Written Answers Nos. 195-205
195. Deputy Brendan Griffin asked the Minister for Finance if a primary medical certificate holder whose vehicle has been written-off as a result of an accident can replace the vehicle without meeting the two-year time limit; and if he will make a statement on the matter. [31369/22]
Amharc ar fhreagraThe Disabled Drivers and Disabled Passengers Scheme provides relief from VRT and VAT on the purchase and use of an adapted car, as well as an exemption from motor tax and the provision of an annual fuel grant.
I am advised by Revenue that a primary medical certificate holder is required to keep a vehicle which is registered on the DPD Scheme in their possession for a specified time period. Where a vehicle is written off as a result of an accident within the specified time period, a repayment of any tax reliefs and remissions is due to the Revenue Commissioners. The salvage certificate and insurance settlement letter should be forwarded to Revenue who will then calculate the repayment figure. I am further advised that the compensation amount received by the customer from their insurance company will generally more than cover any repayment owed to Revenue.
Once the repayment has been made to Revenue, another vehicle can then be brought onto the scheme.
196. Deputy Peter Burke asked the Minister for Finance if he will consider the imposition of a 0% VAT rate for reusable menstrual products similar to the case with disposable menstrual products; and if he will make a statement on the matter. [31419/22]
Amharc ar fhreagraOfficials in my Department are currently reviewing the options now available to Ireland in setting VAT rates. This will include consideration of the new options available to Member States as a result of the recently updated EU VAT rules when setting VAT rates as well as the new limitations introduced on how reduced rates may be applied.
Decisions about tax changes are generally taken in the context of the Budget and, as part of our normal annual Budget preparations. In this context, various options for tax policy changes will be considered by the Tax Strategy Group prior to Budget 2023.
197. Deputy Neasa Hourigan asked the Minister for Finance if the Central Bank has plans to track and regulate ATMs given the exit of a number of banks from the retail banking sector and the sale of a large number of ATMs to non-bank operators; and if he will make a statement on the matter. [31425/22]
Amharc ar fhreagraThe revised Payment Services Directive (PSD2) regulates payment service providers across Europe. When it was transposed in 2018, PSD2 extended transparency rules relating to withdrawal charges to independent ATM operators. Under PSD2 independent ATM operators are required to clearly display charges to their user’s both before withdrawal of cash and upon receipt of cash. The Central Bank of Ireland is the competent authority for PSD2 in Ireland.
A review of PSD2 is currently being carried out by the European Commission. It is likely that the provision relating to independent ATM operators will be examined as part of that review, including regulation and supervision. A public consultation on PSD2 is open on the European Commission’s website until 2 August.
Independent ATM operators are regarded as Professional Cash Handlers. The Central Bank monitors all Professional Cash Handlers involved in the recirculation of euro banknotes for compliance with the Decision of the European Central Bank (ECB/2010/14) on the authenticity and fitness checking and recirculation of euro banknotes. Professional Cash Handlers must ensure compliance with Decision ECB/2010/14.
The Banking and Payments Federation of Ireland (BPFI) collects data on the total number of bank operated ATMs cross the country. This has been declining in recent years mainly because banks have sold, mainly offsite, ATMs to independent ATM operators and more recently also due to branch closures.
Latest data from the BPFI shows that in December 2021 there were 1,787 ATMs operated by banks, this is down from 2,353 in December 2020. The BPFI estimates that the total number of ATM’s was approximately 2,900 in December 2021.
My Department is currently undertaking a review of the retail banking sector. The Retail Banking Review has commenced its work and a public consultation is open on the Department’s website where members of the public can make a submission to the Department of Finance on issues, specifically Question 7 which seeks views on the regulation of ATMs, by 08 of July.
198. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he regards house building inflation to be manageable with particular reference to the cost to young families; and if he will make a statement on the matter. [31607/22]
Amharc ar fhreagraAccording to the Central Statistics Office (CSO) Wholesale Price Index, the wholesale price of building and construction materials (excluding VAT) increased by 18.2 per cent in the 12 months to April 2022. Some key construction materials have experienced very high levels of inflation, including, 28.5 per cent for rough timber, 51.3 per cent for structural steel and reinforcing metal and 21 per cent for plaster.
