Written Answers Nos. 1-43
6. Deputy Joan Burton asked the Minister for Finance if he has commissioned an impact assessment of the increase in VAT from 9% to 13.5% in respect of hotels, restaurants, hairdressing and other activities; the expected increase in revenues in each of the categories in 2019; and if he will make a statement on the matter. [48580/18]
Amharc ar fhreagraThe 9% VAT rate was introduced as part of the Jobs Initiative from July 2011 to December 2013 and was aimed at boosting tourism and the creation of additional jobs in that sector. From Budget 2014 it was decided to retain the 9% rate to support the increased number of jobs, and latterly, due to the weakness in Sterling following Brexit. It was for these reasons that I retained the 9% rate in last year’s Budget.
I also, however, made a commitment during last year’s Finance Bill to undertake a comprehensive economic study of all aspects of the 9% VAT rate in order to better inform any decision in relation to the reduced rate going forward.
The “Review of the 9% VAT rate: Analysis of Economic and Sectoral Developments” was published by my Department in July 2018. In addition to assessing the relevance, cost, value-for-money, impact to date of the 9% VAT rate, the Review also looks at the estimated impact on the relevant sectors were the rate to be increased.
The Review found that tourism expenditure is more sensitive to income growth and the economic cycle than price changes. The economy is currently performing well, with high levels of employment and strong demand in the tourism sector. Growth is also expected to continue in the medium term. This positive economic outlook means that the income channel of demand is likely to ensure that economic activity within the 9% rate sector remains strong. The Review concludes that the VAT rating applied to the tourism sector should not greatly impact demand or employment in the sector. The Budget decision to increase the VAT rate was made following this analysis.
With regard to the expected increase in Exchequer revenues in 2019 as a result of the Budget change, this is estimated to be €466 million. The VAT rate increase in tourist accommodation is expected to yield €235m in 2019, restaurants are expected to yield €191m, hairdressing is estimated to yield €27m in 2019, bloodstock sales is expected to yield €7m and cinemas and shows is estimated to yield €6m in 2019.
13. Deputy Éamon Ó Cuív asked the Minister for Finance the amount of carbon tax collected on solid fuels in each of the years 2015 to 2017 and to date in 2018, respectively; the steps he is taking to ensure compliance with the law in this regard and secure the revenue base; and if he will make a statement on the matter. [48421/18]
Amharc ar fhreagraSolid Fuel Carbon Tax was commenced in May 2013 at a rate of €10 per tonne of carbon dioxide emitted when combusted, and was increased to €20 per tonne in 2014. Approximately 75% of solid fuel carbon tax yield relates to coal.
Annual net receipts for the tax amounted to €23.5m in 2015, €24.4m in 2016 and €19.1m in 2017. As of end October, receipts to date in 2018 amounted to €19.9m.
Revenue has responsibility for administering this tax and takes a risk-focused approach in its deployment of resources on compliance activities. Solid fuel carbon tax is collected by Revenue on a self-assessment basis and compliance with the law is enforced using the full range of compliance interventions and enforcement provisions for self-assessed taxes. Liable fuel suppliers must file a return and pay for each bi-monthly period by the last day of the following month. Where suppliers do not submit returns by the due date Revenue will issue an estimate of the tax due. If a taxpayer fails to pay the amount due, including any debt for which an estimate has issued, Revenue may refer the debt for enforcement action. This can include sheriff enforcement, civil proceedings through the courts or attachment of third parties. I am advised that, to date, Revenue has undertaken actions to enforce approximately €640,000 of Solid Fuel Carbon Tax.
Under European Union Single Market constraints, Revenue has no authority to stop vehicles and physically inspect loads of solid fuel. Similarly, the transport or possession of solid fuel that originated in Northern Ireland are not, in themselves, Revenue offences and Revenue officers have no authority to challenge such transportation or possession.
As I, and my predecessor, have pointed out before, because of the price differential with Northern Ireland, the collection of solid fuel carbon tax is heavily reliant on the regulatory regime covering the marketing, sale, distribution and burning of solid fuels in the State. This regulatory regime is operated by the Department of Communications, Climate Action and Environment and is enforced by local authorities. This regime, which imposes higher environmental standards on coal in the State than applies in Northern Ireland, enables local authorities to undertake enforcement action to prevent the sale or distribution of coal that does not meet our standards.
I am advised that Revenue is working with the Department of Communications, Climate Action and Environment to discuss the effectiveness of the regulatory regime for solid fuel and to explore how Revenue could support the Department to improve matters in light of continuing concerns that fuel sourced from Northern Ireland is getting onto the market here. I understand that contacts are ongoing with a view to undertaking a number of joint operations and to explore the scope for follow up action by Revenue in relation to persons found to be in breach of environmental regulations.
14. Deputy Pearse Doherty asked the Minister for Finance his plans to amend the recommendations in the cost of insurance working group plan that a publicly funded Garda anti-fraud unit to deal with insurance fraud be put in place. [48599/18]
Amharc ar fhreagraAs the Deputy is aware, recommendation 26 of the Report on the Cost of Motor Insurance calls for An Garda Síochána to explore the potential for further cooperation between it and the insurance sector in relation to insurance fraud investigation. In this regard, one measure which the Working Group considered as part of the Report was the establishment of a dedicated team within An Garda Síochána to tackle insurance fraud based on the UK model which is funded by the insurance industry. At this juncture, there are no plans to amend the recommendations of the Cost of Insurance Working Group Report in relation to the issue of the establishment of a Garda anti-fraud unit.
I, as Minister of State for Financial Services and Insurance, have no role in relation to the parameters of a proposed Garda Fraud Unit or how it might be funded. I understand that, at this stage, the Garda Commissioner has yet to form a view on the recommendation, and that no proposal or recommendation has yet been submitted to the Minister for Justice and Equality, Mr. Charlie Flanagan, T.D. It will then be a matter for Minister Flanagan, on foot of a recommendation from the Garda Commissioner, to decide whether the establishment of the proposed unit is something which should be pursued.
Aside from consideration of the feasibility of a fraud unit, there has been significant progress in enhancing the level of engagement and cooperation between An Garda Síochána and the insurance industry. Part of this arose from the Fraud Roundtable, which was hosted by the Department of Finance and which involved wide stakeholder consultation. A key output from this process was the agreement of guidelines titled“Guidelines for the Reporting of Suspected Fraudulent Insurance Claims by Insurance Entities to An Garda Síochána”, which were published on 1st October.
