Written Answers Nos. 101-120
102. Deputy Pearse Doherty asked the Minister for Finance if he is aware of the sale of tracker mortgages to third parties and vulture funds which were overcharged as a result of the tracker mortgage examination; his views on these sales in the context of the principles of the TME; and if he will engage with the Central Bank with respect to same. [11319/23]
Amharc ar fhreagraThe Central Bank Tracker Mortgage Examination required lenders to identify all borrowers affected by tracker related issues and to compensate those affected borrowers for tracker related failings on a mortgage in line with the Principles for Redress that formed part of the framework.
The Principles for Redress set out that lenders make redress and compensation offers that were fair and commensurate with the detriment suffered by affected borrowers. This included that such redress would result in affected borrowers being returned to the position they would have been in had the lenders’ failure regarding the customer’s tracker mortgage not arisen. This included that:
- compensation is reasonable and must reflect the detriment involved arising from and/or associated with being on an incorrect rate (such compensation to reflect the specific circumstances of each impacted customer); and
- impacted borrowers to revert to the appropriate Tracker Interest Rate or to be offered the option to revert to an appropriate Tracker Interest Rate, where relevant.
The Central Bank's final report of the supervisory phase of the examination was published in July 2019. It outlined that over 40,000 customer accounts were impacted by lender failings and that almost €700 million of redress and compensation was paid to impacted borrowers and borrowers were returned to the appropriate tracker rate as necessary.
I am aware that some tracker mortgages were sold to 3rd parties including investment funds, and were subject to the Principles for Redress outlined above if impacted by tracker related issues. With the result that were treated in the same way as impacted tracker mortgages that were not sold to 3rd parties.
In the case of impacted loans that were sold by lenders to 3rd parties, the originating lender was responsible for ensuring that borrowers were put back in the position they would have been if the tracker failing had not occurred.
I have been informed by the Central Bank that this included engaging with any new mortgage entity where necessary to ensure that the customer received redress and compensation and the appropriate tracker rate going forward.
103. Deputy Christopher O'Sullivan asked the Minister for Finance if he has any plans to amend the parameters of the regional uplift scheme to encourage film production as part of the film tax credit, section 481; and if he will make a statement on the matter. [11157/23]
Amharc ar fhreagraSection 481 provides relief in the form of a corporation tax credit related to the cost of production of certain films. 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.
Finance Act 2018 introduced a short-term, tapered regional uplift for productions being made in areas designated under the State aid regional guidelines. The purpose of the regional uplift is to support the development of new, local pools of talent in areas outside the current main production hubs and to support the geographic spread of the audio-visual sector.
The uplift originally provided an increased level of credit for four years, with 5% available in years 1 and 2 (2019 and 2020), 3% available in year 3 (2021), and 2% available in year 4 (2022). However, in recognition of the detrimental impact the COVID-19 crisis had on the audio-visual sector, Finance Act 2020 amended the regional uplift to provide for an additional 5% year in 2021, in effect to replace the incentive year lost as a result of the COVID-related public health measures. The tapered withdrawal of the uplift then restarted in 2022 with a reduction to 3%, it has reduced to 2% this year, and will be Nil thereafter.
There are currently no plans to amend or extend the regional uplift or to introduce alternative proposals for regional specific changes to Section 481. However, I would note that the main film tax credit of 32% will remain available to qualifying productions in all areas of the country following the winding-down of the uplift. Furthermore, other non-tax supports are also available to regional productions, such as Screen Ireland's recently announced fund to support regional activity. The Regional Support Fund is designed to support the development of skills around the country, outside of the established hubs in Dublin and Wicklow. It is targeted at crew across all grades, including new entrants, and will also require commitments in the area of Diversity and Inclusion, sustainable production and on-set initiatives
The Deputy may be aware that Finance Bill 2022 provided for the extension of Section 481 from its current closing date of 31 December 2024 to 31 December 2028, subject to European Commission approval. Early provision for the extension of the relief demonstrates this Government’s commitment to the Irish audio-visual industry, and is intended to provide certainty regarding the future availability of the relief in view of the long lead-times which can be involved in the planning of audio-visual productions. This certainty will foster further confidence in Ireland as a centre of excellence for screen production.
