Written Answers Nos. 199-216
  State Banking Sector Regulation
  NAMA Debtors
  Exchequer Borrowing Requirement
  Property Taxation Yield
  National Debt
  National Debt
  Betting Regulations
  VAT Rates Application
  Promissory Note Issues
  Central Bank of Ireland Issues

Tuesday, 24 September 2013

Dáil Éireann Debate
Vol. 814 No. 2

Written Answers Nos. 199-216

State Banking Sector Regulation

 199. Deputy Michael McGrath   asked the Minister for Finance   the date the Permanent TSB restructuring plan was submitted to the European Commission; when he expects to receive a response; and if he will make a statement on the matter. [39563/13]

Minister for Finance (Deputy Michael Noonan):   I can inform the Deputy that the Permanent TSB restructuring plan was submitted to the European Commission (“the Commission”) on 29 June 2012. As requested by the Commission an updated version of the plan was submitted on 15 August 2013. Discussions are ongoing at a technical level involving the Commission, the Department of Finance and Permanent TSB in relation to the updated version of the plan. There is no formal deadline in place for the Commission to respond on the updated version of the plan. However the Deputy may have noted that Permanent TSB, at its interim results presentation on 29 August 2013 stated that it was aiming for approval before year end and I have no reason at this point in time to believe otherwise.

The Deputy may also be aware that AIB is in discussions with the Department of Finance and the Commission in respect of its restructuring plan and currently expects approval of the plan during the second half of 2013.

NAMA Debtors

 200. Deputy Michael McGrath   asked the Minister for Finance   the number of developers currently in receipt of a salary from the National Assets Management Agency; the number who have received an increased in salary since their contact with NAMA was initiated; and if he will make a statement on the matter. [39566/13]

Minister for Finance (Deputy Michael Noonan):   I am advised by NAMA that it does not pay a salary to any debtor. NAMA seeks to ensure that income generated by assets securing NAMA loans is applied towards repaying a debtor’s indebtedness to NAMA. However as part of the debtor business plan, debtors retain an agreed portion of this income to cover business overheads. In certain circumstances, debtors are allowed a salary out of business overheads where this is necessary to manage and preserve the value of the assets securing NAMA’s loans. NAMA advises that all overheads are reviewed as part of its regular review of each debtor’s performance. NAMA advises that it has not agreed in any case to an increase in the salary retained by debtors from business overheads. NAMA further advises that debtor performance reviews include consideration of developments in the wider economy and that debtors are not immune to these wider considerations.

Exchequer Borrowing Requirement

 201. Deputy Timmy Dooley   asked the Minister for Finance   the cost of pre-funding in 2013 the Exchequer borrowing requirement for 2014; and if he will make a statement on the matter. [39567/13]

Minister for Finance (Deputy Michael Noonan):   The proceeds of all borrowings by the Exchequer, including borrowing under the EU/IMF programme, as well as tax revenues, non-tax revenues and other receipts, are lodged to the Exchequer account at the Central Bank of Ireland to fund on-going Government expenditure. There are constant flows into and out of the Exchequer account and all moneys within it are fungible. The Government must ensure through its management of expenditure, tax and non-tax receipts and borrowings that there are prudent and adequate balances in the Exchequer account at all times. This also provides investors with the assurance they require that they will be repaid upon the redemption of debt. For small open economies such as Ireland, budgetary aggregates are generally more susceptible to the negative effects of external and internal shocks. In general terms the overall level of cash reserves held depends on the State's risk appetite in relation to such shocks. Particular factors which arise in that context include the international economic situation, the State's debt maturity profile and the projected pattern of Exchequer receipts and expenditure. In Ireland, where we are seeking to achieve sustainable access to the debt markets while still running a significant budget deficit, the need to hold appropriate cash balances as we emerge from the EU/IMF programme is paramount. In line with this, the Troika's funding projections for Ireland envisage sufficient cash in hand as at the end of the programme in December 2013 to cover the Exchequer's full needs for the calendar year 2014.

The April 2013 Stability Programme Update forecasts estimated the cumulative Exchequer deficit over the years 2013-2015 at some €25 billion, with the 2014 deficit estimated at just under €9 billion. In fact with 40% of the 2014 EBR forecasted to accrue in the first quarter along with the significant bond redemption of €6.85 billion in January 2014, much of the prefunded cash balances will be utilised in the first 3 months of 2014. Indeed visibility as to our 2014 funding is essential if Ireland is to successfully exit the programme on schedule.