Another important output of this engagement is the commitment for the Garda National Economic Crime Bureau and Insurance Ireland’s Anti-Fraud Forum to meet on a regular basis in order to discuss and act upon current and ongoing general issues which arise in the area of insurance fraud. This enhanced cooperation, I believe, will be very important going forward in tackling the issue of fraudulent claims.
16. Deputy Thomas P. Broughan asked the Minister for Finance his plans for legislative and regulatory changes in relation to the business culture of banks and the accountability of senior banking officials; and if he will make a statement on the matter. [48542/18]
Amharc ar fhreagraAs I have previously informed the House, I intend to bring forward heads of a Central Bank (Amendment) Bill for Government approval in Quarter 1 2019. In that regard it is my intention that the proposed legislation will identify the legislative changes that are required to implement a customer centric culture and to enhance individual accountability.
I have long been on the record as stating that there are cultural failings in the banking sector that must be addressed and I have recently spoken of the need to rebuild the bond of trust that has been sundered with society in the wake of the banking crisis. We, in Government, are supportive of measures to change behaviour and organisational culture within the financial sector, in order to keep the customer at the heart of its operations.
The Central Bank's Section 6A Report on the culture and behaviour of the main retail banks was drafted in response to my request in November 2017. The report published in July, puts forward proposals, to enhance individual accountability by way of Conduct Standards for all regulated financial services providers and the individuals working within them; a Senior Executive Accountability Regime; and enhancements to the current Fitness and Probity Regime.
My Department’s assessment of the report found that it is a detailed and considered analysis of culture within the banking sector. The report’s recommendations are intended to drive positive changes in terms of wider banking culture, greater delegation of responsibilities, and enhanced accountability. The report importantly focuses on simplifying the taking of sanctions against individuals who fail in their financial sector roles.
These Central Bank proposals are being considered as part of the work of the Government's forthcoming Central Bank (Amendment) Bill. Officials in my Department are engaging with the Central Bank and other stakeholders in order to provide for measures that are proportionate and effective to achieve the Government’s objective of a sustainable, customer focussed, financial services industry. Policy matters including how proposals may be implemented are currently being examined including an appraisal of international best practice.
It is important that any proposals that are brought before the Houses of the Oireachtas adopt a strategic approach in proposing and bringing through legislation that allows the Central Bank and firms within the financial sector to drive the necessary changes in culture.
17. Deputy Michael McGrath asked the Minister for Finance the status of the preparedness of the Revenue Commissioners for Brexit; the number of extra staff that have been hired by the Revenue Commissioners since September 2018; the number that will be in place by the end of March 2019; and if he will make a statement on the matter. [48563/18]
Amharc ar fhreagra27. Deputy Joan Burton asked the Minister for Finance the number of additional officials of the Revenue Commissioners and customs and excise recruited to deal with Brexit; the number of additional officials who will be recruited from the end of March 2019; and if he will make a statement on the matter. [48584/18]
Amharc ar fhreagraI propose to take Questions Nos. 17 and 27 together.
I am advised that Revenue is actively engaging in the Interdepartmental work on Brexit coordinated by the Department of An Taoiseach and the Department of Foreign Affairs and Trade.
As the Deputies are aware, in July 2018 the Government made a number of decisions in relation to preparations for a ‘Central Case Scenario’. This is the main scenario based on the UK leaving the EU on 29 March 2019 with a ratified Withdrawal Agreement to include provisions for the backstop arrangements for the island of Ireland; and for a transition period up to 31 December 2020, during which time the UK would uphold the entire EU acquis.
In line with preparations for the ‘Central Case Scenario’, Revenue’s Brexit preparedness and contingency planning encompasses the three key areas of staffing, ICT enhancement, and infrastructure.
In September 2018, the Government approved the phased recruitment of 600 Revenue staff. In response to an open recruitment campaign undertaken by the Public Appointments Service more than 3,000 applications were received. Since September 2018, 43 trade facilitation staff have been appointed by way of internal, interdepartmental and open recruitment. I am advised by Revenue that plans are fully on track for the first phase of 200 additional trade facilitation staff to be trained and in place, working on a 24 hour/7-day week basis, by 29 March 2019. I understand that recruitment and training of the remaining 400 staff is set to progress on a phased basis during the transitional period up to the end of 2020.
In Budget 2017 provision was made for an additional €2 million for ICT funding for Revenue and I am advised that this has been invested in scaling up their Customs ICT framework to deal efficiently with the increase in Customs declarations, post Brexit and that Revenue is confident that the enhanced IT systems will be capable of facilitating smooth and efficient trade flows post Brexit.
I am further advised that Revenue chairs an inter-Departmental Group that was established to consider the adequacy of port and airport infrastructure post Brexit. This Group has identified and agreed the detail of the nature and scale of facilities that would be required at Dublin Port, Rosslare Europort and Dublin Airport. I understand that OPW is now leading on engagement to ensure that the additional infrastructure is operational in a timely manner.
18. Deputy Niamh Smyth asked the Minister for Finance the status of a review of the help- to-buy scheme; and if he will make a statement on the matter. [48423/18]
Amharc ar fhreagraEarlier this year, I commissioned an independent Cost Benefit Analysis (CBA) of the Help to Buy (HTB) incentive. Following a competitive tender process, Indecon International Economic Consultants were appointed to carry out this analysis. The report of the CBA was published at Budget time in the Department of Finance Report on Tax Expenditures and is available on my Department’s website.
In brief, the report finds as follows:
- Prices: While there may have been a very small increase in prices attributable to the introduction of the incentive, the primary driver of house prices remains the continued misalignment between demand and supply.
- Supply: The evidence suggests that following the introduction of the incentive there was a marked increase in supply which can be attributed in part to HTB.
- Affordability: The analysis also finds that availability of HTB has reduced the time to save for all claimants and improved the overall affordability of housing for these individuals.
- Benefit/Cost Ratio: The analysis finds a benefit-cost ratio of 1.28 indicating a moderate positive effect for the incentive but note that if the price of new HTB units was to increase due to the incentive, the net benefit would be reduced.
The incentive is due to expire at the end of next year and will be subject to decision as part of Budget 2020.
