Vol. 1032 No. 1
62. Deputy Pearse Doherty asked the Minister for Finance if he will consider the introduction of timely, targeted and temporary mortgage interest relief in the context of rising interest costs for mortgage borrowers; and if he will make a statement on the matter. [3328/23]
I welcome the Minister for Finance and the Minister of State to their first oral questions and wish them good luck in their new roles.
This question is about the reaction required to the European Central Bank, ECB's interest rate hikes. Interest rates have increased by 2.5%, with a further increase of approximately 1% unfortunately expected by the end of the year. These increases are taking time to work through the Irish system, but it is widely expected that they will do so in the coming months. Cohorts of borrowers have already been impacted by them and, therefore, I am asking the Minister to consider options for introducing a timely, targeted and temporary mortgage relief to support hard-pressed borrowers.
I thank the Deputy for his good wishes and I look forward to working with him over the period ahead.
As the Deputy will be aware, the position is that the formulation and implementation of monetary policy in the eurozone and the setting of official interest rates is an independent matter for the ECB. The Government has no role in setting official interest rates, nor in setting the retail interest rates that lenders may charge on their loans, including mortgages. That is a business and commercial matter for individual lenders.
Regarding mortgage interest relief, and as the Deputy will be aware, the relief for principal private residences was phased out on a gradual basis over the period 2009 to 2020. The decision to abolish it was taken in the wake of the financial crisis, with the cost of the relief being one of the influencing factors. It cost more than €700 million in 2008. It should be noted that, prior to its curtailment and eventual abolition, the top two income deciles in 2005 accounted for close to half of the tax forgone through tax relief. This issue was highlighted in the findings of the 2009 Commission on Taxation report. The relief cost approximately €280 million in 2005.
While I am aware that there have been increases in certain mortgage rates by some lenders, it is important to point out that mortgage interest rates, in particular fixed interest rates, have fallen over the past number of years. For example, in December 2014, the average level of fixed interest rates for new lending was 4.11% compared with 2.48% in November 2022. The Irish average interest rate on new mortgages is now below the eurozone average. In November, Ireland had the third lowest mortgage rates in the eurozone. The differential between the Irish and average eurozone interest rates for new mortgages declined from 1.40% at the end 2021 to -0.27% in November.
I do not intend at this point to introduce mortgage interest relief, but we can have a back and forth on the substance of the issue.
Additional information not given on the floor of the House
The data also indicate that a significant portion of new mortgages - more than 93% in November - are now fixed rate mortgages and this will protect borrowers in the event of a rise in official and market interest rates at least for the period that the interest rate is fixed.
The introduction or reintroduction of mortgage interest relief for principal private residences may not be the best course of action to assist homeowners with rising interest rates. For example, there is additional scope for many borrowers, in particular variable rate mortgage borrowers who have built up equity in their homes, to look at alternative mortgage options and to reduce their mortgage costs. In addition, the reintroduction of the relief is likely to be costly. For example, if it was reintroduced and granted at the standard rate of income tax, my Department estimates that it could cost in the region of €560 million per annum. This tentative costing is based on the latest Central Bank data on primary dwelling mortgage accounts and the average interest rate. As the Deputy will appreciate, even the reintroduction of a more tailored or selective form of mortgage interest relief is likely to involve significant costs.
Finally, as he will be aware, the summer economic statement set out the fiscal parameters for budget 2023. A tax package of in excess of €1.1 billion was announced in budget 2023, which included a substantial income tax component. The budget also included a substantial cost-of-living package and a large range of one-off measures to assist households with cost-of-living pressures. I have no plans, therefore, to reintroduce mortgage interest relief at this time. It should also be noted that the recent report of the Commission on Taxation and Welfare put forward no case or recommendation for the reintroduction of relief for mortgage interest.
It is disappointing that the Minister is ruling it out at this point because the full impact of interest rate hikes is yet to be felt, with retail banks still to pass them on fully through fixed and variable rates. Bank of Ireland has made announcements about its fixed rates.
