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 Header Item Written Answers Nos. 327 - 351
 Header Item Small and Medium Enterprises Debt
 Header Item Home Renovation Incentive Scheme Eligibility
 Header Item Corporation Tax Regime
 Header Item Mortgage Interest Relief Eligibility
 Header Item EU Budget Contribution
 Header Item Debt Relief
 Header Item Pensions Levy
 Header Item Economic Growth Rate
 Header Item Defined Contribution Pension Funds
 Header Item Tax Exemptions
 Header Item Illness Benefit Payments
 Header Item Tax Rebates
 Header Item Property Taxation Yield
 Header Item Tax Yield
 Header Item Savings Accounts Interest Rates
 Header Item Central Bank of Ireland
 Header Item Tax Yield
 Header Item Financial Services Ombudsman
 Header Item IBRC Mortgage Loan Book
 Header Item NAMA Loans Sale
 Header Item Tax Settlements
 Header Item Mortgage Schemes
 Header Item State Bodies

Tuesday, 4 November 2014

Dáil Éireann Debate
Vol. 856 No. 1

First Page Previous Page Page of 112 Next Page Last Page

Written Answers Nos. 327 - 351

Small and Medium Enterprises Debt

 327. Deputy Dara Calleary Information on Dara Calleary Zoom on Dara Calleary asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan his views that the employment prospects for the small and medium enterprise sector would be enhanced by more comprehensive action to tackle SME debt; and if he will make a statement on the matter. [39087/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan In June 2013, the Central Bank set quarterly institution-specific performance targets for covered banks to move distressed SME borrowers onto longer-term forbearance solutions.  The targets set reflect the banks' capacity, processes and systems.  The Central Bank has informed the officials in my Department that the banks have reported that they have met their required targets to date.  This perspective has been reaffirmed by both the IMF and the European Commission who report that the workout of SME arrears is progressing and that imposed targets are being met. 

Resolutions offered to SME customers in difficulty are assessed on the basis of the borrower's maximum affordability. The restructures are often complex due to multiple debt connections.  Irish banks are advancing the process of restructuring their SME loan books.  I am informed by Bank of Ireland that the annual report for the year ended 31 December 2013 gives comprehensive additional asset quality disclosures on all of its Loan Portfolios from pages 380 to 423, including details of forbearance measures on its SME loan portfolios from page 416.  In particular, Bank of Ireland have indicated that they had reached resolution in 90% of distressed SME cases. 

I am informed by AIB that disclosures in relation to its SME portfolio are contained in the Credit Risk disclosures on pages 71 to 153 of the 2013 Annual Financial Report.  In particular, the AIB's results indicate a resolution level of approximately 65%.  It is also worth noting that defaulted loans for both banks have reduced year-on-year. 

The Central Bank's process of assessing financial institutions in their efforts to move distressed SME borrowers onto longer term sustainable solutions is an important element in assisting SMEs to potentially transition from a distressed to a more sustainable state and will continue throughout 2014. Additionally, the Government's enactment of legislation to allow small companies (as defined by the Companies Acts) to apply to the Circuit Court for examinership and the ongoing work of the expanded Credit Review Office are all initiatives that will assist viable SMEs in addressing their debt situation and consequently enhance the employment prospects for the sector as a whole.

Home Renovation Incentive Scheme Eligibility

 328. Deputy Michael McGrath Information on Michael McGrath Zoom on Michael McGrath asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan his plans to introduce tax relief for persons who carry out remedial works on their own septic tank; and if he will make a statement on the matter. [41814/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan As you are aware, the Home Renovation Incentive (HRI) came into operation on 25 October 2013 and will run until 31 December 2015.  The incentive provides tax relief for homeowners by way of a tax credit at 13.5% of qualifying expenditure incurred on repair, renovation or improvement work carried out on a principal private residence. Qualifying expenditure is expenditure subject to the 13.5% VAT rate.  The work must cost a minimum of €5,000 (inclusive of VAT) which would attract a credit of €595.  Where the cost of the work exceeds €30,000 (exclusive of VAT) a maximum credit of €4,050 will apply. The credit is payable over the two years following the year in which the work is carried out. The minimum threshold does not have to be reached by each contractor, where a homeowner engages a number of contractors to carry out different works.  So long as the aggregate payments reach the minimum threshold of €5,000 inclusive of VAT, the homeowner will qualify for relief.

In the recent Budget I announced that rental properties, whose owners are subject to income tax are also eligible to qualify for tax relief under the HRI. Qualifying works carried out and paid for on these properties from 15 October 2014 will qualify.

I can confirm that septic tank repair or replacement works will qualify for the HRI provided all of the other conditions of the incentive are met.

Corporation Tax Regime

 329. 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 corporation tax measures in the Finance Bill 2014 have been approved by the EU Commission on state aid grounds. [41833/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I wish to advise the Deputy that approval of the EU Commission under State aid rules has not been sought for the corporation tax measures in Finance Bill 2014. Such approval is not required as the measures in the Bill, including those I announced in the Budget, involve modifications and enhancements to our general corporation tax regime which do not give rise to State aid. Where measures in the Finance Bill, such as some of the changes to the Employment and Investment Incentive, have been identified as requiring EU Commission approval, they will not come into effect until the approval process has been completed.

