Tax Code

Ceisteanna (36)

Maurice Quinlivan

Ceist:

36. Deputy Maurice Quinlivan asked the Minister for Finance his plans to increase carbon tax; his views on the impact of such an increase on the progressivity of the tax system; and if he will make a statement on the matter. [39089/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

As the Deputy will be aware, it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.

Tax Reliefs Eligibility

Ceisteanna (37)

Joan Burton

Ceist:

37. Deputy Joan Burton asked the Minister for Finance the number of days a person must be resident in the State to avail of the special assignee relief programme; the average number of days persons availing of the programme resided in the State in each of the years 2016, 2017 and 2018; and if he will make a statement on the matter. [39046/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

Section 825C of the Taxes Consolidation Act 1997 provides for the Special Assignee Relief Programme (SARP). This relief provides a deduction from income tax for an employee who is assigned to work in the State by his or her employer.  

There are certain conditions that must be met in order to qualify for SARP, including that the employee must be tax resident in the State for all tax years in which SARP relief is claimed. An individual is regarded as resident in the State for tax purposes for a tax year if he or she is present in the State for –

1. 183 days in that tax year, or

2. 280 days between that tax year and the previous tax year with a minimum of 30 days in any year.

In certain circumstances, an individual may also elect to be resident in the State for a tax year.

Revenue advise me that where SARP relief applies, the employee is regarded a chargeable person for the purposes of self-assessment. As a result, he or she is required to submit a return of income (Form 11) to Revenue for each year SARP relief is claimed. The return of income includes a reporting field for residence (i.e. tick a box if resident or non-resident). As the individual is not required to report the exact number of days present in the State in a tax year, it is not possible to provide the information requested by the Deputy regarding the average number of days persons availing of the programme resided in the State for the years 2016, 2017 and 2018. 

Brexit Preparations

Ceisteanna (38, 53)

Joan Burton

Ceist:

38. Deputy Joan Burton asked the Minister for Finance the steps he has taken to date and plans to take to upgrade customs posts in the event of a no-deal hard Brexit, specifically in respect of areas along the Border with Northern Ireland; and if he will make a statement on the matter. [39044/19]

Amharc ar fhreagra

Brendan Smith

Ceist:

53. Deputy Brendan Smith asked the Minister for Finance the additional measures he plans to implement to counteract cross-Border smuggling and illicit trade from overseas, taking into consideration the additional difficulties that may emerge following Brexit; and if he will make a statement on the matter. [39043/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 38 and 53 together.

The Government is determined in the context of Brexit, deal or 'no deal', to avoid a hard border on the island of Ireland. I am assured by Revenue that in line with that policy it has not upgraded any Customs posts in the vicinity of the border to deal with Customs formalities post-Brexit. 

In preparation for Brexit, Revenue is recruiting an additional 600 staff across a range of grades and is confident that this additional resource will be in place by 31 October. This additional resource is primarily being recruited for the purposes of facilitating and supporting legitimate trade.

Revenue has assured me that it already implements a comprehensive risk-based intervention programme to identify, target and disrupt all forms of cross-border smuggling and criminality. Revenue’s focus on such activity will continue post Brexit.

Revenue’s risk-based approach to illegal cross-border activity is, facilitated and supported by very close cooperation with other agencies of the State, including An Garda Síochána, and also with colleagues in Northern Ireland through the North-South Joint Agency Task Force.

I am satisfied that Revenue’s focus on cross-border smuggling is appropriate and well targeted. I know that Revenue keeps such matters under active review and is committed to quickly confront any new risks as they emerge. I remain open to consider any request from Revenue for additional resources in that regard, if required.

Departmental Budgets

Ceisteanna (39)

Thomas Byrne

Ceist:

39. Deputy Thomas Byrne asked the Minister for Finance if more funding will be made available to the Department of Housing, Planning and Local Government for the Rebuilding Ireland home loan scheme; and if he will make a statement on the matter. [39041/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

This question is more appropriate to my colleague the Minister for Housing, Planning and Local Government as the allocation of funding to housing schemes is primarily his policy responsibility. 

The Deputy may be aware that the Minister for Housing, Planning and Local Government already set out in his answer to PQ 25232 that he had received sanction to increase the funding of the Rebuilding Ireland Home Loan Scheme by €363 million for the remainder of 2019, bringing the total scheme funding to €563 million. 

Any future changes to this or other housing schemes should be raised with the Minister for Housing, Planning and Local Government.

