Written answers

Thursday, 15 May 2014

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail)
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59. To ask the Minister for Finance in an effort to reduce the black economy and assist persons who are working legitimately, if he will examine the proposal whereby all banks who give loans or mortgages on houses require their customers to provide work on the house which was carried out by persons or companies that were fully registered for tax purposes; and if he will make a statement on the matter. [21869/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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This Government is committed to reducing the amount of activity in the shadow economy, particularly in the construction sector. As the Deputy is aware, I introduced the Home Renovation Incentive in Finance Act (No 2) 2013. It provides for tax relief for property owners by way of an income tax credit at 13.5% of qualifying expenditure on repair, renovation or improvement works. The aim of the Incentive is to support tax compliant building contractors by moving activity out of the shadow economy into the legitimate economy.

In order to qualify for the tax credit, the works must be carried out by legitimate contractors on a homeowner's main residence. The homeowner must also be property tax compliant. A simple, easy to use, online Home Renovations Incentive system was introduced on 10th April 2014. This allows contractors to record details of works being carried out and payments received by them.  It also allows property owners to look up the details that the contractor has entered in relation to their works.

While the online system was only introduced on 10th April, the Revenue Commissioners have advised that there has already been a significant amount of activity in the online system.  This indicates that the scheme is working as intended and encouraging individuals and building contractors to operate in the legitimate economy.

I have no plans to introduce a scheme such as the one proposed by the Deputy. Mortgage provision is an operational policy matter for the management board of each bank concerned. 

Mortgage lending decisions must be undertaken on a sustainable and prudential basis by financial institutions and conform fully to the regulatory requirements, both in relation to the financial institution itself, and also with regard to the safeguarding of the borrower's interests.  The Central Bank has advised me that it does not comment on commercial decisions or set commercial policy of individual firms. In a supervisory capacity, the Central Bank oversees and reviews bank practices and regulatory adherence.

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