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 Header Item Written Answers Nos. 128 to 149
 Header Item Illicit Trade in Tobacco
 Header Item Fuel Laundering
 Header Item Pension Provisions
 Header Item Financial Services Regulation
 Header Item Banking Sector Remuneration
 Header Item Illicit Trade in Tobacco
 Header Item Vehicle Registration Issues
 Header Item Capital Programme Expenditure
 Header Item Financial Services Ombudsman Issues
 Header Item Banking Sector Remuneration
 Header Item Departmental Agencies Staff Remuneration
 Header Item AIB Consultancy Contracts
 Header Item Tax Collection
 Header Item Budget 2012
 Header Item Mortgage Debt
 Header Item Tax Credits
 Header Item Promissory Note Negotiations
 Header Item Banks Recapitalisation
 Header Item Tax Code
 Header Item Tax Code
 Header Item Tax Collection
 Header Item Budget Submissions

Tuesday, 4 December 2012

Dáil Éireann Debate
Vol. 785 No. 1

First Page Previous Page Page of 89 Next Page Last Page

Written Answers Nos. 128 to 149

Illicit Trade in Tobacco

 128. Deputy Regina Doherty Information on Regina Doherty Zoom on Regina Doherty asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan his plans to combat the increasing availability of illegal cigarettes in County Meath which are being sold on the black market and door to door at housing estates; and if he will make a statement on the matter. [54003/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am informed by the Revenue Commissioners, who are responsible for the collection of tobacco products tax and for tackling the illicit trade in cigarettes and tobacco products, that they attach a high priority to this issue. The strategy employed by Revenue to tackle this illicit trade is multifaceted. It includes ongoing analysis of the nature and extent of the problem, developing and sharing intelligence on a national, EU and international basis, ongoing review of operational policies, development of analytics and detection technologies, and optimum deployment of resources at point of importation and inland, in order to intercept the contraband product and to prosecute those involved. Interception at the point of importation is achieved through a combination of risk analysis, profiling, intelligence and the screening of cargo, vehicles, baggage and postal packages. Revenue enforcement officers also target this illicit trade at the post-importation level by carrying out intelligence-based operations and random checks at retail outlets, markets and private and commercial premises.

With regard to the Meath area in particular the Revenue enforcement teams have been and will continue to be active in markets, in visiting retail outlets and other commercial premises, and in pursuing those selling door to door. In November 2012 these teams had meetings with Garda Sergeants for the Meath area and with local traders to discuss ways in which they can support each other in identifying illicit cigarette and tobacco traders and outlets. The enforcement teams are active in gathering their own intelligence regarding those involved in the sale of illicit tobacco products in the Meath area and will continue to follow up on any information received and to seize illicit product and to prosecute those engaged in illegal trading in tobacco products.

The illegal trade in tobacco is a serious threat to the Exchequer and to legitimate businesses and the Deputy can be assured that Revenue will continue their work against smugglers and sellers of illicit tobacco products.

Fuel Laundering

 129. Deputy John O'Mahony Information on John O'Mahony Zoom on John O'Mahony asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan if he has co-ordinated a meeting of relevant Government Departments on the issue of fuel laundering in the Border counties with a view to co-ordinating action; the latest update on Government action to crack down on fuel laundering; and if he will make a statement on the matter.  [54501/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am informed by the Revenue Commissioners, who have responsibility for mineral oil tax, that meetings on co-ordinating the response to fuel laundering and illicit fuel take place between relevant Government departments and agencies and their counterparts in Northern Ireland on a regular basis under the auspices of the Cross Border Fuel Fraud Enforcement Group. Agencies involved in this Group include, inter alia, the Department of the Environment, Community and Local Government, Revenue, the Criminal Assets Bureau and the Gardaí. In addition, the Revenue Commissioners and the Department of Justice and Equality meet annually on matters relating to cross-border organised crime. On the action to crack down in fuel laundering, during 2012, Revenue strengthened the licensing conditions that apply to traders dealing in auto fuels and introduced a new licensing regime for traders dealing in marked fuels. From January 2013, Revenue will introduce a new requirement that all licensed fuel traders make monthly returns of fuel movements and transactions. These new control measures will make it more difficult for criminals to source marked fuel for laundering or to put laundered fuel on the market.

