Dáil Éireann debate -
Thursday, 23 Nov 2023

I welcome the recent USC cuts in the budget. I am particularly interested in how many earners in County Kildare will benefit. The Minister might also give details on counties Wicklow, Meath and Louth. My colleague Deputy McGuinness is interested in counties Kilkenny and Wexford. I ask the Minister to give us a broad statement on this but I am particularly interested in Kildare taxpayers.

As part of budget 2024, I introduced a personal income tax package to the value of €1.3 billion in 2024 and €1.5 billion in a full year. The tax package is built around three key pillars. These are changes to tax credits, the standard rate band and USC. The Government has sought to use each of these levers to spread the benefit of the available package as effectively as possible.

With regard to income tax, the main tax credits, which are personal, PAYE and earned income tax credits, will be increased by €100 to €1,875. The standard rate band will be increased by €2,000 to €42,000 for single persons, with commensurate increases for married couples and civil partners. As the budget focused on tackling child poverty, I also increased the home carer tax credit by €100 to €1,800, the single person child carer credit by €100 to €1,750 and the incapacitated child tax credit by €200 to €3,500.

I am aware that the USC is a particular point of concern for many people. This is why I introduced the largest USC package since 2016, with a cost of €350 million in 2024. The 4.5% rate of USC was decreased by 0.5% to 4.0% and the ceiling for the 2% rate of USC was increased by €2,840, from €22,920 to €25,760. The increase in the 2% ceiling will ensure that with the increase in the national minimum wage from €11.30 to €12.70 per hour, a full-time worker earning the minimum wage will remain outside the higher rates of USC. Additionally, the reduced rate of USC concession for medical card holders was extended for a further two years until the end of 2025.

To answer the Deputies' questions, I am advised by Revenue that a total of 1.6 million taxpayer units will benefit from the USC measures announced in the budget. A taxpayer unit counts jointly assessed couples as one unit. However, I am further advised by Revenue that this estimate is provided using Revenue’s micro-simulation income tax model, Tax Modeller, and while this model uses taxpayer unit level data, estimates broken down by taxpayer location are not generated as part of the modelling process. Therefore, a county-by-county breakdown of the number of taxpayer units that will benefit from the USC measures announced in the budget is not specifically available.

I may not require the full expanded time. I thank the Minister for the reply. I note the number of 1.6 million taxpayer units in the State and that a taxpayer unit can encompass a jointly assessed couple. I assume that if one were to apply a pro rata calculation by population, one could arrive at a reasonable estimate of the Kildare figures and those for other counties. I will do this. Kildare is a very industrious and highly populated county, with a high level of employment and enterprise. It is appropriate that this is rewarded in measures such as this.

A key part of the social contract is that we reward enterprise, work, innovation and industry. This is at the heart of this long-promised measure. It has been long sought, since the USC was introduced as a crisis measure during the difficult fiscal years. I understand it was always intended that, eventually, when circumstances permitted, it would be phased out or certainly scaled back. Thanks to the good stewardship of the economy under the Minister and his predecessor, we are in this happy place now with Exchequer surpluses. We can begin to share around the fruits of this labour again.

I welcome the measure and the other measures mentioned by the Minister. I will study these other benefits and the widening of various bands, the medical card exemption and how people can avail of USC credits in other ways. I welcome that minimum wage earners are exempt and out of the loop. That is very important. The squeezed middle is benefiting, which is important. It is also important that enterprise is rewarded. I thank the Minister. I do not need to take the full expanded time. In short, I commend the measures.

I thank Deputy Lawless. It is worth acknowledging that we are implementing the agreed position of the three parties in government. We negotiated a programme for government that provides for indexation of credits and bands as earnings have begun to grow following Covid. We have made significant progress on tax credits. Increasing credits results in a fair distribution of the benefit. We have also increased the entry point to the marginal rate and made changes to the USC. These are the three key pillars.

