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 Header Item Written Answers Nos. 105-114
 Header Item Universal Social Charge Application
 Header Item Credit Union Fund Issues
 Header Item NAMA Debtors
 Header Item NAMA Loans Sale
 Header Item Financial Services Sector
 Header Item Fuel Laundering

Tuesday, 2 July 2013

Dáil Éireann Debate
Vol. 809 No. 2

First Page Previous Page Page of 92 Next Page Last Page

Written Answers Nos. 105-114

Universal Social Charge Application

 105. Deputy Timmy Dooley Information on Timmy Dooley Zoom on Timmy Dooley asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan his plans to reform the universal social charge; if he is considering integrating it with PRSI; the issues that would arise from such integration; and if he will make a statement on the matter.  [31907/13]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan The Universal Social Charge (USC) was introduced from 1 January 2011 to replace the Income Levy and the Health Levy. It was a necessary measure to widen the tax base, remove poverty traps and raise revenue to reduce the budget deficit. The USC is a tax in nature and not a social contribution as it does not possess the attributes of a social security contribution. Payment of the USC does not guarantee a benefit nor is there a defined relationship between payments under the charge, contributions and benefits paid, as there normally is with a social insurance system. PRSI is applied on a narrower earned income base, the rates of charge differ by sector and other non-income related criteria, and there are cash benefit entitlements that derive from the maintenance of a contribution record that varies by sector i.e. employee, self-employed and public servant. These differences mean there are considerable non-tax policy issues that would need to be resolved before PRSI could be incorporated in to the USC charge. Delivering on a commitment in the Programme for Government, the USC was reviewed by the Department of Finance in the lead up to Budget 2012. The report is available at As the Deputy will be aware, it is a long-standing practice of the Minister for Finance not to comment in advance of the Budget on any tax matters that might be the subject of Budget decisions.

Credit Union Fund Issues

 106. Deputy Robert Troy Information on Robert Troy Zoom on Robert Troy asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan his views on whether additional capital will be required by the credit union sector; his views on the progress made to date in securing the future of credit unions; and if he will make a statement on the matter. [31928/13]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan In its final report, the Commission on Credit Unions identified the financial position of credit unions in Ireland, stating that the declining fortunes of the Irish economy have not only put an additional brake on credit union development but have contributed to regression in some credit unions. In response to this, the Commission set out a range of measures to provide a strong foundation for addressing the difficult problems in the sector. Specifically, in terms of the stability of credit unions, the Commission made recommendations in relation to restructuring, stabilisation and resolution. A core recommendation was that the sector be restructured on a voluntary, incentivised and time-bound basis in order to allow the credit union sector perform to a greater level of efficiency. The Government contributed €250 million to the Credit Union Fund in December 2012 to support the restructuring of the credit union sector by the Credit Union Restructuring Board. The board is working to the timetable set out in the Commission’s report and is expected to complete its work by the end of 2015 with any necessary disbursement of funding taking place before then. Any funding provided to credit unions will be on a recoupable basis. The Commission recommended that a statutory stabilisation fund be established to address short-term problems at credit unions that are viable but undercapitalised. The statutory basis for stabilisation is in place under the Credit Union and Co-operation with Overseas Regulators Act 2012 and my Department is conducting an analysis in advance of implementation of a levy by the end of 2013. The Commission also recommended that resolution powers provided to the Central Bank under the Central Bank and Credit Institutions (Resolution) Act 2011 should be considered for those credit unions that meet certain conditions set out in that Act. The Government has provided resolution funding for credit unions of €250 million. Funding will be based on a principle of recoupment over the medium term via a levy under the Central Bank and Credit Institutions (Resolution) Act 2011. I am satisfied that these measures, together with governance and regulatory changes, introduced on foot of the Commission Report will underpin a stable credit union sector into the future.

  Question No. 107 answered with Question No. 100.

