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Archive for December 5th, 2012

This afternoon in the Dail, the finance and public expenditure and reform ministers, Michael Noonan and Brendan Howlin presented Budget 2013. All the associated documents are here. These are the tax measures. These are the cuts to services and welfare. Overall, the Government presented a positive assessment of the economy overall and confirmed that it expects to beat the deficit target for 2012 with an actual of 8.2% versus the target of 8.6% in the Memorandum of Understanding with the programme finance Troika. So, what about the NAMA and property aspects of the Budget 2013 announcements?

(1) NAMA is to ramp up its provision of residential property for social housing in 2013. This is grossly unfair on NAMA which has already made 3,800 homes available to Government which has only overseen the acquisition of 133 homes to date, including 58 in 2011. So much for environment minister, Phil Hogan’s fanfare last December 2011, indicating that NAMA would provide 2,000 homes in the short term.

(2) NAMA has spent €650m of the €2bn investment announced in May 2012.

(3) The property tax will come into effect from 1st July 2013. Residential property will be self-assessed by homeowners and the tax will be collected by the Revenue Commissioners. The tax is payable by owners rather than occupiers unless they’re both the same of course.

(4) So far, claims the Government – opponents have different figures – 66% of households have paid the €100 household charge in 2012 which was supposed to have been paid by 31st March 2012. From 1st July 2013, the Revenue Commissioners will collect arrears on this charge, and from 1st July 2013, the arrears will rise from €100 to €200.

(5) The property charge will be 0.18% on homes worth less than €1m and will be 0.25% on homes worth more than €1m, but only on the element in excess of €1m. If a home is worth less than €100,000 then the assessed value will be €50,000. Above €100,000 there are bands of €50,000 and the assessed value will be the midpoint of the band, eg your home is worth €130,000 then the assessed value will be €125,000, if your home is worth €205,000 then the assessed value will be €225,000.

(6) In 2013 only, only 50% of the annual charge will be payable.

(7) There will be exemptions for three years for first time buyers in 2013, and buyers of homes which were previously vacant and unlived in.

(8) There will be no waivers, only deferrals so if you can’t pay, the charge will be added to a tab  which will be payable when you sell or die.

(9) In 2013, if you have a second property and are presently paying the non principal private residence tax of €200, you will continue to pay that tax in 2013, IN ADDITION to the new charge. From 1st January 2014, you will only need pay the property tax, with the NPPR abolished, but only from 1st Jan 2014.

(10) Rental income will be subject to PRSI, typically about 4%.

(11) Real Estate Investment Trusts will be introduced in 2013. REITs are managed property investment funds and allow ordinary investors to invest in property without investing large sums with tax incentives. Typically, you buy a share in a property fund and then you get income on your share from rent and if property is sold at a profit. If you want out of the fund, you can sell your share. REITs have been promised since this administration came into office.

(12) There was no change to the incentives offered in last year’s budget, but mortgage relief for first time buyers will be ended as previously indicated by the end of December 2012. However first time buyers in 2013 will be exempted from the new property tax for three years.

Estate agents and property consultants Lisney have been quick out of the gates and have provided a response to the Budget 2013 announcements. They criticise the structure of the new property tax for a variety of reasons including no account of stamp duty and that it should be on occupiers rather than owners. With respect to REITs, James Nugent, the managing director of Lisney has this to say:

“REIT’s are publically traded property companies, where the majority of the assets of the company are income producing real estate assets. This will provide liquidity to the market and will allow investors participate in areas of the property market that they would not traditionally have had the opportunity to enter, i.e. it will allow them invest small sums of money in large-scale commercial properties. Given the relatively small size of the Irish market, it is likely that there will only be a limited number of REIT’s established, perhaps two or three. It is positive that this is being introduced at a time when property values are low. This is contrary to the situation in UK when they were introduced at the height of the market in 2007 and suffered large losses within a short period of time due to the falls in property values. REIT’s are also positive from the point of view that they will provide a new source of funding for property companies. A return of a listed property sector is to be welcomed, the added benefit of no taxation at company level is good news for the investor.””

