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

As I have stated previously in the House, the position is that the formulation and implementation of monetary policy in the eurozone and the setting of official interest rates is an independent matter for the ECB. The Government has no role in setting official interest rates, nor in setting the retail interest rates that lenders may charge on their loans, including mortgages. That is a business and commercial matter for individual lenders.

As the Deputy may be aware, mortgage interest relief for principal private residences was phased out on a gradual basis over the period 2009 to 2020. The decision to abolish it was taken in the wake of the financial crisis, with the cost of the relief being one of the influencing factors. It cost more than €700 million in 2008. Prior to its curtailment and eventual abolition, the top two income deciles in 2005 accounted for close to half of the tax forgone through tax relief. This issue was highlighted in the findings of the 2009 Commission on Taxation report. The relief cost approximately €280 million in 2005.

While I am acutely aware that there have been increases in certain mortgage rates by some lenders, it is important to point out that mortgage interest rates, in particular fixed interest rates, have fallen over the past number of years. For example, in December 2014, the average level of fixed interest rates for new lending was 4.11 per cent compared with 3.44 per cent in March 2023. Furthermore, in March, mortgage rates in Ireland were amongst the lowest in the eurozone.

The data also indicate that a significant portion of new mortgages, 89 per cent in March 2023, are now fixed rate mortgages and this will protect borrowers in the event of a rise in official and market interest rates at least for the period that the interest rate is fixed.

The introduction or reintroduction of mortgage interest relief for principal private residences may not be the best course of action to assist home owners with rising interest rates. For example, there is additional scope for many borrowers, in particular variable rate mortgage borrowers who have built up equity in their home, to look at alternative mortgage options and to reduce their mortgage costs.

The reintroduction of mortgage interest relief, even on a selective or tailored basis, is likely to involve significant costs and needs to be considered, not on an ad hoc basis, but in the context of a range of other cost of living measures being provided.

It should be noted that this Government has responded swiftly and decisively, multiple times, to help to offset the most severe impacts of inflation, with a particular focus on protecting the most vulnerable. Overall, €12 billion in direct relief has been made available to counter the effects of inflation, with the policy response designed to avoid generating second round effects that could lead to an inflationary spiral.

The recent report of the Commission on Taxation and Welfare put forward no case or recommendation for the reintroduction of relief for mortgage interest. Further, the OECD has recommended limiting or phasing out mortgage interest relief on owner-occupied housing.

For all of these reasons, the annual Budget is the appropriate time to decide how the fiscal resources available can best be deployed.

Mairead Farrell (Galway West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

359. To ask the Minister for Finance the estimated cost to the Exchequer of increasing the current amount of tax relief of €7,000 that can be claimed per person for postgraduate fees, including the student contribution, to €8,000, €9,000 and €10,000, in tabular form; and if he will make a statement on the matter. [27382/23]

Mairead Farrell (Galway West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

360. To ask the Minister for Finance the estimated cost to the Exchequer of allowing tax relief on the first €1,000, €1,500 and €2,000 spent on tuition fees, including the student contribution, for full-time students, in tabular form; and if he will make a statement on the matter. [27383/23]

Mairead Farrell (Galway West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

361. To ask the Minister for Finance the estimated cost to the Exchequer of allowing tax relief on the first €500 and €1,000 of tuition fees, including the student contribution, for part-time students, in tabular form; and if he will make a statement on the matter. [27384/23]

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

I propose to take Questions Nos. 359 to 361, inclusive, together.

Section 473A of the Taxes Consolidation Act 1997 provides for income tax relief in respect of qualifying tuition fees paid by an individual for a third level education course (including a postgraduate course), subject to the conditions set out in that section. The relief is granted at the standard rate of income tax (currently 20%), where an individual pays “qualifying fees” for an approved course whether on his or her own behalf or on behalf of another individual.

“Qualifying fees” mean tuition fees in respect of an approved course at an approved college and includes what is referred to as the “student contribution”. No other charges and levies qualify for tax relief e.g. administration fees, student centre levy, examination fees, capitation fees. Tuition fees that are, or will be, met directly or indirectly by grant, scholarship, employer contribution or other means are deducted in arriving at the net qualifying fees.

The maximum amount of fees that can qualify for the relief is €7,000 per person, per course, per academic year. Each claim is subject to a single disregard amount each tax year. This amount is taken away from the total qualifying fees for the claim, such that relief can't be received on the disregarded portion. The disregard is currently €3,000 in the case of a full-time student and €1,500 for a part time student. If a claim has been made for more than one student or course, this disregard amount will only be deducted from the claim once.

I am advised by Revenue that it is not possible, based on the available data, to estimate the costs associated with the proposals outlined by the Deputy.

In relation to the question regarding postgraduate fees, Revenue have further advised that data on the existing relief are not captured separately in relation to postgraduate courses only.

In relation to the other questions, Revenue advises that the manner in which the data on the existing relief are currently captured and retained precludes analysis for statistical purposes at this time.

Full details of the existing relief, including the conditions that apply, are set out on the Revenue website at www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/education/tuition-fees-paid-for-third-level-education/index.aspx.