Written Answers Nos. 250-273
251. Deputy Joe Carey asked the Minister for Finance if a house is exempt from the local property tax in circumstances in which the person is visually impaired and their house has been modified for their needs; and if he will make a statement on the matter. [54435/21]
Amharc ar fhreagraThe Finance (Local Property Tax) Act 2012 (as amended) provides for certain properties to be exempt from Local Property Tax (LPT) during the current valuation period (2013 to 2021), and the next valuation period (2022 to 2025), if they meet certain qualifying conditions.
While the legislation does not provide a specific exemption from LPT for properties adapted for occupation by visually impaired persons, section 15A of the Act provides for relief by way of a reduction in the chargeable value of a residential property where it is adapted to make it more suitable for use by a person with a disability. To qualify for the reduction, the property must be occupied as a sole or main residence by the a person with a disability following its adaptation, and the adaptation must have the effect of increasing the market value of the property. Further information regarding the criteria required to qualify for this reduction is available at on the Revenue website.
The relief provided by section 15A of the LPT Act should not be confused with the full exemption provided by section 10B of the LPT Act for properties that are occupied by people who are permanently incapacitated to such an extent that they are unable to maintain themselves by earning an income from working and whose condition is so severe that it dictates the type of property that they can live in. Further information regarding this exemption can also be found on the Revenue website.
252. Deputy Peadar Tóibín asked the Minister for Finance if his Department has identified barriers to entry in the non-investment sector of the Irish banking market and anti-competitive commercial practices by Irish banks; and, if so, the detail of the barriers. [52011/21]
Amharc ar fhreagraThe Competition and Consumer Protection Commission (CCPC), a body under the aegis of the Department of Enterprise, Trade and Employment, is the statutory body responsible for the enforcement of domestic and EU competition law in the State.
As the Deputy may be aware there are a number of proposed transactions in the Irish Banking sector that are currently the subject of ongoing merger investigation by the CCPC. I am advised by the Minister for Enterprise, Trade and Employment that it his understanding that barriers to entry is usually an element of the merger investigation. The CCPC is independent in the performance of its functions, therefore it would be inappropriate for me at this stage to comment further on this matter.
However, more generally, as the Deputy may already be aware, I announced in Dáil Éireann on 1 July 2021 that my Department will undertake a broad-ranging review of the retail banking sector to look at, inter alia, expectations of the sector, competition, consumer protection and consumer choice, the sector’s key role in the provision of sustainable credit to the economy, the availability of credit to SMEs from both banks and non-banks and options to further develop the mortgage market.
The review will also look at the cost of doing business for the sector, including impacts on its sustainability and the forces for change at play or foreseen, be they related, for example, to COVID-19, Brexit, climate change, housing, regulation or technology.
I will bring a Memo for Information to Government in the coming weeks in advance of their publication.
This process will involve engagement with a wide range of stakeholders to develop a fuller analysis of future banking challenges.
253. Deputy Aindrias Moynihan asked the Minister for Finance the plans that are in place for the expansion of the employment and investment incentive scheme; and if he will make a statement on the matter. [53168/21]
Amharc ar fhreagraThe Employment Investment Incentive (EII) provides for tax relief of up to 40% in respect of investments made in certain corporate trades. The EII allows an individual investor to obtain Income Tax relief on investments for shares in certain companies up to a maximum of €150,000 per annum in each tax year for investments made up until 31 December 2019. For investments made after 31 December 2019, the maximum limit is raised to €250,000, or up to €500,000 in the case of those who invest for a minimum period of seven years.
Against the background of the Covid-19 pandemic, in my Budget 2021 address, I announced that an assessment would be made of how the EII Scheme could be enhanced. My officials initiated a public consultation at the end of 2020 which concluded with a number of interactive online sessions over two days at the end of March 2021.
Arising out of this consultation process, I am bringing forward a number of positive improvements to the scheme in Finance Bill 2021. As I indicated in my recent Budget address, I believe that the Employment Investment Incentive (EII) scheme has the potential to become a real driver of investment in early stage companies and high-potential start-ups. Aside from an extension of the scheme for a further three years, I propose to open up the scheme to a wider range of investment funds and my expectation is that this measure on its own will result in greater investment in early stage enterprises.
I also propose to allow a qualifying company repay, redeem or purchase share capital from an individual who has made investments in multiple years and where some of those investments are no longer within their compliance period but other EII investments are within the period, without the relief that individual may have received being reduced by the value redeemed by the qualifying company. As part of the proposed modification, the investor will be precluded from seeking further EII relief in that company for a five-year period following such a redemption. In addition, I propose that a qualifying company may not avail of the capital redemption window unless it has sufficient reserves above any EII investments to enable it to redeem the share issue. In effect, it would not be able to use capital raised which would qualify for relief to redeem that very capital.
