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Thursday, 14 Feb 2019

Written Answers Nos. 1-24

Tax Code

Ceisteanna (14)

Joan Burton

Ceist:

14. Deputy Joan Burton asked the Minister for Finance the discussions he has had with EU member states and the European Commission in respect of proposals on the development of a digital tax; if he has been consulted by EU member states on digital tax proposals; his assessment of the impact of such a tax on Ireland; and if he will make a statement on the matter. [7362/19]

Amharc ar fhreagra

Freagraí scríofa

The 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, was discussed extensively last year among Member States – both at a technical and political level.

In December the proposal was brought before ECOFIN for political decision where it was clear that a number of Member States did not support its adoption. At the meeting, France and Germany unexpectedly tabled an amended proposal which in essence restricted the scope of the proposal to cover only digital advertising. My fellow Ministers and I agreed that we would need time to assess this new proposal and would return to the matter once we had done so.

I have had various conversations with my fellow Ministers about the proposal and the December ECOFIN was held in public session. I expect that the issue will again be discussed by Ministers at the March ECOFIN.

The new proposal fails to address the principled concerns I have consistently expressed about a proposed EU Digital tax – principally that it is based on taxing revenues rather than profits. In fact, the restricted nature of the proposal merely intensifies the concerns that this could be perceived as targeting specific companies and has the potential to aggravate tensions in the international trading arena. While the Directive has therefore not been agreed, a number of Member States have announced that they are moving ahead with their own plans for domestic digital taxes.

It should be recalled that all EU Member States support solutions for taxation of the digital economy to be reached globally at the OECD, and I do not believe that Europe should move ahead of or in a different direction to the work being done at OECD. This work is well under way and a public consultation is now underway giving stakeholders a chance to contribute to this work.

NAMA Social Housing Provision

Ceisteanna (15)

Pearse Doherty

Ceist:

15. Deputy Pearse Doherty asked the Minister for Finance his plans to use the surplus from NAMA to invest in the real economy, including social and affordable housing; and if he will make a statement on the matter. [7342/19]

Amharc ar fhreagra

Freagraí scríofa

I wish to advise the Deputy that subject to current market conditions prevailing NAMA projects a surplus in the region of €3.5bn to be returned to the State once it completes its work. The realisation of this surplus depends on the redemption of NAMA’s remaining subordinated debt by March 2020 and completion of its Dublin Docklands SDZ and residential funding programmes.

As per section 60(2) of the NAMA Act 2009, NAMA must first use surplus funds to redeem and cancel its senior and subordinated debt. The Agency announced in October 2017 that it had redeemed all of its €30.2bn in Senior Debt which was guaranteed by the State and since April 2018 it has commenced the redemption of its €1.6bn in subordinated debt. Surplus funds may only be returned to the Central Fund once NAMA's debt has been redeemed in full, which is expected to be in 2020. Following this NAMA will be in a position to start transferring its expected €3.5bn surplus to the Exchequer.

Any NAMA surplus paid, while Exchequer positive, will not impact the general government balance, in line with Eurostat rules. It will be a decision for the Government as to how any surplus returned by NAMA will be utilised within the framework of the fiscal rules at that time. The intention has always been to use such receipts from the resolution of the financial sector crisis to pay down our national debt and reduce our debt servicing costs.

In the meantime NAMA is making a significant contribution to housing supply where it is in a position to do so. NAMA’s residential funding programme is expected to fund the completion of 20,000 residential units by the end of 2020. NAMA is on track to meet this target with over 9,700 delivered directly and 3,400 indirectly at the end of 2018. In addition, NAMA has an established policy of identifying to Local Authorities and approved housing bodies, properties within its portfolio which may be suitable for social housing. To date nearly 7,000 such properties have been identified, with demand confirmed for 2,717 and 2,475 delivered or committed. Part of this delivery has been through NAMA’s innovative National Asset Residential Property Services (NARPS) model, which has purchased over 1,350 properties from NAMA debtors and leased them on for social housing.

Brexit Preparations

Ceisteanna (16)

Pearse Doherty

Ceist:

16. Deputy Pearse Doherty asked the Minister for Finance the way in which the Revenue Commissioners will ensure the integrity of the Single Market while also ensuring there is no hard border in the event of a hard Brexit. [7344/19]

Amharc ar fhreagra

Freagraí scríofa

The EU and Ireland have stated that they are determined in the context of Brexit, deal or 'no deal', to avoid the need for a hard border on the island of Ireland. In a 'no deal' scenario, intensive discussions between the Government, the EU Commission and EU partners will be required regarding the movement of goods North-South and the protecting of the EU’s Single Market and Ireland’s place in it. I am assured by Revenue that they will provide whatever technical expertise and assistance is required by the Government to facilitate those discussions.

