Cian O'Callaghan
Ceist:7. Deputy Cian O'Callaghan asked the Tánaiste and Minister for Finance the action he is taking to tackle dark money in the Irish financial system; and if he will make a statement on the matter. [48197/26]
Ceisteanna Eile - Other Questions
Financial Services
There is a significant issue with the amount of criminal money laundering going through Europe. There is €647 billion in crime proceeds washed through Europe every year. We have €5 trillion in domiciled investment funds hosted in Ireland. The Garda has warned of an explosion in the recruitment of money mules. What is the Government doing to address dark money? I am aware of the action plan but there are significant gaps in it I wish to highlight, including on enforcement. What is Government doing to address that?
I genuinely look forward to any discussion of how we do better and do more on this area, which is really important and of growing concern. It is important to note responsibility for various aspects of legislation and policy on combating money laundering, countering the financing of terrorism and the financing of weapons of mass destruction falls across a number of Departments, including mine as well the Department of Justice, Home Affairs and Migration, among others.
Notwithstanding this whole-of-government approach, my Department has a number of distinct but intersecting roles. It has a central co-ordination function through the national anti–money laundering steering committee, which brings together relevant Departments, State agencies and the private sector self-regulatory bodies in the legal and accountancy professions. It also has responsibility for aspects of the relevant legislation, in particular the transposition of the sixth anti–money laundering directive, in partnership with the Department of justice. My Department also co-ordinates Ireland’s participation in the Financial Action Task Force which develops global standards for combating money laundering, the financing of terrorism and the financing of weapons of mass destruction. The Financial Action Task Force conducts periodic independent peer-based evaluations of countries to assess both their compliance with the task force’s standards and the effectiveness of the measures a country has taken to combat money laundering, terrorism financing and proliferation financing. Ireland’s next mutual evaluation will be in 2027 and 2028. In other words, we will be externally viewed starting next year to assess how we are getting on with this area.
Over the last two years, my Department has managed the preparation of Ireland’s latest national risk assessment, which the Minister, Deputy O'Callaghan, and I jointly launched last week. The assessment is detailed. It includes 20 sectoral risk assessments, 12 of which are in the financial services sector, and in turn provides a basis to help inform our policy, regulatory and operational priorities. This is accompanied by a detailed action plan comprising 30 measures, which are being progressed across Government and other relevant stakeholders. Officials in my Department will lead delivery of 11 of these. These actions include progressing key measures such as strengthening frameworks on terrorism, enhancing sanctions, improving beneficial ownership transparency, etc. We have committed to reporting progress on these actions every six months to Cabinet and publicly.
As the Tánaiste said, there are 30 actions in the action plan but none of them address the chronic under-resourcing of enforcement. This has been flagged for years and we have a situation where billions and billions are being funnelled through Ireland. The Garda has a backlog of tens of thousands of money laundering cases waiting to be examined. The financial intelligence unit and the Garda National Economic Crime Bureau are grossly under-resourced. It is fine to have the action plan and the aspirations but we have tens of thousands of unexamined cases. It is have been flagged that the area is chronically under-resourced but nowhere in the action plan does the Government commit to putting the resources into enforcement, so it does not add up to much. The resourcing of enforcement has to be looked at if the Government is going to take this area seriously. I have no reason to think it is not but if it does not put the resources into enforcement. then I can legitimately ask how serious it is about this.
It is a fair point. We have published an action plan with the 30 actions and the reporting structure every six months as well. We have to ensure that is adequately resourced. There are associated resource implications that arise from changes to Ireland's anti-money laundering and countering the financing of terrorism, AML-CFT, regime due to the sixth anti–money laundering directive and also increased requirements from the Anti-Money Laundering Authority, AMLA. In recent Government discussions we highlighted some of these issues as well. Of course, these will have to form part of the annual Estimates process through engagement with the Department of public expenditure. In this context, law enforcement agencies, the Gambling Regulatory Authority of Ireland and the Companies Registration Office may also be in scope. We have literally just published the plan. There is a commitment to work across Government on it. Any additional resourcing can and will be considered in the context of the budget.
The other key gap is the national risk assessment identified serious issues and significant risks with regard to crypto assets, yet the action plan only has two measures on such assets and misses a whole range of risks.
It misses, for example, any scrutiny of peel chains where criminals break large crypto amounts into small, tiny transfers to hide the trail. It misses any analysis of unhosted crypto wallets that are not tied to any regulated provider making transparency harder to trace, as well as any mention of the use of crypto to buy high-value goods, which is a common laundering method. It is fine to have the action plan and references to crypto but key crypto issues identified in the national risk assessment plan are missing from the action plan altogether. Why are they missing? Why are they not being addressed? Is the Tánaiste not concerned about these things, which were seriously flagged in the national risk assessment? How come they are not reflected in the action plan? Why have them in the national risk assessment but not in the action plan? How did that happen and why?
It is a fair point to which I will seek a decent answer for the Deputy. I will come back to him in writing on it. I am concerned about the issues relating to crypto and some of the issues the Deputy has highlighted. I will get specialist advice as to our level of satisfaction that the actions are robustly dealing with them, or not.
I am also concerned about other recent developments we have seen in this country, including the recent examination of developments that we saw around a recent by-election. I asked my officials to complete an analysis of the situation. There are discussions ongoing at an EU level to determine whether financial market regulation should apply to certain transactions. This is an area that we need to look at. There is no current evidence that any of this reported activity arose in this jurisdiction but the level of focus, with the greatest respect to the Dublin Central by-election, from forces outside our jurisdiction is a significant cause for concern.