Brexit Preparations

Ceisteanna (40)

Bernard Durkan

Ceist:

40. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied that all sectors throughout the country can be protected in so far as possible in the aftermath of Brexit; if there are specific issues that require attention in this regard at this juncture; and if he will make a statement on the matter. [39009/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The Government has been actively preparing for Brexit since the Brexit referendum took place. While a no deal Brexit will never be Ireland or the EU’s choice, the risk of a no deal remains significant and, therefore, no deal preparations have the highest priority across Government.

The aim of the Government’s preparations is to make sure that Irish citizens and businesses are as ready as possible for a no deal Brexit, as set out in the Government’s most recent Contingency Action Plan published in July. This plan sets out in detail the Government’s analysis of the risks and impacts of a no deal outcome across the range of key issues and sectors and the extensive work ongoing across Government to mitigate these risks. This plan follows on the enactment of the Brexit Omnibus Act earlier this year and the roll-out of a comprehensive programme of engagement with stakeholders across all key sectors with over 1,200 events to date so that citizens and business take the necessary actions to prepare. This is in parallel with detailed contingency planning at EU level. However, as underlined in the Contingency Plan, notwithstanding Government preparations, a no deal Brexit will be highly disruptive for Ireland. 

As Minister for Finance, my objective is to protect the economic and financial interests of the State and to support the work of the Revenue Commissioners so as to minimise the Brexit disruption to trade, to the greatest extent possible.  My Departments and its agencies are advancing preparations within the whole of Government framework overseen by the Department of Foreign Affairs and Trade and the Department of An Taoiseach.

The Government has already taken important steps to prepare our economy, including through dedicated measures announced in Budgets 2017, 2018 and 2019, supported by long-term planning through the National Development Plan and the National Planning Framework which will provide significant investment in Ireland’s public capital infrastructure.

Budget 2020 is being prepared on the basis of Government assessments of the implications of a possible no deal – not because we are resigned to this outcome but because it is the only prudent way to prepare. It is important 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. For the most affected sectors, a number of temporary, targeted support measures are under consideration and both the level and type of support will be finalised as part of the Budget 2020 negotiation. Assuming a no-deal Brexit ensures the Government has the necessary resources at its disposal to meet the impact of this exceptional challenge, whilst preserving the longer-term sustainability of the public finances. Finally, it is important to safeguard the hard won progress of recent years in stabilising the public finances.  

In terms of the financial services sector, the Central Bank has been preparing extensively for Brexit. The Central Bank is satisfied that, from a financial stability perspective, the most material and immediate risks from a no-deal Brexit are manageable.  Some level of market disruption would be inevitable in a no-deal scenario, but the system as a whole should be resilient enough to withstand these bumps.   

The Revenue Commissioners are also prioritising Brexit preparations and have been taking measures aimed at facilitating and supporting legitimate trade with UK post Brexit, in close cooperation with other Government agencies. These measures include a significant upgrade of their national Customs ICT system to deal with increased volumes of customs declarations, the assignment and training of up to 600 additional staff for Brexit related roles across a range of functions and an ongoing extensive nationwide trader outreach programme. Additional physical capacity is also in place at ports and airports to apply checks and controls. Funding and training has also been provided to support the customs intermediary sector.

I am satisfied that my Department and its relevant agencies  are continuing to give the highest priority to the work of preparing for a no deal Brexit, including encouraging and supporting preparedness by business and citizens across the county  so that we can mitigate the impacts to the greatest extent possible.

Mortgage Interest Rates

Ceisteanna (41)

Bríd Smith

Ceist:

41. Deputy Bríd Smith asked the Minister for Finance his plans to take action or enact legislation that will bring rates of Irish banks into line with the European average rates for mortgages in view of the fact the current ECB interest rate for deposit facility is 0.5% and its marginal interest rate is 0.25%; and if he will make a statement on the matter. [39093/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The European Central Bank is responsible for the formulation and implementation of monetary policy for the eurozone and in that context it determines its key lending and deposit rates for monetary policy operations.  The current ECB marginal facility lending rate is 0.25% and, effective from 18 September last, the ECB's deposit facility rate is currently -0.5%.

While the ECB is responsible for the setting of official interest rates for monetary policy purposes, it is a commercial matter for individual banks and other commercial lenders to set their own lending and deposit rates having regard to their credit policies, risk appetite and other commercial considerations when operating in the market.  Neither I nor the Central Bank have a role in prescribing the interest rates that commercial lenders may charge on their loans, including mortgages, or pay for their deposits or other sources of funding.