19. Deputy Thomas P. Broughan asked the Minister for Finance if he has estimated the likely additional contributions Ireland will make to the EU budget from 2020 onwards in the event of British withdrawal on 29 March 2019; and if he will make a statement on the matter. [48543/18]
Amharc ar fhreagraAs the Deputy will be aware, the European Commission’s proposal for the next Multiannual Financial Framework (MFF) 2021-2027 was published on 2nd May 2018. I welcome the publication of the proposals which marks the start of an important debate on the future of the EU budget. The proposals come at a time of great change and adjustment for the EU; with new priorities (including migration, security, climate change etc.) and the departure of UK.
As the Deputy will be aware, with Ireland’s growing prosperity we have moved from being a net beneficiary to a net contributor to the EU budget. As such, it is important that the next MFF be an appropriately sized spending plan for the EU27 in a post-Brexit era, and that it will be capable of meeting the priorities of the EU27. Negotiations on those priorities and how they should be funded will be complex.
Further, in relation to Brexit, given the UK’s current status as one of the largest net contributors to the EU budget, Brexit will have a significant impact on EU budget funding and expenditure. Should the draft Withdrawal Agreement be concluded the UK Government will continue to make contributions into the EU budget for the years 2019 and 2020 as if it were a full member and to continue to pay a contribution during a transition period for a time thereafter. However, as the Deputy will appreciate, while the draft withdrawal agreement was recently published, these negotiations are still on-going, therefore, it would not be appropriate for me to discuss those negotiations or the potential impact on Ireland's net contribution to the EU budget in detail at this point.
Finally, in relation to contributions for the years 2020 to 2023, as part of Budget 2019, my Department forecasted contributions of €2.9bn, €3.1bn, €3.2bn and €3.4bn respectively. However, it is worth noting that these forecasts are contingent on a number of variables, including updated GNI forecasts, the size of the overall EU budget for the year and other EU budget operational developments. As a result, all forecasts will be monitored and updated on an ongoing basis.
20. Deputy Louise O'Reilly asked the Minister for Finance the steps he will take to ensure that residents affected by the liquidation of the structural warranty of an underwriter (details supplied) are not unfairly affected; and his plans to deal with this issue. [48604/18]
Amharc ar fhreagra26. Deputy Pearse Doherty asked the Minister for Finance the steps he will take to ensure residents affected by the going into liquidation of an underwriter (details supplied) of their structural warranties are not unfairly affected. [48600/18]
Amharc ar fhreagraI propose to take Questions Nos. 20 and 26 together.
The Central Bank of Ireland has advised me that it was notified by the Danish Financial Supervisory Authority on 7 March 2018 that it had ordered Alpha Insurance A/S to cease writing new business including renewal of existing contracts and business with immediate effect. It was further notified on 9 May 2018 that the liquidators of the insurance company Alpha Insurance A/S had filed a petition for bankruptcy.
The Central Bank has indicated that as Alpha Insurance A/S is a Danish based insurance firm, it is subject to prudential supervision by the Danish Financial Supervisory Authority, and therefore it had no role in this decision. The Central Bank has also informed me that Alpha Insurance A/S was selling non-life insurance policies, including structural warranty insurance, in Ireland through the broker network on a freedom of services basis and that it also operated in Denmark, France, Germany, Greece, Italy, Norway, the United Kingdom and Spain.
As the structural warranty insurance was initially purchased by the developer, the residents of the impacted properties may wish to get in contact with the property developer in the first instance to see if alternative cover can be arranged.
Ultimately, should there be a claim on the policy due to structural defects, the property developer should seek assistance from the Danish Insurance Guarantee Fund in the first instance. If such an application were unsuccessful, there may then be recourse to the Irish Insurance Compensation Fund to recover 65% of the cost of a claim, up to a ceiling of €825,000 per claim subject to the particular circumstances of the claim and the relevant provisions of the Insurance Acts (1964).
21. Deputy Michael McGrath asked the Minister for Finance his plans to develop a new strategy for the growth and development of the credit union sector; and if he will make a statement on the matter. [48564/18]
Amharc ar fhreagraThe Government has a clear policy to support the strategic growth and development of credit unions delivering the comprehensive recommendations set out in the Commission on Credit Unions Report and the Credit Union Advisory Committee (CUAC) report in 2016, both of which involved extensive stakeholder engagement. CUAC remains an important advisor to me on strategic issues facing the sector.
Since 2011 my Department has put in place a number of measures to assist the credit union sector, including the establishment of the Commission on Credit Unions, introduction of the Credit Union and Co-operation with Overseas Regulators Act 2012 and the establishment of the Credit Union Restructuring Board which oversaw 82 restructuring projects involving 156 credit unions during its lifetime.
More recently an Implementation Group was established to oversee and monitor the implementation of the CUAC Report’s recommendations. The group is chaired by my Department and consists of one member from each of the representative bodies, one member from CUAC and a member from the Central Bank. This group is an important forum for key stakeholders in the sector and has submitted papers on long-term lending and consultation and engagement to the Central Bank. The Implementation Group is expected to issue a final report to me in December 2018.
While there are challenges to returns arising from the low yield environment and low loan to asset ratios, the sector continues to show signs of improvement reflected in growth in new lending, delivering c. 35% of all unsecured consumer lending in 2017, a decrease in the level of reported arrears and an increase in reserves. Total assets have increased consistently for many years and currently stand at approximately €17.5 billion.
Business model development is another challenge and opportunity facing the sector and to this end the Central Bank has set up a dedicated Business Model Unit within the Registrar of Credit Unions and has developed initiatives such as the CEO forum to address key constraints to, and enablers for, business model development. Business model development is also a focus of the CUAC, and I have specifically requested the committee to review barriers to and supports for collaborative efforts as well as SME lending, linking with the outcomes of the Local Public Banking report.
It should be recognised, however, that there are many positive developments taking place in the sector, led by Credit Unions and their representative bodies. Next year will see around 50 large credit unions, encompassing almost half of sector assets, providing Member Personal Current Account Service (MPCAs), a Central Bank-approved suite of services which includes personal current accounts, a range of payment services including debit cards, and overdrafts.
