Making the announcement Minister McEntee commented “I am pleased to announce the re-opening of this important forestry support measure that was temporarily suspended just before Christmas. Although aware of the importance of the Scheme to the forestry industry, the suspension was necessary to enable my Department to take stock of its overall financial position following the welcome allocation for forestry announced in the 2012 Budget. I am happy to say there are no changes to the existing Scheme, which provides payments of €750 per hectare, and it is now open to new applicants. Processing of applications already in the system at the time of the suspension will resume immediately”.

Minister McEntee added “I am fully aware of the importance of this Scheme having visited woodlands and woodland owners who have availed of these grants. The scheme allows broadleaf forest owners to thin, manage and add value to their plantations, while also supplying much needed raw material to the emerging wood-fuel sector, an important and growing enterprise within our rural communities. I am also keenly aware having helped launch the ‘From ash to clash’ DVD recently that hurley makers require ash stands to be thinned early so they will grow on to supply quality ash for hurleys to enable Ireland to be self sufficient in hurley ash within the next few years. I have been aware of the concerns expressed about the future of the Scheme and am delighted that the Government’s commitment to forestry evidenced in the Budget has placed me in a position to be able to make this announcement”.

What is a Debt Relief Certificate?

The Debt Relief Certificate (DRC) provides for the forgiveness of debt for debtors with no assets and no income who are unable to meet qualifying debts totalling not more than €20,000. The purpose is to create an efficient means, non-judicial, of allowing persons to resolve unmanageable unsecured debt problems.

For example: Lets assume that John has the following unsecured debts which he has difficulty repaying:

Bank overdraft €5,000
Credit card €5,000
Personal Loan €5,000
Store catalogue €2,000
Utilities €1,000

John unfortunately now finds himself unemployed and in receipt of a social welfare payment or that his income has been severely reduced. He has little or no capacity to pay off his debts following the payment of rent and meeting his basic household needs such as food, heat, etc. He lives in rented accommodation and has no assets to dispose of to help pay his debts and he is not in a position to receive assistance from family or friends.

What can John do?
John could now contact an approved intermediary (such as MABS) and request their assistance in completing the application form and statement of affairs for a Debt Relief Certificate. The approved intermediary will advise John on his options regarding his qualifying debts and the implications of entering into a DRC. These implications may be significant in terms of future access to credit of any kind and provision of utility and other services.

If John proceeds with the application, the approved intermediary will request full disclosure of his income and outgoings and any other information required by the Insolvency Service. John must pay a processing fee of (€90) to the approved intermediary prior to the submission of the DRC application.

The authorised intermediary submits the documentation to the Insolvency Service for approval. The Insolvency Service will examine the submitted documentation and if satisfied will issue a Debt Relief Certificate. The Certificate will list the qualifying debts of the debtor on the application date, specify the amount of each debt and the creditor to whom it was owed. The Service then gives a copy of the Certificate to John and records the relevant details on the Insolvency Register.

A 1 year moratorium period during which creditors cannot pursue action against John in respect of the debts covered by the DRC commences on the date of the Certificate’s registration in the Insolvency Register.

At the end of the 1 year moratorium period, John is discharged from the debts listed in the Debt Relief Certificate. John cannot apply for a further DRC before 6 years has elapsed and a DRC may not be availed of more than twice in a lifetime.

What is a Debt Settlement Arrangement?

The Debt Settlement Arrangement (DSA) provides for a system of debt settlement between a debtor and two or more creditors to repay an amount of unsecured consumer type debt only over a set period.

For example: Lets assume that that Mary has a number of unsecured debts such as
credit card, personal loans, overdrafts, retail, store catalogues, etc which amount to over €20,000. She has difficulty in repaying her debts in full, perhaps due to reduced income and pressure to maintain mortgage repayments.

(Similarly with the DRC, debts that do not qualify for inclusion in a DSA include secured credit of any type, fines imposed by a court and family maintenance payments).

Mary can now contact a personal insolvency trustee, who having examined her circumstances and completed a financial statement of affairs may apply to the Insolvency Service for a Protective Certificate in respect of preparation of a DSA. If granted by the Insolvency Service, the Protective Certificate would provide for a standstill period (30 days) during which creditors may not take action against Mary.

