Written Answers Nos. 282-306
282. Deputy Thomas Pringle asked the Minister for Finance the actions he has taken or proposes to take regarding persons who have been refused the drawdown of mortgages by the pillar banks as a result of being in receipt of the Covid-19 payment; and if he will make a statement on the matter. [14683/20]
Amharc ar fhreagraAs you will be aware both officials and myself have engaged and will continue to engage extensively with the Banking and Payments Federation (BPFI) and the banks directly in relation to supports for personal and business customers affected by the COVID-19 crisis. Officials in my Department are alert to issues raised directly by the public and these inform the Department’s ongoing engagement process and policy formation.
The Temporary Wage Subsidy Scheme is one of the main tools with which we are protecting the income of employees who otherwise would not be working. However, whilst I acknowledge the seriousness of the issue you have raised and its impact on those affected, what I cannot do is mandate how temporary payments received under the Temporary Wage Subsidy Scheme are treated in lending sustainability evaluations by regulators and lenders.
As Minister for Finance I cannot mandate or overrule the internal risk assessment processes in any bank, even one in which the State has a shareholding. Decisions in this regard are the sole responsibility of the board and management of the banks which must be run on an independent and commercial basis. The independence of banks in which the state has a shareholding 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.
Furthermore the banking crisis we faced over ten years ago was fuelled by unsustainable lending. There are now thankfully far firmer regulatory controls and restrictions on lenders. Speaking on this particular issue, on 7 May the Governor of the Central Bank publicly noted that if an individual borrower’s circumstances have changed such that doubt is cast over the sustainability of potential borrowing, it is in the best interests of the borrower and the bank if the situation is reviewed.
The European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (CMCAR) apply here. These mandate that before concluding a mortgage credit agreement, a lender must make a thorough assessment of the consumer’s creditworthiness. That assessment must take appropriate account of factors relevant to verifying the prospect of the consumer being able to meet his or her obligations under the credit agreement. The CMCAR also provide that a lender should only make credit available to a consumer where the result of the creditworthiness assessment indicates that the consumer’s obligations resulting from the credit agreement are likely to be met in the manner required under that agreement. The assessment of creditworthiness must be carried out on the basis of information on the consumer’s income and expenses and other financial and economic circumstances which is necessary, sufficient and proportionate.
In addition, the Central Bank’s Consumer Protection Code 2012 imposes ‘Knowing the Consumer and Suitability’ requirements on lenders. Under these requirements, lenders are required to assess affordability of credit and the suitability of a product or service based on the individual circumstances of each borrower.
This overall regulatory framework means a decision to grant or refuse an individual application for mortgage credit is a commercial decision to be made by the regulated entity. Where a formal loan offer is made by a lender, the loan offer may contain a condition that may allow the lender to withdraw or vary the offer if in the lender’s opinion there is any material change in circumstances prior to drawdown. In such cases, the decision to withdraw or vary the loan offer is also a commercial decision for the lender.
These overlapping and complimentary regulations are designed to protect consumers, prevent risky unsustainable lending, protect the integrity of the financial system and preserve competition in the market.
283. Deputy Michael Healy-Rae asked the Minister for Finance if the VAT rate on sun cream (details supplied) will be removed; and if he will make a statement on the matter. [14713/20]
Amharc ar fhreagraI am advised by the Revenue Commissioners that the VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. The EU VAT Directive (Council Directive 2006/112/EC) generally provides that supplies of goods and services be chargeable to VAT at the standard rate but that lower rates are permitted in very limited circumstances. There is no scope for a reduction in the rate of VAT on sun protective creams that would be in compliance with the EU VAT Directive.
284. Deputy Frankie Feighan asked the Minister for Finance if a matter relating to the temporary wage subsidy scheme (details supplied) will be investigated with the Revenue Commissioners; if contact will be made with the company in order to resolve the issue; and if he will make a statement on the matter. [14727/20]
Amharc ar fhreagraThe Temporary Wage Subsidy Scheme (TWSS) is an emergency measure to deal with the impact of the COVID-19 pandemic on the economy. It builds on data returned to Revenue through the PAYE real-time system and as such is a fully automated solution. The automated solution, which was developed in a very short timeframe in response to the pandemic, is designed around the dates specified in the legislation. These timelines require that employees were on the payroll at 29 February 2020 and that employers had fulfilled their PAYE reporting obligations for February 2020 before 15 March 2020. The 15 March deadline was subsequently revised to before 1 April 2020 by Revenue under its care and management provisions. These requirements are critical safeguards against abuse and exploitation of the scheme.
Revenue has advised me that the business in question is unable to access the TWSS because it did not file its January, February and March payroll submissions until 24 June, which was outside of the concessionary April deadline. Consequently, the TWSS system, which operates around the legislative dates, cannot calculate the ‘average net weekly pay’ (ARNWP) amount for the relevant employees, which is the key requirement on which the subsidy payments are based. It is not possible for Revenue to design a solution that facilitate access to the TWSS where statutory filing requirements are not adhered to.