I am also removing the 30 per cent expenditure rule which is unduly restrictive in the context of the self-assessment principles that now apply to the relief.
Besides the above positive changes, a number of necessary technical amendments are being brought forward to ensure that the measure operates in line with the policy intention for it.
The EII scheme will continue to be kept under review to seek to ensure that it can reach its full potential as a support to start-up firms.
255. Deputy Rose Conway-Walsh asked the Minister for Finance if he will consider applying a change to the corporation tax return which would oblige multinational companies to disclose the state research and development activity which is carried out in order to make an assessment of the effectiveness of the research and development tax relief at incentivising companies to deepen research and development activity within the State; and if he will make a statement on the matter. [54314/21]
Amharc ar fhreagraAs advised in my response to the Deputy’s previous question (50062/21), a corporation tax return (CT1) already captures certain information in relation to the R&D credit, in particular information which is required for the purpose of calculating a company’s tax liability. From that information, Revenue publishes statistics on the R&D credit, which is available on the Revenue website at www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/r-and-d-tax-credits.aspx.
As also noted in that reply, any change to the corporation tax return requiring companies to provide more granular information on the kind of R&D activity they are undertaking would create additional administration for all firms, but especially smaller companies. While the Deputy suggests that this burden could be limited to multinational companies, I am mindful that, in claiming the R&D credit, firms are already required to prepare detailed paperwork demonstrating that they satisfy two tests:
- (1) that they are carrying on a qualifying activity (a science test) and
- (2) the amount of the claim is based on R&D expenditure incurred (an accounting test). These records are required to be made available to Revenue in the context of a compliance intervention.
While I do not consider that changes to the law are required at this time, as previously advised, the R&D credit, like any other tax expenditure, will be monitored and kept under review.
256. Deputy Mick Barry asked the Minister for Finance the measures he will take to eliminate the opportunities for companies to use Ireland in tax fraud measures as exposed in files (details supplied); and if he will make a statement on the matter. [54448/21]
Amharc ar fhreagraThe Central Bank of Ireland is the independent financial regulator in Ireland and is responsible for the authorisation and supervision of financial services firms. The legislative framework that applies to regulated financial services providers includes European and domestic legislation along with Central Bank regulations and guidance.
The Central Bank, as the independent financial regulator, is committed to effective supervision in keeping with its mandate to safeguard protect investors, financial stability and market integrity. The Central Bank is rigorous in its assessment of risks having regard to the evolving market and risk landscape. Ensuring that regulated financial services providers can clearly demonstrate their compliance with their legislative and regulatory obligations is integral to this process.
With regard to taxation, the European Securities Markets Authority (“ESMA”), launched a formal inquiry concerning dividend withholding tax reclaim schemes in July 2019. The Central Bank of Ireland, in consultation with the Revenue Commissioners, contributed to this process. ESMA’s main conclusion was that Withholding Tax (WHT) schemes are to be primarily considered as a tax related issue and that a first legislative and supervisory response should be sought within the boundaries of the tax legislative and supervisory framework. The key recommendation in the report, within the remit of financial services legislation, is that EU National Competent Authorities (NCAs) for securities markets should be empowered - through amendments to EU legislation - to share information received from other NCAs with national tax authorities, to assist in the detection and prosecution of illegal withholding tax reclaim schemes.
Finally, I would like to mention an important domestic development for the financial services industry, which is the steps being taken to introduce a Senior Executive Accountability Regime (SEAR). This will place obligations on firms and senior individuals within them to set out clearly where responsibility and decision-making lies. Legislation is required and drafting is advancing. Such developments will lead to the further development of a resilient and trustworthy financial services sector, in which firms and individuals adhere to a culture of fairness and high standards.
257. Deputy Mary Butler asked the Minister for Finance the position regarding an application for incapacitated child credit in respect of a person (details supplied); if he will request the Revenue Commissioners to review incapacitated child credit application in respect of a person with a view to awarding same, at pre-diagnosis stage, in line with the current medical advice and significant medical evidence which has been provided; and if he will make a statement on the matter. [54461/21]
Amharc ar fhreagraSection 465 of the Taxes Consolidation Act 1997 provides for the payment of the incapacitated child tax credit to the parent or guardian of a child who is permanently incapacitated, either physically or mentally. The qualifying criteria requires that medical evidence is provided setting out the extent of the incapacity and whether it is expected to permanently prevent the child from being able to maintain himself or herself independently when over the age of 18 years.