It is widely expected that this position will change in the coming months. The picture is mixed. Nearly 250,000 borrowers are on tracker mortgages and are directly exposed to the ECB rate hikes. The average tracker rate stands at 4.63% compared with 1.15% last June and many tracker rate borrowers will see their mortgage repayments increase by thousands of euro this year. Some 44% of outstanding mortgages are on variable rates and are likely to see an immediate increase in mortgage interest costs when rates rise. For fixed rate mortgages, the fixed periods are relatively short, with borrowers refinancing at higher rates after a shorter period.
We have worked with the Parliamentary Budget Office.
I thank the Deputy, but time is up.
I will finish on this point. There is a tailored-----
No. Time is up, I am afraid.
I was just finishing my sentence.
It was just one sentence.
No. The Deputy's time is up. I call the Minister.
Jesus Christ. It was just one more sentence.
I am sorry, but you do not have to use unparliamentary language. The time-----
It was-----
If you do not like the time that is allowed,-----
It is fine.
-----change the time.
I was in the middle of a sentence.
The Deputy is correct to highlight the impact of changes in monetary policy on mortgage holders. They also have an impact on businesses and the sovereign. We have to consider all of these issues in the round. For example, we have to consider in the coming weeks a number of various taxation measures that are due to expire. I have no doubt that the Deputy will have certain views on those as well. He will raise at least one specific issue in that respect in one of his upcoming questions.
It must be acknowledged that, in Ireland, the trend for a long time has been for the level of mortgage arrears to fall consistently. This is welcome progress and is a reflection of the strength of the economy. It is also a reflection of the fact that interest rates have fallen. Rising interest rates have an immediate impact on tracker customers and many variable rate borrowers, but it should also be acknowledged-----
I thank the Minister, but the time is up.
-----that more than 90% of the new mortgages being issued are fixed rate in nature, so many of those who took up mortgages recently are protected.
Deputy Doherty, please.
I was just waiting for the Minister to finish, a Cheann Comhairle.
The Minister needs to acknowledge something about that last point. People on tracker mortgages were on a low rate for quite a sustained period, but they are now seeing their interest repayments increasing by thousands of euro. In some cases, they are increasing by €3,000 per annum. It is a significant increase. It would not matter if it were an electricity, gas or food bill; it is a bill that many families cannot meet. Approximately 100,000 who have had their mortgages sold on to vulture funds despite the Government's commitment that nothing would change are now paying interest rates of 7%.
What I was trying to say earlier was that we would like to submit a proposal on a tailored and time-based mortgage interest relief. It could use a reference rate of last June and a portion of the increase would be absorbed by the State. Mortgage interest hikes are a cost-of-living expense on individuals and, therefore, I encourage the Minister to consider our proposal.
I have not seen Sinn Féin's proposal. I am sure it will be published, if it has not been already. If the Deputy wants to send it to me, I will take a look at it.
Targeting through mortgage interest relief is difficult. In my initial remarks, I referenced the way in which the distribution of the benefit of mortgage interest relief in the past was heavily skewed in favour of the highest income deciles. It was just the nature of how that relief worked. Of course, one could build in caps, limitations and so on, but the wider issue is that we have to deal with the cost-of-living crisis in the round. This means introducing a range of exceptional measures on the expenditure and taxation sides, as we did in the budget. The Government has imminent decisions to make in that regard.
63. Deputy Ged Nash asked the Minister for Finance if he will consider extending the 9% reduced VAT rate on electricity and gas bills to 31 December 2023; if he will provide costings for extension of the measure; and if he will make a statement on the matter. [3084/23]
I congratulate the Minister on his appointment and look forward to engaging with him in his position as Minister for Finance. I also extend my congratulations to the Minister of State, Deputy Carroll MacNeill, on her appointment and look forward to working with her.
I want to establish with the Minister the cost to the Exchequer of extending the reduced 9% VAT rate on electricity and gas bills, and indeed to establish if this is something the Minister is considering in continuing to support those who are finding it very difficult to make ends meet at the moment. We know that many of the once-off measures announced last September are coming to an end. The extension of the 9% VAT rate on electricity and gas bills will assist families over the next period of time.
I thank Deputy Nash for his good wishes. I look forward to working with him in a constructive spirit insofar as we possibly can. I am sure all of us across the floor will have certain clashes and disputes, but hopefully we can conduct our business in good spirits.