Decisions on the level of cash reserves take account of various factors in addition to the cost of maintaining such reserves. These factors include the potential risks of not maintaining an adequate and prudent cash balance, including the risk that the Exchequer would be unable to meet its obligations and that market funding rates for Ireland would therefore be higher than would otherwise be the case due to the perception that the State had a precarious liquidity position.

The State earns a return on these cash balances and deposits, which the National Treasury Management Agency (NTMA) manages in a prudent manner consistent with minimising risk and always having sufficient cash on hand to cover any volatility which might arise. I am informed by the NTMA that they have calculated that, during 2013, based on bond issuance yields and the cost of funding under the EU-IMF Programme, the net interest differential (cost) on the cash balances held is in the region of 2.7% which equates to about €2.2 million per month for each €1 billion borrowed. The key elements of the marginal cost of funds in 2013 include the two long-term bond syndications done in early 2013, the pooled funds received from the EFSF and disbursements received from the IMF, United Kingdom, Sweden and Denmark. The NTMA continues to keep the quantum, maturity and timing of market funding under review based on its assessment of what is required to regain full market access and the overall level of cash balances that it is prudent to maintain.

It is the intention to run lower cash balances in the coming years, once sustainable market access has been established.

Property Taxation Yield

 202. Deputy Andrew Doyle   asked the Minister for Finance   if he will provide a breakdown, in tabular form, of the amount of money raised from the local property tax in each local authority area in County Wicklow; the level of compliance and non-compliance in County Wicklow to date; and if he will make a statement on the matter.  [39568/13]

Minister for Finance (Deputy Michael Noonan):   I am advised by the Revenue Commissioners that compliance data in relation to Local Property Tax (LPT) are only available broken down by city and county councils nationally, and the most up to date figures available for County Wicklow are published on the Commissioners website at: http://www.revenue.ie/en/tax/lpt/lpt-preliminary-data.pdf. As at 23 July 2013, the total LPT paid in respect of properties in County Wicklow was €5,824,791; the amount of LPT declared on returns for properties in the county was €8,230,959; and the compliance level was estimated at 90%.   The Commissioners further advise that work is on-going with refining the Local Property Tax register, and more up-to-date details will be published in due course.

National Debt

 203. Deputy Bernard J. Durkan   asked the Minister for Finance   the total national debt as a percentage of GDP for each years from 1989 to 1993 inclusive; the current budget borrowing requirements for the same years; and if he will make a statement on the matter. [39569/13]

Minister for Finance (Deputy Michael Noonan):   The following table gives the details requested for the years 1989 to 1993. The figures for the years in question have been converted from Irish pounds into Euro. A negative balance or deficit on the Exchequer current account indicates a borrowing requirement, with the nominal amount of borrowing required indicated by the size of the deficit. The Exchequer balance is the sum of the balances on the Exchequer current and capital accounts.

Rounding may affect totals

Source: Department of Finance and CSO

National Debt

 204. Deputy Bernard J. Durkan   asked the Minister for Finance   the total national debt as a percentage of GDP for each years from 1976 to 1980 inclusive; the current budget borrowing requirements for the same years; and if he will make a statement on the matter. [39570/13]

Minister for Finance (Deputy Michael Noonan):   The following table gives the details requested for the years 1977 to 1980. Prior to 1987, the Finance Accounts do not break out Exchequer figures into current and capital balances. In Budget 2001, an exercise was carried out restating earlier years back to 1977 in the modern format. The figures for the years in question have been converted from Irish pounds into Euro. A negative balance or deficit on the Exchequer current account indicates a borrowing requirement, with the nominal amount of borrowing required indicated by the size of the deficit. The Exchequer balance is the sum of the balances on the Exchequer current and capital accounts.

Rounding may affect totals.

Source: Department of Finance and CSO.

Question No. 205 answered with Question No. 158.

Betting Regulations

 206. Deputy Pearse Doherty   asked the Minister for Finance   the revenue that would be raised by applying a 2%, 3%, 4%, 5% tax to online bets and 20% gross profit tax for remote betting intermediaries. [39638/13]

Minister for Finance (Deputy Michael Noonan):   It was announced in Budget 2011 that the necessary arrangements are being made to ensure that bets placed on the internet by domestic punters are subject to the same level of betting duty as applies to high street betting shops. This will serve to broaden the tax base and increase betting duty receipts. The Finance Act 2011 provides for the taxation of bets that remote bookmakers enter into with persons in the State. This means, for example, that a business which engages in online bookmaking and which accepts bets from people in this country will be liable for betting duty on those bets, irrespective of where that business is based. The existing betting duty (1%) will be applied to such bets. The Finance Act also provides for the taxation of Betting Exchanges under the new arrangements; however the calculation of the tax will take account of their particular business model, in other words a 15% tax on the commission charged. In addition, excise duties are being applied to the granting and renewal of remote bookmakers’ and remote betting intermediaries’ licences.