This is a fast-evolving area in general. Our action plan is an honest effort to try to co-ordinate on it, but we also need to be humble in terms of any good or positive feedback that comes forward regarding areas we can look at further. I will engage with the Deputy in writing on crypto.
Banking Sector
Pearse Doherty
Ceist:8. Deputy Pearse Doherty asked the Tánaiste and Minister for Finance the number of offers made for PTSB prior to the launch of the formal sales process and to outline the engagement with the executive management of PTSB regarding the offers. [48249/26]
We have seen a number of media reports – I am sure the Tánaiste has read them – about when the Government was approached with offers in relation to PTSB, and when that was communicated to the executive management of the bank. Will the Tánaiste provide clarity to the Dáil and clear this issue up? How many offers were made for PTSB prior to the launch of the formal sale process? Will the Tánaiste outline the engagement with the executive management of PTSB regarding those offers, as well as the timeline?
I thank Deputy Doherty for the question. The Department received a wide range of proposals in relation to the State’s banking investments over the years, as the Deputy will be aware. As part of their normal functions, officials explore and assess such proposals.
On 5 September 2025, the Department received a non-binding and indicative proposal in writing from Centerbridge Partners to acquire the Minister's stake in PTSB. The Department was of the view that the indicative proposal undervalued the Minister’s stake in PTSB and informed PTSB of its decision to reject the proposal. Following internal governance, the Department advised Centerbridge Partners that the proposal did not provide a basis for engagement. That was the offer. Indeed, it is the only one that I am aware of that took place in advance of the formal sale process.
Subsequently, the board of PTSB launched a formal sale process on 30 October 2025 which was, of course, public and open to all bona fide strategic and financial investors. It was conducted by PTSB in accordance with the Irish takeover rules. Centerbridge Partners was one of the parties in that formal sale process. The Department believes that the process was fair, transparent and offered the greatest opportunity to canvas broad interest from potential bidders. The formal sale process resulted in the board of PTSB recommending a cash offer from BAWAG to shareholders.
BAWAG has set out a long-term ownership approach, including maintaining a strong and resilient Irish banking franchise, investing in the business, retaining the headquarters in Dublin, a branch footprint and safeguarding existing employment rights and pension arrangements in line with applicable law. BAWAG has also indicated its intention to leverage its broader European expertise to strengthen the bank’s competitiveness, including in areas such as SME banking, energy efficiency financing and operational integration. These stated intentions formed part of the overall assessment of the bid.
The State's investment in PTSB was made during the financial crisis to safeguard the stability of the banking system and protect depositors. Since then, PTSB has returned to profitability, increased its balance sheet scale and strengthened its capital ratios. A sale of the State’s investment is consistent with the objectives of recovering taxpayer funds that were used to rescue the banks. Through a combination of fees, dividend income, the bank levy and disposal proceeds, the State has recovered around €4 billion from its investment in PTSB. On an overall basis, this means the State is around €1.3 billion above breakeven on its €29.4 billion investment in AIB, Bank of Ireland and PTSB from direct shareholding linked income and has recovered a further €1.8 billion from the banking sector since the introduction of the bank levy.
Maybe the Tánaiste will clarify that Centerbridge Partners only made one offer. I think he suggested it was on 5 September last year. The public and other shareholders of PTSB are looking at this sale and wondering why we are selling off a public asset on the cheap. When something looks like a bad deal, there is extra scrutiny on the process, and that scrutiny has led to journalists and shareholders looking back.
The CEO of PTSB, on an investor call last September, denied three times that there had been any approach, interest or conversations with potential buyers. He insisted three times that there had been no interest. It appears, however, that the Tánaiste has confirmed there has been interest in the case. How is it possible that the CEO could not have been aware that the private equity firm Centerbridge Partners made offers, and that those offers were communicated to the bank? At what level was this communication from the Government to the bank? Has the Government resolved the issue of how the CEO was not informed of that, or that he informed investors this did not happen?
I am informed by my Department that there was one non-binding, indicative proposal received on 5 September 2025 from Centerbridge Partners to acquire the stake in PTSB. When the indicative proposal was received by the Department, it was assessed. The view was rightly taken that it did not adequately reflect the value of the State’s shareholding in PTSB. The proposal was not pursued and, instead, the formal sale process was subsequently undertaken by PTSB in an open, competitive and transparent manner, which allowed a range of potential investors to participate, including Centerbridge Partners. That was the correct approach. It resulted in a recommendation from the board of PTSB in relation to the offer from BAWAG. That has satisfied the Government’s ultimate objectives in this regard.
I am, of course, aware of media reports. Indeed, I have read them. I respectfully say that these are questions for the CEO of PTSB. I have found him to be an excellent CEO who has done an excellent job. From my Department’s point of view, I am happy to account to the Dáil in terms of the factual situation of that offer received on 5 September 2025.
With respect, it is more than just an issue for the CEO of PTSB. We are the majority shareholder of the bank and the Tánaiste is the person who holds the share on behalf of the Irish people. There is a genuine question here. Regardless of whether we believe that this has been sold on the cheap, it is a deal worth €1.6 billion. It is not a small amount of money. We have a situation where the State, as the largest shareholder, knew there had been an offer. The bank knew there had been an offer. There was an investor call in which investors asked whether there was interest or an offer. We are being told that the executive management of the bank knew about the offer but the CEO did not. That needs to be investigated.
