Christopher O'Sullivan
Ceist:89. Deputy Christopher O'Sullivan asked the Minister for Finance his plans for supporting the unscripted media sector; and if he will make a statement on the matter. [22746/24]
Amharc ar fhreagraBroadcasting Sector
Ceisteanna (89)
Freagraí scríofa
As part of his Budget 2023 speech, my predecessor Minister Donohoe announced that he had instructed officials to explore opportunities to support the unscripted sector. This process was undertaken within the Department throughout 2023. After careful consideration I announced, as part of Budget 2024, the intention to proceed with a measure for the unscripted sector. Work is being undertaken by officials on the design of such a measure at this time with a view to introduction in this year's Finance Act.
The introduction of an incentive for unscripted production sector will require State aid approval, and engagement with the European Commission will form part of development work by officials this year.
Question No. 90 answered with Question No. 70.
Tax Code
Ceisteanna (91)
Alan Farrell
Ceist:91. Deputy Alan Farrell asked the Minister for Finance if he will consider support measures to support the hospitality sector, including VAT reductions; and if he will make a statement on the matter. [22751/24]
Amharc ar fhreagraFreagraí scríofa
As 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 third quarter of 2023, total economy-wide employment expanded from 2.3 million to reach a record high of 2.66 million, an increase of 17 per cent. The Q3 2023 Labour Force Survey indicated that employment in the accommodation and food service sector stood at 181,000.
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
Tax Code
Ceisteanna (92)
Richard Boyd Barrett
Ceist:92. Deputy Richard Boyd Barrett asked the Minister for Finance if he is considering additional taxation measures in budget 2025 to address dereliction and long-term vacancy; and if he will make a statement on the matter. [22765/24]
Amharc ar fhreagraFreagraí scríofa
The Government is acutely aware of the difficulties in the housing market and the challenges this presents for many people and families at the moment. The need to address vacancy and to ensure all viable housing stock is being used is a priority for the Government. In Housing for All, the Government has set out a suite of incentives to address vacancy and efficient use of existing stock.
Following on from a commitment made in Housing for All, a Vacant Homes Tax was announced in Budget 2023 and legislated for in Finance Act 2022. The first chargeable period was 1 November 2022 to 31 October 2023 and the tax was payable on 1 January 2024. The rate of the tax was increased, in Budget 2024, from three times to five times the property’s existing base local property tax rate from the next chargeable period ending 31 October 2024.
The Vacant Homes Action Plan, which was launched by my colleague, the Minister for Housing, Local Government and Heritage in January 2023, outlines the significant progress that has been made in addressing vacancy, along with the actions that are being pursued to return as many vacant properties back into use as possible. In April this year, Minister O’Brien published a Progress Report on the Plan, which sets out what has been achieved in 2023 and the further steps that will be taken in 2024.
A range of schemes and supports have been implemented by the Government to address vacancy and bring properties back into use. Initiatives such as the Vacant Property Refurbishment Grant under the Croí Cónaithe Towns Fund, provide financial incentives for people to buy and refurbish vacant properties and sites; while the Repair and Leasing and Buy and Renew Schemes involve the Local Authority leasing or buying the vacant property from the owner to assist in the provision of social housing. The Urban Regeneration Development Fund provides funding for, amongst other things, local authorities to acquire vacant or derelict properties and sites for re-use or sale, and the Compulsory Purchase Orders (CPO) Activation Programme, launched in April 2023, provides for a planned, proactive and systematic approach by local authorities to bring vacant and derelict properties back into use. All local authorities now have a dedicated Vacant Homes Officer, funded by the Department of Housing, Local and Heritage, ensuring a dedicated focus on tackling vacancy.
With regards to dereliction, I understand the Department of Housing, Local Government and Heritage continues to liaise with Local Authorities on the implementation of the Derelict Sites Act 1990 with a view to improving its effectiveness.
The Deputy will be aware that it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions. Any proposals for potential tax measures must be assessed carefully and need to be targeted and clear in their policy intent. My Department continues to monitor the operation of the Vacant Homes Tax, and monitors all aspects of the property market, including vacant and derelict properties, and I will continue to work with my colleagues in Government to ensure that any further interventions in the housing market are appropriately calibrated, represent the best use of scarce public resources and boost the supply of much-needed housing in the State.
