Tuesday, 19 Oct 2021

Written Answers Nos. 359-378

Insurance Coverage

Ceisteanna (359)

Gino Kenny

Ceist:

359. Deputy Gino Kenny asked the Minister for Finance his views on the denial of mortgage protection insurance to those who have recovered from breast cancer who wish to buy a home effectively ruling out home ownership with long-term renting being the only option given that currently one in nine women are diagnosed with breast cancer; his plans to address same for persons who have recovered from breast cancer being excluded from buying a home as a result of the denial of access to mortgage protection insurance; and if he will make a statement on the matter. [50414/21]

Freagraí scríofa

Minister for Finance

I am aware of the issue of equal access to financial services, such as mortgage protection cover, for those who have recovered from cancer, including breast cancer.  At the outset, it should be noted that neither I, nor the Central Bank of Ireland, can intervene in the provision or pricing of insurance products, or have the power to direct insurance companies to provide cover to specific individuals. This position is reinforced by the EU framework for insurance (the Solvency II Directive).

Notwithstanding this, officials in my Department have been considering issues around access to insurance for cancer survivors, and have consulted Insurance Ireland on this matter.  It has advised that insurers must take the existence of or potential for medical conditions such as cancer into consideration when assessing applications, but that in general, cancer survivors are not declined for insurance.  I understand that the ability to offer cover, and the price quoted, will depend on an applicant’s individual circumstances. In the case of cancer, this includes whether the applicant has ever been diagnosed with cancer, the type, when it went into remission, and whether medical treatment is still ongoing. These factors are individually assessed by insurers in order to understand the level of risk involved on a case-by-case basis.  Insurance Ireland also advised that any rating that may be applied due to a past cancer diagnosis is usually time-bound, and generally speaking, would no longer apply after ten years, subject to there being no relapse or further medical complications.  However, it did state that for certain types of cancer, this may be shorter.  

In addition, my officials have been examining discussions on this subject at EU level. I note that Europe’s Beating Cancer Plan, a strategy published by the European Commission in February, includes an initiative for 2021-2023 to “Address fair access for cancer survivors to financial services (including insurance), via a code of conduct and a reflection on long-term solutions”.  The Department will closely monitor any outputs from this work as it continues to consider relevant issues in this area, and to engage with Insurance Ireland. 

Finally, with regard to mortgage protection insurance and home ownership, the Deputy may wish to note that under Section 126 of the Consumer Credit Act 1995, lenders can provide a mortgage in situations where a borrower may be unable to obtain life insurance, or where such insurance is unduly costly compared to that payable by borrowers generally. In this regard my officials have consulted the Banking and Payments Federation Ireland (BPFI) which has indicated that it estimates that, on an annual basis, 2% of mortgage approvals to consumers have been granted a waiver, and only 0.05% of mortgage applications approved by its members did not proceed to draw-down due to a lack of mortgage protection insurance. Importantly, consumers who feel they have been treated unfairly by any financial service provider, including an insurer, can make a complaint to the Financial Services and Pensions Ombudsman (FSPO).

Pension Levy

Ceisteanna (360)

Richard Bruton

Ceist:

360. Deputy Richard Bruton asked the Minister for Finance the total revenue collected by the pension levy on pensions funds; the way in which the money was used; if private pension funds have recovered in value since the levy was collected; and if there are plans to restore any of the moneys collected. [50430/21]

Freagraí scríofa

Minister for Finance

I assume the Deputy is referring to the Stamp Duty levy on pension schemes. I am advised by Revenue that amounts of levy collected, for the years 2011 to 2015, are published on the Revenue website at www.revenue.ie/en/corporate/information-about-revenue/statistics/receipts/receipts-stamp-duty.aspx.

For the convenience of the Deputy, the amounts of the levy collected are as follows:

-	Stamp Duty Receipts
	2011	2012	2013	2014	2015
Pension Levy	€463.23m	€482.88m	€535.31m	€742.88m	€169.31m

The pension fund levy was introduced in 2011 in the wake of the financial crash and at a time when the economy was in serious difficulties. Something had to be done to preserve and boost jobs and it is an unavoidable fact that difficult economic situations require hard and very often unpopular decisions. All sectors of the economy had to contribute to the recovery plan and the levy was designed to claw back a small amount of the very generous tax reliefs that those contributing to pension arrangements had benefitted from over many years.

For the years 2011, 2012 and 2013, the rate was 0.60% of the pension scheme assets. For the year 2014, the rate was 0.75% of the assets and for the year 2015, the final year of the levy, the rate was 0.15%.

The levy went to fund the tax reductions and expenditure measures introduced in the Jobs Initiative, including lowering the VAT rate for the tourism sector to 9%. The levy was successful and did its job as reflected in the increased activity and employment in that sector.

The performance of private pension funds is primarily a commercial matter and contingent on market circumstances and external factors. The pension fund levy was introduced to support the recovery of the wider economy and was time bound in duration. 