2019 will also see a new regulatory framework for lending being introduced, which should materially increase the scope for credit unions offering mortgages to their members. The proposal would allow sectoral capacity of up to at least €861m for mortgages, with this figure rising if Credit Unions are approved for higher limits. To put this figure in context there is approximately €165m of house loans currently outstanding within the credit union sector. This new lending framework, which is in a consultation process at present, follows the recent significant regulatory changes to the Investment Framework which includes provisions that would allow up to €700 million of Credit Union investment for funding social housing.
This Government recognises the important role of credit unions as a volunteer co-operative movement and its priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall. The Government is determined to continue to support a strengthened and growing credit union movement. Credit unions are member owned and it is these members, with support from their representative bodies, who ultimately are responsible for setting and implementing their own individual strategic plans, with appropriate support from Government.
22. Deputy Willie Penrose asked the Minister for Finance his views on recent revelations that certain high net worth individuals are paying significantly lower rates of income tax than persons of much more modest means as a consequence of various tax breaks including losses carried forward; the estimated tax lost as a consequence of such activity; and if he will make a statement on the matter. [48586/18]
Amharc ar fhreagraRevenue’s role is to ensure compliance with tax legislation and to collect the correct tax due based on taxable income determined in accordance with the relevant tax legislation.
In computing taxable income, the legislation provides for deductions in respect of various tax credits and reliefs including losses incurred both current and carried forward, subject to conditions. These deductions are available to all taxpayers.
The Chapter on the “Management of high wealth individuals’ tax liabilities” in the recent 2017 Annual Report by the Comptroller and Auditor General (C&AG) states that the effective tax rate for high wealth individuals (HWIs) is more than double the rate for all income tax payers. The Report also identifies that 83 HWIs had taxable income of less than the average industrial wage.
The Chairman of the Revenue Commissioners attended the Public Accounts Committee meeting on 15 November. During the detailed discussion with the Committee, the Chairman outlined the various lifestyle and wealth management features of HWIs. In relation to the 83 HWIs with taxable income of less than the average industrial wage, he outlined that this low taxable income is related to the circumstances of the individuals which includes: family members of HWIs (25); non-resident individuals (21); individuals no longer categorised as HWIs (17); entitlement to credits and reliefs (15) with the remaining individuals having low income in that year. It is important to point out that the deductions claimed which lower a taxpayer’s taxable income are legitimate credits against tax liabilities. The Chairman also assured the Committee that there is no evidence, and Revenue does not assume, that wealthy individuals are more likely to be tax non-compliant.
Measures were introduced in the 2006, 2007 and 2010 Finance Acts to restrict the use of certain tax reliefs and exemptions by high income earners. These measures ensure that these individuals have an effective tax rate of approximately 30%. The recent report on the ‘Analysis of High Income Individuals’ Restriction 2016’ published by Revenue in September of this year shows that these restrictions impacted on 521 individuals in 2016 resulting in the collection of additional income tax of €38.5m.
23. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he can intercede with the EU institutions in view of the need to clear the way for an emergency local authority and affordable housing programme; and if he will make a statement on the matter. [48595/18]
Amharc ar fhreagraThe fiscal rules to which Ireland is subject have direct application through a number of EU regulations and through the Fiscal Responsibility Act 2012. Any change to these regulations would have to follow the normal EU approach, beginning with a proposal from the Commission before consideration by Member States and the European Parliament.
The fiscal rules provide some scope for flexibility, where temporary deviations from the required budgetary adjustment are permitted, subject to strict conditions. There are also certain more explicit flexibility provisions within the rules. For instance, to facilitate public investment, increases in capital expenditure are smoothed over a four-year period, where only one-quarter of the increase is taken into account in the first year.
The rules also allow for deviations in the event of specific unforeseen circumstances – to date this has primarily been employed by several Member States in respect of costs relating to the refugee crisis – and to finance structural reforms that improve the long-term sustainability of the economy.
The Government has been clear that the provision of affordable housing is a top priority. The Rebuilding Ireland Action Plan outlines the Government’s strategy for tackling housing issues. By the end of 2018, over 70,000 housing solutions will have been delivered under Rebuilding Ireland. In addition, along with my colleague the Minister for Housing, Planning and Local Government, I signed the Establishment order for the Land Development Agency on 13 September. The Agency will work to better coordinate State lands for regeneration and development in partnership with land-owning State bodies.
Finally, a wide range of housing measures were announced in Budget 2019, which provides a €2.3 billion investment in housing for 2019. This represents a 25 per cent increase on 2018, and is the most the State has ever spent on housing. To ensure that no one has to sleep rough in the winter, an additional €60 million in capital funding was allocated for 2018, much of which will fund additional emergency accommodation. Budget 2019 provides a further increase of €30 million for homelessness services, bringing the total allocation for 2019 to €146 million.
24. Deputy Bobby Aylward asked the Minister for Finance the measures he has taken to meet and engage with insurance companies here regarding excessive premiums being charged to consumers particularly in counties Carlow and Kilkenny; and if he will make a statement on the matter. [48428/18]
Amharc ar fhreagra28. Deputy Niamh Smyth asked the Minister for Finance the status of the measures that have been taken to meet and engage with insurance companies here regarding excessive premiums being charged to consumers, particularly in counties Cavan and Monaghan. [48424/18]
Amharc ar fhreagraI propose to take Questions Nos. 24 and 28 together.
The Minister for Finance is responsible for the development of the legal framework governing financial regulation. Neither he nor the Central Bank can interfere in the 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 insurance sector has been subject to a lot of volatility in recent years, from a point where some premiums appeared to be priced at an unsustainably low level to the more recent experience of large increases, particularly in relation to motor insurance.
Indeed, the problem of rising motor insurance premiums was the main impetus for the establishment of the Cost of Insurance Working Group, which I chair. Its Report on the Cost of Motor Insurance was published in January 2017 and makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, set out within an Action Plan. The Working Group continued its work throughout 2017 and subsequently published the Report on the Cost of Employer and Public Liability Insurance in January 2018.
Stakeholder consultation formed the foundation upon which the Working Group’s two Reports and their recommendations were developed. This consultation process undertaken by the Working Group involved a wide range of stakeholders representing the different voices within this sector, including representative bodies, the major individual motor insurance providers and interest groups. The impact of excessive premiums being charged to consumers from all counties across the country was a feature of this engagement process with industry.
In addition, my officials regularly raise specific issues affecting consumers across the country during their ongoing engagement with Insurance Ireland, including within a sub-group formed to implement relevant consumer-focused recommendations from the Motor Report.
