Wednesday, 31 Mar 2021

Written Answers Nos. 90-109

Credit Unions

Ceisteanna (90, 101)

Barry Cowen

Ceist:

90. Deputy Barry Cowen asked the Minister for Finance if he will report on his engagement with credit unions in County Offaly; and if he will make a statement on the matter. [17173/21]

Michael Moynihan

Ceist:

101. Deputy Michael Moynihan asked the Minister for Finance the status of his engagement with the credit unions. [17142/21]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 90 and 101 together.

The 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 Minister of State in my Department, Sean Fleming TD, has credit unions as part of his remit.

The Government engages intensively with the credit union sector. I met all of the credit union representative bodies in September 2020, the third such meeting during 2020. In addition, Minister of State Fleming met the main representative bodies in January 2021 and again in March 2021. Minister of State Fleming has also met with a large number of individual credit unions, including Tullamore Credit Union, and groups of credit unions since his appointment in July 2020.

In addition to the above engagements, both I and Minister Fleming met with the Credit Union Advisory Committee (CUAC) in December 2020. Minister of State Fleming has separately met with CUAC and has also recently met the Registrar of Credit Unions.

Officials within my Department are also in ongoing and regular contact with sector stakeholders.

Covid-19 Pandemic

Ceisteanna (91)

Emer Higgins

Ceist:

91. Deputy Emer Higgins asked the Minister for Finance if steps can be taken to prevent mortgage approval from being withdrawn from persons due to the fact they are in receipt of the employment wage subsidy scheme or Covid restrictions support scheme. [17149/21]

Freagraí scríofa

Minister for Finance

Since the COVID-19 situation first arose, I have maintained contact with the BPFI and lenders on the measures they have put in place to assist their customers who are economically impacted by the pandemic. In relation to the particular issue of new mortgage lending, the main retail banks previously confirmed that they are considering mortgage applications and mortgage drawdowns in relation to their customers who were on the Employment Wage Subsidy Scheme on a case by case basis and that they are taking a fair and balanced approach. Lenders continue to process mortgage applications and have supports in place to assist customers impacted by COVID-19. Therefore, if mortgage applicants have any queries or concerns about the impact of COVID-19 on their mortgage application, they should in the first instance contact their lender directly on the matter.

However, there are certain consumer protection requirements which govern the provision of mortgage credit. For example, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (CMCAR) provide that, before concluding a mortgage credit agreement, a lender must make a thorough assessment of the consumer’s creditworthiness with a view to verifying the prospect of the consumer being able to meet his or her obligations under the credit agreement. The CMCAR further 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 are 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. The Code specifies that the affordability assessment must include consideration of the information gathered on the borrower’s personal circumstances and financial situation. Furthermore, where a lender refuses a mortgage application, the CMCAR requires that the lender must inform the consumer without delay of the refusal. In addition, the Code requires that the lender must clearly outline to the consumer the reasons why the credit was not approved, and provide these reasons on paper if requested.

Within this regulatory framework, the decision to grant or refuse an application for mortgage credit remains a commercial matter for the individual lender. Also a loan offer may contain a condition that would 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 offer is also a commercial and contractual decision for the lender.

Nevertheless, the Central Bank has indicated that it expects all regulated firms to take a consumer-focused approach and to act in their customers’ best interests at all times, including during the COVID-19 pandemic. If a mortgage applicant is not satisfied with how a regulated firm is dealing with them in relation to an application for credit or the drawn down of credit, or they believe that the regulated firm is not following the requirements of the Central Bank’s codes and regulations or other financial services law, they should make a complaint directly to the regulated firm. If the mortgage applicant is still not satisfied with the response from the regulated firm, he or she can refer the complaint to the statutory Financial Services and Pensions Ombudsman.

Financial Services Sector

Ceisteanna (92)

Eoghan Murphy

Ceist:

92. Deputy Eoghan Murphy asked the Minister for Finance if his attention has been drawn to moves in the UK to bolster its financial technology offering following a review into the industry; and if he is considering similar actions here to build upon Irish capacity given the opportunities as a leader in the EU. [17083/21]

Freagraí scríofa

Minister for Finance

I can confirm that I am aware of the recent UK report ‘Kalifa Review of UK Fintech’ and its recommendations published in February.

‘Fintech’ is an abbreviation of the words ‘financial technology’ and sometimes also known as ‘digital finance’ which means the delivery of financial services by innovative technology.

I would like to take the opportunity to remind Deputies that fintech is a large part of the whole-of-government strategy on international financial services titled Ireland for Finance published in 2019.

Many of the features of the UK report are already captured in the Ireland for Finance strategy and in the work of the wider actors in the Irish ecosystem (both public and private).

The first pillar of the Ireland for Finance strategy is ‘Operating and Regulatory Environment’ and my Department is currently engaged in shaping a number of regulatory proposals from the European Commission to support digital innovation in financial services, the Digital Finance Strategy and package, launched in September 2020. That strategy aims to stimulate responsible innovation and competition, to enable fintech start-ups to scale up and grow, and ensure that EU financial services rules are fit for the digital age, while managing risks to consumers.