Consumer Protection
Ceisteanna (93)
Pearse Doherty
Ceist:93. Deputy Pearse Doherty asked the Minister for Finance to provide an update on consideration of changes to legislation to address the inability of consumers to make complaints to the Financial Services and Pensions Ombudsman with respect to vulture funds as a result of gaps in its regulation. [22787/24]
Amharc ar fhreagraFreagraí scríofa
The Financial Services and Pensions Ombudsman (FSPO) is an independent, impartial, fair and free service that helps resolve complaints against financial service and pension providers from consumers and small businesses. It plays a vital role in the robust financial consumer protection framework in place in Ireland to support consumers of financial services.
The Deputy has raised the issue of the jurisdiction of the FSPO to look at complaints made against financial service providers while they were unregulated.
There a number of pieces of legislation in place that ensure consumers are protected when their loans are sold to non-banks.
Under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 legislation, loan owners have to appoint credit servicing firms who are regulated by the Central Bank.
In 2018, the Consumer Protection (Regulation of Credit Servicing Firms) Act 2018 was enacted, so that the Central Bank now also regulates the person who either holds legal title to a loan, or has material rights to decide how a portfolio of loans is dealt with.
The FSPO is an independent body and has determined that it does not have jurisdiction to investigate the conduct of financial service providers before they became regulated entities.
I have sought legal advice to ensure clarity on the scope of the FSPO's jurisdiction in relation to the issues raised, with the aim of ensuring the broadest possible access to the FSPO as an important part of the consumer protection framework.
My officials continue to intensely engage with relevant stakeholders in relation to the legal advice and all potential legal avenues, with a view to progressing this issue as a matter of priority.
As the Deputy is aware, I am presently bringing the Financial Services and Pensions Ombudsman (Amendment) Bill 2023 legislation through the Oireachtas to ensure the FSPO is on a constitutionally sound footing following the Supreme Court Zalewski ruling.
I have always advocated for the broadest regulatory and consumer protection regime possible, including access to the FSPO, and I have made clear that I am willing to introduce further legislative amendments should that be necessary and possible.
Question No. 94 answered with Question No. 65.
EU Regulations
Ceisteanna (95)
Richard Bruton
Ceist:95. Deputy Richard Bruton asked the Minister for Finance if he will indicate the plans for Ireland to adopt the European taxonomy in investment. [22784/24]
Amharc ar fhreagraFreagraí scríofa
We are well aware that Ireland and the rest of the EU needs to substantially increase sustainable investment over the next decade. This investment cannot come solely from governments, private investors must crowd in and the taxonomy will encourage and guide investors to identify and channel money towards genuinely “green” investments.
As the Deputy knows, the EU taxonomy for sustainable activities is a harmonised classification system for environmentally sustainable economic activities. The Taxonomy has a significant role in supporting the mobilisation of capital towards sustainable investments through providing common definitions to companies, investors and policymakers on what constitutes an environmentally sustainable economic activity. Large companies and financial services providers report on their portfolios’ alignment with the Taxonomy.
This Taxonomy is based on six EU environmental objectives. For an economic activity to be considered Taxonomy-aligned, it must make a substantial contribution to at least one of these objectives, and do no significant harm to the others, in addition to complying with regulatory technical standards and minimum safeguards. The objectives are:
• Climate change mitigation;
• Climate change adaptation;
• Sustainable use and protection of water and marine resources;
• Transition to a circular economy, waste prevention and recycling;
• Pollution prevention and control;
• Protection and restoration of biodiversity and ecosystems.
The Taxonomy Regulation entered into force on 12 July 2020. Under the Taxonomy Regulation, the Commission devised a list of environmentally sustainable activities by defining technical screening criteria for each environmental objective through delegated and implementing acts.
