Header Item Written Answers Nos. 70 to 79
 Header Item Strategic Banking Corporation of Ireland Establishment
 Header Item Tax Rebates
 Header Item Petrol Stretching
 Header Item Property Tax Deferrals
 Header Item Mortgage Data
 Header Item Mortgage Interest Relief Expenditure
 Header Item EU-IMF Programme of Support
 Header Item Tax Relief Costs
 Header Item Tax Data
 Header Item Corporation Tax

Thursday, 12 February 2015

Dáil Éireann Debate
Vol. 867 No. 3

First Page Previous Page Page of 77 Next Page Last Page

Written Answers Nos. 70 to 79

Strategic Banking Corporation of Ireland Establishment

 70. Deputy John O'Mahony Information on John O'Mahony Zoom on John O'Mahony asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the progress on the establishment of the Strategic Banking Corporation of Ireland; when lending to small businesses will commence; and if he will make a statement on the matter. [6440/15]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan The Strategic Banking Corporation of Ireland (SBCI) is built on the foundation stone that was laid by the Taoiseach and Chancellor Merkel when they agreed that the German promotional bank Kreditanstalt für Wiederaufbau (KfW) would help finance the Irish SME sector when Ireland was exiting the EU/IMF programme in late 2013.

I asked my Department and the National Treasury Management Agency to create the necessary mechanisms to construct the SBCI.  Building on the initial funding offer from the KfW, the Government added funding from the European Investment Bank (EIB) and the Ireland Strategic Investment Fund (the new fund to which the assets of the National Pensions Reserve Fund were transferred). The Government approved this approach and legislation enabling the establishment of the SBCI was passed by the Oireachtas in July 2014.

The SBCI was incorporated in September 2014 and since then the SBCI has made considerable progress in building relations with lending partners and in constructing the complex operational capability required to bring products to market. These include establishing operational capability with funders and lending partners, building internal systems and business processes, and establishing a team to safely and effectively manage the funding provided on behalf of the State. In that regard, it is worth pointing out that both the CEO of KfW and the President of the European Investment Bank have complimented the Government's work on the establishment of the SBCI noting that the project from concept to establishment was achieved much more promptly than similar initiatives in other countries. 

The SBCI drew down €200m of its funding from the European Investment Bank during December 2014 so that funds could be borrowed by its lending partners to be distributed to SMEs.  

The SBCI is preparing for a nationwide launch of its products shortly with lending due to commence in Q1. The Government's aim for the SBCI is to enhance the range and profile of SME finance providers in Ireland. The SBCI will achieve this by working with existing and new providers to develop specific funding products and by supporting new entrants to the SME lending market.

Tax Rebates

 71. Deputy Tom Barry Information on Tom Barry Zoom on Tom Barry asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan if legislation will allow a person to successfully claim a tax repayment when a return is made outside of the four-year limitation (details supplied).  [6466/15]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I have been advised by the Revenue Commissioners that they are statutorily debarred from making repayments of tax outside of the four year period from the end of the tax year in respect of which the tax was paid, other than in very specific circumstances (for example, where there is an arithmetical error in an assessment).  Equally, Revenue cannot seek payment of tax from a taxpayer outside of a four year time frame, other than in very specific circumstances (for example where an incomplete tax return is filed).

A taxpayer has an obligation to file his returns on a timely basis.  Compliance with that obligation is essential to the operation of a self assessment tax system.  Therefore, in establishing the time frames within which a taxpayer may seek a repayment of tax, the tax legislation does not extend the 4 year time limit where a return is filed late.  It would be manifestly unfair if a taxpayer who filed his tax returns on time was not entitled to a repayment of tax, should he submit a claim outside the 4 year time limit, but that a taxpayer who had not complied with the filing obligations, imposed by the Acts on every chargeable person, could claim such a repayment if a claim was submitted within 4 years of filing a late return.

Petrol Stretching

 72. Deputy John O'Mahony Information on John O'Mahony Zoom on John O'Mahony asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the number of complaints of petrol-stretching in counties Mayo, Roscommon, Galway and Leitrim received by the Revenue Commissioner's customs and excise section since July 2014 to date in 2015; the number which were investigated; the number which are ongoing in each county, in tabular form; and if he will make a statement on the matter.  [6507/15]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am advised by the Revenue Commissioners, who are responsible for tackling fuel fraud, that they are very aware of the risks posed to consumers' vehicles, legitimate businesses and the Exchequer by all forms of fuel fraud.

