Written Answers Nos. 325-348
326. Deputy Joan Burton asked the Minister for Finance the additional yield to date in 2018 from the decision to increase the commercial stamp duty by 4% to 6% in budget 2018; and if he will make a statement on the matter. [34857/18]
Amharc ar fhreagraI am informed by Revenue that it is not possible to accurately identify the additional yield to date from the increase in Stamp Duty on non-residential property.
You may however wish to note that the provisional yield from Stamp Duty to end June 2018 on property is approximately €270 million, of which approximately €200 million came from non-residential property. The corresponding period in 2017 yielded €156 million of which €86 million came from non-residential property.
327. Deputy Joan Burton asked the Minister for Finance the cost to date of the CGT entrepreneur relief by year; the projected cost in 2018 and 2019; his plans to make changes to this relief; and if he will make a statement on the matter. [34858/18]
Amharc ar fhreagraIt is assumed that the Deputy is referring to the revised Entrepreneur Relief provided for in Section 597AA of the Taxes Consolidation Act 1997.
I am advised by the Revenue Commissioners that the provisional cost of the revised Entrepreneur Relief for 2016, based on the latest data available, is in the region of €20m with approximately 400 individuals claiming the relief. This is provisional and likely to change as further analysis is done.
In general, consideration of Capital Gains Tax changes, including any changes to individual CGT reliefs, are undertaken within the annual Budgetary and Finance Bill process. As is normal, the Deputy will appreciate that I cannot comment on any possible changes in advance of the 2019 Budget. In addition, it would be impossible for me to comment on any possible changes in respect of future Budgets.
328. Deputy Joan Burton asked the Minister for Finance the costs to date in 2018 of the key employee engagement programme; the number of persons that have used the scheme to date; and if he will make a statement on the matter. [34859/18]
Amharc ar fhreagraI am advised by Revenue that, as the Key Employee Engagement Programme (KEEP) only came into effect on 1 January 2018, details of the costs and numbers availing of this programme will only be available once the relevant employer tax returns for 2018 have been received and processed. The first KEEP return is due 31 March 2019.
329. Deputy Joan Burton asked the Minister for Finance the yield to date in 2018 from the compliance measures announced as part of budget 2018 (details supplied); and if he will make a statement on the matter. [34860/18]
Amharc ar fhreagraIn October 2017 I published Revenue’s evaluation of Budget 2016 compliance measures (available at: https://www.revenue.ie/en/corporate/documents/research/budget-2016-compliance-measures.pdf), with the 2018 Budget documentation. This analysis indicates the target of €75 million for 2016 was exceeded and conservative estimates show the measures in total yielded between €120 million and €150 million in the year.
I am advised that Revenue is presently working on the evaluation of the Budget 2017 compliance measures and I expect to publish the results of this evaluation at Budget 2019 time. Revenue will then follow this with an evaluation of the Budget 2018 compliance measures (those cited by the Deputy) in due course. Given the nature of these measures and that the targets reflect yield expected to be collected over the full year, a mid-year evaluation is unlikely to provide an accurate or complete indication of the final outcome. However, I am advised that, based on evidence to date, Revenue expects that the yield targets will be met.
330. Deputy Joan Burton asked the Minister for Finance the products and services to which the second reduced rate of VAT applies; when the reduced rate first applied; and if he will make a statement on the matter. [34862/18]
Amharc ar fhreagraThe 9% reduced VAT rate was introduced in the Finance (No. 2) Act 2011 with effect from 1 July 2011 as part of an initiative package to boost tourism and stimulate employment in the sector.