NAMA Debtors

 108. Deputy Billy Kelleher Information on Billy Kelleher Zoom on Billy Kelleher asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the steps the National Asset Management Agency is taking to protect its claim over assets held by borrowers who file for bankruptcy in the UK; the success it has had to date in securing these assets; and if he will make a statement on the matter.  [31911/13]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan The Deputy may wish to refer to NAMA’s Annual Report and Financial Statements for 2012, which contain extensive information regarding the Agency's operations, including, as set out in pages 26 and 27 in particular, its insolvency activity and on the locus of debtor bankruptcy. NAMA advises that in each instance of bankruptcy involving a NAMA debtor it reviews its options and selects the most appropriate method of ensuring the best possible return for the taxpayer. The Agency advises that, as a secured creditor, it is generally neutral on the locus of bankruptcy proceedings and its experience has been that the location has not tended to prejudice recoveries. This position is based in part on its positive ongoing engagement with several bankruptcy trustees of debtors who have been adjudged bankrupt in the UK. The Agency also advises that the bankruptcy regime in the UK is well-established, sophisticated and that bankruptcy trustees under the UK system possess extensive powers to compel production of legal and banking information, on a cross-border basis, from the bankrupt. These powers have been used in bankruptcy cases involving NAMA debtors to uncover significant undeclared assets. NAMA further advises that the comparatively shorter duration of bankruptcy in the UK is not a consideration for the Agency as the bankrupt’s assets remain in the control of the bankruptcy trustee long after the bankrupt may have been discharged from bankruptcy and any failure to make full disclosure may result in the period of bankruptcy being extended. NAMA advises that it challenges the release from bankruptcy of any debtor in instances where there is non-cooperation with the bankruptcy trustee. NAMA also advises that, even when a bankruptcy is discharged, the bankruptcy trustee continues to deal with outstanding debt until as all assets have been realised and the debt, in so far as possible, has been repaid.

NAMA Loans Sale

 109. Deputy Pádraig Mac Lochlainn Information on Pádraig MacLochlainn Zoom on Pádraig MacLochlainn asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan further to reports of a case being taken in New York concerning the overcharging of interest on Anglo Irish Bank loans, if his attention has been drawn to the details of this case; the provisions that have been made by either the special liquidator at Irish Bank Resolution Corporation and or the National Asset Management Agency to deal with the potential ramifications including financial compensation of those overcharged interest; and if there is a possibility of loans being declared void, or the danger of loans becoming unsellable by the special liquidator as a result of this case.  [31879/13]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan Unfortunately, I am not in a position to comment directly on cases currently in before the Courts. I have been advised by the Special Liquidators that in the Republic of Ireland any claims made in relation to the potential overcharging of interest would likely rank as unsecured creditors in the liquidation. I am further advised by the Special Liquidators that these allegations are not expected to have a significant impact on the sales of those loans by the Special Liquidator.

Financial Services Sector

 110. Deputy Seamus Kirk Information on Seamus Kirk Zoom on Seamus Kirk asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan if he will consider tightening the regulations on the extent and nature of advertising in which moneylenders may engage; and if he will make a statement on the matter.  [31912/13]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan Moneylenders are licensed by the Central Bank of Ireland in accordance with the provisions of Part VIII of the Consumer Credit Act 1995 (as amended). Moneylenders have to apply to the Central Bank each year for renewal of their licences. In addition to the provisions of the Consumer Credit Act 1995, a licensed moneylender must comply with the provisions of the Consumer Protection Code for Licensed Moneylenders and with the European Communities (Consumer Credit Agreements) Regulations 2010. Licensed moneylenders must comply with the following specific provisions with regard to advertising: Chapter 3 of the Moneylenders Code, Regulation 4 (1) and Regulation 7 of the Regulations, and Part II of the Act. Compliance with these pieces of legislation is monitored on an ongoing basis through a robust annual licensing process, ongoing supervision, themed inspections, mystery shops, consumer intelligence and complaints from the Financial Services Ombudsman. Failure to adhere to the provisions may lead to proceedings under our Administrative Sanctions Procedures, which enable us to sanction and to fine regulated entities for breaches of regulatory requirements.