104. Deputy Richard Boyd Barrett asked the Minister for Finance the companies that attended the dinner he hosted in Davos recently; the matters that were discussed with these companies; and if he will make a statement on the matter. [11406/23]
Amharc ar fhreagraAs the Deputy will be aware, I attended the World Economic Forum in January of this year where I participated in a range of high-level meetings and participated in panel discussions on the future of work and on global efforts to combat poverty. I also participated in a number of interviews with international and Irish media, with focus on promoting Ireland as a location for investment and job creation. IDA Ireland also travels to Davos during every World Economic Forum given the extensive attendance of senior executives from international companies, many of whom have investments in Ireland or are considering same. At their request I held a series of meetings with executives and also co-hosted IDA Ireland’s annual dinner event alongside their Acting Chief Executive. The companies involved in these engagements reflected the range of sectors which IDA works with, including technology, pharma and financial services. In line with longstanding practice, the Deputy will understand that discussions with these companies (on consolidating investments, expanding them or making new investments) are necessarily conducted on a confidential basis until such time as any public announcements can be made.
105. Deputy Pearse Doherty asked the Minister for Finance the total number of complaints made with regard to the operation and services provided by the Financial Services and Pensions Ombudsman; if he will consider introducing an independent assessor to consider complaints about the standard of service and practical handling of a case provided by the Financial Services and Pensions Ombudsman; and if he will make a statement on the matter. [11321/23]
Amharc ar fhreagraThe Financial Services and Pensions Ombudsman (FSPO) is committed to providing a receptive service that is delivered in an accessible and inclusive manner, and is responsive to the needs of its customers. The FSPO adheres to ‘Our Public Service’, a framework developed by the Department of Public Expenditure, NDP Delivery, and Reform for innovation and continuous development in Ireland’s public service.
In 2022, the FSPO received and responded to 59 customer service complaints regarding the operation and services provided by the FSPO, which represents an 11% decrease in the number of customer service complaints received in the previous year (2021). Since 1 January 2023, the FSPO has received 17 customer service complaints.
On the issue of introducing an independent assessor, the FSPO already segregates the management of customer service complaints from operational directorates involved in the management of financial service and pension complaints, instead allocating responsibility for these reviews to an entirely separate and independent strategic process.
The FSPO also operates a Customer Charter and Customer Action Plan, which outline the standard of service and behaviour underpinning all interactions with customers and describe the FSPO’s policy of encouraging feedback from its customers, evaluating that feedback and, where possible, continuously improving on the quality of service offered.
It is also important to note that one of the functions of the FSPO Council under Section 40 of the FSPO Act 2017 is to keep under review the efficiency and effectiveness of the Ombudsman and to advise myself as Minister, either at my request or on its own initiative, on any matter relevant to the performance of the functions of the Ombudsman.
106. Deputy Gino Kenny asked the Minister for Finance if he is aware that leading global tax researchers from the University of California, Berkeley and the University of Copenhagen (details supplied) have identified Ireland as a major tax haven and estimate that Ireland artificially attracts €130 billion in profits from other countries and gains €7.2 billion in tax revenue from this profit shifting; and if he will make a statement on the matter. [11372/23]
Amharc ar fhreagraI understand that the Deputy is referring to a report "The Missing Profits of Nations" that examines the attribution of profits by multinational enterprises (MNEs) around the world.
The central analysis of the paper looks at links between the level of profit booked, and the level of wages paid in a country. This creates a misleading impression that corporate profits are or should be directly linked to wage levels rather than to the outputs of investment in all income generating activities such as investment in R&D, intangible assets, capital intensive machinery and investment in staff etc. A small country with high levels of high value adding FDI relative to the size of the domestic economy will of course, appear like an outlier in this type of analysis.
Ireland has a competitive corporation tax rate, an attractive and stable tax regime and a strong reputation and commitment to transparency. Ireland's tax regime is designed to encourage the location of real, substantive and high-value adding investment in the country. This is evidenced by the substantial number of MNEs who have chosen Ireland as their home and the hundreds of thousands of both direct and indirect jobs they contribute to the economy.
Ireland is a strong supporter of the OECD BEPS process and has a track record on taking action on tax planning and in implementing commitments made at international level to support tax transparency including through the implementation of the EU Anti-Tax Avoidance Directives.