Furthermore, I have separately met with representatives from insurance companies and other relevant stakeholders in relation to a number of issues and the problems resulting from high insurance premiums have been discussed during these engagements.
Quarterly progress updates on the implementation of the Reports provide more detailed information on the implementation of each of the recommendations and actions. The seventh quarterly update was published recently and is available on the Department’s website, within “The Cost of Insurance Working Group” sub-section of the main “Insurance” section.
Finally, it should be noted that the most recent CSO data (for October 2018) indicates that private motor insurance premiums have decreased by 22.9% since peaking in July 2016. There was a drop of 9.1% year-on-year in October, the 19th consecutive month with a year-on-year reduction.
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 with the result that premiums should continue to fall from the very high levels of mid-2016.
25. Deputy Pearse Doherty asked the Minister for Finance his plans to legislate to place a cap on the rates that can be charged by moneylenders; and if he will make a statement on the matter. [48598/18]
Amharc ar fhreagra31. Deputy Joan Burton asked the Minister for Finance if he has examined the recent report by an organisation (details supplied) on the perceived extortionate level of interest and charges charged on loans by moneylenders particularly in the run up to Christmas; his plans to regulate and-or cap interest and charges on moneylender type products; and if he will make a statement on the matter. [48583/18]
Amharc ar fhreagra38. Deputy Michael McGrath asked the Minister for Finance his views on whether stricter controls are needed on interest rates charged by licensed moneylenders here; and if he will make a statement on the matter. [48566/18]
Amharc ar fhreagraI propose to take Questions Nos. 25, 31 and 38 together.
I met with the Social Finance Foundation last week and was briefed on the report it had commissioned from the Centre for Co-operative Studies in University College Cork. The purpose of the research was to examine the extent and variety of interest rate restrictions within the EU and further afield and to assess the appropriateness of introducing such a restriction in the Irish market, given its specific circumstances and financial environment. The key report recommendations highlighted by the Social Finance Foundation are that an interest rate restriction should be introduced but that this is conditional on there being a reliable alternative for consumers who are able and willing to repay and that consideration should be given to increasing the statutory 1% monthly cap on credit union interest rates.
The report did not specify the type or level of interest rate cap that should be introduced. Both the report and the Social Finance Foundation highlight that this and other issues should be the subject of further research. The Social Finance Foundation also advised that the only thing worse than high cost credit is no credit.
The Social Finance Foundation points out that the credit union movement is a viable alternative for the community currently serviced by licensed moneylending firms because of the Personal Micro Credit (PMC) Scheme that many of its members participate in. It began as a pilot scheme, supported by Government, in November 2015. Loans under the initiative are branded "It Makes Sense" loans. The PMC Implementation Group was established to oversee and drive the implementation of the scheme through its pilot phase and subsequently through to implementation nationwide. My Department is represented on the PMC Implementation Group, which is chaired by the Department of Employment Affairs and Social Protection.
It should be noted that credit unions are independent and it is at management discretion if they sign up to offer the "It Makes Sense" loan to consumers. Additionally Credit Unions can only lend within their common bonds. Currently 47% of credit unions are involved in the PMC scheme and, therefore, only consumers within the common bond of these credit unions can avail of the “It Makes Sense” loan. As a result the "It Makes Sense" loan is not yet available as a nationwide mainstream alternative of affordable credit for current users of licensed moneylenders.
The report and its recommendations will be examined by my Department.
29. Deputy Aindrias Moynihan asked the Minister for Finance if he will report on the progress of the implementation of the report on the cost of employer and public liability insurance; and if he will make a statement on the matter. [48602/18]
Amharc ar fhreagra39. Deputy Aindrias Moynihan asked the Minister for Finance if the report on the cost of employer and public liability insurance is on target to be implemented on time; and if he will make a statement on the matter. [48601/18]
Amharc ar fhreagraI propose to take Questions Nos. 29 and 39 together.
As the Deputy is aware, the second phase of the Cost of Insurance Working Group project culminated in the publication on 25th January of the Report on the Cost of Employer and Public Liability Insurance, following its approval by Government. This Report makes 15 recommendations with 29 associated actions to be carried out, detailed in an Action Plan contained in the Report with agreed timelines for implementation.
There is a commitment within the Report that the Working Group will prepare quarterly updates on its progress. Such quarterly reports, which originally focused exclusively on the implementation of the Report on the Cost of Motor Insurance, now include updates in respect of the actions from the Report on Employer and Public Liability Insurance also.
The seventh such quarterly report was published on 12th November and shows that 18 of the 19 actions points arising up to end of Q3 2018 have been completed.
The two primary Reports and all of the quarterly updates are available on the Department’s website, within “The Cost of Insurance Working Group” sub-section of the main “Insurance” section.
The 18 actions implemented to date cut across a number of different areas and include:
- The publication of by An Garda Síochána of the “Guidelines for the Reporting of Suspected Fraudulent Insurance Claims by Insurance Entities to An Garda Síochána” on 1st October
- The Law Reform Commission confirming that the subject of caps on damages for personal injuries litigation is included in its draft Fifth Programme of Law Reform, which is to be finalised before the end of the year
- Draft heads being prepared to ensure defendants are appropriately notified of a claim having been submitted against their policy
- An Garda Síochána commencing the collection of statistics under the new “insurance fraud” category which has been added to the PULSE system
- The Courts Service confirming that they will publish a more detailed breakdown of awards in personal injury cases in their Annual Reports
The one Action Point that has been delayed thus far relates to Recommendation 7 under which the Court Rules Committees are considering amendment of the Rules of Court to take account of section 8 of the Civil Liability and Courts Act 2004 (this section deals with notification of claims to defendants). The Department of Justice and Equality expects to be able to submit a report on this matter to the Working Group before the end of the year.
Finally, it should be noted that all 29 actions are scheduled to be implemented before the end of 2019, with 26 due for completion this year. In regard to the remaining actions, 7 are due by the end of this year and 3 are due in 2019. It is hoped that all remaining actions will be achieved by their deadlines in the Report.