I have no plans to repay the levies paid on private pension funds. I do not consider it financially viable or appropriate that the savings achieved over the period of the financial emergency would be annulled, in whole or in part, by making retrospective payments.

The value of the funds raised by way of the levies have been used to protect and create jobs and this has helped to support the improving financial and economic position of the State. Taxpayers who may have ultimately borne the impact of the levy will have since benefited from tax reductions in the last number of Budgets, including the substantial income tax package announced as part of last week Budget. 

Departmental Schemes

Ceisteanna (361)

Gerald Nash

Ceist:

361. Deputy Ged Nash asked the Minister for Finance if he plans to reform and extend the cycle to work scheme to include those on social welfare benefits; and if he will make a statement on the matter. [50485/21]

Freagraí scríofa

Minister for Finance

Section 118(5G) of the Taxes Consolidation Act 1997 (TCA 1997) provides for the ‘Cycle to Work’ scheme. This scheme provides an exemption from benefit-in-kind (BIK) where an employer purchases a bicycle and associated safety equipment for an employee.

Under section 118B TCA 1997 an employer and employee may also enter into a salary sacrifice arrangement under which the employee agrees to sacrifice part of his or her salary, in exchange for a bicycle and related safety equipment.

Where a bicycle or safety equipment is purchased under the ‘Cycle to Work’ scheme or through a salary sacrifice arrangement certain conditions must be met, for example:

- The exemption applies to the first €1,250 of expenditure incurred by the employer in obtaining a bicycle and related safety equipment. This exemption limit is increased to €1,500 for pedelecs or ebikes and related safety equipment. Employers may incur costs in excess of these limits, but any such excess will not qualify for the exemption and will be liable to tax. A salary sacrifice arrangement is subject to the same monetary limits.

- The bicycle and related safety equipment must be new and must be purchased by the employer.

- The bicycle and related safety equipment must be used by the employee or director mainly for the whole or part of their journey to or from work.

- An employee or director can only avail of the ‘Cycle to Work’ scheme once in any 4 year period. A salary sacrifice arrangement is subject to the same time limits and any salary sacrifice arrangement entered into must be completed within a 12 month period.

The ‘Cycle to Work’ scheme is only applicable where the bicycle and safety equipment is provided by an employer to either a director or someone in its employment.

Thus, where an employer-employee relationship does not exist, for example, in the case of self-employed individuals, students, retired individuals, job seekers or those in unpaid work, such individuals cannot qualify for the scheme. Likewise, salary sacrifice arrangements may only be entered into between an employer and a director or employee.

Further guidance regarding the scheme can be found on Revenue’s website.

While the scheme is kept under review by my officials, I have no plans at present for its expansion. 

Banking Sector

Ceisteanna (362)

Alan Kelly

Ceist:

362. Deputy Alan Kelly asked the Minister for Finance the policies he is pursuing to ensure banking services are maintained in rural towns. [50505/21]

Freagraí scríofa

Minister for Finance

The retail financial services sector is undergoing a major period of change.  This year so far we have seen several major announcements including the withdrawal of Ulster Bank by NatWest and the potential withdrawal of KBC Bank Ireland, the closure of a large number of bank branches by Bank of Ireland and a smaller number by AIB. Decisions in this regard, including the management of branch networks, are the sole responsibility of the board and management of the banks, which must be run on an independent and commercial basis.

While these recent announcements are regrettable, Ireland continues to have an extensive network for banking services, including post offices and credit unions. In addition, AIB and Bank of Ireland customers can now lodge and withdraw money and Ulster Bank customers can lodge money at 900 An Post post offices across the country.

The changes currently taking place in the Irish retail banking sector are a reflection of the wider challenges banking is facing, not only in Ireland but also abroad. It is because of these changes that I announced in Dáil Éireann on 1 July 2021 that my Department will undertake a broad-ranging review of the retail banking sector to look at, inter alia, expectations of the sector, competition, consumer protection and consumer choice, the sector’s key role in the provision of sustainable credit to the economy, the availability of credit to SMEs from both banks and non-banks and options to further develop the mortgage market. The structure and delivery channels of the retail banking sector will also be assessed as part of this review.  

I am currently considering the Terms of Reference and will bring a Memo for Information to Government in the coming weeks in advance of their publication. 

Customs and Excise

Ceisteanna (363)

Cormac Devlin

Ceist:

363. Deputy Cormac Devlin asked the Minister for Finance the status of the new automated import system; the number of users registered across Dublin city and county; the benefits it is bringing to businesses across the country; and if he will make a statement on the matter. [50591/21]

Freagraí scríofa

Minister for Finance

I am advised by Revenue that the Automated Import System (AIS), Revenue’s new import system, is fully operational since 23 November 2020. The system has handled over 13 million import declarations since it went live in November. 