The second pillar of the Ireland for Finance strategy is ‘Technology and Innovation’; and work continues under that pillar to take advantage of the opportunities that fintech and digital finance may offer. World leading companies are developing new products and services from Ireland for global markets, with an exceptional level of collaboration between industry, academia, state agencies and regulatory authorities driving Ireland's dynamic ecosystem.

Indeed, the Ireland for Finance strategy builds on the valuable work on fintech achieved under the previous international financial services strategy, IFS2020, as Deputy Murphy will be very familiar with from his time lead on such matters.

‘Talent’ and ‘Communications and promotion’ are the other two pillars of the Ireland for Finance Strategy and we continue to supply the necessary education for the talent and promote our offering in the fintech space under these pillars.

Ireland’s offering includes an ecosystem that involves access to EU single market and customers, a strong financial services sector and a strong IT sector, with major global firms in both sectors operating in Ireland, a skilled English-speaking workforce, (including access to talent from the European Union and UK under the common travel area), and a highly regarded educational system.

We also have an ‘innovation hub’ run by the Central Bank of Ireland. The Innovation Hub allows fintech firms to engage with the Central Bank of Ireland outside of existing formal regulator/firm engagement processes and is a resource to help innovators navigate the regulatory landscape. The Central Bank wants to hear from firms who are developing or implementing innovations in financial services based on new technologies in order to gain early sight of these technologies and enhance their understanding of potential risks, and importantly, potential mitigants.

Further measures in the fintech area are set out in this year’s Action Plan under Ireland for Finance ‘Building on Resilience’ including a new fintech umbrella group set up in the Department of Finance.

Tax Yield

Ceisteanna (93)

David Stanton

Ceist:

93. Deputy David Stanton asked the Minister for Finance the amount of capital gains tax received in each of the years 2015 to 2020; and if he will make a statement on the matter. [17080/21]

Freagraí scríofa

Minister for Finance

In general, Capital Gains Tax (CGT) is charged on the value of the capital gain made on the disposal of an asset. The current rate of CGT stands at 33% cent for disposals made from 6 December 2012 with a limited number of exemptions and reliefs.

Outturns in respect of Capital Gains Tax (CGT) are published on my Department's website at:

http://databank.finance.gov.ie/FinDataBank.aspx?rep=TaxYrTrend

Capital gains receipts for the period 2015 to 2020 are as follows:

€ 000	2015	2016	2017	2018	2019	2020
Capital Gains Tax	669,016	821,961	826,240	993,506	1,075,056	951,320

Covid-19 Pandemic Supports

Ceisteanna (94, 102, 148, 315)

Paul Murphy

Ceist:

94. Deputy Paul Murphy asked the Minister for Finance the total amounts owed by workers for outstanding tax as a result of the temporary wage subsidy scheme; the plans in place to deduct this from workers; the way tax refunds due to workers are affected by same; and if he will make a statement on the matter. [17208/21]

Rose Conway-Walsh

Ceist:

102. Deputy Rose Conway-Walsh asked the Minister for Finance if evidence has been determined of negative financial implications for workers who worked continuously through the Covid-19 pandemic but had been placed on the temporary wage subsidy scheme by their employer; if so, the details of same; and if he will make a statement on the matter. [16826/21]

Bríd Smith

Ceist:

148. Deputy Bríd Smith asked the Minister for Finance the reason workers are facing tax bills from the administration of the temporary wage subsidy scheme when the instruction to the employers was to top-up wages only to normal net amounts, effectively meaning a cut in gross pay and a saving to employers; if he will examine this position again in view of the fact that workers now facing tax bills received no improvement in their take home pay but are now presented with a tax bill; and if he will make a statement on the matter. [17190/21]

Neale Richmond

Ceist:

315. Deputy Neale Richmond asked the Minister for Finance if he has considered reducing the tax liability of those whose income was supported by the temporary wage subsidy scheme; and if he will make a statement on the matter. [16377/21]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 94, 102, 148 and 315 together.

The Temporary Wage Subsidy (TWSS) was in place between 26 March and 31 August 2020 and was introduced as an emergency income support for employees of vulnerable firms whose businesses had been negatively impacted by COVID restrictions and whose turnover had reduced by at least 25% during Q2 while the strictest public health measures were in place. The support was paid via the employer so as to maintain employment links between the employee and employer insofar as was possible and, to that end, the rate of Employers' PRSI was also significantly reduced to 0.5%. The level of income given to each individual employee was based on previous wages received in January and February 2020. Over 66,500 employers received a subsidy under the TWSS with payments worth just under €2.9 billion paid out to a total of 664,000 workers.

The subsidy was based on net pay and tax was not collected in real-time through the PAYE system while the scheme was in operation, and instead would be collected after an end of year review, if any such liability arose. This decision was taken in order to maximise the amount of financial support that was provided to recipients at a time when it was considered that they needed such support most, when the TWSS was first announced and expected to only be in place for 12 weeks.

Net pay was the chosen benchmark for the TWSS as the priority was to preserve take-home income of workers insofar as was possible, noting that similar rates of income supports based on previous pay levels were also being provided for those on the Pandemic Unemployment Payment (PUP) administered by the Department of Social Protection.