Next year, we expect incomes to rise for many, perhaps by 3%, 4% or 5%. We have earnings growth in the private sector and discussions about to get under way on the possibility of a public sector pay agreement. In the absence of making changes to the income tax system, not only would people pay more tax as their earnings grew but their effective rate of tax would increase. The case is often made in the House that there should be no income tax reductions in the budget. In many respects, not to do so would result in an increase in real terms in the burden of tax. We believe this would be fundamentally unfair. That is why we did the best we could with the resources available to bring forward a fair and balanced package that spreads the benefit of the gains across the income levels, while recognising we have a highly progressive income tax system in Ireland. We will continue to maintain and protect this progressivity. It is an important feature of our system.

Cryptocurrency tax evasion is a matter of growing concern, not only in Ireland but worldwide. It is an evolving landscape. It is essential to ensure tax compliance strikes a balance with innovation and investor protection. I would like an update from the Minister on the actions taken by the Department to combat this issue.

I propose to take Questions Nos. 86 and 93 together.

I thank Deputy Dillon for raising this issue. It has been the long-standing position of Government that the international tax system needs to keep pace with changes in how business is being conducted globally. In terms of the action occurring on tax issues in the crypto-asset sector, officials in the Department of Finance and Revenue have been involved in developing the crypto-asset reporting framework, CARF, in recent years.

CARF is an international standard for the automatic exchange of crypto information between tax authorities, developed at the OECD. The reporting framework will require reporting crypto-asset service providers to provide details of all relevant crypto-asset transactions by their users. The exchange of information between tax authorities is a powerful tool to ensure tax compliance across borders. The exchange of information assists tax authorities in accessing necessary information on taxpayers to increase tax compliance. Recently, I joined 47 of my international partners in signing up to a joint statement which commits to commencing crypto-asset reporting framework exchanges by 2027. The statement is available on the Department's website.

Revenue is a member of the expert subgroup to the OECD's working party No. 10, which is developing the technical framework to allow for CARF filing and is part of the newly formed global forum CARF group, tasked with developing proposals for the delivery of CARF's widespread implementation. CARF is being delivered in the EU through an amendment to the directive on administrative co-operation, DAC.

DAC facilitates co-operation between tax authorities of EU member states. It provides a framework for various types of exchange of information, as well as other administrative co-operative measures. Under DAC 8, reportable transactions carried out by all users resident in an EU member state, including Ireland, by a reporting crypto asset service provider resident in Ireland will be reportable to Revenue. A proposal to amend the directive on DAC 8, to deliver CARF in the EU was approved by ECOFIN in May 2023 and DAC 8 was adopted by member states in the Council on 17 October 2023. The transposition of DAC 8 will deliver the CARF rules into Irish legislation in advance of the 2025 transposition deadline.

Revenue published an update to its tax and duty manual in April 2022 that covered the taxation of crypto-assets for corporate and individual crypto-asset holders. The guidance reaffirmed that current tax legislation principles apply to cryptocurrencies, and that no special tax rules should apply to crypto-assets and that general tax principles apply for their acquisition, ownership and disposal. The normal self-assessment taxation rules apply to taxpayers in relation to income and gains derived from crypto-assets. As such, Revenue takes the same approach in identifying and confronting non-compliance in respect of the payment of tax on crypto-asset transactions as it does all other non-compliance. Revenue delivers a risk-focused, effective and proportionate response to non-compliance that reflects taxpayer behaviour. Revenue’s compliance intervention framework provides for a consistent graduated response to taxpayer behaviour, ranging from extensive opportunities to voluntarily correct mistakes, up to the pursuit of criminal sanctions for cases of fraud or evasion. Other than a relatively small number of randomly selected cases to validate the integrity of the risk approach, taxpayers are selected for compliance intervention based on the presence of various risk indicators. Cases have historically been selected using various risk-driven methodologies, including REAP, Revenue’s electronic risk and analysis system, and real-time risk analytics for VAT and PAYE. However, Revenue’s approach to compliance management is evolving to reflect the increasing incidence of real-time tax administration.

I thank the Minister for his comprehensive response. It is crucial for Members of this House to understand the cryptocurrency landscape, which while evolving rapidly presents complex tax challenges. I am interested to hear from the Minister the amount raised in tax by the State from crypto-assets. If he does not have that figure he might give it to me in writing.