The next step is for the personal insolvency trustee to forward a DSA to creditors for their agreement. The proposal would set out the amounts to be repaid by Mary over a five year period and any particular conditions that might attach.

If approved by creditors (by a vote of 65% in value of qualifying creditors), the Insolvency Service would provide formal registration of the DSA.

At the satisfactory conclusion of the DSA after 5 years, all of Mary’s debts covered by it would be discharged in full. Mary could not apply for another DSA within a ten-year period.

The DSA will likely be subject to annual review by the personal insolvency trustee to reflect any changes in Mary’s financial circumstances. It may be varied or terminated and in that regard, Mary could be subject to an application for adjudication in bankruptcy on the ending, termination or failure of the DSA.

There are grounds for challenge by creditors to Mary’s DSA proposal and there is a role for the courts on application to have a DSA annulled.

How might a Personal Insolvency Arrangement work in practice?

Again, let us take the example of John

John has a number of unsecured debts, such as credit card, personal loans, overdrafts etc. These unsecured debts amount to €50,000. He also has a mortgage on his principal private residence for €300,000. His principal private residence is a house valued at €200,000. John also has a buy-to-let mortgage on an apartment that he bought as an investment. That buy-to-let mortgage is for €250,000 but the value of the apartment is only €150,000. John is self-employed and his income has fallen substantially over the past three years so that he is now unable to meet his debt payments as they fall due.

John has tried unsuccessfully to reach an accommodation with his mortgage lenders to restructure the loans. John contacts a personal insolvency trustee and completes a standard financial statement setting out his financial affairs in full. The personal insolvency trustee advises John as to his options and will assess whether John meets the eligibility criteria for a PIA. Those criteria include the following:

• John must be cash-flow insolvent (i.e. unable to meet his debts in full as they fall due);
• it is unforeseeable that over the course of a [5] year period, John will become solvent;
• a debt settlement arrangement (DSA) would not be a viable alternative to a PIA as a mechanism to make John solvent within a period of [5] years.

If the personal insolvency trustee is satisfied that John meets the above eligibility criteria and is satisfied that there is a reasonable possibility that a PIA would be capable of making John solvent within [6] years, the personal insolvency trustee applies to the Insolvency Service for a protective certificate. The Insolvency Service carries out certain checks in relation to the application and issues a protective certificate which protects John from action by his creditors for a minimum of [40] working days (and up to a maximum of [60] working days, subject to extension for a further [10] working days).

The personal insolvency trustee notifies John’s creditors and sends them prescribed information, including information as to John’s financial situation. The personal insolvency trustee considers any submissions from creditors and prepares a proposal for a PIA, taking into account what John can afford to pay to his creditors but leaving him with sufficient income to maintain a reasonable standard of living.

The proposal provides for the following treatment with respect to John’s debts:

• John to make payments totalling €20,000 to unsecured creditors over 6 years representing 40% of the amount due.
• The principal amount of the mortgage in respect of John’s principal private residence is written down to €250,000 and is restructured so that the term of the loan is extended by 5 years, thereby reducing the monthly repayments further.
• John is to sell the buy-to-let apartment under the supervision of the personal insolvency trustee. The proceeds of the sale (€150,000) are paid to the buy-to-let mortgage lender. The shortfall due to that lender (€100,000) abates in equal proportion to the unsecured debts (i.e. 40%) and so John makes further payments to that lender totalling €40,000 over 6 years.

If John consents, the personal insolvency trustee then summons a creditors’ meeting to vote on the proposal. In considering whether to vote in favour of the proposal, the creditors take into account whether the financial outcome for them under the PIA is likely to be better than the estimated financial outcome for them in alternative scenarios such as enforcement or bankruptcy.

If the specified majority of creditors vote in favour of the PIA and no creditor objects to it in the Circuit Court, the PIA comes into effect and the Insolvency Service registers it in the Personal Insolvency Register.

If John’s financial circumstances improve over the course of the PIA (e.g. if he receives an inheritance or his income increases materially), John is obliged to notify the personal insolvency trustee and the terms of the PIA may be varied to provide for increased payments to the creditors.