I am advised by Revenue that their preparations do not include any plans for infrastructure at the border with Northern Ireland. This is in line with the Government’s position in the matter. The Deputy will be aware that the Revenue Chairman, Niall Cody, set out this position clearly when he and Revenue officials appeared before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach on 24 January 2019.

Insurance Data

Ceisteanna (17)

Michael McGrath

Ceist:

17. Deputy Michael McGrath asked the Minister for Finance the details of the analysis carried out regarding the treatment of policyholders in the aftermath of storms Emma and Ophelia; the number of policyholders impacted; and if he will make a statement on the matter. [7368/19]

Amharc ar fhreagra

Freagraí scríofa

In the wake of Storms Ophelia and Emma last year, I understand that Minister of State Michael D’Arcy TD requested officials to look at how insurance claims were managed. His request arose on foot of some negative feedback that the Minister of State had received from policyholders regarding delays in claims being processing in relation to these storms.

In this context, Minister of State D'Arcy and officials met directly with a number of the largest insurance companies operating in the State to discuss their individual responses as well as to seek information with regard to how the claims process was handled since the storms. The meetings also provided an opportunity for the issues that the Minister of State had received feedback on to be set out to the various insurance companies. Meetings also took place with representatives of loss assessors and a number of insurance brokers from an area which was heavily impacted by Storm Emma. Following these meetings, a summary of the key points raised during the meetings on the factors that had influenced the speed at which claims may have been settled was prepared. This document was presented to the Minister of State for his consideration and in response he has asked that the concerns expressed be further examined by members of the CIWG over the coming weeks.

Finally, it is important to note that my Department does not collect the type of information being sought by the Deputy regarding the numbers of policyholders impacted after Storm Ophelia and Storm Emma. I understand however from Insurance Ireland data provided to my Department in June 2018 that there were approximately 11,900 respective claims arising from the storms, which gives the Deputy a sense of the scale of the numbers of policyholders impacted.

Insurance Costs

Ceisteanna (18, 43)

Niamh Smyth

Ceist:

18. Deputy Niamh Smyth asked the Minister for Finance 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. [7275/19]

Amharc ar fhreagra

Bobby Aylward

Ceist:

43. Deputy Bobby Aylward asked the Minister for Finance the measures taken to meet and engage with insurance companies regarding excessive premiums being charged to consumers, particularly in counties Carlow and Kilkenny; and if he will make a statement on the matter. [7359/19]

Amharc ar fhreagra

Freagraí scríofa

I propose to take Questions Nos. 18 and 43 together.

As outlined to the Deputy in previous PQs (including PQs 48424, 43997, 40257, 34064, 30683), stakeholder consultation formed the foundation upon which the Reports of the Cost of Insurance Working Group and their recommendations were developed. This consultation process 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. Furthermore, I understand, Minister of State D'Arcy with responsibility for insurance matters, has met separately with representatives from insurance companies and other stakeholders in relation to a number of issues. The problems resulting from high insurance premiums have been discussed during these engagements.

Quarterly progress updates on the implementation of the Report on the Cost of Motor Insurance and the Report on the Cost of Employer and Public Liability Insurance provide more detailed information on the implementation of each of the recommendations and actions. The seventh quarterly update was published in November and is available on the Department’s website while the eighth quarterly report is currently being prepared.

It should be noted that the Working Group will continue to focus on putting into place the measures proposed in its two Reports. It is envisaged that the full implementation of all the recommendations from both Reports cumulatively, with the appropriate levels of commitment and cooperation from all relevant stakeholders, can achieve the objectives of delivering fairer premiums for consumers and businesses, and a more stable and competitive insurance market.

In this regard, it should be noted that the most recent CSO data (for December 2018) indicates that private motor insurance premiums have decreased by 22.16% since peaking in July 2016. While it is accepted that premiums are still at a high level for many people, such statistics indicate at least a greater degree of stability in the market on an overall basis.