There are currently 94,528 businesses who have registered for Customs and have an active Irish Economic Operators Registration and Identification (EORI) number. Any such business or an agent operating on behalf of the business can use AIS for the purposes of making a customs declaration in respect of a goods import. 14,948 of the business’ registered for Customs have an address in Dublin City and 12,027 have an address in Dublin County.

I am advised by Revenue that AIS is built using the latest technology and provides businesses with real-time Customs responses which is very important for those importing particularly those with “just-in-time” business models, for example food deliveries. It incorporates the latest EU specifications thus enabling businesses that import goods from outside the EU to meet all the legal requirements of the EU Union Customs Code (UCC). This also ensures that businesses who trade in more than one Member State benefit as AIS implements the UCC compliant import declaration which is standardised throughout the EU.

Insurance Coverage

Ceisteanna (364)

Catherine Murphy

Ceist:

364. Deputy Catherine Murphy asked the Minister for Finance if he has engaged with insurance companies and or their representative bodies in respect of insurance providers refusing to provide quotes and or premiums to persons wishing to insure roadworthy and NCT compliant cars over a certain age; if his attention has been drawn to this practice; and the steps he is taking to remedy it. [50598/21]

Freagraí scríofa

Minister for Finance

As the outset, let me state neither I, nor the Central Bank of Ireland, can direct the pricing or provision of insurance products, as this is a commercial matter which individual companies assess on a case-by-case basis. This position is reinforced by the EU Single Market framework for insurance (the Solvency II Directive).

While NCT policy is the responsibility of the Minister for Transport, from an insurance perspective, I understand that it is a minimum requirement of roadworthiness and insurers will generally require a car to have a valid NCT in order to be covered.  However, it is not the only rating factor considered in the provision of motor insurance, therefore having a valid NCT does not automatically mean that an insurer will offer cover. Insurers use a combination of rating factors in making their individual decisions on whether to offer cover and what terms to apply. This may include the age of the vehicle, as well as other factors such as the driver’s age; relevant driving experience; the type of vehicle; and so on. Insurers do not all use the same combination of rating factors, and as a result prices vary across the market.

Insurance companies will also price and offer cover in accordance with their own past claims experience, meaning that in relation to the age of a vehicle and the availability of cover, different insurers will use different age thresholds. However, I understand that in recent years a number of providers have changed their acceptance criteria and increased their vehicle age threshold levels.

With respect to refusals to quote for an older vehicle, it may interest the Deputy to know that under the terms of the Declined Cases Agreement (DCA), which is adhered to by all motor insurers in Ireland, the insurance market will not refuse to provide motor insurance to an individual if he or she has approached at least three insurers and has not been able to obtain cover from them.  The relevant e-mail address for the DCA is: [e-mail].

According to figures from Insurance Ireland, the numbers applying to the DCA have been reducing in recent years, having peaked in 2016. I believe this downward trend demonstrates that insurance reform is having a positive impact on both the availability and the cost of motor insurance. In this regard, the latest Central Statistics Office data shows that motor insurance prices are now 36.6% lower than their peak in July 2016.

It is the Government’s intention that this positive downward trend continues through the implementation of the Action Plan for Insurance Reform. In particular, it is expected that the Personal Injuries Guidelines, which have on average halved award levels for many injuries, should in time lead to lower premiums for customers, including motorists. In his ongoing engagement, Minister of State Fleming has emphasised the need for insurers to reflect the savings from this key reform both by reducing premiums and increasing their risk appetite to provide cover in new areas.  We will continue to hold industry to account on its commitments to pass on savings from the Guidelines and other key actions to customers, as the insurance reform agenda progresses.

Vehicle Registration Tax

Ceisteanna (365)

Catherine Murphy

Ceist:

365. Deputy Catherine Murphy asked the Minister for Finance if he and or his officials have engaged with the Revenue Commissioners in respect of lower and or a temporary waiving of VRT in view of inflated prices for second-hand motor vehicles. [50599/21]

Freagraí scríofa

Minister for Finance

Vehicle Registration Tax (VRT) is a tax chargeable on the registration of vehicles in the State and is levied as a percentage of the open market selling price (OMSP) of the vehicle. The VRT rate is calculated on the basis of CO2 emissions, so that cars with higher CO2 emissions attracted a higher tax liability. VRT does not apply to second-hand vehicles unless they are imported from abroad and then registered for the first time in the state.

VRT has been reformed over the past two budgets to instill within the system a strong environmental rationale in line with Government policy to radically reduce emissions from road transport. The rate gap between low emission vehicles and the rest incentivises motorists in the market for a new car to make ‘greener choices’. Budget 2022 increased VRT rates progressively so that high emission vehicles are disincentised most.   

Registrations have shown consistent strong trends towards vehicles in the lower emissions bands, with significant growth in electric vehicle (EV) and hybrid registrations. Accordingly, registrations of the highest emission vehicles are decreasing. This reinforces the policy intention to incentivise low emission vehicles and discourage highly pollutant cars.

