Written Answers Nos. 164-183
164. Deputy Willie O'Dea asked the Minister for Transport his plans to address the shortfall in what is paid to retirees under the Irish airlines pension scheme; if he is aware of the hardship endured by many of these pensioners due to the reductions made to their defined benefit pension; and if he will make a statement on the matter. [25612/24]
View answerI wish to thank the Deputy for his question. I assume that the Deputy is referring to the Irish Airlines (General Employees) Superannuation Scheme (IASS).
The Deputy will appreciate that pension arrangements applying to a particular pension scheme are a matter for the pension scheme trustees and the scheme members.
165. Deputy Sean Sherlock asked the Minister for Finance if an issue in relation to the exclusion of a person (details supplied) from the help-to-buy scheme will be examined and addressed. [24916/24]
View answerThe Help to Buy (“HTB”) incentive, is a scheme administered by Revenue to assist first-time purchasers with the deposit they need to buy or build a new house or apartment to live in as their home. The incentive gives a refund of Income Tax and Deposit Interest Retention Tax (“DIRT”) paid in Ireland over the previous four years, subject to limits outlined in the legislation.
Further information in relation the conditions and operation of the Help to Buy Scheme are contained in Revenue’s Tax and Duty Manual Part 15-01-46, which can be accessed on Revenue’s website, at www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-46.pdf
I am advised by Revenue that the person concerned has not submitted a HTB application to date. Revenue will contact the individual in order to progress the matter.
166. Deputy Patricia Ryan asked the Minister for Finance if he will clarify, with regard to claiming back medical expenses, when and why the MED 1 form used for this purpose was discontinued; the reason medical expenses can only be claimed online, which seriously disadvantages people who may not be computer literate, particularly older people and those with literacy issues; and if he will consider reinstating the form or a similar alternative. [25320/24]
View answerI am advised by Revenue that section 469 of the Taxes Consolidation Act 1997 (TCA 1997) provides for tax relief where an individual proves that he or she has incurred costs in respect of qualifying health expenses.
Only “health expenses” incurred in the provision of “health care”, which has been carried out or advised by (in certain circumstances) a practitioner, will qualify for tax relief. Broadly, “health care” is defined as the prevention, diagnosis, alleviation or treatment of an ailment, injury, infirmity, defect or disability.
Section 469(6) TCA 1997 provides that a claim for health expenses must be made in such form as prescribed by Revenue.
The Med 1 form was discontinued and no longer accepted from 31 December 2018.
PAYE taxpayers can claim relief on their health expenses in two ways:
• in-year, using the real-time credit online facility; or
• after the end of the year, by completing an Income Tax Return (Form 12).
In relation to the real-time online claim, there is an obligation on the PAYE taxpayer who is making the claim to upload receipts. For those who file a return, there is no requirement to submit receipts.
For customers who are unable to use Revenue’s online service, Revenue continues to provide paper-based Income Tax Returns. The Form 12S is a simplified paper-based Income Tax Return available for PAYE taxpayers. It is intended for customers with routine tax affairs who are unable to use the online services provided by Revenue and allows them to return income from all sources. It also allows them to claim other reliefs, including health expenses that they are entitled to.
The Form 12S was designed around the needs of older and vulnerable customers; this included increasing the font size significantly and colour coding sections to make the form easier to read. The Form 12S incorporates the detail previously requested on the Form Med 1 with the intention that this makes it much easier and straightforward for this customer group to comply with their obligations and claim their entitlements. Revenue incorporated the National Adult Literacy Agency (NALA) guidelines for people with literacy difficulties when designing the Form 12S, together with input on best practices from representatives of various organisations including Age Action, the Irish Deaf Association and Irish Senior Citizens.
Income Tax registered customers, as chargeable persons, must file an annual Income Tax Return to declare income and claim reliefs and in this regard can claim tax relief for health expenses on their Form 11 annual tax return. As well as an electronic filing option, a paper version of the Form 11 may also be filed.
Revenue offers a wide range of contact channels to support its customers to voluntarily comply with their tax and duty obligations and actively encourages customers to use their online services where this is feasible. Revenue fully recognises however that some taxpayers will not be e-enabled, nor wish to conduct their business online. Revenue is committed to providing a quality customer service on alternative channels to help those taxpayers comply with their tax obligations and claim their entitlements.