Mortgage Interest Relief Eligibility

 330. 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 mortgage interest relief will be available to a person who purchased a property as a first-time buyer in 2008 and who subsequently rented out the property but is now residing in the property as their principal private residence; the rate of relief a person in that category may be entitled to; and if he will make a statement on the matter. [41873/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan Section 244 of the Taxes Consolidated Act 1997 provides for tax relief in respect of interest paid on qualifying loans taken out to purchase, repair or improve a property that is used as a sole or main residence.

  The relief, which is due to end in 2017, is available in respect of all qualifying home loans taken out between 1 January 2004 and 31 December 2012.

  Persons that purchased their home within this specified date range are entitled to a 30% rate of relief on interest paid up to an interest ceiling of €20,000 if married/widowed and €10,000 if single, for the first seven years. Thereafter, the ceiling reduces for the remaining years to a maximum of €6,000 if married/widowed and €3,000 if single.

  Regarding the specific case to which the Deputy refers, Revenue has informed me that the person would initially have been entitled to the relief at the 30% rate with effect from 1 January 2008 through to 31 December 2014. However the entitlement would have been discontinued from the time the person started to rent the property out because it no longer served as his/her sole or main residence.

  If the person has now returned to live in the property as his/her sole or main residence, then he/she should reapply for mortgage interest relief via Revenue's online service at
www.revenue.ie. If the person has any difficulty in completing the on-line application he/she should contact the TRS Helpline at 1890 463626 for assistance.

EU Budget Contribution

 331. Deputy Eoghan Murphy Information on Eoghan Murphy Zoom on Eoghan Murphy asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the total cost including breakdown of Ireland's financial contributions to the European Union, including the Commission, Parliament, Central Bank, Court of Justice, Council and any other body functioning under EU auspices; the total cost of each of these bodies; and Ireland's payments as a percentage of the total costs. [41876/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan Ireland's contribution to the EU Budget is an obligation of EU membership and is a charge on the Central Fund under national legislation. The contribution formula for the EU Budget is comprised of Traditional Own Resources (customs duties), a VAT-based payment and a residual balancing component paid in accordance with each Member State's share of EU Gross National Income (GNI). Ireland's contribution varies each year. However, as an indication, Ireland contributed €1,726m to the EU budget in 2013. Figures for earlier years can be found in table 10 of the Budget and Economic Statistics bulletin, published annually by my Department. 

  The following table gives the breakdown of the budgeted administrative cost of each of the institutions, as listed by the Commission in the adopted budget for 2014. The Commission calculated that Ireland would finance approximately 1.14% of the 2014 EU budget based on information at the time of publication.

  It should be noted that the actual cost of the institutions to member states is slightly less than indicated below. This is because the taxes, deductions and pension contributions of the persons working within the institution are netted off against its expenditure. 

  It should also be noted that the ECB is not funded from the EU Budget.

  Administrative Expenditure of the EU Institutions, EU Budget 2014

-Financial Contributions
InstitutionAdministrative expenditure (Payment appropriations in 000's of €)
European Parliament1,755,632
European Council and Council534,202
Commission3,267,245
Court of Justice of the European Union355,368
Court of Auditors133,498
European Economic and Social Committee128,559
Committee and Regions87,637
European Ombudsman9,857
European data-protection Supervisor8,267
European External Action Service518,628

Debt Relief

 332. Deputy Michael P. Kitt Information on Michael Kitt Zoom on Michael Kitt asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan if he will support debt cancellation in situations of unsustainable and illegitimate debt instead of increased International Monetary Fund, IMF, lending as the only policy option; the nature of IMF policy conditions in sensitive economic policy areas; if he will support an end to the IMF's support of regressive taxation; and if he will make a statement on the matter.  [41880/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan Ireland is recognised internationally for its contribution to the fight against global poverty and hunger and its leading role in making international aid more effective.  We have played a strong role in the development of an international consensus on the issue of debt cancellation for the least-developed countries.

The IMF has in the past supported debt cancellation programs.  I understand that the joint IMF World Bank comprehensive approach to debt reduction is designed to ensure that no poor country faces a debt burden it cannot manage.  Through its participation in the International Monetary Fund (IMF) and World Bank, Ireland is supportive of efforts to help countries suffering debt distress. For example, in 2006, Ireland demonstrated its commitment and leadership in the area of debt relief by contributing its full financial share of over €116 million to the two main multilateral initiatives to address debt relief, the Heavily Indebted Poor Countries Initiative (HIPC) and the Multilateral Debt Relief Initiative, while other States opted to pay for this debt cancellation over a much longer period and in smaller instalments.

Furthermore, Ireland has pledged its share of the profits from recent IMF gold sales, totaling 12.94 million SDR (Special Drawing Rights), the asset reserve used by the IMF, which equates to some €15 million, to subsidize lending to low-income countries, which may currently borrow at zero interest from the Poverty Reduction and Growth Trust (PRGT), the IMF's concessional lending vehicle.