Furthermore, Ireland fully supports the two pillared solution to address the challenges brought about by the digitalisation of the economy and is actively engaged at the OECD to follow through on that agreement. The EU Minimum Tax Directive was agreed in December and will ensure that large MNEs will pay a minimum effective tax rate of 15%. It is my intention to bring forward legislation in this years Finance Bill to transpose Directive into domestic legislation before the end of the year.
108. Deputy Richard Boyd Barrett asked the Minister for Finance if he will outline any role or involvement he has in the proposed Coillte/Gresham House deal in relation to the future of Irish forestry; his views on the tax treatment of such an investment plan; and if he will make a statement on the matter. [11403/23]
Amharc ar fhreagraI should say that policy responsibility for the development of forestry in Ireland is within the remit of the Minister for Agriculture, Food and the Marine and of course Coillte. I understand that the development of the investment fund referred to by the Deputy arises in the context of the plan to expand forest cover in Ireland to meet climate change targets. In the context of the issue raised by the Deputy, I can outline the role of the Ireland Strategic Investment Fund (ISIF). For ISIF its statutory mandate is what it refers to as a “double bottom line” mandate of investing for a commercial return and investing to support economic activity and employment in Ireland. ISIF has disclosed that it is investing €25m as part of a wider €200m fund, which will acquire land from farmers and private landowners who wish to sell to the fund at market rates. ISIF has also informed me that its investment is part of both its Food & Agriculture and wider €1bn climate action investment programme, complementing its existing investments in forestry, renewable energy, energy efficiency and energy storage, and generating further progress in Ireland’s transition to a Net Zero economy. ISIF complies with all applicable laws including tax law. The tax treatment of the Fund is set out at note 6 on page 189 of the NTMA’s 2021 Annual Report.
109. Deputy Robert Troy asked the Minister for Finance if any action can be taken for borrowers who previously experienced difficulties in making mortgage repayments to banks and had their loans sold to non-bank lenders companies and are now stuck paying very high variable mortgage repayments, with most credit servicing firms not offering new fixed rates; and if he will make a statement on the matter. [11153/23]
Amharc ar fhreagraThe type of mortgages, including fixed or variable rate mortgages, offered by different categories of Central Bank regulated entity is a commercial matter for each individual lender. In addition, the mortgage interest rates they charge and the basis for the adjustment of the interest rate is, subject to the terms of the particular contract, a commercial matter for individual lenders having regard to their own particular business and operational policies.
Where a mortgage is sold, the new mortgage entity acquires the loan on the existing contract terms and so it will only be able to adjust the interest rate in line with those existing contract terms.
In addition, as part of its Consumer Protection framework, the Central Bank has put in place a range of measures in order to protect consumers who take out or have a mortgage. The consumer protection framework seeks to ensure that lenders are transparent and fair in all their dealings with borrowers and that borrowers are protected from the beginning to the end of the mortgage life cycle.
For example, through protections at the initial marketing/advertising stage, in assessing the affordability and suitability of the mortgage and at a time when borrowers may find themselves in financial difficulties.
The framework includes various Central Bank Statutory Codes of Conduct such as the Consumer Protection Code 2012 and the Code of Conduct on Mortgage Arrears 2013. All regulated entities, including retail credit firms and credit servicing firms, are required to comply with the provisions of these codes in their dealings with consumers.
The Consumer Protection Code 2012 requires that all regulated entities, including entities which service loans, explain to borrowers how their variable interest rates have been set including in the event of an increase. The lender must also signpost the borrower to the CCPC’s mortgage switching tool.
Where a borrower is facing an increase in the rate of their mortgage, they can seek to move to another product at their existing lender or switch to a different lender, noting this will be subject to the lending criteria, terms and conditions of the lender to whom they apply. In this respect, the Central Bank has advised that it has engaged with lenders to ensure the operational capacity is in place to facilitate people to switch at a system wide level.