Revenue has advised me that it has reviewed the application for the incapacitated child tax credit from the person in question but is unable to grant the relief at this point because the child’s diagnosis has not been confirmed by his medical practitioner. However, Revenue has assured me that the claim can be resubmitted should the person receives a confirmed diagnosis in respect of the child from a certified medical practitioner. The relief would then be available from the date the diagnosis is confirmed, subject to the general 4-year time limit for claiming tax credits.
Revenue has also advised me that the person can claim tax relief for additional health expenses in respect of the child. This would include the cost of any relevant assessment carried out by an approved practitioner. Further information on claiming health expenses in respect of a qualifying child can be found at link www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/health-and-age/health-expenses/additional-health-care-expenses-for-a-child.aspx, which may be of assistance to the person.
258. Deputy Dara Calleary asked the Minister for Finance his views on whether in the context of a bank exiting the Irish market and selling its loan book that in the case of any family home mortgage being sold on to a third-party at a discount on the mortgage, for example, a tracker mortgage, that the discount be offered in the first instance to the mortgage holder who may be in a position to buy out their mortgage; and if he will make a statement on the matter. [54634/21]
Amharc ar fhreagraThe sale of a loan book and the price transacted between regulated entities in relation to any such sale is a commercial matter for the business entities involved in that particular transaction.
However, the Central Bank has advised that there are certain requirements which must be met by regulated entities in circumstances where an entity is withdrawing from the Irish market. In particular, the withdrawal must be undertaken in accordance with the provisions of Irish financial services legislation, including the Central Bank’s codes of conduct, specifically, provision 3.11 of the Consumer Protection Code 2012.
Under Provision 3.11 of the Code, a regulated firm that intends to cease operating, merge with another, or to transfer all or part of its regulated activities to another regulated firm, must:
- provide affected consumers with at least two months’ notice to enable them to make alternative arrangements if they so wish;
- ensure all outstanding business is properly completed prior to any transfer, merger or cessation of operations; or, in the case of a transfer or merger, inform customers as to how continuity of service will be provided following a transfer or merger; and
- in the case of a merger or transfer of regulated activities, inform customers that their details are being transferred to the other regulated entity, if that is the case.
In relation to loans, where they are sold or transferred to another regulated entity, the consumer protections in place for borrowers will not change. Also the terms and conditions of a customer’s mortgage or other credit agreement remain in place following a loan sale/transfer. It is worth noting that, under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2018, if a loan is transferred or sold, the holder of the legal title to the credit must be regulated and must act in accordance with Irish financial services law that applies to ‘regulated financial service providers’. This ensures that consumers whose loans are sold or transferred, maintain the same regulatory protections that they had, including under the various Central Bank statutory codes of conduct such as the Consumer Protection Code 2012 and the Code of Conduct on Mortgage Arrears 2013 (CCMA).
The Central Bank has also advised that its supervision of any bank that withdraws from the market will be focused on ensuring that its customers are treated fairly, and remains in compliance with the letter and spirit of regulatory requirements. The Central Bank has clearly communicated the requirement for a customer-focused approach to be taken in all aspects of their business throughout the period of change and that they ensure that customers understand what the withdrawal means for them.
259. Deputy Richard Boyd Barrett asked the Minister for Finance if the provisions of section 97A of the Taxes Consolidation Act 1997 (details supplied) are subject to a limit on the number of individual residential units that a landlord can claim for; the number of residential units for which these reliefs have been claimed that have been brought into use in each of the years 2017 to 2020 and to date in 2021; the total cost to the State in each year; and if he will make a statement on the matter. [54676/21]
Amharc ar fhreagraSection 97A of the Taxes Consolidation Act 1997 provides for a time-limited deduction against rental income for pre-letting expenditure incurred on a residential premises that has been vacant for a year or more. The aim of the measure is to encourage owners of vacant residential property to bring that property into the rental market, for a minimum of four years. The measure is consistent with Government policy as outlined in ‘Housing for All - a New Housing Plan for Ireland’.
I am advised by Revenue that there is no limitation on the number of residential units for which a landlord can make a claim under section 97A TCA. However, the maximum deduction per vacant property permitted under the section is €5,000.
I am further advised by Revenue that the number of claimants, the number of properties declared on tax returns, the amount claimed, and the estimated tax cost associated with claims under section 97A Taxes Consolidation Act 1997 (TCA) are set out in the table below. Returns for 2019 are currently being processed and the data will be available shortly. No information is available at present for 2020 and 2021.
|
Year |
Number of Taxpayers |
Number of Properties Declared |
Amount S97A Claimed €m |
Tax Cost €m |
|
2017 |
630 |
1,225 |
1.1 |
0.3 |
|
2018 |
1,030 |
2,115 |
2.4 |
0.7 |
A deduction under section 97A TCA will be clawed back where a landlord who has made a claim under the section stops letting a residential premises within four years of the first letting. This can happen where either the property is sold or the property changes use from a rented residential property.
