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(Speaker Continuing)
[Deputy Michael McGrath:   ] These are very serious issues. The key issue is that by not meeting the European Commission's deadline for collecting the money from Apple we have provided those who seek to target us with unnecessary ammunition. I do not understand why the Minister will not say when he expects the money to be paid over. The money should be collected by Ireland pending the outcome of the appeal. Fianna Fáil supports the Government's appeal but respects the decision that was made and the money should be collected pending the appeal. Why can the Minister not say when that will be done? Can he update the House on the sum of money involved?
Deputy Paschal Donohoe: I am not sure on what evidence the Deputy can conclude that I am in any way delaying on this issue. In terms of relevant timeframes, it has previously been the case that when a member state has co-operated in good faith with an understanding or direction from the Commission, the Commission will actively engage with the member state for at least two years before initiating proceedings in that regard. The Government sought an extension from the Commission to deal with this matter but it was not granted. One reason the negotiations are so sensitive is because of the amount of money involved. When the fund is set up, as it will be, it will be one of the largest of its kind in the world. The fine is the largest of its kind that a government or company has had to deal with. Because of the complexity of the matter and because the Commission has indicated that other jurisdictions might be able to access the money in the future, before the money can be received we must have a very comprehensive agreement in place in respect of the operation of the escrow account. To have the fund set up, the Government had to go through several procurement processes to ensure compliance with European Union law. That has all taken time and that is the reason I regret the action taken by the European Commission on the issue.
Deputy Bernard J. Durkan: Hear hear.
Deputy Michael McGrath: As the Minister noted, the Commission announced its decision at the end of August 2016. There was a deadline of early January 2017 for the collection of the money. I do not recall the Government saying that was wholly unrealistic, which now seems to be the Minister's central point. He accuses the Commission of bad faith and says that countries would normally get two years following a ruling such as this to collect the money but the Commission has instead initiated infringement proceedings. The Minister is giving further ammunition to the Commission by not even laying out a roadmap for the collection of the money. There are tendering procedures involved. Tendering started in July in regard to the NTMA, as I understand it. Can the Minister provide the House with an estimate of when the decision will be respected in terms of the collection of the money and it being put into an escrow account on a temporary basis pending the appeal?
Deputy Paschal Donohoe: I have indicated a timeline to the European Commission for the potential resolution of the matter. One of the reasons I cannot publicly indicate the likely point at which it will be concluded is we are having discussions and negotiations with a company in this regard and those have to conclude in a manner satisfactory for both parties. I aim to conclude the process as soon as possible, collect the money and, while the money is collected and deposited in an escrow account, continue with the action that Ireland needs to take to defend its name in respect of this issue.
Budget Measures
4. Deputy Joan Burton asked the Minister for Finance the projected effect of pre-budget publicity of an increase in non-residential stamp duty on such transactions in advance of 10 October 2017; his views on market reports that the projected 2018 yield from the 4% increase will not be achieved; and if he will make a statement on the matter. [44872/17]
Deputy Joan Burton: I wish to ask the Minister about the extensive leaking in the days before the budget of his intention to raise significantly the rate of stamp duty from 2% and, potentially, to double it. Such leaks have never been as blatant or widespread as in the run-up to budget 2018 and certain individuals may have been in a position to profit very significantly from them.
Deputy Paschal Donohoe: In 2011 the rate of stamp duty applying to non-residential property transactions was fixed at a flat rate of 2% as a supply-side measure. Budget 2018 increased the rate on such property transactions to 6% as of 11 October 2017. While the commercial property market has now recovered strongly, the recent sharp increase in investment in construction activity poses a risk that this could, if left unchecked, give rise to overheating in the sector and in the domestic economy generally. This view is shared by commentators including the ESRI. Investment in non-residential construction has expanded rapidly over recent years and is approaching its pre-crisis share of gross national income (Star), GNI*. I am acutely aware that residential construction and the overall housing supply remain well below the level needed to meet demand.
With the commercial market now performing strongly, an adjustment in the rate of stamp duty on non-residential property beyond the current rate of 2% is appropriate. The yield from the increased rate is estimated to be approximately €370 million. In addition to providing additional yield, the increase to 6% should support the desired re-balancing of construction activity towards residential investment and help to address potential overheating in the sector.
I am aware of views that we have over-estimated the potential yield from the stamp duty increase. However, those views appear to be based on the additional yield from commercial property developments only, whereas the stamp duty increase I announced applies to the whole of the non-residential property market.
As regards the Deputy's concern about the perceived leaking of this budget decision, I assure her that I played no part in creating an environment in which my decision could be leaked. Speculation was rife on what I was going to do in regard to this measure and several others because they were contained in tax strategy group papers published last summer. A point was reached in the budgetary process at which commentary appeared to be pointing to how few leaks were occurring and all decisions in relation to taxation were treated very sensitively and carefully by me.
Deputy Joan Burton: An examination of media reports, in particular for the 48 hours before the budget, would suggest differently because those reports very specifically said that the stamp duty was going to increase by a very significant amount and generally suggested an increase from 2% to at least 5%. Such reports were carried by practically all of the major national newspapers and organisations such as BreakingNews.ie. That meant that if commercial property owners had their transactions ready, they could save considerable sums of money by moving and completing the transactions during the 48 hours before the budget. The sources of the leak were clearly within the Department of Finance because the leaks were very specific and their accuracy was confirmed when the Minister read out the budget. This is a bad policy because it has allowed some very large property transactions to escape the tax. If this is to be the standard set by the Minister in charge of the budget, it is extremely disappointing and costly for the taxpayer.
Deputy Paschal Donohoe: I categorically reject the absolutely unfounded allegations made by Deputy Burton. Because she agrees with the decision I made, she can do nothing beyond making unfounded and inaccurate allegations regarding my conduct and that of my Department. The decision on this matter was treated with the utmost sensitivity by my officials and me. During the time period to which the Deputy refers, many other assertions were made regarding what would happen on budget day, the majority of which proved unfounded. |
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