Revenue Commissioners

Ceisteanna (366)

Paul Donnelly

Ceist:

366. Deputy Paul Donnelly asked the Minister for Finance if he will provide the necessary funding for the purchase of two extra mobile x-ray scanner trucks for the Revenue Commissioners. [50661/21]

Freagraí scríofa

Minister for Finance

I am advised by Revenue that it operates three mobile container x-ray scanners and one x-ray backscatter van which are sufficient to meet its operational needs. A tender process is currently underway and funding is in place to replace one of the mobile container scanners which is at end of life.

Revenue keeps its operational requirements under continuous review, having regard to ongoing risk evaluation and evolving operational needs.

Legislative Measures

Ceisteanna (367)

Noel Grealish

Ceist:

367. Deputy Noel Grealish asked the Minister for Finance the status of the central bank (individual accountability framework) Bill; when it will be available for pre-legislative scrutiny; and if he will make a statement on the matter. [50727/21]

Freagraí scríofa

Minister for Finance

As the Deputy will be aware, the Programme for Government includes a commitment to introduce a Senior Executive Accountability Regime (SEAR). The SEAR is a key element of the Individual Accountability Framework Bill and will drive positive changes in terms of culture, greater delegation of responsibilities, and enhanced accountability while simplifying the taking of sanctions against individuals who fail in their financial sector roles.

The General Scheme of the Central Bank (Individual Accountability Framework) Bill was approved by Government and published on the Department's website in July 2021.

www.gov.ie/en/press-release/4f16e-minister-donohoe-secures-agreement-to-draft-central-bank-individual-accountability-framework-bill.

The Bill is included in the Priority Legislation for Publication and Drafting for the Autumn 2021 session.

www.gov.ie/en/press-release/904c3-autumn-legislative-programme-published-by-chief-whip-jack-chambers/.

My officials are working closely with the Office of the Parliamentary Counsel on the drafting of the Bill.

I have written to the Chairman of the Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach in accordance with Dáil Éireann Standing Order 173 for its consideration on pre-legislative scrutiny.

EU Funding

Ceisteanna (368)

Mick Barry

Ceist:

368. Deputy Mick Barry asked the Minister for Finance the measures he is taking to oppose the proposal to include nuclear power as a power that can be classified as renewable for the purposes of EU investment in renewable sources; and if he will make a statement on the matter. [50741/21]

Freagraí scríofa

Minister for Finance

The EU taxonomy for sustainable activities being developed at present is a harmonised classification system for environmentally sustainable economic activities. The Taxonomy will have a significant role in supporting the mobilisation of capital towards sustainable investments through providing common definitions to companies, investors and policymakers on what constitutes an environmentally sustainable economic activity. When fully finalised, it will create security for investors and protect private investors from greenwashing, and can assist in planning for the low-carbon transition. Large companies and financial services providers will report on their portfolios’ alignment with the Taxonomy.

This Taxonomy is based on six EU environmental objectives. For an economic activity to be considered Taxonomy-aligned, it must make a substantial contribution to at least one of these objectives, and do no significant harm to the others, in addition to complying with regulatory technical standards and minimum safeguards. The objectives are: 

- Climate change mitigation

- Climate change adaptation

- Sustainable use and protection of water and marine resources

- Transition to a circular economy, waste prevention and recycling

- Pollution prevention and control

- Protection and restoration of biodiversity and ecosystems  

Currently, regulatory technical standards and delegated acts setting these out, based on scientific expertise and stakeholder engagement, are under consultation including with Member States. One delegated act, covering climate change mitigation and adaptation, is awaiting approval by the European Parliament and the Council. A further delegated act, covering the remaining four objectives, is expected in 2022.

The Commission is also due to adopt a complementary climate delegated act on activities not covered in the first such delegated act, namely agriculture and certain energy sectors. To date, the Commission has not consulted Member States on a draft for the forthcoming delegated act that includes nuclear as a sustainable economic activity.

Regardless of whether or not EU agreement is reached to define nuclear energy as an environmentally sustainable economic activity, nuclear powered electricity generation plants are prohibited in Ireland and the Government has no plans to revisit the prohibition on nuclear powered electricity generation in Ireland.

Tax Reliefs

Ceisteanna (369)

Carol Nolan

Ceist:

369. Deputy Carol Nolan asked the Minister for Finance the cost of implementing schemes such as the special assignee relief programme and the key employee engagement programme in each year from 2018 to date; the employers and companies that have availed of these schemes during that time period; and if he will make a statement on the matter. [50860/21]

Freagraí scríofa

Minister for Finance

I am advised by Revenue that the latest costs available for the Special Assignee Relief Programme (SARP) can be found in the 2019 SARP report which is published on the Revenue website and as part of the Budget 2022 Tax Expenditures Report on the Government's Budget 2022 website.