  In addition, Revenue is working closely with Her Majesty’s Revenue and Customs in the UK to tackle the problem on a co-ordinated basis. As part of this process, in June 2012, Revenue and Her Majesty’s Revenue and Customs issued jointly an ‘Invitation to Make Submissions’ on a new and more effective marker for rebated fuel that could be implemented in both jurisdictions. The invitation yielded a very satisfactory number of responses by the closing date of 30 November and these will be evaluated jointly early in the new year.

  The measures implemented to date by Revenue have produced very positive results. Over the last two years, over 70 filling stations have been closed, over two million litres of fuel have been seized and 20 oil laundries have been detected and closed. Revenue is confident that these measures, including those commencing in 2013, will have a significant further impact on illicit fuel operations.

Pension Provisions

 130. Deputy Joe Carey Information on Joe Carey Zoom on Joe Carey asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan further to Parliamentary Question 39 of 7 November 2012, if he will respond to a query regarding a pension in respect of a person (details supplied) in County Clare; and if he will make a statement on the matter. [53711/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan The Deputy’s previous question related to a proposal from IBEC to allow access to certain pension savings on a pre-retirement basis which would represent a move from current principles and practice. The IBEC proposal is being examined as outlined in my reply. The circumstances outlined in the “details supplied” with this question appear to relate to the options available to an individual to access pension benefits where the pension fund is relatively small.

  I am advised by the Revenue Commissioners that under Revenue rules relating to the commutation of trivial pensions there is no objection where the scheme trustees and the beneficiary agree to the payment of once-off pensions at the point of retirement in certain circumstances. This may take place where the total of all funds available for pension benefits, following payment of any lump sum benefit, is less than €20,000. Prior Revenue approval is not required. The quantum of retirement benefits from all sources must be taken into account for the purpose of calculating the €20,000 limit.  The rates of tax and PRSI to be applied to the commuted amount are those that apply to any other pension payment.

  I am further advised by the Commissioners that the website relating to the Pension Scheme mentioned in the “details supplied” advises scheme members of the foregoing commutation option at retirement. Given that the individual concerned took a lump sum on retirement and is now in receipt of a small monthly pension payment, it can only be assumed that he did not meet the necessary conditions to avail of the full commutation option at that time. Once pension benefits in the form of a pension or annuity have commenced to be paid there is no facility for an individual to seek to have the future stream of payments commuted.

Financial Services Regulation

 131. Deputy Michael McGrath Information on Michael McGrath Zoom on Michael McGrath asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan if AIB has engaged with its customers who invested in the AIB Alpha Japan Fund and who believe that the investment product was mis-sold; the number of customers who invested in the fund and the total amount invested; and if he will make a statement on the matter. [53714/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am informed by AIB that in 2007 the AIB Alpha Japan Fund was established to invest in the Japanese property market. The fund closed its fundraising on 3 May 2007 at which time a total of approximately €128 million had been committed by investors to the fund. The number of customers involved has not been publicly disclosed. The fund was sold to investors through a process that complied with the relevant regulatory requirements, at that time. From the outset, the fund was clearly highlighted in the relevant documentation as being a high risk geared investment. The terms and conditions of the fund, including the associated risks of the fund were outlined in the Information Memorandum. The fund provides a detailed update, including audited financial statements, to its investors each year. AIB has also informed me that it does not disclose details of its arrangements or discussions with individual customers. However, if an investor is not satisfied with any aspect of the manner in which the fund was sold to them, they have the option to refer the matter to the Office of the Financial Services Ombudsman for an independent adjudication. AIB is supportive of this process.

