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Tuesday, 21 Jun 2022

Written Answers Nos. 175-188

Research and Development

Ceisteanna (176)

Pearse Doherty

Ceist:

176. Deputy Pearse Doherty asked the Minister for Finance the estimated first and full-year cost for making research and development payable credits payable in one instalment within 12 months for small and micro-companies. [32480/22]

Amharc ar fhreagra

Freagraí scríofa

It is assumed that the Deputy is referring to accelerating the second and third payable credit associated with the research and development tax credit for small and micro-companies.

I am advised by Revenue that, while the suggested measure would not entail any sustained overall increase to the cost of the credit, the estimated additional cash flow cost associated with making the research and development payable credits payable in one instalment within 12 months for small and micro-companies is in the region of €42 million in the first full year.

This estimate is based on information included in tax returns for the year 2020, the latest year for  which data is available, and does not take account of any potential behavioural change.  I would also note that introducing a targeted element to the credit would have State aid implications.

Tax Yield

Ceisteanna (177)

Pearse Doherty

Ceist:

177. Deputy Pearse Doherty asked the Minister for Finance the estimated first and full-year revenue that would be raised by introducing a 40% rate of capital gains tax on individual incomes in excess of €500,000, inclusive of income deriving from capital gains. [32481/22]

Amharc ar fhreagra

Freagraí scríofa

I am advised by Revenue that the estimated full-year revenue generated from a 40% Capital Gains Tax (CGT) rate being applied to the taxable gains of individuals with aggregate income and gains in excess of €500,000 would be in the order of €70 million. 

This full-year estimate is based on 2019 data, the latest year for which fully analysed data are available, with the higher proposed rate being applied to the proportionate amount of the gains above the combined threshold only. This estimate assumes no change in behaviour by individuals resulting from the increase in the tax rate.

The first year yield would depend on the timing of the introduction of the change.

Departmental Schemes

Ceisteanna (178)

Pearse Doherty

Ceist:

178. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of the help to buy scheme for 2023; if all or a portion of that cost is within the base for 2023; and to outline that cost. [32482/22]

Amharc ar fhreagra

Freagraí scríofa

The Help to Buy (HTB) incentive is a scheme to assist first-time purchasers with a deposit they need to buy or build a new house or apartment. The incentive gives a refund on Income Tax and Deposit Interest Retention Tax (DIRT) paid in the State over the previous four years, subject to limits outlined in the legislation. Section 477C Taxes Consolidation Act (TCA) 1997 outlines the definitions and conditions that apply to the scheme. 

HTB is a demand-led tax expenditure which is subject to a broad range of variables, including housing completion rates and prices. The estimated cost of HTB is therefore dependent on the nature and extent of the scheme in 2023, about which decisions have yet to be taken.

At present, HTB is subject to a sunset clause with an associated date of 31 December 2022. Accordingly, there is no provision in the current budgetary arithmetic in respect of the cost of the measure beyond end-December 2022.

The nature and extent of the scheme going forward will be informed by the findings of the review of HTB which is currently being undertaking by Mazars. The future of the scheme beyond its current sunset date is a matter that will fall to be considered by Government in the context of the forthcoming Budget and Finance Bill process.  It would be premature at this point to anticipate the outcome of those deliberations.

Tax Yield

Ceisteanna (179)

Pearse Doherty

Ceist:

179. Deputy Pearse Doherty asked the Minister for Finance the estimated first and full-year revenue that would be raised by introducing a 3% income tax surcharge on the portion of individual income above €140,000. [32483/22]

Amharc ar fhreagra

Freagraí scríofa

I am advised by Revenue that income tax liabilities are calculated on a taxpayer unit basis, where married people and those in a civil partnership who have elected to be jointly assessed are treated as one unit, and their incomes are combined when arriving at the taxable income.

As such, it is not possible to determine the potential yield that might arise from introducing the Deputy's proposal on an individualised basis.

However on a taxpayer unit basis, the estimated first and full year yield from introducing an additional 3% income tax rate on the portion of taxpayer unit income above €140,000 is €235 million and €300 million, respectively.

