108. Deputy David Cullinane asked the Minister for Finance the estimated full year cost of the domestic retrofit tax incentive. [38710/19]Amharc ar fhreagra
Written Answers Nos. 108-118
108. Deputy David Cullinane asked the Minister for Finance the estimated full year cost of the domestic retrofit tax incentive. [38710/19]Amharc ar fhreagra
There is currently no domestic retrofit tax incentive. As part of the annual Taxation Strategy Group (TSG) process undertaken by officials from my Department earlier this year, a proposal for an income tax incentive measure to encourage domestic retrofits was examined and published within the Climate Action and Tax paper. This examination was prompted by the publication of the All of Government Climate Action Plan in June 2019, where it was noted that the built environment accounted for 12.7% of Ireland’s Greenhouse Gases in 2017.
The paper sought to identify the potential cost of a domestic retrofit tax incentive and to explore the factors that might need to be taken into account in the event that such an incentive was to be considered. The design model used for this purpose was the Home Renovation Incentive (HRI) which expired on 31 December 2018 in accordance with its sunset clause.
Briefly, it was suggested in the TSG paper that the proposed incentive might operate as follows:
- The measure would be targeted at domestic properties with a BER rating of B3 or less;
- Participants in the scheme would be able to claim an income tax credit for expenditure on certain qualifying works;
- The credit would amount to a specified percentage (13.5%) of the total qualifying expenditure (excluding VAT) on the qualifying works, and would be claimed over a 2 year period subsequent to the year in which the works were paid for;
- These works would have to be carried out on a qualifying property by a qualifying contractor.
Qualifying works would include wall insulation, attic insulation, floor insulation, window/door upgrades, ventilation systems; renewable energy (heat pumps, solar panels), etc.
It was assumed that if an individual receives a grant for qualifying work, then the total ‘qualifying expenditure’ under the incentive would be reduced by an amount equal to the grant amount.
Among other things, the paper also examined the potential cost of meeting the target set out in the All of Government Climate Action Plan of completing 50,000 building retrofits per annum to achieve a B2 BER up to the year 2030. Using certain assumptions, it was estimated that the annual tax cost could be of the order of €40 million per annum.
The paper was published on my Department's website and is available at the following link:
109. Deputy David Cullinane asked the Minister for Finance the estimated revenue raised through the application of the mineral oil tax to aviation fuel. [38711/19]Amharc ar fhreagra
The tax exemption for jet fuel used for air navigation for international and intra-Community transport purposes is mandatory. Therefore, save for the implementation of any bilateral arrangements provided under the Directive, any proposal to tax such fuel use would be in breach of Directive 2003/96/EC on the taxation of energy products and electricity.
The relief for heavy oil used for commercial air navigation is operated by way of remission and Revenue does not collate data on the overall tax forgone. With regard to light oil used in air aviation, for which there is no mandatory exemption, in 2018 repayments of Mineral Oil Taxation in respect of the partial relief for light oil used for commercial aviation totalled €1.07m.
110. Deputy David Cullinane asked the Minister for Finance the estimated revenue raised from an air travel tax of €3 per passenger on all aircraft capable of carrying eight or more passengers and to airports in which the number of passenger departures in the previous year was more than 100,000. [38712/19]Amharc ar fhreagra
111. Deputy David Cullinane asked the Minister for Finance the estimated revenue raised through a runway movement surcharge of €100, €500 and €1,000 on all non-commercial flights in which the aircraft is over one metric tonne and less than 20 seats. [38713/19]Amharc ar fhreagra
112. Deputy David Cullinane asked the Minister for Finance the estimated revenue raised through a frequent flyer levy of €5 per flight in which frequent flyer is defined as more than six, eight, ten, 12, 14, 16, 18 and 20 flights a year. [38714/19]Amharc ar fhreagra
113. Deputy David Cullinane asked the Minister for Finance the estimated revenue raised through a yearly levy on all private aircraft registered with the Irish Aviation Authority at percentages of the original market value (details supplied). [38715/19]Amharc ar fhreagra
114. Deputy David Cullinane asked the Minister for Finance the estimated revenue raised through a yearly levy on all private helicopters at percentages of the original market value (details supplied). [38716/19]Amharc ar fhreagra
Question No. 116 answered with Question No. 89.
