Written Answers Nos. 301-320
301. Deputy Rose Conway-Walsh asked the Minister for Finance to outline the multiplier applied to public expenditure, particularly capital expenditure, by his Department to estimate economic growth in both GDP and GNI* terms when preparing economic projections, and use an example of how the multiplier is applied; and if he will make a statement on the matter. [14705/24]
Amharc ar fhreagraFiscal multipliers are an important consideration when preparing economic projections and estimating the impact of public expenditure on economic growth. However, isolating the multiplier effect is complicated by the nature of public investment. Public investment does not occur in a vacuum, but rather takes place at a particular point in time against the backdrop of a range of economic and social factors. These contextual factors can play a major role in shaping the magnitude of the fiscal multiplier. The size of a fiscal multiplier also varies by country and over time. For example, an economy’s openness to trade, labour market rigidity and debt levels all factor into the size of the fiscal multiplier. Multipliers can also vary on a project by project basis, depending on the import intensity of a project. The Department therefore takes a judgment based approach, taking these specificities into account.
Indeed, there are a broad range of estimates for Ireland’s fiscal multiplier depending on the approach taken. Estimates for the multiplier for investment expenditure have varied significantly from 0.6 (Varthalitis (2019)) to 1.4 (Ivory et al (2019)). These results differed by the models used across studies and time sampled for analysis.
While investment does have short term economic benefits via a multiplier effect, this Government is also investing to support our long term societal needs and climate ambitions. This includes meeting the significant investment required in sustainable technologies and infrastructure, such as renewable energy and compact development projects, which will have wider benefits into the future.
302. Deputy Rose Conway-Walsh asked the Minister for Finance to outline how the Department converts projected economic growth and government expenditure into numbers of people projected to be in employment when preparing economic projections; and if he will make a statement on the matter. [14706/24]
Amharc ar fhreagraDevelopments in labour demand and labour supply underpin the employment projections my Department publishes in the Budget and Stability Programme Update each year.
In broad terms, economic growth and employment have generally moved in tandem with one another, with higher levels of output typically leading to higher levels of employment and this is the driving force in the modelling that underpins my Department’s projections. Economic developments since the pandemic clearly reflect this relationship. Modified domestic demand – my preferred measure of domestic economic activity - plummeted following the outbreak of the pandemic. Employment also fell sharply as labour demand declined in the face of weakening economic activity. However, the reopening of the economy saw a rapid rebound in both economic activity and employment.
Of course, the outlook for employment also depends on the availability of labour. This is particularly important in an Irish context. Additions to labour supply as a result of both net inward migration and increased participation can explain the strong growth in employment over the past year. With unemployment expected to remain at historically low levels and labour force participation already elevated, sources of domestic labour supply are likely to be more limited going forward. Labour force and employment growth will thus be reliant on net migration.
Indeed, employment growth is expected to continue to moderate over the course of this year in line with demand conditions. However, with net inward migration expected to moderate, labour supply will act as a constraint on employment growth thereafter. My Department will publish updated macroeconomic forecasts, including employment projections, as part of the Stability Programme Update later this month.
303. Deputy Rose Conway-Walsh asked the Minister for Finance to outline how his Department converts projected economic growth and government expenditure into projected tax revenue when preparing economic projections; and if he will make a statement on the matter. [14707/24]
Amharc ar fhreagraMy Department’s projections for tax revenue are based on the relevant macroeconomic indicators across each tax head: for example, personal income tax is grown in line with forecasts for wage and employment growth for the coming years. The projections also take into account other factors that can impact on receipts, such as policy measures, once-off factors and specialist judgement. The latest tax revenue projections were published alongside the Budget in October and will be reviewed as part of the update to the full suite of macroeconomic and fiscal forecasts in the Stability Programme Update later this month.
My Department periodically reviews its methodology for forecasting tax revenues, most recently in 2019 with the publication of the Tax Forecasting Methodological Review. This report provides a comprehensive overview of the Department’s approach to tax forecasting and can be found at the below link.
www.gov.ie/en/publication/76468a-tax-forecasting-methodological-review-2019/
304. Deputy Louise O'Reilly asked the Minister for Finance what the rules governing the salary multiples for mortgages were in 2007; if he can provide details of the rules in place at that time; and if he will make a statement on the matter. [14721/24]
Amharc ar fhreagraIn February 2015 the Central Bank introduced macro-prudential residential mortgage lending measures. These measures introduced, for the first time in the regulatory framework, specified loan to income and loan to value limits on residential mortgage lending.