As the Deputy may be aware, Finance Bill 2021, if passed by the Oireachtas, will extend the period in which pre-letting expenditure can be claimed until 31 December 2024. It is currently scheduled to end on 31 December 2021.
260. Deputy Richard Boyd Barrett asked the Minister for Finance the projected budgeted revenue cost for the full year in 2022 arising from section 28 of the Finance Bill 2021 that inserts a new section 25A into the Taxes Consolidation Act 1997 with provisions relating to attribution of profits to a branch; and if he will make a statement on the matter. [54677/21]
Amharc ar fhreagraSection 28 of the Finance Bill 2021 provides for the application of an OECD-developed mechanism known as the “authorised OECD approach” or "AOA" for the attribution of income to a branch of a non-resident company operating in the State. This delivers on the commitment in the Update to Ireland’s Corporation Tax Roadmap which was published in January of this year.
The section provides that trading and certain other income of a branch is to be attributed by reference to transfer pricing principles and, for these purposes, the OECD’s guidance on the authorised OECD approach will apply.
The adoption of the authorised OECD approach brings our tax rules in line with international best practice. I held a public consultation earlier this year to outline the proposed adoption of the authorised OECD approach in the Irish tax code and received valuable stakeholder input.
In terms of costing it is anticipated that the introduction of this measure will be cost neutral. The new legislation will provide additional clarity and certainty to taxpayers in relation to the attribution of income to branches but is not expected to result in an additional exchequer yield. It was apparent from stakeholder engagement that many groups already use this approach when allocating profits to Irish branches.
It is anticipated that the authorised OECD approach, for the attribution of profits to a branch, will apply to accounting periods commencing on or after 1 January 2022.
261. Deputy Richard Boyd Barrett asked the Minister for Finance the projected budgeted revenue cost for the full year in 2022 arising from the provisions of section 481 of Taxes Consolidation Act 1997 relief for investment in films; and if he will make a statement on the matter. [54678/21]
Amharc ar fhreagra262. Deputy Richard Boyd Barrett asked the Minister for Finance the projected budgeted revenue cost for the full year in 2022 arising from the provisions of section 32 of the Finance Bill 2021 that amends the definition of eligible expenditure in section 481 to confirm that payments made directly by a qualifying company to an individual involved in the provision of labour-only services for the purposes of the production of a qualifying film, qualify as eligible expenditure; and if he will make a statement on the matter. [54679/21]
Amharc ar fhreagra263. Deputy Richard Boyd Barrett asked the Minister for Finance the measures he is planning to put in place to ensure that section 32 of the Finance Bill does not contribute to bogus self-employment in the film industry; and if he will make a statement on the matter. [54680/21]
Amharc ar fhreagra264. Deputy Richard Boyd Barrett asked the Minister for Finance the details of the revenue foregone over the past five years from section 481 of Taxes Consolidation Act 1997 relief for investment in films by year; and if he will make a statement on the matter. [54681/21]
Amharc ar fhreagraI propose to take Questions Nos. 261 to 264, inclusive, together.
The section 481 tax credit provides a 32% payable credit for eligible expenditure on film production in Ireland. The scheme is intended to act as a stimulus to the creation of an indigenous film industry in the State, creating quality employment opportunities and supporting the expression of the Irish culture.
In relation to PQ 54680, section 32 of Finance Bill 2021 amends the definition of “eligible expenditure” in section 481 to confirm that payments made directly by a qualifying company, to an individual involved in the provision of labour-only services for the purposes of the production of a qualifying film, may qualify as eligible expenditure.
This amendment has arisen as a result of the move to a self-assessment basis through Finance Act 2018. This required a substantial rewriting of section 481 legislation and it was subsequently identified that the amended definition of ‘eligible expenditure’ excluded expenditure on individuals providing a labour only service. Payments in respect of such individuals, which could include actors, directors and crew, had always qualified for section 481 relief, and this treatment was expressly stated in previous Revenue guidance. The Finance Bill 2021 amendment therefore provides confirmation of the existing standard industry practice that expenditure on individuals providing a labour only service on the production of a qualifying film may be qualifying expenditure, subject to the other terms and conditions of the credit. It is not intended that such an amendment would encourage a particular form of employment status.
In regard to PQ 54679, there is no expected Exchequer cost of the amendment. It is expected to be cost neutral on the basis that there is no change in existing policy or practice
It is essential that there is compliance with all applicable employment obligations including legislative obligations and policies, not only in the audiovisual industry, but all industries. To grow the audiovisual sector in Ireland, the sector needs to provide quality and sustained employment and training opportunities. This is reflected in the requirement for an undertaking of quality employment introduced in Finance Act 2018. The undertaking commits applicants to compliance with all relevant employment legislation. These conditions apply not only to the producer company but also to the qualifying company. Should a producer company or qualifying company fail to adhere to a condition or obligation specified in a certificate, the Culture certificate may be rendered invalid and any credit claimed may be subject to recoupment by Revenue.
