Written Answers Nos. 41-50
43. Deputy Ged Nash asked the Minister for Finance his views on a recent Central Bank report on household wealth; his views on the growth in the net wealth of the top 20% of households from €560,000 to €853,000; and if he will consider adjusting taxation measures to increase revenue from the top 10% quintile of households to help fund the Covid-19 recovery. [26798/20]
Amharc ar fhreagraI understand that the Deputy is referring to the recently published Central Bank report “Household Wealth: What is it, who has it, and why it matters”.
This report presents the results from the Household Finance and Consumption Survey (HFCS) 2018, which collects data on households’ financial positions. That survey was undertaken prior to the outbreak of COVID-19, but in time will provide a starting point against which to benchmark impact of the pandemic on household finance positions and consumption patterns. It reports that the survey data indicates an improved financial position and resilience for households prior to the COVID-19 crisis when compared to the situation leading into 2008.
I am informed that the HCFS indicates that household net wealth grew by over €76,000 for the median household, or by 74 per cent, to €179,200 from 2013 to 2018, driven primarily by house price growth and declining mortgage debt. The Central Bank report also highlights that a significant portion of wealth for most households was tied up in the family home, and that increases in house prices (74% increase for the period) was a major factor in the reported increase in household wealth. This net wealth grew across the entire wealth distribution, while inequality, as measured by the Gini coefficient, fell over the same period. The decline in negative equity from 33 per cent in 2013 to 4 per cent in 2018 was a key driver of this.
Whilst the net wealth of the top 20 per cent of households increased by approximately 52 per cent from €560,000 to €853,000, the relative share of net wealth held by the top 10 per cent of households - which stood at 50.4 per cent in 2018 - decreased by 2.6 per cent from 2013, and is 1.3 per cent lower than the equivalent figure for the Eurozone as a whole.
My officials continue to examine all issues related to taxation, including wealth taxation, on an on-going basis, and they and I will monitor and consider any additional information and data, such as that in the new report, that comes to light. I do not, however, have any plans to introduce wealth tax measures along the lines of those sought by the Deputy.”
45. Deputy Gary Gannon asked the Minister for Finance if persons that received the temporary wage subsidy scheme will be liable for a lump sum of tax at the end of the year despite only receiving the maximum of their net pay through the scheme; and if he will make a statement on the matter. [25022/20]
Amharc ar fhreagra58. Deputy Pauline Tully asked the Minister for Finance if all persons that received the pandemic unemployment payment on their return to work remain on a week one basis emergency tax for the remainder of 2020 which leaves them with a much reduced wage; and if he will make a statement on the matter. [19000/20]
Amharc ar fhreagra67. Deputy Peter Fitzpatrick asked the Minister for Finance the tax liability on the pandemic unemployment payment and the planned means of recovering tax owed by claimants in view of the fact the payment is not taxed at source. [19027/20]
Amharc ar fhreagraI propose to take Questions Nos. 45, 58 and 67 together.
As the Deputies will be aware, Revenue set out last Friday how any tax liability arising on the Temporary Wage Subsidy Scheme (TWSS) and the Pandemic Unemployment Payment (PUP) will be dealt with.
While the expected tax liability should be modest in most cases, the position as set out by Revenue is very welcome and is a further demonstration of how we will continue to work to minimise financial hardship to the greatest extent possible on taxpayers challenged by COVID-19.
While most income is liable to income tax and the Universal Social Charge (USC) and is deducted in real-time as and when the person is paid, the TWSS and PUP payments were not taxed in real-time and are instead liable to income tax and USC at the end of this year.
To minimise the amount of income tax due, if any, on PUP payments at the end of the year, Revenue placed all recipients of the PUP on the ‘week 1 basis’ of taxation for the remainder of the year so as to “preserve” unused tax credits that can then be used to offset any income tax liabilities that arise at year end.
Revenue has provided assurances that individuals will be given the opportunity to opt to fully or partially pay any income tax liabilities that still arises following the allocation of unused credits and where individuals do not opt to fully or partially pay, Revenue will collect the liability by reducing tax credits over 4 years, interest free, to minimise any hardship. The reduction of tax credits will start in January 2022.
The week 1 basis of taxation means that where an employee returns to work or takes up a new employment following a period while in receipt of the PUP or the TWSS, an employee’s tax is calculated on a ‘non-cumulative basis’. In these cases, an employer will deduct income tax and USC from a person’s pay on a week-to-week basis. Yearly tax credits and rate bands are not backdated to the 1 January and do not accumulate for each pay period. Employers are not permitted to make any refunds of income tax or USC that may be due until a ‘cumulative’ Tax Credit Certificate is issued.