The Betting (Amendment) Bill, which was published in July, will establish the regulatory framework for these licences. The tax changes provided for in the Finance Act can only be implemented once the Betting (Amendment) Bill is enacted.

It is estimated that the full year yield from the taxation of remote betting would be around €20 million. Therefore a straight line calculation of the 2%, 3%, 4% and 5% suggested by the Deputy would suggest a yield of €40 million, €60 million, €80 million and €100 million. However this would not take account of the impact of such a rate on betting activity or any other variables.

VAT Rates Application

 207. Deputy Maureen O'Sullivan   asked the Minister for Finance   the social policy objectives of this Government and of the State on the needs of those who are mobility-impaired and on low incomes, that are advanced by imposing a VAT rate of 23% on walking sticks while the VAT on limousine hire stands at 0%; if this indicates a need for a re-balancing of VAT rates generally in order to achieve co-ordination with social policy objectives; and if he will make a statement on the matter.  [39680/13]

 208. Deputy Maureen O'Sullivan   asked the Minister for Finance   the social policy objectives of this Government and of the State, especially in the context of population health gain, that are advanced by levying 23% VAT on toothbrushes and toothpaste while the VAT on processed sugar stands at 0%; if this indicates a need for a re-balancing of VAT rates generally, in order to achieve co-ordination with social policy objectives; and if he will make a statement on the matter.  [39681/13]

 209. Deputy Maureen O'Sullivan   asked the Minister for Finance   the social policy objectives of this Government and of the State, especially in the context of meeting the health needs of those who are ill, that are advanced by levying 23% VAT on catheters, a basic necessity in the circumstances, while VAT on caviar, a luxury food item stands at 0%; if this circumstance indicates a need for a re-balancing of VAT rates generally, in order to achieve co-ordination with social policy objectives; and if he will make a statement on the matter. [39682/13]

 210. Deputy Maureen O'Sullivan   asked the Minister for Finance   the social policy objectives of this Government and of the State, in the context of in-shore fisheries development, that are advanced by levying VAT at 23% on lobster pots, which are essential working implements, while the VAT on processed lobster, a luxury food item, stands at 0%; if this indicates a need for a re-balancing of VAT rates generally, in order to achieve co-ordination with social policy objectives; and if he will make a statement on the matter.  [39683/13]

 211. Deputy Maureen O'Sullivan   asked the Minister for Finance   the social policy objectives of this Government and of the State, in the context of sustainable home heating, that are advanced by imposing a VAT rate of 23% on solar panels while a 13% levy is imposed on bituminous coal, a contributor to climate change; if this indicates a need for a rebalancing of VAT rates generally, in order to achieve co-ordination with social policy objectives; and if he will make a statement on the matter.  [39684/13]

 212. Deputy Maureen O'Sullivan   asked the Minister for Finance   the social policy objectives of this Government and of the State, in the context of meeting the needs of the elderly, the ill and those with profound physical disabilities, that are advanced by levying VAT at 23% on commodes while the VAT on the purchase of a racehorse stands at only 4.8%; if this indicates a need for a rebalancing of VAT rates generally, in order to achieve co-ordination with social policy objectives; and if he will make a statement on the matter.  [39685/13]

 213. Deputy Maureen O'Sullivan   asked the Minister for Finance   the social policy objectives of this Government and of the State, in the context of the development of the Irish agriculture sector, that are advanced by levying VAT at 23% on raw wool, whilst investment gold, of which Ireland is not at present a major producer, is VAT exempt; if this indicates a need for a rebalancing of VAT rates generally, in order to achieve co-ordination with social policy objectives; and if he will make a statement on the matter.  [39686/13]

 214. Deputy Maureen O'Sullivan   asked the Minister for Finance   the social policy objectives of this Government and of the State, that are advanced by levying VAT at 23% on marriage counselling, while the VAT on admission to a lapdancing club stands at 9%; if this indicates a need for a re-balancing of VAT rates generally, in order to achieve co-ordination with social policy objectives; and if he will make a statement on the matter.  [39687/13]

Minister for Finance (Deputy Michael Noonan):   I propose to take Questions Nos. 207 to 214, inclusive, together.