The Code of Conduct on Mortgage Arrears (CCMA) provides specific protections for borrowers in arrears or facing the prospect of arrears on a loan secured on a primary residence. In particular, a regulated entity must pro-actively encourage borrowers to engage with it about financial difficulties which may prevent the borrower from meeting his/her mortgage repayments. Also, where a borrower is experiencing repayment difficulty, a regulated entity must explore all of the options for alternative repayment arrangements (known as ARAs) offered by the entity to determine if a more suitable and sustainable repayment option is available based on the borrower’s individual circumstances.
If a borrower is not satisfied with the options proposed, or if the regulated entity declines to offer an ARA, an appeals mechanism is provided for in the CCMA. In addition, a regulated entity must review an ARA at intervals that are appropriate to the type and duration of the arrangement, including at least 30 calendar days in advance of an ARA coming to an end.
110. Deputy Peadar Tóibín asked the Minister for Finance if it has been brought to his attention that Ireland has one of the highest debt burdens per capita in the world. [9818/23]
Amharc ar fhreagraI want to assure the Deputy that I am fully conscious that public debt in Ireland is amongst the highest in the world on a per capita basis.
Indeed, last month, my Department published its Annual Report on Public Debt in Ireland 2022, which highlighted that debt per capita amounted to €44,250 per capita last year. The analysis set out in this document also showed, however, that the burden of debt - as measured by interest payments as a share of total revenue - has fallen over the past decade, mainly due to the decline in interest rates.
This means that our debt burden is sustainable, but only as long as we manage it correctly. That is why sticking to a medium-term fiscal framework, with annual increases in public spending capped at 5 per cent per annum, is so important.
This is what Government intends to do.
I am also conscious that there are clear risks to our public finances - most notably in the form of a shock to corporation tax receipts. That is why I have transferred €4 billion to the National Reserve Fund last month and why I am targeting a budgetary surplus for this year.
I would also stress the importance of analysing public debt developments in a forward-looking manner: our population is ageing and this will involve large additional costs to the Exchequer. We will also need to finance climate change mitigation measures as well as the digital transition in the years to come.
With this in mind, my officials will shortly report on the merits of establishing some form of pre-funding vehicle. Such an approach would build fiscal buffers to meet long-term challenges, while also helping to ensure that permanent fiscal commitments are not made on the basis of receipts that are potentially transitory in nature.
111. Deputy Verona Murphy asked the Minister for Finance if the current 9% tourism VAT rate will be extended past 1 March 2023; and if he will make a statement on the matter. [3847/23]
Amharc ar fhreagraAs the Deputy will be aware, in making any decision in relation to VAT rates or other taxation measures, the Government must balance the costs of the measures in question against their impact and the overall budgetary framework.
However, Government recognises the challenging business environment the tourism and hospitality sectors are operating in and the role that these businesses play in driving employment and economic activity across Ireland.
For this reason I will be extending the 9% VAT rate for these sectors to 31 August 2023. It will revert to the 13.5% VAT rate on 1 September 2023. The estimated cost of this measure is €300m. This extension strikes a balance between the cost to public finances and the provision of support for these sectors.
112. Deputy Aindrias Moynihan asked the Minister for Finance if he is satisfied that insurance premiums are being successfully reduced for motorists, businesses and other users, in line with the ever-reducing amounts for personal injury awards; and if he will make a statement on the matter. [11327/23]
Amharc ar fhreagraAs the Deputy will appreciate, 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).
Nevertheless, this Government is continuing to prioritise insurance reform through the whole-of-Government Action Plan for Insurance Reform. The Personal Injuries Guidelines – adopted in April 2021 – represent a key achievement of this reform agenda, with recent data from the Personal Injuries Assessment Board (PIAB) indicating that the overall average award has fallen by 38 per cent compared to awards made in 2020 under the Book of Quantum. Given this pace of reform, and the many other measures being implemented, it is necessary for the insurance industry to pass on benefits to its hard-pressed customers.
In that regard, I welcome recent data from the Central Statistics Office (CSO) showing that the price of motor insurance in January 2023 was 9.1 per cent lower than in January 2022, 16.1 per cent lower than April 2021 (when the Guidelines were adopted), and 43.7 per cent lower than its peak in July 2016. This is particularly notable at a time when general inflation level is 7.8 per cent. The fourth National Claims Information Database (NCID) Private Motor Report, which provided data up to the end of 2021, showed some initial insight into the impact of the Guidelines on awards, which was broadly in line with the data released by PIAB.