  Revenue has, since last summer, received reports from a variety of locations around the country of problems relating to petrol quality, and suggestions that these problems are attributable to petrol stretching.  The total number of complaints of this kind received by Revenue in counties Mayo, Roscommon, Galway and Leitrim during the period from June 2014 to date is 78. A breakdown of these complaints on a county basis is set out in the following table.

CountyNumber
Mayo43
Roscommon17
Galway17
Leitrim1
  Every filling station about which a complaint was made has been visited by Revenue enforcement officers and fuel samples taken from them were sent for analysis by the State Laboratory. Over 300 samples of petrol from filling stations and other sources have been referred to the State Laboratory.

  The scientific analysis required is complex and time consuming and the State Laboratory has conducted an extensive series of tests and re-tests on the samples. Despite this extensive testing, evidence of the presence of prohibited stretching agents has been found in only two samples, both from one location. The conclusive results received from those tests have resulted in the seizure of the product and files are being prepared with a view to prosecution.

  Following a series of further tests conducted by the State Laboratory, results were received which indicated the presence of traces of road diesel in several samples taken from a variety of locations. This could indicate that petrol was contaminated with road diesel at some point in time. There is no rational economic reason or fraudulent incentive for anyone to mix normal road diesel with petrol. If the problems that have come to light were caused by unintended contamination as a result of diesel being inadvertently mixed with petrol at some point along the supply chain, there would be no Revenue offence involved. However, the Revenue Commissioners are vigorously investigating the possibility of tax fraud being associated with the identified problems. In any instances where the analysis of petrol samples by the State Laboratory indicates the presence of illegal stretching agents in petrol, Revenue will take swift and robust action and pursue prosecutions against offenders where possible.

   Revenue will also continue to work closely with An Garda Síochána and to share information and intelligence with them on this issue. I am also advised by Revenue that they undertake, on an ongoing basis, an extensive programme of compliance and enforcement actions to ensure adherence to the legal requirements governing the supply and sale of mineral oil and to allow action to be taken against fraud. This involves, among other things, carrying out analysis of the monthly oil movement returns that oil traders are required to make, and of other supply chain data. In addition, Revenue officers conduct control or compliance visits to mineral oil traders, during which they examine transport and movement documentation and take samples of fuel for analysis.

  I am satisfied that the Revenue Commissioners are taking all possible action to identify the problem and challenge any instances of identified fuel fraud, including, where possible, pursuing prosecutions against offenders.

Property Tax Deferrals

 73. 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 number of deferrals currently in place in respect of the local property tax; the number that have been in place for 2013 and 2014; and if he will make a statement on the matter. [6518/15]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am advised that the most recent Local Property Tax (LPT) information published by the Revenue Commissioners shows that there are around 24,200 and 24,100 properties for which claims for deferral have been filed for 2013 and 2014 respectively. The most up to date figures are published on the Revenue Commissioners website at http://www.revenue.ie/en/about/statistics/lpt-compliance.html and these will be updated in due course.

Mortgage Data

 74. 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 number of private residential and buy-to-let mortgages in the non-deposit-taking, retail credit sub-prime sector; the level of arrears on these mortgages; and if he will make a statement on the matter.  [6521/15]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan The Central Bank has advised that there is no such regulated category as 'sub-prime' lender but that phrase is sometimes used to refer to some non-deposit taking 'retail credit firms'. Retail credit firms are a regulated category of entities which are authorised to provide credit (in the form of cash loans) directly to individuals. Some firms authorised in this category are mortgage lenders. Retail credit firms have been subject to regulation by the Central Bank since 1 February 2008. A register of all Retail Credit Firms is available on the Central Bank website.

The Central Bank has further advised me that non-bank lenders, including regulated and non-regulated firms, accounted for 5.2 per cent of the total stock of residential mortgage accounts outstanding at end-September 2014 (5.4 per cent in value terms). A total of 18,064 mortgage accounts issued by these lenders were in arrears of more than 90 days at end-September this figure accounted for 15.5 per cent of total mortgages in arrears over 90 days. The outstanding balance on these accounts was €3.8 billion, equivalent to 53 per cent of the total outstanding balance on all mortgage accounts issued by non-bank lenders.

The Central Bank continues to engage with all mortgage lenders, including retail credit firms, in relation to lenders' mortgage arrears resolution strategies and approaches to dealing with borrowers in or facing arrears.  Early and effective engagement between borrowers and lenders is key to resolving cases of mortgage difficulty.  Where there is effective and meaningful engagement regarding a mortgage difficulty, the data shows that an increasing number of durable long term mortgage restructures is being put in place.