In noting the challenges that some taxpayers aged 65 and over may face in engaging with our online services, Revenue host an “Age Week” outreach event in our public offices annually. The most recent event was held in May 2024 and the intention is run similar sessions in 2025. The aim of the event is to enhance the support available to assist these individuals in meeting their tax obligations, promote the ease of use of our online services, and to reduce the compliance burden for these taxpayers.
For taxpayers who, for a variety of reasons, may not have access to Revenue online services, an appointment service is provided, where taxpayers can book an in person appointment in Cork, Dublin, Galway or Limerick or a virtual appointment which is conducted via video call. Virtual appointments can be conducted from the taxpayer’s home, removing the need for them to attend a Revenue office. Appointments can be made by calling Revenue’s dedicated appointments phone service at 01 738 3660.
The Form 12S 2023 with instructions on how to FREEPOST same is available from the Revenue website here: www.revenue.ie/en/self-assessment-and-self-employment/documents/form-12s.pdf
For details on the information sessions noted above please see the Revenue website here: www.revenue.ie/en/news/articles/revenue-over65s-event.aspx
Further guidance on claiming tax relief for qualifying health expenses can be found in Revenue’s 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
167. Deputy Paul Murphy asked the Minister for Finance further to Parliamentary Question No. 290 of 23 May 2024, the reason there is a delay in Revenue resolving an issue in relation to taxation of further education and training staff in comparison to staff in compulsory education; if he will request an urgent outcome to these discussions referenced; and if he will make a statement on the matter. [24582/24]
View answerThe legislation governing the deductibility of expenses incurred in employment is contained in section 114 Taxes Consolidation Act 1997 (TCA). To qualify for tax relief under this section, any expenses of travelling (and subsistence relating to that travel) must be necessarily incurred in the performance of the duties of the relevant employment. For all other expenses, they must be wholly, exclusively and necessarily incurred in the performance of the duties of the relevant employment.
The provisions of section 114 TCA are strictly applied, with a body of case law supporting the interpretation and application of the section. Under the section, the expense must be incurred in the actual performance of the duties of the office or employment or as a direct consequence of those duties and should not arise because of the personal circumstances or preference of the individual.
Expenditure incurred by an employee or office holder which merely puts him or her in a position to exercise his or her employment or office would not be regarded as incurred in the performance of the duties of his or her office or employment. Accordingly, travel expenses between a person’s home and his or her normal place of work are not generally tax-deductible expenses.
The general position as set out in Revenue guidance, is that the normal place of work is where an employee works on a day-to-day basis. An employee's normal place of work is a question of fact that can only be considered based on the specific facts of each case.
I am advised by the Revenue Commissioners that, on 1 March 2024, a meeting in respect of this issue was held between their representatives and those from the Education and Training Boards Ireland and Department of Further & Higher Education, Research, Innovation and Science.
Revenue have further advised that they are currently awaiting information which was requested at this meeting in order to better understand the specific nature and terms of the work arrangements in place with External Authenticators. I am informed that Revenue will consider the matter and advise further regarding the tax treatment of this cohort upon examination of the requested information, once received.
168. Deputy Catherine Murphy asked the Minister for Finance the expected net effect of carryover measures carried over for 2025 as a result of Budget 2024 measures; the way in which it is accounted for in the budgetary stance projections; and if he will make a statement on the matter. [24614/24]
View answerThe Tax Policy Changes document, which was published as part of Budget 2024, set out both the first and full year cost of tax policy measures. Carryover is calculated as the difference between the impact of a measure on a full year and on 2024.
The impact of carryover will be reviewed as part of the normal budgetary process, as there are several moving parts to be considered, such as the take-up of measures and specific tax-relevant factors, which could impact on the expected yield or cost of a given measure.
The budgetary stance for Budget 2025 will be set out in the Summer Economic Statement, which will be published in the coming period.
The net carryover impact into next year of expenditure measures will be considered as part of the estimates process.
169. Deputy Catherine Murphy asked the Minister for Finance the estimated total cost of introducing a financial transactions tax in 2025; and if he will make a statement on the matter. [24615/24]
View answerI am taking this question to refer to the model of Financial Transactions Tax proposed by the European Commission, initially in 2011 and then revised under the EU’s enhanced cooperation procedure in February 2013. The proposed rate on exchanges of shares was 0.1% and the proposed rate for derivative transactions was 0.01%.