The VAT rating of goods and services is governed by the EU VAT Directive, with which Irish VAT law must comply. The VAT Directive generally provides that supplies of goods and services should be subject to VAT at the standard rate, which in Ireland is 23%. Regarding reduced rates of VAT, the VAT Directive is restrictive in relation to the application of such rates, whereby Member States may apply up to two reduced rates of VAT of between 5% and 15% but only to specific goods and services set out in Annex III of that Directive. In addition, Member States may retain a zero rate of VAT, or a rate of VAT less than 5%, on goods and services where that rate applied to those goods and services on 1 January 1991. However, no new activity can apply at those rates, and once removed activity cannot be reinstated at those rates. The VAT Directive also allows the continuation of a reduced rate on goods and services not listed in Annex III, where they carried a reduced rate on 1 January 1991, however, the Directive requires that a reduced rate of at least 12% apply to those goods and services.

In general, the VAT rates applying to the goods and services referred to by the Deputy are a result of these EU VAT rules. However, I would draw to the Deputy’s attention that catheters used for use solely or principally with urinary drainage kits or colostomy/ostomy devices apply at the zero rate of VAT. In addition, while solar panels apply at the 23% standard rate, Irish and EU law provide that where the installation of a solar panel accounts for at least one third of the cost of the supply, then the 13.5% reduced VAT rate can be applied. In relation to the hire of a limousine with a driver, this service is exempt from VAT on the basis of a derogation from EU VAT law, where Ireland applies a VAT exemption to the transport of passengers and their accompanying baggage. Furthermore, the EU VAT Directive contains detailed rules regarding the VAT treatment of investment gold in order to avoid VAT fraud, which is why the supply of gold is exempt from VAT.

In general, Ireland applies a reduced VAT rate and zero rate of VAT to a far greater range of goods and services than other EU Member States. In this regard, Ireland already applies the zero rate of VAT to basic foods, and the reduced VAT rate of 13.5% applies to most services, while tourist related services currently apply at the 9% rate. In addition, the 23% standard rate applies to most luxury goods. In this context, while there is generally scope to apply a higher rate of VAT to many goods and service, there is very little scope to do the reverse.

With regard to undertaking a comprehensive review of the different rates of VAT that are applied to different product types, the VAT system and its structure are reviewed on an annual basis in the lead up to the Budget, bearing in mind the constraints of the EU VAT Directive.

Promissory Note Issues

 215. Deputy Clare Daly   asked the Minister for Finance   if the first of the promissory notes bonds of €500 million has been sold and if not, if he will instruct the Central Bank of Ireland to put a stay an any such sale until after the legality or otherwise of the original promissory notes has been established in court.  [39688/13]

Minister for Finance (Deputy Michael Noonan):   I have been advised by the Central Bank that the portfolio of Government bonds now held by the Bank following the liquidation of IBRC will be sold as soon as possible, provided conditions of financial stability permit. The Bank has, however, undertaken that a minimum amount of bonds will be sold in accordance with the following schedule: to end 2014 (€0.5bn), 2015-2018 (€0.5bn p.a.), 2019-2023 (€1bn p.a.), 2024 and after (€2bn p.a.). This portfolio includes both the floating rate bonds exchanged for the Promissory Notes and holdings of the 2025 Irish Government bond acquired from the Bank of Ireland on the termination of its market repo with IBRC due to the latter’s liquidation. The Central Bank normally reports in detail on its balance sheet only at annual intervals, although it also publishes an aggregate balance sheet on a monthly basis. The latter, however, does not contain details of its investment holdings and I am not in a position to comment on the question of sales.

On the question of putting a stay on any sales, it is important to note that the Central Bank is an independent institution and is not subject to my instruction on such matters.

Central Bank of Ireland Issues

 216. Deputy Brendan Smith   asked the Minister for Finance   the position regarding the recommendation of the Numismatic Advisory Committee in the Central Bank regarding a commemorative coin in 2014 for the battle of Clontarf; if a coin will be issued; if the details and schedule for same are as yet available; and if he will make a statement on the matter. [39723/13]

Minister for Finance (Deputy Michael Noonan):   I have approved a recommendation from the Central Bank to issue a small gold collector coin in 2014 to mark the millennium of the Battle of Clontarf. It is likely that the coin will be issued in May 2014 with an issue limit of approximately 10,000. The Central Bank will announce further details in due course.