Mortgage Interest Relief Expenditure

 75. 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 will provide, in tabular form, the number of persons or mortgage accounts in receipt of tax relief at source, in each year from 2012 to 2014; the projected cost of the scheme in 2015; and if he will make a statement on the matter. [6525/15]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am informed by the Revenue Commissioners that, on the basis of returns in respect of eligible tax relief at source (TRS) accounts, it is estimated that the number of individuals availing of mortgage interest relief (MIR) in the years 2012, 2013 and 2014 is as shown in the following table.

YearNumber of individuals availing (estimated)
2012508,200
2013492,700
2014*495,000
  *This figure is provisional and subject to revision

  The cost of relief for 2015 will depend on a variety of factors, including the numbers of mortgages, the monetary amount of the qualifying loans taken out, the rate of relief applying to those qualifying loans, the year the qualifying loans were taken out and the extent to which the ceilings for relief are impacted by changes in interest rates. Accordingly it is not possible to provide an accurate estimate of the expected cost of the relief in 2015.

EU-IMF Programme of Support

 76. 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 average interest rate currently applying to each source of funds under the European Union-International Monetary Fund programme of assistance for Ireland; and if he will make a statement on the matter.  [6526/15]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am advised by the National Treasury Management Agency (NTMA) that the position regarding the interest rate applying to each of the EU/IMF Programme loan facilities, as at 10 February 2015, is as set out in the table following. 

FacilityLoan Amount (bn) as at 10 Feb 2015€ Equivalent (bn) as at 10 Feb 2015Interest Rate on Loan Amount Reference Rate Basis
EFSMEUR 22.522.53.00%Fixed rate based on EFSM cost of funds1
EFSFEUR 18.418.42.21%Some fixed but mainly pooled rate based on EFSF cost of funding
UKTGBP 3.23.92.60%Fixed, based on UK cost of funding
SKLEUR 0.60.61.08%23-month Euribor plus margin of 1%
DKKEUR 0.40.41.07%23-month Euribor plus margin of 1%
IMFXDR 9.010.32.79%Floating rate + 1% margin + surcharges
1   The interest rate on Ireland's EFSM loans is based on the EFSM's cost of funds when it issues bonds. Such issuance is matched against the loans.

 2   Reflects 3-month Euribor at time of most recent rate resets

  The Deputy should be aware that the mixture of floating and fixed interest rates across the various EU/IMF Programme facilities makes it difficult to compare one facility directly against another as they contain different interest rate risk profiles, currencies and maturities.  In addition, the floating interest rates quoted are at a point in time and are, therefore, subject to change depending on movements in market rates.

  As the Deputy will be aware, Ireland is currently in the process of repaying the most expensive portion of its IMF loans and replacing it with less expensive market based funding. Following the second tranche of early repayment of approximately €3.5 billion on 6 February 2015, the total cumulative early repayment to date is approximately €12.5 billion, representing over half of the State's IMF loan facility.

Tax Relief Costs

 77. 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 cost to the Exchequer per annum of the remaining property related tax reliefs; when these reliefs will expire; and the amount of money that would be saved for the Exchequer if they were ended immediately, or on a more phased basis, over a number of years. [6529/15]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am informed by the Revenue Commissioners that the available information on the cost to the Exchequer of property-related tax schemes for the tax year 2013, the latest year for which this information is available, is provisionally estimated at €177 million.

This information is based on tax returns of self-assessed individuals and companies. It should be noted that the corresponding data returned by PAYE taxpayers is not captured in Revenue systems for 2013 in a manner that can be analysed in respect of this Question. However, any PAYE taxpayer with non-PAYE income greater than €3,174 is required to complete a self-assessment tax return.

The estimated relief claimed has assumed tax forgone at the 41% rate for 2013 in the case of individuals and 12.5% in the case of companies. The figures shown correspond to the maximum Exchequer cost in terms of Income Tax and Corporation Tax.

Corresponding data cannot yet be provided for 2014 as the tax returns for this year are not yet due.

There are no property schemes or area based property incentives that could be considered active at the present time. All have expired and no new expenditure can qualify for any relief. However, there remains a potential Exchequer cost from these schemes as capital allowances and other reliefs, which had previously been given, continue to be claimed or carried forward to be claimed in future years. These are the basis for the costing given above.