As the Deputy will be aware, the temporary reduction in the rate of VAT from 13.5% to 9% for gas and electricity was first introduced on 1 May 2022. In recognition of the ongoing difficulties experienced by households and businesses with the increasing cost of energy, it was extended on budget day for an additional four months, from 1 November to 28 February 2023. The estimated cost of the initial reduction was €46 million and the estimated cost of the extension was €45 million. As I have said on a number of occasions, in the coming weeks the Government will examine the full suite of taxation and other measures that are due to expire at the end of February. This will include consideration of the VAT rate on gas and electricity. While it is not possible to provide exact costings for an extension to the end of 2023, I am advised that the estimate for this measure is approximately €150 million.
I believe that because of the arguably short-term thinking of the Government, once the €4 billion in once-off measures melted away in January, families started to feel the pinch. We know that the families who are most exposed to energy poverty are those on low incomes, lone parents, older people living alone and people who are living in rural areas. The final electricity credit will be paid out in March. We need to think quickly and in a very holistic fashion about how those families are going to be supported beyond February and March because we know that inflation will remain high for the foreseeable future. That will have an extreme impact on those who are less well-off and in the bottom income deciles. For the sake of €150 million in the context of a budget surplus, I think the extension of the reduced VAT rate on electricity and gas bills would go some way towards assisting low-income families.
At the outset, as Minister I acknowledge the reality that many individuals and families are genuinely struggling at this point in time. Of course, I accept and recognise that point. I meet people in the course of my constituency work all the time and I know the lived reality of many. That is why we brought forward a budget with an overall package of new measures of €11 billion, of which €4 billion were once-off in nature and around €7 billion were permanent measures. I have to make the point that many of those measures, particularly on the permanent side, have only just kicked in recently, including the reduction in income tax of over €1 billion, the permanent increases in social welfare and the reduction in childcare costs, which has been warmly welcomed. Today we dealt with a memo on the elimination of hospital inpatient charges. There will be a further reduction in education costs later this year. Other measures will be implemented across the year in respect of the announcements we have made. I have to be consistent and say that there are a number of measures to be decided. They will be decided in the coming weeks. I will come back to the Deputy in a moment.
We have a cost-of-living crisis and inflation is high. One of the perverse things is that when inflation is high and goods and services are more expensive, the Exchequer is laughing all the way to the bank with increased VAT returns. It is important to reflect on that and to pass back as much as possible of that increase, or bonanza, to those who need it most by way of an extension of measures like those that were originally introduced in April, such as the VAT reduction on energy bills, and further extended in the budget.
I would like to ask the Minister a related question. Where stands the windfall tax on energy companies? What is the position on that at the moment and what is the expectation in terms of the introduction of what we might describe as a windfall tax which we are now permitted to introduce? It is something we should have done quite some time ago. What is the expected gain for the Exchequer?
First of all, I remind people that the next round of the electricity credit is being applied this month. A further round of that €200 credit will be applied to domestic accounts in March. Again, that is part of the measures that we announced in late September which are still working their way through. Because of the way in which we scheduled and staggered them, the benefits of those measures are being spread. I accept that in the month of January, many people are facing big energy bills, and that the consumption and use of energy has been higher over the last couple of months. Of course, that has coincided with the increase in the per unit cost. We acknowledge that point. Like others in the Government, I have made the point that not all of the measures will, in their entirety, end at the end of February. There will not be a cliff edge in that respect. However, we have decisions to make on a number of the measures that are currently due to expire in law. Those decisions will be made shortly. I will come back to the Deputy on the other matter he raised.
64. Deputy Pearse Doherty asked the Minister for Finance his views on extending the reduced 9% rate of VAT for the hospitality and tourism sector; its estimated cost, including and excluding hotel accommodation; and if he will make a statement on the matter. [3329/23]
The reduced VAT rate for the hospitality and tourism sectors is due to end at the end of February. As we know, these sectors face a number of headwinds this year, including the economic downturn, reduced disposable income and higher travel costs; together with a number of tailwinds, including pent-up demand to travel as a result of the Covid restrictions being eased, risk subsiding and the reopening of the market. Taking these factors together, can the Minister outline his views on extending the reduced VAT for the hospitality and tourism sectors beyond February of this year?
