brian Stanley asked the Minister for Finance the steps he has taken to curtail the exorbitant increase in motor insurance costs; the further steps planned; and if he will make a statement on the matter. [50792/17]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 24 and 36 together.

The Deputy should note at the outset that in my role as Minister for Finance I am responsible for the development of the legal framework governing financial regulation. Neither I nor the Central Bank 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 the risks they are willing to accept.

However, it is acknowledged that pricing in the motor insurance sector has been subject to a lot of volatility in recent years and this phenomenon was the main impetus for the establishment of the Cost of Insurance Working Group in July 2016. Its Report on the Cost of Motor Insurance was published in January 2017.  The Report makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, which are set out in an Action Plan. 

Work is ongoing on the implementation of the recommendations by the relevant Government Departments and Agencies and there is a commitment within the Report that the Working Group will prepare quarterly updates on its progress. 

The third such update was published on 23 October 2017 and shows that 32 actions were due for completion in the first three quarters of the year in total and 29 of those actions have been completed to date.  Substantial work has also been undertaken in respect of the nine action points categorised as “ongoing”.

Of the three actions which have not been fully completed to date, two of them relate to the same recommendation, which requires the approval of the Minister for Justice and the Garda Commissioner for potentially far-reaching cooperative mechanisms between Insurance Ireland and An Garda Síochána to be formalised.  The other outstanding action is contingent on the establishment of the new Office of the Legal Costs Adjudicators, now scheduled for 2018.

The fourth quarterly update should be published early in the New Year and will focus on the 14 actions which are due for completion in the third quarter of 2017. All of the remaining actions are scheduled to be completed before the end of 2018.

It should be noted that the most recent CSO data (for October) indicates that private motor insurance premiums have decreased by 15.2% since peaking in July 2016.  While the CSO statistics indicate a greater degree of stability on an overall basis, these figures represent a broad average and therefore there are many people who may still be seeing increases.  However, I am hopeful that this greater stability in pricing will be maintained and that for the majority of drivers their premiums should continue to fall from last year's levels.

State Aid Investigations

Ceisteanna (25)

Joan Burton

Ceist:

25. Deputy Joan Burton asked the Minister for Finance if a company (details supplied) provided some or all of the fines levied by the EU Commission; and if he will make a statement on the matter. [50717/17]

Freagraí scríofa

Minister for Finance

I am assuming the Deputy is referring to the recovery of the alleged Apple State aid.

Ireland has never accepted the Commission’s analysis in the Apple State aid Decision.

However, we have always been clear that the Government is fully committed to ensuring that recovery of the alleged Apple State aid takes place without delay and has committed significant resources to ensuring this is achieved as quickly as possible whilst ensuring that the interests of the Irish taxpayer are adequately protected.  

Officials and experts from across the State have been engaged in intensive work to ensure that the State complies with all its recovery obligations as soon as possible.

Ireland has made significant progress on this complex issue and is close to the establishment of an escrow fund in compliance with all relevant Irish constitutional and European Union law. 

EU Budget Contribution

Ceisteanna (26)

Joan Burton

Ceist:

26. Deputy Joan Burton asked the Minister for Finance the estimated likely higher contributions to the EU in view of the forecast increase in GNP over the next ten years; if he has studied the impact of our increased financial contribution to the EU; and if he will make a statement on the matter. [50716/17]

Freagraí scríofa

Minister for Finance

Member State contributions to the EU Budget are based upon a complex formula which includes Traditional Own Resources (customs duties), a VAT-based payment and a residual balancing component paid in accordance with each Member State's share of EU Gross National Income (GNI). Given both high levels of economic growth in Ireland in recent years, when compared with that of other Member States, our overall share of contributions to the EU budget has grown significantly and Ireland became a net contributor to the EU budget for the first time in 2014. We forecast this trend to continue in the coming years.