There are also a number of statutory provisions, introduced in recent years, which can potentially affect the rate at which these allowances can be used and, in some cases, terminate the carry-forward of allowances altogether. These are:

- The High Earners Restriction, which was introduced to ensure that, in the case of certain individuals, a minimum effective rate of income tax of 30% is paid annually. This is achieved by restricting the rate at which certain reliefs, including property incentives, can be used to shield income. While the reliefs themselves are not lost, their use is spread out potentially over a much longer time period.

- An upper limit on the annual use of excess capital allowances to shield other income of taxpayers. This provision applies primarily to passive investors in such projects.

- An additional charge to Universal Social Charge (USC) for certain higher income individuals on their use of these property reliefs.

- From 2015, it will not be possible for passive investors to carry-forward unused capital allowances beyond a building's tax life. Where the tax life has already ended, unused allowances have been lost since 1 January 2015.  

These measures, in particular the one which came into effect on 1 January last, will address the legacy issues relating to the Exchequer cost of these expired property incentive schemes. I am further informed that currently there are 3 property related tax reliefs on the statute books which have not been formally commenced. These are:

- Relief for Qualifying Specialist Palliative Care Units (enacted in 2008),

- The Living City Initiative (enacted in 2013), and

- Relief for Certain Aviation Services Facilities (enacted in 2013).

I have already stated my intention to commence the Living City Initiative and the relief for aviation services facilities as early as possible during this current year. Both of these reliefs are targeted and will only apply to expenditure incurred during a 5 year period from the date of commencement. However, there is no current Exchequer cost arising from these schemes.

For the purposes of this response it is assumed that tax reliefs related to principal private residences, including mortgage interest relief, do not come within the scope of the Deputy s request.

Tax Data

 78. 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 will provide the full estimate of the annual cost for 2015 of each tax expenditure on the Statute Book; and if he will make a statement on the matter.  [6531/15]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am advised by the Revenue Commissioners that the total identifiable costs to the Exchequer currently available relate to Income Tax and Corporation Tax allowances, reliefs, exemptions and tax credits for 2012 (the latest year for which figures are available). These cost estimates are published in the Costs of Credits, Allowances and Reliefs tables on the Revenue Statistics web page available at http://www.revenue.ie/en/about/statistics/index.html#section4. Updates will be published in due course.

  There are other expenditures, not included in the above, for which estimates of costs are not readily available. For a fuller listing, I refer the Deputy to my answer to Question No. 195 (36716/14) on 30 September 2014.

Corporation Tax

 79. Deputy Michael McGrath Information on Michael McGrath Zoom on Michael McGrath asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the amount of tax paid by companies operating in the International Financial Services Centre, Dublin in 2014; and if he will make a statement on the matter. [6532/15]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am informed by the Revenue Commissioners that, based on provisional figures for 2014, the total Corporation Tax receipts from the financial and insurance activities sector was around €1,045 million. The estimated total PAYE and associated USC receipts from this sector was in the region of €2,010 million. These figures encompass both domestic and international financial and insurance services across the country as a whole.

I am further advised by the Commissioners that it is not possible to precisely identify the contribution of companies located in the International Financial Services Centre in Dublin to this total. There are however some indications of the size of this contribution.

The estimated Corporation Tax paid in 2014 by companies previously licensed to operate in the International Financial Services Centre (IFSC) is of the order of €545 million.  The estimated total PAYE and USC receipts associated with these companies for 2012, the latest year available, is in excess of €250 million.  It should be noted that these figures relate only to those companies that were once licensed under the preferential IFSC tax regime, which expired in 2005, and for which registrations ceased in 2002.

Following the end of the IFSC tax regime, the corporation tax rate applying to international financial services activities increased from 10% to the standard rate of 12.5%, and therefore it is generally speaking no longer possible to distinguish tax paid solely by companies operating in the International Financial Services Centre in Dublin from tax paid by other companies in the sector.

Separately, based on Revenue analysis of more recent Central Bank information on companies currently operating in the international financial services sector, it is estimated that these companies paid approximately €600 million in Corporation Tax in 2012 (the most recent tax year for which data are available). The associated amount of PAYE and USC is tentatively estimated to be in the region of €384 million. These estimates are tentative and should be considered as provisional, as they may be revised subject to improved information becoming available.  It should also be noted that the figures relate to the international financial services sector as a whole, and are not limited to companies operating in the geographical area of the IFSC, Dublin.


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