When the TWSS was extended for a further 10 weeks until the end of August 2020, Revenue took steps to minimise the amount of income tax and USC due, if any, on TWSS payments at the end of the year. This was done by placing all recipients of the TWSS or 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 or USC liabilities that arise at year end.

The Government have been consistent as regards the TWSS’s liability to tax from the outset of the payment. Indeed, I have been advised by Revenue that it clarified the tax treatment of the TWSS at employee level in the guidance material on the TWSS that it has published on its website since the commencement of the Scheme. Furthermore, Revenue actively engaged in facilitating webinars with the Employer Bodies, Accountancy Firms and Tax Practitioners to explain and clarify any issues for employers as regards the TWSS. For the information of the Deputy, Revenue’s material on Frequently Asked Questions on the TWSS can be found at https://www.revenue.ie/en/employing-people/documents/pmod-topics/guidance-on-operation-of-temporary-covid-wage-subsidy-scheme.pdf

The employer was expected to make best efforts to maintain the employee’s net income for the duration of the scheme. However, the question of an individual’s entitlements and rights in an employment context, the question of what wages an employer would be legally obliged to pay employees in respect of hours worked and the question of an employer’s capacity to pay wages to employees at pre-COVID levels in the light of the impact of the pandemic on the employer’s business, were matters between the employer and the relevant employees and were outside the remit of the TWSS.

An employer who received TWSS payments under the scheme was obliged to pass on any such payments to its employees. Revenue’s ongoing TWSS compliance programme is specifically examining that employers adhered to that requirement, as well as examining employer/employee eligibility for the TWSS. In addition, I am aware that Revenue has previously publicly stated that for certain employees where their employer paid net weekly earnings of between €586 and €960 pre-COVID, the full amount of the subsidy due to such employees may not have been paid through the payroll process during the period the TWSS was in operation. The process of identifying those employees who qualify for an additional subsidy is currently in progress. Revenue intends to offset any additional amount against an individual’s outstanding income tax/USC due for 2020, or by way of direct refund if the person has no 2020 arrears.

Payments made under the TWSS were regarded as income supports and share the characteristics of income. Other income earners in receipt of comparable “normal wages” are taxable on those wages. In the interest of equity, therefore, payments under the TWSS are subject to income tax and Universal Social Charge (USC). While income tax and the USC on most income is deducted in real-time as and when the person is paid, the TWSS payments were not taxed in real-time and were instead liable to income tax and USC at the end of 2020.

Although the final calculation of the end of year liability for each person is dependent on their personal circumstances based on data that Revenue released in January, it is noted that almost half of those in receipt of the PUP or TWSS have no outstanding liability to discharge (in fact over a third are due a refund).

In the case of the remaining taxpayer units with an outstanding liability, the data indicates that amounts to be collected are modest in scale, with 44% owing less than €500 and 72% having a liability of less than €1,000. If paid over the 4 year period beginning in 2022, the majority of those cases will owe less than €5 per week, with nearly half paying less than €2.50 per week. These figures represent a preliminary liability and may be further reduced by additional tax credits or reliefs such as health expenses.

Revenue has also given assurances that if any income tax and USC liabilities remain following the allocation of unused credits, it will work with its customers to collect the outstanding liabilities and a number of flexible arrangements may be entered into, including the collection without interest over an extended period of time for 4 years beginning in 2022. It is also understood that Revenue are facilitating employers who wish to pay the tax liabilities of their employees where such income tax and USC liabilities arise from the scheme.

Revenue made a Preliminary End of Year Statement available to all employees from 15 January 2021, including those who were in receipt of the TWSS. The Preliminary End of Year Statement includes information relating to an employee’s income received, including pensions and income from the Department of Social Protection, as well as their tax credit entitlements. For the tax year 2020, the Statement also includes information on the amounts of TWSS payments, if any, received by each employee. In addition, the Statement provides employees with a preliminary calculation of the income tax and USC position for 2020 and indicates whether their tax position is balanced, underpaid or overpaid for the year.

Upon viewing the Preliminary End of Year Statement through myAccount, which is Revenue’s secure online facility for individual taxpayer services, employees have an opportunity to complete their income tax return for 2020, declaring any additional income and claiming any additional tax credits due, for example qualifying health expenses, to arrive at their final liability for 2020.

When a liability is finalised, individuals may opt to fully or partially pay any income tax and USC liability through the Payments/Repayments facility in myAccount. Where individuals do not opt to fully or partially pay, Revenue will collect the liability by reducing their tax credits over 4 years, interest free. The reduction of tax credits will start in January 2022.

The Preliminary End of Year Statement sets out a provisional tax position for 2020, based on information available on Revenue records, including any Temporary Wage Subsidy Scheme (TWSS) payments reported by the individual’s employer. Revenue published provisional statistics in relation to the preliminary end of year tax position for all PAYE taxpayers for the year 2020, on 14 January 2021 which is available to view on Revenue’s website:

https://www.revenue.ie/en/corporate/documents/statistics/registrations/paye-preliminary-eoy-statements.pdf

I might conclude by noting that Revenue are facilitating employers who wish to pay the tax liabilities of their employees where such income tax and USC liabilities arise from the scheme. Any employers who are in a position to discharge such liabilities on behalf of their workers are encouraged to do so, but it is also acknowledged that, as with the decision around whether to avail of the TWSS in the first place, the question of whether an employer pays the income tax owed by employees in respect of the TWSS is a matter between the employer and the relevant employees.