The cost of SARP for 2018 and 2019 (the latest year for which data are available), can be found below:

	2018	2019
Cost (€m)	42.4	38

I am further advised by Revenue that the employers and companies availing of SARP cannot be provided due to Revenue’s obligation to protect taxpayer confidentiality.  

In relation to the Key Employee Engagement Scheme (KEEP), the first year the scheme became available was 2018. Generally, a qualifying employee must hold any share options granted under the scheme for at least twelve months prior to exercise. Therefore, 2019 was the earliest date that individuals were able to exercise their options to acquire shares in  qualifying companies.

Revenue advise me that as the number of employees exercising shares in 2019 was less than 10, the details of the number of claims and the associated cost cannot be provided due to Revenue’s obligation to protect taxpayer confidentiality. Likewise, details of the employers and companies that have availed of KEEP cannot be provided for the same reason. 

Tax Code

Ceisteanna (370, 383)

Carol Nolan

Ceist:

370. Deputy Carol Nolan asked the Minister for Finance the rationale for increasing the VAT rate applicable to the hospitality sector from the current rate of 9% at the end of August 2022; if he will address concerns that this increase will undermine the capacity of the sector to rebound from the Covid-19-related loss of trade; and if he will make a statement on the matter. [50861/21]

Christopher O'Sullivan

Ceist:

383. Deputy Christopher O'Sullivan asked the Minister for Finance if consideration will be given to the extension of the 9% VAT for hospitality industry past September 2022 to enable the industry to be competitive within the international market; and if he will make a statement on the matter. [51321/21]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 370 and 383 together.

As part of the Government’s response to Covid-19, Budget 2021 brought the VAT rate for Hospitality and Tourism related services and goods down from 13.5% to 9%. This was initially planned for 14 months, from 1 November 2020 to 31 December 2021. This was then extended to 31 August 2022 in recognition of the difficulties facing these sectors.

This extension provides support for a further 8 months to the end of the 2022 summer season, allowing for a longer period of recovery for tourism and hospitality. This measure is only one of the supports the Government has provided for businesses over the course of the pandemic and was always designed to be temporary, with a sunset clause included in the enacting legislation.

A review was undertaken of the 9% VAT rate in advance of Budget 2019. This review found that tourism expenditure is more sensitive to income growth and the economic cycle than price changes, which reduces the relevance of the VAT rate applying to the sector.

It should be noted that significant additional funding has been provided for tourism in the estimates for 2022 to include Business Continuity supports, Enhanced Tourism Marketing & Product Development and to meet Programme for Government commitments and Tourism policy initiatives.

Should the economic position or tourism demand alter, the VAT rate applicable to tourism will be reviewed as part of the budgetary cycle.

Tax Credits

Ceisteanna (371)

Holly Cairns

Ceist:

371. Deputy Holly Cairns asked the Minister for Finance his views on establishing a tax credit scheme for homeowners with solar panels or other renewable energy generation means who are net contributors of energy to the national grid. [50905/21]

Freagraí scríofa

Minister for Finance

As the Deputy will be aware, in my Budget 2022 speech, I announced that I propose to introduce  a tax disregard in respect of personal income received by households who sell residual electricity that they generate back to the grid, in the forthcoming Finance Bill.  The amount of the disregard will be set at €200.  This figure should ensure that most participants will pay no tax on income from this source.

The measure will operate for an initial period of three years with a sunset clause applying at the end of 2024.

The aim of the measure is to remove a potential administrative barrier to entry to the Department of the Environment and Climate Change Micro-generation Support Scheme. 

Further details will be set out in the Bill.  

Credit Unions

Ceisteanna (372)

Thomas Pringle

Ceist:

372. Deputy Thomas Pringle asked the Minister for Finance the number of credit unions that are likely to be permitted to pay a dividend to members for 2021; and if he will make a statement on the matter. [50937/21]

Freagraí scríofa

Minister for Finance

The Central Bank have informed me that they cannot comment on the position regarding individual credit unions.

However, the Central Bank have informed me that in relation to distributions to members, which can take the form of payment of dividends and/or loan interest rebates, credit unions must comply with specific requirements set out in the Credit Union Act, 1997 (the 1997 Act). Specifically in relation to dividends, these are dealt with in section 30 of the 1997 Act which includes a provision that a dividend on shares, not exceeding the permitted maximum, may be declared at each annual general meeting of a credit union in respect of the preceding financial year by a resolution passed by a majority of the members present and voting.  

Credit Unions do not require Central Bank permission for the payment of dividends to their members. In accordance with Central Bank credit union regulations, where a credit union has recorded a deficit in its annual accounts and is proposing to pay a dividend and/or a loan interest rebate to members, it must inform the Central Bank in writing at least 3 weeks before it gives notice of its annual general meeting.