My Department currently forecasts that Ireland's contribution to the EU budget will be €2,020 million in 2017, €2,650 million in 2018, €2,675 million in 2019 and €2,750 million in 2020. It is worth noting that these forecasts are contingent on a number of variables,  including the size of the overall EU budget for the year and other EU budget operational developments which will only emerge as the year progresses. As a result all forecasts will be monitored and updated on an ongoing basis as new information becomes available. These updates also allow for updated GNI forecasts as they become available.

The Commission is due to present a proposal on the next Multiannual Financial Framework (post 2020) by mid-2018. While my Department currently forecasts Ireland's contributions to the EU budget for 2021 to be €2,775 million, this figure is used primarily for illustrative purposes.

National Disability Strategy Implementation Plan

Ceisteanna (27)

Margaret Murphy O'Mahony

Ceist:

27. Deputy Margaret Murphy O'Mahony asked the Minister for Finance the role his Department will play in the National Disability Inclusion Strategy 2017-2021; and if he will make a statement on the matter. [50712/17]

Freagraí scríofa

Minister for Finance

I wish to inform the Deputy that my Department will fulfil any of its obligations under the National Disability Inclusion Strategy 2017 to 2021.

As the Deputy will be aware the Inclusion Strategy is the outcome of a broad and comprehensive consultation process that comprised three distinct phases. Phase one included an initial round of consultations, the aim of which was to identify the priority themes to be addressed in a new Strategy. A second phase was then commenced to identify and agree specific objectives under each of the themes identified in Phase one. Phase three focused on identifying precise and measurable actions and timescales for achievement of each of the objectives that emerged from Phase two.

Work has been ongoing with the National Disability Authority and senior officials across multiple government departments to identify which of the actions generated in phase three can be implemented over the next four years. All of the identified initiatives have been developed to have the maximum beneficial impact for people who have disabilities.

I wish to advise the Deputy that my Department is fully compliant with its obligations under the Disability Act 2005.

Credit Union Restructuring

Ceisteanna (28)

Willie Penrose

Ceist:

28. Deputy Willie Penrose asked the Minister for Finance the status of his Department’s work in respect of the restructuring of the credit union sector; and if he will make a statement on the matter. [50877/17]

Freagraí scríofa

Minister for Finance

I can advise the Deputy that the Government has a clear policy to support the strategic growth and development of credit unions in Ireland as set out in the Commission on Credit Unions Report and recommendations. My Department is chairing a stakeholder group which is working to implement the recommendations of the Credit Union Advisory Committee report of June 2016. 

The safety of members' savings and the security of the credit union sector as a whole are priorities for this Government and a number of measures have been put in place to assist the credit union sector. These measures included, amongst others, the establishment of the Credit Union Restructuring Board - ReBo - and the availability of €250 million of exchequer funding for voluntary restructuring of credit unions facilitated by ReBo.

ReBo was established on a statutory basis on 1st January 2013 pursuant to section 42 of the 2012 Act to facilitate and oversee restructuring of the sector. The 2012 Act provides that when the Minister for Finance is satisfied that ReBo has completed the performance of its functions under Part 3 of the Act, the Minister may by order dissolve ReBo. Prior to dissolving ReBo, section 43(2) requires that the Minister conducts a review of the operation of Part 3 of the Act, to determine whether or not ReBo has, in the Minister's opinion, completed the performance of its functions. A review of the operation of Part 3 of the Act was carried out by me in June 2017 which determined that ReBo had completed the performance of its functions. This review was published on the Department website. My Department has prepared draft Heads of a Bill for the dissolution of ReBo which will be brought to Government shortly.

During its 4 year lifetime, ReBo has overseen and facilitated 82 restructuring projects involving 156 credit unions with assets totalling circa €6bn, across 24 counties. These newly merged credit unions are now bigger and stronger entities that will be better positioned to harness the efficiencies of their increased scale to prudently develop the products and services that their members are looking for now and into the future.  Further restructuring projects have recently taken place without the support of ReBo, which has completed the performance of its functions.      

The Government wants not only strong, vibrant credit unions offering a safe and secure place for members' savings but also credit unions' being appropriately positioned to offer their members a wide range of services including loans, debit card facilities and new facilities based on the needs of their membership. This Government recognises the important role of credit unions as a volunteer co-operative movement in Ireland and 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. 