Banking Sector Remuneration

 132. 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 the review of bankers' remuneration has been completed; if he has received the final report and when he intends to publish smae  [53755/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan As I informed the House, I am expecting the consultant’s report on a Review of Remuneration Practices and Frameworks at the Covered Institutions to be delivered by year end, whereupon consultations with the various stakeholders will commence. I fully recognise that there is a real public interest in the levels of remuneration at the covered institutions and I have committed to publishing the details underpinning the review.

Illicit Trade in Tobacco

 133. Deputy Nicky McFadden Information on Nicky McFadden Zoom on Nicky McFadden asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan if a mandatory minimum fine will be introduced under the Finance Act on conviction of cigarette smuggling and illegal cigarette selling; and if he will make a statement on the matter. [53773/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan Section 119, as amended, of the Finance Act 2001 contains penalties for offences in relation to cigarette smuggling. That section sets out the various actions that constitute offences of evasion or attempted evasion of excise duty, as well as the penalties, by way of a fine or imprisonment, for such offences. Where a conviction for an offence under section 119 occurs following a summary prosecution, the fine that may be imposed is €5,000. A Court may also impose a term of imprisonment not exceeding 12 months, either instead of or in addition to the fine. For convictions following prosecution on indictment, the applicable fine is an amount not exceeding €126,970 or, where the value of the tobacco products concerned is greater than €250,000, not exceeding three times the value of the products. The Court may also impose a term of imprisonment not exceeding 5 years, as an alternative, or in addition, to the fine.

Section 78 of the Finance Act 2005 includes penalties for the illegal sale of tobacco products. A Court may, following a summary conviction, impose a fine of €5,000 or a term of imprisonment not exceeding 12 months, or both. The penalty following conviction on indictment is a fine not exceeding €126,970 or imprisonment for a term not exceeding 5 years, or both a fine and imprisonment. The specific penalty to be imposed in any particular case is a matter for the Courts. Section 130(2) of the Finance Act, 2001 permits a trial judge, in his or her discretion, to mitigate a fine incurred for an offence under excise law, provided that the amount so mitigated is not greater than 50% of the amount of the fine.

The fines for excise offences have been increased in the recent past; those that apply in the event of conviction on indictment were increased substantially by the Finance Act 2010. The need for further changes will be kept under review, taking account, among other considerations, of practical experience of the operation of the increased fines.

Vehicle Registration Issues

 134. Deputy Finian McGrath Information on Finian McGrath Zoom on Finian McGrath asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan if superstition is part of the Government economic policy in relation to the new car registration for 2013 and the term unlucky 13. [53778/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan As the Deputy will be aware, my Department engaged in a consultation process with the motor industry and others in relation to restucturing of VRT and motor tax. In addition, a number of proposals were submitted for consideration by the industry in relation to the registration of motor vehicles. The outcome of the consultation will form the basis of decisions to be taken in the context of Budget 2013. The Deputy can be assured that my decisions in this area will be taken for sound business reasons.

Capital Programme Expenditure

 135. Deputy Sean Fleming Information on Seán Fleming Zoom on Seán Fleming asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan in respect of the October Exchequer returns, the reason the capital spending for his Department was €3m below profile for this period; his plans to ensure the full capital spending is implemented before the end of the year; and if he will make a statement on the matter.  [53830/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan The Capital Budget on my Vote Group is allocated as follows:

 - Office of the Revenue Commissioners - €4.85 million

 - Office of the Minister for Finance - €0.15 million

  My Department expects to use its allocation in December. The Office of the Revenue Commissioners has indicated that variance against profile in October is a timing issue. It is expected that the full Revenue provision of €4.85 million will be spent before the end of the year.

Financial Services Ombudsman Issues

 136. Deputy Bernard J. Durkan Information on Bernard Durkan Zoom on Bernard Durkan asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the number of complaints referred to the Financial Services Ombudsman in each of the past five years to date in 2012; the extent to which the views of complainants were upheld in each year; and if he will make a statement on the matter. [53843/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan The information requested by the Deputy has been supplied by the Financial Services Bureau and is set out below in tabular form. As the Deputy is aware, the Financial Services Ombudsman is independent in the performance of his duties.

