Written Answers Nos. 123-145
Dáil Éireann Debate
Minister for Finance (Deputy Michael Noonan): The cycle-to-work scheme was introduced in Finance (No. 2) Act 2008 and continues to operate. As the Deputy is aware, it is a long standing tradition that the Minister for Finance does not comment on taxation matters in advance of the annual Budget.
124. Deputy Aodhán Ó Ríordáin asked the Minister for Finance if the bike to work scheme will be continued beyond Budget 2013; if yes, if members of the public may, if starting the scheme from now, spread the payments over six or 12 month period; and if he will make a statement on the matter. [46315/12]
Minister for Finance (Deputy Michael Noonan): The cycle-to-work scheme was introduced in Finance (No. 2) Act 2008 and continues to operate. Accordingly, an employer and employee may still enter into a salary sacrifice arrangement whereby the employee agrees to forego part of his or her salary to cover the costs associated with the purchase of the bicycle/safety equipment. Where salary sacrifice arrangements are used, they must be completed over a maximum of 12 months from the date of provision of the bicycle/safety equipment. As the Deputy is aware, it is a long standing tradition that the Minister for Finance does not comment on taxation matters in advance of the annual Budget.
125. Deputy Peter Mathews asked the Minister for Finance further to Parliamentary Question No. 175 of 9 October 2012, if this redemption was funded directly or indirectly, in whole or in part by increasing borrowing from the European Central Bank; and if he will make a statement on the matter. [45643/12]
Minister for Finance (Deputy Michael Noonan): AIB has informed me that the bond redemption was fully met in the ordinary course of business. I understand that the Bank continues to make progress with deleveraging and deposit gathering and overall ECB borrowings have materially reduced since the beginning of the year.
126. Deputy Michael McGrath asked the Minister for Finance in view of the proposed move of the Central Bank of Ireland to the Docklands, his plans for the future of the current Central Bank building on Dame Street, Dublin City Centre; if he has any ideas for the future use of the site; the name of the owner of the building and site; the persons who have been consulted thus far on the future use of the building; the persons he intends to consult with over the period ahead; if he will set out a timeline for the process of deciding on the future use of the property; and if he will make a statement on the matter. [45707/12]
Minister for Finance (Deputy Michael Noonan): Under section 6B of the Central Bank Act 1942, the Central may sell, lease or otherwise dispose of land held by the Bank whenever the Central Bank Commission considers that the land is no longer required for the purpose of enabling the Bank to perform its functions. I would advise the Deputy that I have no function in the matter of accommodation arrangements at the Central Bank. However, I have been informed by the Central Bank that they own all the buildings they occupy on Dame Street and on College Green. It will be a number of years before the Central Bank fully vacates these premises and the possible future use of these premises has not yet been discussed in detail.
127. Deputy Pearse Doherty asked the Minister for Finance the fiscal multipliers used by his Department in determining their growth projections and deficit reduction targets; and if he will make a statement on the matter. [45715/12]
Minister for Finance (Deputy Michael Noonan): In framing fiscal and economic policy so far, the Government has sought to balance the need to restore confidence in Ireland's fiscal position with the key objective of supporting economic growth that delivers jobs. While the short-run impact of fiscal consolidation may see a reduction in economic output, over the medium term positive effects are expected as the fiscal deficit is reduced and increased investor confidence translates into a lower risk premium which will allow us to sooner put public debt on a declining path. Recent IMF staff research suggests that the average scale of fiscal multipliers (the effect of consolidation on growth) across countries may have been underestimated in recent years. However this result did not hold for Ireland which suggests that multipliers used by economic forecasters for Ireland are reasonably accurate.
Ireland is a small, open economy with imports at over 80% of GDP. This means that a considerable impact of consolidation in Ireland translates into reduced demand in countries we import from, not here at home. Evidence of this can be seen in the current account of the balance of payments which has moved from a deficit of -5.7% of GDP in 2008 to a surplus of 1.1% in 2011. It is also important to point out that fiscal multipliers vary according to the fiscal instrument used. For example, the impact on aggregate demand as a result of tax changes could be different to the impact from expenditure changes. I would stress, however, that the Government is committed to implementing consolidation in as growth-friendly a manner as possible.