 

Insurance Coverage

Ceisteanna (29)

Maureen O'Sullivan

Ceist:

29. Deputy Maureen O'Sullivan asked the Minister for Finance the status of negotiations with an organisation (details supplied) regarding flood cover particularly in Dublin 1 and 3 in which flood cover is extremely difficult to obtain. [50804/17]

Freagraí scríofa

Minister for Finance

I am conscious of the difficulties that the absence or withdrawal of flood insurance cover can cause to homeowners and businesses, and that is one of the reasons the Government has been prioritising investment in flood defences over the last number of years. 

However, you should be aware that the provision of insurance is a commercial matter for insurance companies, which has to be based on a proper assessment of the risks they are willing to accept.  Consequently, neither the Government nor the Central Bank can interfere in the provision or pricing of insurance products or have the power to direct insurance companies to provide flood cover to specific individuals or businesses. 

Government policy in relation to flooding is focused on the development of a sustainable, planned and risk-based approach to dealing with flooding problems.  This in turn should lead to the increased availability of flood insurance.  To achieve this aim, there is a focus on:  

* prioritising spending on flood relief measures by the Office of Public Works (OPW) and relevant local authorities,  

* development and implementation of plans by the OPW to implement flood relief schemes, and   

* improving channels of communication between the OPW and the insurance industry, in order to reach a better understanding about the provision of flood cover in marginal areas.  

The above approach is complemented by a Memorandum of Understanding between the OPW and Insurance Ireland, which provides for the exchange of data in relation to completed flood defence schemes which should provide a basis for the increased provision of flood insurance in areas where works have been completed. In this regard, the Insurance Ireland/OPW working group, which the Department of Finance attends, now meets on a quarterly basis to support the information flow and improve the understanding of issues between both parties.  

While it is not possible for me to comment on individual cases, I have been advised by the OPW that information on the Tolka  (East Wall Scheme), the Tolka  (Hawthorne Terrace Scheme) , and the Tolka (Richmond Road Scheme) which are all located in Dublin 3, and built to the 1/100 year standard, has been shared with Insurance Ireland under the Memorandum of Understanding mentioned above.

The OPW does not have any schemes underway in Dublin 1, however Dublin City Council has carried out a number of flood alleviation works. In particular, the Tolka Flood Alleviation Project was finished in 2008, from St. Mobhi Road to Annesley Bridge, with a small amount of quay wall strengthening on East Wall Road; the Spencer Dock / Royal Canal tidal lock gates were completed in 2009.

Finally, you should be aware that a consumer can make a complaint to the Financial Services Ombudsman in relation to any dealings with a Financial Services or Insurance provider during which they feel they have been unfairly treated. In addition, individuals who are experiencing difficulty in obtaining flood insurance or believe that they are being treated unfairly may contact Insurance Ireland which operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to insurance.

Film Industry Tax Reliefs

Ceisteanna (30)

Bríd Smith

Ceist:

30. Deputy Bríd Smith asked the Minister for Finance the action he will take to ensure that the film tax relief scheme is been properly administered and is not being abused by companies in relation to the use of trainees and in building a sustainable film industry here; and if he will make a statement on the matter. [47895/17]

Freagraí scríofa

Minister for Finance

I am informed by the Revenue Commissioners that they are not in a position to track detailed information in relation to the trainees. However, it is possible to examine the applications for relief received during the calendar years 2015, 2016 and 2017, and the following is based on an analysis of those applications:

Year	No. of Film Projects(applications)	No. of trainees
2015	73	243
2016	120	471
2017 (to 17 Nov)	89	408

The number of trainees refers to projected number of individual trainees on each film project at application stage and these posts vary in duration from a few days to many months, depending on the length of the specific project. I am advised by Revenue that they cannot calculate the full time equivalent figures for these trainee positions.