Covid-19 Pandemic Supports

Ceisteanna (95)

Éamon Ó Cuív

Ceist:

95. Deputy Éamon Ó Cuív asked the Minister for Finance the discussions he has had with the banks and building societies in relation to the provision of further mortgage breaks for those who are on pandemic payments due to the level 5 lockdown since January 2021; the results of these discussions; and if he will make a statement on the matter. [16453/21]

Freagraí scríofa

Minister for Finance

Last year the Banking and Payments Federation of Ireland (BPFI) announced a coordinated approach by their member banks and other lenders to help their customers who were economically impacted by the onset of 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. The implementation of this voluntary moratorium by the banking industry was a flexible response to the emerging COVID-19 crisis and ensured that a large volume of affected customers could benefit quickly during a fast moving and evolving public health crisis.

While many borrowers whose payment break has ended have been able to return to full payments, it is also recognised that many borrowers continue to be impacted by the economic consequences of COVID-19. For those borrowers, lenders are expected to engage with them in an effective way and, in line with the requirements of the Code of Conduct on Mortgage Arrears, the Consumer Protection Code and regulations on lending to SMEs, to deliver appropriate and sustainable solutions and facilitate as many borrowers with their debt repayments.

In relation to the reintroduction of mortgage payment breaks, the Central Bank has confirmed that there is no regulatory impediment to lenders offering payment breaks to borrowers, providing they are appropriate for the individual borrower circumstance. My Department maintains ongoing contact with the BPFI and lenders and the BPFI also stated last January that standard payment breaks continue to be part of the wide range of tailored solutions which are being made available to customers upon assessment of their particular situation.

I will continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection and other applicable frameworks will be fully available to all borrowers that still need support at this time.

Tax Reliefs

Ceisteanna (96, 380)

Richard Boyd Barrett

Ceist:

96. Deputy Richard Boyd Barrett asked the Minister for Finance the ongoing efforts being made by his Department and the Revenue Commissioners to ensure full compliance by film production companies with the conditions attached to receipt of section 481 film tax relief particularly following a recent ruling by the scope section that one of the regular recipients of section 481 over many years was found to have wrongly classified an employee as self-employed and in circumstances in which many workers in the industry claim this practice is widespread; and if he will make a statement on the matter. [17197/21]

Paul Murphy

Ceist:

380. Deputy Paul Murphy asked the Minister for Finance the ongoing efforts being made by his Department and the Revenue Commissioners to ensure full compliance by film production companies with the conditions attached to receipt of section 481 film tax relief particularly following a recent ruling by the scope section that one of the regular recipients of section 481 over many years was found to have wrongly classified an employee as self-employed and in circumstances in which many workers in the industry claim this practice is widespread; and if he will make a statement on the matter. [17199/21]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 96 and 380 together.

The section 481 tax credit is intended to act as a stimulus to the creation of an indigenous film industry in the State, creating quality employment opportunities and supporting the expression of the Irish culture. Prior to 2015 the scheme was an investor-based relief which provided tax relief to individuals investing in the film industry. It is my understanding that the Deputies may be referring to a SCOPE ruling relevant to the time when the tax relief was claimed by investors, rather than the film production companies. The scheme was amended as part of Finance Act 2015 and now operates as a corporation tax credit which provides direct support to producer companies.

I am aware that there have been reports of industrial relations concerns in the industry and the Deputies will be aware that I have taken steps in recent Finance Acts to address these issues. Finance Act 2018 amended the section 481 certification process to provide that the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media, after considering an application and applying a set of tests, may issue a Cultural certificate to a producer company stating that a film is qualifying film for the purpose of the credit. One of these tests relates to employment on the qualifying film. Applicants must complete an “Undertaking in respect of quality employment”. This undertaking commits applicants to compliance with all relevant employment legislation in relation to the film being certified and it is also requirement to provide information on any adverse decisions of the Workplace Relations Commission against the company or companies within the group.

The Film Regulations provide for the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media to set conditions relating to employment when issuing a certificate for a qualifying film. Regulation 4 of the Film Regulations stipulates that these conditions are to be met by the producer company but also by the qualifying company (a designated activity company wholly owned by the producer company which exists solely for the purpose of making the one qualifying film). Should a producer company or qualifying company fail to adhere to a condition or obligation specified in a certificate, any credit claimed may be subject to recoupment by Revenue.

In relation to the clawback of the credit, I am advised that Revenue carries out a comprehensive programme of compliance operations each year across a broad range of economic sectors, including the film industry. Many of the operations are carried out on a multi-agency basis, which can include officials from the Department of Social Protection (DSP) and the Workplace Relations Commission. The primary role of these joint investigation units, JIUs, is to detect non-compliance with tax and duty obligations, which includes non-operation of the PAYE system on foot of bogus self-employment.

