Tuesday, 24 Sep 2019

Mortgage Interest Rates

Ceisteanna (79)

Pearse Doherty

Ceist:

79. Deputy Pearse Doherty asked the Minister for Finance if he is satisfied that there is a competitive market for mortgages here; and if he will make a statement on the matter. [26960/19]

Amharc ar fhreagra

Freagraí scríofa

The financial crash and its immediate aftermath had a significant impact on the Irish mortgage market, with a steep increase in mortgage arrears, a sharp slowdown in the rate of new mortgage lending and the withdrawal of some lenders from the Irish market. While there has been a considerable improvement in the overall economy and mortgage market since then, for example overall arrears have fallen and new lending has increased, it is accepted that the financial crash continues to impact on the mortgage market and that problems still remain. Some of the legacy issues which remain are the current higher level of concentration in the Irish mortgage market compared to that which prevailed before the crash and higher capital requirements of banks for mortgages due in significant part to the high levels of losses incurred by banks on mortgages provided in the years leading up to the financial crash.

Nevertheless, it should be acknowledged that there have been some improvements and increasing competition in the market for the provision of new mortgage credit. Some non-bank lenders have recently entered the market or expanded their product range to include primary dwelling mortgages. The Deputy will also be aware that over the recent past some of the main mortgage providers have reduced interest rates on different mortgage products or introduced new products, particularly in relation to fixed interest rate products, thus demonstrating that they are competing in the market. Also, enhancements have been made to the Central Bank Consumer Protection Code in order to better facilitate the mortgage switching process between lenders and also to require lenders to provide information to their borrowers on their other mortgage products that could provide savings to their customers.

Tax Exemptions

Ceisteanna (80)

Seán Sherlock

Ceist:

80. Deputy Sean Sherlock asked the Minister for Finance the reason a person (details supplied) in County Kildare is paying tax on their State pension. [38432/19]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

As previously advised to the Deputy in my reply to Parliamentary Question 27496-19, that where a person is in receipt of both a State pension and a private pension, any income tax that may be due in respect of the State pension is collected by reducing the income tax credits applied to the private pension.

Revenue has advised me that it has re-examined the person’s tax position and calculated that their overall income, including both their Department of Employment Affairs and Social Protection (DEASP) pension and their private occupational pension, is below the annual exemption limit of €36,000. Consequently, the person is not liable for Income Tax and the information previously provided to the Deputy was incorrect.

Revenue has confirmed to me that following the re-examination, it applied exemption status to the person’s tax record. This will result in a refund issuing to them by their pension provider in respect of any tax paid in 2019. Revenue has also confirmed that it will issue refunds to the person in the coming days in respect of tax paid by them in 2017 and 2018.

Finally, Revenue has advised me that they have contacted the person directly to explain the revised position and to apologise for the error that occurred during the original review.

National Economic Dialogue

Ceisteanna (81)

Joan Burton

Ceist:

81. Deputy Joan Burton asked the Minister for Finance if he will report on his attendance at the National Economic Dialogue. [29955/19]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

The fifth National Economic Dialogue took place on June 26th and 27th this year. The Dialogue plays an integral part in the preparations for Budget 2020 and provided an opportunity to consider how best to optimise available resources in the interests of all citizens.

The Dialogue provided an opportunity to foster discussion between stakeholders on how to sustain and strengthen the recovery while taking into account the many competing economic and social priorities within the limited available resources.

As with previous years, this year’s Dialogue was attended by representatives from a wide variety of stakeholders, including the community, voluntary and environmental groups, business unions and the academic community. In addition a number of members of the Select Committee on Budgetary Oversight also contributed to the event.

My opening remarks on “Understanding the Context: Economic Perspectives” and my closing remarks at the Dialogue are available at www.budget.gov.ie. The Dialogue included thematic discussions at six breakout sessions, five of which were chaired by a government Minister and one was chaired by an Assistant Secretary General in the absence of the Minister and Secretary General. The Chair’s report including the reports of the six rapporteurs for the breakout sessions are available on the already mentioned website.

