Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context

Question 301: To ask the Minister for Finance if he will respond to correspondence (details supplied). [1458/11]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

The position is that the Universal Social Charge applies to all emoluments of an employment, including anything treated as a taxable benefit-in-kind. The Universal Social Charge is applied to aggregate income before granting relief in respect of pension contributions. In this regard, an individual's personal contributions to a personal retirement savings account (PRSA), personal pension contribution, additional voluntary contribution or a retirement annuity contribution is disregarded for the purposes of determining the Universal Social Charge that an individual must pay.

In addition, an employer contribution to a personal retirement savings account (PRSA) is chargeable to Income Tax in the hands of the employee as a benefit-in-kind under section 118 of the Taxes Consolidation Act 1997. As the Universal Social Charge treatment follows the Income Tax treatment, the employer's contribution to the personal retirement savings account will also be subject to the Universal Social Charge.

Section 778 of the Taxes Consolidation Act 1997, provides that an employer contribution made to an approved retirement benefit scheme or a statutory scheme is not treated as a benefit-in-kind for Income Tax purposes. Again, as the Universal Social Charge treatment follows the Income Tax treatment, any employer's contribution to such schemes will not be subject to Universal Social Charge.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context

Question 302: To ask the Minister for Finance if he will consider the introduction of a price levy on a litre of petrol and diesel as an alternative to road tax which would ensure that everyone pay their fair share, based on how much they drive, increase Government income, reduce administration and make motoring costs fair and reasonable to all; and if he will make a statement on the matter. [1460/11]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

The Deputy's proposal favours tax revenue being solely based on usage of a car, through fuel consumption, rather than ownership upon which motor tax is determined. This is often argued as the most favourable option from an environmental perspective as it embraces the 'polluter pays principle'. In an Irish context motor tax revenue is allocated to local authorities so this complicates the proposal somewhat.

In addition, motor tax (and VRT) have been reformed in recent years in order to stimulate interest in low emission cars which in turn has led to enhanced sales of more fuel efficient vehicles. This development has been welcomed by both motorists and the motor trade. Consequently it would seem premature to effectively reverse this significant policy change at this early juncture. Furthermore, replacing the revenue collected from VRT and motor tax would require a significant increase in excise duty on petrol and auto-diesel.

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

Question 303: To ask the Minister for Finance if he will set out the VAT treatment of books, newspapers, e-books, online newspaper subscriptions and online information services; his plans to change the VAT treatment of any such products; and if he will make a statement on the matter. [1468/11]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

I am advised by the Revenue Commissioners that the VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. In so far as the supply of printed matter is concerned, three different rates may apply. The general position is that books are zero-rated, newspapers and periodicals are subject to VAT at the reduced rate (currently 13.5%) and stationery and other printed matter are liable at the standard rate (currently 21%). The zero rate applies to printed books, including atlases, children's picture, drawing and colouring books and books of music. The reduced rate applies to newspapers and periodicals, including sectoral publications (sports, fashion, etc.), holiday brochures, prospectuses, catalogues and maps. The standard rate applies to a wide range of printed goods, including stationery, calendars, greeting cards, diaries, yearbooks and posters.

All digitised publications, regardless of their rate when printed (for example, a book liable at zero rate), are treated as the supply of a service liable at the standard rate of VAT. E-books, online newspaper subscriptions and online information services purchased via download over the Internet are also considered the supply of services liable for VAT at the standard rate. The EU position is that digital information services are not the direct equivalent of traditional printed products, including books. Even where the content is similar, the additional functionality (e.g. search facilities, hyperlinks, archives etc) associated with electronic content produces a fundamentally different product.

I have no immediate plans to change the VAT treatment of books. However, as stated in the National Recovery Plan 2011-2014, it is the Government's intention to examine further rebalancing of the VAT system and zero rated VAT items within the context of wider and ongoing EU level consideration of the matter. The VAT system is continually being reviewed at EU level and Ireland is part of that process.

