Thursday, 16 Jun 2022

Written Answers Nos. 21-40

Insurance Industry

Ceisteanna (22)

James Lawless

Ceist:

22. Deputy James Lawless asked the Minister for Finance the amount that motor insurance premiums have fallen since the current Government entered office in June 2020. [30064/22]

Freagraí scríofa

Minister for Finance

Motor insurance is mandatory, in that every person intending to use a vehicle on a public road must have third-party cover at a minimum. Therefore, it is important that motor insurance is affordable, which is why this Government has continued to prioritise efforts to reduce costs for motorists as part of the Action Plan for Insurance Reform.In that regard, I am pleased to note that data from both the Central Statistics Office (CSO), and National Claims Information Database (NCID), show that prices are continuing to fall for private motor insurance.

The latest CSO Consumer Price Index (CPI) for May 2022 data indicates that the price of motor insurance is now 16% lower than in June 2020, when this Government was formed. This is clear evidence that reforms have the desired policy impact. According to the CSO CPI, the price of motor insurance has also declined by 10.9% year-on-year.

In the context of the European market, the Eurostat Consumer Prices show Ireland had the largest price reduction in motor insurance premiums in the EU in the 12 months to April 2022, at 11.7%.

This downward trend of motor insurance prices is also separately validated by data from the National Claims Information Database (NCID), with the last motor report indicating that the average earned premium per policy peaked at €708 in Q4 2017, and declined by 16% to €595 in Q4 2020.

I expect that the next NCID report on private motor insurance, due later this year, will show a continued decrease in insurance prices, as the impact of the various Government reforms in this area continue to bed in and take effect.

Question No. 23 answered orally.

Tax Yield

Ceisteanna (24, 50, 58)

Dara Calleary

Ceist:

24. Deputy Dara Calleary asked the Minister for Finance if he is concerned that the public finances are forecast to remain heavily reliant on corporation tax receipts; and if he will make a statement on the matter. [30074/22]

Richard Bruton

Ceist:

50. Deputy Richard Bruton asked the Minister for Finance the latest appraisal of the reliability of corporation tax receipts; and if he will make a statement on the matter. [31244/22]

Gerald Nash

Ceist:

58. Deputy Ged Nash asked the Minister for Finance if he is concerned at the warnings from an organisation (details supplied) of an over-reliance on corporation tax receipts; if he will outline his strategy to reduce this over-reliance; the way that he plans to broaden and sustain the tax base; and if he will make a statement on the matter. [31011/22]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 24, 50 and 58 together.

I am concerned about the exposure of the public finances to corporation tax receipts.

There are two issues: firstly, concentration risk and, secondly, international corporate tax policy changes.

In relation to concentration risk, the latest data show that around €1 in every €8 collected arises in just 10 large corporate tax payers. This concentration means total tax receipts are vulnerable to the business decisions of a handful of large companies.

In relation to policy, as has been well articulated over the past few years, changes to the international tax regime represent a key risk to this revenue stream. My Department’s central estimate at present is that €2 billion could be lost in corporate tax by 2025 relative to baseline. I would stress that there is significant uncertainty attached to this technical assumption; the final figure could be considerably different.

Of course, the strong growth in corporation tax that we have seen over the last several years is, in many respects, welcome. It meant that, during the pandemic, we had to borrow less than would otherwise have been the case. It is also a reflection of the success of our industrial policy in attracting high quality multinational firms and high wage jobs to Ireland.

While the revenue stream is indeed welcome, we must be careful not to craft budgetary policies on the basis of these highly volatile and unpredictable corporate tax receipts. As a result, Government has frequently cautioned against building permanent expenditure commitments on the basis of corporation tax receipts.

It is also worth pointing out that with borrowing costs rising, our capacity to absorb a shock to corporation tax receipts is more diminished. This further enhances the need to reduce our exposure to this revenue stream.

Finally, last year I established the Commission on Taxation and Welfare to analyse the structure of our public finances and to propose reforms to ensure the long-term sustainability of our tax and welfare systems. The Commission is due to report next month on how to best address vulnerabilities in the tax base to ensure that we are in a position of strength to address any future economic shocks that may occur.

Question No. 25 answered with Question No. 15.