The majority of goods and services to which the 9% rate applies date from 1 July 2011. These include:
- Supply of food and drink (excluding alcohol and soft drinks) in the course of catering or by means of a vending machine;
- Hot take-away food and hot drinks;
- Hotel lettings, including guest houses, caravan parks and camping sites;
- Admissions to cinemas, theatres, certain musical performances, museums and art gallery exhibitions;
- Amusement services of the kind normally supplied in fairground or amusement park services;
- Provision of facilities for taking part in sporting activities by a person other than a non-profit making organization, including green fees charged for golf and subscriptions charged by non-member-owned golf clubs;
- Printed matter, e.g., newspapers, brochures, leaflets, programmes, maps, catalogues, printed music (excluding books); and
- Hairdressing services.
In order to comply with jurisprudence of the Court of Justice of the EU (CJEU), the Finance Act 2012 provided that admissions to historic houses, open farms and built and natural heritage facilities became subject to the 9% rate from 1 January 2012. They had been exempt from VAT prior to this change.
Finally, with effect from 1 January 2015, the 9% VAT rate was extended to apply to the supply of horses - other than those intended for food or agriculture - greyhounds and the hire of horses. This followed a CJEU case taken against Ireland by the European Commission. The 4.8% reduced rate had previously applied to these supplies.
333. Deputy Joan Burton asked the Minister for Finance the Exchequer borrowing requirement for 2018; the projected borrowing requirement for 2019; and if he will make a statement on the matter. [34865/18]
Amharc ar fhreagraThe Summer Economic Statement contains the most recent estimates of the Exchequer Borrowing Requirement for 2018 to 2021.
As per the Deputy's question, the estimates of the Exchequer borrowing requirement for 2018 to 2019 are €1,515 million and €2,405 million respectively.
The increase in the Exchequer borrowing requirement from 2018 to 2019 reflects the Government's commitment to invest in infrastructure, as outlined in the National Development Plan 2018 to 2027, and the annual contributions to the rainy day fund which begin in 2019.
334. Deputy Joan Burton asked the Minister for Finance the gross and net general Government debt for 2017 by cash amount in tabular form; the projected end of year amounts for 2018 and 2019; the details of the Exchequer cash and other assets, the ISIF cash and non-equity investments and other cash and assets held by source; the amounts as a percentage of GDP and GNI in tabular form; and if he will make a statement on the matter. [34866/18]
Amharc ar fhreagraMy Department does not publish GNI forecasts; it does, however, publish forecasts for nominal GDP and GNI*. Gross and net debt as a fraction of each of these variables are set out in the tables. The GDP and GNI* figures for 2018 and 2019 are based on my Department's projected growth rates for these variables (as set out in the Stability Programme Update 2018) applied to the new 2017 base (as published by the CSO last week).
The exchequer cash and other assets, Ireland Strategic Investment Fund (ISIF) cash and non-equity investments and other cash and assets held by general government are combined as EDP debt instrument assets below as the level of granularity of each is unavailable for forecasts.
|
- |
2017 |
2018 |
2019 |
|
Gross General Government Debt (millions) |
€201,294 |
€206,304 |
€209,444 |
|
Gross General Government Debt % of GDP |
68.4% |
66.0% |
63.5% |
|
Gross General Government Debt % of GNI* |
111.1% |
107.5% |
103.9% |
|
Net General Government Debt (millions) |
€174,027 |
€176,899 |
€180,504 |
|
Net General Government Debt % of GDP |
59.2% |
56.6% |
54.8% |
|
Net General Government Debt % of GNI* |
96.1% |
92.2% |
89.6% |
|
EDP debt instrument assets (millions) |
€26,927 |
€29,405 |
€28,940 |
|
EDP debt instrument assets % of GDP |
9.2% |
9.4% |
8.8% |
|
EDP debt instrument assets % of GNI* |
14.9% |
15.3% |
14.4% |
We have one of the highest debt per capita ratios in the developed world and there is a general recognition that sovereign borrowing costs have bottomed out. The Government is committed to prudent budgetary policy that reduces debt and supports sustainable and steady improvements in our living standards.