Year
New Complaints Received
Upheld /Part Upheld
2007
4374
378
2008
5947
417
2009
7619
922
2010
7230
613
2011
7287
828
2012
7462
757

Banking Sector Remuneration

 137. Deputy Michael McGrath Information on Michael McGrath Zoom on Michael McGrath asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan further to Parliamentary Question No. 205 of 20 November 2012, if he will explain the way the annual pension contribution of Allied Irish Banks chief executive (details supplied) of €63,750 is calculated and if this figure represents the annualised value of the amount of money invested by the bank into the company’s pension fund on their behalf or if it is based on an per-employee average of total contributions by the bank into the company’s pension scheme for all employees; if he will outline their pension entitlement would be an annualised basis if they reach the retirement age at AIB as per the terms of their remuneration contract with the bank. [53850/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan As the Deputy will be aware officials in my Department and Mercer have been working on a remuneration review of the Covered Banks and do not currently have the information you have requested. My officials and the banks have provided a very significant level of detail on remuneration and pensions in the Covered Banks and other institutions in tight timeframes. We have received over 50 Parliamentary Questions on these topics alone in recent weeks. The further more detailed information sought in this question is not available to my Department at the present time and the compilation of this information, particularly the historic element, is likely to delay completion of the Mercer Remuneration Report which is a Government priority. I have committed to publishing the details underpinning the review in view of the public interest in the matter. The report will provide a comprehensive and professional analysis of remuneration structures and levels across the Covered Banks both now and before the onset of the banking crisis. As part of the review process I will ask my officials to engage with the banks to agree an appropriate level of public disclosure relating to remuneration that ensures an appropriate balance between the public good and the commercial and data protection issues which arise for the Covered Banks.

Departmental Agencies Staff Remuneration

 138. Deputy Michael McGrath Information on Michael McGrath Zoom on Michael McGrath asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan further to Parliamentary Question No. 205 of 20 November 2012, if he will quantify annualised contributions of the National Treasury Management Agency and the National Asset Management Agency to the pension funds of their respective chief executives (details supplied); if he will furhter quantify their annual pension entitlement will be in retirement if they continue on in their current roles until retirement age or see out the term of their roles under their contracts. [53851/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I refer the Deputy to my reply to his question on the pension entitlements of the Chief Executives of the National Treasury Management Agency (NTMA) and National Asset Management Agency (NAMA) to which I replied as follows on Thursday, 29 November 2012 – "The Chief Executives of the NTMA and NAMA are members of the NTMA defined benefit superannuation scheme. Pension benefits for those who were members of the scheme prior to 1 January 2010 are based on final salary. The pension benefits of members who joined the scheme on or after 1 January 2010 are based on career average earnings. Unlike most public pension schemes which are funded on a pay as you go basis, the NTMA superannuation scheme is a funded scheme. The NTMA contribution to the scheme is determined on the advice of an independent actuary and is at present set at a level of 25% of payroll in respect of members prior to 1 January 2010 and 10.5% of payroll in respect of members who joined the scheme on or after 1 January 2010.

Pension entitlements are within the standard entitlements in the model public sector defined benefit superannuation scheme. Pension contributions are not paid to individual employees – they are paid into the scheme. The level of potential pension payments to members is dependent on length of service, based on final salary or career average earnings, with 1/80th of salary accruing for each year of service.

In relation to the pension entitlements of the Chief Executive of the NTMA, his contract provides that his pension will be based not on his salary as Chief Executive but on his salary as a director of the NTMA prior to his appointment as Chief Executive. The pension of the Chief Executive of NAMA will ultimately be based on a pro-rata average of his final salary as NAMA Chief Executive and his final salary as an employee of the NTMA. He was appointed to the position of Chief Executive of NAMA on 22 December 2009 and his contract as NAMA Chief Executive is a specified purpose contract, linked to the lifespan of NAMA.