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

Question 304: To ask the Minister for Finance the mechanism by which section 23 relief on investment properties is to be phased out over the next four years; if detailed measures are expected to be contained in the 2011 Finance Bill; the extent to which stakeholders are to be consulted on these changes; and if he will make a statement on the matter. [1472/11]

Lucinda Creighton (Dublin South East, Fine Gael)
Link to this: Individually | In context

Question 307: To ask the Minister for Finance his plans to amend the changes to the section 23 tax relief scheme in the forthcoming Finance Bill; his views on whether the withdrawal of the scheme represents a breach of contract; his further views on whether persons who entered into contracts based on the taxation position of the time should be given a reasonable time to ensure they do not get into financial difficulty or become bankrupt; and if he will make a statement on the matter. [1476/11]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

I propose to take Questions Nos. 304 and 307 together.

The changes to section 23-type reliefs announced in the Budget and which are contained in Financial Resolution No. 20 are broadly as follows.

Firstly, for chargeable periods ending on or after 1 January 2011, section 23-type relief will be restricted to set-off against rental income only from the section 23 property itself. Up until now this set-off could be against all rental income in that year.

Secondly, unused section 23-type relief previously available for carry forward beyond the 10 year "normal life" of the relief will be lost.

Thirdly, where a person sells a section 23 property within the 10 year period at any time on or after 1 January 2011, the new owner will get no section 23 relief.

Fourthly, for unused section 23 properties that are, as yet, unsold, the relevant 10 year period for these properties would normally begin once the property is sold and let under a qualifying lease. The Budget change provided that where any of these properties have yet to commence qualifying leases as of 30 June 2011, the 10-year period will commence on that day.

I also announced in the Budget that a guillotine will be introduced to terminate all unclaimed and unused capital allowances, arising after, or carried forward from 2014 as well as unused section 23 relief carried forward from 2014. However, an impact assessment will be undertaken into the effects of the phased abolition of the property-based measures and the guillotine provision. This guillotine provision, which is intended to take effect at end-2014 is not contained in any of the Financial Resolutions passed on Budget Day and will be provided for in future legislation. The arrangements for the impact assessment, and any consultation mechanisms involved have yet to be made.

Further details regarding these measures will be set out in the forthcoming Finance Bill.

My officials have received a wide range of submissions and met with a broad spectrum of stakeholders (including industry groups and professional bodies) in relation to the changes set out in the National Recovery Plan and announced in the Budget.

The measures announced were subject to legal advice.

Deputies will be able to input their views on the proposed changes as part of the normal Finance Bill process. I look forward to all constructive proposals on this matter.

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

Question 305: To ask the Minister for Finance the mechanism by which there is to be a phased reduction in tax relief on pension contributions over the next four years; if detailed measures are expected to be contained in the 2011 Finance Bill; the extent to which stakeholders are to be consulted on these changes; and if he will make a statement on the matter. [1473/11]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

The National Recovery Plan contains proposals for changes to the tax and other relief arrangements for private or supplementary pension provision over the period of the Plan, including a gradual reduction to standard rate income tax (20%) relief on employee/individual contributions to pension arrangements commencing in 2012. Pension contributions are made by certain employees in both the private and public sectors. It is intended that the reduction in tax relief of 7% each year from 2012 to 2014 will be given effect by the Budget and Finance Bills for each of those years As announced in my 2011 Budget Statement, certain changes including the application of employee PRSI and the Universal Social Charge to employee pension contributions, take effect from 1 January 2011. The PRSI change has been legislated for in the Social Welfare Act 2010 while the provisions relating to the Universal Social Charge will be included in the 2011 Finance Bill which will be published shortly.

The National Recovery Plan recognises that the various changes proposed may reduce saving for private pension provision. The Government is committed to raising €700 million from the pension sector over the period of the Plan. However, it is willing to engage with the sector to examine alternatives to the changes put forward in the Plan in order to deliver this outcome and this engagement has commenced.