As the Deputy is aware, at present the 9% rate applies on a temporary basis to the hospitality and tourism sectors until the end of February. The 9% rate was introduced in recognition of the fact that the tourism and hospitality sectors were among those most impacted by the public health restrictions put in place throughout the pandemic. Through no fault of their own, bars, hotels and restaurants among others had to close on multiple occasions in response to the public health crisis. The measure initially ran from 1 November 2020 to 31 December 2021 at a cost of €401 million. It was then extended to 31 August 2022 at a cost of an additional €251 million, and a further extension was announced in budget 2023, bringing the total cost to over €900 million to the end of February 2023. This represents very substantial support by the Government to the hospitality and tourism-related sector.
As set out in budget 2023, from 1 March 2023 these sectors are due to return to the 13.5% rate. The budgetary position for 2023 is constructed on this basis. The estimated cost for extending the current measure to the end of the year is €427 million. This can be broken down into estimated figures of €326 million for hospitality and €101 million for accommodation. As I have said on a number of occasions, the Government will, in the coming weeks, examine the full suite of taxation and other measures that are due to expire at the end of February. In making any decision, the Government will balance the costs of the measures in question against their impact and the overall budgetary framework. It should be noted that other supports have been put in place which are also of assistance to the sector, including the new temporary business energy support scheme. This scheme is aimed at businesses whose average unit gas or electricity price has risen by over 50% compared with their average unit gas or electricity price in 2021.
Although it is noted on the Register of Members' Interests, I wish to declare that I am a director of a music festival that benefited from the 9% VAT rate. It is a not-for-profit organisation. The reduced rate of VAT was introduced in November 2020 during the pandemic more to support the cash margins of struggling businesses than to incentivise a reduction in prices. The total cost of the measure to the end of February will be €902 million. Has the Department undertaken analysis of the economic impact in 2023 if the rate reverts back to 13.5%? It is important that if such an increase happens, we are absolutely assured that the benefits outweigh the costs to the taxpayer, the sectors concerned and employment. There are reports of price-gouging in the hotel sector, particularly in Dublin.
That also needs to be weighed against excluding the accommodation sector because obviously Dublin is not Donegal, Kerry or Galway. There are differences in different regions.
To answer the Deputy's question directly, I have asked my Department to carry out an assessment of all the measures that are currently due in law to expire at the end of February. I will shortly meet my officials to go through that and consider their assessment of all those measures, the economic impact, the current economic circumstances and so on.
The key issue for me is to make sure we make the best use of taxpayers' money, which is limited by its very nature. We hear every day in this House more and more calls for additional expenditure, in some cases for tax reductions or tax supports in different areas. We must make difficult decisions. This is one of a number of measures that are due to expire. It was introduced as a Covid-19 measure to support the sector in very difficult times. We are now in a situation where the labour market is very strong. In fact, there are labour shortages across a whole range of sectors. We will do a full analysis and make a considered decision taking into account all of the factors.
I will be interested to see if that economic analysis and impact assessment on whether this rate will go back up will be published before a decision is taken. The Taoiseach remarked this month that it would be possible to extend the reduction while excluding hotels. Is that on the cards? Is there potential for that? It would also have to exclude all holiday accommodation such as bed and breakfast accommodation, guest houses and campsites. Does the Minister believe that is fair, particularly given the impact it would have on more rural and less lucrative markets? Is this option under consideration?
As I said, there are swings and roundabouts with regard to this. The cost-of-living crisis is dampening demand and higher energy costs are impacting on the sector. We also have staffing issues and so forth. There are, however, other positives in terms of restrictions being lifted. Can I get an understanding from the Minister regarding the cost or economic impact assessment for 2023, which he said is under way? Will such an assessment be published by the Department? Will he answer the question about the exclusion of hotel accommodation?