Additionally, I am informed that Revenue are members of the Employment Status Group. As members of this group, Revenue are assisting DSP in updating the Code for Determining Employment or Self-employment. It is envisaged that the new code will be published by Q3 2021.

Illicit Trade

Ceisteanna (97)

Brendan Smith

Ceist:

97. Deputy Brendan Smith asked the Minister for Finance the measures he will introduce to protect and support legitimate businesses trading in household fuel products due to the difficulties they face with illegal cross-Border trade in such products; and if he will make a statement on the matter. [17155/21]

Freagraí scríofa

Minister for Finance

I am assured by Revenue that combating the threat which illegal cross–border trade of all kinds, including that in household fuel products, pose to legitimate businesses, consumers and the Exchequer continues to be a priority. Revenue and An Garda Síochána collaborate closely in acting against illegal cross-border trade, and also cooperate with their counterparts in Northern Ireland under the framework of the North-South Joint Agency Task Force. I am assuming that the Deputy, when referring to household fuel products, is enquiring about the movement of home heating oils and solid fuel into the State from Northern Ireland.

Steps taken by Revenue to combat the illegal mineral oils trade, including home heating oils, include the introduction of stringent supply chain controls and reporting requirements, a rigorous programme of risk focused enforcement action and the application of robust legislation. In addition, Revenue and the UK Revenue and Customs undertook a joint initiative to introduce a new marker for use in marked fuels, which came into operation in April 2015. The industry view is that the actions taken have been successful in curtailing fuel fraud.

In relation to solid fuels, the Deputy will be aware that the regulatory regime covering the marketing, sale, distribution and burning of solid fuels in the State is enforced by local authorities in the State. Local authorities have powers to inspect premises and vehicles being used for the sale and distribution of solid fuel, collect samples of coal to check for adherence to environmental standards and to prosecute traders involved in selling coal that does not meet these standards. The collection of Solid Fuel Carbon Tax (SFCT) is heavily reliant on the effectiveness of this regulatory regime.

Solid Fuel Carbon Tax (SFCT) is an excise duty that applies to coal and peat when first supplied in the State for use as a fuel. Neither the movement of solid fuel into the State nor the physical presence of solid fuel in the State generate a liability to SFCT. Therefore, there is no smuggling offence, in terms of evasion of SFCT, attaching to coal coming into the State from Northern Ireland. Solid fuel carbon tax is collected by Revenue on a self-assessment basis and compliance with the law is enforced using the full range of compliance interventions and enforcement provisions for self-assessed taxes.

Currently, there is no carbon tax on solid fuel in Northern Ireland. This factor, combined with that jurisdiction's lower VAT rate on solid fuel, lower environmental standards and currency fluctuations, can give rise to significant price differentials which incentivises the sourcing of solid fuel from Northern Ireland. EU Single Market constraints, which still apply in Northern Ireland, preclude the use of any cross-border movement controls in the administration of SFCT. This means that solid fuel coming into the State from Northern Ireland is not subject to cross-border movement controls typical of harmonised excises on mineral oils, tobacco and alcohol. Revenue has no authority to stop vehicles and physically inspect loads of solid fuel. Similarly, Revenue has no authority to challenge transportation or possession of solid fuel that originated in Northern Ireland as such transportation or possession are not, in themselves, Revenue offences. Even if controls were possible, a person transporting solid fuel from Northern Ireland could legitimately claim that SFCT will be accounted for on relevant supplies made in the State. An SFCT return does not have to be made until one month after the end of the two-month accounting period in which the supply is made.

At the beginning of 2020 Revenue participated in a number of “joint operations” within Low Smoke Zones in conjunction with the Department of Environment, Climate and Communication and local authority solid fuel inspection teams, with a view to checking for compliance across several tax headings, including SFCT. In addition, a SFCT compliance module has been included in Revenue’s ongoing Mineral Oil Tax national compliance project. This project, along with many other field-based compliance activities, has been impacted by Covid-19 restrictions since mid-March 2020.

Fiscal Policy

Ceisteanna (98, 143)

Paul McAuliffe

Ceist:

98. Deputy Paul McAuliffe asked the Minister for Finance his plans for the repayment of the substantial debt built up throughout the Covid-19 period in future years; if there will be an increase in taxes or cuts to services as a result; and if he will make a statement on the matter. [17137/21]

Peadar Tóibín

Ceist:

143. Deputy Peadar Tóibín asked the Minister for Finance his plans to increase taxes or cut public services to deal with the national debt resulting from the Covid-19 pandemic and lockdown. [17078/21]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 98 and 143 together.

The unprecedented large-scale State intervention has seen a significant increase in public indebtedness. In Ireland, the debt-to-GNI* ratio rose to around 108 per cent last year. Given the supports required so far this year, this ratio will increase even further.

Crucially however, the low interest environment that we find ourselves in means that, despite this sharp increase in debt, interest costs are actually falling. This is the case not just in Ireland but throughout Europe.

There is no doubt that the very large increases in borrowing that have been undertaken were the correct approach. However, we must think about the implications for fiscal policy once we move out of the immediate phase of the crisis.