335. Deputy Joan Burton asked the Minister for Finance the reason the medium term objective of a structural deficit of 0.5% will not be met in 2018; the estimated structural deficit for 2018 and 2019 under the proposed budgetary fiscal space as outlined in the summer economic statement, the estimated structural deficit if €500 million of fiscal space for the rainy day fund was committed to capital expenditure; the estimated structural deficit if the €900 million of fiscal space that will not be utilised under the Government's plans was also committed to new expenditure measures; and if he will make a statement on the matter. [34867/18]
Amharc ar fhreagraEstimating the cyclical position of the economy has become increasingly complex, in large part because of distortions to GDP arising from activity in the multinational sector. This has resulted in a strongly positive output gap this year, which impacts on the assessment of compliance with the medium term budgetary objective (MTO) of a structural deficit of 0.5% of GDP. It is projected that Ireland will meet its MTO in 2019.
As outlined in Table 2 of the 2018 Summer Economic Statement, the structural deficit for 2018 and 2019 is projected to be 0.9% and 0.4% of potential GDP, respectively.
The Government is committed to establishing the Rainy Day Fund as a fiscal buffer in the event of a major shock to the economy. If the additional €500 million committed to the Rainy Day Fund were to be spent this would, in the first instance, increase the general government deficit by another 0.2 per cent of GDP and have a corresponding impact on the structural position in each of the years 2019-2021.
Under the fiscal rules, an additional €900 million of expenditure is permitted. The impact of spending this €900 million is shown in Line ‘d’ in table 4 of the Summer Economic Statement. The following table is reproduced for the Deputy’s convenience:
|
- |
2019 |
2020 |
2021 |
|
a. General Government Balance (SPU 2018) |
-0.1 |
0.3 |
0.4 |
|
b. Structural Balance (SPU 2018) |
-0.4 |
0.1 |
0.3 |
|
c. MTO |
-0.5 |
-0.5 |
-0.5 |
|
Targeting minimum compliance with expenditure benchmark: |
|||
|
d. General Government Balance (minimum compliance) |
-0.4 |
-0.4 |
0.2 |
|
e. Structural Balance (minimum compliance) |
-0.7 |
-0.6 |
0.1 |
Note: The scenario above does not take into account the second round effects of any such measures
By spending the maximum amount permitted under the fiscal rules the structural deficit would increase and we would not achieve the MTO until 2021.
As I set out in the Summer Economic Statement, this represents money that we would have to borrow, further adding to our debt pile at a time of major downside risks to the economy. Budgetary policy will be formulated on the basis of what is right for the economy at this stage in the cycle and not by minimum adherence to the fiscal rules, which would allow inappropriate increases in expenditure.
336. Deputy Joan Burton asked the Minister for Finance the estimated yield of a bed night tax levy of €1 per night in a hotel or bed and breakfast in a full year for each local authority in tabular form; and if he will make a statement on the matter. [34868/18]
Amharc ar fhreagraI am advised by the Revenue Commissioners that there is no data available to them from tax returns or similar that would assist in providing the information requested by the deputy.
337. Deputy Joan Burton asked the Minister for Finance the amount of Exchequer cash and liquid assets currently on hand; the reason for such a large amount; the carrying cost of this for 2018; the amount of debt and bonds to be refinanced or paid in 2018; the amount of debt raised to date in 2018 by the NTMA; the amount expected to be raised at the end of 2018; and if he will make a statement on the matter. [34871/18]
Amharc ar fhreagra338. Deputy Joan Burton asked the Minister for Finance if the State is carrying large cash reserves in the event of a hard Brexit; and if he will make a statement on the matter. [34872/18]
Amharc ar fhreagraI propose to take Questions Nos. 337 and 338 together.