I believe the National Economic Dialogue is a very constructive exercise. It provides a valuable opportunity for the Government to engage with a wide range of stakeholders. The Dialogues of previous years have had a material effect on the choices made in the budget. I intend to reflect on this year’s discussion when formulating Budget 2020.

European Council Meetings

Ceisteanna (82)

Michael Moynihan

Ceist:

82. Deputy Michael Moynihan asked the Minister for Finance if he will report on the discussions at the June 2019 ECOFIN meeting on the reformed eurozone budget plan and the possibility of a fiscal stabilisation tool on same as requested by President Macron; the response it received; and the actions being taken in this regard. [27981/19]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

At a meeting of the Eurogroup in inclusive formation on 13 June, my Euro area colleagues and I agreed on a term sheet that outlines the general principles and features of a budgetary instrument for competitiveness and convergence. Its aim is to support reform and investment projects that strengthen competitiveness and convergence in the euro area. We also agreed that the size of financial envelope for the instrument would not be determined until it is discussed within the context of discussions on the financial envelope of the wider Multiannual Financial Framework.

Following this meeting, the Taoiseach, and Leaders of the other euro area Member States, participated in the Euro Summit on 21 June, as part of the European Council. The Euro Summit assessed the term sheet which had been agreed, and directed Finance Ministers to agree the remaining elements, particularly the financing, as quickly as possible. Finance Ministers have not discussed the possibility of fiscal stabilisation this year. A budgetary instrument for competitiveness and convergence was further discussed at the recent Informal Finance Ministers' Council meeting in Helsinki. Discussions are ongoing.

European Council Meetings

Ceisteanna (83)

Michael Moynihan

Ceist:

83. Deputy Michael Moynihan asked the Minister for Finance if there was clarity or a decision taken following the June 2019 ECOFIN meeting regarding the intention of Italy to avoid falling into an EU disciplinary process. [28210/19]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

At the ECOFIN meeting on 14th June the discussion on the European Commission’s assessment of the compliance of Member States with the Stability Growth Pact (SGP), specifically for Belgium, Cyprus, France and Italy, was deferred to a future meeting.

On 2nd July Italy wrote to the European Commission setting out its updated projections for the public finances in 2019, advising the Commission of the expenditure-control measures being introduced and the commitment for the new Italian 2019 fiscal policy and 2020 Draft Budgetary Plan (DBP) to achieve broad compliance with the SGP.

On 3rd July the European Commission noted that the Italian response was sufficient at this stage to avert the opening of an Excessive Deficit Procedure for Italy in respect of its 2018 outturn.

Further, the European Commission committed to closely monitor the implementation of Italy’s Budget for 2019 and to assess the compliance of its 2020 DBP with the fiscal rules when submitted.

National Economic Dialogue

Ceisteanna (84)

Michael Moynihan

Ceist:

84. Deputy Michael Moynihan asked the Minister for Finance if he will report on his address to the National Economic Dialogue conference and the competitiveness of Ireland. [27990/19]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

The fifth National Economic Dialogue (Dialogue) took place on June 26th and 27th this year.

The dialogue is an important part of the budgetary process and aims to foster discussion on how best to sustain and strengthen the economy while addressing the many competing economic and social priorities within the limited resources available.

My opening remarks on Understanding the Context: Economic Perspectives and my closing remarks at the Dialogue are available at www.budget.gov.ie along with the Chair’s report on the discussions.

Overall our economy is in good shape and is expected to grow this year and next. Modified domestic demand, an underlying measure of growth in the economy, grew by 4.5 per cent for 2018 as a whole.

One of the best barometers of the health in the economy is the labour market. The strong growth in employment over the last number of years has continued into this year, with total employment increasing by 45,000 (+2.0 per cent) in the year to Q2 2019. As a result, there are now 2.3 million people at work in Ireland.