Subject to a certain level of discretion available to lenders, the current specified loan to income limit is four times gross income for first-time buyers and 3.5 times gross income for second and subsequent buyers.
While mortgage lenders were subject to the relevant provisions of the Consumer Credit Act and the then Central Bank’s Consumer Protection Code in 2007, these did not prescribe any particular salary or other income multiples in relation to mortgage lending.
Any such criteria which applied at that time was, therefore, solely based on that set by the commercial or lending policy decisions of individual lenders.
Subject to the macroprudential lending measures and the other regulatory requirements which currently apply to mortgage lending, it remains a commercial matter for individual lenders to set their own lending criteria and to make their own individual lending decisions.
305. Deputy Paul Donnelly asked the Minister for Finance the number of final demands issued by the Revenue Commissioners and the Sheriff referrals over the value of €10,000 for 2023 and to date in 2024, in tabular form. [14798/24]
Amharc ar fhreagraI am advised that Revenue only refers outstanding tax liabilities to its enforcement agents, including Sheriffs, as a last resort. Before any such action is taken, Revenue makes every effort to engage with the taxpayer to resolve the situation. The important message for taxpayers who receive final demands is to engage with Revenue at the earliest opportunity so that a mutually acceptable solution can be found.
The table below outlines the number of final demands issued in 2023 and from 1 January to 31 March in 2024, along with the total number of warrants issued to the Sheriffs in the same period. The table also outlines the number of Sheriff referrals for values over €10,000, however a breakdown of final demands issued over €10,000 is not available.
|
Year |
Final Demands Issued |
Total No. of Sheriff Referrals |
No. of Sheriff Referrals over €10,000 |
|
2023 |
476,038 |
40,186 |
7,868 |
|
2024 (up to 31 March) |
169,370 |
8,501 |
1,888 |
306. Deputy Claire Kerrane asked the Minister for Finance how many applications have been made to the Succession Farm Partnership Tax Credit; how many have been approved; how many have been paid for the allowed years provided, in tabular form, by years one, two, three, four and five; how much has been paid out under the scheme overall from 2020 to date, broken down by year; if this information can be provided in tabular form; and if he will make a statement on the matter. [14801/24]
Amharc ar fhreagra667D of the Taxes Consolidation Act 1997 provides for a tax credit for Succession Farm Partnerships. The measure came into effect in 2017.
To avail of the tax credit, the farm partnership must be entered onto the register of Succession Farm Partnerships, maintained by the Minister for Agriculture, Food and the Marine. Each partner in a registered Succession Farm Partnership is entitled to an annual tax credit for up to five years of the lesser amount of:
€5,000 per year of assessment divided between the partners in accordance with their profit-sharing ratio; and
the assessable profits (after deducting any capital allowances) of that partner’s “several trade”, meaning the assessable profits arising to the partner from the succession farm partnership.
The table below provides a breakdown of the number of taxpayer units claiming this credit, showing the number of years for which taxpayer units had benefited from the credit (up to end 2021).
|
Number of Years |
Number of Claimants (Taxpayer Units*) |
|
1 Year |
169 |
|
2 Years |
136 |
|
3 Years |
127 |
|
4 Years |
115 |
|
5 Years |
82 |
* A “taxpayer unit” is either an individual with any personal status who is singly assessed or a couple in a marriage or civil partnership who have elected for joint assessment.
The estimated annual cost and number of taxpayer units claiming the Succession Farm Partnership tax credit, broken down by year for 2017 to 2021, the latest year for which complete data are currently available for analysis, is included in the ‘Cost of Tax Expenditures’ publication. For the ease of the Deputy the following table sets out data from the Cost of Tax Expenditures publication.
|
Year |
Numbers |
€m |
|
2021 |
260 |
1 |
|
2020 |
410 |
0.9 |
|
2019 |
350 |
0.8 |
|
2018 |
290 |
0.6 |
|
2017 |
175 |
0.4 |
307. Deputy Pádraig O'Sullivan asked the Minister for Finance if provisions can be made for primary medical certificate appeals to be held in Cork, considering that at present people have to travel to Dublin; and if he will make a statement on the matter. [14833/24]
Amharc ar fhreagraThe Disabled Drivers & Disabled Passengers Scheme provides relief from VRT and VAT on an adapted car, as well as an exemption from motor tax and an annual fuel grant.