30. Deputy Éamon Ó Cuív asked the Minister for Finance the steps he has taken or plans to take to simplify compliance for small self-employed taxpayers in respect of income tax returns with a self-employed gross income of less than €50,000; and if he will make a statement on the matter. [48422/18]
Amharc ar fhreagraBy way of general information, Part 38 of the Taxes Consolidation Act 1997 provides that returns of income shall be in the ‘form prescribed by Revenue’. Therefore, any question of simplifying tax return obligations for any group of taxpayers is a matter for Revenue.
In this regard, I am assured by Revenue that it supports the Small and Medium Enterprises (SME) sector by making it as simple and as inexpensive as possible for sole traders, partnerships and businesses to comply with their tax obligations. To achieve this ambition, Revenue has taken various initiatives over the last number of years to assist taxpayers in filing their income tax returns. For example, recent initiatives include:
- prepopulating income tax returns with data already available through other sources to minimise the complexity of the return filing requirement and,
- providing simplified and clear information, including instructional videos on the Revenue website, to support and assist taxpayers in completing the various components of the income tax return.
Where a self-employed taxpayer has PAYE income and their self-employed income is less than €30,000 gross and €5,000 net, that self-employed income can be ‘coded’ or taken into account in calculating their annual PAYE tax credits and standard rate band. Those taxpayers can submit a shorter Form 12 tax return; online through PAYE Services in myAccount.
Also, Revenue continuously consults with business representatives through various forums to identify further initiatives that can achieve tax filing compliance in the least obtrusive way possible. For example, Revenue has established Business Customer Panels to get feedback on its services from taxpayers and to receive suggestions for potential further improvement.
Finally, while it is never possible to fully eliminate the requirements of meeting tax obligations, I am advised that Ireland compares very favourably with other countries in easing the administrative burden to the greatest extent possible. In this regard, the Deputy will be interested to note that Ireland is ranked in the ‘PWC/World Bank - Paying Taxes 2018’ report as the easiest country in the EU in which to pay business taxes and 4th easiest worldwide. I commend Revenue for this achievement, which is testament to its ongoing efforts to make the tax system as easy as possible for citizens to comply with.
32. Deputy Joan Burton asked the Minister for Finance his plans in respect of digital taxation; and if he will make a statement on the matter. [48585/18]
Amharc ar fhreagraThe Deputy will be aware that the Commission proposal for an interim Digital Services Tax, which imposes a 3% levy on the turnover of certain companies’ digital activities, is currently being debated among Member States – both at a technical and political level.
Ireland has a significant number of concerns with the Commission’s interim tax proposals. These concerns include the short term nature of the approach, the proposed move away from taxing profits to taxing revenues, the lack of a clear link between any new interim tax and evidence of value creation by digital business and the potential impact on international trading relations from the adoption of a unilateral EU initiative on digital tax.
While Ireland is among a number of Member States which object to the fundamental nature of the proposal, we are joined by a wider group which share our concerns on a series of technical issues yet to be resolved. Unanimity is required among Member States before the proposal could be agreed.
I recently reiterated Ireland's opposition to the proposal at ECOFIN on 6 November where I highlighted particular concerns I have regarding the negative consequences for Europe as a predominantly exporting bloc from creating a precedent of taxation at point of consumption rather than where value is created.
The Deputy will also recall that we discussed this proposal when I attended the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach as part of Committee Stage of the Finance Bill 2018. During that debate, I acknowledged that the taxing landscape for digital companies is going to change. However, it is my strong view that if the EU were to unilaterally introduce a digital tax, it would undermine the international tax reform process and risks disrupting international trading relations.
Ireland has been a committed participant in, and strong supporter of, tax reform efforts led by the OECD through the BEPS process. I believe the OECD offers the safest and most effective way for delivering a sustainable solution to the challenges arising from the digitisation of the economy. Intensive work is underway at the OECD and it is expected that the next significant update will be published in June 2019.
Ireland will continue to actively engage with work in the area of the digital economy at both OECD and EU level.
33. Deputy Mick Wallace asked the Minister for Finance if his attention has been drawn to the latest progress report by the Comptroller and Auditor General into the National Asset Management Agency; his views on the findings regarding section 172 declarations, particularly that NAMA case managers do not carry out verification processes regarding these; his further views on whether this may have had knock-on effects on loan and property sales; and if he will make a statement on the matter. [48605/18]
Amharc ar fhreagraThe C&AG section 226 report recorded a small number of instances (4 out of a total of 78) where Section 172 confirmations could not be located in respect of sales.
I am advised that Section 172 confirmations are examined by NAMA when a sale occurs and that NAMA has a policy of obtaining written confirmation from purchasers of NAMA secured assets that, among other things, the purchaser is not a party precluded from completing the purchase by virtue of Section 172(3) of the NAMA Act 2009.
Section 172(3) in summary prevents the sale of property back to defaulting debtors. Under Section 7(2) of the NAMA Act 2009, any person who intentionally, recklessly or through gross negligence provides false or inaccurate information to NAMA commits a criminal offence. In addition, under Section 6 of the Statutory Declarations Act 1938, it is a criminal offence for a declarant to make a statutory declaration which is false or misleading in any material respect. As such, I do not believe that there is any effect on loan or property sales as there are significant consequences where a confirmation or declaration made for these purposes later turns out to be false, inaccurate or misleading.The fact that the provision of false or inaccurate information or a false declaration constitutes a criminal offence is considered to be a strong deterrent to any purchaser who might be contemplating doing so.
34. Deputy Joan Burton asked the Minister for Finance his views on debt write-downs for customers who have engaged with their financial institutions in respect of household mortgages; his plans to offer more support to families at risk of eviction; and if he will make a statement on the matter. [48582/18]
Amharc ar fhreagraI have been advised by the Central Bank of Ireland that, within their 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 had 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.
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 Government is committed to supporting people in mortgage arrears to remain in their homes and there are a range of supports and services in place to assist people in that regard, including the Mortgage to Rent scheme; the personal insolvency system; and the Abhaile service which funds borrowers access to regulated financial or legal professionals.
As Minister for Finance, I am unable to interfere with any commercial decision of a financial entity and so I cannot comment specifically on whether institutions should be doing debt write-downs. However, I do think it is important to note that the review published last week of the Central Bank's Report on the Effectiveness of the Code of Conduct on Mortgage Arrears in the context of the Sale of Loans by Regulated Lenders states that for borrowers who engage with the process, the CCMA is working effectively and as intended.