As more and more countries graduate from the multilateral debt relief initiatives, the question of how they can maintain their debt at sustainable levels has become more relevant.  In this regard, Ireland contributes €100,000 annually to the Debt Management and Financial Analysis System programme operated by the United Nations Conference on Trade and Development (UNCTAD) which provides software solutions and technical assistance to developing countries to manage their debt sustainably.

Debt relief to developing countries, and loans from the International Financial Institutions, are often conditional on the implementation of certain macro-economic and development policies.  The Government takes the view that interventions by the International Financial Institutions should take into account country ownership of their programmes, poverty reduction and the achievement of the Millennium Development Goals.

I welcome the ongoing process of reform within the World Bank and the IMF to ensure they can adequately meet the development challenges of a changing world.  Ireland has supported the governance reforms of recent years and shifts in quotas and voting power in favour of developing and transition countries.  These have served to increase the legitimacy and democratic representation of the International Financial Institutions.

I understand that the IMF does not generally lend to countries whose debt is considered unsustainable and that its policies require it to conduct an in-depth assessment of a country's debt sustainability before it commits to a lending program. The Fund's debt sustainability analysis also incorporates an assessment of the economic growth prospects of the country concerned.    

In relation to the policy conditionality aspects of IMF lending, I understand that as far as taxation is concerned, the Fund advocates taxation policies which are as broad-based and growth friendly as possible.    

In the wider policy context, I would draw the Deputy's attention to the recent IMF Fiscal Monitor Report which emphasizes the importance of tax reform and the potential benefits of fiscal consolidation polices that are designed to sustain and underpin economic growth. In this context structural reforms, both of the tax system and also of a more general nature, are also widely regarded as having an important role to play.

Pensions Levy

 333. Deputy Timmy Dooley Information on Timmy Dooley Zoom on Timmy Dooley asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan if the pension levy is applicable to both incomes of a person (details supplied) in County Clare who has a full-time position with the local authority and also works for the fire service; and if he will make a statement on the matter. [41894/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan This question appears to relate to the pension-related deduction which applies to the salaries or earnings of those employed in the public service. I am not responsible for the policy or administrative aspects of this deduction. The broad policy and administrative aspects are a matter for my colleague, Mr. Brendan Howlin TD, the Minister for Public Expenditure and Reform, while the specific issues raised in the detail of the question may be more appropriate to my colleague, Mr. Alan Kelly TD, the Minister for the Environment, Community and Local Government.

Economic Growth Rate

 334. Deputy Terence Flanagan Information on Terence Flanagan Zoom on Terence Flanagan asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the new measurement of economic growth, GDP and GNP, in view of a recent EU directive; the way this compares to the previous measurement; and if he will make a statement on the matter. [41896/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan The first full-year estimates of GDP and GNP for 2013 were published in March of this year, along with estimates for previous years. The second estimate of 2013 GDP and GNP was released in July of this year and included revisions for 2013 and previous years. This was subsequently updated in September.

  I am advised by the CSO that the estimates subsequent to July include the impact of the transition to the new statistical standard ESA 2010, the inclusion of some previously unrecorded illicit activities, as well as regular revisions due to updated source data. Estimates are also impacted by the move to a new base year for chain linking.

  The growth in GDP and GNP at constant prices for 2008 to 2013  as set out in March and more recently in September is set out in the table below.

y-o-y % growth20082009 2010 20112012 2013
GDP at constant prices
March 2014 Estimate-2.2-6.4 -1.12.20.2-0.3
September 2014 Estimate-2.6-6.4 -0.32.8-0.30.2
GNP at constant prices
March 2014 estimate-1.8-9.10.5-1.61.8 3.4
September 2014 estimate-2.3-9.01.7-0.92.03.3


  These estimates are subject to change with the publication of national income and expenditure estimates in mid-2015.  More detail on the transition to the new statistical approach can be found at the following link: 
http://www.cso.ie/en/newsandevents/pressreleases/2014pressreleases/implementingnewinternationalstandardsfornationalaccountsandbalanceofpaymentsstatistics/

   

Defined Contribution Pension Funds

 335. 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 extent to which he has studied the impact on holders of combined contribution pensions who are prevented from accessing their total savings due to the requirements of the need for proof of an independent pension of €12,700, Approved Retirement Fund, ARF, in respect of whom the State appears to attempt to provide for their retirement by way of a nominal payment as low as €1,200 per annum, which can have virtually no impact on their quality of life, but who could benefit in a variety of ways if allowed to draw down their full entitlement in a single payment subject to normal taxation or, at least, if consideration may be given to their availing of the most beneficial option in the circumstances; and if he will make a statement on the matter. [41921/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan There are a number of alternative options available at retirement to individuals who have Defined Contribution pension funds (after taking their tax-free lump sum) other than the immediate purchase of a pension annuity.  

These options include investing in an Approved Retirement Fund (ARF) where the funds can be drawn-down at the ARF owner's discretion subject to taxation or taking the balance of the pension funds as one taxable lump sum. The availability of these options is subject to certain conditions including the requirement that (if aged under 75) the individual has in payment, in his or her own right, at the time of exercising these options a guaranteed pension income for life of €12,700 per annum. This guaranteed pension income can include a pension paid by the State.  