As the Deputy knows, the costing that has been put on the overall measure being extended to the end of the year is €427 million, which is a very large sum of money by any yardstick. The Deputy asked verbally and in writing about excluding hotel accommodation. I am advised by Revenue, as I set out last week in written replies to parliamentary questions, that there would be significant practical operational concerns in having different VAT rates applying to hotel accommodation and meals given how the sector operates, with various packages ranging from bed and breakfast accommodation through to all-inclusive board and lodging packages. This could lead to the underpayment of VAT because the charge for accommodation and meals would have to be apportioned. In the view of Revenue, it would undoubtedly provide opportunities for tax planning, which would be difficult to police. This would give rise to administrative and operational complexity as well as increased risk of avoidance and scope for manipulation of the VAT system. This is the view of Revenue and those are the points it made to me. I must also take account of those points when we are making a decision.
65. Deputy Róisín Shortall asked the Minister for Finance the additional revenue raising measures he is considering to ensure sustainable funding of public services, following the Parliamentary Budget Office and the Irish Fiscal Advisory Council calculation that an extra €7 billion per year is needed; and if he will make a statement on the matter. [3331/23]
I join others in congratulating the Minister on his new role. I wish him well and look forward to working with him. I also extend best wishes to the Minister of State, Deputy Carroll MacNeill, in her promotion. I hope she has a fruitful career in the Department of Finance.
My question relates to choices that were made at budget time whereby a very substantial tax package benefited a small minority of taxpayers. A huge number of taxpayers did not get any benefit from it. That was a political choice the Government made and with which I disagreed strongly at the time. I made the case, as the Social Democrats always do, for greater investment in and better access to public services as a better way to spend money.
I thank the Deputy. Her time is up.
I wish to ask the Minister about the repercussions of that.
I thank Deputy Shortall very much. I look forward to working with her over the period ahead.
In the summer economic statement 2021, the Government adopted a medium-term budgetary strategy that would ensure continued investment in public services and progressive reductions in personal taxation while maintaining our public finances on a sustainable path. This strategy was operationalised through ceilings on growth in public expenditure. Core current public expenditure growth will be capped at 5% per annum, broadly in line with the estimated trend growth rate of the economy over the medium term.
As the Deputy knows, last year, in recognition of the far less benign inflationary environment, this strategy was adapted on a once-off, temporary basis to provide for an increased budget 2023 package of €11 billion of new measures to continue to fund public services and provide relief for households and businesses struggling with the cost-of-living challenge. Crucially, however, it is planned that future budgets will return to the sensible and sustainable fiscal parameters set out in the medium-term budgetary framework.
In formulating budgetary policy in a context of inflation running at multi-decade highs, Government must strike the appropriate balance between continuing to support public services while avoiding poorly crafted fiscal policy. Inappropriate policy measures exacerbate the problem, contributing to a severely damaging inflationary spiral and becoming part of the very problem it was intended to address. As a result, the Government's response to inflation has focused on measures that are temporary, timely and targeted and aimed at those most in need. This is the most economically appropriate response to an inflationary shock driven primarily by global pressures where Government cannot fully absorb the impact. The Irish Fiscal Advisory Council, IFAC, also assessed that the Government's approach in the budget struck the appropriate balance between supporting vulnerable households and avoiding adding to inflationary pressures.
Structural fiscal headwinds in the coming years will involve major challenges. Perhaps I can elaborate further in relation to population, the impact of the international tax agreement and also climate action measures.
At the time of the budget, the Parliamentary Budget Office in the Oireachtas and the Irish Fiscal Advisory Council both calculated that an additional €7 billion per year is needed to meet inflationary costs and allow public services just to stand still. They calculated that the bottom line with regard to the budget was that just €2.2 billion was allocated for that purpose. That obviously leaves a huge shortfall. The implications are that as the year goes on, we will see inevitable cutbacks in key public services. Does the Minister accept the figures of both of those bodies? Does he have proposals for revenue raising to at least make up that shortfall so those services can stand still, although they will arguably need more?
I am not anticipating any cutbacks in public services arising from the budget for 2023. I am very well aware of the projections the Irish Fiscal Advisory Council made about the costs the State will be incurring over the years ahead in respect of a whole range of areas, including demographic costs, the cost of Sláintecare and the cost of climate action measures. That will involve the Government making choices. As the new Minister for Finance, I have, as the Deputy knows, inherited the Commission on Taxation and Welfare report, which makes for very interesting reading and sets out a whole series of recommendations. There will be choices to be made regarding both expenditure and taxation over the coming years to ensure our fiscal position is sustainable. While we had a very strong headline surplus in 2022, the underlying position is different because we had buoyant corporation tax receipts. My Department and Revenue have estimated that approximately €10.5 billion of those receipts are potentially windfall in nature and cannot be relied upon into the future.