The Delegated Acts covering climate adaption and mitigation including nuclear and natural gas investments have been agreed and are in place with company reporting having commenced. A further Delegated Act on the four remaining environmental goals (circular economy, biodiversity, water/marine and pollution) was adopted in June 2023, applying as of January 2024.
This week, the Commission is expected to give a positive assessment of Ireland’s modified recovery and resilience plan, which includes a REPowerEU chapter. The plan is now worth €1.15 billion (in grants) and covers 11 reforms and 19 investments. The Commission is also expected to endorse Ireland’s first payment request for €324 million under the Recovery and Resilience Facility.
The Recovery and Resilience Facility Regulation includes important substantive conditions from the EU Taxonomy for Sustainable Finance in its climate tracking methodology as it incorporates technical screening criteria for certain intervention fields and associated coefficients.
Ireland’s modified plan has a strong focus on the green transition, allocating 50.2% of funds to support climate objectives.
The Taxonomy’s effect on investment is primarily by encouraging investors and consumers to make more sustainable decisions through science-based definitions of sustainability and with transparent reporting and disclosures of sustainability impacts and risks. It allows investors to confidently invest in both projects and/or companies that have a substantial positive environmentally sustainable impact.
Tax Yield
Ceisteanna (96, 110)
Willie O'Dea
Ceist:96. Deputy Willie O'Dea asked the Minister for Finance for a report on income tax receipts in the first four months of 2024; and if he will make a statement on the matter. [22569/24]
Amharc ar fhreagra
Cathal Crowe
Ceist:110. Deputy Cathal Crowe asked the Minister for Finance for a report on corporation tax receipts in the first four months of 2024; and if he will make a statement on the matter. [22566/24]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 96 and 110 together.
Income tax receipts of €11.2 billion were collected in the first four months of the year. This was up by €0.7 billion or just over 7 per cent on the same period last year. This is a clear reflection of the strength of our labour market despite all the external challenges that we have faced over the last number of years.
In terms of corporation tax, receipts recorded in the first four months of 2024 stood at €2.7 billion. This was down by €0.8 billion or almost 24 per cent on 2023. The indications are that this relates to a timing factor: so we would expect a corresponding increase at some point later in the year to offset this.
Nonetheless, as I have stated on many occasions corporation tax is a highly volatile and unpredictable source of tax revenue. A key pillar of this Government’s approach to budgetary policy has been to mitigate the risk of volatile windfall tax receipts being used to fund permanent spending. These are receipts unlinked to the domestic economy.
This is why we published legislation to establish two new long-term investment funds, the Future Ireland Fund and the Infrastructure, Climate and Nature Fund, to enable us to make use of these potentially transient revenues to prepare for future structural challenges. This legislation is currently making its way through the Houses of the Oireachtas.
Question No. 97 answered with Question No. 81.
Tax Data
Ceisteanna (98)
Matt Carthy
Ceist:98. Deputy Matt Carthy asked the Minister for Finance the number of non-domiciled individuals taxed on a remittance basis; the number of individuals who have self-assessed with Revenue as non-domiciled in each of the years 2021, 2022 and 2023; and if his Department is considering changes to the non-domicile regime to restrict the remittance basis of taxation that applies to the regime. [22782/24]
Amharc ar fhreagraFreagraí scríofa
An individual who is resident or ordinarily resident, but not domiciled in the State, is taxable on the remittance basis of tax in respect of foreign income and gains. Such individuals pay tax on:
(1) Income and gains arising in Ireland,
(2) Foreign income which they “remit” or bring into the State, and
(3) Foreign gains which they "remit" into the State where the gain accrues from the disposal of assets situated outside the State.
It should be noted that the benefit of the remittance basis only arises where such an individual has foreign income or gains for the year. An individual who is taxable on the remittance basis in respect of foreign income or gains is required, under self-assessment provisions, to report the amount of the foreign income or gains which are remitted to the State in a tax return for the year in which the remittance occurs.