Since 1 December 2011, licensed moneylenders are also subject to a new fitness and probity regime. The ML Code sets out General Principles with which a moneylender must comply. For example, a moneylender must act honestly and professionally, with due skill, care and diligence in the best interest of consumers. Chapter 3 of the ML Code places specific requirements on moneylenders in relation to the contents and presentation of advertisements. The main areas covered by Chapter 3 of the ML Code require moneylenders to ensure advertisements are fair and not misleading, clearly understood, complete and accurate. The Central Bank deals with regulated entities, including moneylenders, where there are concerns around the fairness, clarity, accuracy and potential for an advertisement to be construed as misleading in their overall content and presentation and actively follows up on any issues identified. For example, where key information in relation to a product or service in advertisements is not sufficiently prominent and is included in smaller print to other parts of the advertisement, the Central Bank will address this with the individual entity.

Fuel Laundering

 111. Deputy Robert Troy Information on Robert Troy Zoom on Robert Troy asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan his views on the operation of the green diesel scheme; the way the loss to the taxpayer from diesel smuggling can be reduced; and if he will make a statement on the matter. [31929/13]

 236. Deputy Pearse Doherty Information on Pearse Doherty Zoom on Pearse Doherty asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the money that could be saved for the Exchequer if fuel dyeing was discontinued.  [31808/13]

 245. Deputy Pearse Doherty Information on Pearse Doherty Zoom on Pearse Doherty asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the cost to the Exchequer each year as a result of diesel laundering.  [31940/13]

 246. Deputy Pearse Doherty Information on Pearse Doherty Zoom on Pearse Doherty asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan if he has considered ending the process of dyeing diesel and instead offering a rebate to farmers, transport firms, hauliers and so forth, to compensate for accessing the more expensive diesel type.  [31941/13]

 252. Deputy Pearse Doherty Information on Pearse Doherty Zoom on Pearse Doherty asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan if he has considered the introduction of one excise duty for all diesel including green diesel, with a rebate system for agricultural and other users of green diesel; and if he will set out the financial ramifications of such a move.  [32002/13]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I propose to take Questions Nos. 111, 236, 245, 246 and 252 together.

I am advised by the Revenue Commissioners, which have responsibility for the collection of mineral oil tax, that they are very aware of the threat fuel fraud poses to the Exchequer and to legitimate businesses. The most serious risk in relation to illicit trade in mineral oil products is from the laundering of markers from diesel that is subject to a reduced rate of mineral oil tax on condition that it is not used in road vehicles. EU Directive 2003/96/EC, which sets out the requirements for the taxation of energy products and electricity, permits diesel used for certain industrial and commercial purposes to be subjected to a lower rate of energy tax than that applied to auto-diesel. Those purposes include agricultural, horticultural and piscicultural works and in forestry, in stationary motors and in plant and machinery used in construction, civil engineering and public works. The Directive provides also that diesel used for certain other purposes, such as sea fisheries and commercial navigation, must be exempted from energy tax. Where diesel is released for consumption subject to a lower rate of energy tax, or is exempted from that tax, the fuel concerned may not be used as auto-diesel and must be marked, in accordance with EU Directive 95/60/EC on fiscal marking of gas oils and kerosene (and its associated Decisions), to distinguish it from auto-diesel. The corresponding provisions of Irish law are contained in the Mineral Oil Tax Regulations 2012 (S.I. No. 231 of 2012). Under these regulations, a specified substance and a blue dye must be added to the fuel, resulting in a green coloured marker.

This system of marking diesel has been an effective and efficient means of delivering a tax rebate on a product used by a very large number of users across a wide range of uses. Fuel laundering to remove the marker added to lower-taxed mineral oil for off-road use has been a persistent problem over the years. However, it remained a marginal activity because the sulphur content of marked fuel was higher than that for road fuel and therefore the sulphur content continued to distinguish laundered fuel from genuine road fuel. Environmental requirements in relation to the sulphur content of fuel changed from the beginning of 2011, which resulted in marked fuel with the same sulphur content as road fuel coming onto the market. With this change, fuel laundering became more viable and criminal gangs intensified their laundering and distribution activities dramatically from the first half of 2011. In response, Revenue has made action against fuel laundering one of its priorities and is implementing a comprehensive strategy to tackle the problem through enhanced supply chain controls, the acquisition of a more effective fuel marker and continued robust enforcement action.