On insurance for businesses, the CSO does not publish this data, and the National Claims Information Database (NCID) has yet to publish employers’ liability, public liability and commercial property data for 2021 and 2022. I understand that it is the Central Bank’s intention to publish such data for 2021 this year. However, I acknowledge that difficulties remain in this sector and it is the Government’s intention that price reductions seen in the motor sector will have effect across other forms of insurance. Actions that should particularly benefit businesses are the recent Personal Injuries Resolution Board Act 2022 –and amendments to the duty of care via the Courts and Civil Law (Miscellaneous Provisions) Bill 2022.
Minister of State Carroll MacNeill is continuing to meet individually with the CEOs of the eight main insurers in the Irish market to discuss the Government’s reform package. In these meetings, and in ongoing engagement with industry, the Minister of State has consistently stressed the importance of insurers reflecting lower claims costs through reduced premiums. These engagements have been positive, with insurers confirming their commitment to passing on savings from the Guidelines.
Finally, it is important to note that it will take time for the Guidelines to take effect, particularly as there are still a number of pre-existing claims before the Courts which will be assessed under the Book of Quantum, as well as ongoing legal challenges to the Guidelines. In addition, buy-in from all stakeholders is vital if the Guidelines are to have the expected effect, and it will take a period of time for their true impact to be felt. In the meantime, the Government will continue to engage with stakeholders in relation to their use, as well as with the Central Bank with regards to enhancing the NCID to monitor their impact.
113. Deputy Brian Leddin asked the Minister for Finance his plans for reviewing motor tax and VRT for ICE and electric vehicles to encourage the uptake of smaller, lighter and more efficient vehicles on our roads; and if he will make a statement on the matter. [11386/23]
Amharc ar fhreagra222. Deputy Richard O'Donoghue asked the Minister for Finance his plans for the affordability of electric cars in the years ahead for families and students who depend on the second-hand market for transport. [10766/23]
Amharc ar fhreagraI propose to take Questions Nos. 113 and 222 together.
At the outset, the Deputy should note that neither the Government nor the Minister for Finance have a role in dictating the list price of vehicles which are decided by car manufactures or car dealerships.
My colleague, the Minister for Transport, has overall policy responsibility for transport policy including managing the National Vehicle and Driver File (NVDF) which is a database containing details of all 2.5 million registered vehicles and their owners as well as the 2.6 million licensed drivers in the country. The role of the Department of Finance on the other hand is limited to the taxation of vehicles, namely Vehicle Registration Tax (VRT), motor tax, VAT, and benefit-in-kind.
Regarding taxation, VRT is an emissions-based tax and therefore the amount of VRT incurred will vary across different vehicle makes and models. The charge is determined by the Open Market Selling Price of the vehicle. While there were no changes to VRT as part of Budget 2023, recent reform to the rates structure has provided for increased VRT rates for high emission vehicles, while lower emission vehicles continue to incur low rates of VRT. This reflects the environmental rationale of the tax and underpins Government commitments to decarbonise road transport.
It is important to note that VRT is a tax chargeable on the first registration of vehicles in the State and so is not chargeable on second hand cars sourced here.
The motor tax system was also reformed in Budget 2021, in line with Government commitments to reduce emissions from road transport and in the context of transitioning to the new Worldwide Light Test procedure (WTLP) emissions testing regime. In order to do this the existing New European Driving Cycle (NEDC) motor tax table was adjusted to reflect climate action priorities and to ensure a level playing field with the introduction of the new WTLP table.
Government policy with regard to vehicle taxation is to lower the emissions profile of the fleet. Recent reform has been focused on incentivising behavioural change towards low emission vehicles. The overall policy with regard to these taxes is kept under review as part of the Tax Strategy Group and Budgetary cycle.
Ireland is at the beginning of its transition to private electric transport. Within a few years it is anticipated that there will be a viable second hand market that will provide a more affordable pathway to the purchase of an EV. In addition, the motor industry is planning to bring more affordable electric vehicles onto the market. Notwithstanding this, steps are being taken to accelerate the establishment of a second hand EV market in Ireland.