115. Deputy David Cullinane asked the Minister for Finance the estimated full-year saving from the scrapping of the tax exemption on profits or gains arising from the occupation of woodlands here managed on a commercial basis and with a view to the realisation of profits. [38717/19]Amharc ar fhreagra
Section 232 of the Taxes Consolidation Act 1997 provides for an exemption from Income Tax (but not USC or PRSI) and Corporation Tax on the profits or gains arising from the occupation of woodland in the State, which is managed on a commercial basis and with a view to the realisation of profits.
I am advised by Revenue that the available data regarding the cost and uptake for this exemption is as follows:
Exchequer Cost €m
No of claimants
Revenue further advise me that it is not possible to estimate the potential additional tax yield that would arise if the exemption were no longer available, as it is not possible to predict the behavioural changes by taxpayers that might occur following abolition of the exemption.
117. Deputy Richard Boyd Barrett asked the Minister for Finance the equivalent interest rates in banks in which he is a majority shareholder; the reason they differ; the figures a mortgage holder would pay over 20 years on a €100,000 and a €200,000 loan, respectively (details supplied); and if he will make a statement on the matter. [38765/19]Amharc ar fhreagra
As the Deputy will be aware, as Minister for Finance I have no role in setting the interest rates on lending products offered by the banks in which the State has a shareholding. The day to day operations of the banks are the sole responsibility of the boards and management teams and each bank must be run on an independent and commercial basis. The banks’ independence is protected by Relationship Frameworks which are legally binding documents that cannot be changed unilaterally. These frameworks, which are publicly available, were insisted upon by the European Commission to protect competition in the Irish market.
In regards to your question about repayments, both AIB and PTSB have a wide range of mortgage products with differing rates. The Deputy can find the full breakdown of the various products and their applicable interest rates on the websites for the banks in question (https://aib.ie/our-products/mortgages/mortgage-interest-rates and https://www.permanenttsb.ie/mortgages/mortgage-interest-rates/ ).
You refer to both the ECB's interest rate for deposits and its marginal interest rate in the context of where mortgage rates are in Ireland. First of all I think it is important to note that neither AIB nor PTSB fund their mortgage books via the ECB. However it is true that Irish mortgage rates are higher than the European average. Indeed the reasons for this were explored in a report published by my department in March (Risk Weighted Assets in Ireland: The Link to Mortgage Interest Rates).
This report shows that a large part of the difference between Irish mortgage rates and European mortgage rates is linked to how capital rules are applied. The very significant loss history from the last crisis mean that Irish banks now have to hold far more capital on mortgage loans than their European peers. This and other contributing factors are discussed in the report. The report is available at: https://www.gov.ie/en/publication/ff6c0a-risk-weighted-assets-in-ireland-the-link-to-mortgage-interest-rates/
118. Deputy John Curran asked the Minister for Finance the actions he is taking to address issues raised in a study conducted by an organisation (details supplied), which found that a significant number of community and voluntary bodies are at risk of closure due to increasing insurance costs; and if he will make a statement on the matter. [38781/19]Amharc ar fhreagra
I am aware of the study referred to by the Deputy which was carried out between mid-June and the start of September 2019. It focused on employer and public liability insurance and was responded to by 770 Public Participation Networks members (which equates to just over 5% of total PPN membership). The survey indicated that 83% of respondents have seen their insurance increase over the last 3 years, 45% indicated that they may have to reduce events or services, and more worryingly, 47% indicated that they may have to close within the next year due to rising insurance costs.
This study confirms much of what we already know about there being a significant problem in relation to the cost and availability of public and employer liability cover. Unfortunately, as the Deputy is aware neither I, nor the Central Bank of Ireland, can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept. This position is reinforced by the EU framework for insurance, which expressly prohibits Member States from adopting rules, which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products. Consequently, I am not in a position to direct insurance companies as to the price or the level of cover to be provided to either consumers or businesses. A further constraint is the fact that for constitutional reasons, I cannot direct the courts as to the award levels that should be applied. In summary, therefore there is unfortunately no quick fix solution to this matter.