I am advised by the National Treasury Management Agency (NTMA) that at end-June, Exchequer cash/liquid assets stood at €23.4 billion. This is an increase of just under €13 billion on the end-2017 position. This increase primarily reflects the pre-funding undertaken by the NTMA in advance of large forthcoming bond redemptions. The NTMA raised over €11 billion in new bond funding in the first six months of the year. This is seventy per cent of the mid-range of the full year target issuance of €14-€18 billion. The weighted average interest rate on the new bond issuance in the first half of the year was just above 1 per cent.
It is important to note that approximately 40 per cent of the end-June cash/liquid asset balance is funded from short-term markets at an aggregate negative interest rate. Furthermore, there is a large bond redemption of close to €9 billion in mid-October and so cash/liquid asset balances will decline in the coming months. The NTMA expects to have approximately €13 billion in cash/liquid assets at year-end.
There are two benchmark bond maturities in 2019, one in June and one in October. The combined balance on these two bonds is currently just over €13 billion. Bilateral loans from the UK also begin to mature next year.
The estimated cost of holding cash reserves at the current level is around €1 million per month per €1 billion of borrowing.
As regards Brexit, the NTMA is satisfied that its current funding strategy is appropriate and consistent with its risk appetite.
344. Deputy Michael McGrath asked the Minister for Finance the full year cost of increasing the VAT registration thresholds for SMEs and the self employed to €50,000, €60,000, €80,000 and €90,000, respectively; and if he will make a statement on the matter. [34895/18]
Amharc ar fhreagraVAT is governed by the EU VAT Directive (Council Directive 2006/112/EC), with which Irish VAT law must comply. The Directive provides that VAT registration thresholds may only be raised by Member States to maintain their value in real terms, that is, they may only be increased in line with inflation. Our VAT thresholds were increased to their current values, €37,500 for services and €75,000 for goods, on 1 May 2008 and as the Central Statistics Office figures show the consumer price index is below the level it reached in 2008, it is not possible to increase these thresholds. Furthermore, any increase in the thresholds above these levels would require a derogation and agreement by all 28 Member States.
Ireland’s VAT registration thresholds for small enterprises and the self-employed are among the highest in the EU. In addition, SMEs benefit from a range of VAT simplification measures including; simplified and electronic invoicing; special schemes for retailers and pharmacists; the facility to make VAT returns on a bi-annual or annual basis; the cash receipts basis of accounting where the trader is not required to pay VAT until payment for the supply is received; the facility for small businesses to submit an annual VIES return rather than monthly; and the Mini One Stop Shop which allows business to register, file and pay VAT due in all Member States through the Irish MOSS system.
345. Deputy Michael McGrath asked the Minister for Finance the full year cost of expanding the SARP scheme to new recruits and not just existing employees; and if he will make a statement on the matter. [34896/18]
Amharc ar fhreagraThe Special Assignee Relief Programme (SARP) is available to employees of companies that are incorporated and tax resident in a country with which Ireland has a double taxation agreement or a Tax Information Exchange Agreement. Under existing legislation, the employee must have worked for the employer for a minimum of 6 months outside of Ireland immediately before being assigned to work in Ireland.
As part of the SARP review in 2014, the proposal to include employees that were newly employed from outside an organisation rather than restricting it to employees moving within an organization was considered. However, the review found that to include new hires in this manner could cause job displacement in the Irish labour market. If, for example, an Irish tax resident individual and a foreign based individual with similar skills both applied for the same job, it would be less costly for the employer to hire the foreign based individual. This would place the Irish tax resident individual at a considerable disadvantage.
Revenue have informed me that it is not possible to provide the estimated cost for extending SARP (if the six month requirement was removed) because the potential extra uptake to the scheme or the wage levels of the extra employees involved is unknown.
347. Deputy Catherine Connolly asked the Minister for Finance the steps taken by his Department to ensure that a directly supervised bank (details supplied) complies with its obligations under EU legislation, directives, regulations, guidelines and the Charter of Fundamental Rights of the European Union on arrears and foreclosures; the procedures and or mechanisms in place; and if he will make a statement on the matter. [34914/18]
Amharc ar fhreagraI have been advised by the Central Bank of Ireland that as the information requested and referred to in this parliamentary question is lender specific supervisory information, the Central Bank is not in a position to comment on individual lenders due to confidentiality requirements under Central Bank legislation. The Central Bank has suggested that the information referred to should be requested from the lender detailed in the question.