The Scheme is open to severely and permanently disabled persons who also meet the medical criteria, as a driver or as a passenger and also to certain organisations. In order to qualify for relief, the applicant must hold a Primary Medical Certificate issued by the relevant Senior Area Medical Officer (SAMO) or a Board Medical Certificate issued by the Disabled Driver Medical Board of Appeal. Certain other qualifying criteria apply in relation to the vehicle, in particular that it must be specially constructed or adapted for use by the applicant.
To qualify for a Primary Medical Certificate (PMC) an applicant must be permanently and severely disabled as defined by satisfying at least one of the six medical criteria as set out in legislation, in order to obtain a Primary Medical Certificate.
In the event that a PMC is not granted by the relevant Senior Area Medical Officer an appeal may be made to the independent Disabled Drivers Medical Board of Appeal (DDMBA).
At an appeal hearing the Board reviews the decision by a HSE Primary/Senior Area Medical Officer and determines if an appellant does, or does not meet, one of the six medical criteria. Only if an appellant meets one of the six eligibility criteria will the Board issue a Board Medical Certificate.
It is a matter for the Board to determine its working methods, including the location of appeal hearings. I have no role in relation to the granting or refusal of PMCs and the HSE and the Medical Board of Appeal must be independent in their clinical determinations.
308. Deputy Colm Burke asked the Minister for Finance if he will expand the dental tax relief med 2 scheme so increase the tax band from 20% to 40% as per 2009 levels and to specifically include dentures in the scheme; and if he will make a statement on the matter. [14872/24]
Amharc ar fhreagraAs the Deputy will be aware, with effect from 1 January 2009, income tax relief in respect of qualifying health expenses, with the exception of relief in respect of nursing home expenditure, has been granted at the standard rate of tax. Prior to that date, tax relief was available at the taxpayer's marginal rate of income tax. The decision to standardise health expenses relief was to widen the tax base and bring the rate at which relief was granted in line with the majority of tax expenditures. In addition, the standard rating of the relief has made the tax system fairer, in that all beneficiaries may receive tax relief at the same rate, currently 20 per cent.
The rationale behind income tax relief for health expenses is broadly intended to provide assistance for significant or exceptional health expenses. Generally expenses of a routine nature are ineligible for the relief. Routine dental treatment which includes the provision and repairing of artificial teeth or dentures is excluded from the relief. The exclusion of expenses incurred in respect of routine dental treatment has been in place since the relief’s inception in 1967 and I am satisfied that the legislation as drafted and implemented provides sufficient flexibility for expenses that should qualify. There are no plans to change these arrangements at this time.
In my view, the availability of tax relief at the standard rate of income tax for health expenses, including qualifying dental expenses is sufficiently calibrated and is the most appropriate use of fiscal resources. As such, I have no plans to enhance the relief.
Further guidance on claiming tax relief for qualifying health expenses can be found in section 13 of Tax and Duty Manual Part 15-01-12, which can be accessed using the following link:
www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-12.pdf.
309. Deputy Michael Creed asked the Minister for Finance if he can clarify the situation regarding liability for stamp duty by approved affordable housing purchasers and, if liable, whether the liability is on the discounted affordable house price or the full market value; and if he will make a statement on the matter. [14948/24]
Amharc ar fhreagraI am advised by Revenue that approved affordable housing purchasers are liable for stamp duty on the acquisition of their approved affordable housing. Stamp duty is charged at the standard rates applying on the acquisition of residential property, which are 1% on values up to €1 million and 2% on values exceeding €1 million. If, however, the housing is purchased directly from a local authority, the stamp duty liability will be capped at €100 in accordance with section 106B of the Stamp Duties Consolidation Act 1999 (“SDCA”).
In relation to the Deputy’s question as to whether the liability is on the discounted affordable house price or on the full market value, I am advised by Revenue that, as a general rule, stamp duty is calculated by reference to the consideration paid for a property. However, section 30 SDCA provides that if the consideration paid is less than the market value of the property and this confers a “substantial benefit” on the purchaser, stamp duty is instead calculated by reference to the market value.
Stamp duty is a self-assessed tax and is payable by an approved affordable housing purchaser in accordance with these rules. The definitive position in relation to a specific case would be determined by the wording of the contract between the seller and the purchaser. If any individual requires a more definitive view of the stamp duty treatment of a particular transaction, he or she can contact Revenue’s National Stamp Duty Office (NSDO). Contact details for the NSDO are available on the Revenue website at www.revenue.ie/en/contact-us/customer-service-contact/stamp-duty.aspx.