As the largest shareholder, we also need to know whether staff of the Department of Finance listened in to that investor call in September or reviewed the transcripts when they were published. I have those transcripts in front of me. We need to know what action they took when they heard the CEO deny that there had been any interest. When he was asked whether there was any interest, communication or offer, the CEO, on three occasions, told investor after investor there was none. It appears that is not true. We need to get to the point of who knew what when. How could the CEO of a bank that is selling €1.6 billion of assets mislead, it appears, investors in that call? It appears the Government has not really done anything to follow up on it.
I truthfully do not know the answer as to whether officials in the Department of Finance were on that call or reviewed that transcript. I am happy to find that out for the Deputy. I truthfully do not know that. I also cannot account for why the CEO of the bank said that on an investor call. I genuinely believe that it made no material difference to the formal sale process and recovering taxpayers’ money that was invested in PTSB. A full, transparent and open process was undertaken, which ultimately led to a board recommendation from PTSB. However, in the interest of transparency, if there is information that my Department can make available to the Deputy on the questions he asked, I am happy to do that and correspond with him in that regard.
Tax Reliefs
John Connolly
Ceist:9. Deputy John Connolly asked the Tánaiste and Minister for Finance when he will be making a recommendation with regard to any further extension of the tax and excise changes introduced on foot of the Middle East war; and if he will make a statement on the matter. [48378/26]
I observed the interaction earlier in the question session between the Tánaiste and Deputy Doherty on this same issue. I very much welcome that the Government is going to bring clarity to this over coming days. It is as I expected because from the outset of the conflict in the Middle East, the Government said that we would observe the impact of the conflict on prices in Ireland and take the appropriate measures at the appropriate time. We have always said that we must be conscious that this conflict could prolong into the winter. As the uncertainty and volatility continues, this is prudent.
I thank Deputy Connolly for his question and his comments, and that is the approach the Government is trying to take. None of this is easy for households or for businesses. War has caused havoc in the world and it has caused a shock to the global economy. Ireland, as a small open economy, is not immune from that. There is no government in the wide earthly world that can insulate its people, even if it wishes to, from the impact of that but what we have said from day one consistently across Government is that we will be nimble and agile in trying to respond to the issue and that we will always keep things under review.
I often get asked, and I can understand why, whether I will agree to this or that for a period of time and what I have always tried to say is that sometimes we have stop, take stock and decide what the appropriate action to take is. In the next couple of days the Government will decide what is now the appropriate thing to do.
We put a very large package of support in place. It is in place until 31 July. It is true that petrol and diesel prices are now lower than when we brought that in. As for whether they are lower by the 32 cent, they are not. As for whether we need to try to avoid a cliff edge, we do. As for whether we also need to be responsible for public money, the taxpayers' money, to give ourselves options for the budget, etc., we do too. This is a balance that we have to get right.
All the current legislation going through the Dáil is simply giving legislative underpinning to decisions we took many weeks ago. We will then update that decision in terms of what excise looks like post-31 July. We will do that in the coming days. We will do it in plenty of time, before this House goes into recess. We will seek to avoid any sudden cliff edge for families and businesses.
I welcome that and I very much welcome the fact the Tánaiste has forecast that we want to avoid a situation where there would be a cliff edge, where suddenly there would be a massive increase in price again, which would impact on households, in particular, and people who depend on their cars because, as we know, unfortunately, the transport system in many parts of the country is not at the capacity we would like to see and people are reliant on private transport. Obviously, the tax and excise changes on fuel have an impact.
I refer to the legislative work that would need to be done before the Dáil rises on 16 July. We must ensure people are assured that throughout the period the Dáil is in recess that we have made provision to ensure we avoid that cliff edge.
It is a fair question. What I am saying is that it is not possible for somebody to absorb the full 32 cent. I get that point but I also have to balance that with the fact the Deputy, on behalf of his constituents, Deputy McCormack, on behalf of his, and all of us on behalf of ours, will be looking for things to be done in the budget too. I cannot ignore the fact that the price of oil is now falling and the fact the Strait of Hormuz is currently open. I cannot ignore the cost, in that on the way in today, I saw the cost of diesel is now below the cost of petrol. The situation is different factually to when we brought in the original package and we need to work our way through that in the coming days.
There is a number of different ways the Government can do that. It can decide to amend, at the appropriate point, the legislation going through the Dáil. That might be the most efficient way should the Government decide it wishes to take action. The Government can decide to bring forward further financial resolutions and the likes, too. The cleanest way might be that before the legislation passes through both Houses of the Oireachtas, the Government makes a determination but that involves a whole-of-government conversation which I am currently engaged in with colleagues.
The final clarity I would seek is in terms of the figure the Department of Finance has put out consistently about the full cost of these measures as being €750 million. Are we making provision, given the fact there may be consequences and there may be a necessity to extend these measures? The Tánaiste is talking about the prices having come down somewhat and maybe ameliorating the change but have we made provision? Are we contemplating what the full cost to the Exchequer might be if the necessity arises to continue these measures for an extended period, given the volatility that seems to exist in the conflict in the Middle East and the uncertainty it may continue to cause for some time? The Tánaiste is correct. All TDs will be coming to his Department with demands for the budget but I want to make sure the Department is fully aware of what this potential cost might be in terms of budget provision.
