Month: January 2019

A selection of submissions for Finance Minister Paschal Donohoe ahead of Budget 2018:

Among the most interesting parts:

* The minister was told the “opportune time” had arrived to double betting tax amid ongoing pressure to increase tax on gambling.

Mr Donohoe doubled the rate from one to two percent in this year’s budget and was afterwards met with fierce opposition from the bookmaking industry.

His officials had warned that alternative proposals to tax punters directly or the profits of bookmakers would not be possible this year.

* Minister Donohoe also considered giving a reprieve to smokers in the Budget after seven consecutive years of excise duty increase.

Asked for his views on a tax rise for tobacco, the minister had written: “Not currently minded to implement a further increase.”

However, cigarettes did ultimately take another hit in Budget 2019 with a 50 cent rise in the price of a box of twenty cigarettes and similar rises for other tobacco products.

* For alcohol products, Minister Donohoe heeded the advice of officials who warned Brexit and cross-border shopping could counteract any tax increase.

“I am currently minded to make no changes,” said the minister. “Will review in final days before Budget.”

Officials said there was now a “significant price differential” between how much was paid for booze in Dublin and offers available north of the border in Newry.

* The Department of Finance were forced to play whack-a-mole with wealthy tax avoiders after a new scheme for dodging inheritance tax was uncovered.

Two years ago, the Department shut down a loophole where high-wealth individuals used an exemption to transfer properties tax-free to their children.

However, the Revenue Commissioners have now discovered that a new system was being used for inheriting valuable houses without having to pay any tax.

Those involved used what are known as ‘discretionary trusts’, a system usually set up to manage a person’s assets on behalf of their children.

You can read more in the documents themselves:

THE Department of Finance was worried it couldn’t even publish an anonymised list of pensions for former ministers and officeholders because it would be too easy to identify them.

Each year, the Department had printed a list of former taoisigh, ministers, presidents, along with other ex-officeholders and how much they received in their annual pension.

However, the 2017 list was never published due to concerns over data protection and that even an anonymous list could create a breach.

Internal emails reveal how concerns were first raised early in the summer after their ongoing publication was raised at a GDPR meeting.

The pension details always “attract great media interest”, one email said.

“At a recent GDPR course it was suggested that we shouldn’t actually be doing this as we would be releasing the name and gross amount paid and in breach of GDPR,” wrote an official.

Consideration was given to whether some other form of publishing, either anonymously or in aggregate for groups like former Taoisigh, ministers, presidents, or other officeholders.

In a later email, the Department of Finance data protection officer Colm O’Neill said: “Appreciate if we could have a chat about this publication given that it identifies individuals – I’m not aware of any legal basis for processing this personal data.

“Even if the names of the individuals were anonymised, it wouldn’t be that difficult to identify the former office holders if compared with last year’s publication.”

Mr O’Neill said that the Department of Finance were not even the controller of the pension data and were taking it from their sister department the Department of Public Expenditure.

Discussion between officials also raised the possibility that figures for previous years – which remain on the department website – might have to be deleted too.

In one email, an official said: “My initial view would be that unless someone can identify a lawful basis to publish the data, it shouldn’t be published and anything up already should be removed.”

In later correspondence, the Department said that the introduction of GDPR [the General Data Protection Regulations] in May had changed things dramatically.

“What applied before 25 May and what applies now are two very different things,” said an email.

As the deadline for publishing the Department’s Finance Accounts for 2017 approached in late July, the Department were still unsure what to do about the pension figures.

However, on July 27, it was confirmed that the figures – which had been available online dating back to 2009 – would not be made public.

An email said the information constituted “personal data” and that the ex-politicians and officeholders involved should not be made identifiable in this way.

A message from Helen Codd, the data protection officer of the Department of Public Expenditure, said their legal advice was that publication had to be halted.

“I … would appreciate if the practice of issuing this material with the Finance Accounts as a matter of routine ceases with immediate effect,” she wrote.

The email explained that if the material was subsequently sought under FOI, it would be dealt with “appropriately at that time”.

In a statement, the Department of Public Expenditure said: “Due to the implementation of the General Data Protection Regulations it is our view that the data referenced … [can] no longer be published.”

The Department of Finance said the pension figures were not held by them and it was not for them to release.

FINANCE Minister Paschal Donohoe was on the verge of sanctioning a €10 increase in carbon tax only for a later change of mind, departmental documents show.

A pre-budget submission for Mr Donohoe prepared by his officials reveal that the minister had been preparing to sign off on the tax hike in advance of Budget 2019.

However, the increase never went ahead amid fears over Brexit and how higher costs would impact on people who did not have options to choose renewable or cleaner energy sources.

A copy of the submission includes a note from Mr Donohoe, who wrote: “I am currently minded to implement a €10 increase on Budget Day.”

The €10 increase would have raised around €210 million in Exchequer funding had it proceeded according to the document.

In an executive summary, civil servants told Mr Donohoe that increasing the tax rate would support climate change policy and “send a signal” to the public about government policy.

“In order to meet climate change targets, which currently appears difficult,” it said, “there have been calls for a long term strategy to increase the carbon tax rate to €80 (per tonne CO2) by 2030. The current rate of €20 has been in place since 2012.”

The submission warned that the increase might “disproportionately” hit low income households who were already at risk of fuel poverty.

It also said that businesses with particularly large energy spends would also be hit.

To try and minimise the impact, it was suggested that the Department could increase the rate paid as part of the National Fuel Scheme, an allowance paid for fuel purchases for social welfare recipients and others.

Separately, changes to the diesel rebate scheme could also be used to reduce the impact on hauliers and bus operators.

The submission painted a bleak picture of how Ireland was doing in meeting its climate change targets saying that emissions had actually increased in a number of areas in recent years, including transport and residential homes.

However, it said even advocates for carbon tax accepted that increases could hurt households that were most at risk of “fuel poverty”.

“Households dependent on more carbon intensive fuels such as oil and solid fuels are more likely to experience fuel poverty,” it said.

The submission also said there were “cross border” risks associated with increasing carbon tax particularly if the UK did not follow suit or “sterling continues to weaken”.

It said that so-called “fuel tourism” where motorists cross the border to buy petrol and diesel was a double-edged sword. While one study found drivers from Northern Ireland had helped generate €230 million in transport taxes in the south, this had added 2% to the Republic’s annual greenhouse gas emission levels.

Fuel prices were more or less the same on both sides of the border at the time of the submission.

A greater problem was that significantly higher taxes on solid fuels in the South meant that there was ongoing problems with the “illicit sale of solid fuels”.

“This includes high sulphur coal, which is damaging to public health, jeopardises legitimate business in the South as well as depriving the Exchequer of Revenue,” it said.

The submission also explained how the impact of increased carbon tax would have dramatically different impacts on different households.

This would depend on the BER rating of homes, whether they were on the gas network, and the availability of public transport with rural areas much more likely to be hit hard.

In a statement, the Department said that Brexit had been a key factor in the minister’s change of heart on increasing carbon tax in the budget.

They said: “While some households are in a good positon to reduce their carbon footprints, others may not have such choices available to them, at least not yet.

“Ireland has relatively high fuel tax rates in OECD terms. At current prices, total fuel taxes (including the NORA [oil reserve] levy) is about 60 percent of the retail price on a litre of petrol and 54 percent on a litre of diesel.”

The Department also said fuel prices had increased significantly over the past year, with diesel and petrol prices both up by over 10 percent.