Cryptocurrency is becoming increasingly mainstream. I would be interested to hear what steps are being taken to educate and inform the public of the tax obligations when dealing with digital assets. That is really important. Given the international nature of cryptocurrency transactions, it is good to hear the Government has a plan and is collaborating with international partners, and with EU colleagues to ensure tax evasion in the crypto space is effectively addressed. I welcome the Minister's comments and want to ensure we strike the balance between protecting investors and fostering innovation in the crypto space.

It is a complex area, and one that is rapidly evolving. My Department is paying close attention to developments in this area. It is important to say that Ireland is already recognised as a global leader in the exchange of information. Exchanging information on crypto-assets is important and reinforces our commitment to best international practice and tax transparency. Given the nature of the issue at hand, we can only address it collectively with countries working together through established frameworks. It is also in the relevant international forums that we can have a co-ordinated and cohesive approach to dealing with the issues that arise from crypto-assets. That is why we have been directly involved in developing the crypto-asset reporting framework in recent years. I assure the Deputy we will continue to work on that. I do not have to hand the data he has sought. I will check with the Department what information we have and can make available.

With the various types of crypto-assets, such as stablecoins and utility tokens, and with the privacy focus around cryptocurrency, it is important to have information in the public domain about what types of revenue the State is generating in this space. As we have said, people are looking for innovative areas in which to invest, such as digital assets. We certainly need a monitoring and tracking tool to ensure crypto transactions are reported, given their decentralised and pseudonymous nature within the sector. That would be important. As the Minister says, we are now moving into a space where a lot of people are investing in these types of assets. It will be a major sector in the years to come.

I assure the Deputy that the Revenue Commissioners are active in this space. It is important we take every opportunity to remind people of what the taxation obligations are, in particular in an emerging area such as digital assets. That is why, in April last year, the Revenue Commissioners updated their guidance on crypto-assets. They did not change their general guidance with regard to the taxation of crypto-assets. However, additional clarifications were provided to aid the general understanding of the mechanics of crypto-asset taxation. This included additional guidance on how to determine if a crypto transaction is trading in nature, how chargeable gains should be calculated for capital gains tax, CGT, purposes including the providing of illustrative examples and details of CGT payment dates for non-incorporated persons. It also included guidance that confirmed gifts and inheritances of crypto-assets may be subject to capital acquisitions tax, and that payments of crypto-assets to employees are benefits-in-kind that should be subject to payroll taxation in the ordinary way. However, the receipt of crypto-assets as payment by an employee may give rise to additional filing obligations for income tax or capital gains tax, for example, depending on the applicable facts and circumstances for that employee when he or she disposes of the asset at a future date. Guidance was also introduced setting out the record retention requirements relating to crypto-asset transactions. I am satisfied the guidance is there, but we perhaps need to find ways to amplify that and raise awareness for people engaged in buying and selling digital assets at this time.

An estimated 113,000 mortgage borrowers in this State have had their loans sold to vulture funds. That includes approximately 80,000 primary dwelling homes. The aim of the credit servicers directive is to encourage the development of secondary markets of non-performing loans. Will the Minister inform the House of his Department's assessment of the impact this directive will have on consumer protection and citizens' rights, and the date he expects its transposition to take place?

The credit servicers directive provides for a common EU framework for the transfer and management of bank originated, non-performing loans, including mortgages, which are transferred or sold after 29 December 2023. It sets out an EU-wide regulatory arrangement for both the purchasers and servicers of such credit agreements, and in particular provides for a new EU authorisation framework for credit servicers to be overseen by national competent authorities. In the case of Ireland this will be the Central Bank of Ireland. Any credit servicer entity authorised under this framework will have the right to passport credit servicing activities across the EU based on a home member state authorisation.

In addition, the directive makes certain amendments to the consumer credit directive and the mortgage credit directive. At EU level, the directive will impose obligations on creditors, including to have adequate policies and procedures in order that they will be required to exercise reasonable forbearance before initiating enforcement proceedings and which shall take into account, among other elements, the consumer’s circumstances. The current domestic consumer protection framework already requires regulated entities to work with and assist a personal consumer in resolving arrears on a loan.