311. Deputy Matt Shanahan asked the Minister for Finance if he will engage with the banking sector (details supplied) and request it to provide a status report regarding the offer to provide a 'gambling block' to customers; and if he will make a statement on the matter. [15047/24]
Amharc ar fhreagra312. Deputy Matt Shanahan asked the Minister for Finance if he will publish the timeframe provided by the financial institutions required to deliver gambling block security to their online platforms (details supplied); and if he will make a statement on the matter. [15048/24]
Amharc ar fhreagraI propose to take Questions Nos. 311 and 312 together.
The regulation of gambling is the responsibility of my colleague the Minister for Justice, who is bringing the Gambling Regulation Bill 2022 through the Oireachtas. The Bill sets out the framework and legislative basis for the establishment of a new, independent statutory body – Údarás Rialála Cearrbhachais na hÉireann, the Gambling Regulatory Authority of Ireland – and provides for a robust regulatory and licensing regime to regulate gambling in-person and online, and for the regulation of gambling advertising, websites and apps.
The Bill completed Committee Stage in Dáil Eireann on 11 July 2023. It is hoped the Bill will be enacted in the coming months. The Bill includes a number of protections and safeguards including prohibiting licensees from accepting payment from a credit card or an account funded by credit for a gambling activity or extending a credit facility to a participant of a gambling activity, and the establishment of the National Gambling Exclusion Register to allow any person to register with the Authority to exclude themselves from gambling online with one or more licensed operators, or from specific gambling activities, for a specific or indefinite period of time. The Bill will also prohibit licensees from having cash withdrawal facilities, such as ATMs, on their premises.
I am aware of press reports from 2019 that a number of the retail banks operating in Ireland were considering the introduction of gambling blocks. This is a commercial decision for the banks in question and introduction of such a feature is a matter for them to consider. However, I understand that at least one of the entities operating in the Irish market offers the service of a gambling block for payments to gambling entities. This service is activated only at the customer’s request and, while the user can choose to deactivate the block, this is subject to a delay.
313. Deputy Matt Carthy asked the Minister for Finance the amount of Irish taxpayers' money currently invested in companies which derive profit from their activities in illegal Israeli settlements; and if he will make a statement on the matter. [15312/24]
Amharc ar fhreagraI am assuming that the Deputy is referring specifically to companies that derive profit from activities in illegal Israeli settlements, as defined by the database maintained by the United Nations Human Rights Council.
On the 20th of March 2024, the Director of the Ireland Strategic Investment Fund (ISIF) attended the Committee on Finance, Public Expenditure and Reform, and Taoiseach meeting on Pre-Committee Stage Scrutiny of the Illegal Israeli Settlements Divestment Bill 2023. At that Committee meeting, the ISIF Director outlined that as at 31 December 2023 the ISIF’s direct investments in companies on the UN database totalled approximately €4.2 million in 11 companies. He also outlined that the ISIF’s indirect investments include 8 companies totalling approximately €9.4 million.
ISIF has since taken an investment decision to divest from six of these companies with a total value of approximately €2.95m. The six companies are: Bank Hapoalim BM; Bank Leumi-le Israel BM; Israel Discount Bank Ltd.; Mizrahi Tefahot Bank Ltd.; First International Bank Ltd.; and Rami Levi Chain Stores Ltd.
315. Deputy John Paul Phelan asked the Minister for Finance if his Department will simplify the VAT code on car sharing, noting the current dual-rate system is unnecessarily complex and discourages car rental; and if he will make a statement on the matter. [15320/24]
Amharc ar fhreagraAs the Deputy will be aware, the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In general, the VAT Directive provides that all goods and services are liable to VAT at the standard rate unless they are exempt from VAT or fall within Annex III of the Directive, in which case lower VAT rates may apply subject to certain rules. Currently Ireland has a standard VAT rate of 23% and two reduced rates of 13.5% and 9%.
The supply of car hire is not listed in Annex III and therefore would in general be subject to the standard rate. However, the Directive allows for historic VAT treatment to be maintained under certain conditions and Ireland has retained the application of the reduced rate of VAT, currently 13.5%, to the supply of short term car hire.
This is known as a ‘parked rate’ and the continuation of this reduced rate application is conditional on the rate being no less than 12% and the requirements for the derogation are maintained. Therefore, there is no discretion under the Directive for Ireland to widen the scope of the derogation and apply a reduced VAT rate to the supply of long term car hire (for a period greater than 5 weeks in total in a twelve-month period).