In the year-end circular issued to all credit unions in September 2021, the Central Bank set out its expectations on the payment of dividends and rebates in respect of the financial year-end 30 September 2021. This states that, in the context of the 2021 year-end, credit union boards must be cognisant of the continued level of uncertainty of the economic outlook and take a prudent approach to distributions. Maintaining and building adequate levels of reserves, including adequate operational risk reserves, remains key to ensuring credit union financial stability and resilience.

Where a credit union may be considering the potential for a proposed distribution, they are expected to contact their supervisor in the Registry of Credit Unions at an early stage to clearly outline the rationale for proposing such  course of action, taking account of liquidity and operational resilience positions and the need to demonstrate prudent forward looking capital reserve management.

Credit unions are currently at an early point of the prescribed period for the holding of their annual general meetings (AGMs) - credit unions are required to hold their AGMs between the months of October and January. If dividend or rebate payments are proposed in respect of the financial year-end 30 September 2021, as outlined above, prior engagement by those credit unions with the Central Bank is expected. Finally, under the 1997 Act, member approval of a resolution on the payment of a proposed dividend is required at the credit union’s AGM.  

Credit Unions

Ceisteanna (373)

Thomas Pringle

Ceist:

373. Deputy Thomas Pringle asked the Minister for Finance his views on whether the ongoing increase in regulatory costs for credit unions is justified; the basis upon which it started out on; if he proposes changes to make credit unions more responsive to their communities; and if he will make a statement on the matter. [50938/21]

Freagraí scríofa

Minister for Finance

The credit union sector pays four material levies and charges. Three of these levies – Deposit Guarantee Scheme, Resolution and Stabilisation – are used to build up funds that are available to protect member’s savings. The fourth levy is an Industry Funding Levy set by the Central Bank to offset the cost of regulation.

Industry Funding Levy

Since 2004, the amount of the Industry Funding Levy payable 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 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% of regulatory costs on a phased basis, starting with a 20% recovery rate for the 2019 levy (levied in 2020), moving to 35% in 2020 (levied in 2021) and to 50% in 2021 (levied in 2022). I have also recommended that credit union contributions should not increase beyond the 50% target until: 1) the levy trajectory has reached the planned 50% 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.

Resolution & Stabilisation Levies

Following a review of the Resolution Levy in 2019 I announced a reduction in the levy rate which resulted in a reduction of €4 million per annum from €9 million in 2019 to €5 million from 2020, a 44% reduction. The Resolution Levy has been kept at €5 million since this time.

Following review in 2020 it was decided to reduce the Stabilisation Levy for 2021 from €3 million in 2020 to €300,000, a reduction of 90%. The Stabilisation Levy for 2022 has similarly been kept at approximately €300,000.

In combination Resolution and Stabilisation levies have fallen 56% from €12 million in 2019 to €5.3 million in 2021 and 2022.   

Developments and growth in the credit union sector

In terms of supporting and enabling the sector to be more responsive to their communities, the following are some recent developments which highlight the potential of the sector to fulfil a role in relation to their communities.

Review of Lending and Investment Regulations

The Central Bank has in recent years completed reviews of both the lending and investment frameworks. Following introduction of the new lending regulations on 1 January 2020, credit unions now have a combined capacity to provide up to approximately €1.1 billion in additional SME and mortgage loans, with further lending capacity available to credit unions who can comply with certain conditions or on approval by the Central Bank.

As at June 2021, credit unions had a combined mortgage and SME loan book of circa €372 million, an increase of 18% year-on-year. 

The revised investment regulations took effect on 1 March 2018. Under these regulations, credit unions are permitted to place their surplus funds that have not been lent to members in a range of investments including Tier 3 Approved Housing Bodies (AHBs).   I am pleased to share with the Deputy that two credit union backed funds have received approval from the Central Bank and will be able to invest up to €900 million in these funds, which will subsequently lend to Approved Housing Bodies (AHBs). This will provide an additional funding channel for AHBs who have a large role to play in the recently announced Housing for All Action Plan.

SME Lending

Nineteen credit unions were approved in early 2021 by the Department of Enterprise, Trade and Employment for participation in the Covid-19 Credit Guarantee Scheme. Further development of SME lending in a controlled manner could also assist credit unions in growing and diversifying their loan book. 

SME lending has grown 5.6% year on year to end June 2021.

Access to Finance for Retrofit

The Government significantly increased the funding available to support retrofit in recent years. My officials have been engaging with the Department of Environment, Climate and Communication, the Department of Public Expenditure and Reform, and the Sustainable Energy Authority of Ireland to support increased credit union participation in green retrofit loan schemes.  Several credit union retrofit initiatives have been launched.  

Current Accounts

The Deputy may also wish to note that credit unions can seek approval from the Central Bank to offer additional services such as current accounts and debit cards. Over 60 credit unions have been approved to provide the Member Personal Current Account Service (MPCAS). 