285. Deputy Alan Kelly asked the Minister for Finance if he will provide a copy of the departmental briefings received by him and each Minister of State at his Department on taking up their roles; and if he will make a statement on the matter. [14803/20]
Amharc ar fhreagraI wish to advise the Deputy that the briefing document provided by my Department to me and to the Minister of State at my Department with responsibility for Financial Services, Credit Unions and Insurance following our appointment will be published in the coming weeks. The published version will have regard to the relevant provisions of the Freedom of Information Act 2014.
286. Deputy David Cullinane asked the Minister for Finance further to Parliamentary Question No. 63 of 30 June 2020, the way in which he can reconcile the fact that dividing an annual salary paid monthly by 52 results in a higher number than if it is calculated in accordance with the guidance for average revenue net weekly pay, ANRWP; and if a review will be conducted of payments made through the temporary wage subsidy scheme to ensure that no underpayments occurred. [14813/20]
Amharc ar fhreagraAs previously advised to the Deputy in Parliamentary Question Nos. 63 of 30 June 2020 and 168 of 7 July 2020, under the Temporary Wage Subsidy Scheme (TWSS) the amount of subsidy payable to eligible employees is based on their ‘average revenue net weekly pay’ (ARNWP) for January and February 2020, as returned by the employer to Revenue through the real-time PAYE system.
The use of January and February 2020 payroll as the base-period for calculating the employee ARNWP was confirmed by me in my letter of 16 April 2020 to Revenue, which also sets out my determinations of the amount of wage subsidy payable to different classes of employees.
Revenue advises me that it is satisfied that the TWSS is correctly calculating the amount of subsidy due to employees in accordance with the legislation contained in The Emergency Measures in the Public Interest (COVID-19) Act 2020 and my determination letter of 16 April 2020 and that there are no plans for a review.
287. Deputy Alan Kelly asked the Minister for Finance his plans to introduce better regulation of the insurance industry. [14908/20]
Amharc ar fhreagraAt the outset, it is important to note that I am very much aware of the problems faced by many businesses and consumers in relation to the cost and availability of insurance. I also acknowledge the need to continue with the reform agenda and this is recognised in the Programme for Government's cross-Departmental insurance agenda.
In terms of insurance regulatory reform, I believe much progress has been made through the work of the Cost of Insurance Working Group. Key legislative reforms include:
- The Central Bank (National Claims Information Database) Act 2018 to increase transparency
- Amendments to sections 8 and 14 of the Civil Liability and Courts Act 2004 to make it easier for businesses to challenge fraudulent claims
- The Personal Injuries Amendment Board (Amendment) Act 2019 to strengthen the role of PIAB
- The Non-Life Insurance (Provision of Information) (Renewal of Policy of Insurance) Regulations 2007 (S.I. No. 74 of 2007) with regard to new requirements on insurance renewal
- The Insurance (Amendment) Act 2018 to address issues relating to the liquidation of Setanta Insurance
In terms of reform, a necessary step is to bring the levels of personal injury damages awarded in this country more in line with those awarded in other jurisdictions. The establishment of the Judicial Council in December is very important in this regard, and it is expected that the Personal Injuries Guidelines Committee will submit draft Guidelines to the Judicial Council by 28 October. The aim is that such guidelines can result in the lowering of award levels and a more consistent application of making awards in courts. I would expect the insurance industry to reflect lower award levels in lower premiums.
Another important reform is the Consumer Insurance Contract Act 2019 which is due to be commenced on a phased basis shortly. The commencing of the majority of the provisions of this Act will, amongst other things, place an onus on insurers to handle claims promptly and fairly, and reform other aspects of insurance law such as the practice of warranties and replacing the principle of insurable interest.
However, it is also important to recognise that there is no single policy or legislative measure that will remedy the cost and availability of insurance. There are also many constraints faced by the Government in trying to address matters in this policy space, in particular the fact that Government cannot direct the courts as to the award levels that should be applied or direct insurance companies as to their pricing levels.
In conclusion, I wish to emphasise that insurance reform is a key priority for this Government and as noted above this is reflected in the programme for Government. This is an issue that I, as Minister for Finance, Minister of State Chambers in my Department and other Ministerial colleagues will focus our energies and cooperate on as part of our collective contribution to the Government's commitment to deliver further insurance reforms.
288. Deputy Sean Sherlock asked the Minister for Finance the delegated functions assigned to the Minister of State with responsibility for financial services, credit unions and insurance; and the date those delegated functions come into effect. [15043/20]
Amharc ar fhreagraNo formal Delegation of Ministerial Functions Orders have been signed. This position is kept under review in light of the requirements of the role.