Ireland is committed to implementing further consolidation in the years to 2015 in order to correct our excessive deficit. This is designed to sustain investor confidence and keep the cost of borrowing as low as possible to minimise the cost to taxpayers. This strategy has shown recent signs of success with the significant lowering of bond yields since early summer and the successful return of the NTMA to the debt market.
129. Deputy Joe Higgins asked the Minister for Finance the mines from from which the metals are sourced for the production of euro coins here; and if these mines abide by appropriate health and safety standards and employment practices. [45736/12]
Minister for Finance (Deputy Michael Noonan): I propose to take Questions Nos. 128 and 129 together.
The Central Bank of Ireland acts as an agent of the Minister of Finance in the production and the issuing of euro coins. The composition of the metals used in the production of Euro coins is set out in Council Regulations (EC) No 423/1999 and No 975/98, both of which were published in the Official Journal of the European Union. The Central Bank tenders for its coin blank requirements and does not source the metal to be used. The Central Bank currently has a framework agreement in place with the South African Mint (Pty) Ltd, for the provision of 1 cent, 2 cent and 5 cent Euro coin blanks. The Central Bank does not currently have a framework agreement in place for the supply of coin blanks for the 10c, 20c, 50c, €1 and €2 coins. As part of this framework agreement, the South African Mint (Pty) Ltd was required to declare that it is fully compliant in respect of its statutory obligations relating to all relevant employment and Health & Safety legislation and regulations. The contract in place is for the purchase of coin blanks, as the Central Bank does not itself source metals for the production of Euro coins.
Minister for Finance (Deputy Michael Noonan): I am advised by the Revenue Commissioners that maintenance payments made under a legally enforceable separation agreement are taxable in the hands of the recipient, unless the parties have elected to be jointly assessed to tax in accordance with the provisions of section 1026 (for former spouses) or 1031K (for former civil partners) of the Taxes Consolidation Act 1997. In either situation both parties must be resident in the State for the provision to apply. Where such an election is not made, the payer is entitled to a tax deduction against his or her income for the maintenance payments made. In the United Kingdom, maintenance payments made under a separation or divorce agreement have not been deductible against the income of the payer since 1988. Additionally, such payments are not taxable in the hands of the recipient under UK law.
However, such a maintenance payment made to an Irish resident person by a non-resident individual will be taxed as income arising from a foreign possession under Schedule D of Case III by virtue of section 18 of the Taxes Consolidation Act 1997. It will also attract a universal social charge. There are no provisions in the Double Taxation agreement between Ireland and the UK to exempt this type of income from Irish tax in the hands of the recipient resident in Ireland.
The tax treatment in different countries in relation to various sources of income may not always be similar. The Double Taxation conventions are not designed to make the tax treatment the same. Rather they are designed to ensure that Irish tax law is applied in the same way to Irish nationals and nationals of other jurisdictions where they are chargeable to tax in Ireland on similar sources of income. Irish tax law provides that all maintenance payments are taxable in the hands of the beneficiary.
There has been no amendment of the Ireland / UK Double Taxation Agreement in recent years that affects the tax treatment of maintenance payments and I am advised by the Revenue Commissioners that there are no current proposals to make such an amendment. The issue of the lack of relief in the United Kingdom for a payment being made which is then properly taxable in this State in the hands of the recipient is one that could be addressed to the taxing authorities in the other jurisdiction.