If John subsequently decides to sell his principal private residence and property prices have improved since he entered into the PIA, there is a clawback of the uplift in value up to a maximum of the amount that has been written off under the PIA (i.e. €50,000) but disregarding any improvements made to the property since the date of its valuation for the purposes of the PIA.

If John does not abide by the terms of the PIA (e.g. there is a 6 month arrears default in making the payments due under the PIA) the arrangement will fail and John will again be liable in full for the debts. The creditors can then take enforcement action against John or petition for his bankruptcy.

If John successfully completes the PIA, all of his unsecured debts and the shortfall due in respect of the buy-to-let mortgage are discharged. John remains liable to pay the mortgage in respect of his principal private residence on the restructured terms agreed under the PIA.

The Minister of State with responsibility for forestry at the Department of Agriculture, Food and the Marine, Shane McEntee TD, today announced the immediate opening of a new Forest Roads (Grant) Scheme. 

The previous Scheme was closed in mid-December 2011 and a consultative process was immediately commenced with industry stakeholders on proposals put forward by the Department for a new Scheme.  These consultations are now complete and a new Scheme with revised provisions is being introduced.  Minister McEntee explained “Our priority is to achieve the best value from the funding available. The new Scheme incorporates a number of changes to help us achieve this objective and to ensure the continuation of what is one of our most important support measures under the Forestry Programme. I would like to thank the industry representatives for their very useful inputs to the consultative process and assure them of the Government’s continued commitment to forestry”.

Minister McEntee added: “There were over 200 applicants at the time of closure of the old Roads Scheme whose applications had yet to be determined or approved.  The Department will shortly be writing to these applicants offering them the opportunity to switch to the new Scheme subject to their acceptance of the new terms and conditions”.

Speaking about the function, Chairperson of Cork South West Fine Gael Anthony Keohane said “it is a great opportunity for us to mark these two former Deputy’s great achievements in their public life as well as thank them for their years of service. To have the Taoiseach at such an event only goes further to show how well liked and well respect both Jim and Paddy are”. A large number of both Jim and Paddy’s former colleagues past and present in Dáil Éireann, from across the country, will make the trip to Bantry to celebrate the occasion.

The function will take place in the West Lodge Hotel Bantry on the 3rd of February and further information about the event and tickets can be obtained by ringing 0872110324 or by emailing info@corksouthwestfg.ie. You can also check our website www.corksouthwestfg.ie

The Minister for Finance has requested the Central Bank to arrange for
the issue of a special coin in 2012 to mark the 90th anniversary of
the death of Michael Collins. The Minister confirmed to Cork South
West Fine Gael TD Jim Daly on the 13^th of this month that he has requested the Central Bank to
issue a commemorative coin to mark the 90th anniversary of his
predecessor in the Department of Finance.

Jim Daly TD has welcomed the state’s acknowledgement of the
contribution of his fellow West Cork man to the country during a time
of enormous crisis. “Michael Collins stands out as one of the greatest
contributors to the setting up of this state as an independent
republic. The former Minister for Finance gave his every waking hour
to this country eventually making the ultimate sacrifice by loosing
his life in the struggle for independence. I am aware that there are
many other significant anniversaries to be commemorated in the run up
to 2016 but Michael Collins made a particularly unique contribution
that merits a special acknowledgement from the Irish state.”

Broad Revenue Targets
• A €3.8bn total adjustment of which €1.6bn is from tax & €2.2bn from spending reductions.
• Only €1.6bn of this adjustment from tax because international experience shows that cuts in spending are better than increasing tax for fixing deficits, or growth and jobs than.
• But €600m of this tax figure is carry over from measures in the last budget. So new tax measures only need to raise €1bn. When this carry over is excluded, this gives a 2:1 ratio for 2012 on spending/tax.
• Key Message: With regard to any individual tax measure below, it is better for the economy to increase this tax rather than increase income tax which will affect jobs.