If the guaranteed pension income requirement is not met and the individual does not wish to purchase a pension annuity at that time, a maximum of €63,500 of the remaining pension funds (or the remaining funds if lower than that amount) must be invested in an Approved Minimum Retirement Fund (AMRF) until either the guaranteed pension income requirement is met or the individual reaches age 75 at which point the AMRF becomes an ARF with unrestricted access to the funds subject to taxation. Any remaining pension funds in excess of the €63,500 set-aside amount can be invested in an ARF. The funds in an AMRF can be used at any time to purchase a pension annuity.

The purpose of these various arrangements is to seek to ensure that individuals have options to access a source of income from their pension funds over the full period of their retirement. In this year's Finance Bill, I have included a number of amendments to further enhance these arrangements. I have no plans, however, to remove the guaranteed pension income in payment requirement.

Section 17 of the Bill, as published, reduces the imputed distribution rate from 5% to 4% for ARFs and vested Personal Retirement Savings Accounts (PRSAs) beneficially owned by individuals aged between 60 and 70 where the value of assets in those products is €2 million or less. The purpose of this change is to reduce the risk that the owners of funds in these circumstances will outlive the funds available for their retirement. Section 17 also replaces access by the beneficial owner to the accrued income, profits or gains arising in an AMRF with an option to draw-down up to 4% of the assets of such funds each year. This is primarily aimed at those individuals whose AMRF constitutes a significant part of their retirement funds and who, while not wishing to purchase a pension annuity with those funds, may require access to a portion of these funds to provide a more certain form of income prior to reaching age 75.

Tax Exemptions

 336. Deputy Michael McGrath Information on Michael McGrath Zoom on Michael McGrath asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan in the context of other tax changes in the budget, the reason he did not review the income exemption limits for people aged over 65 years of age and the marginal relief rate of 40%; and if he will make a statement on the matter. [41933/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan The Deputy will be aware that all aspects of the tax code are reviewed in the normal course of preparing the annual Budget and Finance Bill. As we begin to emerge from a prolonged economic downturn, the Government has chosen to utilise the limited fiscal space available to it in order to assist with job creation and economic growth. The income tax changes announced in the Budget are designed to ensure that work pays and to help individuals to transition from unemployment back into jobs and indeed to remove potential blockages that may be deterring part-time workers from taking on additional hours of employment. 

I have long said that the burden of the income tax system in Ireland is too high and that I would seek to reduce it as soon as it was prudent to do so. The measures announced in the Budget are the first stage of a reform plan, to be undertaken over a number of years, to address this issue, particularly for low and middle-income earners who have borne the greater share of the cost of the economic downturn.

In Budget 2015 I have reduced the two lower rates at which USC is payable from 2% and 4% to 1.5% and 3.5%, respectively. I have also increased the bands of income on which these new lower rates will apply. Furthermore, I have also increased the threshold before which the 7% rate of USC becomes payable to €17,576, so that those on the minimum wage will now only be liable to a maximum 3.5% rate of USC.

The Budget also provides for the retention of the exemption from the top rates of USC for medical card holders with incomes that do not exceed €60,000. These individuals will now only be liable to pay a maximum USC rate of 3.5%, down from 4%. This reduced rate will also apply to the over 70s, with incomes that do not exceed €60,000, again down from 4%.

It should be noted that the over 65s, who currently pay USC, will benefit from these changes regardless of whether they opt for assessment under the general income tax system, or the age exemptions and marginal relief systems. Such individuals can of course elect for assessment under whichever system proves more beneficial to them.

Illness Benefit Payments

 337. Deputy John Lyons Information on John Lyons Zoom on John Lyons asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the reason a person (details supplied) is being requested to pay back tax when cheques for sick leave were not cashed by the person; if he will clarify with the Revenue Commissioners that these cheques during a period of sick leave were not cashed; and if the person's tax liability could be rectified as a result. [41976/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am informed by the Revenue Commissioners that in accordance with section 126 of the Taxes Consolidation Act 1997 the person concerned is chargeable to income tax in respect of the Illness Benefit paid to him by the Department of Social Protection.

In the details supplied it is mentioned that the person concerned has not cashed his Illness Benefit cheques. This is a matter that he should take up with the Department of Social Protection. However, as matters stand, he remains liable to income tax on the benefit as the payments have been made to him.

Should the person in question require further clarification in relation to his tax liabilities, he may contact Ms Bernie Mulvey, South City/Dun Laoghaire Rathdown Revenue District, 85/93 Lower Mount St, Dublin 2, telephone number 01 6474140.

Tax Rebates

 338. Deputy Michael Healy-Rae Information on Michael Healy-Rae Zoom on Michael Healy-Rae asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan his views on a matter (details supplied) regarding the diesel rebate scheme; his plans to change existing guidelines; and if he will make a statement on the matter. [42000/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I introduced this scheme in the Finance Act 2013 in order to provide for a repayment to qualifying road haulage and bus operators of a part of the mineral oil tax paid on their purchases of auto-diesel for use in the course of business. As part of the scheme's risk control framework, provision was made for certain restrictions on the means by which the auto-diesel concerned may be purchased. Purchases in bulk must be made from a licensed mineral oil trader, and delivered, in a quantity exceeding 2,000 litres, to a premises or place that is under the control of that qualifying road transport operator.