That is fine except the Minister's partners in Government have signalled a direction of travel with regard to further tax cuts and the substantial costs those will entail. Does the Minister accept the figure from the Irish Fiscal Advisory Council and Parliamentary Budget Office that the Government needs €7 billion in the current year for public services to stand still? What does the Minister expect the shortfall will be? Is he again going to rely on being bailed out with corporation taxes? My principal question, however, is whether the Minister accepts that €7 billion figure and the shortfall in his calculations. If so, how does he intend to make up that shortfall?
I do not accept that there is a shortfall in 2023. We believe we have made adequate provision across all of the expenditure Votes in 2023 to meet the Government priorities. Within that there will be a lot of choices and decisions to be made but from our perspective, there is certainly not any shortfall in the budgetary position across Departments for 2023.
The Deputy made a point about income tax reductions. I make the point to her that if you have a static tax system and, at a time of rising incomes, you make no change to bands or credits, that is an increase by stealth. That is an issue the Government believes needs to be addressed. There is a programme for Government commitment to increase bands and credits. We have, thankfully, made progress on that in the last number of budgets. Coming up to every budget, we will assess the budgetary position and economic circumstances and make the best decisions we can.
66. Deputy Pearse Doherty asked the Minister for Finance if he will introduce measures to ensure that recent reforms in the insurance sector will result in proportional reductions in premiums for consumers; and if he will make a statement on the matter. [3330/23]
The personal injury guidelines have been in effect since April 2021. Despite the sharp reductions in personal injury awards and claims through the High Court, there is growing frustration that the benefits of the reforms are not being passed on in full to customers, businesses, community groups, sporting organisations, etc. The money is being pocketed by the industry. Will the Minister of State introduce measures to ensure transparency and apply pressure to the industry to pass on the savings they are making, euro for euro, to their customers? Will she support the Bill that is before the finance committee?
I thank the Deputy for his question and good wishes. I look forward to working with him. He raises an important point in which every Deputy has an interest.
Government recognises the concerns felt by individuals, businesses and community groups regarding the cost and availability of insurance, and as such, has prioritised the delivery of targeted, multifaceted reform to this key sector. The Government has consistently emphasised its clear expectation that insurers should pass on any savings arising from those reforms through reduced premiums but also - this is important - increase their risk appetite to provide cover to lesser-served, pinch-point sectors. Domestic policy action has been clearly targeted at delivering real and sustainable change benefiting policyholders, but the Deputy is aware that the impacts of the ongoing reform programme will take time to transmit to price levels for a variety of reasons. Those can variously include uncertainty arising from ongoing legal challenges, the inherent complexity of the insurance sector’s operating environment, or even dynamic external developments, which can determine price or supply in a small market such as Ireland.
The insurance industry's response to the Government’s reform agenda continues to be monitored closely. As Minister of State with responsibility for insurance, I will be meeting with the CEOs of the main insurers in the Irish market next month in order to further assess their response to the action plan reforms and to stress the importance of reflecting lower claims through reduced premiums.
There are some positive developments. Central Statistics Office, CSO, consumer price data show that motor insurance prices have fallen by 16.1% since the introduction of the personal injury guidelines in April 2021. This benefits an estimated 2.2 million policyholders and is a notable outcome in the current inflationary environment, with motor insurance being a compulsory requirement and, as such, having been cited as a price barometer by all sides in this House.
I wish the Minister of State well. Most of what she said could have been written by the insurance industry. That is disappointing. We really need to work on this. It does not take much time. Industry profits are already being boosted. Personal injury awards are down by 38% in the book of quantum. It has already happened. The number of cases that went through the courts in the first nine months of last year averaged 223 per month, about one third of the monthly average in 2019. What are going up are profits. Some €176 million was made by the insurance industry, a 13% return, in 2021. They are taking us for fools. Talking about the Minister of State's expectation is not good enough. We need action.