Revenue also engages regularly with the Department of Social Protection (DSP) and the Workplace Relations Commission (WRC), across a range of industries, to address any misclassification of individuals as ‘self-employed’ when ‘employee’ status would have been more appropriate. Together with the DSP and the WRC, they have updated the Code of Practice for Determining Employment Status which was published in July 2021. The Code aims to be of benefit to employers, employees, independent contractors and legal, financial and HR professionals. It is also aimed at investigators, decision-makers and adjudicators in the DSP, Revenue, the WRC, their respective appeals bodies, and the courts. Its purpose is to provide a clear understanding of employment status, taking into account current labour market practices and developments in legislation and caselaw. The Code highlights that there is no single clear legal definition of ‘employment’ or ‘self-employment’ under EU or Irish law and also emphasises that “the reality behind the contract” is what determines employment status.
In addition, there has been positive progress in relation to negotiations between employer and worker representatives in the sector in the past year. A modernised Crew Agreement was introduced in January 2021 which promotes good practice, regularises evolving work practices and provides for an industry pension scheme operating under the Construction Workers Pension Scheme (CWPS). This Agreement includes a monitoring structure to oversee the operation of the agreement, and a commitment to developing the first Work/Life Balance policy for the film and television industry. The Agreement acts as a framework for the industry covering all crew grades except film construction.
I understand that a Construction Crew Agreement is also under active negotiation, and my officials will continue to monitor progress in this regard.
It should be noted that the monitoring of compliance with employment rights legislation is primarily a matter for the Department of Enterprise, Trade and Employment through the Workplace Relations Committee (WRC).
In relation to PQ 54678, as the level of future investment in the film industry is unknown, there is no basis available from tax returns or other data available to Revenue to accurately project the potential cost of the measure in 2022. However, and referring also the Deputy's question PQ 54681, I would note that the value of tax relief provided under the provisions of section 481 of the Taxes Consolidation Act for Investments in Films for the years 2015 to 2019 is available in the Costs of Tax Expenditures table published at www.revenue.ie/en/corporate/documents/statistics/tax-expenditures/costs-tax-expenditures.pdf.
265. Deputy Richard Boyd Barrett asked the Minister for Finance the number of businesses that are receiving payments under the employment wage subsidy scheme; the amount has been paid in total under the scheme to date in 2021; and the amount that is budgeted for payment in 2022; and the changes to rules for eligibility for this scheme; and if he will make a statement on the matter. [54682/21]
Amharc ar fhreagraSection 28B of the Emergency Measures in the Public Interest (Covid-19) Act 2020 provides for the operation of the Employment Wage Subsidy Scheme (EWSS). It provides a subsidy to qualifying employers based on the numbers of paid and eligible employees on the employer’s payroll and charges a reduced rate of employer PRSI of 0.5% on wages paid which are eligible for the subsidy payment.
The objective of the Employment Wage Subsidy Scheme (EWSS) is to support employment and maintain the link between the employer and employee insofar as is possible. The EWSS has been a key component of the Government’s response to the continued Covid-19 crisis to support viable firms and encourage employment in the midst of these very challenging times.
In September 2021, which is the most recent month for which complete payslip information from employers is available for analysis, 27,500 employers received payments through the EWSS in respect of almost 312,000 employees, at a cost of €448.6m (€391.3m in direct subsidy and €57.3m in PRSI foregone).
The cost to date (4th November) is almost €6.2 billion, comprising of direct subsidy payments of €5.35 billion and PRSI forgone of almost €850 million to 51,600 employers in respect of over 681,000 employees.
Of the total expenditure, 2020 accounts for approximately €1.64 billion (€1.39 billion direct subsidy and almost €250 million in PRSI foregone) and 2021 accounts for approximately €4.56 billion (€3.96 billion in direct subsidy and almost €600 million in PRSI foregone).
It is widely acknowledged that the EWSS has played a central role in supporting businesses, encouraging employment and helping to maintain the link between employers and employees during this pandemic.
Government policy has been that there will be no cliff edge to the support, at the same time, it is necessary to unwind and phase out this temporary, emergency support measure. That is why, on Budget Day, I announced the extension of EWSS in a graduated form until 30 April 2022. This ensures there will be no sudden end to the EWSS and also provides clarity and certainty to business.