The Chief Executives of NTMA and NAMA have waived 15% of salary through the gifting of a proportion of salary to the Exchequer under Section 483 of the Taxes Consolidation Act 1997. Gifting of a proportion of salary to the Exchequer under this provision does not affect the calculation of pension benefits. The salary of the Chief Executive of NTMA for 2011 was €490,000 before the voluntary reduction. The salary of the Chief Executive of NAMA for 2011 was €430,000 before the voluntary reduction. The public service Pension-Related Deduction is applied to the Chief Executives of the NTMA and NAMA".

AIB Consultancy Contracts

 139. Deputy Michael McGrath Information on Michael McGrath Zoom on Michael McGrath asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the amount of money paid by AIB to consultants (details supplied) for work carried out at the bank in 2009, 2010 and 2011; and if he will make a statement on the matter. [53852/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan The Deputy will be aware that the Bank’s policy in relation to professional fees is a matter for the management and board of the institution. I have no role in the day-to-day commercial and operational decisions of the banks, which include these matters. These decisions are taken by the board and management of the institution. Notwithstanding the fact that the State is a significant shareholder in the institution, I must ensure that the bank is run on a commercial, cost effective and independent basis to ensure the value of the bank as an asset to the State, as per the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. I have been informed by the bank that for commercial confidentiality reasons, AIB does not publicly disclose the details of contracts with individual external service providers. However I note that as part of its ongoing strategy to return AIB to a sustainable business model, the bank is introducing measures to reduce its overall cost base by €0.4 billion per year by 2014. These measures include:

- A severance scheme aimed at reducing staff numbers by 2,500 by 2014;

- Reductions to staff pay, benefits and pension arrangements;

- The outsourcing of certain functions in the bank;

- A material reduction in the use of external service providers.

Tax Collection

 140. Deputy Michael McGrath Information on Michael McGrath Zoom on Michael McGrath asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the reason a person who wishes to settle a tax liability with the Revenue cannot pay by debit card and if he will confirm the fee charged by Revenue when a credit card is used; and if he will make a statement on the matter. [53860/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am advised by the Revenue Commissioners that customers can use both debit and credit cards to make tax payments via Revenue’s Online Service (ROS). This is an internet facility that provides tax payers with a secure and efficient facility to pay tax liabilities and file tax returns. The debit and credit cards that can be used to make tax payments via ROS are VISA, MasterCard and Laser. There is no fee in respect of debit cards usage on ROS, but there is a transaction charge of 1.49% of any payment made by credit card. Payment by credit card may also be made by telephone and the transaction charge in respect of such payments is 1.69%. The transaction charge is purely in respect of fees incurred by Revenue in the provision of the service.

Budget 2012

 141. Deputy Stephen S. Donnelly Information on Stephen Donnelly Zoom on Stephen Donnelly asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan if he will outline all impact analysis on Budget 2012 conducted before and after the budget came into effect; and if he will make a statement on the matter.  [53872/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan With regard to budgetary matters, when focusing on the primary objectives of reducing the deficit and returning sustainability to the public finances, it has been of vital importance to the Government to spread the burden of the adjustments made in as fair and equitable a manner as possible, while also seeking to minimise their negative impact on economic growth. A distributional analysis of proposed budget measures is performed each year based on various income levels for the different categories of income earners, for example single individuals, married one-earner couples with no children and married one-earner couples with children. A distributional analysis which models the impacts on disposable income by income decile using SWITCH, the ESRI Tax-Benefit model, is also undertaken in evaluating various budgetary options. Illustrative examples are contained in the Budget 2012 document. The Deputy might also be aware that an analysis of the impact of the 9% VAT rate introduced as part of last years Jobs Initiative was published in the recent Medium-Term Fiscal Statement.

  As part of the broader budgetary framework reform measures, the Comprehensive Review of Expenditure (CRE) was introduced in 2011 as a line by line examination of public expenditure. In particular, it was sought to identify means of reducing expenditure, while minimising the impact on service delivery. The expenditure submissions prepared by Departments as well as other cross cutting thematic papers have been published on the Department of Public Expenditure and Reform website. These give more detail on the analysis underpinning the final expenditure ceilings. The ongoing work of the Irish Government Economic and Evaluation Service also supports Departments in evaluating policy and expenditure options. The central expenditure evaluation unit, CEEU, within the Department of Public Expenditure and Reform promotes best practice in the evaluation of programme expenditure across all Departments and public sector agencies.