I am advised by the Revenue Commissioners that the latest number of self-assessment Form 11 income tax returns for 2021 in which a taxpayer has indicated that they are non-domiciled is 53,900. The data is on a taxpayer unit basis, where jointly assessed couples are counted as one unit, and the taxpayer unit is counted where either party to the joint assessment has indicated that they are not domiciled. Relevant statistics for 2022 and 2023 are not yet available. I am also informed by the Revenue Commissioners that an individual who is not domiciled in the State is not required to report whether they have availed of the remittance basis of foreign income and gains when completing a return. On this basis, it is not possible to confirm the numbers of taxpayers who avail of the remittance basis of tax in cases where they are in receipt of foreign income and gains.
As with all areas of taxation policy, the remittance basis of taxation will be considered as part of the annual budgetary and Finance Bill process.
Banking Sector
Ceisteanna (99)
Richard Bruton
Ceist:99. Deputy Richard Bruton asked the Minister for Finance to review the recovery of funds invested in the rescue of the pillar banks during the financial crisis; and if he will make a statement on the matter. [22783/24]
Amharc ar fhreagraFreagraí scríofa
The total recapitalisation of the domestic banks amounted to €64.1bn, of which €34.7bn was invested in Anglo Irish Bank and INBS or Irish Bank Resolution Corporation (IBRC) and €29.4bn in AIB, Bank of Ireland and PTSB. To date, €24.4bn of the investment in the three remaining banks has been recovered in cash by way of disposals, investment income and liability guarantee fees.
As part of this activity, the State has fully disposed of its investment in Bank of Ireland.
The State has made good progress in reducing its shareholding in AIB from 71.1% at the beginning of 2022 to 32.4% today while recovering over €3.8bn as part of that process.
With regards to PTSB, in June 2023 the State successfully disposed of a 5% shareholding in the bank. The disposal was carried out by way of a placing of shares in an accelerated book building process to investors, carried out in tandem with NatWest. Following this transaction, the State retains a 57.4% shareholding in the bank.
The remaining investments in AIB and PTSB are currently valued at c. €4.4bn (as at 15/05/2024) leaving a shortfall of c. €0.6bn.
The investment in IBRC is largely a sunk cost with a net €1.1bn recovered to date.
The long-standing policy of this Government is to return the remaining banks to private ownership, while achieving value for the taxpayer. It continues to be this Government’s belief that banking in the main is an activity that should be provided by the private sector and that taxpayer funds which were used to rescue the banks should be recovered and used for more productive purposes.
Tax Rebates
Ceisteanna (100, 106)
Jackie Cahill
Ceist:100. Deputy Jackie Cahill asked the Minister for Finance his response to concerns from farmers who were refused refunds on VAT items that previously qualified; and if he will make a statement on the matter. [22701/24]
Amharc ar fhreagraJackie Cahill
Ceist:106. Deputy Jackie Cahill asked the Minister for Finance the reason calf feeders were VAT refundable without any question up to August 2023 and are now being refused; and if he will make a statement on the matter. [22702/24]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 100 and 106 together.
The flat-rate farmers refund order has been raised on a number of occasion particularly over how VAT refund claims are being administered and processed by the Revenue Commissioners. As the Deputy is aware, the legislation only provides for VAT refunds to unregistered farmers for the following expenditure:
the construction, extension, alteration or reconstruction of farm buildings or structures;
the fencing, draining or reclamation of farmland; and
the construction, erection or installation of qualifying equipment for the micro-generation of electricity for use in the farm business.
The refund order was originally introduced in 1972 and has seen minor amendments to the type of expenditure covered. In 1993, the order was updated to provide for claims for fencing and in 2012 the order was amended to clarify that certain equipment used for the microgeneration of electricity was covered. The refund order does not provide for any other farming equipment or machinery.
I am advised by Revenue that they can only administer the refund order according to the legislation as enacted. The agricultural sector, particularly the Dairy Sector, has evolved significantly since 1972. Since 1972, new products have come onto the market that differ from previous versions and while the function of the products may be identical, there are important differences from a VAT perspective. Revenue will continue to monitor refund claims for new and innovative products as they are received but can only refund expenditure that is within the scope of the legislation.