290. Deputy Chris Andrews asked the Minister for Finance whether a company that has placed employees on the temporary wage subsidy scheme and submitted a questionnaire to the Revenue Commissioners but has not lost 25% of turnover will not have to pay anything back to the Revenue Commissioners on behalf of the employees; whether the employees will receive a tax bill at year end as a result of being on the scheme; and if he will make a statement on the matter. [15085/20]
Amharc ar fhreagraThe Temporary Wage Subsidy Scheme (TWSS) is a measure designed to maintain employment during the public health restrictions necessitated by the COVID-19 pandemic. To date, the scheme has provided in excess of €1.9 billion in support to almost 59,000 employers in respect of some 568,000 employees. There are approximately 410,000 employees currently receiving support through the scheme.
The Emergency Measures in the Public Interest (COVID-19) Act 2020 places the administration of the TWSS under the care and management of Revenue, which includes ensuring that this significant investment of public funds is properly allocated to eligible employers and employees. In the exercise of this important role, Revenue is conducting a programme of compliance checks on all employers availing of the scheme to confirm that they meet the eligibility criteria, and crucially that employees are receiving the correct amount of subsidy due to them.
In order to verify eligibility, Revenue is asking employers to summarise the impact of the COVID-19 restrictions on their business, the basis on which they reasonably anticipated a reduction of 25% or more in their turnover in Quarter 2 of this year, and whether the expected level of reduction actually occurred. I assume that the questionnaire referred to by the Deputy relates to this information request.
I am advised by Revenue that, where a business had a reasonable basis for projecting a minimum 25% decrease in turnover, but ultimately suffered a lesser reduction in trade, it will require that employer to exit the scheme on a prospective basis, but will not seek retrospective repayment. However, where a business was clearly not eligible for the scheme or failed to pay the correct level of subsidy to its employees, or abused the scheme in any other way, there will be a requirement to repay the funds received. Revenue has also advised me that any identified abuse of the TWSS will also lead to a more in-depth examination of the employer’s overall tax position.
TWSS payments to employees are liable to both income tax and Universal Social Charge (USC) by the employee. These amounts are not being collected in real-time through the PAYE system but will instead become liable by the employee at year end and will be calculated by Revenue as part of the ‘End of Year Review’ process. However, the level of tax and USC due by any employee may be reduced or eliminated by the amount of unused tax credits available. Any liability due may also be further reduced if the employee has additional tax credits, for example health expenses, to offset. Revenue has also very recently placed all recipients of the TWSS (and the Pandemic Unemployment Payment) on the ‘week 1 basis’ of taxation for the remainder of 2020 to ‘preserve’ unused tax credits that can then be used to offset any tax or USC liabilities that arise.
Revenue has also assured me that if any tax and USC liabilities still arise following the allocation of unused credits, it will work with the employees impacted upon to collect the outstanding liabilities over an extended period. This will be achieved by reducing their tax credits for future years, thereby minimising any financial hardship to the greatest extent possible.
291. Deputy Neale Richmond asked the Minister for Finance the number of applications that were received for banking licences here in each of the years 2015 to 2019, inclusive, and to date in 2020; and if he will make a statement on the matter. [15106/20]
Amharc ar fhreagraThe Central Bank has provided tabular details of the number of applications received for banking licences for the period 2015 to date. It should be noted that the table does not include assessments in relation to material expansions of activities by existing banking licence holders, which were undertaken in the context of Brexit, as these did not constitute new licences.
The following are the details for the period 2015 to date:
|
Year |
Number of Applications Received |
|
2015 |
One |
|
2016 |
None |
|
2017 |
None |
|
2018 |
None |
|
2019 |
One |
|
2020 (to date) |
None |
292. Deputy Neale Richmond asked the Minister for Finance the number of new banking licences that were issued here in each of the years 2015 to 2019, inclusive, and to date in 2020; and if he will make a statement on the matter. [15107/20]
Amharc ar fhreagraThe Central Bank has provided tabular details of the number of new banking licences issued for the period 2015 to date. It should be noted that the table does not include assessments in relation to material expansions of activities by existing banking licence holders, which were undertaken in the context of Brexit, as these did not constitute new licences.
|
Year |
Number of Licences Granted |
|
2015 |
One |
|
2016 |
None |
|
2017 |
None |
|
2018 |
None |
|
2019 |
One |
|
2020 (to date) |
None |
293. Deputy Neale Richmond asked the Minister for Finance the status of the roll-out of the Ireland for Finance strategy; and if he will make a statement on the matter. [15108/20]
Amharc ar fhreagraThe Ireland for Finance strategy was launched by the former Minister of State for Financial Services and Insurance, Michael D’Arcy TD, and myself in April 2019. The launch was held in Iveagh House, and it was attended by a large number of executives and financial sector leaders from across the industry. A number of guests travelled from many different locations abroad for the launch. It attracted extensive media coverage, both domestically and internationally.