However, it is important that Ireland has a healthy and competitive commercial banking system so that it is in a position to provide loan finance to households and businesses, whilst also being resilient to economic and financial market shocks.  This means that the banking system must be in a position to generate sustainable profits over the medium term so that it will be in a position to sufficiently generate capital to absorb losses which may arise over the credit cycle.  While Irish mortgage rates are currently high relative to the eurozone average interest rates, it is unfortunate that the past mis-pricing of risks in historical lending continues to be a burden on the system as evidenced by the continuing relatively high level of non-performing loans on the balance sheets of banks and the consequently high level of capital which has to be maintained by banks.  It should also be borne in mind that different mortgage markets have their own individual characteristics which can impact on the level of mortgage rates in those markets. 

 I am of the view that increased competition within the context of an appropriately regulated mortgage market and making it easier to switch mortgages, as opposed to administrative controls, remains the best way to ensure that retail lending rates are reduced in a sustainable way for the market as a whole without giving rise to potentially undesirable consequences for the provision of new mortgage lending.  In that context, it should be acknowledged that there have been some recent 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 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.  These developments have increased the mortgage options for the benefit of existing and new borrowers.

European Central Bank

Question No. 43 answered with Question No. 12.

Question No. 44 answered with Question No. 32.

Ceisteanna (42)

Thomas P. Broughan

Ceist:

42. Deputy Thomas P. Broughan asked the Minister for Finance if he has made submissions through the Council of Ministers to the European Central Bank on the failure of the bank to achieve appropriate goals in areas such as inflation, employment and growth in the context of a necessary stimulus for the EU economy in 2019 and 2020; and if he will make a statement on the matter. [38306/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The European Central Bank (ECB) has a very clear and limited mandate, given by the Treaty on the Functioning of the European Union, which is to maintain price stability in the euro area.  The Treaty establishes the independence of the ECB by prohibiting it from seeking or taking instructions from EU institutions or bodies, from any government of an EU Member State, or from any other body. These requirements are set out in Article 130 of the Treaty and ensure that the principle of central bank independence is respected and there is no influence on the members of ECB’s decision-making bodies. Clearly, therefore, it would not be appropriate for me to make submissions such as the Deputy suggests.

While the ECB is independent in carrying out its mandate and tasks, it is not unaccountable. As a European institution, the ECB is accountable in the first instance to the European Parliament.  The President of the ECB regularly reports on the ECB's monetary policy and its other tasks at his hearings before the European Parliament Committee on Economic and Monetary Affairs. In addition, the ECB replies to written questions from MEPs, which are published with the ECB's answers in the Official Journal of the EU and on the ECB's website.

The Central Bank of Ireland is part of the Eurosystem, which consists of the ECB and the National Central Banks of the nineteen Member States that have adopted the euro. The Central Bank contributes to the formulation of monetary policy at Eurosystem level, and further details of this are set out in the Bank’s Annual Report.

Aside from issues of monetary policy, the Deputy might also consider the role of fiscal policy at the broader European level.  The Commission is currently reviewing the fiscal rules and framework, and many of these issues were discussed at the recent Ecofin meeting. There is a general acceptance that the current framework can be improved and the recent report by the European Fiscal Board contained a number of interesting suggestions.

Question No. 43 answered with Question No. 12.
Question No. 44 answered with Question No. 32.

Home Building Finance Ireland

Ceisteanna (45)

Darragh O'Brien

Ceist:

45. Deputy Darragh O'Brien asked the Minister for Finance the amount loaned out by Home Building Finance Ireland to date; the estimated number of homes to be built; and if he will make a statement on the matter. [37700/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

HBFI commenced operations on the 28th January this year and published its half-year progress update in mid-July. The update is available on the HBFI website (www.hbfi.ie/latest/home-building-finance-ireland-publishes-half-year-update) and I am advised that HBFI furnished a copy to all Deputies. The key highlights to end June (after 5 months of operations) are as follows:

- More than 100 Expressions of Interest (EOIs) received

- Over 30 full funding applications received

- €41m in funding approved, translating to 228 units

- 92% of full applications made to HBFI from outside of Dublin

- Projects range in size from 10 units to 73 units

- Average size of facilities provided to-date is €6m

Since its launch earlier this year HBFI has been actively engaging with small and medium sized builders and developers throughout the country through a range of market awareness raising initiatives. HBFI continues to benefit from a strong pipeline of interest from prospective borrowers as a result of these engagement activities.