The following are the broad parameters of this extension:
- The current arrangements, including the enhanced rates of subsidy, will remain in place until November 2021;
- For December 2021 to February 2022, the original two-rate subsidy of €151.50 and €203 will apply;
- For March and April 2022, a single flat rate of €100 will apply and the reduced rate of Employers’ PRSI will be reinstated for these two months;
- Businesses availing of the EWSS on the 31st of December 2021 will continue to be supported until the 30th of April 2022. The scheme will close to new employers from 1 January 2022.
Essentially, these arrangements will ensure that the EWSS will remain in place for six months after the removal of most public health restrictions and for over two months after the PUP ceases to exist.
It is estimated that the cost of extending EWSS for the six month period November 2021 until April 2022, in the graduated form that I outlined, will be in the region of €1.26 billion, with 2021 accounting for €580 million and 2022 accounting for €680 million. This costing is based on a tentative estimate of an average of approximately 220,000 employees being supported by the scheme over the period, with possibly higher numbers in the earlier months.
I am satisfied that these revised arrangements for EWSS strike a balance between helping those businesses which continue to need support, while recalibrating the scheme in light of the wider economic recovery.
266. Deputy Richard Boyd Barrett asked the Minister for Finance the projected budgeted revenue cost for the full year in 2022 arising from the provisions of section 72 of the Finance Bill 2021 that removes the prohibition on reduction of penalties in offshore cases; and if he will make a statement on the matter. [54683/21]
Amharc ar fhreagraSection 72 Finance Bill 2021 proposes to remove the prohibition on making a qualifying disclosure where any matter contained in the disclosure relates to “offshore matters”. The aim of this amendment is to facilitate voluntary compliance and Revenue wants to encourage taxpayers to come forward voluntarily before they are contacted. The existing legislation means that there is no incentive for certain taxpayers to come forward in advance of a Revenue compliance intervention. It has also created difficulties whereby minor offshore matters could prejudice disclosure of an onshore default to the extent that taxpayers with any offshore issues were effectively disincentivised from using the disclosure regime.
This amendment will afford taxpayers an opportunity to avail of reduced penalties in offshore cases. However, it is already possible for taxpayers to have the penalties applying to offshore settlements reduced for co-operating with the compliance intervention. The nature of the behaviour leading to a tax default is also taken into account in determining the quantum of the penalty – that is, whether the default was deliberate or careless, and whether the careless default had or did not have “significant consequences” (where the tax underpayment was more than 15% of the taxpayer’s overall liability for that taxhead).
It is anticipated that these proposed changes will encourage voluntary compliance and as a result will increase the number of settlements agreed with Revenue in offshore cases. Although the amount of penalties in individual cases will reduce, the overall amount collected in tax, interest and penalties is likely to increase as more taxpayers voluntarily comply. Furthermore, the availability of the disclosure programme is expected to reduce the length of time taken to finalise inquiries related to offshore cases and will thereby reduce administration costs.
In summary, it is anticipated that the removal of the prohibition on making a qualifying disclosure and associated reduction in penalties in offshore cases will both increase the number of settlements finalised and the quantum of those settlements.
267. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he continues to monitor any inflationary tendencies in Ireland with a view to corrective action if required; and if he will make a statement on the matter. [54717/21]
Amharc ar fhreagra280. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he continues to observe inflationary tendencies in this economy with particular reference to the need to identify their origin; and if he will make a statement on the matter. [54731/21]
Amharc ar fhreagraI propose to take Questions Nos. 267 and 280 together.
While Covid-19 had a deflationary impact both in Ireland and internationally last year, inflation has picked up since the beginning of this year. The ‘flash’ HICP inflation rate reached 5.1 per cent in October – the highest rate since 2003. The emergence of inflationary pressures in recent months is not unique to Ireland however, with the euro area flash inflation rate reaching 4.1 per cent in October.
The recent rise in inflation is partly explained by temporary factors, which are expected to fade over time, including ‘base effects’ associated with the ‘normalisation’ of oil prices following their collapse last spring and the imbalance between supply and demand that emerged following re-opening. This has been compounded by global supply chain disruptions, including transport bottlenecks, input shortages (e.g. semi-conductors) and labour supply shortages in some sectors. More recently, increases in wholesale energy prices have put additional upward pressure on prices, with energy inflation of 18½ per cent recorded in September.
Looking ahead, the most likely scenario is that inflation will moderate over time as temporary factors fade, demand stabilises and supply pressures ease. The Department is forecasting inflation of 2¼ per cent this year and next. However, the recent spike in wholesale energy prices means that there could already be some upside to these projections. Indeed, a scenario analysis outlining the macroeconomic implications of higher than expected inflation is set out in the Economic and Fiscal Outlook published with the Budget.