Bulk purchases from licensed mineral oil traders can be verified by reference to the monthly electronic returns that the oil traders are required to make to Revenue. These returns form part of the supply chain controls introduced by Revenue to tackle the problem of illicit fuel, prior to the introduction of the diesel rebate scheme. The return provides an electronic record of the purchases, stock movements and sales of mineral oil each month by licenced mineral oil traders, by oil product type, including bulk sales to customers exceeding 2000 litres. This information can be used to verify electronically claims for bulk purchases under the diesel rebate scheme. A reduction in the minimum bulk purchase requirement for the diesel rebate scheme would require a corresponding reduction in the minimum threshold for purchases to be reported by mineral oil traders in their monthly returns, greatly increasing the number of transactions to be reported in these returns and the related administrative burden on the mineral oil traders.

Purchases by means of a fuel card, approved by Revenue for the purpose of the scheme, also qualify for repayment.  There is no minimum requirement on purchases made in this way, so it is not clear to me how this can be considered discrimination against a small operator.  Fuel cards are widely available and are usable across the road network and there are a number of fuel card providers who can supply suitable fuel cards to road transport operators and fuel retailers. A fuel card will be approved where Revenue is satisfied that the fuel card provider will supply it with the information required about purchases of auto-diesel by means of that card.

The current purchasing arrangements under the scheme are necessary to enable Revenue to manage repayments to qualifying transport operators while controlling the risk of fraud. I am satisfied that the purchasing arrangements achieve the right balance between making the scheme available to compliant transport operators and allowing Revenue to manage effectively the risk of fraud and I have no plans to change these arrangements.

Property Taxation Yield

 339. 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. 119 of 8 April 2014, his estimate of the cost of allowing the local property tax to be deducted as an expense by landlords; and if he will make a statement on the matter. [42014/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am advised by the Revenue Commissioners that the cost of allowing 100% Local Property Tax (LPT) to be deducted as an expense by landlords would be €13m in year 1 and €25m in a full year. This cost is a tentative estimate and relates to one year's LPT (i.e. does not allow for any offset of previous year's LPT).

As the Deputy is aware, the Thornhill Group, the inter-departmental group, chaired by Dr Don Thornhill, set up to consider the design of a property tax recommended that the LPT paid in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates.

The group recognised the considerable pressures on the public finances and the need to bridge the gap between expenditure and revenue, and, for this reason, suggested that consideration be given to phasing in deductibility over a period of years. The group also considered that it was for Government, having regard to the prevailing budgetary situation, to decide on the time span for phasing-in deductibility and what percentage of LPT to allow as a deduction from gross rents for tax purposes. While the issue was considered in the context of Budget 2015, I decided not to recommend its introduction to Government at this stage.

Tax Yield

 340. 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 yield in each year from 2011 to 2013 from income tax, PRSI and USC on income from the rent received by landlords from residential properties; and if he will make a statement on the matter. [42015/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am informed by the Revenue Commissioners that the amount of gross domestic rental income declared on income tax returns was €4.1bn for 2011 and €4.0bn for 2012 (returns for  tax year 2013 are not yet available). Deductions and reliefs in respect of losses, expenses and capital allowances are allowable from gross rental income and the taxable rental income for 2011 and 2012 was in the order of €1.0bn and €1.2bn respectively. These figures include rental income from both residential and commercial properties as declared by income tax payers, the details returned to Revenue do not distinguish between the two.

As rental income is aggregated with all other incomes for the purposes of the income tax assessment calculation, it is not therefore possible to specify the yield from rental income alone or provide a breakdown of yield by income tax, PRSI and USC.

Savings Accounts Interest Rates

 341. Deputy Terence Flanagan Information on Terence Flanagan Zoom on Terence Flanagan asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the reason banks have been allowed to apply pressure to ensure that post offices and credit unions keep their savings rates low; and if he will make a statement on the matter. [42131/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan State Savings is the brand name used by the National Treasury Management Agency (NTMA) to describe the range of Government savings products offered by the NTMA to personal savers. All State Savings money form part of the sovereign debt of Ireland, the repayment of which is a direct, unconditional obligation of the State.

The position is that it is the Government's objective to raise money to fund the Exchequer at the lowest cost to the taxpayer while remaining competitive in the prevailing market conditions. The newly announced reductions in interest rates represent a saving to the Exchequer in the cost of servicing the National Debt and a benefit to the overall public finances. These new interest rates announced by the NTMA in October 2014 reflect the reductions in interest rates in the savings market and in sovereign bond yields generally.

The NTMA keeps the suite of State Savings products and the interest rates paid on them under constant review to ensure that the products remain competitive and attractive to retail investors, while balancing the funding requirements and not incurring interest costs above the levels generally prevailing in the market on Government borrowings.

Credit unions are not for profit entities that exist to attain the economic and social goals of the individuals that make up their membership and the wider local communities. Members' savings are eligible for an annual dividend payment which is paid out of a credit union's surplus funds. As such, each credit union is responsible for setting the dividend rate in line with its own level of surplus funds.