Notwithstanding the above, I wish to reemphasise however that this issue remains a priority for the Government. The Cost of Insurance Working Group (CIWG), which was established in July 2016, and which produced two reports, is continuing to work to implement the recommendations of the Cost of Motor Insurance Report and the Cost of Employer and Public Liability Insurance Report. Its most recent Progress Update, the Ninth, was published in July 2019 and shows that the vast majority of recommendations and actions due by Q2 2019 have been completed. To that end, the key achievements to date from the two reports, including the following:
- The establishment of the Personal Injuries Commission and the publication of its two reports, which included a benchmarking of award levels between Ireland and other jurisdictions for the first time. This showed that award levels for soft tissue injuries in Ireland were 4.4 times higher than in England and Wales;
- The enactment of the Judicial Council Act 2019 in July, which provides for the establishment of a Personal Injuries Guidelines Committee. It is now matter for the Judiciary to put in place the Judicial Council and to operationalise the Personal Injuries Guidelines Committee, which will introduce new guidelines to replace the Book of Quantum. While the Government cannot interfere in their deliberations, I would hope that the Judiciary will recognise the importance of this issue and prioritise it accordingly;
- The Law Reform Commission (LRC) has undertaken a detailed analysis of the possibility of developing constitutionally sound legislation to delimit or cap the amounts of damages which a court may award in respect of some or all categories of personal injuries, as part of its Fifth Programme of Law Reform;
- The establishment of the National Claims Information Database in the Central Bank of Ireland (CBI) to increase transparency around the future cost of private motor insurance. The CBI is due to make its first report by the end of 2019, and will also make recommendations regarding potentially expanding its scope to include employer and public liability insurance;
- Reforms to the Personal Injuries Assessment Board through the Personal Injuries Assessment Board (Amendment) Act 2019 to strengthen the powers of PIAB around compliance with its procedures;
- Amendments to Sections 8 and 14 of the Civil Liability and Courts Act 2004 to align the timeframes by which claims should be notified to businesses and organisations with GDPR time limits on the keeping of CCTV footage to make it easier for businesses, community groups and insurers to challenge cases where fraud or exaggeration is suspected, and;
- Various reforms of how fraud is reported to and dealt with by An Garda Síochána, including increased co-ordination with the insurance industry, a divisional focus on insurance fraud guided by the Garda National Economic Crime Bureau (GNECB) which will also train Gardaí all over the country on investigating insurance fraud, and the recent success under Operation Coatee, which targets insurance-related criminality.
I believe that these reforms are having a significant impact with regard to private motor insurance (CSO figures from August 2019 show that the price of motor insurance is now 24% lower than the July 2016 peak). However, I recognise there is still much work to be done in the public/employer liability insurance areas. In this regard, a big issue which the Government is trying to address is the level of awards as well as the inconsistent application of such awards. This problem is a significant part of the reason a number of UK insurers have left the Irish market, a point, which was confirmed to the Minister of State for Financial Services and Insurance, Michael D’Arcy TD when he met a number of such companies in London recently
Consequently, I believe that the single most essential challenge which must be overcome if there is to be a sustainable reduction in insurance costs particularly for small businesses and community groups is to bring the levels of personal injury damages awarded in this country more in line with those awarded in other jurisdictions, and the establishment of the Judicial Council in the near future is very important in this regard.
What will also be key is that insurers pass on the benefits of any reduction in award levels to policyholders. In this regard, Minister of State D’Arcy has been engaging with them in order to seek a commitment that they will reduce premiums and, even more importantly, widen their risk appetite to reflect savings made, in particular if there is a recalibration of award levels downwards. I am also encouraged by the comments made by a number of insurers at the Finance, Public Expenditure and Reform and Taoiseach Oireachtas Committee in July about the passing on of savings arising from a recalibration of award levels downwards.
In conclusion, I am believe that the cumulative effects of the completion of the recommendations of the CIWG, including a reduction in award levels, will lead to reductions in pricing in particular for small businesses and community groups and also to a more competitive and stable insurance market.