  The primary objective of Budget 2012 was to reduce further the deficit in our public finances in line with our commitments, since it is not sustainable to continue running such large deficits. On the basis of the most recent data available, it appears that we will meet our deficit targets for 2012. The Government sought to implement the measures required to reduce the deficit in a manner that was as fair and equitable as possible and in a manner that would protect the emerging economic recovery.

Mortgage Debt

 142. Deputy Stephen S. Donnelly Information on Stephen Donnelly Zoom on Stephen Donnelly asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan further to Parliamentary Question No. 210 of 20 November 2011, if he will provide the actual amount of mortgage debt surrendered to borrowers by Bank of Ireland, rather than impairment provisions the bank has made; and if he will make a statement on the matter. [53875/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I have received the following response from Bank of Ireland:-

Bank of Ireland has given very comprehensive mortgage disclosures in its recent annual and interim accounts, and the Interim Management Statement (IMS) dated 13 November. It has provided additional mortgage related disclosure as part of its response to Parliamentary Question Number 51262.

Specifically, Bank of Ireland has given significant and comprehensive disclosure on its Retail Ireland Residential Mortgage portfolio in pages 107-117 of its Interim Report for the six months to 30 June 2012, and gives further significant and comprehensive disclosure on its asset quality, including in connection with Retail Ireland residential mortgages, in pages 25-29 of this Interim Report. Bank of Ireland also provided significant and comprehensive disclosure on its provisioning policies per pages 124-126 of its Annual Report for the year to 31 December 2012. There have been no material changes to these policies since then.

Bank of Ireland does not provide disclosures in the areas above other than as set out above.

Tax Credits

 143. Deputy Stephen S. Donnelly Information on Stephen Donnelly Zoom on Stephen Donnelly asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the rationale for the tax rule which prevents a person from availing of research and development tax credits if they own more than 10% of the company involved; and if he will make a statement on the matter. [53878/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I assume that the Deputy is referring to the ‘key employee’ provision of the R&D tax credit which allows the tax credit to be transferred to a person key to carrying out of R&D in order to encourage them to drive R&D projects and to bring them to Ireland. This provision is restricted to a person who owns less than 5% of the company. The objective of the provisions is to allow companies attract and retain employees that are key to driving and developing R&D projects in the company. It is not intended to be a mechanism to reward the owners of companies, hence the restriction.

Promissory Note Negotiations

 144. Deputy Stephen S. Donnelly Information on Stephen Donnelly Zoom on Stephen Donnelly asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan in relation to the promissory note interest payments to Irish Bank Resolution Corporation, if any of the amount being paid in is being withdrawn on an ongoing basis, for example, once per year; if he will provide an estimate of the total amount of interest that will be paid assuming no deal with the ECB, and the estimate for the amount of this which will ultimately be returned to the State; and if he will make a statement on the matter.  [53891/12]

 170. Deputy Stephen S. Donnelly Information on Stephen Donnelly Zoom on Stephen Donnelly asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan further to Parliamentary Question No. 199 of 27 November 2012, regarding the Irish Bank Resolution Corporation promissory note payments and expected Exchequer return, that if the total promissory note capital payment is €30.6 billion and the projected sum of interest rate payments is €16.8 billion as per his answers, giving a total payment to IBRC of €47.4 billion, and that if the projected cost of IBRC to the State is between €25 billion and €28 billion as per his answer, he would expect that the entire interest payment of €16.8 billion plus between €2.6 billion and €5.6 billion of the €30.6 billion capital, resulting in a total of between €19.4 billion and €22.4 billion being returned to the State; and if he will make a statement on the matter.  [54546/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I propose to take Questions Nos. 144 and 170 together.