Central Bank of Ireland

 342. Deputy Eoghan Murphy Information on Eoghan Murphy Zoom on Eoghan Murphy asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan his views on correspondence (details supplied) regarding the sale of mortgage loans in Ireland to funds operating from a separate jurisdiction [42139/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan By virtue of an exemption in Part V of the Central Bank Act 1997, an unregulated entity to whom a cash loan is transferred by a regulated entity is not subject to Central Bank supervision.

  As Minister for Finance, I am committed to bringing forward legislation that protects consumers whose loans are sold to unregulated entities. The Government has reiterated this commitment on several occasions. In July and August of this year, my Department ran a public consultation seeking views on its proposed legislation to protect consumers whose loans are sold to unregulated entities.  

  The Department of Finance received 19 submissions from a range of respondents, from the financial services industry, consumer groups, public representatives and individuals and other stakeholders. These have now been published on the Department's website at
http://www.finance.gov.ie/what-we-do/banking-financial-services/consultations/responses-public-consultation-process-consumer.

  Officials in my Department have carefully considered the submissions and are working with the Office of the Attorney General to progress this legislation. It is anticipated that it will be published by the end of this year.

  As stated in the public consultation document, the mission of the Government is to ensure that consumers whose loans are sold by a regulated entity to a currently unregulated entity maintain the same regulatory protections as they had prior to the sale, including under various Central Bank Codes including the Code of Conduct on Mortgage Arrears (CCMA). The proposed legislation is not retrospective. However, it will apply to all owners of loans, regardless of when they were acquired, thus capturing entities which have already purchased loan books.

Tax Yield

 343. Deputy Terence Flanagan Information on Terence Flanagan Zoom on Terence Flanagan asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan his views on a matter (details supplied) regarding tax on the self-employed; and if he will make a statement on the matter. [42165/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan A fair, efficient and competitive income tax system is essential for economic growth and job creation. I have long said that the burden of the income tax system in Ireland is too high and that I would seek to reduce it as soon as it was prudent to do so. The measures announced in the Budget are the first stage of a reform plan, to be undertaken over a number of years, to address this issue, particularly for middle-income earners who have borne the greater share of the cost of the economic downturn.

In Budget 2015 I have reduced the top rate of income tax from 41% to 40%.  I have also extended the standard rate band on which income tax is chargeable at the lower 20% rate by €1,000. These measures ensure that all those currently paying the top rate of income tax will benefit from the income tax changes in the Budget.

In addition I have reduced the two lower rates at which USC is payable from 2% and 4% to 1.5% and 3.5%, respectively. I have also increased the bands on which these two lower rates are chargeable. Furthermore, I have also increased the threshold above which the 7% rate of USC becomes payable to €17,576, so that those on the minimum wage will now only be liable to a maximum 3.5% rate of USC.

Ireland already has one of the most progressive income tax systems in the developed world. To preserve that progressivity, the Budget also contains USC measures which have the effect of limiting the maximum benefit from this package of tax measures to approximately €14 per week for any individual taxpayer, which means that those with very high incomes will only benefit to the same extent, as those with more modest incomes.

All of these changes announced in the Budget will ensure that all those currently paying income tax and/or USC, including the self-employed, regardless of their income level, will see a reduction in their tax bill in 2015. I propose to continue this reform in future Budgets, subject to the required economic growth and the consequent fiscal space available to the Government.

Financial Services Ombudsman

 344. Deputy Dara Calleary Information on Dara Calleary Zoom on Dara Calleary asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the position regarding a case with the Financial Ombudsman (details supplied); and if he will make a statement on the matter. [42166/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan At the outset, I must point out that the Financial Services Ombudsman is independent in the performance of his statutory functions. 

  The Financial Services Ombudsman's Bureau was established under the Central Bank and Financial Services Authority of Ireland Act, 2004. The legislation provides for an independent, impartial investigation and resolution of disputes between consumers and Financial Service Providers.

  The Financial Services Ombudsman is an independent officer and it would not be appropriate for me to intervene in an individual's complaint.

IBRC Mortgage Loan Book

 345. 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 he is satisfied that all potential bidders for a certain commercial loan book being sold by the IBRC special liquidator (details supplied) had equal access to the books and records of the underlying business; and if he will make a statement on the matter. [42210/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan The Special Liquidators of IBRC have confirmed to me that the sales processes that they have employed have been designed to maximise value from the sale of Irish Bank Resolution Corporation Limited (in Special Liquidation) loan assets for creditors and this continues to be the case. The Special Liquidators are satisfied that this has been achieved in the current and previous loans sales processes. I am further advised that the level of information made available to bidders, throughout the liquidation process, has been provided on the basis of legal advice furnished to the Special Liquidators.