During the following months, the Minister of State undertook a number of visits to key global markets to launch the Strategy and to further promote Ireland as a top-tier location of choice for specialist international financial services. His itinerary included Brussels, London, New York, Hong Kong and Tokyo. It included engagements with senior executives in firms across a range of financial services sectors in each city.
Since the launch of Ireland for Finance last year, there have been a number of significant financial services investments secured such as:
- Fundrock’s regional second site in Limerick was opened where it intends to employ 45 people
- Rimes decided to establish its first office in Ireland in Cork
- Japanese company JRI America Inc. announced that it will further expand its Technology Centre in Tralee, Co. Kerry, creating 100 new jobs over 5 years
- Australian company, EML Payments Limited decided to establish a Technology & Innovation Hub in Galway, employing 20 people
- Carne, an Irish founded global provider of fund management company solutions to the asset management industry, announced a significant expansion in its Irish operations, creating an additional 250 regional jobs over the next three years in the South East
- Opus Fund Services announced its decision to establish a regional second site in Wexford, creating 100 jobs
- DMS announced that it is to create 50 further jobs in Cashel and locate several global centres of excellence there
- Boston-based Liberty Mutual Group announced that it will create 120 new jobs in Cavan town over the next 3 years
- Mastercard announced its plans to create 1,500 jobs in the next three to five years as it significantly grows its new European Technology Hub in Dublin
- there were also openings of new or renovated offices by Deutsche Börse Group in Cork and Elavon in Arklow
Other highlights since the launch of the Ireland for Finance strategy include the establishment of a steering committee to oversee the development of the Fintech Foresight Group. This steering committee will be chaired by Brian Hayes, CEO of the Banking & Payments Federation of Ireland. Fintech is a growth area for international financial services and we were pleased to submit our response to the European Commission’s recent consultation on Digital Finance.
Considerable work has also been done by the Industry Advisory Committee on establishing a Women in Finance Charter and I look forward to further developments on this initiative throughout the year. Research shows that diverse teams can improve the quality of decision-making, reduce groupthink and allow assumptions to be challenged more effectively, and this is why Diversity was included as a horizontal priority of the Ireland for Finance strategy.
Sustainable Finance was also highlighted as a horizontal priority of the Ireland for Finance strategy and there have been a number of developments in this space also. Ireland’s second Climate Finance Week was held in November 2019 with some 2,000 delegates attending 18 events over the week. All relevant industry representative associations supported Climate Finance Week, including the signing of a statement of intent to support the sustainable finance agenda within their organisations. As part of Climate Finance Week we also saw the launch of a deep dive review of future ESG skills report and the publication of the second Irish ESG State of Play report.
The fifth edition of the European Financial Forum was held on 12 February 2020 in Dublin Castle. The European Financial Forum is an annual event that showcases Ireland's international financial services environment to an international audience, and highlights the Government of Ireland’s commitment to the development of the international financial services sector. This year’s event was another great success where attendees heard from Mary Daly, President and CEO of the Federal Reserve Bank of San Francisco; Norihiro Takahashi, President of the Government Pension Investment Fund of Japan; Francisco Aristeguieta, CEO of International Business for State Street Corporation; and Steven Maijoor, Chair of the European Securities and Markets Authority (ESMA).
You may recall that under the previous strategy for the development of international financial services, 'IFS2020' launched in 2015, there was an ambitious target of 10,000 net new jobs in the five year period to end 2019. The jobs figures as reported by the agencies, IDA and Enterprise Ireland, indicate an increase of approximately 11,500 net new jobs over the lifetime of the IFS2020 strategy to end-2019 meaning the strategy achieved additional 1,500 new jobs over the estimate. I am also pleased to report that one-third of these jobs are located in the regions outside of Dublin.
A draft Ireland for Finance Action Plan for 2020 was compiled in December 2019 but was not published before the General Election was called. As you will know, the Ireland for Finance strategy was included in the Programme for Government and the Action Plan for 2020 will also be considered by the recently appointed Minister of State at the Department of Finance, Jack Chambers TD, in light of developments such as Covid-19. We expect to bring the Ireland for Finance Action Plan for 2020 to Government for a decision in the near future.
We expect that Action Plan 2020, and those that follow, will be informed by the important work that the Ireland for Finance team have been carrying out with the European Commission and DG FISMA on FinTech and Sustainable Finance. The Commission is due to publish new strategies for both areas before the end of 2020 and as part of the consultation process, the Department of Finance has carried out a comprehensive engagement with all of the relevant stakeholders for these sectors in Ireland. The aim of this work has been to ensure that the international financial services sector in Ireland is best placed to respond to the job creation opportunities that the transition to a more digital and climate resilient future will present. By aligning the work of Ireland for Finance with the work of the Commission, the Department of Finance is positioning the sector to play an important role in the recovery of the economy, as a source of resilient and growing employment.