Many of the factors explaining the current high inflationary environment are not within Ireland’s control. These include the inflationary impact — via energy prices — of Russia’s unprovoked invasion of Ukraine; the impact of a rapid rebound in global demand post-pandemic; and blockages in global supply chains affecting the availability of key inputs.
These events will clearly have an impact of the price of new homes coming onto the market. However, it is important to note that inflation in the price of second hand homes is currently higher than inflation in new homes. The CSO’s Residential Property Price Index shows that from Q1 2021 to Q1 2022, the price of new homes increased by 6.2 per cent and the price of second hand homes increased by 17.8 per cent. This indicates that the mismatch between demand and supply is the primary driver of residential property price inflation, not the rising cost of input prices.
As a result, the Government’s primary response to mitigate residential price inflation has been to increase supply. Under Housing for All, the target is to build 33,000 new homes on average per annum to 2030. In the twelve months to April 2022, 32,456 new homes were commenced. Moreover, in the 12 months to end Q1 2022, there were 44,491 units granted planning permissions nationally.
As well as increasing the supply of homes in general, more work needs to be done to increase the supply of social and affordable homes. In Budget 2022, €4 billion was allocated towards housing, including capital funding of €2.58 billion, a large proportion of which will be used to deliver 9,200 new social homes. Under Housing for All, there is a commitment to invest over €4 billion in housing per year to 2030.
Housing for All targets the delivery of over 90,000 social homes, 54,000 affordable homes for purchase or rent, 18,000 cost rental homes and 170,000 private homes by 2030. Achieving these targets will make a real difference in improving affordability for our citizens, including young families.
Young families can also avail of supports such as the Help to Buy scheme, which provides a refund of income tax and deposit interest retention tax, and the Local Authority Home Loan.
All of these measures demonstrate the need to take a multi-faceted approach to increase the supply of new housing.
199. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which this country continues to remain an attractive location for foreign direct investment; and if he will make a statement on the matter. [31608/22]
Amharc ar fhreagra205. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which Ireland continues to compete with competition for foreign direct investment; the most likely directly from when he expects any challenges; and if he will make a statement on the matter. [31614/22]
Amharc ar fhreagraI propose to take Questions Nos. 199 and 205 together.
Ireland has long established itself as a market of choice for foreign direct investment and FDI makes a highly significant contribution to the domestic economy. Ireland’s ability to attract and retain FDI reflects our strong legal and regulatory landscape, our track record as a stable and pro-enterprise jurisdiction, and our talented and flexible workforce. These unique features continue to support our competitive advantages, which are recognised and valued by the multinational sector.
During the Covid-19 pandemic, the resilience of the multinational sector proved remarkable, with the sector supporting the economy during the worst of the crisis and now helping to bolster the economic recovery.
The stock of FDI in Ireland continues to grow, reaching over €1,200bn in the first quarter of 2022. Last year, the Industrial Development Agency reported the highest increase in FDI employment in a single year, indicative of the strength of the FDI sector in Ireland.
Against the backdrop of current geopolitical instability and uncertainty, the FDI environment is likely to face challenges over the coming years. The war in Ukraine may result in a reconfiguration of the global economy while at the same time the pandemic has dealt a significant blow to globalisation. The extent to which this transpires will only be seen with time, but deglobalisation – should it occur – could result in lower levels of global FDI, with impacts on living standards and productivity in host countries.
Given that a number of these factors are beyond our control, we must focus on the factor we can control, ensuring that Ireland remains an attractive environment for FDI investment.
200. Deputy Bernard J. Durkan asked the Minister for Finance if the revised proposals in respect of corporation profits tax are likely to have any negative effect on foreign direct investment here; and if he will make a statement on the matter. [31609/22]
Amharc ar fhreagraI understand that the revised proposals in respect of Corporation tax profits which the Deputy is referring to in his question relate to the projected cost of joining the agreement by the OECD/G20 Inclusive Framework on BEPS last October through a two-pillared solution to address tax challenges arising from the digitalisation of the economy.
Pillar One will see a reallocation of 25% of residual profits to the jurisdiction of the consumer. The scope is confined to multinational groups with turnover in excess of €20 billion annually. Residual profit is profit greater than 10% of turnover.
Pillar Two provides that the minimum effective rate is 15% for multinational enterprises with annual turnover in excess of €750m.
