Darragh O'Brien
Ceist:101. Deputy Darragh O'Brien asked the Minister for Finance the estimated first and full-year cost of increasing the rent-a-room tax relief scheme threshold by €1,000 intervals to €20,000. [27439/18]
Amharc ar fhreagraTax Reliefs Costs
Ceisteanna (101)
Freagraí scríofa
As the deputy may be aware, the numbers of those availing of the rent a room relief and the cost to the Exchequer can be found on the cost of tax expenditures report. The report can be located at the following link:
https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/costs-expenditures.aspx.
I am advised by Revenue that it is not possible to estimate the costs for the changes to the rent a room scheme as suggested by the Deputy. In order to do so, Revenue would require knowledge of the number of potential claimants with rental income in excess of this amount. However, tax returns are only filed by those claiming under the current threshold and therefore no information is available to Revenue on the potential number of new claimants.
Tax Reliefs Costs
Ceisteanna (102)
Darragh O'Brien
Ceist:102. Deputy Darragh O'Brien asked the Minister for Finance the estimated first and full-year cost of increasing the home renovation incentive relief rate by 1.5% intervals up to 20%; and if he will make a statement on the matter. [27440/18]
Amharc ar fhreagraFreagraí scríofa
The Home Renovation Incentive (HRI) is a scheme that allows home owners, landlords and local authority tenants to claim tax relief on qualifying works. The works must be completed by a tax-compliant contractor and be subject to 13.5% VAT. The HRI relief is paid in the form of a tax credit at 13.5% of qualifying expenditure, which can be set against Income Tax evenly over two years, provided the claimant has paid enough tax in each of the two years to claim it back. Where the full use of the credit cannot be made in those two years, the credit will be carried forward to later years. This rate of 13.5% is in line with the VAT rate so that it effectively reduces the rate of VAT to zero on qualifying works. HRI can be applied for up to 4 years after the qualifying works have been completed.
The additional costs of increases to the relief in the manner outlined by the Deputy are set out in the table.
|
- |
Cost (€m) |
- |
|
Rate of Relief |
First Year |
Full Year |
|
13.5% |
0 |
0 |
|
15.0% |
1.3 |
2.5 |
|
16.5% |
2.5 |
5.1 |
|
18.0% |
3.8 |
7.6 |
|
19.5% |
5.1 |
10.1 |
|
20.0% |
5.5 |
11.0 |
The first year cost of these increases is approximately half of the full year cost due to the requirement to split this credit across a period of at least two years. These costs are based on the maximum amount of HRI credits available to be claimed in 2016.
The Deputy may wish to note that quarterly and annual HRI statistical reports can be found on Revenue’s website: https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/index.aspx.
Tax Reliefs Costs
Ceisteanna (103)
Darragh O'Brien
Ceist:103. Deputy Darragh O'Brien asked the Minister for Finance the estimated first and full-year cost of allowing landlords to offset current year rental losses arising under current Case V taxation rules against other taxable income in the same year. [27443/18]
Amharc ar fhreagraFreagraí scríofa
Income is classified under a number of categories for taxation purposes and there are distinct rules for each category. As the Deputy notes, rental income from Irish property is taxed under Case V of Schedule D. The rules for Case V provide that landlords can carry forward rental losses for offset against future rental profits, but cannot offset rental losses against other net taxable income in the current year, other than rental profits from other Irish properties. Revenue have informed me that the manner in which losses are recorded on tax returns reflects the current structure of tax legislation, that is, Irish rental losses can only be offset against profits from Irish rental properties. As such, given the data which is available, it is not possible for Revenue to estimate the cost of allowing rental losses to be offset against non-rental profits.
Tax Deduction Systems
Ceisteanna (104)
Darragh O'Brien
Ceist:104. Deputy Darragh O'Brien asked the Minister for Finance the estimated first and full-year cost of a deduction for pre-letting expenses incurred by a landlord in bringing a property which has been vacant for a minimum period of one year to the rental market. [27444/18]
Amharc ar fhreagraFreagraí scríofa
In Budget 2018 I introduced a new deduction for pre-letting expenses of a revenue nature incurred on a property that has been vacant for a period of 12 months or more. I introduced this measure in order to encourage owners of vacant residential property to bring such properties into the rental market.