Vacant Properties

Ceisteanna (26)

Pearse Doherty

Ceist:

26. Deputy Pearse Doherty asked the Minister for Finance if he will commit to introducing a vacant property tax in the upcoming Finance (Covid-19 and Miscellaneous Provisions) Bill 2022; the number of local property tax returns in which survey questions on vacancy were completed; and if he will make a statement on the matter. [31250/22]

Freagraí scríofa

Minister for Finance

For the Local Property Tax (LPT) valuation period 2022-2025, residential property owners were asked to indicate in their LPT returns the occupancy status of their properties on 1 November 2021 and, where vacant, the duration of and reason for the vacancy. These information requirements were included in LPT returns in accordance with section 39A of the Finance (Local Property Tax) Act 2012 (as amended), which was introduced by the Finance (Local Property Tax) (Amendment) Act 2021. Any information obtained under section 39A may only be used for compiling statistical information in relation to vacant residential properties.

It is important to note that LPT applies in respect of any building which is in use as, or is suitable for use as, a dwelling. Properties that were uninhabitable or unsuitable for use as a dwelling, as at 1 November 2021, are not liable for LPT for 2022. Owners of these properties were not required to value their property for LPT purposes and they were not required to submit an LPT return to Revenue.

As the information on occupancy status was collected as part of the LPT return, all property owners that submitted an LPT return for the valuation period 2022-2025 completed the local property tax survey on vacancy that the deputy has referred to. As of 11 May, 1,250,611 property owners had filed returns in respect of 1,597,200 properties.

I am advised by Revenue that, as with any other tax return, all LPT returns are subject to validation and checking by Revenue, and this extends to the information returned regarding the occupancy status of properties. Where a person files an LPT return but fails to include in the return all of the required information and fails to remedy matters when asked to do so by Revenue, section 146 of the Finance (Local Property Tax) Act 2012 provides that the person will be liable to a penalty of the amount of the LPT that is correctly payable in respect of the property (subject to a cap of €3,000). Accordingly, where a person failed to indicate in their LPT return for the valuation period 2022-2025 that the property was unoccupied on 1 November 2021 and fails to remedy matters when asked to do so by Revenue, the person will be liable for a penalty as outlined.

Revenue have completed a preliminary analysis of the LPT returns received to date which has been shared with my Department. The results of the preliminary analysis suggest that levels of vacancy are low across all counties. The Minister for Finance will be considering this issue in consultation with colleagues before reverting to Government with proposals on the appropriate response. I understand Revenue intends to publish a profile of the occupancy data from the LPT returns very soon.

The Finance (Covid-19 and Miscellaneous Provisions) Act 2022 has recently been enacted so any potential vacancy measure would require new legislation.

Question No. 27 answered orally.

Primary Medical Certificates

Ceisteanna (28, 31, 47)

Niamh Smyth

Ceist:

28. Deputy Niamh Smyth asked the Minister for Finance the status of the resumption of the primary medical certificate appeals process; if a new board has been appointed following the closure of the expression of interested phase in April 2022; and if he will make a statement on the matter. [29521/22]

Niamh Smyth

Ceist:

31. Deputy Niamh Smyth asked the Minister for Finance the status of the resumption of the primary medical certificate appeals process; and if he will make a statement on the matter. [29520/22]

Catherine Connolly

Ceist:

47. Deputy Catherine Connolly asked the Minister for Finance when the new disabled drivers medical board of appeal will be in place; and if he will make a statement on the matter. [30712/22]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 28, 31 and 47 together.

The Disabled Drivers & Disabled Passengers Scheme provides relief from Vehicle Registration Tax and VAT on the purchase and use of an adapted car, as well as an exemption from motor tax and an annual fuel grant.The Scheme is open to severely and permanently disabled persons as a driver or as a passenger and also to certain charitable organisations. In order to qualify for relief, the applicant must hold a Primary Medical Certificate issued by the relevant Senior Area Medical Officer (SAMO) or a Board Medical Certificate issued by the Disabled Driver Medical Board of Appeal. Certain other qualifying criteria apply in relation to the vehicle, in particular that it must be specially constructed or adapted for use by the applicant.To qualify for a Primary Medical Certificate an applicant must be permanently and severely disabled, and satisfy at least one of six medical criteria, in order to obtain a Primary Medical Certificate.