131. Deputy Paudie Coffey asked the Minister for Finance if the practice of banks charging customers for the banks solicitors costs where loans are being re-structured is correct; his plans to ensure that banks pay for their own solicitors costs; and if he will make a statement on the matter. [45761/12]
Minister for Finance (Deputy Michael Noonan): I, as Minister for Finance, have no statutory role in relation the issues raised by the Deputy. It is a commercial matter for the bank concerned. As I mentioned in reply to Parliamentary Question No 156 of 16 October 2012, I have been advised by the Central Bank that, under the Consumer Protection Code, a regulated entity must act honestly, fairly and professionally in the best interests of its customers and the integrity of the market. Furthermore, the Code requires a regulated entity to make full disclosure of all relevant material information, including all charges, in a way that seeks to inform the customer and, in this regard, provision 4.54 of the Code states that: Prior to providing a product or service to a consumer, a regulated entity must: provide the consumer, on paper or another durable medium, with a breakdown of all charges, including third party charges, which will be passed on to the consumer; and where such charges cannot be ascertained in advance, notify the consumer that such charges will be levied as part of the transaction.
Section 149 of the Consumer Credit Act 1995, as amended, requires a credit institution to notify the Central Bank of every proposal to increase a previously notified charge or to impose any charge in relation to the provision of a service to a customer that has not been previously notified to the Central Bank. However, third party charges such as legal fees which are being passed on to a customer are not subject to the provisions of Section 149 of the Act.
132. Deputy Ann Phelan asked the Minister for Finance if it is the case that all non-resident contractors entering into public service contracts to the value of €10,000 over a 12 month period or non-resident contractors who received a payment worth €2,600 within a 12 month period, must register for tax here and must produce a tax clearance form from the Revenue Commissioners in order to remain eligible to bid for public service contracts; and if he will make a statement on the matter. [45763/12]
Minister for Finance (Deputy Michael Noonan): In the case of all public sector contracts of a value of €10,000 (inclusive of VAT) or more within any 12-month period, the contractor (and agent as appropriate) will be required either to produce a current tax clearance certificate, or, demonstrate a satisfactory level of subcontractor tax compliance (where Relevant Contracts Tax applies). This requirement applies to both resident and non-resident contractors. Furthermore, in the case of subcontractors on any public sector contract of a value of €10,000 (inclusive of VAT) or more, it will be a condition for the award of the contract that all subcontractors employed on the project must produce a tax reference number where payments exceed €650. Where payments exceed €2,600 in any 12 month period the subcontractor will be required to either produce a current tax clearance certificate or demonstrate a satisfactory level of subcontractor tax compliance.
133. Deputy Gerry Adams asked the Minister for Finance if he will provide in tabular form the total number of contracts a company (details supplied) has now or in the past with State owned financial institutions of Allied Irish Bank, Irish Bank Resolution Corporation, Permanent TSB and the National Assets management Agency; if he will detail the services the company is providing to each of these financial institutions; if he will detail the fees paid to the company from each of these financial institutions; and if he will make a statement on the matter. [45778/12]
Minister for Finance (Deputy Michael Noonan): I can inform the Deputy that the company referred to in the question has contracts in place to provide services to AIB and IBRC. AIB has informed me that due to the substantial increase in the number of customers in financial difficulty, AIB works with the company referred to in the question who predominantly provide customer case management and assessment services to AIB’s Mortgage Arrears Support Unit. This company operates within AIB’s Mortgage Arrears Resolution Strategy framework and Standards for customer engagement. For commercial reasons AIB does not disclose fee details in relation to external service providers.
I have been advised that IBRC has not outsourced the management of any portion of its residential mortgage book to the company referred to in the question. IBRC is fully committed, as part of its mortgage arrears resolution strategy, to taking a proactive approach in managing mortgage arrears. In doing so IBRC identified a specific skills and experience gap in its Mortgage Arrears Support Unit and was determined to fill this gap as a priority. Despite seeking appropriately skilled individuals in the open market, IBRC was unable to secure the necessary skill set required and therefore looked instead to adopt an alternative in-source solution whereby a third party service provider would be contracted under IBRC’s normal procurement process to supply IBRC with the appropriate skilled resources required.
I have been informed that IBRC’s procurement process was followed. A request for quotation was published on OJEU (the official journal of the EU) and tenders were invited, a shortlist of interested firms compiled and following commercial discussions and contract negotiations the contract was awarded to the company referred to in the question.