The Central Bank is responsible for the supervision of conduct of business regulation for regulated entities providing financial products or services to Irish residents. This is conducted through a risk-based approach and includes, inter alia, Consumer Protection Risk Assessments, thematic inspections, desk-based reviews, on-site inspections and ad-hoc trigger-based reviews.
Within the remit of the Central Bank’s responsibilities for safeguarding stability and protecting consumers, its approach to mortgage arrears resolution is focused on ensuring the fair treatment of borrowers through a strong consumer protection framework and ensuring that lenders have appropriate arrears resolution strategies and operations in place.
The Code of Conduct on Mortgage Arrears (CCMA) forms part of the Central Bank’s Consumer Protection Framework. It is a statutory Code first introduced by the Central Bank in February 2009, with the current CCMA becoming effective from 1 July 2013. The CCMA provides a strong consumer protection framework, requiring relevant firms to ensure borrowers in arrears or pre-arrears in respect of a mortgage loan secured on a primary residence are treated in a timely, transparent and fair manner and that due regard is given to the fact that each case of mortgage arrears is unique and needs to be considered on its own merits.
Banks, retail credit firms and credit servicing firms servicing loans on behalf of unregulated loan owners are all required to comply with the CCMA. The CCMA recognises that it is in the interests of borrowers and regulated firms to address financial difficulties as speedily, effectively and sympathetically as circumstances allow. It sets out the Mortgage Arrears Resolution Process (MARP), a four-step process that regulated entities must follow:
Step 1: Communicate with borrower;
Step 2: Gather financial information;
Step 3: Assess the borrower’s circumstances; and
Step 4: Propose a resolution
Each regulated entity must consider the borrower’s situation in the context of the solutions they provide, which may differ from firm to firm. The CCMA does not prescribe the solution which must be offered. The CCMA includes requirements that arrangements be sustainable and based on a full assessment of the individual circumstances of the borrower and that repossession be used only as a last resort. Borrowers who engage with their lender, therefore, benefit from the protections afforded under the Mortgage Arrears Resolution Process (MARP).
Under the CCMA, a regulated entity may only commence legal proceedings for repossession where it has made every reasonable effort to agree an alternative repayment arrangement (ARA) with the borrowers and other clear requirements are met or the borrower has been classified as not co-operating. During the legal process, borrowers have opportunities to re-engage with lenders to find a solution. In some circumstances, however, loss of ownership may be unavoidable.
The Central Bank has conducted a number of themed inspections on the CCMA since its introduction in 2009.
Details of these themes and the feedback issued can be found at the following link: https://www.centralbank.ie/regulation/consumer-protection/compliance-monitoring/themed-inspections
In June 2015 the Central Bank completed a themed inspection of compliance with the CCMA. The themed inspection included onsite inspections of a number of regulated mortgage lenders to examine the processes in place around certain provisions of the CCMA and the controls lenders have in place to ensure compliance with those processes and the CCMA. The Central Bank released the findings from this work in June 2015. See Press Release for further details: https://www.centralbank.ie/news/article/central-bank-s-themed-inspection-identifies-weaknesses-in-lenders-compliance-with-the-code-of-conduct-on-mortgage-arrears
Deputy, you will be aware that I asked the Governor of the Central Bank to carry out a review of the effectiveness of the CCMA earlier this year and I expect this review to be completed in the coming months.
In relation to prudential matters, all Irish retail banks are supervised through the Single Supervisory Mechanism (SSM). In this regard, the subject retail banks are obliged to ensure they fully comply with all relevant EU guidelines with regards to arrears and foreclosures.