In the event that a PMC is not granted by the relevant Senior Area Medical Officer an appeal may be made to the independent Disabled Drivers Medical Board of Appeal (DDMBA).

Following the resignation of all members of the previous Disabled Drivers Medical Board of Appeal an Expression of Interest seeking suitable candidates for the Board closed on 29th April 2022. The Department of Health has convened a selection panel to assess the suitability of applicants for nomination.

It should be noted that during this period, requests for appeal hearings can continue to be sent to the DDMBA secretary based in the National Rehabilitation Hospital. New appeal hearing dates will be issued once the new Board is in place.

There are 382 appeals outstanding from 2021 and 175 new requests for appeal in 2022 to date.

Assessments for the primary medical certificate, by the HSE, are continuing to take place.

Tax Code

Ceisteanna (29, 37)

Gerald Nash

Ceist:

29. Deputy Ged Nash asked the Minister for Finance if he plans to introduce a windfall tax on the super-normal profits of energy companies; if he will provide details of any engagement that he and his officials have had with the Minister for the Environment, Climate and Communications, his officials and the Commission for the Regulation of Utilities on this issue; and if he will make a statement on the matter. [31010/22]

Alan Farrell

Ceist:

37. Deputy Alan Farrell asked the Minister for Finance his views on a windfall tax in the context of energy companies in Ireland; and if he will make a statement on the matter. [30549/22]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 29 and 37 together.

Energy policy, including increasing costs of energy supply and the taxation of profits, is a matter of key concern to the Government. There are many strands to this policy, including energy security, rising input costs and costs to consumers, and the need to reduce dependence on fossil fuels. The complexities of the energy market and the range of producers and contracts must also be acknowledged. For example, the Renewable Energy Support Scheme (RESS) contains strong consumer protection measures, with wholesale market revenues above the auction price returned to electricity consumers through the Public Service Obligation Levy. All of these aspects must be considered in connection with proposed new policy measures.

In April, the Government approved and published the National Energy Security Framework, which sets the overarching response to the impacts of the war in Ukraine on the energy system in Ireland. The Framework includes a commitment to work with the European Commission and other Member States to consider the proposals set out in the EU’s REPowerEU plan. Under REPowerEU, it is considered that taxation or regulatory measures aimed at removing gains created by the current crisis situation could be considered.

Energy policy is under the remit of the Department of the Environment, Climate and Communications (DECC). The Energy Security Energy Group, which is chaired by DECC and includes the Commission for Regulation of Utilities, is considering these issues in its role overseeing the implementation of the National Energy Security Framework.

Officials in DECC are working to examine where gains created by the current crisis situation may be occurring and to consider what, if any, action would be appropriate having regard to over-arching energy policy. This includes engaging with Department of Finance officials to determine potential fiscal response measures. This work, which will help inform the implementation of the National Energy Security Framework, includes consideration of potential negative impacts of any such action. For example, there is a risk that a windfall tax may lead to higher consumer costs and negatively impact upon investment in the energy sector, particularly in the area of renewables. This would in turn impact on the Government's ambitions to tackle climate change through the reduction of carbon emissions.

A well-functioning EU electricity market is crucial for the integration of our Internal Energy Market and supporting investment in new renewables. The best long-term approach for Ireland to insulate consumers from volatility on international wholesale energy markets is to invest in energy efficiency and renewable energy. Cutting our dependence on fossil fuels and generating power from our own renewable sources will ensure a cleaner, cheaper energy future in the long term.

I would also note that the Government has taken a number of measures to reduce the burden on consumers in relation to the cost of energy. This includes providing €200 worth of energy credit to every household in the country; reductions in fuel excise duty; and a reduction in the VAT rate for electricity and gas.

Economic Policy

Ceisteanna (30)

Matt Shanahan

Ceist:

30. Deputy Matt Shanahan asked the Minister for Finance the way that he and his Department plan to address the new challenges such as supply chain issues and inflation highlighted in the recently published progress report on the 2021 Economic Recovery Plan which also confirmed that employment levels have exceeded pre-pandemic levels; and if he will make a statement on the matter. [31007/22]

Freagraí scríofa

Minister for Finance

The Irish economy has proven to be remarkably resilient over the last number of years when faced with the unprecedented challenges posed by the Covid-19 crisis. Arguably, the resilience of the Irish economy has been most clearly evident in the labour market, where a remarkable recovery has taken place in just a short space of time. There was a record 2½ million people in employment in the first quarter this year while the unemployment rate fell to 4.7 per cent in May, its lowest rate since 2006.