In particular, in respect of a loan secured on a primary residence, the code of conduct on mortgage arrears, CCMA, requires that regulated entities must make every reasonable effort to agree an alternative repayment arrangement with a co-operating borrower. Further, legal proceedings may only be commenced after the time periods set out in the code have expired.

The transposition of the directive does not reduce the scope of the existing consumer protection framework at either a national or EU level, including the application of the CCMA. It amends both the consumer credit directive and the mortgage credit directive to make certain improvements to those directives in the interests of consumers.

The directive will be transposed by way of a ministerial regulation made under the European Communities Act 1972 and my Department is working with the Office of the Attorney General and the Central Bank to finalise this legal instrument by the transposition date of 29 December 2023.

Is it not the case that the directive will provide for the outsourcing of debt collection and enforcement of the security, which could involve eviction proceedings by a credit servicer or a vulture fund? A number of concerns have been raised by consumer rights advocates, for example by Professor Padraic Kenna of the University of Galway. He says this directive could transform the treatment of non-performing loans, NPLs, in the EU. We know that 15% of home loans are already held by vulture funds, thanks to Fianna Fáil and Fine Gael. As the European Consumer Organisation has noted, those who seek to maximise profits on the back of vulnerable customers should face restrictions, not legislative support. They do not operate like traditional retail banks. It has been warned that the facilitation of lenders to sell NPLs to vulture funds that are not based in the EU and could outsource debt collection activities could lead to a race to the bottom. How does the Minister respond to some of those concerns from European organisations?

This directive will not substantially change the existing domestic regulatory framework governing loan sales, other than in the case of loans falling within scope, that is, non-performing loans sold by a bank to a non-bank from 30 December 2023. The purchaser of such loans will not now have to be authorised by the Central Bank or by a comparable competent authority in another member state. However, the credit servicer of such loans will have to be authorised and will have to comply with all consumer protection requirements. Therefore, the borrower will continue to maintain all the consumer protections following the loan sale. It should be noted that pursuant to the Consumer Protection (Regulation of Credit Servicing Firms) Acts of 2015 and 2018, any entity which requires or services a residential mortgage loan now falls within the regulatory scope of the Central Bank, either as a credit institution, a retail credit firm or a credit servicing firm. I will respond further in a moment.

It has been noted that these vulture funds and debt collection servicing credit agents will operate under different legal traditions and consumer protection codes. It is clear that this directive will have a greater impact on poor households. There is every possibility that Irish households could see decisions made about their loans being made by vulture funds that are not registered in EU member states. That is the position the Minister has just outlined. We have seen the disastrous consequences of the sale of mortgage loans to vulture funds. These consequences have been made clear in recent years with households facing aggressive interest rate hikes by vulture funds that they would never have seen with main street lenders. It is crucial that the non-performing loan market is not further expanded to the detriment of consumers and vulnerable customers. That is what the directive will do. It will allow for other non-regulated entities to purchase these loans outside of the European Union. That is an issue that the finance committee will consider in the coming weeks at my request. What assurance can the Minister give that the transposition of this directive will not see a further weakening of consumer protection?

First, it is a directive, so transposition is a requirement. We will transpose the directive by means of a ministerial order in the coming weeks and active work on that is ongoing. We already have a very well established body of law to protect the rights of consumers. We have the 2015 Act, amended by the 2018 Act. In many respects what the EU is doing here is catching up with what countries like Ireland have already done by ensuring that where loans are sold, the statutory protections and system of regulation continue to apply.

The Deputy has raised a specific issue on the role of debt collection agents. I will take that away and examine what he has said on the record in that regard and come back with a formal response.

The Department of Finance's submission on addressing the appalling failure of the State to support mobility for people with a disability has pointed out that the only active scheme is outdated and needs to be replaced. We heard the same story a decade ago on the motorised transport grant and the mobility allowance. When are we going to actually see some action in this area?

I propose to take Questions Nos. 88, 106, 119 and 120 together.

