Minister’s Brief

Recommendations

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o non-Life Insurance (3%; there is also a non-tax “Insurance Compensation Levy” of 2%) o Life Insurance (1%), introduced in 2009 o Health Insurance (charge is per person insured and varies according to age and the type of health insurance policy – this levy is transferred directly into the Risk Equalisation Fund, rather than into the Exchequer) Main exemptions: Young trained farmer relief and consanguinity relief. Financial Transactions Tax Ireland is not part of the group of 10 member States working on proposals, under enhanced co-operation provisions, to introduce a Financial Transactions Tax (FTT) but we are monitoring developments. Deposit Interest Retention Tax (DIRT) DIRT is deducted from deposit interest paid to the accounts of Irish residents. The basic rate is 41% where interest was paid or credited at least once annually (most bank accounts) and 36% where it was paid less frequently. The basic rate has increased from 20% in 2008, the standard rate of income tax at the time. The increases were introduced primarily to generate additional yield and to encourage spending in the economy to stimulate growth and employment. DIRT is a “final liability tax”, i.e. it satisfies the individual’s full liability to Income Tax in respect of deposit interest. The individual may still be liable to PRSI on the interest. Deposit interest is not subject to the Universal Social Charge. Exit taxes; apply to payments and deemed payments from life assurance and funds products, at the same rate as DIRT. Main exemptions: Individuals aged 65 and over with total income, including the deposit interest, below €18,000 for single individuals or €36,000 for married couples/civil partners, can have interest paid without deduction of DIRT or can apply for a refund of DIRT deducted. Permanently incapacitated persons whose tax credits exceed any tax payable (including DIRT) are also exempt. Companies can have bank interest paid without deduction of DIRT, but are liable to CT on the interest at the CT “passive income” rate of 25%. The Exit Tax rate for payments to companies is also 25%. Yield: The yields from DIRT, Life Assurance Exit tax and Investment Fund Exit tax in each of the years 2010 to 2014 are set out in the table below. Page 50 of 184
Tax Head 2007 (€m) 2013 (€m) 2014 (€m) 2015 (€m) 2016(e)(€m) DIRT 153 499.5 435.2 301 300 Exit tax (Life) 75.4 58.7 129.9 247 N/A Exit tax (Funds) 8.7 9.7 28.6 37.6 N/A Pensions Pension savings for retirement to supplement the basic State pension is encouraged through the tax system by exempting employee and employer contributions from marginal rate taxation (within limits for employee contributions, generally), exempting pension fund investment growth while taxing the pension benefit on drawdown (except for the permissible tax-free lump sum). General restrictions have been applied to the tax reliefs available over the period of fiscal consolidation with the removal of PRSI exemption on and the application of USC to pension contributions. More targeted restrictions on higher-earners have been applied by significant reductions in the annual earnings cap for determining annual tax-relieved contributions, a lifetime cap on tax-free retirement lump sums and a lifetime cap on the maximum allowable pension fund at retirement for tax purposes (the Standard Fund Threshold). In addition, stamp duty levies were applied to the assets of funded pension saving arrangements over the period 2011-2015 to pay for the Jobs Initiative. Over half of the workforce (mostly in the private sector) do not have supplementary pension coverage. A high-level inter- Departmental Group was established in 2015 under the aegis of the Department of Social Protection to consider the factors involved in constructing an efficient and effective universal retirement saving system for those without supplementary pension coverage. Work on developing and introducing a workable system (including a tax or other State incentive) is a long-term project which will take at least 5 years The ARF option for Defined Contributions pension savings has been in place for 17 years and some aspects need to be reviewed (for example the Approved Minimum Retirement Fund). Local Property Tax Annual yield 2007 (€m) 2013 (€m) 2014 (€m) 2015 (€m) 2016(e)(€m) LPT NA 316 493 475 440 The Finance (Local Property) (Amendment) Act 2015 provided for the postponement of the next LPT revaluation date from November 2016 to 2019. The Government decided that the remaining 11 recommendations in the 2015 Thornhill Report were to be left for consideration in due course by the incoming Government. Amongst these is the Report’s central recommendation which can be summarised as: Page 51 of 184
Page 1 and 2: Minister’s Brief 2016 s Page 1 of
Page 3 and 4: 3.2.1.1 Policies on Mortgage Arrear
Page 5 and 6: 1. Introduction For the purposes of
Page 7 and 8: 2.1 Economic and Fiscal Directorate
Page 9 and 10: 2.2 Finance and Banking Directorate
Page 11 and 12: 3. Detailed Briefing Page 11 of 184
Page 13 and 14: 3.1.2 Economic Division Description
Page 15 and 16: Detail: Economic Outlook Pr
Page 17 and 18: 3.1.2.2 Microeconomic analysis unde
Page 19 and 20: changes in the relevant tax base) a