However the war in Ukraine has fundamentally altered the economic outlook and created significant economic headwinds both in Ireland and throughout the world. The onset of the war stoked fears around global energy and commodity supplies and brought about a rapid spike in prices. These volatile price movements, in particular in the global energy market, have had knock on implications for the everyday cost of living in Ireland. Driven by the rise in energy prices, inflation is currently running at a multi decade high of 8.3 per cent. Higher energy price are now having a pass-through impact into other sectors and as a result price pressures are becoming increasingly broad based. Higher prices will erode the purchasing power of consumers and undermine the profitability of businesses. At least over the short term, higher inflation will continue to act as a significant headwind to economic growth.

The Government is acutely aware of the cost pressures currently facing households and businesses and has responded to help alleviate some of this burden. On a cumulative basis, the Government has announced €2.4 billion in cost of living measures since last October. These measures have included changes in tax and social welfare, the provision of an energy credit for households, a temporary reduction in the rate of VAT on the supply of gas and electricity and a reduction in the excise rate for petrol, diesel and marked gas oil.

Although the impact of the war in Ukraine represents the most immediate and pressing risk to our economy, it is important not to lose sight of the other challenges we continue to face. Covid highlighted the vulnerabilities in global supply chains, if these vulnerabilities become more persistent than expected, it will have negative implications for both output and inflation. Domestically, there is also a real risk that a wage-price spiral emerges as the economy approaches full employment and prices remain elevated. This would damage Ireland’s cost competitiveness and hamper the economy’s ability to compete in the global market place.

My Department will continue to monitor risks to the Irish economy closely, and respond as needed. In calibrating how we respond to the current challenges, it is important that we strike the right balance and ensure policy does not add further inflationary pressures into the system.

Question No. 31 answered with Question No. 28.

Tax Code

Ceisteanna (32, 56)

John Lahart

Ceist:

32. Deputy John Lahart asked the Minister for Finance when planned changes to corporation tax will be implemented; and if he will make a statement on the matter. [30136/22]

Matt Shanahan

Ceist:

56. Deputy Matt Shanahan asked the Minister for Finance his views that the Organisation for Economic Cooperation and Development global tax agreement which Ireland recently signed up to may be in trouble; if he is concerned that policymakers in both parts of the US and parts of Europe are already finding it difficult to comply with the agreement which is expected to be implemented in Ireland in 2023 and could result in Ireland’s corporate tax rate rising from 12.5% to 15% in line with over 130 countries worldwide; and if he will make a statement on the matter. [31009/22]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 32 and 56 together.

I understand that the planned changes to Corporation tax to which the Deputy is referring in his question are those which the OECD/G20 Inclusive Framework on BEPS met to agree last October through a two-pillar 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.

The implementation timeframe for both Pillars is ambitious as acknowledged recently by the Secretary General of the OECD. However, I am fully committed to delivering both pillars of the agreement as soon as possible.

Intensive work is ongoing, both at the OECD and EU, to reach agreement on the technical detail required in both Pillars to ensure that these complex provisions are transposed robustly and in co-ordination by all signatories to the agreement.

An intensive programme of meetings is ongoing at the OECD to ensure that the Agreement can be translated into rules which ultimately can become legislation. My officials and those of the Revenue Commissioners are endeavouring to shape the rules to ensure that they provide the necessary tax certainty, are administrable for business and tax administrations, and remain broadly faithful to the October Agreement.

On Pillar One the OECD have divided the work into 14 building blocks necessary to implement Pillar One. Each block is sent to public consultation as part of the development process and these elements will eventually form the Pillar One Model Rules.

These model rules, which will govern the reallocation of taxing rights to market jurisdictions, are to be delivered through a Multilateral Convention. This will be both legally and legislatively challenging to develop and deliver.