It is a fair question. Thankfully, as a country, we have had an ability to bring in a very significant package, one of the largest packages in the European Union, without having to borrow for it. Our nearest neighbour, the UK, brought in a much smaller package per head of population and had to go to the markets and borrow for it. I think it got charged approximately 5% for the luxury of that. The fiscal reserves we built up as a country - the surplus we are running in a growing economy - have enabled us to act but there is no consequence-free decision on expenditure either, as the Deputy and I both appreciate.
The current package has cost approximately €772 million. That is made up of €150 million for the original excise duties to the end of May; the €139 million when we decided to extend them to the end of July; €121 million from the further excise reductions we put on top of that; €22 million from the carbon tax deferral; €10 million for the diesel rebate; €40 million for the National Oil Reserves Agency, NORA, levy change; €70 million for the fuel allowance expansion; €120 million for the transport scheme; and €100 million for the agriculture scheme. That gets you to €772 million.
What we need to decide to do next needs careful consideration and a balanced approach to try to avoid that sudden cliff edge for people but also to try to be nimble and agile in our response. We will work through it all in the next few days.
Tax Reliefs
Ged Nash
Ceist:10. Deputy Ged Nash asked the Tánaiste and Minister for Finance for an assessment of the full-year cost in 2027 of the reduction in VAT for the hospitality sector to 9%; and if he will make a statement on the matter. [48323/26]
The hospitality VAT rate cut will be introduced from 1 July, next Wednesday. Of course, we all know that for every tax cut there is a consequent cost for the taxpayer. Can the Tánaiste put on the record of the House his assessment of the full-year of this particular VAT cut?
As the Deputy will be aware, the 9% VAT rate will be reintroduced for hairdressing services and for restaurant and catering services in the food-related hospitality sector from 1 July 2026. We have different views on this. I am very pleased that this is happening. The decision reflects the Government's commitment to supporting employment in sectors that are highly labour-intensive and form a key part of the domestic economy.
I am aware the Deputy and I have different views on it. In my view, it reflects a need that has been recognised in the programme for Government to support SMEs, especially those in the retail, tourism and hospitality sectors. The programme for Government notes the increased cost pressures on these sectors and states that the Government will bring forward measures that will entail changes to VAT.
The vast majority of businesses within this sector are small businesses. They are spread across the whole State. All of these businesses employ people whose jobs I and the Government are trying to protect and sustain in the time ahead and the most important thing at the moment in the global environment we live in is to protect and retain those jobs. The available Central Statistics Office, CSO, data for the food and catering and accommodation sectors indicate that over 99% are SMEs with over half of those businesses being microenterprises with less than ten employees.
The estimated full year cost for 2027 of the 9% VAT rate being applied to food and catering services is €633 million. The estimated cost of the hairdressing element is a further €48 million. The total full-year cost, to answer Deputy Nash's question, is estimated to be €681 million.
In making any decision in relation to VAT rates or other taxation measures, the Government must balance the costs of the measures against their impact. As outlined in last year's budget, the objective of the measure is to try to support businesses in services sectors, such as hospitality, who are facing increased cost pressures - they are even more increased now than at the time of the last budget. This measure is expected to support them and over 150,000 jobs they support and sustain across the country.
The Tánaiste knows well and acknowledged that we have a difference of opinion on the best way in which we can support those jobs. I firmly believe, and I stand over the position, that this is not the best way to do that and is not the best way to allocate finite public resources in terms of supporting the subsectors of that sector that we are all concerned, that is, the small microenterprises that keep our towns and villages across the country going. In the Labour Party's view, the best way to do that is to target supports from the perspective of energy supports, training, staff retention and, indeed, a wholesale analysis and review of the commercial rates sector. We believe that is the best way to support those companies that we are all concerned about.
Of course, there is a consequence for every decision that we take. There was a limited amount of resources available for a tax package last year, and there will be this year and going forward. The impact of making this decision last year meant that there was no indexation of personal tax rates, bands and credits and the Tánaiste has put on the record that is something he wants to address this year. That comes, of course, at a cost too.
While I vehemently disagree with the Deputy on this, and he vehemently disagrees with me on my position on it, I do not doubt his bona fides on it. Nobody, neither nor the Deputy, is suggesting that we have a monopoly on trying to support jobs. The Deputy wants to do it as do I. We all want to sustain employment. I accept that point but we have a difference of view on how to go about it.
I am very blunt and honest about this. I campaigned in an election and I stood in cafés, restaurants and hairdressers and I told people that if they voted for me and put my party back in government, we would pursue this measure, as did my coalition colleagues. We are now pursuing the measure. That is important. There is a democratic link, I suppose, to the programme that we offered people in the general election and the composition of this Government as well.
There is a cost. There is a cost to everything the Government does. There is a cost to not doing things too. I cannot misrepresent the previous budget. In fairness, we did not know about the war in Iran at the time of the previous budget but the pressure on these businesses has got even higher since then. The certainty we can provide the café owner, the restaurant owner and the hairdresser in our constituencies and communities that their VAT bill will, effectively, be permanently reduced from next week will, I genuinely believe, be a welcome relief to many of them.