Given the significant volume of claims processed annually (37,368 in 2023), Revenue only selects claims for manual review on the basis of risk. Where a claim is identified for manual review and is deemed ineligible such claims are refused and Revenue ensures that any similar ineligible claims are also identified and refused. Claimants may appeal decisions to refuse claims within 30 days after the date of the refusal letter by completing and submitting a ‘Notice of Appeal’ form to the Tax Appeals Commission (TAC). Ineligible claims can be refunded in error; however, this does not create a precedent for other similar claims to be paid.
Revenue is engaging with the farming sector and have met with the ICMSA and IFA on several occasions, most recently with the ICMSA on 22 April and the IFA on 9 May. Revenue officials also attended the Joint Oireachtas Committee on Agriculture, Food and Marine on 8 May. Revenue is currently reviewing submissions from the representative groups. Revenue advise that it is anticipated that an updated guidance document will issue this month once all outstanding information has been received by Revenue.
Finally, the Deputy may wish to note, that it is always open to a farmer to elect to register for VAT in respect of their farming business and claim a full deduction for the VAT they incur on their business costs, subject to rules on deducibility.
Tax Code
Ceisteanna (101)
Willie O'Dea
Ceist:101. Deputy Willie O'Dea asked the Minister for Finance the tax changes he is considering to make it more attractive for people to invest their savings, rather than having money sit in bank accounts; and if he will make a statement on the matter. [22568/24]
Amharc ar fhreagraFreagraí scríofa
I note the Deputy's query in relation to the taxation of individuals savings and investments and whether any changes are being considered in this regard. As with all areas of tax policy, the taxation of savings and investments will be kept under review throughout the annual budgetary and Finance Bill process.
Last year, on 6 April 2023, I published the Terms of Reference for a review of Ireland’s funds sector - ‘Funds Sector 2030: A Framework for Open, Resilient & Developing Markets’. The review is wide ranging and looking at a range of issues relevant to the funds sector, taking into account the recommendations in this area of the Commission on Taxation and Welfare 2022 report, Foundations for the Future. In that context, one area being considered by the review is the taxation regime for funds, life assurance policies and other related investment products; with the goal of simplification and harmonisation where possible. A public consultation was held from 21 June 2023 to 15 September 2023 and the review is now well advanced.
Based on the data available, Irish savers and investors do not invest in as broad a range of products as in many other Member States. However, there are many reasons for this including taxation. As per the terms of reference, the Review team will report to me this Summer and I look forward to considering its findings at that point. On that basis it would not be appropriate to presuppose any outcomes of the review at this time.
Finally, it is also important to highlight the existing tax free savings products which are available in Ireland and provide and efficient and attractive way for people to save. The National Treasury Management Agency (NTMA), through State Savings products, offers a wide range of tax free savings products to the general public, including Prize Bonds and fixed rate savings bonds/certificates. The NTMA keeps these products under review.
Inflation Rate
Ceisteanna (102)
Joe Flaherty
Ceist:102. Deputy Joe Flaherty asked the Minister for Finance if he expects that with inflation now moderating, the pressures many consumers have faced will likely ease across the year; and if he will make a statement on the matter. [22683/24]
Amharc ar fhreagraFreagraí scríofa
Inflation reached multi-decade highs in 2022, averaging 8.1 per cent across the year with a peak of 9.6 per cent in June 2022 (as measured by the HICP). Whilst the initial driver of this inflationary pressure was a surge in global energy prices, it subsequently became increasingly broad-based as price pressures spread throughout the economy. This was extremely challenging for households who saw their purchasing power significantly eroded.
Since then, enormous progress has been made in reducing inflation with headline HICP inflation of just 1.6 per cent in April.
Key to this moderation has been the partial reversal of energy prices from extremely high levels. Consumer energy prices in April are estimated to have decreased by 6.3 per cent compared to April last year. This decline captures the fall in wholesale energy prices being passed through to retail gas and electricity bills. I expect further cuts to take place throughout this year as this process continues.
However, I am conscious that many households are still facing significant cost of living pressures, with pockets of inflationary pressure still remaining. This is particularly the case for domestic sectors, especially certain services prices. In part, this is due to capacity constraints in the economy. The labour market is essentially at full-employment and supply-demand imbalances are evident in a number sectors, including housing a key policy priority area for the Government.