The primary objective of HBFI is to increase the availability of funding in the market to developers for viable residential development projects. It is important that appropriate credit, due diligence and legal procedures are adhered to in all areas of the lending process - to safeguard, in so far as possible, the funding provided by HBFI. These procedures require adequate time to ensure the highest standards are met and it is important that HBFI have a consistent approach in all applications for funding. 

Mortgage Interest Rates

Question No. 47 answered with Question No.12.

Ceisteanna (46)

Richard Boyd Barrett

Ceist:

46. 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; if so, the different amounts of interest a mortgage holder would pay over a 20 year lifetime on a €100,000, €200,000 and €300,000 loan, respectively, in the banks in which he is a majority shareholder in comparison to the amount they would pay if they were charged ECB rates, in view of the fact the current ECB interest rate for deposit facility is 0.5% and its marginal interest rate is 0.25%; and if he will make a statement on the matter. [38985/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

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 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: www.gov.ie/en/publication/ff6c0a-risk-weighted-assets-in-ireland-the-link-to-mortgage-interest-rates/.

Question No. 47 answered with Question No.12.

Help-To-Buy Scheme

Ceisteanna (48)

Martin Heydon

Ceist:

48. Deputy Martin Heydon asked the Minister for Finance the take-up of the help-to-buy incentive in County Kildare and nationally; the factors being taken into account in deciding whether to extend it; when a decision will be made; and if he will make a statement on the matter. [37663/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The Help To Buy (HTB) incentive was announced in Budget 2017 and backdated to 19 July 2016. Revenue advise me that over the period 19 July 2016 to 30 August 2019 (the most recent month for which data are available), 14,722 claims for HTB were made on a national basis, of which 13,955 were approved. Out of the 14,722 claims made overall, 1,421 of the claims related to the County of Kildare. 

The Help to Buy incentive is scheduled to expire on 31 December 2019.  This is provided for in Section 477C of the Taxes Consolidation Act 1997. As is normal practice, the role and operation of the incentive is being examined in the context of the forthcoming Budget and Finance Bill process.

However, at this close proximity to the Budget, it would be inappropriate for me to be drawn in relation to the existence of the relief into the future.

Labour Market

Ceisteanna (49)

Joan Burton

Ceist:

49. Deputy Joan Burton asked the Minister for Finance if he has undertaken an economic evaluation of wage levels here; and if he will make a statement on the matter. [39048/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The Minister for Housing, Planning and Local Government has agreed to take the part of the question pertaining to rents.  I will address the remaining part on the economic analysis of wage levels.

My Department monitors developments across all aspects of Ireland’s economy on an ongoing basis.  With regard to the labour market, my Department conducts regular analysis on wages and related matters, using official data from multiple sources.  

Ireland’s robust economic growth has seen consistent year-on-year growth in average wages since the beginning of 2016, with the pace of growth picking up through 2017 and 2018. The most recent data available show the average weekly wage grew by 3.5 per cent year-on-year in the second quarter of 2019.  In the earlier stages of economic recovery, growth in weekly earnings was primarily as a result of growth in hours worked per week, but recent data have shown much stronger growth in average hourly pay.  For instance, in 2018 average weekly earnings grew by 3.3 per cent, with average hourly earnings growing by 2.9 per cent.

Below the headline figure, the data show variation across sectors of the economy.  For example, recent quarters have seen strong growth in weekly earnings for workers in the ‘administrative and support services’, ‘information and communication technology’ and ‘transport and storage’ sectors.  Over the last 12 months, both weekly and hourly earnings are growing across all economic sectors reported by the CSO, showing the broad-based strength of Ireland’s current economic performance.

The latest macroeconomic forecasts published by my Department as part of the Stability Programme Update in April this year projected continued growth in average wages of 3 per cent for 2019, with further wage growth expected in the medium-term.  This is consistent with the other labour market elements of the forecast, such as continued growth in employment and a further decline in the unemployment rate.  This also indicates the existence of a ‘Phillips curve’ in the Irish economy - with the labour market closing in on full employment and the supply of labour becoming scarce, wages are increasing in order to attract or retain employees.  A new set of labour market projections and commentary will be published with Budget 2020.

Finally, I am fully alert to the possible risk of an overheating economy.  Indeed the Government’s Future Jobs Ireland strategy aims to maximise the supply of suitably skilled labour in our economy, boosting productivity and protecting our international competitiveness.