Brexit Preparations

Ceisteanna (19)

Thomas P. Broughan

Ceist:

19. Deputy Thomas P. Broughan asked the Minister for Finance the key areas administered by his Department in which emergency legislation may be necessary in the event of a no-deal Brexit; if such legislation has been prepared and is ready to be presented to the Houses of the Oireachtas; and if he will make a statement on the matter. [7154/19]

Amharc ar fhreagra

Freagraí scríofa

The Government remains firmly of the view that ratifying the Withdrawal Agreement, agreed between the EU and the UK, remains the best way to ensure an orderly UK exit from the EU. A 'no deal' Brexit is the worst possible outcome and would not be in the interests of the UK, Ireland or the EU, and dealing with it would be an exercise in damage limitation.

While ratification of the Withdrawal Agreement is still the Government's preferred outcome, it has also put in place a series of measures, both nationally and in conjunction with the EU, in preparation for the possibility that the UK fails to agree a deal for its departure from the EU on 29 March 2019.

At its meeting on 11 December 2018, the Government decided to give greater immediate priority to the preparations for a no deal Brexit. This work is being co-ordinated by the Department of the Taoiseach in collaboration with the Department of Foreign Affairs and Trade, and involves all Government Departments and agencies. Given the proximity of the date of Brexit, contingency planning has moved to taking actions to mitigate the risks of a no deal Brexit, without prejudice to the Government’s priority of finalising the ratification of the Withdrawal Agreement. This includes putting the necessary legislation in place.

On 24 January, the Government published the General Scheme for the Miscellaneous Provisions (Withdrawal of the United Kingdom from the European Union on 29 March 2019) Bill. The Scheme focuses on those areas that need to be addressed urgently and immediately through primary legislation to protect our citizens and to support the economy, enterprise and jobs, particularly in key economic sectors.

The elements of the General Scheme which relate to my areas of responsibility are parts 6, 7 and 8 as follows:

In Part 6, legislative amendments are proposed for Income Tax, Capital Tax, Corporation Tax and Stamp Duty legislation in order to ensure continuity for business and citizens in relation to current access to certain taxation reliefs and allowances, and the retention of a number of anti-avoidance provisions in the event that the UK is no longer a member of the EU/EEA.

In Part 7, legislative measures are proposed to support the implementation of the European Commission’s equivalence decision under the Central Securities Depositories (CSD) Regulation providing continuity for the settlement of trading in Irish equities.

In Part 8, legislative measures are proposed to provide for a temporary run-off regime, which, subject to a number of conditions, will enable insurance undertakings and intermediaries to continue to fulfil contractual obligations to their Irish customers for a period of three years after the date of the withdrawal of the UK from the EU.

In addition, at the Government meeting on 5 February, the Cabinet also approved a number of further tax proposals including the introduction of Postponed Accounting for VAT in order to alleviate cash flow impacts for business, and amendments to Section 56 VAT relief authorisations to mitigate the potential for abuse.

It is intended to publish the full text of the Bill on 22 February 2019 and as the timelines are tight for the necessary ratification, the Government will work very closely with all Opposition parties in the Oireachtas and all members of the Dáil and Seanad in ensuring that the necessary no deal Brexit related legislation will be in place before the 29 March.

Tax Code

Ceisteanna (20)

Maureen O'Sullivan

Ceist:

20. Deputy Maureen O'Sullivan asked the Minister for Finance the way in which he plans to resolve the issues raised by unmarried persons regarding the perceived unfairness of the inheritance tax system by which there is an overarching emphasis placed on marriage and persons who are not married placed at a disadvantage. [7357/19]

Amharc ar fhreagra

Freagraí scríofa

It is a long-held principle of inheritance tax that transfers of property between spouses are exempt. All inheritances taken by a spouse from his or her spouse since January 1985 are exempt from tax and are not taken into account in computing tax. The spousal exemption from inheritance tax was extended to civil partners with effect from 1 January 2011.

As a result of the full tax exemption that applies, spouses and civil partners are not included in any of the tax-free Group thresholds and inheritances between spouses and civil partners are not counted for the purposes of aggregating lifetime inheritances. There are three separate Group thresholds based on the relationship of the beneficiary to the disponer. The Group A threshold (currently €320,000) applies, inter alia, where the beneficiary is a child (including adopted child, step-child and certain foster children) or minor child of a deceased child of the disponer. The Group B threshold (currently €32,500) applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer. The Group C threshold (currently €16,250) applies in all other cases.