Throughout this period of high inflation, the Government has been at the forefront in supporting the most vulnerable. By responding swiftly and decisively to the cost of living challenges, the Government has helped to mitigate the impact of inflationary pressures on both businesses and households. The temporary and targeted nature of the measures taken by Government have been designed to avoid adding to the inflationary burden whilst providing support to those most in need.
My Department forecasts an inflation rate of just over 2 per cent for this year as a whole. Looking forward, I expect the moderation in inflation to help ease the pressures facing consumers. This should improve households’ purchasing power and support increased consumer spending over the year.
Tax Code
Ceisteanna (103)
Seán Haughey
Ceist:103. Deputy Seán Haughey asked the Minister for Finance his plans for a substantial income tax package in budget 2025; and if he will make a statement on the matter. [22682/24]
Amharc ar fhreagraFreagraí scríofa
The Programme for Government (PfG), “Our Shared Future” contains a number of specific commitments relating to income tax. These include the commitment that, “from Budget 2022 onwards, in the event that incomes are again rising as the economy recovers, credits and bands will be index linked to earnings. This will be done to prevent an increase in the real burden of income tax, to prevent more low income workers being taken into the tax net because of no changes to the tax system and to ensure there is no increase in the number of people having to pay higher income tax and USC rates.” In addition, the PfG states that “the Earned Income Tax Credit will be equalised with the employee tax credit”. It also includes a commitment to increase the Home Carer Tax Credit to support stay-at-home parents and those with caring responsibilities.
Significant progress has been made in achieving these commitments. For example, over the last three Budgets the Government increased the Standard Rate Cut-Off Point for single persons by 19 per cent from €35,300 to €42,000, with commensurate increases for persons who are married/in civil partnerships. In addition, the main tax credits - personal tax credits, employee tax credit and earned income credit - were increased by around 13.6 per cent or €225 each from €1,650 to €1,875. The Home Carer Tax Credit was increased by €100 from €1,700 to €1,800 (a 5.9 per cent increase) in Budget 2024. It is also worth noting that the earned income tax credit was equalised with the employee tax credit in 2021.
As Ireland’s fiscal position is heavily reliant on volatile ‘windfall’ corporation tax receipts, it is important that a balanced and sustainable fiscal policy continues to be pursued. Government will set out the fiscal parameters for Budget 2025 in the Summer Economic Statement in the coming months. These parameters, and the commitments outlined in the PfG, will inform my decisions in regard to the make-up of the Budget 2025 income tax package.
Tax Code
Ceisteanna (104)
Richard Boyd Barrett
Ceist:104. Deputy Richard Boyd Barrett asked the Minister for Finance if he will reconsider his plans to reinstate higher excise on fuel in August; if he will outline, given the increased costs of living on ordinary people, what the cost impact will be on households and business from increasing taxes on fuel; and if he will make a statement on the matter. [22763/24]
Amharc ar fhreagraFreagraí scríofa
The Government is conscious of the implications of fuel costs for all sectors of society. This is reflected in the fact that in 2022, in light of the acute impact rising prices were having on households and businesses, the Government provided for temporary cuts in excise rates which, inclusive of VAT amounted to 21 cents, 16 cents and 5.4 cents per litre on petrol, auto-diesel and marked gas oil, respectively.
These temporary cuts to excise rates were initially due to end on 31 August 2022, but following review and monitoring of fuel prices, were extended until February 2023, with a phased restoration of rates occurring in June and September 2023. A final restoration of excise rates was due to take place on 31 October 2023, but Budget 2024 provided for further extension until 31 March 2024, with phased restoration occurring in April and August 2024. The first of these restorations took place on 1 April 2024 adding 4 cent per litre to petrol, 3 cent per litre to auto diesel and 1.7 cent per litre to MGO.
The remaining temporary reductions on a VAT inclusive basis amount to 4 cent per litre for petrol, 3 cent per litre for auto diesel and 1.7 cent per litre for MGO. These are currently legislated to be restored on 1 August 2024.