The cornerstone of our recovery, has been the improvement in our competitiveness. Since July 2008, the Central Bank’s real harmonised competitiveness indicator has improved by approximately 22 per cent. The improvement in our competitiveness reflects the hard-won productivity gains made over the last number of years, alongside wage and price moderation.

Importantly, the robust economic growth in recent years has not yet given rise to significant inflationary pressures. In the first eight months of 2019, average annual inflation of just 0.9 per cent was recorded.

On wage developments, while average annual earnings grew by over 3 per cent in 2018, this came on the back of a near decade of low or negative growth in earnings. The rise in labour income is a welcome development. However it needs to be monitored closely, as a significant acceleration in wages could undermine Ireland’s relative competitiveness to other European countries.

Over the medium-term, the domestic economy is expected to act as the primary driver of growth. In this context, we must remain conscious of the potential upward pressure this will place on both prices and wages, that could give rise to a loss of competitiveness.

Despite the positive outlook for our economy, the risks over the coming years are numerous and primarily external in nature. The best way we can mitigate against these risks is through prudent budgetary policy, careful management of the public finances and by focusing on competitiveness-oriented policies. Through the National Development Plan in particular, we are investing significantly to address the bottlenecks to growth which emerged during the recovery, such as the need for housing and public infrastructure investment. This should ensure that our economy remains competitive and avoid the build-up of bottlenecks that could limit our growth potential.

National Economic Dialogue

Ceisteanna (85)

Michael Moynihan

Ceist:

85. Deputy Michael Moynihan asked the Minister for Finance if he will report on his address to the National Economic Dialogue conference on 26 June 2019 and the external risks and the possibility of a disorderly Brexit. [27991/19]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

The fifth National Economic Dialogue (Dialogue) took place on June 26th and 27th this year.

The dialogue is an important part of the budgetary process and aims to foster discussion on how best to sustain and strengthen the economy while addressing the many competing economic and social priorities within the limited resources available.

My opening remarks on Understanding the Context: Economic Perspectives and my closing remarks at the Dialogue are available at www.budget.gov.ie along with the Chair’s report on the discussions.

The Stability Programme Update 2019, published by my Department in April, sets out the principal economic risks facing the Irish economy, along with an assessment of their relative likelihood and economic impact. The Economic and Fiscal Outlook, due to be published with the Budget 2020 documentation, will update this assessment. At present the balance of risk is firmly tilted to the downside, both in the short-term and over the medium-term.

The Irish economy is in an unusual position, facing possible domestic overheating and capacity constraints on the one hand, and a slowdown in key export markets on the other. In addition to this, the nature and timing of the UK’s exit from the EU is causing uncertainty in terms of the EU, including Ireland’s, future trading relationship.

The Government’s consistent message has been that a no deal Brexit will have profound implications for Ireland on all levels. These include macroeconomic, trade and sectoral challenges, both immediately and in the longer term.

In March 2019, the Department of Finance and the ESRI published a comprehensive assessment of the potential impact of Brexit. This report shows that compared to a no Brexit baseline, the level of GDP in Ireland would be around 2.6 per cent lower in a ‘deal’ scenario, and 5.0 per cent in a disorderly ‘no deal’ scenario, ten years after Brexit compared to a no Brexit baseline.

The most recent Contingency Action Plan, published in July, set out in detail the Government’s analysis of the risks and impacts of a no deal outcome across 26 key areas. A no deal outcome will never be the EU choice but it remains a significant threat. Preparedness and contingency planning must continue at EU and Member State level.

Given the lack of clarity regarding the timing and format that the UK’s exit will take, I recently announced that Budget 2020 will be framed on the assumption of a ‘no deal’ Brexit. Three main factors influenced the Government’s approach:

- First, to give certainty to businesses and citizens that the Government is prepared for a no-deal Brexit and stands ready to support the economy in such a scenario;

- Second, to safeguard the hard won progress of recent years in stabilising the public finances; and

- Finally, to avoid a situation in which decisions made in the Budget might need to be reversed in future.

Assuming a no-deal Brexit ensures the Government has the necessary resources at its disposal to meet the impact of this exceptional challenge, while preserving the longer-term sustainability of the public finances.