The Government is very conscious of inflationary pressures and introduced a range of measures in Budget 2022 to protect households against increases in the cost of living. These include a personal income tax package worth €520m and a social welfare package of over €550m. The fuel allowance was increased by €5 per week to compensate lower income households for the additional energy costs they are likely to incur due to an increase in the carbon tax. There were also increases in the allocation of Early Learning Care and School-Age Childcare to ensure childcare prices do not rise. Nevertheless, my Department will continue to monitor inflationary developments over the coming months.
269. Deputy Bernard J. Durkan asked the Minister for Finance the measures available in this jurisdiction to combat such issues as inflation, in Ireland or throughout the Eurozone; and if he will make a statement on the matter. [54719/21]
Amharc ar fhreagraThe flash estimate for HICP inflation in October is 5.1 per cent, which would be the highest rate since 2003. The emergence of inflationary pressures in recent months is not unique to Ireland however, with the euro area flash estimate reaching 4.1 per cent.
The recent increase in inflation is partly explained by temporary factors, which are expected to fade over time, including ‘base effects’ associated with the ‘normalisation’ of oil prices following their collapse last spring and the imbalance between supply and demand that emerged following re-opening. This has been compounded by global supply chain disruptions, including transport bottlenecks, input shortages (e.g. semi-conductors) and labour supply shortages in some sectors.
Looking ahead, the most likely scenario is that inflation will moderate over the course of next year as temporary factors fade, demand stabilises and supply catches up. At the time of the Budget, inflation of around 2¼ per cent was projected for this year and next. However, the recent spike in international wholesale energy prices means there could already be some upside to these projections. A scenario analysis outlining the macroeconomic implications of higher than expected inflation is set out in the Economic and Fiscal Outlook published with the Budget.
Consistent with this outlook, the Commission and the ECB are confident that elevated inflation is linked to temporary factors, supply-side constraints and the recovery in demand as our economies reopen. That said, energy prices can entail wide-ranging consequences for inflation including for businesses and families. In recognition of the social impacts, many Member States have introduced targeted measures to protect vulnerable households from energy poverty. In framing Budget 2022, I was conscious of these cost of living pressures, and therefore announced a range of measures including targeted social welfare initiatives.
Additionally, the European Commission has issued a Communication on Tackling Rising Energy Prices, and the matter was discussed at various Council configurations. In short, my fellow Finance Ministers and I all agree that this is an important issue and that we need to continue monitoring inflation and energy price developments and the potential implications of these for our economies.
270. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he has had discussions with EU finance ministers in his role as president of the Eurogroup, the various issues which now constitute a threat to economic stability in the future; and if he will make a statement on the matter. [54720/21]
Amharc ar fhreagra271. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he continues to influence thinking in the Eurogroup with the view to ensuring a united effort to challenge potential threats to European economies; and if he will make a statement on the matter. [54721/21]
Amharc ar fhreagraI propose to take Questions Nos. 270 and 271 together.
As President of the Eurogroup, I have regular discussions with my fellow euro area and EU Finance Minister colleagues, at our monthly meetings and through regular bilateral engagement, both virtual and - now that health restrictions are lifting - physical where possible.
The first priority of the Eurogroup is to agree on economic and fiscal policies to support the recovery and long-term growth, as laid out in the unanimously agreed Work Programme of the Eurogroup [available here: www.consilium.europa.eu/media/49739/eg-20210521-eg-work-programme.pdf].
We regularly take stock of the latest economic situation, including inflation developments throughout the EU, with input from the European Commission and the European Central Bank.
The Eurogroup has facilitated a high degree of coordination of national economic policies across the euro area and the EU, particularly throughout the duration of the pandemic. Finance Ministers signed up to two statements in November 2020 [available here: Eurogroup statement on COVID-19 developments this autumn - Consilium (europa.eu)] and March 2021 [available here: Eurogroup statement on the euro area fiscal policy response to the COVID-19 crisis and the path forward - Consilium (europa.eu) ] agreeing on a united approach to responding to the pandemic. For example, in the March 2021 statement, Ministers agreed that "continued strong coordination of supportive fiscal policy in the euro area remains critical to ensure our economies move into a sustained recovery phase."
As a result, the economic recovery throughout this year has been robust, with recent indicators pointing to strong growth. This momentum reflects our coordinated policy support, successful vaccine roll-out and the boost to reforms and investment now that recovery funding has started to flow. Indeed, growth figures for the third quarter show that the euro area is nearly back to pre-pandemic levels of output.
The pandemic has demonstrated that threats to economic stability cannot always be easily predicted. Nonetheless, the Eurogroup continues to remain alert to the possibility of emerging economic threats.