Fuel Sales

Ceisteanna (374, 375, 376)

Bernard Durkan

Ceist:

374. Deputy Bernard J. Durkan asked the Minister for Finance the procedure to be followed in the case in which a consumer purchases coal from Northern Ireland as advertised on social media for direct delivery to other homes throughout the country in which low smoke zones exist; and if he will make a statement on the matter. [51013/21]

Bernard Durkan

Ceist:

375. Deputy Bernard J. Durkan asked the Minister for Finance if solid fuel carbon tax and VAT is applicable in situations in which a purchaser or distributor imports fossil fuels from Northern Ireland for sale and distribution throughout Ireland; and if he will make a statement on the matter. [51014/21]

Bernard Durkan

Ceist:

376. Deputy Bernard J. Durkan asked the Minister for Finance if the purchase of coal imported from Northern Ireland requires VAT and or solid fuel carbon tax to be paid before the goods are distributed throughout Ireland; and if he will make a statement on the matter. [51015/21]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 374, 375 and 376 together.

Solid fuel (coal and peat) is liable to excise duty in this jurisdiction in the form of Solid Fuel Carbon Tax (SFCT). SFCT is a national excise and applies at different rates to four categories of solid fuel including coal, peat briquettes, milled peat and other peat. The SFCT rate on coal, currently €88.23 per tonne, applies to all types of smokeless and “smoky” coal.  Liability to SFCT arises when solid fuel is first supplied in the State. As solid fuels are not covered by the EU control and movement regime there are no barriers or controls on solid fuels moving between Member States and Northern Ireland. The movement of solid fuel across the border into the State from Northern Ireland does not generate a liability to SFCT nor does the physical presence of solid fuel in the State. It is not until solid fuel is first supplied within the State that SFCT becomes liable.

If a solid fuel supplier based in the State  sources some or all of their solid fuel supplies from outside the State, they will be accountable for SFCT when they make first supplies in the State and must register with Revenue to account for and pay SFCT.  If a supplier based outside the State brings solid fuel into the State for supply direct to consumers they must register with Revenue for SFCT.  I am advised by Revenue that the majority of registered suppliers are importers/wholesalers and producers and approximately 5% of those registered for SFCT are based in Northern Ireland.  It is important to note that where a private individual travels to Northern Ireland to purchase solid fuel for their personal use, no SFCT is payable provided the private individual accompanies the fuel back into the State.

With regard to VAT, under the terms of the Protocol on Ireland / Northern Ireland transactions involving the movement of goods between Ireland and Northern Ireland in either direction continue to be treated as intra-Community transactions and subject to EU VAT rules. These rules apply to business to business (B2B) supplies of goods only to / from Northern Ireland to taxable persons in Ireland and other EU Member States. The goods, including fuel products, are supplied at the zero rate of VAT and the taxable person in receipt of those goods self-accounts for VAT on a reverse-charge basis and, if applicable, takes a simultaneous VAT deduction in their next VAT return. The onward distribution and sale of a fuel product to a consumer in the State is subject to the normal VAT rules and the Irish supplier is liable to account for VAT, currently the reduced rate of 13.5%, on the supply. The consideration for a supply of goods or services is defined in EU VAT law and consists of everything which the supplier is entitled to receive in return for goods or services supplied including taxes, duties, levies and charges, excluding the VAT itself. Therefore, VAT is chargeable on the solid fuel carbon tax element of fuel products.

Where a business in Northern Ireland sells goods and arranges the transport of those goods to a consumer in Ireland, such sales of fuel products are referred to as intra-Community distance sales. Intra-Community distance sales of fuel products from Northern Ireland to a consumer in a Member State are subject to VAT in the Member State of destination of the supply, which would be Ireland if the consumer is based in this State. In such cases, the supplier of those goods is required to register, subject to a threshold, in the State and account for VAT on those supplies.

The Deputy has asked about deliveries of coal to homes throughout the country in which Low Smoke Zones exist so I am taking it that he is referring to deliveries of “smoky” coal. Certain solid fuels, primarily coal, are regulated under the Air Pollution Act (Marketing, Sale, Distribution and Burning of Specified Fuels Regulations) 2012 (SI No. 326 of 2012), as amended.  These Regulations come under the aegis of the Department of the Environment, Climate and Communications and their enforcement is a statutory function of Local Authorities. They are not matters in which Revenue has a role. My colleague, the Minister for the Environment, Climate and Communications, recently announced the development of a regional approach to air quality enforcement and new, enhanced regulations to support the introduction of new standards for solid fuels from January 2022. In response to a Parliamentary Question last week Minister Ryan outlined that Local Authorities will be responsible for enforcing the new regulations and will have significant powers available to them to enable them to do so effectively. He also advised that discussions with the Local Authority sector have commenced with the intention of establishing dedicated resources to support consistent enforcement of the new regulations across the country. The same enforcement procedures will apply to all solid fuels regardless of how they have been placed on the market in Ireland, including through online sales or other forms of advertising.

