Written Answers Nos. 174-183
175. Deputy Richard Boyd Barrett asked the Minister for Transport the discussions between his Department, the NTA and a company (details supplied) in relation to the future of their services under the BusConnects programme, specifically the company's announced plans for expansion of the depot facilities in Dublin and the resulting loss of car park spaces for its staff; and if he will make a statement on the matter. [51969/21]
Amharc ar fhreagraAs Minister for Transport, I have responsibility for policy and overall funding in relation to public transport. The National Transport Authority (NTA) has statutory responsibility for the planning and development of public transport infrastructure in the Greater Dublin Area, including BusConnects.
Noting their responsibility in relation to this matter, I have forwarded your query to the NTA for their consideration and direct reply.
176. Deputy Joe Carey asked the Minister for Finance if matters raised by a person (details supplied) in relation to an allowance will receive a response; and if he will make a statement on the matter. [51804/21]
Amharc ar fhreagraI am advised by Revenue that Clerical Officers who were on Career Break on 1 January 2003 are not eligible to receive the Annual Personal to Holder (APTH) payment. This is because they were not serving in Revenue on 1 January 2003 (Integration Day), the designated date by reference to which eligibility for payment of the APTH was determined.
The background is that following an extensive industrial relations negotiation process in 2002/2003, widespread communication and staff engagement, agreement was reached on the rationalisation and integration of General Service and Departmental Taxes grading structures in Revenue. Arising from the agreement, 1 January 2003 was designated as Integration Day and as of that date, Departmental Taxes grades were ceased, the individuals who were serving in those grades took on the duties and conditions of service of the equivalent General Service grades; and they were re-certified by the Civil Service Commission to General Service grades.
As part of the Integration Agreement, a promotion/upgrading process was agreed and those individuals who were serving in Revenue on Integration Day and were not successful in the process, were instead awarded an Annual Personal to Holder Payment (APTH), an allowance paid on a personal-to-holder basis, in addition to the existing salary point on an incremental scale, for as long as the person remains in that grade. Revenue staff who are still in receipt of an APTH are those who met the criteria above and who currently serve in the same grade in which they served on Integration Day, 1 January 2003. However, staff who were recruited or transferred into Revenue, or who returned from Career Break after Integration Day were not, and are not, eligible for the APTH payment.
Revenue confirms that an extensive review was carried out by the appropriate Personnel Officer at the request of the individual in question. A comprehensive reply issued directly to the individual in question on 19 November 2020, explaining why an APTH is not payable in this specific case.
177. Deputy Emer Higgins asked the Minister for Finance his views on reviewing the local property tax liability to make those in receipt of the old age pension exempt from paying local property tax due to their reduced income and financial inability to pay; and if he will make a statement on the matter. [51754/21]
Amharc ar fhreagraThe 2012 report of the Interdepartmental Group on the Design of a Property Tax considered the issue of introducing an exemption or waiver for property owners below a certain income threshold. Having considered the possible inequities and administrative challenges of such an exemption or waiver structure the group recommended instead a deferral scheme that would assist property owners in a number of different scenarios including low income. The interdepartmental group recommended that where taxpayers are entitled to, and have elected for, deferral of LPT, interest due on deferred payments should be at a lower rate to the rate charged on overdue LPT which is 8% per annum. The Government accepted these recommendations.
The Finance (Local Property Tax) Act 2012 (as amended) accordingly includes arrangements whereby a person may opt to defer, or partially defer, payment of the tax if certain conditions are met. Any LPT that is deferred between 2013 and 2021 carries an interest charge of 4% per annum. Interest will accrue on the deferred amount until such time that it is paid off. In providing for the possibility of deferral of the tax, the reduced rate of interest recognises that the circumstances in which a person defers the tax charge are very different from those where the property owner simply fails to pay the tax.
The 2019 Interdepartmental LPT Review Group recommended that the income thresholds for LPT deferrals should be reviewed regularly by reference to (i) movements in the CPI, (ii) wage growth in the economy, and (iii) changes in fixed income payments by the State. The Finance (Local Property Tax) (Amendment) Act 2021 provides that from the next valuation date of 1 November 2021, the deferral thresholds will increase to €18,000 for a single owner and €30,000 for a couple. This is an increase of 20% in these thresholds.