NAMA Loans Sale

 346. Deputy Michelle Mulherin Information on Michelle Mulherin Zoom on Michelle Mulherin asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the difference in the amount bid by the highest bidder and the second highest bidder in respect of the sale of loans (details supplied); and if he will make a statement on the matter. [42241/14]

 347. Deputy Michelle Mulherin Information on Michelle Mulherin Zoom on Michelle Mulherin asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan his views on the value offered to the taxpayer in the sale of certain loans; and if he will make a statement on the matter. [42242/14]

 348. Deputy Michelle Mulherin Information on Michelle Mulherin Zoom on Michelle Mulherin asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan his views on the process followed by the National Asset Management Agency in respect of the sale of certain loans; and if he will make a statement on the matter. [42243/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I propose to take Questions Nos. 346 to 348, inclusive, together.

  Sales processes which are run by NAMA are a matter for the NAMA Board and it is not my normal practice to comment on them or on individual transactions. However, in this instance, I understand the sale was discussed at a recent meeting of the Oireachtas Joint Finance Committee and my understanding of the matter is based on NAMA's testimony to that Committee.

  NAMA's policy is that the sale of all loans and the sale of properties by debtors and receivers should be openly marketed to ensure that the best price available in the market is achieved in all instances.  NAMA enjoys a strong reputation in the market for the quality of information it provides as part of its open market loan sale process and for the transparent and professional manner in which such transactions have been completed to date. Its loan sales process is built on international best practice and it uses experienced advisers to ensure that transactions are executed to the highest market standards and that bidders are treated equally by mapping out a clear and rigorous process to be followed in each loan sale. 

  I understand that, in this instance, the rules and format of the bidding process and the fact that NAMA would consider only unconditional binding bids at the end of the Phase II due diligence were made clear to all bidders in the process.  Mitigation of execution risk is standard industry practice in any loan sales process and to accept conditional bids, contingent on funding, would expose NAMA to accusations of being reckless and irresponsible with the interests of Irish taxpayers and would damage its credibility and, by extension, that of Ireland, internationally. It could also be exposed to complaints from underbidders who could reasonably contend that they were disadvantaged because they had faithfully abided by the rules which had been established at the outset.  

  There are substantial costs associated with the preparation and submission of bids on large transactions and any suggestion of unfairness or of a lack of professionalism in the process would be likely to alienate potential bidders. I am satisfied that if NAMA had not set out the ground rules for this loan sale with the utmost clarity and if, instead, it had left room for the inclusion of conditionality and ambiguity in the framing of bids, particularly around funding, it would have discouraged credible counterparties from participating in the process. It would also have left itself open to disputation as to what constituted the best price and ultimately would have risked losing value for Irish taxpayers.   

  The NAMA Chief Executive advised the Oireachtas Joint Finance Committee that the differential between the conditional bid and the successful bid was not material in the context of the price ultimately achieved. I understand that the differential was considerably outweighed by the execution risk that attached to the conditional bid and by potential negotiation over a warranty package and it would have been unacceptable for NAMA to put Irish taxpayers' interests at risk in such circumstances.

  In the case of large loan and asset sales generally, compliant bidders cannot be expected to let their bids stand while a conditional bidder is allowed additional time to finalise an offer.  The industry experience is that some bidders seek to use conditional offers to eliminate fully funded bidders from the process with the aim of ultimately seeking to reduce their own conditional bid.  

  I am not for a moment suggesting that this scenario applied in this particular instance. However, it is entirely understandable that NAMA would wish to preside over a sales process which was rigorous and professional in its execution and fair to all bidding parties. This was necessary not only to secure the integrity of this particular sale but also of any future NAMA loan sales. It is important for NAMA, and indeed more broadly for Ireland's reputation internationally, that sales processes such as this be conducted in a manner which is above reproach. I am satisfied that NAMA adhered faithfully to its own stringent process for assessing competing bids in this case and that it obtained the best price on offer to it having assessed the risks attaching to  the bids received.

Tax Settlements

 349. 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 position regarding an appeal submitted to the Revenue Commissioners by a person in County Cork (details supplied); and if he will make a statement on the matter.  [42269/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am advised by Revenue that interest charges are levied on taxpayers who do not meet their tax payment obligations in a timely fashion or who seek to pay their liabilities through phased arrangements. The charges are imposed to compensate the Exchequer for the late payment of funds and to ensure equity for the vast majority of taxpayers who pay on time.

In regard to the specific case to which the Deputy refers, the person in question has been facilitated with three 'informal' phased payment arrangements to meet his liabilities over the last four years without the inclusion of any interest. However, in spite of receiving concessions beyond what would normally be allowed, his payments patterns have not improved and he has consistently failed to meet his tax obligations in a timely manner.

Given the person's continued failure to pay his taxes on a timely basis and given the latitude that Revenue has already allowed him over an extended period of time it is not possible to again provide such an arrangement without an interest element being included.

However, notwithstanding the previous difficulties, Revenue is willing to facilitate the person with a formal 12 month phased arrangement to help him meet his 2013 Income Tax liability. A proposal in this regard was offered to the person on 24 October 2014. The proposed arrangement includes interest charges in respect of an insufficient Preliminary Tax payment for the year and in respect of the 12 months of deferred payments.  

The proposal is open to the person to agree to up to 8 November 2014 and I am assured by Revenue that no debt collection/enforcement action will be started before that date.