I am advised that Revenue has received a number of requests from employees who were moved to the week 1 basis of taxation to be returned to the cumulative basis of taxation. A small number of these requests have been granted, for example where the employee only received a few weeks payment under the PUP or the TWSS, and where Revenue was satisfied that the employee would not suffer any hardship. The majority have remained on the week 1 basis of taxation as a return to the cumulative basis of taxation would have resulted in the employee suffering hardship either now or later through the end of year review process.
46. Deputy Pearse Doherty asked the Minister for Finance if cuts made to the employment wage subsidy scheme, in comparison to the temporary wage subsidy scheme in September 2020, will be reversed in view of the increased restrictions that have been introduced in sectors of the economy and are likely to be introduced in the near future; and if he will make a statement on the matter. [26794/20]
Amharc ar fhreagra55. Deputy Pearse Doherty asked the Minister for Finance the number of employers and employees availing of the employment wage subsidy scheme; if he will increase the level of subsidy under the scheme in view of greater restrictions on work and business in recent weeks; and if he will make a statement on the matter. [26792/20]
Amharc ar fhreagra89. Deputy Alan Dillon asked the Minister for Finance if he will respond to the request by performers and crew in the live entertainment industry to retain the temporary wage subsidy scheme; if other supports and grants will be provided for those in the sector that due to social distancing requirements are uncertain as to when they will return to work; and if he will make a statement on the matter. [17247/20]
Amharc ar fhreagra262. Deputy Alan Dillon asked the Minister for Finance his plans to increase the wage subsidy scheme of €203 per week to the previous amount of €350 per week for travel agents that have been forced to survive on zero income since March 2020; and if he will make a statement on the matter. [26535/20]
Amharc ar fhreagra283. Deputy Gary Gannon asked the Minister for Finance if his attention has been drawn to calls from the live events sector to reinstate the employment wage subsidy scheme at the full rate per week for these workers in view of the fact the sector is closed and dramatically reduced under public health advice; and if he will make a statement on the matter. [25023/20]
Amharc ar fhreagra314. Deputy Pearse Doherty asked the Minister for Finance the number of employees earning less than €151.50 across the economy that do not qualify for the employment wage subsidy scheme; if he will increase the level of subsidy under the scheme in view of greater restrictions on work and business in recent weeks; and if he will make a statement on the matter. [27357/20]
Amharc ar fhreagraI propose to take Questions Nos. 46, 55, 89, 262, 283 and 314 together.
The design of the Employment Wage Subsidy Scheme (EWSS) reflects the changing environment around the COVID-19 pandemic which has shifted from crisis mode to one of living alongside the virus, in line with the recently announced Resilience and Recovery 2020-2021: Plan for Living with COVID-19.
The Government’s focus has therefore shifted from an employee income support paid via the employer that maintained the existing employee/employer relationship insofar as was possible, to a direct employer subsidy to help support viable firms and encourage employment, including prospective employment of new hires and seasonal workers.
It is appropriate that the level of State subsidy be moderated as many of the strictest public health restrictions on the economy have been eased and so it is expected that businesses are able to shoulder more of the economic burden of their businesses, including wages. At the same time, it is recognised that economic outputs are unlikely to return to normal for many businesses for much of the rest of 2020, which is why the Government remains committed to supporting employers by means of a wage subsidy.
A number of new flexibilities have been included in the EWSS, while the rates and eligibility criteria have been modified so that the support is sustainable into the more medium term. In that regard, I would note that the level of subsidy being granted under the EWSS is commensurate with the average payment per worker under the TWSS which had been reducing since the start of June and when the TWSS ceased at the end of August was €282 across all recipients and €225 in the case of first-time recipients.
It is important to emphasise that the adaptation from the TWSS to the levels of support in the EWSS will allow employers to rely on the continuation of support over a longer period of up to 8 months while also ensuring such support is sustainable and affordable.
With regard to the request for the number of employees on the Employment Wage Subsidy scheme, Revenue has begun to publish weekly statistics updates on the EWSS as employers continue to complete the registration process. These statistics are available on the Revenue website at www.revenue.ie. As of 25 September 2020, over 36,746 employers had registered for the scheme and the published statistics include a breakdown of employers by size, sector and county. EWSS registered employers must file payslips with Revenue for eligible employees in respect of relevant pay periods. Until these processes are completed it is not possible to know the number of employees (nor their characteristics or locations) that will be supported under the scheme. The payslip information for EWSS recipient employers for the period 1 September onwards will be available from October and Revenue has confirmed that it will publish employee level information as soon as is practicable after that date.