A review of the interest rate on deferred LPT also took place this year, in advance of the next LPT valuation period (i.e. 2022 to 2025). The review took account of the Covid initiative on the warehousing of tax debts, in respect of which a reduced interest rate of 3% applies for late payment of outstanding liabilities. In the interests of consistency and fairness, the Government decided to reduce the LPT deferral rate to 3%. The 3% rate will apply to any LPT that is deferred on or after 1 January 2022. It will also apply to any LPT that was deferred between 2013 and 2021, to the extent that it is still outstanding in 2022.
Where a liable person does not qualify for or does not wish to avail of a deferral there are a wide number of phased payment options available to assist with budgeting. The various options are designed to provide the maximum possible flexibility for individual circumstances. Throughout the pandemic, Revenue has engaged extensively with individual taxpayers experiencing difficulties paying taxes due to the pandemic to agree flexible arrangements that best suit their circumstances, including in respect of LPT liabilities and will continue to fully engage with taxpayers facing tax payment difficulties.
178. Deputy Ged Nash asked the Minister for Finance if he will provide an updated analysis on the forecasted losses or gains to the Exchequer arising from Ireland’s decision to sign up to Pillars One and Two of the OECD global corporation tax reform initiative; and if he will make a statement on the matter. [51757/21]
Amharc ar fhreagraYou are aware that, on Friday 8th October, Ireland joined 135 other member jurisdictions of the OECD/G20 Inclusive Framework in reaching a high level agreement on a two-pillar solution to address tax challenges arising from the digitisation of the economy in recent years.
There are two pillars to the OECD agreement. Pillar One will see a reallocation of a proportion of profits to the jurisdiction of the consumer. This means that, in effect, corporate tax revenue streams which now flow to the Irish Exchequer will flow to the Exchequers of other countries when implemented. Pillar Two will see the adoption of a new global minimum effective tax rate of 15% applying to multinational companies (MNEs) with global revenues in excess of €750m.
My Department and the Revenue Commissioners has estimated that the cost of the agreement could be up to €2 billion annually when both pillars come into effect. This figure is included in the Stability Programme Update, the Summer Economic Statement (SES), and in the medium term forecast included in Budget 2022. This is an extremely challenging exercise, both in terms of timing and magnitude. For the purpose of calibrating this medium-term forecast, the impact of international tax reform is very tentatively estimated – in terms of revenue foregone – at €2 billion relative to baseline by 2025; the revenue impact is phased in from 2023.
In respect to the exercise to estimate the cost of the agreement, it is important to note that there have been significant changes in recent months to the original proposals, both in relation to Pillar One, in which there is now a higher re-allocation than was originally foreseen, and on Pillar Two through the adoption of a 15% minimum rate as well as the introduction of substance based carve-outs based on the carrying value of assets and payroll. The substance based carve-out is expected to offer relief to taxpayers from the minimum effective rate but this is difficult to estimate as it will be firm specific. Indeed, predicting how individual companies may react to a potential new tax regime is very difficult.
It should also be stressed that while there is now a broad high level agreement in place on the main features of a solution, discussions are continuing and will continue into 2022 on how the agreement will be implemented in practice. For instance, the discussions on Pillar One will need to examine the rules in respect to reallocation from entities within a group. Further, it remains to be seen what additional tax will be paid by MNEs under Pillar Two when substance based carve-out rules are applied which can reduce the effective tax rate paid by an MNE. In terms of further complexity, the final agreement on these carve-outs include a 10 year transition period where the carve-out percentage is reduced year-on-year.
A further consideration is that although there are two pillars to this Agreement, it is important to understand that they are intended as integral parts of a single agreed solution. How they interact and the degree to which this interaction influences business behaviour is very difficult to predict.
For all these reasons, I do not believe that I yet have sufficient grounds to revise the working estimate of a potential annual cost of up to €2 billion that I have used in assessing the potential impact of the agreement on the public finances.
As technical discussions on the implementation framework continue, officials from my Department and from Revenue will keep the position under review and, when and if necessary, my Department will provide an update on how the agreement is expected to impact the public finances.