Ireland already has a tax on financial transactions, a Stamp Duty on transactions in shares, stocks and marketable securities that currently stands at 1%. I am advised by Revenue that the yield from this tax has been in the range of c. €370 to €780 million in the last five years. This data along with other information on stamp duty receipts is available on the Revenue website. Instruments used in the financial services industry such as derivatives are generally exempt from stamp duty, unless they relate to immovable property in Ireland or shares in Irish registered companies.
Based on the data currently held by the Revenue Commissioners or my Department it is not possible to accurately estimate the yield of a Financial Transactions Tax modelled on that proposed by the EU, i.e. a tax of 0.1% on share and bond transactions and 0.01% on derivative products. An important further consideration would also need to be given as to whether the existing Stamp Duty regime could co-exist with any Financial Transactions Tax proposal which might be implemented in such a scenario.
As regards the potential administrative cost of introducing such a tax, I am advised by Revenue that the cost of setting up a new tax will depend on a number of factors, including the scope and design of the new tax. Until such time as these factors are known, it is not possible for Revenue to estimate the cost of setting up the new tax.
For additional information, in relation to a possible Financial Transactions Tax as an own resource for the EU budget, leaders agreed as part of the July 2020 Multi-annual Financial Framework (MFF) agreement that a Financial Transactions Tax may form part of a package of new own resources to finance the EU budget. However, at this point, no such proposal has been put forward by the Commission. If and when this happens, I will examine any proposal based on its merits and ensure it meets the criteria of fairness and equity.
170. Deputy Catherine Murphy asked the Minister for Finance the expected revenue yield from 15% minimum effective corporate tax rate for large firms if successfully implemented; and if he will make a statement on the matter. [24616/24]
View answerIn October 2021, Ireland, along with more than 135 other countries, signed up to the two-pillar solution to address the tax challenges arising from digitalisation.
Discussions remain on-going at the OECD on a number of key elements of Pillar One which, once agreed, would involve a portion of taxable profits from Irish-based multinationals being reassigned to other jurisdictions and, accordingly, a loss of tax revenue.
For Pillar Two, the EU Minimum Tax Directive was transposed into Irish law in Finance (No.2) Act 2023 giving effect to the new rules from the end of 2023. This means that a minimum effective corporate tax rate of 15 per cent will apply to the profits of ‘large’ enterprises – those whose annual turnover exceeds €750 million – from this year which is expected to increase tax revenue, though it will be 2026 before there is any impact on receipts. Overall, the net effect of the two-pillar solution on Ireland will be a significant loss of corporate tax revenue.
A first estimate of the net cost of implementation of the overall OECD agreement, i.e. taking into account the loss of tax revenue from Pillar One and expected increase from Pillar Two, was published by my Department in 2020. Annual corporation tax receipts were assumed to decline by €2 billion or approximately 20 per cent of corporation tax revenue at that time. Since then, corporation tax receipts have increased substantially and accordingly, the cost of implementation of the agreement is also likely to have increased significantly.
Estimating the potential impact of the OECD agreement represents a considerable and on-going challenge, not least due to the fact that the negotiations are still ongoing. Given the uncertainty at this stage, the original assumption was retained in the Stability Programme Update with a net loss of €2 billion from both pillars of the agreement incorporated from 2026 onwards. As negotiations progress and more detail emerges, my Department will publish revised estimates of the impact on the public finances.
171. Deputy Róisín Shortall asked the Minister for Finance further to Parliamentary Question No. 16 of 17 April 2024, the reason the VAT exemption for counsellors and psychotherapists will not apply until the Counsellors and Psychotherapists Registration Board is opened; the reasons this cannot be implemented ahead of registration; and if he will make a statement on the matter. [24650/24]
View answerAs previously outlined , the VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. Under our legislation the provision of medical care services by recognised medical professionals are exempt from VAT. However in order for them to be exempt, there has to be a formal registration process thus explaining why counsellors and psychotherapists cannot qualify for the exemption until the Counsellors and Psychotherapists Registration Board is opened.
Questions on the establishment of the Counsellors and Psychotherapists Registration Board and their progress in opening their register are a matter for my colleague, the Minister for Health.