In a ‘no deal’ scenario, the Government will make the resources available to support those in need, and to introduce timely, targeted and temporary supports to the sectors of the economy most exposed to the impact of a no-deal Brexit.

Other than ‘Brexit’, the main short-term risks relate to a deteriorating international environment and an escalation of trade protectionism.

Over the medium-term, the principal risks relate to potential overheating as the economy approaches full-employment, and changes in other jurisdictions that affect the competitiveness of Ireland’s corporate tax regime.

The economy is in a good position to meet these challenges. Economic growth, which resumed early this decade, has been consistently among the highest in the EU for a number of years, notwithstanding reservations about the headline data. The recovery is perhaps most clearly evident in the labour market. The unemployment rate has fallen to 5.2 per cent from the peak of 16 per cent in 2012.

The headline budget deficit was eliminated last year for the first time in a decade. The Government has been taking steps to build up the resilience of the economy so that we have the capacity to deal with adverse economic shocks. This includes building up our fiscal buffers by balancing our books, reducing our debt burden and establishing the Rainy Day Fund.

Our companies are being supported to prepare for Brexit, to diversify their markets and supply chains, to develop new skills and to explore new opportunities.

The Government will continue to work to strengthen the resilience of the economy, to maximise opportunities and to prepare our economy for the challenges ahead, including through the Ireland Connected Trade and Investment Strategy, the 10-year National Development Plan and Future Jobs Ireland 2019.

Financial Services Regulation

Ceisteanna (86)

Pearse Doherty

Ceist:

86. Deputy Pearse Doherty asked the Minister for Finance the estimated saving to be made from moving the entire cost of regulating the financial industry, with the exception of the credit union industry, from the State to the financial industry. [38493/19]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

Section 32D of the Central Bank Act provides that, with the approval of the Minister for Finance, the Central Bank Commission may make regulations requiring regulated firms to pay a levy in respect of the cost of regulation.

The Central Bank is moving on a trajectory that will see all regulated financial firms, with the exception of Credit Unions, paying 100% of the cost of regulation by 2024. The paper outlining this approach “Funding the cost of regulation” is available at the following link. In order to achieve the move to full industry funding, I recently approved the Central Bank to increase the proportion of financial regulation costs to be recovered from firms on a phased basis to 100% by 2024.

In relation to the credit union sector, I approved an exception which will see the cost of the levy to that sector being increased on a phased basis to 50% to be reached by 2021, at which time a review of the impact on the sector and a public consultation regarding increasing the levy beyond 50% will take place. Since 2004 the amount of the Industry Funding Levy payable by each credit union has been capped at a rate of 0.01% of total assets.

There is no estimate at present for the cost of regulation of the financial industry by the Central Bank for 2019, however, the 2018 cost was €213 million. Based on existing funding from industry for 2018, moving to 100% funding for that year, by reducing the subvention, would have meant estimated savings of €68 million for 2018. In 2018, Credit Unions paid €1.6 million towards the cost of their regulation under the Industry Funding Levy. Therefore, Credit Unions currently contribute approximately 8% to the cost of their regulation.

Full details of the Funding of Financial Regulation activities is available in the Central Bank of Ireland Annual Report 2018 available at: http://centralbank.ie/docs/default-source/publications/corporate-reports/annual-reports/2018-central-bank-annual-report.pdf?sfvrsn=17 The aforementioned paper "Funding the cost of regulation" is available here: https://www.centralbank.ie/docs/default-source/regulation/how-we-regulate/fees-levies/industry-funding-levy/funding-the-cost-of-financial-regulation.pdf?sfvrsn=6

Corporate Governance

Ceisteanna (87)

Pat Casey

Ceist:

87. Deputy Pat Casey asked the Minister for Finance if the anomaly will be rectified by which the Companies Registration Office is asking community-based organisations such as community employment schemes and community halls to specify a beneficial owner in cases in which no such owner exists in view of the fact that they are community and social enterprise companies; and if he will make a statement on the matter. [38518/19]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

Statutory Instrument 110 of 2019, the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019, was signed into law on 22 March 2019. These Regulations transpose Article 30 of the Fifth Anti-Money Laundering Directive and maintain the obligation, first established in 2016, for corporate entities to obtain and hold information on their beneficial ownership – that is, the people who ultimately own or control the company.