Tax Code

Ceisteanna (180)

Éamon Ó Cuív

Ceist:

180. Deputy Éamon Ó Cuív asked the Minister for Finance the rate of tax being paid by financial investors on the profit from rents in apartment blocks and other residential property; the rate of tax paid by persons on the profits from rents from apartment blocks and other residential property; the reason for the difference in these rates of tax; if a radical overhaul of this is being examined given the forthcoming budget and the need to have an equitable tax system; and if he will make a statement on the matter. [32765/22]

Amharc ar fhreagra

Freagraí scríofa

In broad terms, where an individual invests in rental property via a collective investment vehicle, a tax exemption may apply within the vehicle (subject to conditions) and the investor is subject to tax when they receive distributions of profits or gains.  Where an individual holds property directly, they are subject to tax on income or gains as they arise, subject to the normal payment and return filing deadlines.  In both cases, the tax rates will be determined by the person's total income or gains in the relevant year, among other factors.

The following is a more detailed overview of the tax regime applicable when investing in Irish property through an investment vehicle or as an individual landlord.

Investment Vehicles

In terms of investing in Irish property through investment vehicles, the primary regimes utilised are the Irish Real Estate Fund (IREF) regime and the Real Estate Investment Trust (REIT) regime. It should be noted that, as with investment vehicles generally, taxation in REITs and IREFs occurs primarily at the level of the investor rather than within the investment vehicle. Additionally, both REITs and IREFs apply withholding taxes on distributions to investors to ensure collection of tax revenues.

An IREF is an investment undertaking where 25% or more of the value of that undertaking is made up of Irish real estate assets. Generally IREFs must deduct a 20% withholding tax on distributions to non-resident investors, and further taxation is a matter for their country of residence. Certain categories of investors such as pension funds, life assurance companies and other collective investment undertakings are generally exempt from having IREF withholding tax applied provided the appropriate declarations are in place. Non-resident investors from treaty resident countries may be able to reclaim some part of IREF withholding tax if the relevant tax treaty allows for this. Irish resident investors are not subject to the IREF withholding tax as they are already subject to 41% exit tax on income/gains from funds.

Investors can also invest in Irish property through a REIT. A REIT is a quoted company, used as a collective investment vehicle to hold rental property. The function of the REIT framework is not to provide an overall tax exemption but rather to facilitate collective investment in rental property by removing a double layer of taxation which would otherwise apply on property investment via a corporate vehicle. REITs are publicly listed companies - therefore distributions are dividends within the scope of Dividend Withholding Tax, which applies at a rate of 25%. REITs are obliged to distribute at least 85% of profits annually. Irish resident investors are liable to tax at their marginal rates on dividends received, with a credit for the DWT deducted. Non-Irish resident investors are subject to DWT at 25%. Those resident in treaty-partner countries may be able to reclaim some of this DWT under the relevant tax treaty.

Institutional investment from entities like IREFs and REITs in commercial and residential property is critically important to generating additional supply of property as part of our Housing for All plan.

It is important to acknowledge that much of the residential investment committed to by institutional investors is observed by the level of forward commit transactions – that is, the provision of capital to fund the construction of new dwellings or the agreement of binding purchase contracts that de-risk a project sufficiently to enable the sourcing of low-cost financing. Without such commitment, it is highly likely that these dwellings would not be built.

Individual Landlords

The rate of tax payable by an individual landlord on rental profits will be determined by their overall level of income.  Ireland has a progressive income tax system which provides that, as a person’s income increases, they move up through the various rates and bands of income tax, USC and PRSI.

Section 97(1) Taxes Consolidation Act 1997 (TCA 1997) sets out the rules for computing rental profits or gains.  Landlords are entitled to deduct certain expenses from the gross rental income received and are then taxed on the balance, which is the rental profit.  Generally, expenses which are capital in nature are not allowable as deductions unless they fall into the category of “plant” for the purposes of section 284 TCA 1997 and can be claimed as capital allowances (over eight years at 12.5% of the allowable cost per year).  However, the expense must have been incurred wholly and exclusively for the purposes of the business of letting the property. 

In all cases involving the letting of property by an individual, if the net rental income (gross rental income minus expenses) is less than €5,000 and if the landlord’s only other source of income is employment income, he/she must declare the rental income by filing a Form 12 return. If the net rental income is over €5,000, the landlord must register for self-assessment and declare the rental income in a Form 11 return.  Returns of income must be submitted by the return filing date for the year of assessment in question.