Of course it will, and who would not want free money? However, that does not address the structural problems we have in the hospitality sector. We had a VAT rate cut of one form or another in place for the vast majority of the past 15 or 16 years. In fact, the Labour Party helped to introduce that back in 2011 to ensure we could generate some jobs in a sector that could quickly add them, and it absolutely did, as the evidence suggests. However, notwithstanding that there are subsets of the hospitality sector that are in difficulty, there is always churn in the sector more broadly. That is not me being callous about it; that is the reality of business. We cannot continue to permanently support the bottom line of every business. This is a place where we need to have hard conversations with businesses and workers about the finite resources we have. Is this the best way to use the resources we have?
We will have little change out of €2.5 billion between now and 2030 from this VAT cut. My only concern is whether this is the best use of public resources, given this is a sector that all the evidence suggests is, thankfully, adding jobs, not losing them.
The Deputy would not be doing his job if he was not scrutinising the decisions we make; that is his job. I believe it is a good use of taxpayers' money because the cost of this needs to be seen alongside the amount of income tax and other taxes these businesses and their employees are going to create. When I go back to my community and constituency and go into the local café, I know they will feel some sense of relief that some Bill is coming down the line. What annoyed me a lot about the 9% VAT rate in the recent period, though not nearly as much as it annoyed people in the hospitality sector, was this constant annual anxiety of whether the Government would roll it over for another year. At least, we are providing certainty now for a landscape. I believe this is the appropriate rate at which VAT should be levied in these sectors. There is much talk about the hospitality sector. Hairdressing probably does not get mentioned as much, but it is also an important cost base. There are lots of people working in these sectors, including part time, and there will be lots of young people getting summer jobs working in them as well. The hospitality sector, by which I do not mean hairdressers, is disproportionately represented in rural communities and the CSO data shows that those are overwhelmingly SMEs. The Deputy and I have a difference of view, although there may not be any differences between us about where we want to get to. That is my position.
Insurance Industry
Tony McCormack
Ceist:11. Deputy Tony McCormack asked the Tánaiste and Minister for Finance when the Cabinet subgroup on insurance reform will next meet; and if he will make a statement on the matter. [48365/26]
The Tánaiste and I will know that the cost of insurance for families and businesses is probably one the biggest costs every year, be it car insurance, home insurance or general business insurance. Can the Tánaiste indicate when the Cabinet subgroup on insurance reform will next meet and will he make a statement on the matter?
I can indeed. I thank Deputy McCormack for his question. I see there are a lot of students in the Public Gallery. I am not sure what school they are from, but they are very welcome. They picked a lovely sunny day to come into the Dáil. I thank them for being here and hope they enjoy their summer holidays, which are coming shortly.
As the Deputy will be aware, the programme for Government commits to maintaining the Cabinet committee subgroup on insurance reform to ensure insurance issues continue to receive strong attention, but also effective cross-government co-ordination. I chair that Cabinet subgroup, which meets on a regular basis to advance the action plan for insurance reform, but also to review progress made by each Minister in delivering his or her assigned actions. There is a responsibility on many Departments in this respect and the Cabinet committee provides us with an opportunity to bring people together.
The most recent meeting of the subgroup took place last month. Several priority actions have been set out in the action plan, which are focused on areas where the greatest impact on transparency, affordability and availability of insurance can be achieved. As part of this, a new motor insurance transparency code was launched on 2 March 2026. I thank my colleague, the Minister of State, Deputy Troy, for his work on that. The code is designed to enhance trust, clarity, transparency and understanding. The idea is that people should get, with their premium, a piece of paper explaining the breakdown, composition and rationale behind it.
Legislation to safeguard access to mortgage protection insurance for cancer survivors is also progressing through the Oireachtas. The Bill has passed through all Stages of Dáil Éireann and is making its way through Seanad Éireann. It is my intention, with the co-operation of everyone, that this be passed through the Oireachtas and signed into law this summer. This will be very important.
As the Deputy will be aware, this legislation builds on the voluntary code of practice that is currently in place and which was issued by Insurance Ireland in December 2023. The idea is that a cancer diagnosis should be disregarded, where the person has got through their cancer journey, for the purpose of mortgage protection. It sets out a reduction in the required remission period for cancer survivors from seven to five years, as well as an increase in the sum assured threshold from €500,000 to €650,000.
Work is also ongoing with the office to promote competition in the insurance market to enhance competition in the insurance market. We are also doing a lot of work on flood insurance and the flood insurance protection gap. The committee will meet again in formal session in September.
I welcome the Tánaiste's response and the work that has been undertaken on insurance reform in recent years. However, many businesses, sporting organisations, community groups and voluntary bodies continue to raise concerns with me and other TDs about the cost and availability of insurance. Will the Tánaiste specifically outline the key priorities the Cabinet subgroup will consider in its next meeting? Will it examine whether the savings arising from the reforms already introduced are being passed on through lower premiums? What further measures are under consideration to improve affordability?
Deputy McCormack is right. We have introduced significant reform in this sector and we now need the industry to ensure the benefit of those reforms are passed onto the customer. We have seen some progress in some areas but, frankly, we have not seen enough. We are very carefully monitoring this in the Cabinet committee. We are often asked for a long list and told if we do A, B, C and D, the premiums will fall. However, as the Deputy rightly suggested, we need to show this is actually happening.
I am also conscious there needs to be greater transparency on this. The big priorities are seeing the motor insurance transparency code; passing the right to be forgotten Bill regarding cancer survivors; looking at the national claims information database regarding the cost of motor insurance and other trends; monitoring those trends in Ireland and internationally; making progress on the flood insurance gap; and, generally, driving delivery of our insurance reform agenda and the action plan for insurance reform out to 2029.