Pillar Two is more advanced. The OECD published Model Rules in December 2021 and published a commentary to these rules in March of this year. The Model Rules provide an important framework to assist individual jurisdictions to implement the Global Minimum Effective Tax Rate in a coordinated and consistent manner in accordance with the terms of the Agreement.

Work is ongoing on the OECD’s Implementation Framework to deal with further implementation issues, such as co-existence with the US GILTI regime, and the GloBE information return.

In the EU, work on delivering Pillar Two into legislation through the Minimum Tax Directive is very advanced. I am fully supportive of the efforts of the French presidency towards reaching unanimous agreement of the Directive and am optimistic that unanimous agreement can be reached at ECOFIN soon.

The EU Minimum Tax Directive now provides for implementation by 31 December 2023, which is in line with the OECD agreement of 2023 implementation. This remains faithful to the original deadline, while recognising the complex work required of both tax administrations and businesses in order to introduce and operate these rules effectively.

Domestically, a public consultation has recently been launched on the implementation of Pillar Two into Ireland’s tax code and I encourage all interested parties to engage with this consultation.

Credit Unions

Ceisteanna (33)

Willie O'Dea

Ceist:

33. Deputy Willie O'Dea asked the Minister for Finance his plans to expand the credit union sector; and if he will make a statement on the matter. [30326/22]

Freagraí scríofa

Minister for Finance

This Government recognises the importance of credit unions. The Programme for Government contains commitments to:

- Review the policy framework within which credit unions operate;

- Enable and support the credit union movement to grow;

- Support credit unions in the expansion of services, to encourage community development; and

- Enable the credit union movement to grow as a key provider of community banking in the country.

With regard to fulfilling the commitments in the Programme for Government for credit unions, the Review of the Policy Framework has been completed.

Minister of State Sean Fleming recently met with all the credit union representative bodies on the proposals, who broadly supported the proposals. Legislation to implement the proposals will go to Cabinet shortly.

The policy proposals contained in the Review address five key objectives:

1. Improving member services

2. Supporting investment in collaboration

3. Supporting Governance

4. Recognition of the role of credit unions

5. Transparency of regulatory engagement

Cumulatively, the desired outcome of these objectives is to strengthen the role of credit unions as a provider of community banking and to further enable credit unions to focus on priorities that will better position the sector to face the challenges and opportunities of the future.

In developing these proposals Minister Fleming has met the Irish League of Credit Unions, the Credit Union Development Association, the Credit Union Managers Association, the National Supervisors Forum, the Registrar of Credit Unions, the Credit Union Advisory Committee, the CEO Forum, collaborative ventures and many individual credit unions.

In total as part of the Review process Minister Fleming has held over 40 stakeholder meetings with the credit union sector and considered well over 100 proposals.

Housing Policy

Ceisteanna (34)

Thomas Gould

Ceist:

34. Deputy Thomas Gould asked the Minister for Finance if his Department has engaged with the Department of Housing, Local Government and Heritage to source a better solution for the mortgage to rent scheme given the potential profits available to a private operator. [29650/22]

Freagraí scríofa

Minister for Finance

A whole of Government strategy has been put in place to address the mortgage arrears problem and the level of arrears continues to decline. The number of primary dwelling mortgages in arrears peaked at over 140,000 in 2013 and have subsequently declined to around 47,000 mortgage accounts at the end of December 2021. This amounts to 6.5 per cent of all primary dwelling mortgage accounts.

However, if accounts in short term arrears are excluded, around 32,500 mortgages are more than 90 days in arrears which amounts to 4.5 per cent of all primary mortgages as at the end of 2021. At the end of 2020, 5.3 per cent of primary dwelling accounts were more than 90 days in arrears.

As one part of this overall Government framework to address mortgage arrears, ‘Mortgage To Rent’ (MTR) was introduced in 2012 as a specific social housing response for borrowers who, having gone through the Mortgage Arrears Resolution Process as set out in the Central Bank Code of Conduct on Mortgage Arrears, were deemed to have an unsustainable private mortgage.

Under the MTR scheme, the borrower surrenders their property to their lender and it is then then sold to an MTR provider which can be either an Approved Housing Body or, since 2018, a private company. The Approved Housing Body or local authority (in the case where the property is sold to a private company) then becomes the landlord and the borrower remains in the property as a tenant paying a differential rent to the landlord based on his or her income.