As a tax expenditure of the Taxes Consolidation Act 1997, Section 481 is subject to the requirements of the Department of Finance tax expenditure guidelines. As a requirement under the guidelines, reliefs such as section 481 are required to be reviewed periodically. A full ex post analysis and review of section 481 will be undertaken in line with the tax expenditure guidelines prior to any announcement on the extension of the relief beyond 2020. Should issues arise in relation to section 481 being utilised in a manner for which it is unintended, I will ask my officials to investigate these matters as part of the review.

Departmental Functions

Ceisteanna (31)

Pearse Doherty

Ceist:

31. Deputy Pearse Doherty asked the Minister for Finance the steps he will take to implement the actions attributed to his Department under the measures to enhance the States corporate, economic and regulatory framework; and if he will make a statement on the matter. [50885/17]

Freagraí scríofa

Minister for Finance

My Department is the lead Department for ten key actions to enhance the State’s corporate, economic and regulatory framework. The Deputy will be pleased to learn that a number of actions have already been implemented and the others are in progress for implementation within their deadlines.

My Department, in consultation with the Central Bank, has transposed MiFID II into Irish law via SI 375/2017. A MiFID II Bill providing for criminal sanctions for certain serious infringements of the MiFID II framework is expected to be enacted in Q1 2018.

Ireland has implemented the Common Reporting Standard which provides for the automatic exchange of financial account information between tax authorities.  The first information exchange began in September 2017. Ireland was one of only 3 countries to receive the top rating from the Global Forum on Tax Transparency and Exchange of Information for being fully Compliant with international standards on tax transparency and exchange of information. The Revenue Commissioners, in conjunction with my Department, continue to monitor whether any additional powers or resources are currently required. Any such measures will then be proposed to me as Minister for Finance for appropriate action. Funding allocated to Revenue in Budget 2018 will support them in undertaking a number of initiatives, including:

- Significant reform of the administration of the PAYE system; and

- The enhancement of ICT systems capacity for data matching and data analytics.

The Financial Action Task Force (FATF) Report on Ireland’s Anti Money Laundering (AML) and Countering the Financing of Terrorism (CFT) was published on 7th September, and found that overall, Ireland has a sound and substantially effective regime to tackle money laundering and terrorist financing. The review made a series of detailed recommendations in regard to all aspects of Ireland’s AML/CFT regime. An action plan to address those recommendations has been drafted and is expected to be agreed before year end. The action plan transposes all of the recommendations arising from Ireland’s FATF review, and sets out to deliver improvements in the AML/CFT measures in place in Ireland between now and our 5th year FATF Follow-up Assessment.

Article 30 of the 4th Anti-Money-Laundering Directive requires that Member States hold in a central register, information on the beneficial ownership of corporate and other legal entities incorporated within their territories. It also requires that Member States hold adequate, up-to-date information regarding the beneficial ownership of any express trust governed under its law. My Department is currently transposing these provisions by way of Statutory Instruments. This work is well advanced and the transposition is expected to be concluded shortly.

Finally, in relation to the Progress Report on the implementation of the recommendations of the Report of the Joint Committee of Inquiry into the Banking Crisis, my officials are working to finalise the report and I expect to publish this before Christmas. The progress report will illustrate the wholesale change in the regulatory culture since the financial crisis, characterised by a more intrusive supervisory approach by the Central Bank. Recent events have shown it is now time for a similar sea change within the Irish retail banking sector, and are a reminder that we cannot be complacent but must continuously strive to improve governance and practice wherever there are failings.

Question No. 32 answered with Question No. 7.

Paradise Papers

Ceisteanna (33, 35)

Michael McGrath

Ceist:

33. Deputy Michael McGrath asked the Minister for Finance if wrongdoing occurred in relation to Irish persons or companies in view of the work undertaken by the Revenue Commissioners to determine the publication of the Paradise Papers; if it has identified particular loopholes that were availed of to legally evade tax in offshore jurisdictions; the action he has taken in relation to the State supported banks that assisted persons and companies in evading tax; and if he will make a statement on the matter. [50795/17]

Richard Boyd Barrett

Ceist:

35. Deputy Richard Boyd Barrett asked the Minister for Finance the actions he plans to take regarding aggressive tax avoidance by large corporations following the revelations of the Paradise Papers; and if he will make a statement on the matter. [50866/17]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 33 and 35 together.