A cap on allowable expenses of €5,000 per property applies, and the relief is subject to clawback if the property is withdrawn from the rental market within 4 years. The relief is available for qualifying expenses incurred up to the end of 2021. At the time of Budget 2018, this measure was projected to cost €1.5 million in 2018 and €3 million in a full year.
I have been informed by Revenue, that as tax returns for 2018 are not due to be filed until after the year’s end, it is not possible at present to comment on the current uptake of the scheme or update the projected cost estimates.
Tax Deduction Systems
Ceisteanna (105)
Darragh O'Brien
Ceist:105. Deputy Darragh O'Brien asked the Minister for Finance the estimated first and full-year cost of a tax deduction against rental income for an element of the capital cost of a property in the initial years of ownership of a residential rental unit with a corresponding reduction in the base cost of the property on a future disposal for capital gains tax purposes based on 4% of the capital cost per annum for the first five years. [27445/18]
Amharc ar fhreagraFreagraí scríofa
The Report of the Working Group on the Tax and Fiscal Treatment of Rental Accommodation Providers (2017) identified the measure suggested by the deputy as a possible medium-term option. The report does not cost the measure but notes that three factors relevant for the costing would be:
- the reduction in current income tax revenues;
- in the longer term, the claw-back of the deduction as CGT rather than income tax, USC and PRSI; and
- the potential for loss to the Exchequer if the property is not subject to CGT in future.
I am advised by Revenue that to cost the measure, certain further information would need to be available, including the number of eligible landlords and estimates for the relevant element of the capital costs. In the absence of this information it is not possible for Revenue to identify a cost.
Tax Reliefs Costs
Ceisteanna (106)
Darragh O'Brien
Ceist:106. Deputy Darragh O'Brien asked the Minister for Finance the estimated first and full-year cost of a capital gains tax relief of 4% per annum which would accrue on an annual basis for a property purchased with a tenant in situ and is retained as a rental property for a minimum of five years. [27446/18]
Amharc ar fhreagraFreagraí scríofa
To cost the measures requested by the Deputy, certain information would need to be available, including the number of eligible landlords, estimates for the relevant element of the capital costs and the numbers of properties purchased with a tenant in situ. In the absence of this information it is not possible to cost the proposal.
Living City Initiative
Ceisteanna (107)
Darragh O'Brien
Ceist:107. Deputy Darragh O'Brien asked the Minister for Finance the estimated first and full-year cost of expanding the living city initiative criteria to all areas. [27447/18]
Amharc ar fhreagraFreagraí scríofa
The Special Regeneration Areas for the Living City Initiative were designated following consultation with the relevant city councils and an independent review by a third party advisor.
Specific qualifying criteria were set down that were required to be taken into account by the city councils when putting forward the proposed Special Regeneration Areas for each city. In particular, it was stated that the Special Regeneration Areas should be inner city areas which are largely comprised of dwellings built before 1915, where there is above average unemployment and which demonstrate clear evidence of neglect, dereliction and under-use. It was also specified that areas which are generally regarded as affluent, have high occupancy rates and which do not require regeneration should not be included.
Officials in my Department reviewed the Living City Initiative in 2016 in consultation with the relevant councils and the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs. On foot of that review, a number of changes to the scheme were announced in Budget 2017 in order to make the Initiative more attractive and effective.
The principal change extended the residential element of the scheme to landlords, who are now able to claim the relief by way of accelerated capital allowances for the conversion and refurbishment of property, which was built prior to 1915, where such property is to be used for residential purposes.
In addition, the requirement for a pre-1915 building to have been originally constructed for use as a dwelling in order to qualify for the residential element of the Initiative was removed. The floor area restriction for owner-occupiers has also been removed. Furthermore, the minimum amount of capital expenditure required for eligibility for relief, under all elements of the scheme, was also amended and must now only exceed €5,000.
The possibility of extending the Special Regeneration Areas was considered, but it was decided that such a change would dilute the Initiative's potential impact on the originally targeted areas.
Revenue have informed me that in order to cost the Deputy's proposal, they would require information on the number of eligible properties in areas outside of the current Special Regeneration Areas. This information is not available from tax returns or other sources, and as such, Revenue are not able to provide this estimation.