I understand that officials in my Department have engaged with their counterparts in the Department of Health in relation to this matter and have advised them that the VAT exemption in question will apply from the date of registration by the Counsellors and Psychotherapists Registration Board.
In summary, a VAT exemption for psychotherapists and counsellors requires a legal basis and without the registration board there is no legal basis on which to rely.
172. Deputy Jennifer Whitmore asked the Minister for Finance if he is aware that there is a lack of insurance cover available to cover children's activity and sporting summer camps (details supplied); if he plans to engage with this sector on this issue; and if he will make a statement on the matter. [24661/24]
View answerAt the outset, I wish to reassure the Deputy that I recognise the concerns felt by some sport and recreation clubs regarding insurance cover. Officials from my Department have engaged with representative groups in the sector and have determined that there does not appear to be a widespread issue with market capacity. Notably, last summer, the rebalancing of the Duty of Care—one of the primary "asks" from both the insurance industry and reform advocates—was accomplished. Consequently, amendments to the Occupiers’ Liability Act 1995 should yield significant benefits for businesses, sporting groups, and community and voluntary organisations. Over time, cost savings from fewer claims should help lower premiums for these organisations, especially those involved in high-risk or high-footfall activities where 'slips, trips, and falls' claims are common. This will particularly benefit the tourism, hospitality and recreation/activity sectors.
One of the key changes in the law now allows for a broader range of scenarios in which it can be demonstrated that a visitor or customer has voluntarily assumed a risk resulting in harm. Besides being a legislative change, I am hopeful this development will initiate a cultural shift in the claims environment in Ireland, aligning us more closely with our European Union counterparts. It is crucial that we, as legislators, collaborate with other stakeholders to raise awareness of the new Duty of Care landscape, thereby empowering organisations such as sport and recreation clubs to secure insurance cover from their insurers or brokers.
Insurance reform is a top priority for this Government and is being pursued through the Action Plan for Insurance Reform and the latest Implementation Plan shows that the vast majority of actions are either implemented or underway. I would like to assure the Deputy that the Government intends for the implementation of the Action Plan to positively affect the affordability and availability of insurance across all sectors of the economy, including sporting and recreational activities.
173. Deputy Carol Nolan asked the Minister for Finance to provide details of any anti-racism or unconscious bias training and presentations made available to staff in his Department during the period 2021 to date; the content of such training and presentations; the provider of any such training and presentations and the costs incurred for each event; if attendance at such training and presentations is mandatory or voluntary for staff; and if he will make a statement on the matter. [24669/24]
View answerI wish to inform the Deputy that my Department has made available training in unconscious bias open to all staff.
This comprised a half day workshop on Unconscious Bias which took place in both 2021 and 2022. This training programme aims to assist staff in recognising their biases and assist in the promotion of equality. The training provider was The Hobbs Consultancy and the cost of the service was €24,188.
While staff attendance was not mandatory a total of 143 staff attended the workshops over 12 sessions.
My Department is currently developing an Equality, Diversity and Inclusion Strategy. Actions in the Strategy will include anti-racism and unconscious bias training programmes.
In line with the National Action Plan against Racism 2023-2027, my Department will review further training in this regard in due course. In addition, my Department fully adheres to its obligations under relevant legislation including the Employment Equality Acts 1998-2015 and the Irish Human Rights and Equality Commission Act 2014.
174. Deputy Carol Nolan asked the Minister for Finance if his Department will be prioritising the progression of any specific pieces of legislation prior to the Dáil summer recess; and if he will make a statement on the matter. [24701/24]
View answerThe Government legislative priorities for the Oireachtas term running up to the Summer Recess have been published at: https://www.gov.ie/en/publication/edb3c-government-legislation-programme-2024/.
Three Bills which fall under the responsibility of the Department of Finance have been listed in the Priority for Publication list. All legislation in the lists will be progressed, but my officials will continue to prioritise these three Bills in particular. Those three bills are the Access to Cash Bill, the Motor Insurance Insolvency Compensation Bill and the Credit Review Service Bill.
I will also continue to prioritise and progress the Finance Act, which will need to be enacted before the end of the calendar year, and the Conclusion of IBRC Special Liquidation and dissolution of NAMA Bill, which will bring those bodies to a conclusion.