On foot of Deputy McCormack raising this issue, I will ask the Minister of State, Deputy Troy, to write to him with a comprehensive update on the delivery of that action plan. It might be of use to some of those organisations the Deputy mentioned.
Small businesses are particularly vulnerable to increases in insurance costs. Unlike larger firms, they often have limited purchasing power and little capacity to absorb significant increases in premiums. For many, insurance is now one of their largest operating costs. Will the Tánaiste outline whether the Cabinet subcommittee is considering any targeted measures to improve competition and affordability in the insurance market for small businesses, in particular the scope for additional reforms to ensure smaller enterprises benefit fully from the Government's insurance reform programme?
This is a big area we are focusing on. I am conscious insurance costs are significant for all businesses, but they can have a disproportionate significance for smaller businesses, where a hike or an extra premium cost that was not expected could be the difference between viability or not. We have all met businesses in that place.
Attracting more competition into the market is very important and helpful, and we are actively seeing what can be done in that space. Obviously, those are commercial decisions but making sure we keep our environment correct so that it is good and transparent and, at the same time, competitive for people to come in is a key issue. We will continue to work very closely on the concerns of small businesses in this area. The Minister of State, Deputy Troy, will keep Deputy McCormack up to date.
Tax Exemptions
Michael Cahill
Ceist:12. Deputy Michael Cahill asked the Tánaiste and Minister for Finance if he will be reviewing the group B and group C thresholds under capital acquisitions tax; and if he will make a statement on the matter. [48383/26]
I raise again the issue of inheritance tax and the anomalies that exist for parents and their children, on one hand, and childless adults, their brothers, sisters, nieces and nephews, on the other.
I thank Deputy Cahill for the question. This is an important issue on which I have had several meetings. Capital acquisitions tax, CAT, is a tax which applies to both gifts and inheritances, and is charged at a rate of 33%. For CAT purposes, the relationship between the person giving a gift or inheritance and the person who receives it determines the maximum amount, known as the group threshold, below which CAT does not arise. The group thresholds were most recently increased in budget 2025.
Deputy Cahill will remember the group A threshold increased to €400,000 from €335,000. This broadly applies to where the beneficiary is a child of the disponer. The group B threshold increased to €40,000 from €32,500. This threshold applies where the beneficiary is a brother, sister, niece, nephew or lineal ancestor or descendant of the disponer. The group C threshold increased to €20,000 from €16,250, with this threshold applying in all other cases.
Along with tax-free group thresholds, various reliefs and exemptions are available in relation to CAT, including agricultural relief, business relief, the small gift exemption, favourite niece or nephew relief and the dwelling house exemption. It is important from a tax policy perspective to maintain stability and certainty and to ensure that the CAT thresholds are appropriately set in the context of the range of reliefs available.
There is a significant associated cost with further changes to the group thresholds, whether it involves increasing thresholds or reforming the inheritance tax category system, for example, bringing those who are childless within the scope of the group A threshold. Department of Finance officials produced a tax strategy group paper last year which examined that as well. We will do this again as part of our tax strategy group papers this year, and publish information and costings.
I recognise the burden of this tax. I have had some good meetings with groups which are concerned about this. The Deputy should note that capital acquisitions tax group thresholds are kept under review annually through the finance Bill and annual budget.
I have raised this issue on a number of occasions. It is a huge issue and there are anomalies. We need to address this. Currently, children inheriting a family home from their parents are exempted from inheritance tax up to €400,000, which, considering the price of homes currently, is undoubtedly far too low. However, a major anomaly exists when it comes to childless couples and individuals, who often decide to leave their home and assets to their nieces and nephews, brothers and sisters. Unlike children inheriting from parents, nieces, nephews, brothers and sisters are only entitled to €40,000 tax-free, leaving them with a significant tax bill which often precludes these individuals from affording the property. At a time when this country is in the midst of a housing crisis, should we not be doing everything possible to ensure that families are able to afford to keep their homes, instead of penalising those who do not have children and those who are left assets by their uncles and aunts? I call on the Tánaiste, in his capacity as Minister for Finance, to reduce inheritance tax, which is charged at a flat rate of 33% of the value of assets exceeding specific relationship-based tax-free thresholds, and to significantly increase those thresholds, of €400,000 in the case of a son or daughter.
I appreciate this is a serious issue which causes stress, strain and worry to many people. I have had much engagement with colleagues and groups about this and continue to do that. We keep all these issues under review as part of the finance Bill each year. The tax strategy group will again look at these issues this year. We will publish data, information and costings that can help to inform the debate in these Houses. The only thing I have to say, to be honest with people, is that some of these moves are quite expensive. We will have to decide as a collective, whatever the size of the total tax package in this budget is, which we will publish in the summer economic statement, how we divide that, with all of the competing demands regarding tax. I am aware of the burden that this places on people. There were significant increases in thresholds under the previous Government. I hope that we can make some progress on this over the course of this Government. Whether it is in this budget or other budgets is a matter for the Government to consider in the time ahead.