I am informed by Revenue that it is examining the Paradise Papers with a view to identifying all persons and entities, including Irish registered companies, mentioned in the papers with a possible connection with the State.  As these cases are identified the information from the Paradise Papers will be compared with the information held in Revenue’s own files. All information available will then be assessed and if individuals or entities associated with Ireland are identified that may have Irish tax issues, whether it be evasion or unacceptable tax avoidance, Revenue will take whatever action is necessary to recover all taxes legally due together with all associated interest, penalties and surcharges.

Deputies will be aware that Revenue has already collected over €1 billion in tax, interest and penalties in the course of its ongoing investigations into offshore tax evasion, including tax evasion facilitated by financial institutions.

Revenue is determined that any tax evasion identified as a result of investigations arising out of the Paradise Papers will be thoroughly investigated. Where tax evasion is uncovered Revenue will seek to have the maximum sanctions applied up to and including criminal prosecutions.

To this end, I am informed by Revenue that on 20 November 2017 it wrote to the financial institutions concerned seeking disclosure of any information not already disclosed to Revenue which the institutions have relating to the opening of an account or the depositing of funds by Irish persons, including Irish registered companies, in offshore operations owned by the institutions.

Revenue will also work in close cooperation with other tax administrations, in the framework of the OECD’s Joint International Taskforce on Shared Intelligence and Cooperation, in addressing issues raised by the Paradise Papers, and will, as appropriate share information under existing legal frameworks.

Motor Insurance Costs

Ceisteanna (34)

Brian Stanley

Ceist:

34. Deputy Brian Stanley asked the Minister for Finance the actions being taken to address the substantial loadings being put on the insurance costs for both young and older persons and the refusal of some companies to insure vehicles over ten years old despite the fact they have a valid NCT. [50793/17]

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 as to the pricing level or terms or conditions that they should apply in those cases. 

Motor insurers use a combination of rating factors in making their individual decisions on whether to offer cover and what terms to apply.  My understanding is that the factors include those such as the age and type of the car, the age of the driver, the claims record, driving experience, the number of drivers, how the car is used, etc.  As Insurers do not all use the same combination of rating factors prices vary across the market and consumers are free to choose.  In addition, insurance companies will price in accordance with their own past claims experience, meaning that in relation to the age of a car and the availability of cover, different insurance companies will use different age thresholds.  

The Deputy should note that the Competition and Consumer Protection Commission website has an informative section regarding the purchase of car insurance.  One of the tips listed to help cut costs is to “shop around” and to “always get quotes from several insurance providers when you need to get or renew insurance”.  A checklist for “motor insurance shopping around” is also provided.  I would note that this advice applies equally to older drivers as it does to young and inexperienced drivers.

Policy in relation to the NCT lies with the Minister for Transport, Tourism and Sport.  The NCT was introduced to comply with an EU Roadworthiness Testing Directive aimed at improving road safety and environmental protection. While the NCT is one component of having safer vehicles on our roads, every vehicle owner has a personal and legal responsibility to ensure that their vehicles are roadworthy and well maintained.  The NCT is an inspection or general “health check” of what is visible and accessible on the day of the test and includes a check of the roadworthiness of such safety features, amongst others, as lighting, brakes and tyres.  It is important to understand that the NCT is a minimum requirement of roadworthiness and that insurers will generally require that a car has a valid NCT in order to be covered.  However, in making their individual decisions on whether to offer cover and what terms to apply, this is not the only rating factor taken into account in the provision of motor insurance, as mentioned in the paragraph above. 

Finally, it is worth noting that according to the terms of the Declined Cases Agreement, the insurance market will not refuse to provide insurance to an individual seeking insurance if he/she has approached at least three insurers and has not been able to obtain cover from them.  If the Deputy is aware of a driver that is unable to get cover from an insurer on the grounds provided in the question, Insurance Ireland can be contacted in this regard at [e-mail] or 01-6761914 or 01-6761820.

Question No. 35 answered with Question No. 33.