This contract award has resulted in ten employees from this company being contracted to the Bank and deployed to IBRC’s residential mortgage division. These employees operate from IBRC premises, using IBRC systems and processes and work alongside IBRC employees. Additional details relating to the engagement between IBRC and this individual third party advisor are confidential and subject to non-disclosure agreements. As a result, the Bank will not disclose any information with regards to fees or other commercially sensitive matters in relation to this contract.
I am informed by PTSB that it has no contract now, nor has it had in the past with the company referred to in the question. PTSB advises that it has a tendering process underway in relation to third party administration of a portfolio of commercial mortgage loans. The company whose details are supplied is among the parties that PTSB has spoken to in this regard. PTSB has not completed the tendering process, nor has it signed a contract with any party in this regard.
134. Deputy Gerry Adams asked the Minister for Finance if he will confirm whether as per the Central Bank of Ireland Guidance on Fitness and Probity Standards 2011 the Central Bank of Ireland assured itself that persons in a company (details supplied) performing the pre-approval controlled functions are compliant with the Fitness and Probity standards; if he will detail if he is concerned about the number of contracts being awarded by State owned financial institutions to the company where two of its six shareholders were working in Bank of Scotland (Ireland) during its reckless lending into the Irish property market and whose Chief Executive was a board member at bank of Scotland (Ireland) during this period; and if he will make a statement on the matter. [45779/12]
Minister for Finance (Deputy Michael Noonan): I have been informed by the Central Bank of Ireland that the company referred to in the Deputy’s question is not a regulated financial services provider and therefore neither the company nor its employees are subject to the Central Bank of Ireland’s Fitness and Probity regime. The standards do not apply to persons performing functions with respect to a regulated financial service provider where that function is carried on by another person (e.g outsourced) and all of the following conditions are satisfied: there is in place a written agreement between the regulated financial service provider and the entity to which the function is outsourced, for the carrying on of that function; and the entity to which the function is outsourced is a financial service provider who is regulated either by the Central Bank of Ireland or another financial regulator in another jurisdiction. Otherwise, the standards apply. The awarding of any contracts by the pillar Banks is a day-to-day operational matter for the institutions concerned.
135. Deputy Gerry Adams asked the Minister for Finance if he will provide the tendering process that took place which resulted in UBS being awarded the contract to advise on €3 billion of corporate loans for Irish Bank Resolution Corporation; if he will confirm the total number of firms who tendered for the advisory role for IBRC; if he will confirm if a deadline has been put in place to sell these loans; and if he will make a statement on the matter. [45780/12]
136. Deputy Gerry Adams asked the Minister for Finance if he will detail the total fees to be paid to UBS for their advisory role for the €3 billion Irish Bank Resolution Corporation corporate loan book; if he will distinguish the difference between what UBS are advising on and the role Blackstone played in their advisory role with IBRC; if he will detail if UBS have a mandate to sell the €3 billion corporate loan book; and if he will make a statement on the matter. [45781/12]
Minister for Finance (Deputy Michael Noonan): I propose to take Questions Nos. 135 and 136 together.
I have been advised that the Bank adheres to a structured procurement process for the appointment of all of its advisors. This procurement process is open, objective and transparent and is subject to the Bank’s governance processes including oversight through a regular reporting process by the Board of the Bank. The appointment of advisors in relation to the Bank’s corporate loan portfolio was conducted within this procurement process. The Board of the Bank has advised me that due to the commercial sensitivities associated with the work undertaken by these advisors and a risk that such disclosures may have a detrimental impact on the Bank’s efforts to maximize loan recoveries, they will not disclose the detail requested by the Deputy.