When the British introduced reduced awards, they said companies would have to show how this is passed on, euro for euro. We have produced similar legislation for the Irish sector. It is before the finance committee. I encourage the Minister of State to support that legislation.
I appreciate the importance of what the Deputy is saying and he is correct in his analysis of reduced awards but it takes time for that to be passed on in every respect to policyholders. There are other positive indications that the substantial reform programme is having a marked effect and the market is responding to it. It has been recently reported that new insurance firms are seeking to enter the Irish market, which would help provide more competition. That is an important market dynamic in reducing costs generally for consumers. Providers are also moving into areas that had previously proved problematic and been highlighted many times in this House, such as equestrian activities, childcare, non-standard buildings and inflatable hires, bouncy castles and so on. There is no doubt that issues remain and reform legislation is before this House to rebalance the duty of care, through amendments to the Occupiers' Liability Act 1995. That is an important pinch-point that has to be addressed. There is work to do on that, as the Deputy is aware.
I agree, and I will work with the Minister of State on other legislation, particularly on the duty of care and some other needed reforms. However, we passed legislation. I supported that legislation but not to deepen the pockets of the insurance industry. Awards have been slashed and the numbers going through the courts have dropped dramatically. The profits of the industry have increased. We need to take out the big stick and say the industry has not passed it on. Indeed, businesses are likely to have seen increased costs.
I will take issue with another point. The Minister of State referenced the CSO but that is not a credible source. That is not to cast any aspersion on the CSO but data is available to us on the price of motor insurance. The CSO will show motor insurance decreased by 21% in 2021. That is a basket survey that is done. The national claims information database contains every motor insurance policy issued in the country in that year and shows that it only dropped by 2%. The industry would like to use CSO data but the accurate figure from every policy shows it has only dropped 2%.
There is legislation before the Dáil. I would like to sit down and work with the Department on it.
My attitude to all matters in this House is to sit down and discuss them constructively and I am always available to do that. As Minister of State with responsibility for insurance, I am not here to support or provide excess or extra profits to the industry but to make sure a reform programme is delivered across Government that will increase competitiveness, draw new entrants into the market, where possible, and increase the risk appetite of existing market participants in order to create a more competitive insurance environment for the people of Ireland in motor and home insurance, as well as for business, which the Deputy rightly highlighted and regarding which there is much to do. That is the focus of the reform agenda in the Departments of Finance, Enterprise, Trade and Employment, and Justice with outstanding work to do. The focus is firmly on delivering for the people of Ireland to make sure insurance is available, competitive and reliable at every turn.
67. Deputy Róisín Shortall asked the Minister for Finance if he will waive the 23% VAT rate on antigen tests; and if he will make a statement on the matter. [3332/23]
This question has been overtaken by events. I welcome the announcement last Saturday by the Minister that he intends to waive the 23% VAT on antigen tests. I would like more detail on that from the Minister in respect of the timeline for the legislation. I note he has introduced it on an administrative basis. For what length of time does he expect the waiver to be in place?
I thank the Deputy. I will put the initial reply on the record because it deals with some of the issues.
As the Deputy will be aware, VAT on supplies of Covid-19 testing kits were subject to a temporary zero rate until 31 December 2022 as the result of an EU Commission derogation. While recognising the success of the Government’s vaccination programme, I have decided that Covid-19 test kits should be subject to a zero rate of VAT on an ongoing basis. This is because there are still significant levels of this virus in general circulation. My decision is reinforced by the public health guidelines which continue to advise caution, in particular recommending self-isolation if one has symptoms of Covid-19 and recommending Covid testing for certain vulnerable groups.
I propose that the zero rating of Covid-19 testing kits will be put on a legislative basis at the first available legislative opportunity; in the meantime, the Revenue Commissioners have agreed to operate it with effect from 1 January 2023 on an administrative basis. To answer the Deputy’s question, I will legislate for it with the agreement of the House at the first opportunity in the coming weeks or short number of months, whenever that opportunity arises, to make sure it is properly underpinned legislatively. I will not put an end date on it, so the zero rate is effective and will continue until we decide otherwise but I do not anticipate that will be the case.
Does the Minister expect to legislate in a stand-alone Bill or is he waiting for another finance Bill of some description?
We will add it to another Bill at the first opportunity.