The Regulations also provide for the establishment of a central register of beneficial ownership information. This central register is operated under the aegis of the Companies Registration Office and began accepting filings on 29 July 2019.

The purpose of the Regulations is to prevent the use of corporate entities as vehicles for money laundering or terrorist financing and to provide competent authorities with access to information on the true ownership and control of corporate entities. Therefore, the obligation to file information with the central register applies to all companies formed under the Companies Act and societies registered under the Industrial and Provident Societies Acts, with the exception of companies listed on regulated markets that are subject to disclosure requirements consistent with European Union law or subject to equivalent international standards which ensure adequate transparency of ownership information. The Regulations apply to community and social enterprises if they are created under the above Acts. In cases where no beneficial owner can be identified, companies are permitted to register the senior managing officials of the company instead. The scope of the Regulations is necessary in order to meet the State's obligations on foot of the Directive.

While the relevant legislation was signed by myself as Minister for Finance, the register is maintained by a “Registrar of Beneficial Ownership of Companies and Industrial and Provident Societies”, as provided for under Regulation 18 of SI 110/2019, who has been appointed by the Minister for Business, Enterprise and Innovation.

Corporation Tax

Ceisteanna (88)

Richard Boyd Barrett

Ceist:

88. Deputy Richard Boyd Barrett asked the Minister for Finance the amount forgone due to historic losses being used as tax deductions and exemptions for banks and insurance companies. [38523/19]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

Corporation Tax Loss Relief is provided for by Section 396 of the Taxes Consolidation Act (TCA) 1997. It allows for losses incurred in the course of business to be accounted for when calculating a business’ tax liabilities. Loss relief is a long standing feature of the Irish Corporate Tax system and is a standard feature of Corporation Tax systems in all OECD countries. Loss relief is not specific to any one business sector. It recognises the fact that a business cycle runs over several years and that it would be unbalanced to tax profits earned in one year and not allow relief for losses incurred in another. I am informed by Revenue that a research paper on Corporation Tax, including the most recent information in respect of losses forward, is published on its website at: https://www.revenue.ie/en/corporate/documents/research/ct-analysis-2019.pdf. As shown in Figure 5 of the publication, the amount of losses forward used for all companies in the financial and insurance sector is €3.2 billion for 2017 with an estimated tax cost of €400 million. The Deputy may also be aware that in 2018 my officials produced a report for the Committee on Finance, Public Expenditure and Reform, and Taoiseach on the potential consequences of changes to the corporation tax loss relief, including in particular relief for losses carried forward for banks. This report, which contains further information on the rationale for loss relief and the technical considerations relevant to the operation of the relief, is published on my Department’s website.

Fuel Traders Licences

Ceisteanna (89, 116)

Niamh Smyth

Ceist:

89. Deputy Niamh Smyth asked the Minister for Finance if the Revenue Commissioners will grant permission to a business (details supplied) to sell diesel while awaiting approval of the fire officer. [38554/19]

Amharc ar fhreagra

Niamh Smyth

Ceist:

116. Deputy Niamh Smyth asked the Minister for Finance if the Revenue Commissioner will grant permission for the sale of diesel at a location (details supplied) while awaiting approval of the fire officer. [38719/19]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 89 and 116 together.

A licence to sell diesel and marked gas oil can be granted in the absence of a ‘Dangerous Substance Licence’ being issued by the Local Authority. However, the licence can only issue where the conditions set down in Section 101 of Finance Act 1999 (as amended) are fully met. This includes a restriction on storing or selling petrol and can also include other specified conditions that Revenue may require.