Tax Code

Ceisteanna (50)

Maureen O'Sullivan

Ceist:

50. Deputy Maureen O'Sullivan asked the Minister for Finance the way in which the perceived unfairness of the inheritance tax system as outlined in correspondence from a person (details supplied) can be addressed; and if he will make a statement on the matter. [38959/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I have received correspondence from the Deputy with regard to the treatment under Capital Acquisitions Tax (CAT) of couples who are married, cohabiting or in a civil partnership and the CAT treatment of those who do not have children. The correspondence, which is an external legal opinion sought by the Deputy, suggests changes to the current CAT rules and treatment.

For the purposes of Capital Acquisitions Tax, the relationship between the person who provides the gift or inheritance and the person who receives the gift or inheritance determines the lifetime tax-free threshold (the Group Threshold) below which gift or inheritance tax does not arise. As Capital Acquisitions Tax is generally payable by the beneficiary, rather than the disponer, the system promotes horizontal equity in that all individuals with similar circumstances are treated in a similar manner.

It is a long-held principle of inheritance tax that transfers of assets between spouses are exempt. The spousal exemption from inheritance tax was extended to civil partners from 1 January 2011. Where a couple is cohabiting, rather than married or in a civil partnership, each partner is treated for the purposes of tax as a separate and unconnected individual.

Cohabitants do not have the same legal rights and obligations as a married couple or a couple in a civil partnership, which is why they are not accorded similar treatment to couples who have a civil status recognised in law. Any change in the tax treatment of cohabiting couples can only be addressed in the broader context of future social and legal policy development in relation to such couples.

I would say that where two people - irrespective of their relationship - share a home owned by one of them, and where the homeowner dies leaving that home to the other person, they can avail of the CAT dwelling house exemption, once other conditions of the relief are met.  

As regards the treatment of individuals with no children, gifts or inheritances from them are subject to either category B or C thresholds irrespective of their individual status. There would be a significant potential Exchequer cost with the extension of the Category A threshold to allow individuals with no children to nominate a potential beneficiary.  

Apart from the potential legal difficulties of any change in the treatment of cohabitants, which is a broader policy issue than just CAT, there would be potentially significant Exchequer costs in changing the current CAT rules.

NAMA Operations

Ceisteanna (51)

Michael McGrath

Ceist:

51. Deputy Michael McGrath asked the Minister for Finance the way in which he plans to use the projected surplus from NAMA; when the agency will wind up; and if he will make a statement on the matter. [39060/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

As part of its Annual Report for 2018, NAMA revised its projected surplus to be returned to the State upwards to €4 billion. The realisation of this surplus depends on the success of NAMA’s ongoing deleveraging and completion of its Dublin Docklands SDZ and residential funding programmes.

Surplus funds may only be returned to the Central Fund once NAMA's debt has been redeemed in full by March 2020. It is estimated that €2 billion will be transferred in 2020 with a further €1.5 billion being transferred in 2021 and €0.5 billion in 2022. This timeline is contingent on NAMA’s projected surplus of €4 billion remaining unchanged.

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 July I published the second Section 227 Review into the progress NAMA has made in achieving its objectives. Considering the advanced stage of NAMA's deleveraging activities I also took the opportunity to review the arrangements for the wind down of NAMA for the coming years. A copy of this review has been published on my Department's website.

On foot of the review I have recommended that NAMA be allowed additional time to work through a residual loan portfolio with a projected carrying value of c.1% of its originally acquired assets that is expected to remain at the end of 2021. A limited extension of NAMA will enable the Agency to maximise the value of this residual portfolio in the interest of the taxpayer and best fulfil the Agency’s commercial obligations under Section 10 of the NAMA Act. NAMA shall submit a detailed wind-down plan for its ultimate dissolution to the Minister for Finance by the end of 2021, and its operations shall not continue past end-December 2025.

NAMA’s extension will not impact upon the timeline for the transfer of its expected €4bn surplus.

Brexit Issues

Question No. 53 answered with Question No. 38.

Ceisteanna (52)

Thomas P. Broughan

Ceist:

52. Deputy Thomas P. Broughan asked the Minister for Finance if, depending on the Brexit outcome by 31 October 2019, a second budget for 2020 and the medium term may be needed after 31 October 2019; and if he will make a statement on the matter. [38990/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I will present Budget 2020 to Dáil Éireann on the 8th of October and, as agreed by Government, this will be based on the assumption - purely for budgetary purposes - of a disorderly exit of the UK from the European Union. 