Tax Exemptions
Ceisteanna (108, 128)
Pearse Doherty
Ceist:108. Deputy Pearse Doherty asked the Minister for Finance if a vehicle registration tax, VRT, exemption will be introduced for mountain rescue vehicles and other vehicles used solely in such rescue activities; and if he will make a statement on the matter. [27452/18]
Amharc ar fhreagra
Éamon Ó Cuív
Ceist:128. Deputy Éamon Ó Cuív asked the Minister for Finance his plans to exempt vehicles used for mountain rescue from VRT in budget 2019 in view of the fact that these vehicles are often financed by voluntary donations and small grants; and if he will make a statement on the matter. [28013/18]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 108 and 128 together.
Section 130 of the Finance Act 1992 (as amended by Section 102 of the Finance Act 2010) introduced, from 1 January 2011, a revised classification system for the assessment of VRT which reflects the categories used for classification of vehicles at European level under various EC Directives. Passenger Vehicles (EU Category M) and Commercial Vehicles (EU Category N) are classified based on the specifications of these vehicle types and in particular, the number of seats and their goods carrying capacity. There are no provisions for the classification of vehicles based on their usage.
A vehicle may be registered as an ambulance if it conforms to the definition provided in the 2007/46 Framework Directive (as amended). This states that the vehicle must be: “intended for the transport of sick or injured people and having special equipment for such purpose.” Furthermore, the layout and technical equipment of the patient compartment have to comply with the European requirement (IS EN 1789:2007 +A1: 2010 +A2:2014) on medical vehicles and their equipment. This standard emphasises, amongst other things, the ceiling clearance level of the patient compartment which gives sufficient space for the treatment of the casualty during transport. Under the terms of the Directive these vehicles are assigned an EU SC bodywork code as a special purpose vehicle at EU type-approval stage.
Vehicles such as converted 4x4s and sports utility vehicles cannot meet the required standards as set out above, in particular in relation to the ceiling clearance level and partitions. Revenue therefore regards them as category A which is consistent with their passenger transport design. When deployed operationally, the primary function of these vehicles is to support ground personnel and provide transport facilities for patients to take them from off-road areas to a waiting emergency ambulance. In addition, these 4x4s may not be exclusively used for the carriage of sick or disabled persons, as they may also be used as staff vehicles outside of specific events.
Any attempt to base VRT classification on the use of a vehicle as distinct from its design would be unworkable legislatively and administratively. However, the Programme for a Partnership Government recognises the difficulties facing community and voluntary groups in relation to VRT rates on vehicles and I have asked my officials to examine the matter.
Legislative Reviews
Ceisteanna (109)
Pearse Doherty
Ceist:109. Deputy Pearse Doherty asked the Minister for Finance his plans to review section 135(3A) of the Taxes Consolidation Act 1997, as inserted by section 23 of the Finance Act 2017; if there is evidence that it has reduced tax avoidance; and if he will make a statement on the matter. [27498/18]
Amharc ar fhreagraFreagraí scríofa
Section 135(3A) of the Taxes Consolidation Act 1997 was introduced to counter a specific avoidance scheme identified by Revenue whereby taxpayers were seeking to extract profits from companies in a manner which avoided a charge to income tax. The scheme involved individuals avoiding a liability to income tax where the individual disposed of shares and arranged for the consideration for the disposal to be funded from the assets of the company. The measure introduced ensures that distribution treatment correctly applies to such transactions. The measure has no effect in relation to bona fide transactions entered into by SMEs.
Subsection (3A) came into effect in respect of arrangements entered into after 2 November 2017. Therefore, the first full year in which the provision has application is 2018. The relevant tax returns in respect of the year 2018 are not due to be filed until 2019. Accordingly, it is not yet possible to comment on the effect which the amendment has had in closing down the relevant avoidance scheme. I am informed by Revenue that they have engaged in extensive consultation with practitioners, as well as the Department of Business, Enterprise and Innovation and Enterprise Ireland in relation to the provision subsequent to its introduction. A detailed guidance note was also issued in relation to the provision in order to provide interpretative guidance on the measure which included practical worked examples in relation to the application of the new subsection.