  As the Deputy is aware, the promissory note repayments, both capital and interest, are made to IBRC. As IBRC is wholly owned by the State, any future return to the State will be by way of dividends from IBRC or from the projected final net asset position for IBRC. IBRC provides details of their outstanding liabilities in their published accounts. This cumulative figure amounted to €50.4bn at 30 June 2012 including €45.2bn representing sale and repurchase agreements with banks and central banks. This amount will have to be repaid over time, mainly from annual instalments on the promissory notes. The realisable value on the remaining IBRC loan book (€15.6bn at 30 June 2012) will also be used to reduce this liability over time. The amount of money required by IBRC to repay total liabilities (including these sale and repurchase agreements) is subject to material uncertainty and market factors which include the expected timing of asset recoveries and sales (themselves dependant on property prices, especially in the UK and Ireland); the volume and timing of maturing funding commitments and deposits; and projected interest rates within the Eurozone.

  The bank’s policy is that, due to the commercially sensitive nature of such information as noted above, combined with the many external variables involved, it does not issue formal projections. However, I can point out that the Chairman of IBRC stated recently at the Oireachtas Committee for Finance and Public Expenditure that he hopes the final bill for Anglo Irish Bank, “will come nearer to €25 billion than the €29 billion to €34 billion figure”, previously announced. The bank remains of the view that there will be a small return to the State at full resolution, given the assumptions currently being used.

  In relation to inclusion of interest in the projected ultimate outturn, I have been advised that in calculating the projected final net asset position, IBRC take into account interest from all assets including customers, securities and promissory notes.

  An interest holiday was inserted into each of the promissory notes which meant that between 1 January 2011 and 31 December 2012 no interest was payable. While there was an interest holiday this does not affect the promissory note repayments of the principal amount. The cash flows on the promissory notes are 10% (€3.06 billion) of the original amount per annum until the full amount is repaid. Set out is a detailed aggregated schedule of capital repayments and interest payments on the promissory notes.

Promissory Note Schedule

€bn
Total interest

Paid: A
Total Capital Reduction: B
Repayments:

A + B
 
31/03/2011
0.55
2.51
3.06
 
31/03/2012
-
3.06
3.06
**
31/03/2013
0.49
2.57
3.06
 
31/03/2014
1.84
1.22
3.06
 
31/03/2015
1.75
1.31
3.06
 
31/03/2016
1.65
1.41
3.06
 
31/03/2017
1.55
1.51
3.06
 
31/03/2018
1.44
1.62
3.06
 
31/03/2019
1.32
1.74
3.06
 
31/03/2020
1.19
1.87
3.06
 
31/03/2021
1.06
2.00
3.06
 
31/03/2022
0.91
2.15
3.06
 
31/03/2023
0.75
2.31
3.06
 
31/03/2024
0.57
1.52
2.09
 
31/03/2025
0.45
0.47
0.91
 
31/03/2026
0.39
0.52
0.91
 
31/03/2027
0.33
0.58
0.91
 
31/03/2028
0.26
0.65
0.91
 
31/03/2029
0.19
0.73
0.91
 
31/03/2030
0.10
0.81
0.91
 
31/03/2031
0.01
0.05
0.05
 
 
16.8
30.6
47.4
 
  * These numbers may not tot exactly as a result of rounding

  ** The March 2012 repayment was settled with a long term Government bond.

Banks Recapitalisation

 145. Deputy Stephen S. Donnelly Information on Stephen Donnelly Zoom on Stephen Donnelly asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the work that has been done to determine which of the senior bondholders in the State guaranteed institutions had insurance on their holdings, such as credit default swaps; the results of these investigations were; and if he will make a statement on the matter. [53892/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan As previously outlined to the Deputy, it is not possible to identify the senior bondholders invested in specific institutions at a given point in time. As these securities are freely tradable once issued it is not possible to trace their ultimate ownership. These securities are traded and dealt through market participants and settled by clearing house systems. An issuer does not have any access to the records of the clearing house. At maturity, the Bank will instruct its paying agent to transfer the funds due to the clearing house who will then distribute the funds to the holders of the securities as per their records. Even where the bank is presented with lists alleging to represent names of bondholders I am informed there is no way for the bank or anyone else to completely verify the accuracy of such lists.