In this regard, the Department of Transport convened the Electric Vehicle Policy Pathway (EVPP) Working Group to produce a roadmap to achieving the 2030 EV target. This Group considered a variety of regulatory, financial, and taxation policies to accelerate EV adoption. The Group has also examined the issue of price parity between EVs and Internal Combustion Engine (ICE) vehicles and has found that parity in respect of the Total Cost of Ownership is likely to be achieved later on this decade, driven by falling battery prices and savings due to economies of scale.
Additional measures to further incentivise EVs and/or disincentivise fossil fuelled vehicles will also be necessary. Cost-effective, targeted policy supports should continue to be developed and strengthened over the coming years. An Implementation Group has been established to progress the recommendations and consider further potential measures and barriers to the adoption of the EVs. It will also examine the creation of a second hand market.
It should also be noted that there are currently a raft of very generous measures to support the uptake of EVs, including; low levels of Vehicle Registration Tax and motor tax, VRT reliefs, preferential BIK treatment, home charger grants, toll reductions and various purchase grants.
In summary, I am satisfied that the Government has provided a broad suite of supports for the uptake of lower emission vehicles. Future taxation policy with regards to vehicles will be kept under review.
115. Deputy Frankie Feighan asked the Minister for Finance if he will consider a tax incentive scheme strategy or study to encourage the development of a hotel enterprise, with a minimum of 20 beds, in tourism business-dependent towns that currently do not have a hotel within their town boundaries (details supplied). [9596/23]
Amharc ar fhreagraCapital allowances are currently available for hotel enterprises subject to meeting the conditions set down in the legislation. These allowances are available for industrial buildings, which includes certain buildings and structures, when used for particular purposes (including for the purposes of the trade of hotel-keeping). Generally, capital expenditure on the construction or refurbishment of these buildings qualifies for relief at a rate of 4% over 25 years. However, acquisition costs (for acquiring a site or an existing building) are not allowable for the purposes of the allowances.
In relation to the creation of new tax incentives, and as the Deputy will appreciate, decisions regarding taxation measures are usually made in the context of the annual Budget and Finance Bill process and at the appropriate time. Such decisions also must have regard to the sound management of the public finances and my Department's Tax Expenditure Guidelines. The guidelines make clear that any policy proposal which involves tax expenditures should only occur in limited circumstances where there are demonstrable market failures, where a tax-based incentive is more efficient than a direct expenditure intervention. In relation to this final point, direct expenditure measures in relation to the tourism sector are primarily a matter for the Minister for Tourism, Arts, Gaeltacht, Sport and Media.
Our recent history with section 23 type property-based reliefs, including capital allowances for registered tourist accommodation (section 352 of the Taxes Consolidation Act 1997), suggests that an extremely cautious approach is necessary. In the past such measures were too broadly based and inefficient. They created distortions in the construction sector and were, with good reason, ended a over decade ago.
117. Deputy Brian Stanley asked the Minister for Finance if he will provide the total value of money received in carbon tax in 2021 and 2022. [11410/23]
Amharc ar fhreagraI am advised by Revenue that the amount of Carbon Tax collected in 2021 and the provisional amount collected in 2022 are €652.3 million and €790.5 million respectively. The provisional figure for 2022 may be subject to revision.
118. Deputy Matt Carthy asked the Minister for Finance the projected contribution of and receipts to the Exchequer from the European Multi-annual Financial Framework in each of the years 2023 to 2027. [10334/23]
Amharc ar fhreagraIreland’s projected contributions to the current EU Budget Multiannual Financial Framework, which spans the period 2021 until 2027, are expected to rise over the remainder of the lifetime of the Framework agreement. Ireland’s gross contributions to the EU Budget are forecasted to increase from approximately €4 billion in 2023 to €4.5 billion in 2027.
It should be noted these forecasts were published as part of Budget 2023, and are due to be updated in the coming weeks as part of the Stability Programme Update.
Data on Ireland’s EU Budget receipts are published annually, for the previous year, in my Department’s Budgetary Statistics in the second quarter of each year – for example, 2022 receipt data will be published in autumn or winter 2023. Therefore, it is not yet possible to confirm Ireland’s receipts from the EU Budget for the remainder of the 2021-2027 Multiannual Financial Framework. However, my Department estimates that our receipts from the 2021-2027 Multiannual Financial Framework will be in the region of approximately €2-2.5 billion each year. However, this figure is very difficult to forecast and is contingent on a number of factors such as Departments drawdown capability and project implementation.