Tax Exemptions
Ceisteanna (110, 118)
Pearse Doherty
Ceist:110. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of increasing the annual exemption limits for persons aged 65 years of age and over by €1,000 for a single person and €2,000 for a couple; if further increases would be a straight line calculation; and if he will make a statement on the matter. [27499/18]
Amharc ar fhreagra
John McGuinness
Ceist:118. Deputy John McGuinness asked the Minister for Finance his plans to increase the pension exemption limit for tax purposes from €36,000 in view of the fact that it has not been adjusted for the past four to five years; the estimated cost of an increase for each €1,000; and if he will make a statement on the matter. [27834/18]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 110 and 118 together.
I am informed by Revenue that the costs for increasing the annual exemption limits for persons aged 65 years and over can be found by consulting the Revenue Ready Reckoner, available at https://www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf.
The cost requested is as follows;
|
Cost of Increasing Aged 65 and over Income Tax Exemption Limit |
First Year |
Full Year |
|
By €1000 for single/widow/surviving partner and €2000 for married/civil partner |
27m |
31m |
Amounts other than those shown can be extrapolated using a straight line or pro-rata calculation.
The purpose of the exemption limit is to identify a certain income limit below which a taxpayer aged 65 or over is not required to pay income tax or to submit claims to Revenue for income tax reliefs.
This exemption limit does not equate to the amount of income which would be sheltered by the tax credits available to the individual or couple as both the exemption limit and the tax credits available can vary depending on the personal circumstances of the individual. For example:
- There are separate single and married exemption limits, and increases are also available for individuals with dependent children including incapacitated adult children.
- While all taxpayers have a personal tax credit, a PAYE credit is available only in respect of qualifying income and is limited for use against that type of income. Additional tax credits are also available, such as those for widows/widowers, for blind individuals, for those caring for incapacitated children or dependant relatives, and for health expenses incurred by the taxpayer.
In my view the current income exemption limits are the most appropriate use of limited resources. I am however conscious of the significant contribution made by taxpayers generally to the rebalancing of the public finances, and of the challenges that individuals continue to face notwithstanding the improving economic conditions.
For this reason Budget 2018, for the fourth year in succession, introduced reductions in the income tax and USC burden with a particular focus on low and middle income earners. It is my intention to continue to make progress on reducing the personal tax burden in future Budgets subject to having the necessary resources.
Financial Services Sector
Ceisteanna (111)
Michael McGrath
Ceist:111. Deputy Michael McGrath asked the Minister for Finance the status of each of the 30 actions identified in the IFS2020 strategy in tabular form; if they have been implemented; and if he will make a statement on the matter. [27677/18]
Amharc ar fhreagraFreagraí scríofa
In March 2015, the Government launched the ‘International Financial Services 2020 Strategy’ (IFS2020), which is led by Minister of State Michael D’Arcy TD. One of the main deliverables is to create 10,000 net new jobs across the Enterprise Ireland and IDA Ireland portfolios in international financial services over five years from 2015 – 2020. To end-2017 the IFS2020 Strategy has created approximately 7,000 net new jobs in the sector placing us on target to create 10,000 by 2020. The IFS sector now employs almost 42,000 people across Ireland with 30% of those employed in the sector located outside Dublin.
The initial Strategy document launched in 2015 sets out five strategic priorities with 30 specific actions outlined as follows.
This strategy document is available on my Department’s website at the following link:
http://www.finance.gov.ie/wp-content/uploads/2017/05/IFS2020.pdf.
The five strategic priorities are:
Strategic Priority 1: Promote Ireland as a location for International Financial Services & world class innovative products & services
Strategic Priority 2: Drive continuous improvement in the operating environment & competitiveness of Ireland's IFS sector
Strategic Priority 3: Drive Research, Innovation & Entrepreneurship in the IFS sector, with a particular focus on financial technology & governance, risk & compliance.
Strategic Priority 4: Develop job-creation opportunities from emerging IFS sub-sectors & new markets
Strategic Priority 5: Data and Benchmarking of Progress
Whereas the 30 specific actions are listed as follows:
Utilise the IDA to promote and market Ireland as a location for IFS.