295. Deputy Brendan Griffin asked the Minister for Finance if the top-up payment paid to a staff member under the temporary wage subsidy scheme is a tax-deductible expense for the business owner in view of the fact that the business owner is currently paying income tax or corporation tax on the top-up; and if he will make a statement on the matter. [15164/20]
Amharc ar fhreagraThe Temporary Wage Subsidy Scheme (TWSS) was legislated for in section 28 of the recently enacted Emergency Measures in the Public Interest (Covid-19) Act 2020.
I am advised by Revenue that in computing the employer’s liability to income tax or corporation tax, as the case may be, the employer is not entitled to a deduction in respect of TWSS payments paid to an eligible employee. However, any top up of a TWSS payment, by way of the payment of normal wages to the employee by the employer, is deductible in computing the employer’s liability to income tax or corporation tax in the normal manner.
296. Deputy Brendan Griffin asked the Minister for Finance his options in respect of a reduction of the 13% VAT rate currently applicable to the hospitality sector; if he cannot lower this rate below 5%; if that is the case, the reason therefor; if he has had contact with the European Commission regarding potential VAT reductions in the economy; and if he will make a statement on the matter. [15165/20]
Amharc ar fhreagraI am advised by Revenue that the VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish VAT law must comply. In general, the reduced rate of VAT (13.5%) currently applies to accommodation, certain recreational activities and supplies of food and drink in restaurants, excluding alcohol and soft drinks.
Under EU VAT law, Member States may only have two reduced rates which cannot be higher than 15% and no lower than 5%. These lower rates can only be applied to a prescribed list of services in Annex III of the VAT Directive 2006/112/EC. Ireland currently has two reduced rates, 9% and 13.5%. In order to introduce a new reduced rate, one of the current reduced rates would have to be removed. In general, the VAT rate on accommodation, certain recreational services, such as amusement parks, fairgrounds, cinemas, etc., can be reduced to a rate no lower than 5%. The provision of food and drink in restaurants can also be reduced to a rate no lower than 5%, with the possibility to excluding alcohol and soft drinks.
Ireland, in line with the VAT Directive, also maintains several standstill provisions and derogations that allows it to maintain reduced rates, zero rates and exemptions to certain supplies for historical reasons. These standstill provisions and derogations cannot be extended.
297. Deputy Brendan Griffin asked the Minister for Finance the amounts generated by the 23% VAT rate in each year since 2012, in tabular form; if he has considered reducing the rate in order to stimulate businesses, particularly in the retail sector; and if he will make a statement on the matter. [15166/20]
Amharc ar fhreagraI am advised by Revenue that VAT registered traders are not required to separately identify the VAT generated from a particular activity or product type on their VAT returns. However, using Revenue and other third-party data, an estimate of the VAT generated at the standard rate (currently 23%) for the years 2012 to 2019 is provided below.
|
Year |
Yield Standard Rate (23%) €m |
|
2012 |
€8,013 |
|
2013 |
€7,957 |
|
2014 |
€8,530 |
|
2015 |
€9,153 |
|
2016 |
€9,690 |
|
2017 |
€9,546 |
|
2018 |
€10,045 |
|
2019 |
€10,901 |
Information in relation to the effect of a VAT rate change on receipts is available on page 25 in the Revenue Ready Reckoner at link which the Deputy may be interested in:
www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf.
The Government is fully aware of the unprecedented impact that the coronavirus is having on business and people’s livelihoods. In this regard a range of measures have been introduced to provide income support to those who need it while also giving confidence to employers to retain the link with employees so that when this crisis passes our people can get back to work as quickly and seamlessly as possible.
In addition to current support measures, my officials are examining a range of possible measures to ensure that the economy is in a position to recover rapidly while maintaining a stable tax base.
298. Deputy Brendan Griffin asked the Minister for Finance the amount generated by alcohol excise duty in each year since 2012, in tabular form; if he has considered reducing the rate in order to stimulate businesses, particularly in the hospitality sector; and if he will make a statement on the matter. [15167/20]
Amharc ar fhreagraI am advised by Revenue that the receipts generated by Excise Duty on alcohols for the years 2012 to 2018 are published on the Revenue website at link: www.revenue.ie/en/corporate/documents/statistics/excise/net-receipts-by-commodity.pdf.
The Excise Duty receipts on alcohol for 2019 amounted to €1,233 million.
In relation to the issue of the rate of alcohol excise duty, 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. The Deputy will be further aware that the Government’s July stimulus package to boost the economy following the COVID crisis will contain measures to support businesses and their employees.