Supports will continue for as long as they are needed. However, permanent increases in expenditure are only possible when funded by permanent increases in taxation. To that end, it is imperative that once the public health situation allows, we begin to roll back the once-off and emergency supports that were put in place in an appropriate and incremental way. The objective will be to close the gap between what the State earns and what it spends.

While we must return the public finances to a sustainable setting, I anticipate that economic growth will do much of the ‘heavy lifting’ in this regard. The best way to service the increased debt is to grow the economy. The fundamental strengths in our economy will help us to do that. There will be no return to the austerity measures that were necessary during the last financial crisis.

We faced into this pandemic on a solid footing, with a strong pre-crisis fiscal position. Two consecutive annual surpluses had been recorded and the debt-to-income ratio had seen a significant downward trajectory over a number of years. This strong pre-crisis position gave us policy options

Reducing the debt ratio back to lower and safer levels must be a key priority over the medium-term. This will, once again, provide us with options should we face another unexpected shock in the future.

Tax Reliefs

Ceisteanna (99, 127)

Aindrias Moynihan

Ceist:

99. Deputy Aindrias Moynihan asked the Minister for Finance if an urgent review will be carried out of the current 10% rate allowed under the e-working tax relief towards heating and electric expenses incurred from working from home (details supplied); the measures being taken to address this economic disparity; and if he will make a statement on the matter. [17176/21]

Paul McAuliffe

Ceist:

127. Deputy Paul McAuliffe asked the Minister for Finance his plans to increase tax credits for persons working from home in future budgets; and if he will make a statement on the matter. [17138/21]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 99 and 127 together.

Where e-workers incur certain extra expenditure in the performance of their duties of employment remotely or from home, such as additional heating and electricity costs, there is a Revenue administrative practice in place that allows an employer to make payments up to €3.20 per day to such employees, subject to certain conditions, without deducting PAYE, PRSI, or USC. Revenue have confirmed that PAYE workers using their primary residence as a workplace during Covid-19 restrictions qualify as e-workers for the purposes of this practice.

This administrative practice has been in place for some time and the choice of whether to make the payment of €3.20 is at the discretion of the employer. The value of relief allowed under the Irish system is already considered sufficient to cover any legitimate additional costs incurred by workers. The level of support allowed also compares favourably internationally: at €3.20 per day up to €16 per week or €832 per annum may be paid tax free. By contrast, the weekly rate in the UK is just £6 per week or a maximum of £312 per annum.

Revenue also advise that the provision of equipment, such as computers, printers, scanners and office furniture by the employer to enable the employee work from home will not attract a Benefit-In-Kind charge, where the equipment is provided primarily for business use. The provision of a telephone line, broadband and such facilities for business use will also not give rise to a Benefit-in-Kind charge, where private use of the connection is incidental.

Where an employer does not pay €3.20 per day to an e-worker, employees retain their statutory right to claim a deduction under section 114 of the Taxes Consolidation Act (TCA) 1997 in respect of actual vouched expenses incurred wholly, exclusively and necessarily in the performance of the duties of their employment. PAYE employees are entitled to claim costs such as additional light and heat in respect of the number of days spent working from home, apportioned on the basis of business and private use.

As I announced on Budget day, in addition to these existing measures, Revenue have agreed to allow broadband to qualify for this relief. This apportionment is based on the number of days the person spent working from home in year with 30% of the apportioned value accepted by Revenue as related to work in the home.

PAYE workers can claim e-working expenses by completing an Income Tax return at year end. Revenue advise that the simplest way for taxpayers to claim their e-working expenses and any other tax credit entitlements is by logging into the myAccount facility on the Revenue website.

Revenue have published detailed guidance on e-working arrangements in their Tax and Duty manual TDM 05-02-13 e-Working and Tax which may be viewed at the following link: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-02-13.pdf

Finally, the national remote working strategy: Making Remote Work, commits the Tax Strategy Group to reviewing the current tax arrangements for remote working in respect of both employees and employers. The Tax Strategy Group will take account of the economic, financial and organisational implications arising from the experience of remote working during the pandemic, and assess the merits of further enhancements for consideration in the context of Budget 2022.

Economic Policy

Ceisteanna (100)

Ruairí Ó Murchú

Ceist:

100. Deputy Ruairí Ó Murchú asked the Minister for Finance the engagement he has had on the recently launched Dublin Belfast Economic Corridor Report; his views on the report; and if he will make a statement on the matter. [17207/21]

Freagraí scríofa

Minister for Finance

As the Deputy may be aware, the Dublin Belfast Economic Corridor initiative is a collaborative project led by a network involving eight local authorities, North and South of the border, Dublin City University and Ulster University. Both universities recently published a report regarding the potential for an economic corridor between Dublin and Belfast.

While not directly engaged in the project, the Government is supportive of this initiative, and is determined to help unlock the opportunities this co-operation offers. We have set out in the National Planning Framework how we want to build on the strengths of the Dublin-Belfast Economic Corridor to capitalise on the clear economic potential of the region. Opportunities to create shared growth and prosperity are important for the all-island economy.