The national disability inclusion strategy transport working group, NDIS TWG, comprising members from a range of Departments, agencies and disabled persons' organisations, was tasked to review all Government-funded transport and mobility supports for those with a disability, including the disabled drivers and disabled passengers scheme, DDS. Officials from the Department of Children, Equality, Disability, Integration and Youth led the work of the group.

The final report was published on 24 February 2023, and welcomed the proposal put forward by the Department of Finance and the criteria subgroup that the disabled drivers scheme be replaced with a needs-based, grant-aided vehicular adaptation system and indicated that the proposal was a clear deliverable on which work could begin in the relatively near future.

The final report also notes in its conclusion that the disabled drivers scheme is outdated and that the scheme needs to be addressed as a matter of priority. However, the final report does not set out next steps. It will be a matter for the Government as to how to take this matter forward. I will address that now.

Access to transport for people with disabilities is a multifaceted issue that involves work carried out by multiple Departments and agencies. Under the aegis of the Department of the Taoiseach officials from relevant Departments and agencies are meeting to discuss the issues arising from the report and to map a way forward.

Department of Finance officials are proactively engaging with the work of the senior officials group as an important step in examining ways to replace the disabled drivers scheme, as one specific personal transport response, in the context of broader Government consideration of integrated transport and mobility supports for those with a disability. Two meetings have been held so far, the first in July and the second more recently at the beginning of November. Officials from the Department of the Taoiseach are currently considering material supplied after these meetings. Any further changes to the existing scheme will be considered in that context.

The reality is that people with a disability are being marooned in their own homes because of the lack of supports. The sad reality is that disabled people are only half as likely to be in employment because of their disability than someone who has full mobility. Furthermore, only 15% of women with a disability are in full-time employment. This is despite a huge staffing shortage right across the economy. They are damning figures. As the Minister is aware, the recommendation states that a needs-based, grant-aided vehicular adaptation scheme must be introduced. What does this mean in reality and when will we actually see it?

In recent years, difficulties have been experienced with the disabled drivers scheme and the primary medical certificate, in particular on the appeals side for the latter. There were a number of resignations from the appeals board, as the medics involved said the scheme was too restrictive. Urgency is needed on the part of the Government. As Chair of the Oireachtas disability committee, we hear from people week in and week out who experience difficulties in getting the primary certificate or appealing it. I just do not feel the Departments are dealing with the matter as urgently as possible. I heard the Minister comment about a meeting in November. We would appreciate if this could be dealt with as a matter of the utmost urgency because people with disabilities need a scheme to ensure that there is a plan to have them mobile and able to participate in society. Whether in work or social care we must ensure that they are participating to the fullest extent possible.

People born with physical disabilities often endure a multitude of health challenges. The amendment the scheme requires would greatly assist families in improving access to transportation for the many doctor and hospital visits required by those with disabilities and, as previously mentioned, would give necessary access to employment.

The current criteria for obtaining the primary medical certificate have been referred to, even by the Minister, as archaic and arduous for families who are already juggling so much. They have been waiting for far too long as it is.

I have raised the matter of the disabled drivers and passengers scheme with the Minister and the Taoiseach. I pointed to the fact that it needs to be amended to reflect that carers are not always blood relatives of those they care for, as is often the case in rural Ireland.

I thank the Deputies. As well as being a Minister in a Government, I am a practising TD and deal with individual cases all the time. That has helped me to reach the conclusion that the existing scheme is not the best way to address the needs of persons with a disability, whether they are drivers or passengers. It is a tax-based scheme. The gateway criterion entails eligibility for the primary medical certificate. We are all aware of the details of that. A new scheme is needed but it should be based on the needs of the person concerned and be grant based. There is work under way across the Government. The key Departments are working on this and the work is being co-ordinated by the Department of the Taoiseach. That is to bring a focus and urgency to the issue. In the meantime, my officials and the Revenue Commissioners will continue to ensure the existing scheme operates. We have worked hard to get the appeals board back up and running and we anticipate that it will recommence hearing appeals in the first half of December. That is welcome because there is a backlog, with over 1,100 appeal cases waiting to be heard. The board, in itself, is not the solution to the issue because the success rate regarding appeals is very low given the nature of the eligibility criteria, which are so defined and not based on individual need. We will continue to play our part in my Department, but it does require all other relevant Departments working together on the process that is under way to have a new scheme agreed.