The inclusion of a private entity in the MTR scheme arose from a 2017 review of the scheme and was seen as a way to achieve greater scale to meet the long-term social housing needs of some borrowers who have unsustainable mortgages.

In overall terms, eligibility for the MTR scheme and policy on the operation of the scheme, including the entities which can purchase properties and provide services under the scheme, are in the first instance a matter for my colleague the Minister for Housing, Local Government and Heritage. However, I work closely with my colleague as we seek to address the problem of mortgage arrears and housing more generally.

Tax Code

Ceisteanna (35)

Brian Leddin

Ceist:

35. Deputy Brian Leddin asked the Minister for Finance his plans for reviewing the capital acquisition tax rules to support farmers who wish to utilise more than 50% of their land to develop solar farms; and if he will make a statement on the matter. [31332/22]

Freagraí scríofa

Minister for Finance

As the Deputy may be aware, agricultural relief allows the value of agricultural assets gifted or inherited (including farmland, buildings, stock) to be reduced by 90% of its value for the calculation of a Capital Acquisition Tax (CAT) liability. This is a valuable relief from CAT and a fundamental objective of this relief is that it is availed of by genuine, and active farmers, and that it relates to agricultural land which is being actively farmed.

One of the key conditions for agricultural relief is that agricultural property must make up at least 80% of a beneficiary’s total property. Prior to the changes made in Finance Act 2017, any land leased for solar panels was not classified as agricultural land and therefore could not be counted towards satisfying this 80% threshold.

In recognition of the then Government’s commitment to facilitate the development of solar energy projects in Ireland and the potential role of farmland in achieving this, an amendment was made to allow land leased for solar panels to be classified as qualifying agricultural activity under certain conditions.

While introducing this amendment, it was important that sight was not lost of the fundamental principle which underpins agricultural relief policy, namely to support the intergenerational transfer of family farms and to encourage succession planning. Therefore, a key aspect of this relief is to ensure that it is targeted at land, which is actively farmed. Consequently to facilitate the above policy objectives, the amendment included a condition that in order to be classified as qualifying agricultural activity, the total area under lease for solar should not exceed 50% of the total area of agricultural land.

This addressed any potential disincentive to leasing land for solar panels, while also preserving the integrity of this significant CAT relief.

I currently have no plans for reviewing this matter.

Banking Sector

Ceisteanna (36)

Neasa Hourigan

Ceist:

36. Deputy Neasa Hourigan asked the Minister for Finance the position regarding the practice of payees discouraging such as refusing to accept online direct debits using European Union non-Irish IBANs; the compliance of this practice with Article 9(2) of the relevant SEPA Regulation; the level of enforcement of this regulation by the Central Bank; and if he will make a statement on the matter. [30782/22]

Freagraí scríofa

Minister for Finance

The European Commission recently increased its efforts to deal with a common problem across EU Member States known as IBAN discrimination.

IBAN discrimination occurs where an employer or company refuses to accept your Single European Payment Area (SEPA) IBAN for euro payments or direct debits. Such restrictions are not allowed under the SEPA Regulation and constitute a barrier to the smooth functioning of SEPA. This is a breach of Article 9 of the SEPA Regulation (Regulation EU 260/2012). Article 9 states that that a payer or payee cannot specify the Member State in which the account to be debited or credited is located.

Obligations under the SEPA Regulation apply to all entities making or receiving payments, including businesses (some of which are regulated financial services providers), employers and state institutions.

The Commission has issued letters to the national competent authorities of Member States where instances of IBAN discrimination were reported. The Central Bank of Ireland was designated as competent authority for the purpose of the SEPA Regulations and Department officials have been engaging to determine the best means of dealing with the issue of IBAN discrimination in Ireland. This issue could potentially escalate given a number of credit institutions do not use "IE" IBAN for their bank account numbers.

At present, where non-compliance (with Article 9(2) of the SEPA Regulation or any other provision) is found, the Central Bank’s response is determined in accordance with its legislative powers, including as provided for in the Irish SEPA Regulations.

If a complaint relating to an alleged infringement of the SEPA Regulation by a Payment Service Provider is, in the first instance, made to the Central Bank, the Central Bank informs the complainant of the right to make a complaint to the Financial Services and Pensions Ombudsman.