299. Deputy Chris Andrews asked the Minister for Finance if he will address a matter (details supplied) relating to custom duties and VAT on the importation of medical devices and protective equipment in order to help in the fight against Covid-19; and if he will make a statement on the matter. [15207/20]
Amharc ar fhreagraThe European Commission Decision C(2020)2146, adopted on 3 April 2020, provides for the importation of goods to fight the effects of COVID -19 (including personal protective equipment) from outside the European Union without the payment of VAT or Customs Duty from January 2020. Such relief is permitted where the goods are imported by or on behalf of State bodies, public bodies and other bodies governed by public law, disaster relief agencies and organisations approved by Revenue including organisations regulated by the State and involved in the care, support and treatment of people at risk of COVID-19 and there is no scope to extend this. The goods must be distributed or made available free of charge to the persons affected by or at risk from or involved in combating the COVID-19 outbreak by the bodies and organisations referred to above. The relief is scheduled to end on 31 July 2020 but there is provision for an extension if this is required following a review and consultation with Member States. An extension of 3 months is currently being considered.
Following a request from my Department, Revenue has also implemented, on an administrative basis, the application of the zero rate of VAT to the domestic supply of certain goods as necessary to combat COVID-19 (including personal protective equipment) when supplied to hospitals, nursing homes, GP practices and the like, for use in the delivery of COVID-19 related health care services to their patients. This concessionary treatment will apply until 31 July, subject to review. The scope of the relief corresponds with the relief on the importation of these goods by the bodies specified in the Commission Decision.
Any further extension of zero rating to cover supplies of personal protection equipment would require a change in legislation at EU level; the VAT Directive would not permit a legislative measure for the application of the zero rate of VAT to such supplies and there are no grounds in the Commission Decision that would support the adoption of such a measure, even on a temporary basis.
300. Deputy Brendan Griffin asked the Minister for Finance his views on correspondence in respect of the VAT rate (details supplied); and if he will make a statement on the matter. [15227/20]
Amharc ar fhreagraThe Government is fully aware of the unprecedented impact that the coronavirus is having on business and people’s livelihoods. In this regard a range of measures have been introduced to provide income support to those who need it while also giving confidence to employers to retain the link with employees so that when this crisis passes our people can get back to work as quickly and seamlessly as possible.
In addition to current support measures, my officials are examining a range of possible measures to ensure that the economy is in a position to recover rapidly while maintaining a stable tax base.
301. Deputy Brendan Griffin asked the Minister for Finance if he will consider temporarily reducing VAT on retail (details supplied); and if he will make a statement on the matter. [15233/20]
Amharc ar fhreagraThe Government is fully aware of the unprecedented impact that the coronavirus is having on business and people’s livelihoods. In this regard a range of measures have been introduced to provide income support to those who need it while also giving confidence to employers to retain the link with employees so that when this crisis passes our people can get back to work as quickly and seamlessly as possible.
In addition to current support measures, my officials are examining a range of possible measures to ensure that the economy is in a position to recover rapidly while maintaining a stable tax base.
302. Deputy Danny Healy-Rae asked the Minister for Finance if he will address a matter relating to the temporary wage subsidy scheme (details supplied); and if he will make a statement on the matter. [15249/20]
Amharc ar fhreagraThe Temporary Wage Subsidy Scheme (TWSS) builds on data returned to Revenue through its real-time PAYE system. The core principles of the scheme are that –
- the business is suffering significant negative economic impact due to the pandemic;
- the employees were on the payroll at 29 February 2020; and,
- the employer had fulfilled its PAYE reporting obligations for February 2020, by 15 March 2020 (which date was recently extended to 31 March 2020 by Revenue concession and subject to conditions).
The TWSS is predicated on the employer wanting to keep the employees on the payroll and to retain them until business picks up. The amount of the subsidy for each employee is calculated based on the average net weekly pay reported for January and February 2020. Furthermore, the TWSS legislation makes no distinction between employees by reference to their age. All eligible employees of qualifying employers are entitled to the wage subsidy. It is not intended that this position will change in any future iteration of the scheme.
Policy responsibility for the Covid-19 Pandemic Unemployment Payment is a matter for my colleague the Minister for Employment Affairs and Social Protection.
303. Deputy Catherine Murphy asked the Minister for Finance the number of vacancies by job title in the Office of the Financial Services and Pensions Ombudsman as of 3 July 2020; and the estimated full-year cost of filling those vacancies, in tabular form. [15263/20]
Amharc ar fhreagraFirstly, I must point out that the Financial Services and Pensions Ombudsman (FSPO) is independent in the performance of his statutory functions. I have no role in the day to day workings of the office or in the decisions which he takes.