Utilise the extensive EI overseas office network and dedicated Financial Services Global Team (FSGT) located in key target international markets to support the expansion and growth of Irish owned entities.
Provide clear briefing materials and information to equip the Embassy network to support their efforts in promoting Ireland as a location for IFS and producer of innovative products and services.
Use our Embassy network and the overseas offices of the enterprise development agencies to ensure that appropriate priority is given to the IFS sector in their ongoing planning and activities.
Coordinated approach to international promotion of IFS.
Relevant Departments and Agencies will explore the possibility of appropriate private-sector secondments both in Ireland and overseas to support the objectives of IFS2020.
A representative from the IFS industry will be invited by the Minister for Foreign Affairs and Trade to participate in the Export Trade Council.
Develop a “banner brand” for the IFS sector to promote Ireland’s IFS sector, including during overseas trade missions and at selected international events.
Host a major IFS Summit to highlight emerging trends and opportunities in the sector.
Establish an IFS Education and Skills Liaison Group.
Deliver training needs and future skills needs assessment for the sector.
Enhance the Finuas Network to take account of the broadening of IFS activities in Ireland with a particular focus on Payments and FinTech.
Promoting IFS as a career choice.
Ensure that the six monthly review of the critical skills list for employment permits continues to reflect the skills shortages experienced by the IFS.
Talent Attraction – Single Website Portal.
Place making and Regional Development.
Marketing the overall opportunity in the SDZ.
The Central Bank and Department of Finance will, in accordance with their respective legal roles, review the authorisation service standards reported by the Central Bank in 2015.
Continuous development of Double Taxation Treaties.
Determine the position with regard to core markets infrastructure with input from the key stakeholders, examining key strategic issues, dependencies and critical emerging issues.
Drive continued innovation in the IFS industry by increasing the number of companies engaged in projects.
Drive Research, Development and Innovation (RD&I) within existing firms.
Enhancing IFS – ICT sectoral collaboration.
Identify both domestic and international sources of funding for FinTech companies and develop an engagement process to facilitate introductions to investor ready companies.
Partner with existing accelerators to support engagement and up skilling and the mentoring process with participating companies.
Set up an indigenous “funds services cluster” and support the group to target key markets, in particular the UK and North America.
Create a Payments Forum and develop a Sectoral Strategy for Payments.
Analyse the financial services capabilities of the BPO cluster in Ireland through a high level group and recommend actions to develop the international financial services capability.
Develop a working group that will examine the opportunities afforded by the Capital Markets Union green paper as well as follow on opportunities for strategic positioning and skills enhancement.
Relevant Departments and Agencies will work together to research, design and deliver a year-end annual IFS progress report.
IFS2020 is reviewed and updated annually through the development of annual action plans. Three further action plans (2016, 2017 and 2018) have been published since the initial strategy (and actions 2015) document, and in total 159 actions have been identified.
Quarterly progress reports track the progress of measures within the IFS2020 Action Plans and are published on my Department’s website. The latest quarter 1 of 2018 progress report is available at the following link: http://www.finance.gov.ie/wp-content/uploads/2018/05/IFS2020-Q1-2018-Progress-Report.pdf.
A small number of measures were delayed from one quarter to the next, but almost all were completed within the annual period. Measure 20 in the 2015 Strategy - financial market infrastructure - was delayed in 2015, and recast as Measure 28 in the 2016 Action Plan, and completed on time. Measure 27 in the 2016 Action Plan was to fully adopt the ‘Alternative A’ provisions of the Cape Town Convention and was delayed from Q4 2016 to Q2 2017. All other measures for 2015, 2016 and 2017 have been implemented and measures for 2018 remain on track for completion by end-2018.
Legislative Programme
Ceisteanna (112)
Michael McGrath
Ceist:112. Deputy Michael McGrath asked the Minister for Finance when the investment limited partnership (amendment) Bill will be introduced; when the new legislation will become law; and if he will make a statement on the matter. [27678/18]
Amharc ar fhreagraFreagraí scríofa
As the Deputy knows, the Funds Industry has been a successful and significant element of the Irish financial services landscape for many years. This success has been underpinned by various periodic relevant changes in the legislative landscape that have made Ireland an attractive domicile for promoters in Asia, across Europe, the U.S., and further afield. In addition, we also have a regulatory regime which provides a robust and consistent approach to the supervision that promotes confidence in Ireland as a location for investment funds.