137. Deputy Gerry Adams asked the Minister for Finance if Blackstone in their advisory role for Irish Bank Resolution Corporation advised IBRC on the €3 billion corporate loan book that UBS has now been given a mandate to advise on; if he will confirm if in view of Blackstone's advisory role for IRBC they are precluded from bidding for the €3 billion corporate loan book; and if he will make a statement on the matter. [45782/12]
Minister for Finance (Deputy Michael Noonan): I have been advised that the ‘strategic advisory arm’ of Blackstone was retained by the Bank in December 2011 to advise on a range of strategic matters including, but not limited to, the structure of the Bank’s balance sheet. Blackstone’s remit included a focus on the Bank’s aggregate, but not specific, portfolio of loans. As already advised, the ‘investment arm’ of the Blackstone Group, which has been validated as independent of the ‘strategic advisory arm’ of the Group, is not precluded from participating in any future loan book sales processes which IBRC may engage in.
138. Deputy Gerry Adams asked the Minister for Finance if he will confirm the reasons a person (details supplied) from his Department was appointed to an initial six month secondment in Irish Bank Resolution Corporation; if he will detail his exact role; if he will confirm the reason it was considered appropriate to seconde his Department official into IBRC now and not before; if he will confirm that he retains confidence in both the board and management of IBRC; and if he will make a statement on the matter. [45783/12]
Minister for Finance (Deputy Michael Noonan): The secondment arrangement for the person referred to in the question is appropriate at this time as IBRC continues to explore opportunities for deleveraging with a view to maximising the recovery for the taxpayer. The addition of this person to the bank’s senior management team, as Head of Market Solutions, brings a wealth of expertise and knowledge to IBRC and will further strengthen the organisation. This arrangement does not in any way infer any lack of confidence on my part in the Board and management of the bank in carrying out the mandate of the bank. The person referred to in the question’s experience in banking coupled with experience as Assistant Secretary in the Dept. of Finance will serve to assist the IBRC management team in identifying deleveraging opportunities and the formulation of strategy. As Head of Market Solutions at IBRC, this person is responsible for all aspects of deal execution in respect of certain designated portfolios. In addition as a member of the Bank’s Group Executive Committee (GEXCO) and the Transaction Review Committee, this person will participate fully in the formulation of strategy for IBRC as a whole.
139. Deputy Gerry Adams asked the Minister for Finance if he will confirm if the 12 firms (details supplied) that received emails from ex National Assets Management Agency employee Enda Farrell are precluded from future NAMA loan sales, asset sales or contracts for service; and if he will make a statement on the matter. [45784/12]
Minister for Finance (Deputy Michael Noonan): I am advised by NAMA that its sales processes require that its loan sales, and asset sales conducted by its debtors and receivers, be carried out on a competitive basis with the aim of ensuring that the best price available in the market is achieved at the time of transaction. I am advised also that any contracts for service are put to competitive tender with a view to obtaining the most economically advantageous price for the taxpayer. I am advised that, in running these sales and tendering processes, NAMA ensures that all potential counterparties and bidders have access to whatever information is required to submit informed bids and prices.
I am advised also that NAMA does not propose to exclude from these competitive processes any potential counterparty or service provider who might be in a position to submit competitive bids or prices advantageous to the taxpayer. While the review of the unauthorised documentation is on-going, I am advised by NAMA that the level of information available to potential purchasers is significantly more detailed than any information that might have been included in the recent unauthorised disclosure of data by a former employee of NAMA. I understand that all parties who received information have indicated that they will co-operate with the Commercial Court.
140. Deputy Patrick O'Donovan asked the Minister for Finance the number of companies registered to pay corporation tax here with one employee or less; and if he will make a statement on the matter. [45788/12]
Minister for Finance (Deputy Michael Noonan): I am informed by the Revenue Commissioners that the number of employers, both company and self employed, with one employee or less is 94,981 for 2011, the latest year for which the information is available. As corporation tax returns do not require the number of employees to be provided, the information requested by the Deputy as regards company employers cannot be separately identified.