The government is acutely conscious of the pressures facing our housing system and Housing for All is the Government’s plan to boost the supply of housing to 2030, to increase availability and affordability of housing, and to create a sustainable housing system into the future.  This recognises the critical importance of both State and private funding to increase our overall housing stock. Officials continually keep the taxation of property related income under review with a view to recommending changes if required.

Vacant Properties

Ceisteanna (181)

Aindrias Moynihan

Ceist:

181. Deputy Aindrias Moynihan asked the Minister for Finance when figures for the number of vacant properties per county based off the local property returns will be published; and if he will make a statement on the matter. [32800/22]

Amharc ar fhreagra

Freagraí scríofa

The Government’s strategy Housing For All includes an action for my Department to collect data on vacancy with a view to introducing a Vacant Property Tax. The timeframe for delivery on this commitment is the second quarter of 2022.

The Finance (Local Property Tax) (Amendment) Act 2021 enabled Revenue to collect certain information in relation to the occupancy status of residential properties in the Local Property Tax (LPT) return forms, submitted by residential property owners in respect of the new LPT valuation period of 2022-2025. The LPT returns included questions such as whether a property is vacant, the reasons for the vacancy and if the period of vacancy exceeds 12 months. The aim was to provide an indicative profile of vacant residential properties which will help to inform policy. It should be noted that LPT applies only to habitable residential properties, and derelict or uninhabitable properties are not captured under the LPT system.

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. I 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 shortly.

Cost of Living Issues

Ceisteanna (182)

Aindrias Moynihan

Ceist:

182. Deputy Aindrias Moynihan asked the Minister for Finance his considerations to address the rising cost in living as headline inflation has exceeded what was forecasted since the budget; and if he will make a statement on the matter. [32801/22]

Amharc ar fhreagra

Freagraí scríofa

Consumer price (HICP) inflation picked up sharply over the course of last year and stood at 8.3% 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% in May.

The key driver of the elevated level of inflation at present is the sharp rise in wholesale energy, food and other commodity prices since the onset of the war in Ukraine. Pass-through price effects are now being felt in other sectors and the recent rise in non-energy or ‘core’ inflation, which stood at 4.9% in May, suggests inflationary pressures are becoming increasingly broad-based.

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 include changes in tax and social welfare, the provision of an energy credit for households and a temporary reduction in the rate of VAT on the supply of certain energy products.

However, it is important to bear in mind that the causes of current price pressures are not within our control. Whilst the Government will continue to work to help alleviate cost of living challenges, resources are limited and we cannot cushion households and businesses from the entire impact.  The Government has to balance the appropriate response to the increased cost of living in Ireland with the unprecedented level of global economic uncertainty and macroeconomic risk. 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. 

Primary Medical Certificates

Ceisteanna (183)

Sorca Clarke

Ceist:

183. Deputy Sorca Clarke asked the Minister for Finance the steps he has taken to ensure the expected changes to the eligibility criteria policy for a primary medical certificate are implemented; and if he will make a statement on the matter. [32809/22]

Amharc ar fhreagra

Freagraí scríofa

The 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 an annual fuel grant. The car must be purchased before applying for VRT and VAT relief, as applicable to the category of adaptations made to the vehicle.

The Scheme is open to severely and permanently disabled persons who meet one of six medical criteria, as a driver or as a passenger and also to certain 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.

I gave a commitment that a comprehensive review of the scheme, to include a broader review of mobility supports for persons with disabilities, would be undertaken.

In this context I have been working with my Government colleague, Roderic O’Gorman, Minister for Children, Equality, Disability, Integration and Youth. We  both agree that the review should be brought within a wider review under the auspices of the National Disability Inclusion Strategy, to examine transport supports encompassing all Government funded transport and mobility schemes for people with disabilities. 

We believe that this is the most appropriate forum to meet our mutual objectives in respect of transport solutions/mobility supports for those with a disability.

The NDIS working group, chaired by Minister Anne Rabbitte, with officials from both my Department and the Department of Children, Equality, Disability, Integration and Youth as well as others, held its first meeting on 26 January 2022. A stock-taking exercise of existing transport and mobility schemes currently supporting people with disabilities is ongoing ahead of the next meeting of the group. The issue was also discussed at the most recent meeting of the NDIS Steering Group on 13 April, which included input from stakeholders.