Department officials are working with the Central Bank to amend the SEPA regulations in order to assist the Bank in dealing with cases of IBAN discrimination and to proactively resolve some of the potential issues that may arise here.

The proposed changes to the SI 132 of 2013 (the Irish SEPA Regulations) are being made to give the Central Bank of Ireland additional powers to act against entities, that are not regulated financial service providers, engaging in the practice of “IBAN discrimination”.

These changes will expand the direction making powers of the Central Bank and bring the enforcement powers in line with the powers provided for under other similar legislation such as the European Union (European Markets Infrastructure) Regulations 2014.

Officials will continue to engage with industry and the relevant authorities on this topic.

Question No. 37 answered with Question No. 29.

Inshore Fisheries

Ceisteanna (38)

Christopher O'Sullivan

Ceist:

38. Deputy Christopher O'Sullivan asked the Minister for Finance if measures will be introduced to allow inshore fishers who only have the option for petrol-fuelled outboard engines to avail of the scheme under which they can claim VAT back on the petrol, as is the case with diesel engines; and if he will make a statement on the matter. [26777/22]

Freagraí scríofa

Minister for Finance

I am advised by Revenue that, in accordance with the EU and Irish VAT law, fishers can decide whether or not they wish to register for VAT.

Many fishers do not elect to register for VAT and therefore they are not entitled to recover VAT incurred on their expenses. However, VAT unregistered fishers may be able to claim a repayment of VAT paid on the purchase or importation of marine diesel for use on a registered sea-fishing vessel, under the Value-Added Tax (Refund of Tax) (no. 16) Order,1983. The refund order does not provide for a refund of VAT incurred on petrol. Under the VAT Directive, with which Irish VAT legislation must comply, this refund order cannot be expanded.

The Deputy may wish to know that even if the taxpayer is registered for VAT and makes only taxable supplies, the VAT Consolidation Act provides that VAT cannot be reclaimed on petrol, otherwise than as stock-in-trade.

Cost of Living Issues

Ceisteanna (39, 43)

Neale Richmond

Ceist:

39. Deputy Neale Richmond asked the Minister for Finance the measures that he believes are contributing to the decrease in consumer spending to date in 2022; the steps that he will take to address this and the rising cost-of-living; and if he will make a statement on the matter. [31067/22]

Fergus O'Dowd

Ceist:

43. Deputy Fergus O'Dowd asked the Minister for Finance his views on the slight decrease in consumer spending in quarter one 2022; the possible reasons for same; and if he will make a statement on the matter. [31334/22]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 39 and 43 together.

A decline in consumer spending was recorded in the first quarter of this year, reflecting numerous headwinds at the start of the year. Firstly, there was the Omicron wave and its impact on hospitality and certain other contact-intensive services sectors in the early part of the first quarter. Then as the economy fully re-opened we were faced with the fallout from the war in Ukraine, which led to a collapse in consumer sentiment due to the heightened uncertainty and a further rise in inflationary pressures. All of this is reflected in an increase in household precautionary savings, with households saving around a fifth of disposable income in the first quarter, a rate not seen since the second quarter last year.

The war in Ukraine and the associated economic and financial sanctions represent a large ‘supply-side’ shock to the world 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. Inflationary pressures have risen steeply as a result.

Consumer price inflation in Ireland rose to 8.3 per cent in May, a multi-decade high. Core inflation has also been increasing sharply in recent months, suggesting price rises are becoming more broad-based, with a greater range of consumer goods affected.

I am acutely aware of the real hardship this inflationary pressure has created, with both businesses and households feeling the strain. Rising prices ultimately reduce the real incomes of households and result in households cutting back on spending.

The Government has introduced a series of measures to ease the impact of rising prices, with €2.4 billion in announced cost of living measures so far, including measures announced in Budget 2022. We will continue working to ensure the fallout is minimised for those who are least-equipped to respond, although we cannot cushion the impact for all. It is crucial that we remain prudent in our response, and avoid a situation where broad fiscal measures contribute to further inflationary pressures.