Delivered No Income tax Increase to Support Jobs
• Income tax is a tax on jobs. We have managed not to increase this in a jobs crisis. The Commission on Taxation said “taxes on labour should be kept low to support employment”
• This will give households certainty on their take home pay.
• The top rate of tax (incl PRSI & USC) imposes high marginal rates (52%) at modest incomes (€32,800)
• Almost 80% of the previous govt’s taxation changes have fallen on income / labour. And Fianna Fail planned a further €630m in income tax hikes by 2014

Promoting Economic Growth
• International trade / FDI: No change in 12.5% corporation tax rate. ‘Special Assignee Relief Programme’ to allow companies to attract key people to Ireland. Foreign Earnings Deduction to support our export drive to BRICS countries
• R&D measures targeted at indigenous industry.
• Measures to encourage Property Transactions: stamp duty on commercial property to decrease from 6% to 2%; a Capital Gains Tax exemption (for 7 years’ value gain)
• Measures to help Agri-Food sector: Encourage the transfer of farms to the next generation through Stamp Duty reduction; Farmers will also be significant beneficiaries of the reduction in the USC.

USC Exemption for lowest Paid — Fairness
• The exemption level from the USC will be raised from €4004 to €10,036,
• This benefits nearly 330,000 people who are on the lowest incomes

Capital Taxes — Fairness & raise €166m
• Increase from 25% to 30% in both CAT (Capital Acquisitions Tax) refers to inheritances & CGT (Capital Gains Tax) refers to selling assets
• Increase from 27% to 30% in DIRT rate taxing those with interest from savings. This makes saving less attractive and should encourage consumption.

High Earners Measures — Fairness
• Extended PRSI to include unearned income such as rental income, dividends and investments. It will improve equity as all income will be taxed on the same basis.
• Legacy Property Tax Reliefs: a property relief surcharge of 5 per cent will be imposed on investors with an annual gross income over €100,000
• Pensions: various measures on Approved Retirement Funds and ‘vested’ PRSAs on assets in excess of €2m
• “tax exiles”: abolishing the “citizenship” condition for payment of the Domicile Levy so as to ensure that “tax exiles” cannot avoid it by renouncing their citizenship.

Mortgage Interest Relief — help negative equity generation
• Increasing mortgage interest relief to 30% for First Time Buyers in 2004-08, from the current sliding scale of 20% to 25%.
• This is targeted to those who took out their mortgage during the peak years of the housing bubble, and are thus more likely to be in negative equity.
• Fulfilling a key Programme for Government commitment.

2% VAT Increase — to raise €560m
• When taxes have to be increased, the OECD / Commission on Taxation / ESRI support an increase in indirect tax (e.g. VAT) rather than direct tax (e.g. income tax).
• Other European countries are doing it: 20 of 27 MS have increased VAT in the last 4 years
• Effect on the domestic economy: The UK has increased its standard rate of VAT so now at 20%, and the exchange rate is a bigger factor for cross border shopping. And not increasing income tax will offset consumer confidence.
• We will limit the top rate of VAT to 23% as per the Programme for Government
• It is part of the troika agreement. Fianna Fáil are just delaying it.
• Delayed until January 1st so no effect on Christmas trade
• €500 per household claim is inaccurate; as business contributes to the total yield as well.

Household charge of €100 p.a. — to raise circa €160m
• OECD / Commission on Taxation / ESRI say property tax is least damaging to economy.
• Is a flat rate charge unfair? It is temporary until a valuation system is in place, and then the amount of tax can be based on the house / site value. The previous govt. announced a property tax but didn’t put the groundwork in place.
• Waivers for those on mortgage interest supplement and those residing in certain unfinished housing estates

Carbon tax — to raise €80m
• €5 per tonne increase from €15 to €20.
• Increasing the price on carbon (the tax rate) will change behaviour to reduce our greenhouse gas emissions combating climate change
• Increasing the carbon tax means a relatively small increase spread across all fossil fuels rather than larger increases in the excise rates on specific fuels, such as petrol or diesel.

Motor Tax — to raise €46.5m
• Rates to increase across all categories. They average 7.5%, with flat rate increase at the low carbon end.
• This is a rebalancing of the system. When the system changed to be carbon based, and many people switched to low carbon cars, the motor tax for many decreased.