The FSPO has advised me that the number of vacancies at 3 July 2020 and the estimated full year costs are as follows:
|
Grade |
Number of Vacancies |
Full Year Costs |
|
Assistant Principal Officer |
2 |
€170,143 |
|
Higher Executive Officer |
2 |
€117,332 |
|
Executive Officer |
14 |
€508,882 |
The Ombudsman has also informed me that the estimated costs are based on salaries at the starting point on the relevant scale plus employer costs. Different terms and conditions may apply, if, immediately prior to appointment, the appointee is already a serving Civil Servant or Public Servant.
304. Deputy John Brady asked the Minister for Finance the reason a company (details supplied) is permitted to make staff redundant while availing of the temporary wage subsidy scheme; if this can be suspended until all options are assessed, that is, to give business a chance to recover after Covid-19; and if he will make a statement on the matter. [15295/20]
Amharc ar fhreagraThe Government’s priority in so far as the Temporary Wages Subsidy Scheme (TWSS) is concerned was and is to ensure that all employers experiencing significant negative economic disruption from COVID-19 can register for and start to receive payment quickly. The ambition of the scheme is to ensure the relationship between employers and employees is maintained to the greatest extent possible so that businesses can restart operations quickly once the crisis has passed.
The TWSS can only operate in respect of an employee, whether full-time or part-time, who was on the payroll of the employer as at 29 February 2020. Thus, eligible employers can participate in the scheme in respect of any eligible employees on their payroll, including rehired staff who were temporarily laid off. Eligibility for the scheme can be satisfied by an employer once they meet the relevant criteria, which can be at any point in time during the scheme’s duration.
The amount of the subsidy for each employee is calculated based on the average net weekly pay of the employee as reported to Revenue for January and February 2020. With regard to the subsidy amount, there is no distinction made between businesses who closed due to the restrictions and businesses who continued to trade, with employees continuing to work full time with similar hours as before the Covid-19 pandemic.
The Deputy will be aware that I cannot comment on any specific employer that may have been mentioned in information supplied with his question. I can say, however, that the TWSS has no role in relation to the employer / employee relationship in so far as terms, conditions, entitlements and rights of the employment are concerned. Consequently, the operation and management of redundancy is a matter between the employer and employee concerned and is outside the remit of the TWSS.
305. Deputy Paul McAuliffe asked the Minister for Finance if he is considering the introduction of a tax credit to allow persons to buy digital technologies to assist them to work remotely. [15369/20]
Amharc ar fhreagraSection 114 of the Taxes Consolidation Act 1997 (TCA) allows an employee or office holder to claim a deduction for expenses incurred by him or her wholly, exclusively and necessarily in the performance of the duties of his or her employment or office. This may include expenses incurred on digital technology, if all elements of the requirement are met.
Furthermore, an employer may provide certain equipment to employees to enable them to work from home, without a taxable benefit-in-kind arising if certain conditions are met. Where an employer provides the following equipment to an employee specifically for business use, and any personal use is incidental, a taxable benefit-in-kind will not arise:
- a computer (including a laptop or hand-held computer),
- a printer,
- a scanner,
- a modem,
- software,
- discs, disc drives and other computer-peripheral devices.
An employer may also provide a dedicated home telephone landline, mobile phone or high-speed home internet connection to an employee for business use. Where the employer bears the cost of installation and use of a home telephone landline, mobile phone or high-speed home internet connection for an employee, a taxable benefit-in-kind will not arise provided any personal use is incidental.
Where an employee uses his or her personal home telephone landline or mobile phone for business purposes a portion of the bill (including line rental) may be reimbursed by the employer without a charge to tax arising. In determining the element of the bill to be reimbursed by the employer it is necessary to make a reasonable estimate of the business use of the phone and to retain records used in calculating same. In such circumstances, the employee may not also claim a deduction for this expense under section 114 TCA.
Further information on the operation of benefit-in-kind on employer provided equipment can be found on Revenue’s website at the following link:
www.revenue.ie/en/employing-people/benefit-in-kind-for-employers/other-benefits/internet-computers-phones-and-work-related-supplies.aspx.
Given the existing provision for deductibility of such expenses under section 114 TCA, I have no plans at present to introduce a further tax credit to allow individuals to buy digital technologies to assist with remote working.
306. Deputy Michael Healy-Rae asked the Minister for Finance if a series of matters will be examined in relation to credit unions (details supplied); and if he will make a statement on the matter. [15391/20]
Amharc ar fhreagraThe Government welcomes the important work credit unions are doing to support communities throughout Ireland at this difficult time and recognises the key role that credit unions play in the delivery of financial services in local communities across Ireland, the need for which is heightened at this time. Credit unions account for approximately one third of the consumer credit market and are well positioned to provide access to credit to support the recovery from the current crisis.
The economic outlook arising by virtue of COVID-19, including reduced demand for new lending, has increased the challenges the sector is already facing. As a result it was agreed that the CUAC would report to me on challenges and opportunities for the sector, incorporating implications of COVID-19, the role credit unions could play in the economic recovery and any relevant recommendations. I understand that this report is almost complete and will be submitted to me in the coming days.