Any prior inheritance received by a beneficiary since 5 December 1991 from within the same Group threshold is aggregated for the purposes of determining whether any tax is payable on a benefit. Where a person receives inheritances that are in excess of their relevant tax-free threshold, CAT at a rate of 33% applies on the excess over the tax-free threshold.

While single individuals may not bequeath property free of inheritance tax under the spouse or civil partner exemption, they may bequeath property or assets to individuals free from inheritance tax provided the value of the property or assets does not exceed the relevant tax-free Group thresholds when previous bequests to the individual are taken into account.

In addition, single individuals can avail of the ‘dwelling house exemption’ to bequeath their principal private residence, generally the most substantial asset owned by an individual, free from inheritance tax which allows for property to be inherited tax-free irrespective of its value where the beneficiary is already living in the house subject to certain conditions.

Agricultural property and relevant business property of a single individual can also be bequeathed with a significant 90% reduction in their taxable values under the Agricultural Relief and Business Relief schemes where the relevant conditions are met.

To the extent that there are differences in the tax treatment of the different categories of couples, across relevant tax heads including inheritance tax, such differences arise from the objective of dealing with different types of circumstances while at the same time respecting the constitutional requirement to protect the institution of marriage. Therefore any change in the tax treatment of cohabiting couples in respect of inheritance as with other taxes could only be addressed in the broader context of future social and legal policy development in relation to such couples.

Brexit Preparations

Ceisteanna (21)

James Browne

Ceist:

21. Deputy James Browne asked the Minister for Finance the steps he has taken to date and plans to take in preparation for post-Brexit customs checks at ports here, specifically Rosslare Europort; and if he will make a statement on the matter. [7267/19]

Amharc ar fhreagra

Freagraí scríofa

I am informed by Revenue that, in keeping with their role and responsibilities, they are strongly focused on facilitating the efficient and timely movement of legitimate trade, post Brexit.

During 2018, Revenue chaired an Inter-Departmental group which was established to consider the adequacy of port and airport infrastructure and facilities, post-Brexit. The group included representatives from Revenue; the Department of Agriculture Food and the Marine; the Department of Health; the HSE’s Environmental Health Service; the Department of Transport, Tourism and Sport; the OPW; the Department of Justice; and An Garda Síochána.

In relation to Rosslare Europort, the group identified the infrastructural requirements including service and accommodation requirements. Following a Government Decision in September 2018, the OPW were tasked with leading the engagement with relevant stakeholders, with a view to ensuring that the necessary additional infrastructure for both the central case and the no-deal scenarios becomes operational in a timely manner. This work is ongoing towards having the necessary temporary facilities in place to cater for a no-deal scenario in March 2019 as well as permanent facilities in place by 1 January 2021.

As regards staffing and resources, I am advised that Revenue are on track to have appointed over 400 additional staff nationally to customs and related roles for Brexit during the period September 2018 to 29 March 2019. 30 of these additional 400 staff are being assigned to Rosslare Europort. These additional staff will bring the total Revenue staff in Rosslare EuroPort to approximately 50 by 29 March 2019.

I am also advised that on 30 January, Revenue, together with Department of Agriculture Food and the Marine, hosted a Customs Brexit Information seminar in Wexford town. This was part of an extensive trader engagement program where they contacted traders who trade with the UK highlighting the Brexit-related Revenue supports and inviting them to a series of Revenue Brexit seminars. The seminars provide traders with the opportunity to speak directly with Revenue experts across a range of specific Customs themes as well as with experts from other Government Departments. Revenue will continue its engagement with and support of trade and business providing them with timely information in relation to unfolding political and policy developments.

National Children's Hospital Expenditure

Ceisteanna (22)

Clare Daly

Ceist:

22. Deputy Clare Daly asked the Minister for Finance if the national surplus reserve fund will be used to fund cost overruns at the national children’s hospital. [7350/19]

Amharc ar fhreagra

Freagraí scríofa

The “National Surplus (Exceptional Contingencies) Reserve Fund” which is also referred to as the Rainy Day Fund, is intended to be an economic buffer available for drawdown in the event of a sharp economic downturn. It is intended to allow the Government of the day to mitigate the effects of such a downturn.

The aim in establishing the Fund is that in the event of a future shock, we can maintain expenditure programmes, and capital programmes in particular. Maintaining capital investment will have demand and supply side benefits by supporting employment and future productive capacity, and it will also help us escape the self-perpetuating recessionary cycle of a sudden economic shock.