175. Deputy Pearse Doherty asked the Minister for Finance if the tax revenue projections from 2025 in the Stability Programme Update incorporate indicative tax packages in each of the years from 2025; and if so, to outline their annual value and cumulative value from year to year. [24768/24]
View answerIn line with the last number of years, the Stability Programme Update tax revenue projections incorporate an indicative tax package each year from 2025, on the order of €1.1 billion as outlined in Government's medium strategy in the Summer Economic Statement 2023. On a cumulative basis, this equates to c. €3.3 billion from 2025 to 2027.
It should be emphasised that this is a technical assumption: Government will set out the parameters for Budget 2025, including the size of any tax package, in the upcoming Summer Economic Statement.
176. Deputy Holly Cairns asked the Minister for Finance if he will consider expanding the criteria for the primary health care certificate to include persons with a single upper body amputation; if there are plans to update the criteria more broadly to reflect modern living and working conditions; and if he will make a statement on the matter. [24809/24]
View answerThe Deputy should note that my Department and I share concerns that the Disabled Drivers and Disabled Passengers Scheme (DDS) is no longer fit-for-purpose and believe it should be replaced with a needs-based, grant-led approach for necessary vehicle adaptations that could serve to improve the functional mobility of the individual.
However, this is very much a matter for Government as whilst my Department has oversight of the DDS, I do not have responsibility for disability policy.
In that context, any further changes to the existing DDS would run counter to the National Disability & Inclusion Strategy (NDIS) proposals to entirely replace the scheme with a modern, fit-for-purpose vehicular adaptation scheme.
Under the aegis of the Department of Taoiseach officials from relevant Departments and agencies are meeting to discuss the issues arising from the NDIS report and to map a way forward. One of these issues which is being examined is how the DDS can be replaced. Four meetings of the group have been held, in July, November, December 2023; and March 2024.
The Department of Finance submitted a note to the group with my approval in mid-January 2024. This note outlines a proposal for a replacement scheme for the DDS which would be a needs-based, grant-led approach for necessary vehicle adaptations that could serve to improve the functional mobility of the individual. This proposal is in line with what the NDIS Transport Working Group Report endorsed. Further consideration is being given to the principles and parameters for a new scheme in line with best international practice.
177. Deputy Paul Murphy asked the Minister for Finance if the Government will amend the rules to primary medical certificates to allow blind people to qualify. [24822/24]
View answerThe Deputy should note that my Department and I share concerns that the Disabled Drivers and Disabled Passengers Scheme (DDS) is no longer fit-for-purpose and believe it should be replaced with a needs-based, grant-led approach for necessary vehicle adaptations that could serve to improve the functional mobility of the individual.
However, this is very much a matter for Government as whilst my Department has oversight of the DDS, I do not have responsibility for disability policy.
In that context, any further changes to the existing DDS would run counter to the National Disability & Inclusion Strategy (NDIS) proposals to entirely replace the scheme with a modern, fit-for-purpose vehicular adaptation scheme.
Under the aegis of the Department of Taoiseach officials from relevant Departments and agencies are meeting to discuss the issues arising from the NDIS report and to map a way forward. One of these issues which is being examined is how the DDS can be replaced. Four meetings of the group have been held, in July, November, December 2023; and March 2024.
The Department of Finance submitted a note to the group with my approval in mid-January 2024. This note outlines a proposal for a replacement scheme for the DDS which would be a needs-based, grant-led approach for necessary vehicle adaptations that could serve to improve the functional mobility of the individual. This proposal is in line with what the NDIS Transport Working Group Report endorsed. Further consideration is being given to the principles and parameters for a new scheme in line with best international practice.
178. Deputy Alan Kelly asked the Minister for Finance if he has spoken formally with his Turkish counterpart in the past six months. [24882/24]
View answerSince my appointment as Minister for Finance in December 2022, I have not yet had any formal engagement with the Turkish Finance Minister, Mehmet Simsek. Ireland shares membership of a number of European organisations alongside Turkey, such as the Organisation for Economic Cooperation and Development (OECD), while diplomatic relations are facilitated between our respective resident Embassies in Ankara and Dublin.