There are several commitments in the Programme for Government relating to credit unions, which will be expanded upon in the coming weeks and months as the new Government beds down, taking into account work already completed such as the CUAC report noted above and a separate CUAC report on directors finalised in February 2020.
Since 2004, the amount of the Industry Funding Levy payable by a credit union has been capped at a rate of 0.01% of its total assets as at 30 September of the previous year. The balance of regulatory costs has been funded by the Central Bank in accordance with the provisions of the Central Bank Act, 1942 (as amended). The cost of regulating the credit union sector has increased over recent years with the emergence of the necessity to increase the intensity of supervision of this sector. In 2018, the credit union sector contributed €1.7 million (circa 9% of the total costs incurred in regulating the sector).
During 2019, I approved the Central Bank request to recover 50 per cent of credit union costs on a phased basis, starting with a 20% recovery rate for the 2019 levy, which will be levied on an arrears basis in 2020, moving to 35% in 2020 (levied in 2021) and to 50% in 2021 (levied in 2022).
In response to the Central Bank's request, I also recommended that credit union contributions should not increase beyond the 50% target until: 1) the levy trajectory has reached the planned 50 per cent rate, at which time the impact on the viability of the sector will be better understood; and 2) a public consultation regarding increasing the levy rate for credit unions beyond 50% is undertaken, which would include a regulatory impact assessment of such a change on the sector.
Given that all other financial services sectors are at, or moving towards, 100% recovery, the move towards 50% in respect of credit unions, with further increases at that time being subject to consultation and Ministerial approval, is measured and takes account of the role that credit unions play in Irish society. Exemptions from levies result in a burden on the tax payer through state subvention.
It is also worth noting that the Department of Finance, in collaboration with the Central Bank, held a public consultation in 2019 on potential changes to the Credit Institutions Resolution Fund Levy. Following this review, I announced on 1 October 2019 a reduction in the levy rate which will result in a reduction of €4 million per annum from €9 million in 2019 to €5 million from 2020, or 44% reduction. My Department is also currently carrying out a review of the Stabilisation Levy which will be completed shortly.
In relation to regulatory reserves, adequate reserves (capital) support a credit union’s operations, provide a base for future growth and protect against the risk of unforeseen losses. The minimum regulatory reserve to be maintained by all credit unions under Central Bank regulations is 10% of the assets of the credit union. Credit unions had average reserves of 16% as at December 2019. Given the current reserves position of credit unions, the level of the minimum regulatory reserve requirement does not represent an impediment to growth in credit union lending.
The Central Bank informs me that the current reserve requirement for credit unions is a reflection of a number of factors including: available sources of reserves (retained earnings); the need for individual credit unions to have the capacity to absorb potential losses; and the business model currently operated by credit unions, which is predominantly focused on the provision of short-term personal lending. In setting the minimum regulatory reserve requirement, the Central Bank are mindful of the financial resilience of the sector, members confidence and the protection of members' funds.
The Deputy may be interested to note, however, that one of the “Additional Observations” contained in a 2019 Peer Review Report of the Central Bank’s Performance of its regulatory functions in relation to credit unions - undertaken by the International Credit Union Regulators’ Network (ICURN) - suggests that the Registry of Credit Unions conduct additional stress-testing on regulatory reserves under the existing leverage ratio and risk-weighted reserve approach. The Registry of Credit Unions has advised me that it will consider this suggestion as it plans its work around implementation of the Peer Review Team’s recommendations. The Central Bank informs me that introducing a risk weighted approach could place a disproportionate burden on individual credit unions involving a requirement for system enhancements and a level of new expertise with associated cost impacts for individual credit unions.
Credit unions already have the ability to improve their loan to asset ratio, including through additional consumer lending, mortgage and SME lending, either individually or through collaborative efforts. Following recent revisions to Central Bank lending regulations, the sector currently has capacity to lend an additional €1.1 billion for mortgage and SME lending collectively, with further additional lending capacity available to credit unions which can comply with certain conditions or on approval by the Central Bank. As at end 2019, credit unions had a mortgage and SME loan book of approximately €300 million.
As part of the Government's COVID-19 supports, it is proposed to revise the Credit Guarantee Scheme (CGS). The scheme is a Department of Business, Enterprise & Innovation (DBEI) scheme, operated by the Strategic Banking Corporation of Ireland (SBCI), and is already available for banks, non-banks and credit unions to participate in, subject to certain conditions. Officials from DBEI, SBCI and my Department have been and will be available to discuss the CGS and other State financing supports with banks, non-banks and credit unions.
I and my officials will continue to engage constructively to assist credit unions in delivering new services to their members, including potential involvement in the CGS and Government initiatives in relation to retrofitting.