This strategy included strengthening the licensing conditions for auto-fuel traders in 2011 and the introduction of a new licensing system for marked fuel traders in October 2012. In addition, since January 2013, all licensed fuel traders are required to make electronic returns to Revenue of their fuel transactions each month. These supply chain control measures are designed to make it difficult for fuel criminals to source marked fuel for laundering and to get laundered product onto the market. Analysis of the monthly returns of fuel trading will enable Revenue to identify suspicious or anomalous fuel transactions and patterns of distribution. Analysis of the first few months of returns data is well advanced. Traders found to be involved in suspicious activity will be investigated and if they are unable to account properly for the source or disposal of product, they will face revocation of their licence, tax assessment and prosecution where appropriate. In addition, Revenue and HM Revenue & Customs in the UK signed a Memorandum of Understanding in May 2012 on a joint approach to finding a more effective marker for use in both jurisdictions. A number of proposals for a new marker submitted in response to an Invitation to Make Submissions are being evaluated. The outcome of this process is expected later this year. Revenue, in co-operation with other law enforcement agencies on both sides of the Border, continues to intensify enforcement action against fuel fraud and this work has yielded significant results to date. In the past two years 97 filling stations throughout the State were closed for breaches of licensing conditions. Since the beginning of 2010, over 2.8 million litres of fuel have been seized and 29 oil laundries detected and closed down, including five oil laundries in 2013 to date.

While there have been a number of calls for the replacement of the current marking scheme with a rebate scheme, a change of this nature would impact on a wide range of users, would be costly to implement and would, itself, be at risk from fraud. Marked gas oil has a variety of uses including the propulsion of trains, the operation of agricultural, construction and industrial machinery, commercial sea-navigation (including fishing) and commercial and home heating purposes. A change to a rebate system for all users would involve the establishment of an expensive repayments system and place a new administrative burden on oil traders, users and the Revenue Commissioners. It would also impose significant cashflow costs for those currently using marked gas oil. Also, repayment schemes are vulnerable to abuse and the introduction of a wide-ranging scheme such as that proposed would not necessarily offer greater security against fraud than the current arrangements.

It has been suggested recently that huge savings could be made by moving from the current system of marking rebated fuel to one based on making repayments to those users that currently use marked fuel. This seems to be based on the erroneous view that adding the prescribed markers to rebated fuel is exceptionally costly and is borne by the Exchequer. This is not the case; the cost of the markers is negligible and is borne by the industry. The cost to the Exchequer of marked fuel is the tax foregone and an alternative system based on direct repayments to users would not produce any savings for the Exchequer and might be more costly if the incidence of fraud were greater. If the fuel for off-road use was not marked under the new system, it could be diverted easily to road use; if it was marked it could be laundered as at present. It would also be the case that marked fuel from Northern Ireland would continue to be available and could be laundered by fuel criminals based in Border areas.

For these reasons, I am not proposing any change to the existing scheme. I strongly support the current strategy bring implemented by Revenue and am confident that it will succeed with the co-operation and support of the legitimate trade. I am informed by the Revenue Commissioners that the industry has worked very closely with them in developing and implementing their strategy. Revenue regularly reminds motorists and the public generally that, in addition to its impact on the Exchequer and legitimate trade, they should be aware of the risks posed to their vehicles by using laundered fuel and the fact that sourcing fuel in this way is funding criminal activity. The legitimate retail trade can also contribute to closing down this illegitimate trade by providing information on the outlets that are selling laundered diesel. Revenue chairs the Hidden Economy Monitoring Group (HEMG) and has established regional sub-groups of the HEMG to facilitate the reporting of information by traders through their representative associations. Retailers who suspect or have evidence that laundered diesel is being sold in their area should report this through their representative associations to the Revenue. Such reports are treated as confidential and are fully investigated by Revenue.

  Question No. 112 answered with Question No. 103.

  Question No. 113 answered with Question No. 95.

  Question No. 114 answered with Question No. 88.

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