It is expected that the Agreement will bring long-term stability and certainty to the international tax framework arising from discussions which have taken place.
Importantly for Ireland, the agreement provides that the minimum effective rate for those companies in the scope of the agreement will be 15%, and this will provide the critical certainty for Government and business alike. At the same time we protected the 12½% rate for out of scope business which will continue to be an important part of our offering in the future.
The agreement will also continue to support innovation and growth, acknowledging as it does the need for innovation incentives such as for research and development.
This is a global agreement, and will ultimately underpin the required certainty and stability in the international tax framework, important to both business and government alike, when it comes to making future investment decisions.
I have long held that there will be a price to pay but it is a price that is worth paying to reduce the risk of disputes and escalating trade tensions. Instead this agreement will achieve greater tax certainty and the removal of unilateral measures such as digital services taxes.
Ireland’s economic success is not simply an accident of history. It has been achieved by identifying our strengths and developing a strong offering that meets the needs of modern business. While Ireland is not blessed with abundant natural resources, we have invested in education so that we have our own resource - a highly educated workforce whose skills meet the needs of modern enterprises.
Ireland’s place in the world is that of a business friendly country, deeply integrated with the global economy, and an ideal location for companies looking to access the EU, the world’s largest consumer market.
The historic agreement achieved at the OECD last October, will provide a platform for Ireland's continued competitiveness and attractiveness for Foreign Direct Investment.
201. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which Ireland continues to perform well within the European Union from an economic perspective; and if he will make a statement on the matter. [31610/22]
Amharc ar fhreagraAs it stands, Ireland remains one of the strongest performers in the European Union. Irish exports recorded a robust start to 2022, with a continued strong performance in the multinational sector. The Irish modified current account, which strips out the distorting effects of globalisation, is in a very strong position and is expected to remain in surplus over the medium term. The Irish labour market has also remained resilient, with the unemployment rate of 4.7 per cent in May the lowest since 2006.
Within a European context, Ireland’s economic recovery from the pandemic has been particularly remarkable. Modified domestic demand – a measure of the domestic economy - was almost 6 per cent above its pre-pandemic level in the first quarter of 2022, whilst domestic demand for the EU as a whole remains broadly in line with pre-pandemic level.
However, Ireland and our fellow EU member states are currently facing significant headwinds to economic growth. Russia’s invasion of Ukraine represents a large supply-side shock to the domestic economy, with the main channel of transmission from the war to the Irish economy coming via the sharp rise in energy and other commodity prices.
Consumer price (HICP) inflation picked up sharply over the second half of last year and stood at 8.3 per cent in May. Almost every advanced economy in the world is in the same position, with euro area inflation reaching a record 8.1 per cent in May.
Taking account of all factors, the international environment is one of exceptional uncertainty and there are significant risks to the economic outlook for Ireland, as well as for the EU. The war in Ukraine presents a serious headwind to economic activity, with rising inflation and widespread uncertainty posing a threat to consumer spending and business investment throughout Europe.
202. Deputy Bernard J. Durkan asked the Minister for Finance the extent, if any, to which he remains confident in this country’s ability to withstand inflationary tendencies; and if he will make a statement on the matter. [31611/22]
Amharc ar fhreagraConsumer price (HICP) inflation picked up sharply over the second half of last year and stood at 8.3 per cent in May – a multi-decade high. Almost every advanced economy in the world is in the same position, with euro area inflation reaching a record 8.1 per cent in May.
The key driver behind the elevated level of inflation at present is the sharp rise in wholesale energy prices, food and other commodity prices since the onset of the war in Ukraine. Global supply chain disruptions, including the availability of inputs and transport bottlenecks have also added to inflationary pressures. The war in Ukraine and China’s zero-Covid strategy are compounding these disruptions. Domestically, the ongoing mismatch between demand and supply, including in parts of the labour market, continues to place upward pressure on prices.
Pass-through price effects from higher energy prices are already being felt in other sectors, such as food (via increased fertiliser and fuel costs) and consumer goods (via higher energy inputs). Indeed, the rise in non-energy or ‘core’ inflation suggests that inflationary pressures are becoming increasingly broad-based.
At the time of SPU 2022, the Department forecast average inflation of 6¼ per cent for this year. However, with many of the risks outlined in the SPU having already come to pass, there are upside risks to this projection. Needless to say, the war in Ukraine and in particular the escalation of sanctions against Russia will continue to shape the outlook for inflation over the short term.