I believe we should separate the limit on the house from any other inheritance. The €40,000 cap in the case of a niece, nephew, brother or sister is absolutely ridiculous and discriminatory. In the upcoming budget, I propose that the Minister increase the €40,000 cap and we separate the house from the inheritance. The bands are less today than they were 15 or 16 years ago, as they were reduced during the recession. If the value of the house and any other assets is over €600,000, a son or daughter is liable for a €66,000 capital acquisition tax on the very same inheritance. A niece, nephew, brother or sister is liable for €184,8000. Our parents, grandparents and their parents before them worked extremely hard and paid their taxes to provide for their families and build family homes. The same applies to our uncles and aunts and their people before them. They too worked extremely hard and paid their taxes. I believe this issue needs to be addressed urgently. It is also a huge issue for the farming community and farm succession. It is a form of double taxation. I have a huge issue with it.
Deputy Cahill certainly gives that very clear impression. I know this is a serious issue and I hear from colleagues on the Government and Opposition benches about it. I share some of that concern too. In the specific role that I hold, I have to be honest about balancing the competing demands. We will have a certain amount available for tax measures and we will have many things that different people want to do. Inheritance tax is one that is coming up. Personal income tax is also coming up. We will have to look at all of this in the round.
The Deputy and I have both been in government in the past, so we have made progress on this issue, including in the previous Dáil. This Government has four more budgets to deliver, so the next budget will be one of four. How we divide up the tax package and what we can or cannot do to reform CAT this year will have to be decided and informed by discussions we have about the priorities. I am not ruling anything out today. I know people who have concerns about this will also understand that it is a matter for 6 October, when we unveil the budget, from a tax and spending point of view. I will continue to engage with Deputy Cahill.
Universal Social Charge
Catherine Callaghan
Ceist:13. Deputy Catherine Callaghan asked the Tánaiste and Minister for Finance his plans for the reduction or abolition of USC in budget 2027; and if he will make a statement on the matter. [48308/26]
I ask the Minister his plans for the reduction or abolition of USC in budget 2027, in particular, if there is scope to reduce the USC that is payable on occupational pensions for people aged over 66.
As I know Deputy Callaghan is aware, the programme for Government and our party manifesto commit to making progressive changes regarding income tax. The aim here is to make sure that people can keep some more of their own money. People in this country still feel that when they work hard, play by all the rules and then look at the slip at the end of the week or month and see the take-home pay figure, they are left struggling to get by, let alone get ahead. We want to make progress on that over the course of the next four budgets. There was not a personal income tax package in the previous budget. There will be one in this budget. I expect and hope there will be one in each of the next four budgets. Over the course of those four budgets, we can make real progress. In the previous Dáil, to give an example, we managed to get from a situation where people were paying the higher rate of tax at €33,000 and brought that up to the higher rate of tax being paid at €44,000. We also made some progress on the USC in the previous Dáil when we saw the middle rate of USC, of 4.5%, reduce by 1.5 percentage points to 3%.
About a third of people are not paying any income tax or USC, which we need to factor in too. When people talk about progressivity, we need to balance that. The USC is an individualised tax, which means that a person's liability for the tax is determined on the basis of his or her individual income or personal circumstances. It is therefore seen by some as a more sustainable charge than those it replaced, and it is applied at a lower rate on a wide base. The USC yield for last year was €5.6 billion. For this year, it is projected to be €5.9 billion, so there is a significant yield. What we decide to do on personal income tax, whether on income thresholds, tax credits or the USC, will be considered in the weeks ahead. The ultimate aim will be to see how we can most help people who are either working hard or the people who, as the Deputy recognised today, have worked hard with respect to their net income. We will consider all the options in the round.
I acknowledge all the work that has been done to date. I am sure the Minister hears from his constituents as regularly as I do that the fact that the USC was first introduced in 2011 as a temporary measure but is still with us 15 years later has made this particular tax a point of contention. I absolutely acknowledge the reality that there are many major investments into public services and infrastructure projects across the country that were only possible because of this tax, which, as the Minister mentioned, will bring in €5.9 billion this year.
The medium-term fiscal and structural plan, which the Minister published in December, is a strong statement of the Government's intent and ambition to achieve key social and economic targets. Of course, it is essential that under this plan, our public finances remain stable, resilient and ready, which goes to the Minister's point that there is a need to decide how exactly we make changes in the upcoming budget. While the USC will play a key role in delivering on this plan, I wonder, as we continue to experience a budget surplus, if there might be room to alleviate the pressure this tax places on certain sectors. For instance, would the Minister consider measures to increase the income disregard for USC or to reduce the amount payable on pension contributions at this time?
I have to give the annoying answer that we will consider all of these matters in the budget. I do not want to rule anything in or out today, other than to say a couple of things. The Deputy is right to acknowledge the burden that people feel from taxation. She is also right to acknowledge, very fairly, the benefit that we see from the taxes that people pay. The USC is expected to bring in €5.9 billion this year. It would be a very different challenge if we did not have that almost €6 billion. The next staging post as regards the total amount available for tax measures will be the summer economic statement in July. That will outline how much we intend to put aside for tax measures. We can then start to have an informed debate about the best way to spend that money and the best policy options. In general, regarding the surplus, I am pleased to live in a country where we have an economic surplus. It comes with challenges, but it much better to have a challenge than a deficit. I am conscious that some of that surplus is based on a temporary windfall tax and, therefore, a more appropriate use of it is to put it into our investment funds to deliver infrastructure and deal with future demographics.
It is really hard to argue with that point of view. Above all, I know that the Government is dedicated to delivering on the commitments made in the programme for Government, which will work towards a fairer, more equal Ireland. One of the key components of the programme is a commitment to progressive changes to personal income tax, which I am glad the Minister has recognised will happen, and to ensure that, as we push forward and grow our economy, nobody is left behind.