Therefore, I can confirm that the only accurate record of the holders of such bonds is the initial purchasers of the specific bond issuance. Regarding the levels of insurance undertaken by individual holders of bonds in the Irish covered banks, speculating as to how individual bondholders might mitigate against the different risks associated with managing their portfolios is not an area I can advise the Deputy on.

Tax Code

 146. Deputy Mary Mitchell O'Connor Information on Mary Mitchell O'Connor Zoom on Mary Mitchell O'Connor asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan if he is considering the introduction of a profit tax for tobacco companies as included in the Irish Cancer Society and Irish Heart Foundation’s pre-budget submission; if he has assessed what revenue could be generated if their proposal was included in budget 2013 for 2013 and 2014; if he has assessed if an individual sector taxation or the introduction of a new rate of corporation tax into tax law would diminish confidence to foreign investors of Ireland’s commitment to the headline 12.5% corporation tax rate; and if he will make a statement on the matter.  [53913/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I assume the Deputy to refer to the proposal to introduce a price cap of the pre-tax price of tobacco. Preliminary advice on this suggests that any proposal to interfere with the ability of manufacturers to set the maximum price level for tobacco is a breach of Council Directive 2011/64/EU on the structure and rates of excise duty applied to manufactured tobacco. In the circumstances, therefore, the question of individual sector taxation or the introduction of a new rate of Corporation Tax does not apply.

Tax Code

 147. Deputy Luke 'Ming' Flanagan Information on Luke 'Ming' Flanagan Zoom on Luke 'Ming' Flanagan asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan his views on whether vehicle registration tax is in compliance with the Treaty of Rome; in particular if he will consider Article 25 of the treaty to be fully complied with as it states that an excise or custom duty cannot be redesignated as a tax; and if he will accept that this may be the case as Ireland was given a derogation under Article 14 on import duty on vehicles up until 31 December 1992 when the vehicle registration tax was introduced; and if he will make a statement on the matter.  [53918/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am advised by the Revenue Commissioners that Section 132 of the Finance Act, 1992 provided for the introduction, from 1 January 1993, of “a duty of excise, to be called vehicle registration tax”. I can assure the Deputy that the legislation in relation to vehicle registration tax is compatible with the provisions of the Treaty on European Union and the Treaty on the Functioning of the European Union. Vehicle registration tax is a feature of the tax system in 18 other Member States of the European Union.

Tax Collection

 148. Deputy Paschal Donohoe Information on Paschal Donohoe Zoom on Paschal Donohoe asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the reason the pension of a person (details supplied) in Dublin 7 was taxed; and if he will make a statement on the matter. [53937/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am informed by the Revenue Commissioners that the person in question is in receipt of an occupational pension and a pension from the Department of Social Protection. As the person’s total income exceeds the exemption limit of €18,000 he is liable to income tax.

Budget Submissions

 149. Deputy Arthur Spring Information on Arthur Spring Zoom on Arthur Spring asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the process by which his Department costs pre-budget submissions produced by pressure groups and political parties; and if a submission can be declared to have been costed even when it has only received a brief general opinion from his Department. [53992/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan The facility to cost Budget proposals and policies is one made available by my Department, on request, to all opposition parties. No party to date has availed of this facility in relation to Budget 2013. In advance of Budget 2012 one such request was received. This was passed to the relevant officials, examined in detail and costed accordingly. My Department receives Pre-Budget Submissions from a wide variety of groups and individuals. To date, some 540 have been received on Budget 2013. Even allowing for some duplication in the submissions received, it would be impractical to provide detailed costings for each. However, all Pre-Budget Submissions received are recorded and distributed as appropriate, both in my Department and in the Department of Public Expenditure and Reform, so that their content may be considered by the relevant officials in the context of Budget preparation.


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