European Union

Ceisteanna (40, 193)

Richard Boyd Barrett

Ceist:

40. Deputy Richard Boyd Barrett asked the Minister for Finance the assessments that are being carried out to establish whether the objectives for quality employment and training and the culture test are being met for the section 481 tax relief; if European Union conditions in relation to State aid for arts and culture state support are being met; and if he will make a statement on the matter. [31319/22]

Richard Boyd Barrett

Ceist:

193. Deputy Richard Boyd Barrett asked the Minister for Finance if his attention has been drawn to the recent correspondence from EU Commissioner Vestager to the Irish Government in relation to State aid to the Irish film industry; if it is failing to meet the culture test for such State aid and his views on whether it may also not be meeting the industry development test similarly required for such State aid to the film industry; and if he will make a statement on the matter. [22482/22]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 40 and 193 together.

I am not aware of any correspondence from Commissioner Vestager as set out in the Deputy’s question. My officials have also engaged with those in the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media (DTCAGSM) and the Department of Enterprise, Trade and Employment (DETE), who also advise that no such correspondence has been identified. My officials have sought clarification from the Deputy’s office on the question but unfortunately no further information was provided in the time available. I would note that, should any correspondence be received from the European Commission on State aid to the Irish film industry, or indeed any subject matter, I would treat it with the utmost priority.

It is possible that the Deputy may be referring to correspondence in respect of the Audiovisual Media Services Directive (AVMSD). The AVMSD governs EU-wide coordination of national legislation on all audiovisual media, traditional TV broadcasts and on-demand services. In May the European Commission referred five Member States, including Ireland, to the Court of Justice of the European Union over the failure to transpose the revised AVMSD (Directive (EU) 2018/1808). The revised Directive provides EU-wide media content standards for all audiovisual media. It does not relate to tax matters. The referral included a request to impose financial sanctions in accordance with Article 260(3) TFEU. This is a matter for my colleague the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media (TCAGSM).

With regard to the film tax credit, section 481 TCA 1997 provides a 32% payable credit for eligible expenditure on film production in Ireland. The scheme is intended to act as a stimulus to the creation of an indigenous film industry in the State, creating quality employment opportunities and supporting the expression of the Irish culture.

In order for a production to qualify for the relief it must have been issued with a cultural certificate by the Minister for TCAGSM. In considering whether to issue a certificate in relation to a film, the Minister for TCAGSM will consider whether the film will either or both:

i. act as an effective stimulus to film making in the State through among other things, the provisions of quality employment and training and skills development opportunities (referred to as ‘the Industry Development test’), and

ii. be of importance to the promotion, development and enhancement of the national culture including, where applicable, the Irish language (referred to as ‘the Culture test’)

To ensure adherence with the Industry Development test, all applications for film relief must include a Skills Development Plan. For all projects with eligible expenditure in excess of €2 million, a copy of the Skills Development Plan should also be submitted to Screen Ireland for approval. The Skills Development Plan requires information concerning the number of skills development participants and the types of skills activities undertaken. Within 6 months of completion of the project, applicants are required to submit a Quality Assurance Compliance Report including all evidence of skills development activity for all skills development participants.

Applicants for the film tax credit must also complete an undertaking in respect of quality employment. This undertaking commits applicants to compliance with all relevant employment legislation and requires them to have in place written policies and procedures in relation to grievances, discipline and dignity at work (including harassment, bullying and equal opportunity). These conditions shall be met by both the producer company and the qualifying company. If an applicant company does not adhere to the conditions specified in the undertaking, any credit claimed may be subject to recoupment by Revenue.

The Culture test is the mechanism which ensures that aid is provided only to projects which promote European culture. As part of the application to DTCAGSM, applicants must demonstrate how the project will be of importance to the promotion, development and enhancement of the national culture by meeting at least three of the eight applicable criteria. These criteria are set out on Screen Ireland’s website[1]. Further information may be requested from the applicant by DTCAGSM if any clarification is required. The test is assessed by one member of staff in DTCAGSM, reviewed by another member of the Department, and is finally approved at the Principal Officer grade. Should a production fail to pass the Culture test, it will not be certified by the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media and will therefore not qualify for relief.

[1] www.screenireland.ie/filming/section-481#:~:text='Section%20481'%20is%20a%20tax,the%20Revenue%20Commissioners%20(Revenue)