In budget 2026, the Government lived up to those commitments. It is important that we note that. It raised the 2% USC tax band up to €28,700. This measure meant and means that a full-time worker on minimum wage will not be pushed into the higher 3% tax rate. That allows for a meaningful increase in take-home pay. Across the country and in my own constituency of Carlow-Kilkenny, there is an appetite for similar measures to be considered in this year's upcoming budget. Is further indexation planned?
I thank Deputy Callaghan for acknowledging that there will be a personal income tax package. The aim is that it will deliver in line with the programme for Government commitments around progressive changes. We will look at the various options in the round. We will decide them on 6 October and will have plenty of opportunities to engage directly and to engage through this structure in advance of that. The point the Deputy made about the minimum wage increases not being gobbled up for low-income workers by USC is important. That is a principle that we have had for the last number of years and is certainly one that I would hope we could continue. There is another issue and I will say this honestly. Around a third of people are not paying any income tax or USC. I do not say that in a judgmental way but sometimes the some of the low-income workers we want to help have to be helped in ways other than the income tax system too. I said this earlier, but I really believe it. While I firmly believe a personal income tax package can play a role in assisting people with the cost of living and we will have one, it will also need to be supplemented by what we can do on the spending side to reduce structural costs that families face in areas like childcare, an issue I know the Deputy is passionate about with the carers' allowance. We will see the carers' allowance income threshold increase next month as an example. We need to look at all of this in the round. I look forward to continued engagement in the time ahead.
We only have a few minutes left, but I will let Deputy Murphy ask his question and the Tánaiste reply.
Tax Code
Paul Murphy
Ceist:14. Deputy Paul Murphy asked the Tánaiste and Minister for Finance if he will introduce a wealth tax in budget 2027; and if he will make a statement on the matter. [48192/26]
Eleven Irish billionaires now own more than wealth than two thirds of the population. Half of the population owns less than 10% of the total wealth. It is time for a wealth tax. A wealth tax on the richest 1% could raise €9 billion. At a time when so many people are suffering in one of the richest countries in the world, is it not time to introduce one?
I thank the Deputy. As he will be aware, wealth is already taxed in a number of ways in Ireland. These include capital gains tax, CGT, capital acquisitions tax, CAT and local property tax. Stamp duty also acts as a tax on wealth, including that charged on the acquisition of shares, stocks and marketable securities of Irish registered companies, and on the acquisition of property both residential and non-residential. The revenue raised from a wealth tax, regardless of the form it takes, may not be additional to that raised by the existing forms of wealth taxation, as the revenues from those taxes could be impacted by the introduction of a wealth tax.
In looking at the question of wealth taxes, the Commission on Taxation and Welfare's 2022 report identified challenges that would impede the implementation of a wealth tax. Its conclusion was that a new tax on net wealth should not be introduced without first attempting to substantially amend Ireland’s existing taxes on capital and wealth. The commission argued that, as an alternative to introducing a new tax on wealth, CGT and CAT could be re-examined. These are existing taxes on wealth that have well-established but distinct bases and are well understood in their operation. A 2024 report by the Parliamentary Budget Office entitled “An Overview of Taxes on Wealth in Ireland" noted, among other things, that a specific wealth tax risks an increased concentration of overall tax receipts on a relatively small proportion of taxpayers. It proposed base-broadening measures to increase the number of taxpayers and to diversify revenue sources.
It is important to note that Ireland has one of the most progressive taxation systems and social transfers of any EU or OECD country, which contributes to the redistribution of income and the reduction of income inequality. In 2016, my Department worked with the ESRI to conduct a research project into the distribution of wealth in Ireland and the potential implications of a wealth tax. Recognising the passage of time that has elapsed since this research project was undertaken, the ESRI is currently conducting analysis under its joint research programme. This will include scenario and distributional analysis under a range of wealth tax scenarios. A draft paper will be completed before the end of the year and I will consider the analysis in due course. I do not plan on introducing a wealth tax in budget 2027.
We heard this week from Barnardos that, in Ireland, one of the richest countries in the world, 30% of parents say they do not have enough food to feed their children. A total of 44% of parents - almost one in two parents - said they have to cut back themselves so that their kids have enough to eat. That is at one side of the pole of Irish capitalism. On the other side is the 11 billionaires who are richer than 66% of the population. Eleven people are richer than two thirds of the population put together - 3.5 million people. That is up from nine billionaires in 2024. The richest two billionaires have more wealth than the bottom 50%. That is an Irish expression of a global trend, where billionaire wealth grew three times faster in 2025 than the average annual rate of the previous five years. We now have the world's first trillionaire, although, because of the share prices, he may not be a trillionaire at this moment, but it speaks to the massive inequality. A wealth tax, a tax on assets of the multimillionaires and billionaires in this country, is one way to begin to tackle this inequality and to put money back into people's pockets.
I thank Deputy Murphy for his contribution. I have already outlined the Commission on Taxation and Welfare's 2022 report and the issues that it suggested would impede the implementation of such a tax, as well as the Parliamentary Budget Office report from 2024. I have also outlined how we have one of the most progressive taxation systems and social transfer systems in the EU and the OECD and the research work being carried out by the ESRI. I have no doubt that this is an issue Deputy Murphy will return to again when we have a longer time to discuss it and engage.