With regard to the number of employees earning less than €151.50, I am advised by Revenue that it is not possible to predict in advance the number of employees likely to be paid at or below a certain income range in September 2020. Incomes in earlier months do not provide a reliable guide to possible September levels, given the volatility in the labour market this year as well as the usual seasonal changes observed month to month. Also, the Deputy will be aware that the substitution of the Temporary Wage Subsidy Scheme (TWSS) subsidies for ‘gross pay’ for a substantial number of employees across the economy this year, further complicates comparisons to previous months.
I will continue to monitor closely the administration of the EWSS as well as the uptake and utilisation of this important economy-wide employment measure in the weeks and months ahead with a view to ensuring that it achieves its objective of supporting viable enterprises and employers.
47. Deputy Mairéad Farrell asked the Minister for Finance his views on whether it is appropriate that those businesses in high profitability sectors should be eligible for the temporary wage subsidy scheme; and if he is taking measures to ensure businesses that do not need the scheme are not availing of it. [16653/20]
Amharc ar fhreagraThe Temporary Wage Subsidy Scheme (TWSS) expired on 31 August 2020. The Employment Wage Subsidy Scheme (EWSS) replaced the TWSS from 1 September, as the Government’s focus has shifted from an employee income support paid via the employer that maintained the existing employee/employer relationship insofar as was possible, to a direct employer subsidy to help support viable firms and encourage employment, including prospective employment of new hires and seasonal workers.
As regards employer eligibility for the scheme, an employer must be able to demonstrate that their business will experience a 30% reduction in turnover or orders between 1 July and 31 December 2020 as compared to the corresponding 2019 period as a result of the disruption to business caused by the Covid-19 pandemic. Additionally, and unlike TWSS, the employer must have a tax clearance certificate to be eligible to join the EWSS and must continue to meet the requirements for tax clearance throughout the scheme.
I would point out to the Deputy that the EWSS legislation contains a number of important safeguards and flexibilities in so far as the scheme’s operation and effectiveness is concerned. I, as Minister for Finance, am required under the law to monitor and superintend the administration of the scheme and to have economic assessments made every 2 months.
It is also noted that the EWSS legislation requires that immediately at the end of each month, from August 2020 onwards, each employer availing of the scheme must carry out a self-review of its business circumstances and if it is manifest to the employer that it no longer meets the eligibility test for qualification for the scheme, then the employer must immediately cease claiming wage subsidy payments.
Finally, the administration of the EWSS is placed under the care and management of Revenue, as was done with its predecessor, the TWSS. The Deputy will be aware of Revenue’s ongoing compliance programme relating to the TWSS. While Revenue’s focus on the EWSS in these early stages is no doubt concentrated on getting the scheme up and running and ensuring that all employers who are eligible for subsidy payments receive the payments quickly, I understand that Revenue will, in due course, undertake an appropriate employer compliance campaign relating to the EWSS.
48. Deputy Neale Richmond asked the Minister for Finance the status of the Investment Limited Partnerships (Amendment) Bill 2019; and if he will make a statement on the matter. [25965/20]
Amharc ar fhreagraThe Investment Limited Partnership (Amendment) Bill 2019 passed all stages in Dáil Eireann last year. The previous Government intended to introduce a number of amendments to the Bill in the Seanad, related to the introduction of anti-money laundering standards and beneficial ownership requirements as signalled at the time in the Dáil. However, the Bill lapsed with the dissolution of the Dáil and Seanad before these amendments could be brought forward.
The Government approved the draft text and publication of the Investment Limited Partnerships (Amendment) Bill 2020 at its meeting on 15 September 2020. This Bill consolidates all proposed amendments into one new piece of legislation and will ensure that the same standards of transparency and beneficial ownership apply across all of Ireland’s investment fund vehicles.
The Investment Limited Partnerships (Amendment) Bill 2020 passed Second Stage in the Seanad on 23 September 2020. Committee Stage in the Seanad is scheduled for 30 September 2020 and it once completed in the Seanad, it is planned to introduce the Bill in the Dail. It is Government's intention to progress this legislation through the Oireachtas as soon as is practical, with a view to enacting the legislation by year end.