The Government is acutely aware of the cost pressures currently facing households and businesses and has announced €2.4 billion in cost of living measures since last October to alleviate some of this pressure. However, the causes of current price pressures are not within our control. Whilst the Government will continue to help with the cost of living challenge, resources are limited and we cannot cushion households and businesses from the entire impact. Furthermore, in calibrating how we respond to the current challenges, it is important that we strike the right balance and ensure that policy doesn’t inadvertently add further inflationary pressures into the system.
Finally, it is worth pointing out that monetary policy is the first line of defence against inflation. In this context, the European Central Bank has indicated a tightening of policy in the coming months. By slowing demand in the economy, this should help bring demand and supply back into balance, with positive implications for inflation.
203. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which housing costs here continue to impact on the cost of living; the degree to which any provision can be made to offset the inflationary tendencies; and if he will make a statement on the matter. [31612/22]
Amharc ar fhreagraMy Department continues to monitor all aspects of the property market, including the rate of inflation in the housing market, on an ongoing basis. According to the most recent figures released by the Central Statistics Office, the National Residential Property Price Index increased by 15.2 per cent in the twelve months to March 2022. The Consumer Price Index also shows that private rents have increased by 11.2 per cent in the twelve months to May 2022.
Many of the factors explaining the current high inflationary environment are not within Ireland’s control. These include the inflationary impact — via energy prices — of Russia’s unprovoked invasion of Ukraine; the impact of a rapid rebound in global demand post-pandemic; and blockages in global supply chains affecting the availability of key inputs.
The Government’s primary response to mitigate residential price inflation has been to increase supply with recent data providing encouragement in that regard. In the twelve months to April 2022, 32,456 new homes were commenced. Moreover, in the twelve months to end Q1 2022, there were 44,491 units granted planning permissions nationally.
In addition to increasing the supply of homes in general, more work needs to be done to increase the supply of social and affordable homes. In Budget 2022, €4 billion was allocated towards housing, including capital funding of €2.58 billion, a large proportion of which will be used to deliver 9,200 new social homes. Under Housing for All there is a commitment to invest over €4 billion in housing per year to 2030.
Housing for All targets the delivery of over 90,000 social homes, 54,000 affordable homes for purchase or rent, 18,000 cost rental homes and 170,000 private homes by 2030. Achieving these targets will make a real difference in improving affordability for our citizens.
In addition to these measures taken in the housing market, a package of measures totalling €2.4 billion has been introduced to ease the impact of the rising cost of living on our citizens. These measures include tax and welfare changes; a reduction in the excise rate on fuels; a VAT reduction on the supply of gas and electricity; a temporary reduction in public transport fares; and other measures.
All of these measures highlight the need to take a multi-faceted approach to increase the supply of new housing and I will continue to work closely with my Government colleagues to ensure these targets are delivered.
204. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he remains satisfied that the economic principles in respect of this country’s economy remain firmly seated; and if he will make a statement on the matter. [31613/22]
Amharc ar fhreagraPrior to the pandemic Irish economic fundamentals were strong, with robust growth, a labour market close to full employment, relatively modest credit growth, and surpluses in the underlying current account and the public finances. The outbreak of the Covid-19 pandemic turned the economy on its head, but we weathered the storm and achieved a remarkable economic recovery.
The economy is now facing new and significant headwinds as a result of the war in Ukraine, including rising energy and commodity prices. Consumer price (HICP) inflation rose to 8.3 per cent in May, a multi-decade high. While rising prices are impacting on Irish households and businesses, the key drivers of inflation at present are external in nature and almost every advanced economy in the world is in the same position.
Notwithstanding these challenges, the economic fundamentals of the Irish economy remain strong. The labour market has remained resilient, with the unemployment rate of 4.7 per cent in May the lowest since 2006. The external side of the economy also continues to perform very strongly with exports in excess of €150 billion in the first quarter, and the modified current account is expected to remain in surplus.
While geopolitical tensions and global issues of supply are risks to Ireland’s economy, our resilience and strength ultimately comes from being a dynamic economy open to investment and trade across our borders. This has long proven to be the fundamental strength of the Irish economy, and that remains the case today.