179. Deputy Michael Creed asked the Minister for Finance the current situation regarding a claim for a pension by a person in County Cork (details supplied). [24921/24]
View answerThe Department of Social Protection (DSP) State pension (contributory) is a taxable source of income, similar to certain other DSP payments including Jobseekers’ Benefit and Maternity Benefit. As such, it is liable to Income Tax (IT) although it is not subject to the Universal Social Charge (USC) or Pay Related Social Insurance (PRSI).
Section 126(2B) of the Taxes Consolidation Act (TCA) 1997 provides that, with effect from 1 January 2014, any increase in the State pension in respect of a qualified adult dependant is treated as a taxable income of the beneficiary of the pension, even in circumstances where the payment may be made directly to the qualifying adult dependant.
Where a person in receipt of the State pension from DSP has an additional source of employment or pension income, the mechanism used to tax payments from DSP is by reducing the person’s annual tax credits and rate band by the annual amount of their DSP income. This ensures that the weekly payment from DSP is paid gross to the recipient, while the weekly/monthly salary or pension, paid by their employer, will have any tax due on the DSP income and the employment deducted from it.
For example, an increase of €5 per week in a DSP payment means that tax on an additional €260 is to be collected over the course of the year by reducing a person’s tax credits. €260 extra income at the standard rate of tax of 20% gives rise to a reduction in tax credits of €52 for the year or €4.34 per month, ensuring the recipient is not adversely impacted by any increase in DSP income.
I am advised by Revenue, that a review of the tax credits and reliefs of the person concerned has confirmed that they are in receipt of their full entitlements. However, the individual is in a preliminary tax overpayment position for the tax years 2022 and 2023 and Revenue will make contact to assist in completing the necessary income tax returns, which will allow the refunds to issue.
180. Deputy Steven Matthews asked the Minister for Finance further to Parliamentary Question No. 171 of 28 May 2024, if his attention has been drawn to a case (details supplied) which appears to contradict the assertion that there is no market capacity issue; the actions he will take to address this concern; and if he will make a statement on the matter. [24935/24]
View answerOfficials from my Department have consulted with the insurance sector on the matter raised by the Deputy, including with Insurance Ireland. It has confirmed that, in its view, there is no widespread market capacity issue in the provision of insurance for children’s summer camps, and that some of the largest insurance companies in the State offer cover for a range of activities. It did note that if the insured party plans to run summer camps that fall outside their core activity for which the main policy has been provided, then insurer may follow a range of options, from charging an extra premium, attaching certain stipulations to policies or refusing to provide cover. In these scenarios, it is best for the insured to engage with their insurance provider or broker in order to ascertain how best to address the question. In this context, it is important to note that neither I nor the Central Bank of Ireland can intervene in the provision or pricing of insurance products. This position is reinforced by the EU framework for insurance (the Solvency II Directive). Consequently, Government is not in a position to direct insurance companies regarding the cost of policies or what terms and conditions they apply.
181. Deputy Paul Kehoe asked the Minister for Finance how many audits have been carried out by the Revenue Commissioners on persons (details supplied) in the past four years; and if he will make a statement on the matter. [24958/24]
View answerI am advised by Revenue that in the past four years (i.e., 01/06/2020 – 31/05/2024), 115 compliance interventions have been opened in respect of individuals aged over 80 years.
The Deputy will wish to note that Revenue operates a 3 Level Compliance Intervention Framework, designed to provide a consistent graduated response to risks identified in the taxpayer base. This Framework applies from 1 May 2022. The above figure includes all Level 2 interventions carried out under this Framework (comprising 98 Risk Reviews and 9 Audits) as well as 8 Audits carried out prior to 1 May 2022.
182. Deputy John Lahart asked the Minister for Finance if he will examine the hospitality VAT rate given restaurants and cafés are struggling to survive (details supplied); and if he will make a statement on the matter. [24985/24]
View answerAs the Deputy will be aware, the 9 per cent VAT rate was applied on a temporary basis to the hospitality and tourism sectors until 31 August 2023 when it reverted to the 13.5 per cent rate. The 9 per cent rate was introduced on 1 November 2020 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.
The economic rationale for a VAT rate reduction at that time, as it was in 2011 when it was also reduced to 9 per cent, was to lower consumer prices, encouraging higher demand, more output and an increase in employment.