179. Deputy Ged Nash asked the Minister for Finance when his Department will publish the submissions made to the recent public consultation process on corporation tax reform; and if he will make a statement on the matter. [51758/21]
Amharc ar fhreagraI can inform the Deputy that the responses to the Department of Finance's public consultation on the OECD tax reform proposals was published on my Department's website on Thursday 14 October 2021.
The submissions are available at the following link: www.gov.ie/en/publication/5e8d3-responses-to-oecd-tax-reform-consultation/.
180. Deputy Catherine Murphy asked the Minister for Finance further to Parliamentary Question No. 130 of 12 October 2021, if he will clarify a series of matters in relation to bank branches (details supplied). [51778/21]
Amharc ar fhreagraOfficials from my Department contacted the Central Bank of Ireland regarding the Deputy's question and received the following response:
"The Central Bank cannot comment on its engagements with individual regulated entities, due to supervisory confidentiality obligations.
The Central Bank expects Banks to take a consumer-focused approach in respect of any decision that affects their customers. On 25 June 2021, the Central Bank issued an industry letter regarding its consumer protection expectations in the changing retail banking landscape. The letter is available to view on the CBI website.
Banks are required to notify the Central Bank when they intend to close, merge or move a branch. The Central Bank’s focus regarding branch closures is to ensure that banks adhere to the relevant requirements in the Consumer Protection Code 2012 (the Code) and how banks communicate the closures to their customers.
When notification is received in accordance with Provision 3.12 of the Code, the Central Bank engages with the bank to ensure the impact of the decision has been carefully considered across its full customer base and at the appropriate levels.
Any decision by a Bank board to close bank branches must be supported by an analysis and understanding of the impact the decision will have across its customer base.
In respect of changes to the operations of branches, the focus of the Central Bank is on ensuring that the change is communicated to customers and that customers retain access to services, albeit in different locations or through alternative means.
Decisions relating to the business model of regulated firms are for the boards of those firms alone. In relation to Banks, the Central Bank has no role in approving the closure of branches or the change in operations of branches."
181. Deputy Pearse Doherty asked the Minister for Finance if his attention has been drawn to the problems faced by the mobile sauna industry in accessing affordable public liability insurance; the actions he has taken in relation to same; and if he will make a statement on the matter. [51817/21]
Amharc ar fhreagraAt the outset it is important to note that 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) which expressly prohibits Member States from doing so.
Nonetheless, this Government recognises the concerns felt by many businesses, including in recreational and leisure areas, such as the mobile sauna business, regarding the cost and availability of insurance. It has therefore prioritised the implementation of the Action Plan for Insurance Reform. As the Deputy may be aware, the first Action Plan Implementation Report, which was published in July, shows that significant progress has been made, with 34 of the 66 actions contained therein now completed.
One of the key achievements in the first half of this year was the implementation of the Personal Injuries Guidelines some six months ahead of schedule. Early data from the Personal Injuries Assessment Board (PIAB), published last week, shows that since the commencement of the new Guidelines award levels have reduced by an average of 40%. This is an encouraging development; it is my hope that this trend will continue and result in lower costs for businesses. As the insurance reform agenda progresses, we will continue to hold the industry to account on its commitments to pass on savings from the Guidelines, and other elements of the reforms, to customers. Minister of State Fleming, in his ongoing engagement with the sector, has emphasised the need for insurance providers to reduce premiums and increase their risk appetite to provide cover in new areas.
I would like to take this opportunity to assure the Deputy that securing a more sustainable and competitive market through deepening and widening the supply of insurance in Ireland remains a key policy priority for this Government. In this regard, it is my intention to work with my Government colleagues to ensure that the implementation of the Action Plan can continue to have a positive impact on the affordability and availability of insurance for all individuals, businesses and community groups across the country.
182. Deputy Neale Richmond asked the Minister for Finance if VAT can be offset in tax returns in a case (details supplied); and if he will make a statement on the matter. [51821/21]
Amharc ar fhreagraFollowing the withdrawal of the UK from the European Union, goods moving into this country from Great Britain are treated as imports from a third country, i.e. from outside the EU. I am advised by Revenue that, where goods are imported into Ireland from a third country like Great Britain, the importer is required to complete a customs declaration and pay customs duty, if applicable, and VAT. Under customs law, VAT at import is chargeable on the customs value of the goods; usually this will be the purchase price, plus the cost of transport and insurance, plus any customs duties payable.