Page 21 and 22: 3.1.2.3 Economic coordination inclu
Page 23 and 24: 3.1.2.4 Budgetary/fiscal policy, go
Page 25 and 26: Assessment of compliance with SGP o
Page 27 and 28: was a deviation from the fiscal rul
Page 29 and 30: tax, followed by personal income ta
Page 31 and 32: Tax Strategy Group - What Does It D
Page 33 and 34: Detail: Income Tax Policy Income Ta
Page 35 and 36: Credit in 2014 - that credit was of
Page 37 and 38: INCOME TAX INCENTIVES Agri-Taxation
Page 39 and 40: Marine taxation In Budget 2016, a r
Page 41 and 42: Detail: Indirect Tax Policy Tax Hea
Page 43 and 44: outcomes, then it was proportionate
Page 45 and 46: More fundamental threats to tobacco
Page 47 and 48: 3.1.3.4 Finance Bill co-ordination,
Page 49: ise in both equity markets and prop
Page 53 and 54: 3.1.3.5 International taxations, co
Page 56 and 57: fully in line with the new OECD req
Page 58 and 59: 3.1.5.1 EU Economic Governance issu
Page 60 and 61: At EU level, the Governance section
Page 62 and 63: 3.1.5.2 EU-IMF Post Programme Monit
Page 64 and 65: 2. EU Funding Mechanisms/ Programme
Page 66 and 67: Detail: The EU Strategy Unit manage
Page 68 and 69: 3.1.5.4 International Relations Uni
Page 70 and 71: 3.1.5.5 Permanent Representation of
Page 72 and 73: 3.2 Finance and Banking Directorate
Page 74 and 75: 3.2.1.1 Policies on Mortgage Arrear
Page 76 and 77: available is €1.8 million. Initia
Page 78 and 79: 3.2.1.2 Policies on Central Bank po
Page 81: deemed necessary, it may be prefera
Page 84 and 85: Detail: Key Initiatives to achieve
Page 86 and 87: 5. Majority of credit requests cont
Page 88 and 89: 3.2.2 Financial Services Division D
Page 90: A further group is reviewing the re
Page 93 and 94: financing would be available to cov
Page 95 and 96: o Cumulative impact of financial le
Page 97 and 98: 3.2.2.2 National and EU policy and
Page 99 and 100: Securities The draft EU Prospectus
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In addition a full view of the fina
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"packaging", wrapping or bundling t
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3.2.3 Shareholding Management Unit
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3.2.3.1 State’s Banking Investmen
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3.2.3.2 State’s shareholding in A
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sheet continues to contract, albeit
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3.2.3.4 NAMA Specialist - Declan Re
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Detail: NAMA Background As part of
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3.2.3.5 IBRC (in special liquidatio
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In February 2013 the Irish Bank Res
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3.2.3.6 State’s shareholding in P
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PTSB’s return to profitability ha
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Credit Union Restructuring Board (R
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3.2.3.8 Management of all legal mat
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3.2.4.1 Risk and Financial Stabilit
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• development and maintenance of
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epresented and an Industry Advisory
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3.2.4.1 Management of FoI and PQ pr
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3.2.4.1 Liaison with the Attorney G
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3.2.4.2 Management of the Accountan
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Future Developments The vote accoun
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3.2.5 International Financial Insti
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Key Points: International Monetary
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with the delegation led by Second S
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assistance to the developing world.
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In addition to capital contribution
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would be the Minister for Finance o
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3.3 Corporate Page 165 of 184
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supported by OPW and a number of ex
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3.3.2. Corporate Affairs Descriptio
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member, the Department has a Busine
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ability of both electronic files an
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3.3.3. Human Resources Division Des
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Detail: 1. Organisational Structure
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effectively to improve and deliver
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The Department is currently reviewi
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Erosion of income tax base did not
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Minister’s Brief

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