Furthermore the Central Bank have stated that they will continue to assertively supervise regulated firms' compliance with the CCMA, track how long and short term arrangements are being applied to borrowers over time and that although strategy, commercial decisions and contractual rights of regulated entities cannot be interfered with, the Bank will investigate any patterns of behaviour it becomes aware of that suggests the CCMA is not being followed. The Central Bank will also engage with industry on providing fuller information to borrowers on the assessment of their case in relation to arrangements being considered or not.
35. Deputy Maureen O'Sullivan asked the Minister for Finance if his attention has been drawn to the results of a report issued by a company (details supplied) illustrating the effects on employment in the retail bookmaking industry as a result of the blanket increase in betting duty; and if he will make a statement on the matter. [48579/18]
Amharc ar fhreagraAs announced in the Budget I have increased the rate of betting duty from 1 per cent to 2 per cent for all bookmakers and the rate of betting intermediary duty from 15 per cent to 25 per cent on the commission earned for betting intermediaries. These measures will take effect from 1 January 2019.
The rate of betting duty at 1 per cent on the amount of bets wagered in Ireland is at an all-time low, and betting duty receipts are exceptionally low when compared to other sectors subject to excise taxes. It is also the case that there is no VAT applied on betting transactions. With the Betting (Amendment) Act 2015 now well embedded in, I believe it is timely to increase the rates of Betting Duty and Betting Intermediary Duty.
I am familiar with arguments put forward by the betting sector regarding the impact of the increase in betting duty. I acknowledge that advances in technology have challenged existing business models and have changed the structure of many markets, including the betting market, with more betting taking place online. I further acknowledge that smaller bookmakers may have ongoing difficulties competing in that environment or indeed with large retail bookmakers. While I have sympathy for small bookmakers I cannot apply the increase to some bookmakers and not others. Ultimately many taxes on goods or services are passed through to the end consumers and bookmakers will need to make commercial decisions on such matters.
I should point out that my Department held a consultation with the sector last year asking if the current model was appropriate and the overwhelming response was that it was. The main focus of the sector's engagement during this consultation was to oppose any increase in the betting duty, which leaves me with few options in this regard other than to impose a straight forward increase in the current regime.
Finally, we must also acknowledge the raised public consciousness of the problem of gambling in society. While problem gambling can result in the problem gambler, and their family, bearing the severest of economic and of course personal costs, the social costs of problem gambling can extend to their employers and to public institutions in the health, welfare and justice systems, such costs ultimately borne by taxpayers. This needs to be better reflected within the betting duty regime.
36. Deputy James Browne asked the Minister for Finance his plans to make suicide clauses in life insurance policies illegal; and if he will make a statement on the matter. [48426/18]
Amharc ar fhreagraAt the outset, the Deputy should note that while I am very conscious of the sensitivity of this issue, neither I in my role as Minister for Finance, nor the Central Bank of Ireland, can interfere in determining what an insurance contract covers and what it excludes 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 such rules. Consequently, I am not in a position to direct insurance companies as to the pricing level or terms or conditions that they should apply in respect of particular categories of policyholders or particular products.
Having said that, because of the very specific and sensitive nature of your question, I believe that it is important to get greater clarification of how this matter is handled by the Industry. Therefore, my officials contacted Insurance Ireland seeking information on the general approach taken by insurers in Ireland in relation to suicide clauses. However, due to the very short turnaround time for response to your question, Insurance Ireland were not in a position to provide any perspective on the policies adopted by insurers on this issue. Instead, it has been agreed with Insurance Ireland that they undertake a survey of their members to clarify what their current practice is regarding this matter. Once this exercise has been completed and appropriately considered, Minister of State D’Arcy will write to update you on this matter as soon as possible.
40. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the Central Bank monitors the activities of regulated and unregulated lending institutions, with particular reference to their dealings with customers; if it is recognised that the lending institutions are not accurately representing the manner and methodology of their dealings in respect of repossessions in view of the fact that countless so-called voluntary surrenders have been achieved through intimidation; and if he will make a statement on the matter. [48594/18]
Amharc ar fhreagraThe Central Bank of Ireland have advised me that within the remit of their 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, aimed specifically at the process to be followed by 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.
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 overriding objective of the CCMA is to ensure the fair and transparent treatment of consumers in mortgage arrears or pre-arrears, and that due regard is had to the fact that each case of mortgage arrears is unique and needs to be considered on its own merits. 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.
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.
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. This framework requires lenders to exhaust the options available from the suite of ARAs offered before taking action which may result in the borrower losing his/her home (whether by voluntary sale or repossession).
In relation to a lender’s communications with a borrower in or facing mortgage arrears Provision 22 of the CCMA states that a lender must ensure that:
a. the level of communications from the lender, or any third party acting on its behalf, is proportionate and not excessive, taking into account the circumstances of the borrowers, including that unnecessarily frequent communications are not made;
b. communications with borrowers are not aggressive, intimidating or harassing;
c. borrowers are given sufficient time to complete an action they have committed to before follow up communication is attempted. In deciding what constitutes sufficient time, consideration must be given to the action that a borrower has committed to carry out, including whether he/she may require assistance from a third party in carrying out the action; and
d. steps are taken to agree future communication with borrowers.
Turning to the issue regarding the subject of loans which are sold to unregulated third parties, in July 2015, the Consumer Protection (Regulation of Credit Servicing) Act 2015 (“the 2015 Act”) was introduced to fill a consumer protection gap where loans are sold by an original lender to an unregulated firm.
Under the 2015 Act if the firm who bought the loans from the original lender is an unregulated firm, then the loans must be serviced by a ‘credit servicing firm’. Credit Servicing Firms are typically firms that manage or administer credit agreements such as mortgages or other loans on behalf of unregulated entities. Credit Servicing Firms are required to obtain authorisation from the Central Bank in order to conduct credit servicing activities as defined in the 2015 Act. As a result, all firms who either currently operate in this area or intend to operate in this area (and meet the definition of a Credit Servicing Firm) require authorisation by the Central Bank.