While I recognise that households and business continue to face challenges, the Government must strike the appropriate balance between providing support and avoiding fuelling cyclical inflationary trends. The Government has provided relief to consumers and businesses since 2022 through a number of support measures including temporary reductions in excise. However, these measures were introduced as temporary support measures and involve an ongoing cost to the exchequer while they are retained.
Finally, the Deputy should note that I will continue to monitor and review the position in the coming weeks in the context of the final phase of excise rate restorations due to take place in August 2024.
Tax Credits
Ceisteanna (105)
Rose Conway-Walsh
Ceist:105. Deputy Rose Conway-Walsh asked the Minister for Finance the value and number of successful claims under the research and development tax credit made by SMEs and non-SMEs, respectively, in each of the years 2021, 2022 and 2023; if his Department will consider introducing a simplified application process for SMEs to encourage research and innovation among indigenous companies; and if he will make a statement on the matter. [22793/24]
Amharc ar fhreagraFreagraí scríofa
The Exchequer costs of Research and Development (R&D) tax credit claims for accounting periods ending in 2020, 2021 and 2022 respectively are €658 million, €753 million and €1.148 billion. I am advised by Revenue that the figure for claims in respect of 2022 is a provisional figure as additional processing is required in relation to specified returns associated with 2022 claims, and a more detailed breakdown is expected to be available later this summer. Data in respect of claims for the year 2023 will be available next year.
For the Deputy’s information, Revenue’s statistical information in respect of the Research & Development (R&D) credit, for all years up to 2021, is available at the following link: www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/index.aspx
Tax data does not specifically differentiate between SME and non-SME companies, but there are a number of metrics that can be used as a reasonable proxy for SME status.
For example, in respect of 2021 out of a total of 1,629 claimant companies, 1,431 or 88% of the number of claims, amounting to €190 million of R&D tax credit, were made by companies dealt with outside Revenue's Large Cases Division, which can be used as a proxy for SMEs.
One of the criteria for SME status is employee headcount, with companies having under 250 employees being in scope of the definition. Again in respect of the year 2021, 1,429 claims were in respect of claimants with under 250 employees, amounting to €194 million in R&D tax credit. Similar data in respect of prior years is also included in the Revenue report linked above.
On the second part of the Deputy’s question, there are no specific provisions for SMEs in the R&D tax credit, and nor are there any restrictions for SMEs wishing to avail of the scheme. It is available to all firms, within the charge to Irish tax, that undertake qualifying R&D activities. However, I am aware that Revenue issued updated guidance in 2017 with the specific aim to reduce the administrative burden for relatively small claims for SMEs and micro-companies.
The administration of the R&D tax credit is a matter for the Revenue Commissioners. The Tax Administration Liaison Committee (TALC) Sub-Committee on Simplification and Modernisation of Business Reliefs for SMEs provides a forum where Revenue and tax practitioners can identify opportunities to simplify and modernise the administration of business supports. The matters discussed by the sub-committee, which include the R&D tax credit, will inform recommendations in relation to administrative changes which may benefit SMEs.
I am also aware that Revenue participate in a number of initiatives to ensure that the availability of the R&D tax credit, and the activities in respect of which it is available, is communicated to firms of all sizes. For example, Revenue attend and speak at R&D events organised by IRDG, the IDA and Enterprise Ireland. Revenue has also established an R&D discussion group which provides a forum for Revenue and representative organisations to raise and address issues affecting the operation of the R&D tax credit.
I would also note that the refundable nature of the R&D tax credit can be particularly attractive to start-up companies or SMEs which are not making profits as the credit can effectively part-fund the R&D activity and act as a valuable source of cash-flow.
Finally, the Deputy may be aware that Finance (No.2) Act 2023, also introduced changes to the R&D tax credit which will benefit SME claimant companies and companies undertaking smaller R&D projects. For accounting periods commencing on or after 1 January 2024, the rate of the credit has increased from 25% to 30% and the threshold for payment of the credit in full in the first year rather than over the usual period of three years was increased from €25,000 to €50,000.