Question No. 375 answered with Question No. 374.

Question No. 376 answered with Question No. 374.

Departmental Offices

Ceisteanna (377)

Peadar Tóibín

Ceist:

377. Deputy Peadar Tóibín asked the Minister for Finance the estimated amount spent by his Department on the procurement, purchase and rent of new office space; and the amount spent on the procurement, purchase and rent of office equipment in each of the past ten years and to date in 2021. [51025/21]

Freagraí scríofa

Minister for Finance

I wish to advise the Deputy that no new office space has been procured, purchased or rented by my Department. The matter of securing office accommodation is the responsibility of the Office of Public Works.

With regard to office equipment for my Department in the past 10 years, to date, such expenditure amounts to some €0.95m. This relates to furniture-related items only and the annual expenditure is outlined below.

Year	Furniture Amount
2011	€ 70,460.93
2012	€ 45,465.81
2013	€ 32,393.67
2014	€ 28,076.32
2015	€ 156,315.17
2016	€ 115,562.38
2017	€ 167,035.81
2018	€ 151,918.63
2019	€ 72,727.27
2020	€ 50,267.44
2021	€ 64,139.70
Total	€ 954,363.13

I wish to advise the Deputy that my officials are currently reviewing IT-related equipment expenditure records in relation to this request. The request covers a significant time period and, in light of this, I regret to advise that it was not possible to provide the information sought in the time available to respond to this Parliamentary Question. Therefore, I will make arrangements to provide the information to the Deputy in line with Standing Order 42A.

Tax Code

Ceisteanna (378)

Paul Murphy

Ceist:

378. Deputy Paul Murphy asked the Minister for Finance the investigations that have been carried out to uncover fraud in relation to the employer Covid-19 refund scheme, the temporary wage subsidy scheme or the employment wage subsidy scheme; if fraud has been identified to date; and the actions that will be taken in relation to fraud discovered. [51161/21]

Freagraí scríofa

Minister for Finance

The Temporary Wage Subsidy Scheme (TWSS) was introduced on 26 March 2020 and it replaced the Employer Covid-19 Refund Scheme. The TWSS closed at the end of August 2020 when it was replaced by the Employment Wage Subsidy Scheme (EWSS) with effect from 1 September 2020.

I am advised by Revenue that since June of last year, a programme of compliance checks on employers who participated in the TWSS scheme has been undertaken, to ensure that such employers were properly eligible to receive monies and that the supports were properly paid out to qualifying employees. Revenue further advise that an investigation is initiated where following an examination of a taxpayer’s affairs, Revenue believes that serious tax or duty evasion may have occurred or a Revenue offence may have been committed and have confirmed that no such interventions have been initiated on foot of a TWSS compliance check.   

Revenue have confirmed that to date, compliance checks have been completed in respect of 64,740 employers, representing more than 99.6% of total employers in the scheme, with the remainder of such checks in progress.  The compliance checks initiated have shown very high levels of compliance with the TWSS requirements by employers, with approximately 2% of total employers in the scheme having had to repay the TWSS subsidy as they failed to meet the requirements of the scheme but did not fraudulently participate in the TWSS.  Settlements in relation to those employers found to be ineligible totalled €28.6m.

Revenue is undertaking a multi-faceted approach to compliance checks to safeguard the integrity of the EWSS since the scheme commenced on 1 September 2020.   This includes undertaking real time checking of PAYE compliance of employers availing of the scheme, and cross-referencing claim data against other Revenue data sources to identify anomalies or trends requiring attention.   The real time review procedures are supported by a real time engagement with employers, to facilitate timely resolution of issues, to ensure employers claim the correct EWSS entitlement or cease claiming where they no longer have an entitlement.   

Revenue is also carrying out a risk-focused follow-up program of compliance interventions in accordance with The Code of Practice for Revenue Audit and Other Compliance Interventions.  I am advised that in most instances, agreement is reached and EWSS overpaid is recouped.   Where issues are identified and agreement is not reached, Revenue will raise an EWSS notice of assessment and employers have the option to submit an appeal to the Tax Appeals Commission (TAC) within 30 days of the receipt of the notice of assessment.  

Revenue have completed compliance checks on 5,762 employers and have reclaimed EWSS of €10.4m.  Compliance checks on an additional 1,603 employers are ongoing, plus investigations of 11 employers where the most egregious behaviour has been identified. I am advised by Revenue that in high-risk cases, currently involving 346 employers of €3.48m EWSS claims, payment of EWSS is suspended pending satisfactory conclusion of the Revenue intervention. Action on high risk and egregious cases, includes liaison with the Department of Social Protection and An Garda Síochána, as appropriate.   

The Deputy will be aware that EWSS will continue to operate up until 30 April 2022 and during the remaining period of operation I am advised that Revenue will continue to undertake a risk focused approach to EWSS claim processing and will continue to be very proactive in identifying and challenging EWSS fraud.