Due to changes in the global private equity market in both structure and relevant European legislation, it has been decided that there is a case to update the Investment Limited Partnership Act 1994. The IFS2020 Action Plan commits to developing amendments to the Investment Limited Partnership Act 1994 so as to make the structure more attractive to fund managers.
Consequentially, my Department sought and obtained approval from the Government for the preparation of the necessary "Heads" for legislation in 2017. My officials have developed the Heads and these have been sent to the Office of the Parliamentary Counsel for their consideration. A drafter has been assigned to work on this workstream and the Bill appears on the Government's legislative programme for 2018. It is anticipated that the draft legislation will be developed in the second half of this year with the intention for the Bill to be then considered by the Houses of the Oireachtas before the end of the year.
Stability and Growth Pact
Ceisteanna (113)
Michael McGrath
Ceist:113. Deputy Michael McGrath asked the Minister for Finance the amount by which Ireland would miss its MTO target in 2019 if the €500 million dedicated to the rainy day fund were to be spent in 2019; and if he will make a statement on the matter. [27699/18]
Amharc ar fhreagraFreagraí scríofa
The estimates prepared by the European Commission, in its Spring Forecast, and my Department, in the Stability Programme Update 2018, both project a structural deficit of 0.4 per cent of GDP for next year.
If an additional €500 million were to be spent this would, in the first instance, increase the deficit, and have a corresponding impact on the structural position. On the assumption that all other variables are unchanged the resulting structural deficit would be 0.6 per cent of GDP in 2019.
Ceteris paribus the MTO would, therefore, not be achieved next year.
The Government is committed to establishing the Rainy Day Fund as a fiscal buffer in the event of a major shock to the economy.
As I set out in the 2018 Summer Economic Statement, the increases permitted under the fiscal rules represent money that we would have to borrow. Budgetary policy will be formulated on the basis of what is right for the economy at this stage in the cycle and not by rules that would increase borrowing.
Stability and Growth Pact
Ceisteanna (114)
Michael McGrath
Ceist:114. Deputy Michael McGrath asked the Minister for Finance the minimum structural effort required under the fiscal rules to move towards the medium term objective in a year with a structural deficit of 0.9%; if Ireland is obliged under the European fiscal rules to move towards its medium term objective of a structural deficit of 0.5%; and if he will make a statement on the matter. [27700/18]
Amharc ar fhreagraFreagraí scríofa
A Member State in the preventive arm of the Stability and Growth Pact is legally required to be at, or making sufficient progress towards, its Medium Term budgetary Objective (MTO). Ireland's MTO is a structural deficit of 0.5 per cent of GDP.
The European Commission sets the required annual fiscal adjustment based on inter alia the cyclical position of the economy. In 'normal' economic times, a Member State not at its MTO should improve its structural deficit at a rate of 0.6 per cent of GDP per annum. A Member State cannot be required to over-achieve its MTO but is free to do so if it so chooses.
The Commission has projected a structural deficit in Ireland of 0.6 per cent of GDP for 2018. Accordingly, the Commission has proposed a Country Specific Recommendation that Ireland should achieve its MTO next year. My Department has projected a structural deficit of 0.9 per cent of GDP for this year; however, it is the Commission's figures that matter from a legal perspective.
As I set out in the 2018 Summer Economic Statement, budgetary policy will be set so as to reduce borrowing and steadily increase public expenditure underpinned by stable and predictable tax revenue.
Stability and Growth Pact
Ceisteanna (115)
Michael McGrath
Ceist:115. Deputy Michael McGrath asked the Minister for Finance if a country is not at its MTO, if it is obliged under the fiscal rules to apply a convergence margin; the way in which the convergence margin is calculated; the amount in monetary terms of the convergence margin for 2019 (details supplied); and if he will make a statement on the matter. [27701/18]
Amharc ar fhreagraFreagraí scríofa
Under the Stability and Growth Pact, Member States must attain a country-specific Medium Term budgetary Objective (MTO) which is set in structural terms. For Ireland this is currently set as a structural deficit of 0.5 per cent of GDP.