316. Deputy John Paul Phelan asked the Minister for Finance if he will consider reducing the rate of VAT to hire e-bikes to encourage people making the transition to sustainable alternatives, noting the relevant EU Directive permits a reduced rate in the range of 9% to 13.5%; and if he will make a statement on the matter. [15321/24]
Amharc ar fhreagraI am advised by Revenue that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In general, the VAT Directive provides that all goods and services are liable to VAT at the standard rate unless they are exempt from VAT or fall within Annex III of the Directive, in which case lower VAT rates may apply subject to certain rules. Currently Ireland has a standard VAT rate of 23% and two reduced rates of 13.5% and 9%.
The service of hiring bicycles including e-bikes is included in Annex III and Ireland applies a reduced rate, currently 13.5%, to the supply of hiring bicycles, including e-bikes for a short period of time (no more than 5 weeks); hire for longer periods is subject to VAT at the standard rate of 23%.
317. Deputy Pearse Doherty asked the Minister for Finance the estimated weekly and annual cost if the employment wage subsidy scheme were to be reintroduced with various subsidy rates (details supplied). [15372/24]
Amharc ar fhreagra318. Deputy Pearse Doherty asked the Minister for Finance the estimated weekly and annual cost if the employment wage subsidy scheme were to be reintroduced with various subsidy rates (details supplied). [15373/24]
Amharc ar fhreagra319. Deputy Pearse Doherty asked the Minister for Finance the estimated weekly and annual cost if the employment wage subsidy scheme were to be reintroduced with various subsidy rates (details supplied). [15374/24]
Amharc ar fhreagraI propose to take Questions Nos. 317 to 319, inclusive, together.
Section 28B of the Emergency Measures in the Public Interest (Covid-19) Act 2020 provided for the Employment Wage Subsidy Scheme (EWSS) which was an economy-wide enterprise support for eligible businesses in respect of eligible employees.
The EWSS was a unique scheme which was developed and operated in exceptional circumstances during the Covid-19 pandemic. Eligibility to EWSS was based on the employer demonstrating that its business was likely to experience a 30 per cent reduction in turnover or orders during a specific reference period and that the disruption to business was caused by the Covid-19 pandemic. The EWSS ended for most employers on 30 April 2022 and closed fully on 31 May 2022.
I am advised by Revenue that it is not possible to provide the cost estimates requested as, based on details supplied, it is not possible to determine the cohort of employers who might be eligible for any reintroduced form of the scheme.
320. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which Ireland continues to perform well within the European Union from an economic perspective; and if he will make a statement on the matter. [15408/24]
Amharc ar fhreagra322. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which Ireland’s economy continues to compete with other European economies inside and outside of the Eurozone; and if he will make a statement on the matter. [15410/24]
Amharc ar fhreagraI propose to take Questions Nos. 320 and 322 together.
Economic growth across Ireland, the EU and the Eurozone was somewhat subdued in 2023. Irish modified domestic demand – my preferred measure of the domestic economy – grew modestly by ½ a per cent in 2023. GDP in both the EU and Eurozone similarly grew by ½ a per cent last year, with the German economy notably recording a contraction of -0.3 per cent.
The outlook for both the domestic and European economies remains uncertain, and the Government is conscious of the challenges on the horizon. In its most recent forecasts published in February the European Commission revised down its GDP projections for Ireland and the EU for this year, mainly as a result of the weaker than expected growth seen at the end of 2023, and as monetary policy continues to impact on growth. My Department will update its macroeconomic forecasts as part of the Stability Programme Update later this month.
Downside risks to the outlook remain, and Ireland is facing many of the same headwinds as our European peers. An escalation of geo-political tensions and uncertainty surrounding the full impact of monetary policy tightening represent risks to the outlook, while there are potential upside and downside risks to inflation.
However, the Irish economy has displayed remarkable resilience in the face of the large and unprecedented shocks faced in recent years. The economy is facing into this year on solid footing with a record level of employment, and remains competitive on the international stage. Ireland’s reputation as a stable and pro-enterprise jurisdiction is reflected in the continued investment in the economy. The stock of foreign direct investment in Ireland stood at €1.3 trillion in the fourth quarter of 2023.
I am conscious of the need for Ireland to maintain its competitive position given the positive contribution of FDI to the economy. Indeed, the numbers employed in the multinational sector in Ireland last year are estimated at over 300,000 according to the IDA. Continued investment in skills and infrastructure will help Ireland to remain attractive in this regard, and this Government will continue to monitor risks to our competitiveness in the year ahead.