Despite facing numerous successive headwinds over recent years, the domestic economy has proven to be remarkably resilient. Looking ahead, as inflation eases, the real disposable income of households should recover and support consumer spending. As a result, households are on a stronger financial footing and this will support demand for contact-intensive services including the tourism and hospitality sectors.
In relation to employment, between the end of 2020 when the 9 per cent rate was re-introduced, and the final quarter of 2023, total economy-wide employment expanded from 2.3 million to reach a record high of 2.71 million, an increase of over 17 per cent. The Q4 2023 Labour Force Survey indicated that employment in the accommodation and food service sector stood at 183,000.
It is noteworthy that 14 EU countries have a VAT rate of 12 per cent or higher on food services. Our nearest neighbour Great Britain and Northern Ireland has a VAT rate of 20 per cent on food services.
It is important to remember that VAT reductions, even temporary VAT reductions, have a cost to the Exchequer. The estimated cost of the 9 per cent VAT rate for tourism and hospitality, from 1 November 2020 to 31 August 2023, was €1.2 billion. This represented a very substantial support by the Government to the hospitality and tourism related sectors.
The cost of a further temporary VAT reduction to 9 per cent for a full year is estimated to be €764 million. Even where the measure is restricted to food and catering services, the estimated full year cost is €545 million.
The Government wants to maintain a healthy and profitable environment for these sectors going forward. However, in making any decision in relation to VAT rates or other taxation measures, the Government must balance the costs of the measures in question against their impact and the overall budgetary framework.
In light of these points I have no plans to reduce the VAT rate for the tourism and hospitality sector.
The Deputy will also be aware that, on 5 February, I announced changes to the tax debt warehousing scheme including a reduction in the interest rate on warehoused debt to 0 per cent which, amongst other sectors, will assist businesses in the tourism and hospitality sectors.
The Government has provided significant support to business throughout the period of increasing costs and Budget 2024 contained a number of measures which will support businesses facing increased costs, including the Increased Cost of Business (ICOB) grant, which aims to provide financial support to small and medium sized businesses who operate from a rateable premises, at a cost of €257 million. The grant will be at a rate of half an enterprise’s commercial rates bill, for 2023, for firms paying up to €10,000 in rates. A flat €5,000 grant will be available to firms who pay between €10,000 and €30,000 in rates.
Broader supports for SMEs which were announced in Budget 2024 include the extension of the 9% VAT rate on gas and electricity from end-October 2023 to end-October 2024.
In addition, the Deputy may have noted the wide range of measures brought forward by my colleague, the Minister for Enterprise, Trade and Employment, announced on 15 May. Details of these measures can be found at the following link:
enterprise.gov.ie/en/news-and-events/department-news/2024/may/202405151.html.
183. Deputy John Lahart asked the Minister for Finance if he will consider the example of New Zealand where all vehicles using the road have a requirement to be registered; and if he will make a statement on the matter. [24986/24]
View answerThe Deputy should note that if a vehicle is a mechanically propelled vehicle that is used on public roads, there is a requirement to register that vehicle, under section 131 of the Finance Act 1992.
Registration is required to take place within 30 days of construction or importation into the State under Statutory Instrument 318/1992 - Vehicle Registration and Taxation Regulations 1992.
A mechanically propelled vehicle is defined under section 130 of the Finance Act 1992 as amended, as follows:
“mechanically propelled vehicle” means a vehicle that –
(a) has been designed and constructed for road use,
(b) is, at the time of declaration for registration, in compliance with any measures taken to give effect in the State to any act of the European Communities relating to the approximation of the laws of Member States in respect of type-approval for the type of vehicle concerned,
(c) is intended or adapted for propulsion by a mechanical means, or by an electrical means or by a partly mechanical and a partly electrical means, and
(d) is capable of achieving vehicle propulsion at the time of registration or at the time of examination by a competent person under section 135D(1)(d), to the satisfaction of the Commissioners, including a motor-cycle but not including [a powered personal transporter, a tramcar or other vehicle running on permanent rails or a vehicle (including a cycle with an attachment for propelling it by mechanical power) not exceeding 400 kilogrammes in weight unladen adapted and used for invalids.
Any vehicle that does not fulfil the definition of a mechanically propelled vehicle, or is not used on public roads, is not required to be registered.