When a Member State is not at its MTO, a convergence margin applies. The process of calculating this convergence margin is detailed in the 2018 Edition of the Vade Mecum on the Stability and Growth Pact. This may be found at https://ec.europa.eu/info/publications/economy-finance/vade-mecum-stability-and-growth-pact-2018-edition_en.
The convergence margin is set by the Commission, following its assessment of the Stability Programme. It is calculated on a country-specific basis and is designed to ensure that the MTO is achieved in a suitable manner.
The convergence margin for 2019 is set out in table 3 of the 2018 Summer Economic Statement and reduces the reference rate of potential growth by 0.6 percentage points.
In nominal terms this equates to c. €400 million.
Of course, had there been no convergence margin for 2019 and this money was spent, it would have increased the deficit (both headline and structural).
As I have said, the increases permitted under the fiscal rules represent money that we would have to borrow. Budgetary policy will be formulated on the basis of what is right for the economy at this stage in the cycle and not by rules that would increase borrowing.
GDP-GNP Levels
Ceisteanna (116)
Michael McGrath
Ceist:116. Deputy Michael McGrath asked the Minister for Finance when his attention was drawn to the potential effects of contract manufacturing on GDP figures in 2017; and if he will make a statement on the matter. [27776/18]
Amharc ar fhreagraFreagraí scríofa
Ireland’s national accounts data, including GDP, are prepared by the Central Statistics Office which is independent. They are prepared in accordance with EU and international standards currently in place.
Contract manufacturing is a form of outsourcing whereby an Irish-resident firm engages a company abroad to manufacture goods on its behalf (and vice versa). Crucially, for the purposes of calculating GDP in accordance with the standards, the inputs used in the production process, including the valuable intellectual property rights, remain in the ownership of the Irish-based entity and no change of economic ownership is deemed to take place during the production process.
Putting it another way, the foreign-based contract manufacturer supplies a manufacturing service to the Irish-based company and the former never takes ownership of the product. When these goods are finally sold in a third country, a change of economic ownership is deemed to take place and the transaction is recorded as an export from the Irish-based entity for the purposes of GDP estimates. It is important to stress that while this activity inflates Ireland’s exports and GDP, it has almost no impact on Irish living standards as it generates little or no domestic activity/employment.
Contract manufacturing has been a feature of the Irish national accounts for over a decade. However, the phenomenon has been especially noticeable since 2015 following the relocation by a small number of firms of their entire balance sheets to Ireland (with the balance sheets mainly consisting of high income-generating assets such as intellectual property). These firms appear to engage in outsourcing by way of contract manufacturing.
My Department has been aware of contract manufacturing for a number of years and in particular since the release of the 2015 national accounts which clearly illustrated the potential effect of contract manufacturing on GDP.
In this context, high frequency indicators such as industrial production have been poor leading indicators for contract manufacturing in recent quarters. As a result, the actual impact of contract manufacturing on the full year GDP figures last year only became apparent when the quarterly national accounts for the fourth quarter of 2017, incorporating preliminary full year GDP estimates for 2017, were released in March 2018. The final figures for 2017 will be contained in the National Income and Expenditure 2017 results expected to be published by the CSO in July.
Foireann Roinne
Ceisteanna (117)
Aindrias Moynihan
Ceist:117. D'fhiafraigh Deputy Aindrias Moynihan den Aire Airgeadais an bhfuil oifigeach Gaeilge ceaptha dá Roinn; an post lánaimseartha atá ann nó an bhfuil dualgais bhreise ar an oifigeach Gaeilge; cén grád atá ag an oifigeach Gaeilge; an bhfuil sé nó sí ábalta a ghnó nó a gnó a dhéanamh trí Ghaeilge; agus an ndéanfaidh sé ráiteas ina thaobh. [27807/18]
Amharc ar fhreagraFreagraí scríofa
Is ar mo chomhghleacaí, An tAire Josepha Madigan TD, An tAire Cultúir, Oidhreachta agus Gaeltachta, atá an fhreagracht maidir le hAcht na dTeangacha Oifigiúla 2003 agus Scéimeanna Gaeilge.