Revenue wrote to the applicants on 1 March 2019 and again on 30 May 2019 setting out the information required before a licence to sell diesel and marked gas oil can be granted. To date the required level of information has not been provided by the applicants.

Revenue has assured me that the license application will be processed as soon as the required information is provided.

Property Tax Data

Ceisteanna (90)

Maureen O'Sullivan

Ceist:

90. Deputy Maureen O'Sullivan asked the Minister for Finance the amount and value of property tax collected in each local authority in each of the years 2011 to 2018 and to date in 2019, in tabular form. [38597/19]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

I am advised by Revenue that the amount of Local Property Tax (LPT) collected, broken down by Local Authority area since its introduction in 2013, for the years 2013 to 2018, is available on the Revenue website at link: https://www.revenue.ie/en/corporate/information-about-revenue/statistics/local-property-tax/index.aspx.

Information in respect of LPT collected, broken down by Local Authority area for 2019 to date is available at link: https://www.revenue.ie/en/corporate/information-about-revenue/statistics/local-property-tax/quarterly-reports-2019/local-property-tax-july.aspx

Tax Data

Ceisteanna (91)

David Cullinane

Ceist:

91. Deputy David Cullinane asked the Minister for Finance the estimated revenue raised by an increase of the VRT surcharge on imported diesel cars new and second-hand from 1% to 5%, 10%, 15%, 20%, 40% and 50%. [38693/19]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

I am advised by Revenue that the estimated additional revenue that could be raised in a full year from the proposed increases are shown in the following table. These estimates are based on the trends in diesel cars in 2019 and do not take into account any subsequent change in behaviour due to the increased duty on diesel cars. However, given the large increases proposed it is highly unlikely that the estimated revenue would be fully achieved.

New Rate	5%	10%	15%	20%	40%	50%
€m	123	276	430	583	1,197	1,504

Tax Data

Ceisteanna (92)

David Cullinane

Ceist:

92. Deputy David Cullinane asked the Minister for Finance the estimated revenue raised by an increase of the fuel excise rate on diesel by €0.01, €0.02, €0.03, €0.04 and €0.05. [38694/19]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

I am advised by Revenue that the estimated revenue in a full year from the proposed increases are as follows:

€	0.01	0.02	0.03	0.04	0.05
€m	28	55	83	110	137

Tax Data

Ceisteanna (93)

David Cullinane

Ceist:

93. Deputy David Cullinane asked the Minister for Finance the estimated revenue raised by the scrapping of the diesel rebate scheme. [38695/19]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

The cost of the diesel rebate scheme in any given year is variable, depending on the volumes of claims and the quarterly rebate rates used. Therefore it is not possible to give an estimate of the additional revenue that would accrue were the diesel rebate scheme to be scrapped.

The highest annual cost of the scheme was €21m while the lowest annual costs of the scheme was zero.

Tax Data

Ceisteanna (94)

David Cullinane

Ceist:

94. Deputy David Cullinane asked the Minister for Finance the estimated revenue raised by a reduction in maximum payable under the diesel rebate rate to €0.03 per litre when the price, including VAT, is €1.54 per litre or more. [38696/19]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

The savings generated would be entirely dependent on the volumes of claims and the quarterly rebate rates used, which is dependent on the retail price of diesel. All of these variables will likely fluctuate from quarter to quarter and from year to year.

Tax Data

Ceisteanna (95)

David Cullinane

Ceist:

95. Deputy David Cullinane asked the Minister for Finance the estimated revenue raised by an increase in the electricity tax for business use to the rates per megawatt hour (details supplied). [38697/19]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

I am advised by Revenue that the estimated yield in a full year from the proposed increases are as follows :

New rate	€1	€2	€3	€4	€5
€m	2.3	7.0	11.7	16.4	21.0

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 98 to 107, inclusive, together.

I am advised by Revenue that tax remitted in respect of benefits-in-kind is not separately itemised by benefit type on employer returns. Instead, the total aggregated benefit-in-kind figure is declared to Revenue. Therefore, tax returns do not provide the data necessary to compile the costings sought by the Deputy.