119. Deputy Rose Conway-Walsh asked the Minister for Finance if he is aware of the sale of tracker mortgages to vulture funds which were overcharged as a result of the tracker mortgage scandal; and if he will make a statement on the matter. [11328/23]
Amharc ar fhreagraThe Central Bank Tracker Mortgage Examination required lenders to identify all borrowers affected by tracker related issues and to compensate those affected borrowers for tracker related failings on a mortgage in line with the Principles for Redress that formed part of the framework.
The Principles for Redress set out that lenders make redress and compensation offers that were fair and commensurate with the detriment suffered by affected borrowers. This included that such redress would result in affected borrowers being returned to the position they would have been in had the lenders’ failure regarding the customer’s tracker mortgage not arisen. This included that:
- compensation is reasonable and must reflect the detriment involved arising from and/or associated with being on an incorrect rate (such compensation to reflect the specific circumstances of each impacted customer); and
- impacted borrowers to revert to the appropriate Tracker Interest Rate or to be offered the option to revert to an appropriate Tracker Interest Rate, where relevant.
The Central Bank's final report of the supervisory phase of the examination was published in July 2019. It outlined that over 40,000 customer accounts were impacted by lender failings and that almost €700 million of redress and compensation was paid to impacted borrowers and borrowers were returned to the appropriate tracker rate as necessary.
I am aware that some tracker mortgages were sold to investment funds and these loans were subject to the Principles for Redress outlined above if impacted by tracker related issues.
In the case of impacted loans that were sold by lenders, the originating lender was responsible for ensuring that borrowers were put back in the position they would have been if the tracker failing had not occurred.
I have been informed by the Central Bank that this included engaging with any new mortgage entity where necessary to ensure that the customer received redress and compensation and the appropriate tracker rate going forward.
120. Deputy David Stanton asked the Minister for Finance further to Parliamentary Question No. 196 of 23 February 2023, if his Department is considering any changes to the range of professional services for which professional services withholding tax is operated; if professional services to which PSWT currently applies could instead be considered for the relevant contracts tax; and if he will make a statement on the matter. [11385/23]
Amharc ar fhreagraProfessional Services Withholding Tax (PSWT) is a deduction at the standard rate of income tax, currently 20%, from relevant payments made by accountable persons to specified persons in respect of certain professional services. The tax deducted is a payment on account against the specified person’s final Income Tax or Corporation Tax liability for the year, with the amount of PSWT deducted credited against the tax liability for that year. A specified person can include businesses undertaken through a company, sole trade or partnership.
Accountable persons include Government Departments, State agencies and bodies, local authorities, colleges and authorised medical insurers.
The range of professional services that come within the scope of PSWT includes, but is not limited to:
- Services of a medical, dental, pharmaceutical, optical, aural or veterinary nature.
- Services of an architectural, engineering, quantity surveying or surveying nature, and related services.
- Services of accountancy, auditing or finance and services of financial, economic, marketing, advertising or other consultancies.
- Services of a solicitor or barrister and other legal services.
- Geological services.
Relevant Contracts Tax (RCT) is a withholding tax that applies to certain payments made by principals to subcontractors in the construction, forestry and meat processing sectors. The RCT tax deducted is credited against the subcontractors Income Tax or Corporation Tax liability for that year.
The rate of deduction that is applied on payments to subcontractors can be zero, 20% or 35% and is determined by a number of factors including the tax compliance record of the subcontractor.
Where a principal contractor enters a relevant contract with a subcontractor, they are obliged to submit details of the contract to Revenue. Immediately before a principal makes a payment to a subcontractor, the principal must notify Revenue of their intention to do so. Revenue will respond with a deduction authorisation and notify the principal of the rate of deduction to be applied to the payment.
While some persons may operate as a principal for the purposes of RCT and an accountable person for PSWT, these withholding taxes in general apply to different sectors and the administrative process for each withholding tax is different. However, they both play an important role in ensuring the tax compliance of service providers and subcontractors that come within scope of each of the withholding taxes.