Mortgage Schemes

 350. Deputy Finian McGrath Information on Finian McGrath Zoom on Finian McGrath asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan his views on a matter (details supplied) regarding new Central Bank rules on house deposits; and if he will make a statement on the matter. [42273/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan The Central Bank of Ireland has recently published proposals to introduce new macro-prudential measures for residential mortgage lending in Ireland. The proposed Central Bank measures would place restrictions on the loan to value (LTV) and loan to income (LTI) ratios banks can apply when lending for house purchase.

  The measures set out are:

- restrict new lending for principal dwelling houses (PDH) above 80 per cent LTV to no more than 15 per cent of the value of all new PDH loans;

- restrict new lending for PDHs above 3.5 times LTI to no more than 20 per cent of the value of all new PDH loans.

  However, the Central Bank has also stated that there needs to be certain exemptions from the LTV limits in certain circumstances, such as mortgages in arrears or in relation to the residual debt from negative equity mortgages.

  The Central Bank consultation period on the published proposals runs until 8 December next and submissions and comments on the measures outlined in the consultation paper are invited.  These can be submitted in an electronic format to the Central Bank at 
realestate@centralbank.ie.

State Bodies

 351. Deputy Michael McCarthy Information on Michael McCarthy Zoom on Michael McCarthy asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the number of quangos set up since 2011 in his Department; the number of members of same; the cost and expense incurred to date including details of the briefs that they cover; and if he will make a statement on the matter. [42515/14]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan Since 2011, four bodies under the aegis of my Department have been established.

  Irish Fiscal Advisory Council (IFAC)

  The IFAC was established on an interim basis in July 2011 and was put on a statutory footing on the 31 December 2012 under the Fiscal Responsibility Act 2012. It comprises of five Council members.

  In 2013, the Fiscal Council received a total of €499,939. So far in 2014, the Fiscal Council has received a total of €425,438. To facilitate payments from the Central Fund, the Fiscal Council has provided projected costs for the full year in 2014. The projected costs for 2014 are €732,020.

  The costing of the Fiscal Council before it was established on a statutory basis (from July 2011 to end December 2012) is as follows; €222,008 for 2011, €408,920 for 2012.

  The mandate of the IFAC is:

- To endorse, as it considers appropriate, the macroeconomic forecasts prepared by the Department of Finance on which the Budget and Stability Programme Update are based.

- To assess the official forecasts produced by the Department of Finance. These are the macroeconomic and budgetary forecasts published by the Department twice a year - in the Stability Programme Update in the Spring and in the Budget in the Autumn.

- To assess whether the fiscal stance of the Government is conducive to prudent economic and budgetary management, with reference to the EU Stability and Growth Pact (SGP). The SGP is a rule-based framework that aims to coordinate national fiscal policies in the economic and monetary union.

- To monitor and assess compliance with the budgetary rule as set out in the Fiscal Responsibility Act. The budgetary rule requires that the Government's budget is in surplus or in balance, or is moving at a satisfactory pace towards that position.

- In relation to the budgetary rule, to assess whether any non-compliance is a result of 'exceptional circumstances'. This could mean a severe economic downturn and/or an unusual event outside the control of Government which may have a major impact on the budgetary position.

  Strategic Banking Corporation of Ireland (SBCI)

  The SBCI was incorporated during September 2014 as a Companies Act Company.  It is a permanent self-sustaining company where the profits from its commercial activities will fund its expenses into the future.  It is not dependent on an annual expenditure vote from the Department's resources.

  The SBCI was incorporated as an independent company during September 2014.  It has three members of its board who do not receive compensation for being members of that board.  The current board is an interim board whose brief is to successfully oversee the initial commercial operations of the company.

  There has been negligible cost to the exchequer since it was incorporated.

  New Economy and Recovery Authority (NewERA)

  In September 2011 the Government announced the establishment of  NewERA, initially on a non-statutory basis, within the NTMA. The NTMA (Amendment) Bill 2014, once commenced will put this function on a statutory basis. The core role of NewERA involves the oversight of the financial performance, corporate strategy, capital and investment plans of the following commercial State entities - ESB, Ervia (formerly Bord Gáis Éireann), EirGrid, Bord na Móna and Coillte. NewERA's role also involves, where requested, advising on the disposal or restructuring of State assets. In addition, NewERA works with relevant stakeholders to develop proposals for investment in energy, telecommunications, water and forestry to support economic activity and employment. A total of 13 NTMA staff were assigned to the NewERA function at year-end 2013.

  NewERA is a business unit within the NTMA. Costs incurred by the NTMA in performing NewERA's functions are part of the NTMA's overall operating costs which are set out in the NTMA's published annual report.

  Credit Union Restructuring Board (ReBo)

  ReBo was set up on 1 January 2013 in accordance with Section 42 of the Credit Union and Co-Operation with Overseas Regulators Act 2012.

  The Board of ReBo currently has 12 members and there are no vacancies. There are currently 11 staff members in ReBo.

  ReBo's mission is to facilitate and oversea the restructuring of credit unions on a voluntary, incentivised and time bound basis so as to support the financial stability and long term sustainability of credit unions generally.

  As per the draft accounts for the year 2013, total expenditure for the year end 2013 amounts to circa €700,000. The 2013 accounts are currently awaiting sign-off from the C&AG.


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