Tommy Broughan (Dublin North East, Labour)
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Question 113: To ask the Minister for Finance if he will instruct covered institutions to greatly reduce or eliminate fixed rate release penalties on mortgages in view of the structural problems in the Irish financial and property markets since 1997; and if he will make a statement on the matter. [10371/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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At the outset the Deputy may wish to note that the choice of mortgage product ultimately rests with consumers in light of their assessment of the terms and conditions that their lending institution offers. The decision of borrowers is influenced by a range of factors such as their personal preferences and their own assessment of the relative merits of fixed and variable rate mortgages.

Generally mortgages are for long periods. To some consumers a fixed interest rate on a mortgage offers peace of mind in that the borrower benefits from certainty regarding the cost of their mortgage, does not need to be concerned with changes in mortgage interest rates and accordingly he or she can budget more confidently.

Where a bank offers a fixed rate over a certain period it incurs additional costs in obtaining fixed or other funding in respect of the loan over the period. The additional costs will reflect both the market view in relation to future trends in interest rates for the period and the fact that longer term deposits generally attract higher interest rates than short term. In addition, if a borrower wishes to break a fixed interest rate contract prior to the end of the agreed term in order to change to a variable interest rate contract, it will generally result in funding costs for the lender concerned. If covered institutions were prohibited from charging customers for the funding costs, the price and availability of fixed rate mortgages is likely to be adversely affected.

Joe Costello (Dublin Central, Labour)
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Question 114: To ask the Minister for Finance the number of Irish citizens who qualify for non-payment of tax here; the estimated worth of these citizens; if they pay tax in any other country; the estimated value to the Exchequer of such lost tax; if he has proposals for ending the tax exile provisions; and if he will make a statement on the matter. [10381/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am assuming that by "Irish citizens who qualify for non-payment of tax here," the Deputy means Irish-domiciled individuals claiming to be non-resident for tax purposes.

I am informed by the Revenue Commissioners that Irish citizens who are non-resident for tax purposes are in general chargeable on: income arising in Ireland, for example, income from directorships, a trade or profession, rented properties etc; and gains from the disposals of land, buildings or shares deriving their value from these assets and certain other assets such as minerals in the State or other assets related to exploitation of such minerals.

In general, non-resident individuals are liable to Irish capital gains tax on disposals of land, buildings or shares deriving their value from these assets and certain other assets such as minerals in the State or other assets related to exploitation of such minerals. They are not liable to Irish capital gains tax on assets outside this category, for example, shares or equities in companies not deriving their value primarily from land, buildings, etc. There are variations on this position if the non-resident individual is ordinarily resident and/or domiciled in Ireland.

I am also informed that an individual who is not domiciled but is ordinarily resident in the State is, in general, taxable on all Irish income and on UK and foreign sourced income remitted to the State whether the individual is resident or not resident in the State.

I am advised by the Revenue Commissioners that the number of chargeable persons who claimed on their 2007 tax return that they or their spouse were not resident in the State is 5,867. This figure is based on the 2007 tax returns processed up to the end of February 2009.

There is no statutory obligation on citizens to show their worth on their tax return. Therefore, it is not possible to estimate the net worth of chargeable persons who are not resident in the State. Likewise, there is no statutory obligation on citizens to show if they have paid tax in any other country on their tax return. It is, therefore, not possible to state if chargeable persons who are not resident in the State pay tax in any other country.

There is no statutory obligation on citizens who are only taxable in the State on Irish sourced income or on income remitted to the State to return details of income or gains arising anywhere else in the world. Therefore, it is not possible to establish the amount of these incomes or gains or of any associated tax. These arrangements are fairly standard across OECD countries.

A person is regarded as resident in the State for tax purposes in a tax year if he or she spends: 183 days in the State in that year, or 280 days in aggregate in that tax year and the preceding tax year. An individual who is present in the State for 30 days or less in a tax year will not be treated as resident for that year unless he or she elects to be resident. Also, for years up to and including 2008, a day will only count as a day of presence in the State for tax residence purposes if the individual is present in the State at the end of the day.

However, section 15 Finance (No. 2) Act 2008 amended the legislation so that as respects 2009 and subsequent years an individual is regarded as present in the State for a day if he or she is present in the State at any time during that day. These rules are similar to the rules that apply in many other developed countries. As with other areas of taxation, the rules are constantly kept under review.

Joan Burton (Dublin West, Labour)
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Question 115: To ask the Minister for Finance if, in the course of recent discussions with financial institutions covered by the bank guarantee scheme, he asked the banks to consider waiving fees for consumers who wish to switch from a fixed to a variable rate mortgage; if such a measure was considered during recapitalisation negotiations with banks (details supplied); if he has proposals to introduce such a measure to ease the burden of mortgage repayments on hard-pressed families; and if he will make a statement on the matter. [10475/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Anyone taking a fixed rate mortgage knows that they are ensuring certainty for their payments over the period. In doing so they avoid the risk of rate increases, but of course they forgo the chance to benefit from rate reductions.

In general banks will try to match fixed rate loans with fixed rate funding, so that there is a real cost to them if a customer wishes to end the fixed rate agreement before the due time.

I have not discussed this issue with any representatives of the credit institutions either in the context of the bank guarantee scheme or the recapitalisation programme and I have no plans to seek to impose this requirement on any credit institution.

Joan Burton (Dublin West, Labour)
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Question 116: To ask the Minister for Finance if, in the course of recent discussions with financial institutions covered by the bank guarantee scheme, he asked the banks to consider freezing margins charged on variable rate mortgages; if such a measure was considered during recapitalisation negotiations with banks (details supplied); if he has proposals to introduce such a measure to ease the burden of mortgage repayments on hard-pressed families; and if he will make a statement on the matter. [10476/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The variable mortgage interest rates have fallen sharply in recent times. This is a major benefit to many families.

The Deputy will be aware that many lenders are conducting extensive advertising campaigns, showing that competition is a real factor on the mortgage scene. The existence of that level of competition in the mortgage lending market is sufficient, I believe, to ensure that credit institutions will reduce their rates where possible in order to remain competitive and retain their share of the market.

The Deputy will appreciate that a balance must be achieved by Government between influencing private banks through the bank guarantee scheme and other financial support incentives while at the same time being seen to have a hands-off approach to the day to day running of these institutions which must operate on a strictly commercial basis.

I have not discussed this issue with any representatives of the credit institutions either in the context of the bank guarantee scheme or the recapitalisation programme and I have no plans to seek to impose this requirement on any credit institution.