The VAT treatment of agents depends on their legal status. In general, where an agent is the de facto importer of the goods, then the agent is responsible for the payment of the VAT on imports. In such a case, the agent may qualify to use the Postponed Accounting arrangements which were introduced under last year’s Brexit Act. These new rules allow an accountable person to self-account for VAT on imports on their normal VAT3 Return. The benefit of this is that instead of having to pay VAT up-front at the time of importation, the accountable person may wait until they are making their VAT3 return and, subject to the usual rules on VAT deductibility, they can reclaim VAT at the same time as it is declared. The Postponed Accounting arrangements are intended to alleviate cash flow issues where VAT-registered businesses might otherwise have to pay import VAT at the point of importation of goods and then wait until their next VAT return is filed before they could recover the VAT.
I am advised by Revenue that different procedures are in place for agents who are not the importer of the goods. I would recommend that the taxpayer uses the MyEnquiries facility within the Revenue Online Service (ROS) to confirm the appropriate tax treatment that applies to their particular circumstances. Further information is also available on the Revenue website.
183. Deputy Joe Carey asked the Minister for Finance if his Department will give direction to the Central Bank and banking institutions to recognise the capacity to pay rent of first-time buyers coupled with their history of paying rent as key eligibility criteria in securing a mortgage given the struggles being experienced by first-time buyers to save for a mortgage while also paying rent; and if he will make a statement on the matter. [51900/21]
Amharc ar fhreagraThe Central Bank of Ireland has statutory responsibility for the regulation of mortgage lending by banks and other regulated entities. In line with this mandate, the Central Bank introduced macroprudential measures for residential mortgage lending in February 2015. The objective of these mortgage measures is to increase the resilience of the banking sector and households and to reduce the risk of credit-house price spirals from developing.
The mortgage measures apply certain loan-to-value (LTV) and loan-to-income (LTI) restrictions to residential mortgage lending by relevant financial institutions regulated by the Central Bank. The LTI limit is 3.5 times the borrower’s income. For first-time buyers, the LTV limit is 90% of the value of the residential property, (i.e. a deposit of 10%).
While regulated lenders must comply with the various rules within the macro prudential and consumer protection frameworks, the extension of credit by lenders to potential customers is a commercial decision for the lender themselves and each lender will have its own individual credit lending policies.
Before providing a mortgage, lenders are required to undertake thorough creditworthiness assessments to ensure a borrower will be able to repay the mortgage. This assessment must take into account the individual circumstances of the borrower, including personal circumstances and financial situation.
The Central Bank has advised that in general, lenders do take rental payments into account when making their affordability assessment as part of regular underwriting process, to assess borrowers’ ability to repay a mortgage. However, there is no Central Bank guidance or guidelines to lenders specifically in relation to their consideration of rent being paid by mortgage applicants in the context of their mortgage applications. This is for each bank to determine and to set out in its credit policy and it is therefore not an issue that I can instruct the Central Bank or lenders on.
It is important to note that a mortgage is the largest liability that most households will take on in their lifetime. It comes with less flexibility than a rental contract, leaving borrowers more exposed to shocks to incomes, house prices and interest rates in the future. The ability to make regular repayments – evidenced through rental payments – does not substitute for the protection for borrowers in having a deposit. A mortgage deposit acts as a cushion of housing equity, and can help households to absorb house price falls without the borrower falling into negative equity.
It is worth noting that the Central Bank is carrying out a review of the framework for the mortgage measures throughout 2021 and 2022, in parallel to its regular annual reviews of the calibration of the measures to ensure they continue to remain fit for purpose. The Central Bank has advised that this review will provide it an opportunity to examine a range of topics including but not limited to the objectives of the mortgage measures, the choice of tools and the framework and strategy used for calibration. The evolution of the housing and mortgage markets since 2015 and that the availability of new data sources (such as the central credit register) will inform the Bank's analysis. Given the widespread international use of mortgage measures, the Central Bank has also advised that it will also analyse how different countries implement and evaluate their macro prudential measures to ensure it takes international learning and best practice into its review.