141. Deputy Gerry Adams asked the Minister for Finance if he will provide in tabular form all appointments to State boards under his ambit since the Government took office; when the person was appointed; if the position entitles the holder to remuneration and if so the amount in each case; if the appointment was made in accordance with new procedures whereby Departments has to invite expressions of interest from the public in vacancies on the boards under their aegis. [45804/12]
142. Deputy Gerry Adams asked the Minister for Finance the number of chairs of State boards that have been appointed since the Government came into office; if there is a remuneration for the position and if so the amount of same; if the appointee was required to go before Oireachtas Committees to discuss what they have to offer to the particular Board or Committee to which they are being appointed. [45820/12]
Minister for Finance (Deputy Michael Noonan): I propose to take Questions Nos. 141 and 142 together.
* The Department did not seek expression of interest. The composition of a body such as a Fiscal Council is critical to its independence and credibility. In following the Common Principles recommendations, we sought candidates who hold valuable experience and demonstrate competence in their fields of expertise. A significant number of potential candidates were considered against a range of criteria. The criteria included the desire of having a mix of appropriate backgrounds, namely academia, the financial sector/financial markets and public finance; expertise in macroeconomic/microeconomic and a strong international dimension, in addition to the need to take gender considerations into account. As would be normal practice, the process by which potential nominees were identified, considered and selected involved officials from my Department. The final decisions regarding the appointments were made by me following consultations with Cabinet colleagues and others.
143. Deputy Aengus Ó Snodaigh asked the Minister for Finance if consideration will be given to limiting the granting of a financial licence to financial institutions selling mortgages and related property products that they have to partake in State run mortgage relief schemes such as the mortgage to rent scheme. [45831/12]
Minister for Finance (Deputy Michael Noonan): The Deputy will be aware that last October the Government published the Report of the Inter-Departmental Working Group on Mortgage Arrears (“Keane Report”). The ‘Keane Report’ recommended, as one of a range of measures that could be deployed to assist distressed mortgage holders, the introduction of a mortgage to rent scheme for appropriate cases. The Minister for Housing and Planning formally launched the mortgage to rent scheme on a nationwide basis at the end of June 2012. It is now one of the options available in appropriate cases in the roll-out of the lender’s Mortgage Arrears and Resolution Strategies. Regarding the licensing of banks the inclusion of conditions on such licences is a matter for the Central Bank under the Central Bank Act, 1971.
144. Deputy Michael McCarthy asked the Minister for Finance the number of political parties in opposition that asked his Department to cost their pre-budget proposals and or their policies in respect of Budget 2012; if he will name the parties in question; and if he will make a statement on the matter. [45864/12]
Minister for Finance (Deputy Michael Noonan): The facility to cost Budget proposals and policies is one made available by my Department, on request, to all opposition parties. In advance of Budget 2012 one such request was received, from Fianna Fáil.
145. Deputy Joe Higgins asked the Minister for Finance the number of persons who declare themselves to be non-resident for tax purposes in Ireland on their tax forms; the amount of tax these persons are currently paying; the amount of these being monitored by Revenue due to being considered high-worth persons; and the nature of this monitoring. [45867/12]
Minister for Finance (Deputy Michael Noonan): I am advised by the Revenue Commissioners that for the tax year 2010, the latest year for which figures are available, the number of persons who have filed tax returns indicating that they are non-resident for tax purposes is 10,781 and that the amount of income tax due per those returns was approximately €49 million. It is important to note that the circumstances of individuals who are non-resident for tax purposes but who file tax returns can vary widely. They include, for example, Irish nationals who have moved abroad for work reasons but who retain their home here (their tax return is generally only in respect of rental income on their Irish home); foreign nationals who never resided here but who have investments (including property) here; foreign nationals who worked here for a period and who may have acquired Irish tax residence for that period (for example, individuals who worked here on a temporary assignment) may retain an Irish tax liability, after ceasing to be resident, in respect of investments made in Ireland during their period of residence. The number of non-resident individuals that are considered by Revenue to be high wealth individuals is currently 54.
I am further advised by the Revenue Commissions that monitoring tax residence of high Wealth individuals is part of its risk-based programmes and that the procedures adopted in validating the tax returns of such individuals depend on the circumstances of each case and include a range of checks together with an intelligence-based dimension. For operational reasons, the nature of these checks and intelligence gathering is not publicised.
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