My officials will continue to work closely with officials from the Department of Children, Equality, Disability, Integration and Youth, to progress this review, and on foot of that will bring forward proposals for consideration.

I cannot comment on any potential changes to the scheme in advance of these proposals.

Question No. 184 answered with Question No. 174.
Question No. 185 answered with Question No. 174.

Freedom of Information

Ceisteanna (186)

Carol Nolan

Ceist:

186. Deputy Carol Nolan asked the Minister for Public Expenditure and Reform if there are plans to amend the Freedom of Information Acts to make the office of President and Áras an Uachtaráin subject to FOI; and if he will make a statement on the matter. [31813/22]

Amharc ar fhreagra

Freagraí scríofa

The Supreme Court recently considered constitutional issues relating to the potential applicability of access to information regimes to President in the case of Right to Know v. Commissioner for Environmental Information [2022] IESC 19.

The Court's findings confirm, in light of the President's immunity under Article 13.8 1° of the Constitution, that any move to make the President or his staff subject to FOI would very likely be unconstitutional.  Accordingly, there are no plans at present to consider such an amendment, nor is it likely to be considered at any point of the future given the constitutional position.

However, a comprehensive review of the Freedom of Information legislation more generally is underway, which offers an opportunity for all interested stakeholders to have their say on the operation of the FOI regime and any issues they have experienced or proposals they may have.

A full public consultation in the review opened on 16 June, and will be taking submissions until 12 August.  I would encourage all Members of the Houses and anyone else who wishes to raise issues in relation to FOI to make their voices heard in the context of the review.

Parking Provision

Ceisteanna (187)

Neasa Hourigan

Ceist:

187. Deputy Neasa Hourigan asked the Minister for Public Expenditure and Reform the guidelines or criteria that determine the level and type of parking allowed for events in the Phoenix Park. [31885/22]

Amharc ar fhreagra

Freagraí scríofa

The Office of Public Works accommodate the hosting of events in the Phoenix Park with over two and half thousand sporting and recreational events taking place annually in the Park. Due to its close proximity to the centre of Dublin, it has been host to a number of major events because of its scale. The Papal Visits of 1979 and 2018, soccer team homecomings and large-scale concerts are examples of such events. The finish of the Tour de France’s Irish stage was also held in The Phoenix Park. The Bloom horticultural shows are held annually at The Phoenix Park Visitor Centre. Many charity and community groups avail of the Park and hold various sports day and community days.

The guidelines for parking is specific to each event with organisers working with the OPW and An Gardaí Siochána to discuss their traffic management plans as a core element of their overall Event Management Plan. The event organisers will take into account the spaces available and will advise people attending to use sustainable transport, car pooling or buses. Road closure orders are usually in place for events.

In general, the OPW does not allow parking on grass. An exception is made for the Bloom Festival which due to its five day programme attracting a large number of people from across Ireland who purchase bulky items at the event. This requires additional parking which is managed by the event organisers. 

Flood Risk Management

Ceisteanna (188)

Mairéad Farrell

Ceist:

188. Deputy Mairéad Farrell asked the Minister for Public Expenditure and Reform the size of each allocation and any corresponding capital carryover in relation to the capital allocation for flood defences in each of the years 2018 to 2021, in tabular form; and if he will make a statement on the matter. [32029/22]

Amharc ar fhreagra

Freagraí scríofa

Between the years 2018 to 2021 the Office of Public Works has trebled to some 90 flood relief schemes at design and construction stages. The table below gives the capital allocation to the Office of Public Works and capital carryover for the design and construction of flood relief schemes for each of the years 2018 to 2021 inclusive. 

Capital Allocation & Capital Carryover for Flood Defences in the Years 2018 – 2021

€,000

2018 Allocation

63,969

2018 Capital Carryover

-

2018 Total Funding Available

63,969

 

 

2019 Allocation

68,969

2019 Capital Carryover

-

2019 Total Funding Available

68,969

 

-

2020 Allocation

81,366

2020 Capital Carryover

-

2020 Total Funding Available

81,366

 

-

2021 Allocation

81,366

2021 Capital Carryover

4,000

2021 Total Funding Available

85,366

 

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