Credit servicing firms must act in accordance with Irish financial services law that applies to ‘regulated financial service providers’. This ensures that consumers, whose loans are sold to another firm, maintain the same regulatory protections that they had prior to the sale, including the CCMA. As the Deputy will be aware, the Government is supporting Deputy Michael McGrath’s Private Members Bill requiring the regulation of loan owners. My Department have worked closely with Deputy McGrath to make the Bill more effective. The Consumer Protection (Regulation of Credit Servicing Firms) Bill 2018 was considered by the Select Committee on 12 July and it is expected that Report Stage will take place today. Finally, it is important to note that the review published last week of the Central Bank's Report on the Effectiveness of the Code of Conduct on Mortgage Arrears in the context of the Sale of Loans by Regulated Lenders states that for borrowers who engage with the process, the CCMA is working effectively and as intended.
41. Deputy Thomas P. Broughan asked the Minister for Finance his views on the ending of the asset purchasing programme quantitative easing by the European Central Bank; the estimated impact this may have on interest rates and economic activity here and the rest of the EU; and if he will make a statement on the matter. [48541/18]
Amharc ar fhreagraThe European Central Bank (ECB) recently confirmed that it will continue to make net purchases of €15 billion per month under the Asset Purchase Programme (APP) - also known as Quantitative Easing - for the final quarter of 2018, when it expects that net purchases will end.
However, the ECB intends to reinvest the principal payments from maturing securities purchased under the APP for an extended period after that. It also expects that key ECB interest rates will remain at present levels at least through mid-2019.
The winding down of the APP could potentially affect economic activity across the EU through the impact it may have on bank lending, the cost of sovereign funding and market liquidity, which will need to be monitored.
While not possible to predict the future path of ECB monetary policy or interest rates, guidance from the ECB suggests that monetary policy is likely to remain accommodative for some time yet.
As the Deputy is likely aware, the most recent Economic and Fiscal Outlook published by my Department includes an assessment of the impact of policy rate tightening which sets out that the changing stance of monetary policy is a downside risk to the global economic outlook.
However, the negative impacts of tapering are expected to be limited. This view is supported by recent outturns in the euro area which showed steady growth of 1.7 per cent year-on-year, confirming the broad based expansion in the euro area despite weakening foreign demand. Flash estimates from Eurostat also concur with this view. My Department will continue to monitor developments and advise accordingly.
The National Treasury Management Agency (NTMA) has also been contemplating the ending of QE since it commenced. Through taking pre-emptive action - including the early repayment of loans, and the early buyback and switching of near-term maturing bonds for longer maturity bonds - it has significantly improved our debt redemption profile and lowered our interest bill.
The NTMA expects to end this year with over €13 billion in cash to pre-fund ahead of larger bond redemptions. Relative to other sovereigns, Ireland has been particularly pro-active in taking advantage of the highly accommodative interest rate environment of recent years in order to pre-fund.
42. Deputy Michael McGrath asked the Minister for Finance the status of the liquidation of a company (details supplied); when the Insurance (Amendment) Act 2018 will be fully commenced; when the next payment will take place; when all claimants involved in the company will receive compensation in full; and if he will make a statement on the matter. [48567/18]
Amharc ar fhreagraSetanta Insurance was placed into liquidation by the Malta Financial Services Authority on 30 April 2014. As it was a Maltese incorporated company, the liquidation is being carried out under Maltese law.
The Deputy will be aware that the Insurance (Amendment) Act 2018 (Act 21 of 2018) was signed into law in July this year. The Act, inter alia, provides for the payment of 100% of the compensation due to Setanta third party personal injury motor insurance claimants including the additional 35% to those who have settled their claims and have already received compensation of 65% of their claim. The final part of the Act, Part 4, will come into operation on 1 December this year, under the Insurance (Amendment) Act 2018 (Commencement) (Part 4) Order 2018, which I signed on 13 September.
The State Claims Agency have, on 19 November, obtained High Court approval for payments from the Fund in respect of the fourth tranche of payments to Setanta claimants. It is hoped that the Agency will issue payments within ten working days of receiving funds from the Fund on foot of the High Court order. It is anticipated this will be completed by late November/early December.
This tranche of claims is comprised of approximately 1,500 separate payments with a value of approximately €21 million, and will comprise of (a) newly settled claims requiring 100% payment, (b) all those cases where 65% was previously paid and where the balance of 35% is due and (c) a number of third party legal costs payments.
It should be noted that the process of settling claims is still ongoing and is subject in some cases to court procedures. The next application to the High Court will be subject to a three-month rule so will be late February 2019 at the earliest. The liquidator of Setanta estimates that the process of settling the vast majority of these outstanding claims should be completed by end-2019.
43. Deputy Willie Penrose asked the Minister for Finance if he has commissioned an impact assessment of the increase in VAT from 9% to 13% in respect of hotels, restaurants, hairdressing and other activities; the expected increase in revenues in each of the categories in 2019; and if he will make a statement on the matter. [48581/18]
Amharc ar fhreagraThe 9% VAT rate was introduced as part of the Jobs Initiative from July 2011 to December 2013 and was aimed at boosting tourism and the creation of additional jobs in that sector. From Budget 2014 it was decided to retain the 9% rate to support the increased number of jobs, and latterly, due to the weakness in Sterling following Brexit. It was for these reasons that I retained the 9% rate in last year’s Budget.
I made a commitment during last year’s Finance Bill to undertake a comprehensive study of all aspects of the 9% VAT rate, in order to better inform any decision in relation to the reduced rate going forward.
The “Review of the 9% VAT rate: Analysis of Economic and Sectoral Developments” was published by my Department in July 2018. In addition to assessing the relevance, cost, value-for-money, impact to date of the 9% VAT rate, the Review also looks at the estimated impact on the relevant sectors were the rate to be increased.
The Review found that tourism expenditure is more sensitive to income growth and the economic cycle than price changes. The economy is currently performing well, with high levels of employment and strong demand in the tourism sector. Growth is also expected to continue in the medium term. This positive economic outlook means that the income channel of demand is likely to ensure that economic activity within the 9% rate sector remains strong. The Review concludes that the VAT rating applied to the tourism sector should not greatly impact demand or employment in the sector. The Budget decision to increase the VAT rate was made following this analysis.
With regard to the expected increase in Exchequer revenues in 2019 as a result of the Budget change, this is estimated to be €466 million. The VAT rate increase in tourist accommodation is expected to yield €235m in 2019, restaurants are expected to yield €191m, hairdressing is estimated to yield €27m in 2019, bloodstock sales is expected to yield €7m and cinemas and shows is estimated to yield €6m in 2019.