The Tánaiste and Minister for Enterprise, Trade and Employment has welcomed the report and stated that the corridor project could be a means of enhancing economic and social cooperation between Dublin and Belfast and all parts in between. Belfast and Dublin have a great deal to offer each other, and this work to strengthen business links between the two cities is very welcome.

Under the "New Decade, New Approach" Agreement, the Government has made a strong commitment to work with the Northern Ireland Executive to achieve greater connectivity on the island. The Government will work closely with the Northern Ireland Executive, through the North South Ministerial Council and other structures, to work towards a shared approach that will allow us to realise the development opportunities available.

Question No. 101 answered with Question No. 90.

Question No. 102 answered with Question No. 94.

Fiscal Policy

Ceisteanna (103)

Peadar Tóibín

Ceist:

103. Deputy Peadar Tóibín asked the Minister for Finance his plans in relation to debt that has built up as a result of the Covid-19 pandemic. [17077/21]

Freagraí scríofa

Minister for Finance

As the Deputy will be aware, the pandemic and the necessary public health measures introduced to control the spread of the virus have had a huge impact on our economy and our society.

In response the Government has acted decisively and on an unprecedented scale to support households, businesses and our health sector. Almost €38 billion in fiscal support has been provided representing almost a fifth of national income.

The range of pandemic-related supports will continue as long as is necessary, and will only be withdrawn, in a gradual and responsible manner, when it is appropriate to do so. This is a reflection of Government’s commitment to continuing to support our economy as we face the current phase of the pandemic.

The careful management of our public finances before the onset of the pandemic allowed us to enter the crisis from a position of strength and to act decisively. However, the suite of pandemic-related supports introduced to mitigate the worst effects of the pandemic, have been largely financed by additional borrowing.

Last year our debt-to-modified national income ratio rose to 108 per cent and is set to rise further this year. Although, the low interest environment that we find ourselves in means that, despite this sharp increase in debt, interest costs are actually falling. However, as we emerge from lockdown and reopen our economy it will be essential that we restore the public finances to a sustainable footing and ensure that we do not risk becoming a fiscal outlier.

We will aim to service our increased debt by growing the economy and the fundamental strengths in our economy – as seen by some of the underlying trends in our tax figures - will help us to do that.

Covid-19 Pandemic Supports

Ceisteanna (104)

Pa Daly

Ceist:

104. Deputy Pa Daly asked the Minister for Finance his views on the eligibility for non-rateable premises for Covid-19 supports under his Department; and if he will make a statement on the matter. [16745/21]

Freagraí scríofa

Minister for Finance

The Covid Restrictions Support Scheme (CRSS) is a targeted support for businesses significantly impacted by restrictions introduced by the Government under public health regulations to combat the effects of the Covid-19 pandemic. Details of CRSS are set out in Finance Act 2020 and detailed operational guidelines, which are based on the terms and conditions of the scheme as set out in the legislation, have been published on the Revenue website at: https://www.revenue.ie/en/corporate/press-office/budget-information/2021/crss-guidelines.pdf.

To qualify under the scheme, a business must carry on a trade or trading activities, the profits from which are chargeable to tax under Case I of Schedule D. The trade must be carried on from a business premises that is located in a region subject to restrictions introduced in line with the Government’s ‘Living with Covid-19 Plan’, with the result that the business is required to prohibit or considerably restrict customers from accessing its business premises.

For the purposes of the CRSS, a business premises is defined as the building or similar fixed physical structure in which a business activity is ordinarily carried on – It does not require that the premises is a rateable premises. Mobile premises, or premises which are not permanently fixed in place, do not meet the definition of business premises.

The purpose of the CRSS is to provide additional support to the businesses who have had to close temporarily or significantly restrict access to their premises as a direct result of public health Regulations. It is a part of the broad spectrum of Government supports being provided to assist businesses impacted by COVID-19.

In respect of the other supports under my department, I can confirm that operating a business activity from a rateable premises is not a condition of the EWSS scheme or of the debt warehousing schemes.

The Government will continue to assess the effects of the Covid-19 pandemic on the economy and I will continue to work with Ministerial colleagues to ensure that appropriate supports are in place to mitigate these effects.

Question No. 105 answered with Question No. 89.

Insurance Costs

Ceisteanna (106, 371)

Michael Moynihan

Ceist:

106. Deputy Michael Moynihan asked the Minister for Finance the action being taken on differential pricing in the motor and home insurance markets. [17141/21]

Pearse Doherty

Ceist:

371. Deputy Pearse Doherty asked the Minister for Finance his views on the Central Bank’s Interim Report in its Review of Differential Pricing Practices in the Irish Private Car and Home Insurance Markets; if he will support legislation to prohibit its practice; and if he will make a statement on the matter. [1851/21]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 106 and 371 together.

The Deputies will be aware that the Programme for Government includes a commitment to work to remove dual pricing, a form of differential pricing, from the market. In this regard, the Action Plan for Insurance Reform also commits to examine the forthcoming Central Bank Review of Differential Pricing in the Motor and Home Insurance Markets and take any appropriate actions as deemed necessary, in light of the final report.