On a broadcast on Midlands 103 last week, there was a young man who is without his arm, without a limb. The motorised transport grant is closed to him, as is the mobility allowance, and he is not disabled enough to get the primary medical certificate and apply to participate in the disabled drivers scheme. Therefore, we need a scheme that allows people to engage with society and access employment.

I welcome the senior officials group but what we need is ministerial leadership, either through a Cabinet subcommittee on this issue or a task force led by the Minister of State, Deputy Rabbitte, who I know is personally committed to this.

I thank the Minister for letting us know about the appeals board getting back up and running but, as he has said, the success rate at that level is very low. The answer is to make the necessary amendments and have the scheme up and running as soon as possible because the reality, as outlined by the Minister based on his having met people in the circumstances in question, is that they are absolutely isolated. That is a huge concern.

I thank the Deputies for their contributions. I believe they will acknowledge it is not a competence of the Department of Finance to define who should be eligible for transport supports and mobility supports arising from disability. We are continuing to administer the existing scheme and will do so until it is replaced. I have shown willingness to respond to events that have arisen and individual cases that have highlighted gaps in the existing scheme. Colleagues will be familiar with Leigh Gath and the change we made to ensure she and others in a similar situation got the support they needed under the existing scheme.

I will ensure the appeals board is given the resources it needs to hear cases as quickly as possible but I must reiterate it is not the ultimate solution. Owing to the nature of the criteria, the success rate is in the low single digits in percentage terms. Therefore, we do need a new scheme. We will play our part because we have gathered at Revenue level and in my Department considerable experience in the administration of the existing scheme. There is a lot of knowledge and experience that can be used in the development of a new scheme, and the Department is actively involved in supporting that work.

It is not the Chair’s fault but it is not the first time that we have been left in this silly situation in which we deny Members debating time in the House and must then suspend the House for five minutes until we actually proceed to Leader’s Questions. It is just not good enough that this happens so frequently.

I welcome the appeals process concerning the primary medical certificate. That is a positive development but we all know the current system is just not fit for purpose. The reality is that the two grants that were beneficial to people – the motorised transport grant and the mobility allowance – have been suspended for ten years. What we need is the comprehensive and swift implementation of the recommendations of the report.

I thank the Minister for the response on resources for the appeals process to ensure as many appeals as possible may be heard. He mentioned the competence in the Department of Finance and the change under the Department responsible for disabilities to ensure the new scheme, whenever it will be tailored, will meet the needs we hear about weekly at meetings of the disability matters committee. There is a need for the scheme and it is important to have it up and running as soon as possible and practicable.

I will come back on the case I have encountered in Clare. The Minister has advised that amendments have been possible in particular cases. I am not sure if it is the Minister for Finance who is able to ensure these. The individual in the case in question, who lives out as far as west Clare, has a full-time carer who lives in the home, but that carer is not blood related so they cannot avail of the disabled drivers and passengers scheme. West Clare entails a huge distance and there are no taxis or anything like that. Considering the surgery the individual has to have, he will not be able to use a normal vehicle to get around. Must I raise this with the Minister, or could he advise me where I might seek to have an amendment made?

I thank all the Deputies. We should acknowledge that many are benefiting from the existing scheme. I had the figures to hand during Committee Stage of the Finance Bill. Between the VRT, the tax, and the fuel grant, the figure for this year was in the order of €70 million to €80 million. Therefore, many are benefiting from the scheme. It is working well for them. However, there are many people who do not meet the eligibility criteria of the scheme as it stands. Therefore, the focus of the Government is now on implementation. We have a working group report and, with the leadership of the Department of the Taoiseach in pulling together all the various Departments that have a contribution to make, we will make progress on this issue. It is a priority for the Government. We are treating it as an urgent issue because we accept the current scheme is not optimal.