I have outlined on several occasions that, irrespective of the actual Brexit outcome, there will be no additional Budget for next year.  This position has not changed.

Question No. 53 answered with Question No. 38.

Tax Code

Ceisteanna (54)

Thomas Byrne

Ceist:

54. Deputy Thomas Byrne asked the Minister for Finance his plans to make changes to flat rate expenses; and if he will make a statement on the matter. [39040/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am advised by Revenue that their review of the flat rate expenses regime is ongoing and that it is intended to have the review completed by the end of 2019.  The Deputy will be aware from my previous replies on this matter that Revenue confirmed an implementation date of 1 January 2020 in respect of any changes that may be made to the flat rate regime, to ensure they do not impact on any specific group earlier than the rest. Revenue has advised that this position is unchanged. 

The flat rate expenses regime is a concessionary practice operated by Revenue where both specific commonality of expenditure exists across an employment category and the statutory requirement for the tax deduction as set out in section 114 of the Taxes Consolidation Act 1997 is satisfied. To qualify for a deduction under that section, an expense must be “wholly, exclusively and necessarily” incurred in the performance of the duties of the employment and paid by the employee. 

The purpose of the flat rate expenses regime is to simplify tax administration for both taxpayers and Revenue by making it easier for large groups of employees working in the same sector to avail of their entitlement to tax relief in respect of allowable expenses incurred in the performance of their employment duties.  I understand that the purpose of the review is to ensure that the expenses granted to each employment category remain justified and appropriate to modern day employments and work practices.  Each category is being examined separately in light of the legislative requirements and Revenue has engaged with relevant representative bodies in each of the cases under review. 

The Deputy will be aware from my previous replies to questions on this matter that I am aware of Revenue’s programme of work in this area.  Furthermore, the Deputy will be aware that the administration of the tax code is exclusively a matter for Revenue who are independent in the performance of their functions.  Any changes in practice to the flat rate expenses regime are therefore a matter for Revenue, but I understand that any withdrawal of the practice can only take place if Revenue are satisfied that there is no longer a legally valid basis to give the concession, after engagement with the relevant representative body acting on behalf of the various categories of workers.

As I have said on previous occasions, there has been no change to the general rule set out in legislation so all employees retain their statutory right to claim a deduction under section 114 TCA for any valid expenses incurred wholly, exclusively and necessarily in the performance of the duties of their employment, to the extent which the expenses are not reimbursed from any source.  So while certain employees may no longer claim a deduction on a universal “flat rate” basis, they may still be able to still claim a deduction on a specific “vouched basis”.

International Programmes

Ceisteanna (55)

Maureen O'Sullivan

Ceist:

55. Deputy Maureen O'Sullivan asked the Minister for Finance his views on illicit flows of capital from development partner countries of Ireland in the global south; if his attention has been drawn to the issue of tax avoidance being linked to poverty in developing countries; if he will raise the matter with his EU counterparts; and if he will make a statement on the matter. [37369/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The flows of illicit capital out of developing countries represent diversions of resources from their most efficient uses in developing economies and are likely to adversely impact domestic resource mobilization and hamper sustainable economic growth.

Ireland’s new international development policy ‘A Better World’ commits the Irish government to strengthening domestic resource mobilisation through effective bilateral and multilateral partnerships. Ireland has committed to undertake efforts to help developing countries to raise their own domestic revenue in ways that are more efficient, fairer and better promote good governance and equitable and inclusive development, and essential to achieving the 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals.  

Ireland, in accordance with our International Tax Strategy, is committed to engaging constructively and respectfully with developing countries in relation to tax matters and to supporting such countries in raising domestic tax revenues in ways that are more efficient, that promote good governance and equitable development and that can allow them to eventually exit from a dependence on official development assistance. This has also informed our decision to join the Addis Tax Initiative (ATI) in 2017.   

Through Ireland’s International Development Cooperation programme we provide support to regional tax organisations that provide much needed assistance to developing countries tax administrations on technical issues such as transfer pricing and automatic exchange of information, to help developing countries combat tax avoidance and the illicit flows of capital.  

In light of these commitments, my Department is working closely with the Department of Foreign Affairs and Trade and the Office of the Revenue Commissioners to increase Ireland’s work on domestic resource mobilisation through providing increased technical assistance and peer to peer learning to developing countries tax administrations, ensuring that increased revenue can support the furthest behind first.