Such possible threats include rising inflation and higher energy prices. The sharp rebound in global demand and persisting production and transport disruptions has brought elevated rates of inflation. The ECB projects inflation to average 2.2 per cent this year and decline to rates of 1.7 and 1.5 per cent in 2022 and 2023, respectively. Both the Commission and the ECB are confident that elevated rates of inflation are linked to temporary factors, supply-side constraints and the recovery in demand as our economies reopen.
In short, my fellow Finance Ministers and I all agree that supporting a sustainable economic recovery is vital and that we need to continue monitoring inflation and energy price developments and the potential implications of these for our economies. We will also continue to monitor and respond to other issues that may emerge.
272. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he continues to review any difficulties faced by borrowers who may have had to postpone meeting scheduled mortgage payments during the lockdown; if any specific provision is being made or can be made to address the situation; and if he will make a statement on the matter. [54722/21]
Amharc ar fhreagraSince the COVID-19 situation first arose, I have maintained contact with the Banking and Payments Federation Ireland and lenders on the measures they have put in place to assist their customers who are economically impacted by the pandemic. The initial measures put in place included payment breaks initially for a period up to three months and then subsequently extended for up to six months. The implementation of this voluntary moratorium by the banking industry was a flexible response to the Covid-19 crisis and ensured that a large number of affected customers could benefit quickly during a fast moving and unprecedented public health crisis.
Banking Payment Federation Ireland (BPFI) data at end of last year showed that 89% of PDH mortgage accounts with expired COVID-19 payment breaks had returned to full repayments on the existing term or on an extended term. For people who availed of pandemic unemployment payments and as a result were placed in a position that they were required to restructure credit arrangements or who are otherwise experiencing loan repayment difficulties, the Central Bank has advised that it is working to ensure lenders are acting in a way that protects the best interests of borrowers, and in line with relevant codes and regulations, including the Code of Conduct on Mortgage Arrears.
The Central Bank’s clear expectation is that lenders engage effectively and sympathetically with distressed borrowers – in line with the Code of Conduct on Mortgage Arrears, the Consumer Protection Code and regulations for lenders lending to SMEs – to deliver appropriate and sustainable solutions. These solutions should be tailored to the financial circumstances of each borrower and the lender’s objective should be to facilitate as many borrowers as possible to return to repaying their debt. Borrowers who continue to experience financial distress should therefore engage early with their lenders, who have specific obligations to support borrowers. Also, borrowers should consider what they can pay and should be cautious about accruing significant amounts of arrears where it is not necessary.
273. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which house price inflation here is likely to affect economic performance in the future; and if he will make a statement on the matter. [54723/21]
Amharc ar fhreagraMy Department continues to monitor all aspects of the property market, including the rate of house price inflation, on an ongoing basis. According to the most recent figures released by the Central Statistics Office, between July and August 2021, the national Residential Property Price Index (RPPI) increased by 2.2 per cent, while prices increased by close to 11 per cent in the year to August 2021.
These rises in residential property prices in recent months, while concerning, are likely due to increasing activity amongst potential home-buyers as public health restrictions were eased. Along with an unwinding of savings built-up during lockdown, demand has manifested in an increase in the volume of purchases of new homes, typically more expensive than second-hand homes.
While the Government is very conscious of pressures in the housing market, including the potential for a faster unwinding of excess savings and construction inflationary pressures due to global supply chain disruptions, the underlying factors driving house price inflation in Ireland at present are primarily due to insufficient supply.
The current inflationary pressures are also fundamentally different to periods in the past, such as the credit fuelled house price inflation in the years prior to 2008. Since then macro-prudential rules were introduced to the mortgage market to safeguard against the worst of potential shocks and operating with a constraining effect on the rate of house price inflation. That being said, the current imbalance in the housing market has the potential to impact on competitiveness and labour supply and thereby adversely affect our economic performance in the future.
To mitigate against these risks, the Government has put in place a suite a measures, including the recently published Housing for All strategy. The Strategy sets out an ambitious programme of housing delivery to meet the needs of our growing economy and population over the medium-term through both private and public investment. While cognisant of potential capacity issues in the sector, Housing for All also represents the most ambitious investment in social and affordable housing in the history of the State. The Strategy aims to increase housing supply by as much as 300,000 units by 2030 and an average of 33,000 units per annum. The result of correcting the current imbalance will be to ease the potential for house price inflation and improve housing affordability.
In this respect, I am encouraged by recent forward indicators of housing supply, most notably the high levels of housing commencements which show that in the 12 months to September 2021 there were 30,519 units commenced nationally, the highest in many years and a positive indication of future supply. Indeed, housing completions are also turning a corner, in spite of the challenges of the pandemic, with most economic observers now revising upwards their predictions for completions for 2022 and beyond. Reaching our target of 33,000 new homes per annum is the best response for our citizens and supporting the economy in the medium-term.
