Pearse Doherty (Donegal, Sinn Fein)
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166. To ask the Minister for Finance if he will introduce a vacant property tax through provisions in the upcoming Finance Bill 2022, consistent with comments made by the Minister for Housing, Local Government and Heritage; and if he will make a statement on the matter. [27350/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Government’s strategy ‘Housing For All’ includes an action for my Department to collect data on vacancy with a view to introducing a Vacant Property Tax. The timeframe for delivery on this commitment is the second quarter of 2022. The Finance (Local Property Tax) (Amendment) Act 2021 enabled Revenue to collect certain information in relation to the occupancy status of  residential properties including, where unoccupied, the duration and reason for this, in the Local Property Tax (LPT) return forms submitted by residential property owners in respect of the new LPT valuation period 2022-2025. This information, together with information from other available sources, will be used to assess the merits and impact of introducing a Vacant Property Tax. 

In considering the case for such a tax it is important to have a sound understanding of the quantity, locations and characteristics of long-term vacant properties. It is also essential to identify the reasons for vacancy, and whether this is long or short-term in nature. There may be genuine and acceptable reasons for vacancy such as refurbishment work, the temporary absence of the owner for medical reasons or pending the grant of probate for a deceased person’s estate.

The LPT returns included questions such as whether a property is vacant, the reasons for the vacancy and if the period of vacancy exceeds 12 months. The aim was to provide an indicative profile of vacant residential properties which will help to inform policy.  It should be noted that LPT applies only to habitable residential properties, and derelict or uninhabitable properties are not captured under the LPT system.

Revenue have completed a preliminary analysis of the LPT returns received to date which has been shared with my Department. The results of the preliminary analysis suggest that levels of vacancy are low across all counties. I will consider the issue in consultation with colleagues before reverting to Government with proposals on the appropriate response. I understand Revenue intends to publish a profile of the occupancy data from the LPT returns in due course.

Addressing vacancy and dereliction, and maximising the use of the existing housing stock, is a priority objective of the Government, as evidenced in the Housing for All strategy where one of the four pathways in the plan is specifically dedicated to this area.

Jackie Cahill (Tipperary, Fianna Fail)
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167. To ask the Minister for Finance if he will review the income limit for a reduced universal social charge rate for medical card holders given the rising cost of living and of many staple items, such as food and fuel; and if he will make a statement on the matter. [27351/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy will be aware, the Universal Social Charge (USC) was designed and incorporated into the Irish taxation system in 2011 to replace two other charges, namely the Health and Income Levies. Its primary purpose was to widen the tax base and to provide a stable revenue stream to the Exchequer to provide funding for public services.   

The USC is an individualised tax, meaning that a person’s liability to the tax is determined on the basis of his/her own individual income and personal circumstances. The USC is applied at a low rate on a wide base, which ensures that it is a stable and sustainable source of revenue for the State.

Currently individuals with incomes of less than €13,000 are exempt from USC. For 2022, it is estimated that just over 797,000 taxpayer units which represents 28 per cent of all taxpayer units will be exempt from USC. 

In addition, medical card holders with total income of €60,000 or less benefit from reduced rates of USC. The reduced rates of USC that apply for 2022 are 0.5% on the first €12,012 of income and 2% on the balance. Taxpayers that can avail of this concession are not subject to the 4.5 per cent USC rate of charge, as would be the case for other taxpayers.  

It is important to point out that the concession for medical card holders was never intended to be a permanent feature of the USC.  Instead, it was planned to phase in the full USC charge for medical card holders via a transitional approach. This concession for medical card holders has been extended on a number of occasions most recently in Budget 2022, with an extension of the concession until 31 December 2022.      

The USC has played a vital part in meeting the many expenditure demands placed on the Exchequer.  USC receipts have been central to the current stability of the public finances since March 2020, despite the challenges arising from the Covid-19 pandemic.

Ireland has one of the most progressive personal income tax systems in the world, which plays a crucial role in the process of income redistribution. Our redistributive tax system has been acknowledged by the IMF, the OECD and the ESRI.  In my view, a broad-based, progressive income tax system, where the majority of income earners make some contribution but according to their means, is the most fair and sustainable income tax system in the long term. As such, I have no current plans to increase either the USC exemption limit of €13,000 or the income ceiling of €60,000 for medical card holders to avail of a reduced rate of USC.  

Finally, it is worth pointing out that since October 2022, this Government has introduced a suite of measures to address increases in the cost of living, at a combined cost of approximately €2.1 billion.

Pearse Doherty (Donegal, Sinn Fein)
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169. To ask the Minister for Finance his views on the implementation of the Organisation for Economic Co-operation and Development/G20 Inclusive Framework Agreement on base erosion and profit-shifting; his views on the implementation of the agreement within the agreed timelines; and if he will make a statement on the matter. [27488/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy is aware, the OECD/G20 Inclusive Framework on BEPS met last October to agree a two-pillar solution to address tax challenges arising from the digitalisation of the economy.

Pillar One will see a reallocation of 25% of residual profits to the jurisdiction of the consumer. The scope is confined to multination groups with turnover in excess of €20 billion annually. Residual profit is profit greater than 10% of turnover. 

Pillar Two provides that the minimum effective rate is 15% for multinational enterprises with annual turnover in excess of €750m.

It is expected that the Agreement will bring long-term stability and certainty to the international tax framework arising from discussions which have taken place.

The implementation timeframe for both Pillars is ambitious as acknowledged recently by the Secretary General of the OECD.  However, I am fully committed to delivering both pillars of the agreement as soon as possible.

Intensive work is ongoing, both at the OECD and EU, to reach agreement on the technical detail required in both Pillars to ensure that these complex provisions are transposed robustly and in co-ordination by all signatories to the agreement.

An intensive programme of meetings is ongoing at the OECD to ensure that the Agreement can be translated into rules which ultimately can become legislation. My officials and those of the Revenue Commissioners are endeavouring to shape the rules to ensure that they provide the necessary tax certainty, are administrable for business and tax administrations, and remain broadly faithful to the October Agreement.

On Pillar One the OECD have divided the work into 14 building blocks necessary to implement Pillar One.  Each block is sent to public consultation as part of the development process and these elements will eventually form the Pillar One Model Rules.

These model rules, which will govern the reallocation of taxing rights to market jurisdictions, are to be delivered through a Multilateral Convention. This will be both legally and legislatively challenging to develop and deliver.  

Pillar Two is more advanced. The OECD published Model Rules in December 2021 and published a commentary to these rules in March of this year.  The Model Rules provide an important framework to assist individual jurisdictions to implement the Global Minimum Effective Tax Rate in a coordinated and consistent manner in accordance with the terms of the Agreement.

Work is ongoing on the OECD’s Implementation Framework to deal with further implementation issues, such as co-existence with the US GILTI regime, and the GloBE information return.

In the EU, work on delivering Pillar Two into legislation through the Minimum Tax Directive is very advanced. I am fully supportive of the efforts of the French presidency towards reaching unanimous agreement of the Directive and am optimistic that unanimous agreement can be reached at ECOFIN soon.

The EU Minimum Tax Directive now provides for implementation by 31 December 2023, which is in line with the OECD agreement of 2023 implementation.  This remains faithful to the original deadline, while recognising the complex work required of both tax administrations and businesses in order to introduce and operate these rules effectively.

Domestically, a public consultation has recently been launched on the implementation of Pillar Two into Ireland’s tax code and I encourage all interested parties to engage with this consultation.