49. Deputy Mick Barry asked the Minister for Finance the meetings he has had with the main banking and lending institutions in relation to the Covid-19 mortgage moratorium; the measures he will take to extend the scheme; and if he will make a statement on the matter. [26696/20]
Amharc ar fhreagra50. Deputy Christopher O'Sullivan asked the Minister for Finance if he has considered engaging the banks and requesting them to extend loan repayment moratoriums beyond the 30 September 2020 deadline in view of the six-month Covid-19 roadmap. [26592/20]
Amharc ar fhreagra54. Deputy Brian Stanley asked the Minister for Finance the status of extending the mortgage repayment break for those on the pandemic unemployment payment. [26628/20]
Amharc ar fhreagra56. Deputy Paul McAuliffe asked the Minister for Finance his plans to extend the mortgage moratorium; and if he will make a statement on the matter. [26714/20]
Amharc ar fhreagra73. Deputy Cormac Devlin asked the Minister for Finance the measures he is taking to ensure banks and financial institutions are providing flexible facilities to persons that continue to be impacted by the Covid-19 pandemic; and if he will make a statement on the matter. [26813/20]
Amharc ar fhreagra76. Deputy Brian Stanley asked the Minister for Finance the steps his Department has taken to investigate whether interest rates can be suspended on mortgages for those on the pandemic unemployment payment. [26629/20]
Amharc ar fhreagra305. Deputy Bernard J. Durkan asked the Minister for Finance if further assistance is contemplated in respect of home borrowers that find themselves in arrears with the mortgages arising initially from the economic collapse and further complicated by Covid-19; and if he will make a statement on the matter. [27252/20]
Amharc ar fhreagraI propose to take Questions Nos. 49, 50, 54, 56, 73, 76 and 305 together.
On 18 March last, the Banking and Payments Federation of Ireland (BPFI) announced a coordinated approach by banks and other lenders to help their customers who were economically impacted by the Covid-19 crisis. The measures included flexible loan repayment arrangements where needed, including loan payment breaks initially for a period up to three months and then subsequently extended for up to six months.
Banks have now provided for flexible options for borrowers who can recommence payments following a payment break, and the BPFI has produced a useful guide on this - https://www.bpfi.ie/wp-content/uploads/2020/09/Final-BPFI-Coming-off-the-COVID-19-Payment-Break.pdf. Also, the Central Bank has also updated its Covid-19 FAQ in relation to mortgage payment breaks on 18 September.
However, I continue to make it clear to lenders - and I reiterated the point at the meeting with the main banks this week - that they should continue work with and pro-actively assist their customers who are still experiencing difficulty as a consequence of Covid-19. I would also encourage any borrower who feels he or she may have difficulty in resuming payments after a Covid-19 payment break to contact their lender and if possible to do so before the payment break end date. Borrowers have a suite of regulatory protections and lenders have specific obligations, under the Central Bank consumer protection framework, to support and work with borrowers in arrears or in pre-arrears. In particular, lenders are obliged to engage and work with co-operating borrowers to identify an appropriate alternative repayment arrangement having regard to the particular circumstances of a case, and lenders should use the full suite of solutions available to them for their borrowers who continue to be impacted by Covid-19. In this regard, it is important to note that, while the European Banking Authority recently stated it would not extend its 30 September closing date to qualify for a Covid-19 payment break, banks can continue to support their customers with an extended payment break after 30 September on a case by case basis if needed with such loans classified according to the normal prudential framework.
I will also continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection framework will be fully available to mortgage and other borrowers that will still need support following a Covid-19 payment break. In this regard, the Central Bank wrote to all regulated lenders on 8th June setting out its expectations in relation to payment breaks. That letter requested that firms confirm that they are adhering to the Bank’s supervisory expectations and what the Bank expects in firms’ communications with borrowers. In addition, it requested that firms submit their Board approved strategic and operational plans for managing the increase in distressed debt, including supports for those borrowers unable to resume full payments after a payment break. The Central Bank has advised that it has challenged the five retail banks and six retail credit firms/credit servicing firms on their plans. While it is broadly satisfied with the firms’ plans, the Central Bank will continue to engage with all firms to ensure that these plans are effective.
In relation to the accrual of interest on loans, it should be noted that lenders will continue to incur costs (both in respect of funding and enhanced operational requirements) and that other borrowers will continue to be liable for their interest charges. However, apart for normal interest, no other specific charge or fee will be imposed on a borrower who avails of a Covid-19 payment break. Covid-19 payment break measures do not come without cost to the banking sector and these costs will also have to be managed in a way that protects their business and will be as fair as possible to the various stakeholders. Nevertheless, it has also been made clear to banks that it will not be acceptable for them to make excess profits on payment breaks and that it will be a matter for them to demonstrate that such a situation will not arise.