Is féidir liom a chur in iúl don Teachta go ndéantar foráil i Scéim Gaeilge na Roinne Airgeadais 2018-2021 Oifigeach Gaeilge a bheith ag mo Roinn. Is é Oifigeach Comhlíonta na Roinne, atá ag leibhéal Príomhoifigeach Cúnta, atá i ról an Oifigigh Ghaeilge faoi láthair agus atá freagrach as ábhar a bhaineann le hAcht na dTeangacha Oifigiúla 2003 sa Roinn. Tá an ról sin sa bhreis ar na dualgais eile atá leagtha ar an Oifigeach Comhlíonta sa Roinn.
Tá forálacha i bhfeidhm ag mo Roinn chun seirbhísí Gaeilge a chur ar fáil don phobal agus leagtar amach go mionsonraithe iad sin i Scéim Teanga na Roinne ar féidir í a fháil ar láithreán gréasáin na Roinne nó ag an nasc: https://www.finance.gov.ie/ga/updates/language-scheme-2018-2021/
Is féidir liom a dheimhniú don Teachta go bhfuil mo Roinn tiomanta do sheirbhísí ar ardchaighdeán i nGaeilge a chur ar fáil dá cuid custaiméirí agus a chinntiú go mbeidh acmhainní cuí teanga sa Roinn chun an méid seirbhísí Gaeilge atá de dhíth a chur ar fáil.
Question No. 118 answered with Question No. 110.
VAT Yield
Ceisteanna (119)
Peadar Tóibín
Ceist:119. Deputy Peadar Tóibín asked the Minister for Finance the amount of VAT paid in relation to concerts performed by foreign resident music artists here in each of the past five years; and the rate of VAT that they pay. [27837/18]
Amharc ar fhreagraFreagraí scríofa
I am informed by the Revenue Commissioners that the information recorded on VAT returns does not separately identify particular products or activities. Therefore, it is not possible to provide the amount of VAT paid in relation to concerts performed by foreign resident music artists.
In general, where a concert takes place in Ireland, the artist’s performance fee is subject to Irish VAT at the standard rate, currently 23%. Where an international performer is engaged by a promoter, it is the responsibility of the promoter to account for VAT due on the performance fees. This means that where the promoter is established in Ireland, the promoter is required to account for Irish VAT on the performance fee. In circumstances where the artist and promoter are both established outside the State, the promoter is required to account for VAT on the performance fee where he/she is established.
Where premises providers allow promoters who are not established in the State to hold concerts (on their premises), they must report details of the events to Revenue. Failure to do so can make the premises providers jointly liable for any VAT arising. This is a safeguard provision to ensure the correct VAT is collected and paid in relation to any merchandise sold at the venues.
Mortgage Lending
Ceisteanna (120)
Michael McGrath
Ceist:120. Deputy Michael McGrath asked the Minister for Finance the requirements on lenders to provide information to consumers when they are offering incentives such as cashback offers in the context of the new requirements introduced by the Central Bank to provide additional transparency and facilitate mortgage switching; and if he will make a statement on the matter. [27839/18]
Amharc ar fhreagraFreagraí scríofa
The Central Bank advises that Provision 6.12 of the Consumer Protection Code 2012 states that, where a regulated entity offers an incentive to a personal consumer on an existing mortgage, the regulated entity must provide the personal consumer, on paper or on another durable medium, with the information needed to consider the incentive offered.
This information must:
Quantify the implications for the personal consumer of availing of the incentive including an indicative cost comparison of the total cost of the existing mortgage if they do not avail of the incentive and the total cost of the mortgage if they avail of the incentive;
Clearly set out the length of time during which the incentive will be available;
Clearly set out any assumptions used, which must be reasonable and justifiable;
Set out the advantages and disadvantages to the personal consumer of availing of the incentive;
Include other key information which the personal consumer should have available to them when considering the incentive; and
Include a statement that the personal consumer may wish to seek independent advice prior to availing of the incentive.
On June 20, the Central Bank published a new addendum to the Consumer Protection Code 2012, which will take effect from 1 January 2019. The Bank advises that the addendum extends the transparency requirements set out in Provision 6.12 above to all mortgage holders i.e. for new, existing and switching mortgage holders.