The National Surplus (Reserve Fund for Exceptional Contingencies) Bill passed 2nd Stage recently Thursday, 31 January. Section 9 of the Bill sets out the criteria for drawdown of the Fund.

The first element of the criteria for drawdown is that the Minister for Finance of the day must be satisfied on reasonable grounds that drawdown is necessary to:

- remedy or mitigate exceptional circumstances, or;

- prevent potential serious damage to the financial system in the State, or;

- support major structural reforms with long-term positive budgetary effects.

Indicators to establish whether “exceptional circumstances” exist could include factors such as a sharp and significant increase in unemployment, or a dramatic fall-off in tax receipts.

The Bill proposes a clear role for the Oireachtas in that money will not be paid out other than pursuant to a Dáil resolution passed on foot of a proposal from the Minister for Finance. The Minister for Finance must also consult with the Minister for Public Expenditure and Reform before deciding whether to make the proposal.

Unfortunately, we cannot predict with any great certainty what will trigger a future economic shock. What is certain is that there are external risks and challenges. The issue of cost overruns in the building of the National Children’s Hospital, while a matter of grave concern, and one which must be addressed, would not be considered “exceptional circumstances” under the criteria proposed for the "National Surplus (Exceptional Contingencies) Reserve Fund".

Irish Fiscal Advisory Council Reports

Ceisteanna (23)

Thomas P. Broughan

Ceist:

23. Deputy Thomas P. Broughan asked the Minister for Finance the response issued to the November 2018 fiscal assessment report by the Irish Fiscal Advisory Council; if he and his officials have met the council to discuss its critique of his fiscal stance; and if he will make a statement on the matter. [7153/19]

Amharc ar fhreagra

Freagraí scríofa

I can confirm for the Deputy that my formal response to the November 2018 Fiscal Assessment Report (FAR) issued to the Irish Fiscal Advisory Council on 23rd January 2019. In keeping with established practice, a copy of the response was also published on my Department’s website. Given its independent nature, I do not as a matter of course hold formal meetings with the Council. However, in terms of parliamentary scrutiny of the Budget, last month I attended a meeting of the Oireachtas Budget Oversight Committee to discuss the Council’s November FAR. This allowed for a positive exchange with Committee members around some of the main issues arising from Budget 2019, as well as the assessment report.

In terms of the Council’s assessment of the fiscal stance, I note that the Council assessed the Irish economy to be operating at close to potential and that the outlook remains broadly positive. This is an assessment that is broadly similar to that of my own Department. I undoubtedly share the Council’s views on the risks facing the economy and the current uncertainties arising from the external environment has been a significant part of my decision to target a balanced budget this year. Indeed, it is important to stress that a surplus of about ½ per cent of GDP would have been in prospect had the Government not decided to increase capital expenditure by almost a quarter this year, which in turn will boost the productive capacity and further enhance the resilience of the economy.

Finally, it is also worth noting that the European Commission which has responsibility for assessing our compliance with the fiscal rules, assessed Budget 2019 as being compliant with the fiscal rules. This is a positive endorsement of the Government’s budgetary policy and the underlying fiscal stance we have adopted as part of Budget 2019.

Carbon Tax Implementation

Ceisteanna (24, 46)

Thomas P. Broughan

Ceist:

24. Deputy Thomas P. Broughan asked the Minister for Finance his plans for carbon taxation; if the fee and dividend approach outlined recently is the preferred option for these taxes; and if he will make a statement on the matter. [7152/19]

Amharc ar fhreagra

Bríd Smith

Ceist:

46. Deputy Bríd Smith asked the Minister for Finance his views on plans to increase the carbon tax; if his attention has been drawn to studies from Canada (details supplied) that suggest such policies do not reduce CO2 emissions; and if he will make a statement on the matter. [3310/19]

Amharc ar fhreagra

Freagraí scríofa

I propose to take Questions Nos. 24 and 46 together.

Decisions in relation to the carbon tax take place as part of the annual budgetary process.

The Energy and Environmental Taxes paper prepared annually for the Tax Strategy Group contains analysis on the carbon tax to help inform budget decisions. The Tax Strategy Group papers are available to read on the Department of Finance website.

The Deputy will also be aware that the Joint Oireachtas Committee on Climate Action is currently considering the report and recommendations of the Citizens Assembly regarding measures to tackle climate change, including in relation to the carbon tax. The final report of the Committee is expected to be published soon and this will be taken into consideration as part of the budgetary process surrounding any potential changes to the carbon tax rate.

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