The Central Bank’s Interim Report marks an important milestone in its review of the issue and summarises the initial observations from its ongoing market analysis and consumer research. This will inform the next phases of its work and I look forward to it being finalised in the coming months. I note that the Central Bank has stated that differential pricing can be associated with both benefits and costs for consumers. Accordingly, completion of the analysis will be essential in order to ensure a full market perspective, evidence-based conclusions and in turn appropriately calibrated regulatory interventions. In addition, the associated consumer research, which is ongoing, will also provide insights which will be essential to the Central Banks’s overall analysis.

Both Minister of State Fleming and I have repeatedly called on the insurance industry to treat their customers fairly and in line with the Central Bank’s Consumer Protection Code. I believe that the insurance industry should now be proactively addressing these concerns. In this regard, Minister of State Fleming has previously sought the views of the main insurers on differential pricing, and will continue to raise this matter with the industry, including at upcoming meetings in the coming weeks.

In conclusion, I would note that the new Office to Promote Competition in the Insurance Sector will work to enhance consumer awareness and develop information campaigns, in collaboration with relevant stakeholders, about the benefits of switching from and engaging with providers.

Economic Policy

Ceisteanna (107)

Bernard Durkan

Ceist:

107. Deputy Bernard J. Durkan asked the Minister for Finance to the extent to which he remains confident that adequate economic provision has been made or is available to facilitate recovery in the aftermath of Covid-19; the extent to which his Department continues to monitor the ill effects of the virus on the economy; and if he will make a statement on the matter. [17156/21]

Freagraí scríofa

Minister for Finance

The level of budgetary support that have been put in place by this Government to deal with the economic and social impact of Covid-19 has been extraordinary. With a total value of almost €38 billion, or nearly a fifth of national income (or GNI*), the Government has made use of all three avenues available: direct public expenditure, the taxation system and ‘below the line’ supports such as credit guarantees.

There has been a broad international consensus on the use of counter-cyclical budgetary policy to deal with the economic impact of the pandemic, with the European Commission, IMF, OECD, and ECB all subscribing to the view that because the crisis was not caused by underlying economic problems (imbalances), the correct approach is to support the economy.

As we emerge from lockdown and reopen our economy, the objective will be to close the gap in the public finances, but in an incremental and responsible way. We will aim to service our increased debt by growing the economy and the fundamental strengths in our economy – as seen by some of the underlying trends in our tax figures - will help us to do that.

Over the coming months the Government will publish the Stability Programme Update as well as the National Economic Plan. Both documents will help frame our recovery as we emerge from the pandemic.

Question No. 108 answered with Question No. 89.

Credit Register

Ceisteanna (109)

Rose Conway-Walsh

Ceist:

109. Deputy Rose Conway-Walsh asked the Minister for Finance the steps he has taken to protect the credit scores of viable businesses throughout the Covid-19 pandemic; and if he will make a statement on the matter. [16827/21]

Freagraí scríofa

Minister for Finance

I would ask the Deputy to note that the Central Credit Register (CCR) does not produce credit scores; rather the information on a credit report provided by the CCR is factual in nature and the information is provided to the CCR by lenders. It contains no guidance, recommendation or prohibition for lenders on what decision they should make on an application for credit or repayment arrangements agreed with borrowers. Subject to complying with applicable law and regulatory requirements, it is a matter for lenders to make their own lending decisions in accordance with their own credit policies and risk appetites. The Central Bank, as regulator, has advised lenders that in their reporting to the CCR, they will need to apply judgement, for example, around whether a restructure has been agreed in response to an identification of financial distress and should be reported as such.

One of my main concerns is to ensure that SMEs have access to sufficient liquidity, and that access to credit for SMEs is maintained. The Government has announced a range of measures to assist companies deal with the consequences of the COVID-19 restrictions, and to ensure that they have access to sufficient liquidity. These include tax measures, as well as loan schemes available through the Strategic Banking Corporation of Ireland, to assist SMEs. Throughout the pandemic, the network of Local Enterprise Offices have continued to act as a point of contact for businesses around the country, and they can offer advice and support to small businesses, about how best to proceed and what supports are available to them, further information on COVID-19 supports available to SMEs can be found at https://enterprise.gov.ie/en/What-We-Do/Supports-for-SMEs/COVID-19-supports/.

I also announced on the 25 February that the Employment Wage Subsidy Scheme (EWSS) and Covid Restriction Support Scheme (CRSS), will now remain in place until 30 June 2021 to support businesses affected by COVID-19 restrictions.

The SME Regulations https://centralbank.ie/news/article/regulations-for-firms-lending-to-smes-from-2016 set out the required treatment of SMEs by regulated entities in relation to various aspects of business lending. This includes detailed provisions around the credit application process, requirements regarding security or collateral, credit refusals and withdrawals, handling complaints, managing arrears and having in place policies for engaging with SMEs in financial difficulty.

In addition, Credit Review https://www.creditreview.ie was established to assist those SMEs and farm borrowers that have had credit applications of up to €3 million refused or indeed an existing credit facility withdrawn or amended by the participating bank. SMEs can apply to Credit Review after exhausting the internal appeals process in the participating institution, which are currently AIB, BOI, Ulster Bank and Permanent TSB.

As Minister I will continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection and other applicable frameworks will be fully available to all borrowers that need support.