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“Ireland’s ranking shows how little faith investors have in our ability to prevent the abuse of power. Our failure to hold people to account for wrongdoing is also having a negative impact on international perceptions of Ireland. There appears to have been very little action taken on foot of the publication of the final Moriarty Tribunal report, while The Taoiseach’s decision to make public appearances with Denis O’Brien after the publication of the report will have done our international reputation no favours” Transparency International, 5th December 2012

The man who owns 29.9% of Independent News and Media, the country’s biggest private media group and who is widely seen as controlling the group with a long-term associate installed as chairman and two nominated directors on the board, is also the man who controls the country’s largest private radio group, Communicorp and indeed his so-called “right hand man” Paul Connolly owns 50% of Elevation Media Limited which in turn owns 100% of F5 Communications (Ireland) Limited which produces the premier domestic business magazine, Business and Finance – this man is Denis O’Brien.

And this morning, he is mentioned twice in the release which accompanies the publication of the annual Corruption Perceptions Index by Transparency International, an index which tracks countries worldwide in making their countries more honest. The 2011 Index has Ireland falling a record 11 places to be the 25th cleanest, most honest country in the world – in 2010 we were regarded by Transparency International as being the 14th most honest country in the world, six places ABOVE our neighbours in the UK; today, the UK has leapfrogged us and we are today one place BELOW the UK.

Our deterioration is blamed on what Transparency International’s Irish chief executive, John Devitt, says is “our failure to hold people to account for wrong doing”.

The statement accompanying today’s publication of the index states “The poor results come after a succession of political controversies. The Moriarty and Mahon Tribunals published negative findings against politicians and business people after 15 year-long investigations into corruption and payments to government ministers. There was further controversy a year after the publication of the final Moriarty Tribunal report when the Taoiseach shared a platform at Wall Street with Denis O’Brien, a leading businessman linked to clandestine payments to the former minister for communications, Michael Lowry. Mr Lowry was found to have influenced the award of the second mobile phone licence to Mr O’Brien’s consortium in 1995.”

This is the scene at the New York Stock Exchange on 19th March 2012 and the Sunday Independent previously claimed that An Taoiseach Enda Kenny knew that Denis O’Brien would be present 12 days in advance of the event in New York which formed part of the traditional Irish visitation to the US as part of the annual St Patrick’s Day celebrations.

AFarewellToHighIndexRating

Denis O’Brien and Michael Lowry have consistently disputed the findings of the Moriarty Tribunal, an Irish mechanism whereby a judge was appointed, initially to examine the finances of politicians but is probably best known today for examining the circumstances in which a mobile phone licence was awarded to Denis O’Brien in the mid-1990s when Michael Lowry was the Fine Gael communications minister. The Tribunal sat for 15 years and its ultimate cost is yet to be settled but is likely to be in the hundreds of millions, and it concluded, according to Elaine Byrne writing in the Sunday Independent in an article which I don’t believe is subject to libel proceedings “Judge Moriarty concluded that O’Brien donated almost IR£1m in “clandestine circumstances” to Lowry who, according to the tribunal, “not only influenced, but delivered” the licence.””

The latest update from Government on dealing with the Moriarty Tribunal report, from our soporific justice minister Alan Shatter appears to have been in May 2012 when he responded to a parliamentary question by saying “I am informed by the Garda authorities that following their examination of the report of the Moriarty Tribunal, they are consulting with the Director of Public Prosecutions as to whether aspects of it may be pursued from a criminal point of view.”

Last year, Michael Lowry lost a libel case taken against former Independent News and Media journalist Sam Smyth with the judge in the case stating “But of course tribunal hearings and findings may be reported upon by the media and tribunal findings may certainly provide a roadmap or trail for other bodies or persons with an interest in the subject matter of inquiry, be it the Oireachtas, the Office of the Director of Public Prosecutions or litigants who engage in private litigation. Shorn of this characteristic, the function of tribunals would be rendered totally nugatory and pointless. The critical consideration in the cases cited above is that tribunal findings do not of themselves constitute material of probative value in such proceedings. They may however point to sources of evidence which may then be accessed in that separate context.”

It seems that only does Denis O’Brien operate in some of the most corrupt countries on the planet according to Transparency International – countries like Haiti – but he is now associated with the reputation of this country deteriorating, though it should be said that he hasn’t been charged or convicted of any crime, disputes the findings of the Moriarty Tribunal and welcomes the forthcoming court case taken by the failed bidders for the mobile phone licence as an opportunity to vindicate his position.

UPDATE: 9th December, 2012. The Irish Times yesterday carried this story with reaction from Denis O’Brien who has apparently issued a statement which said “When contacted by a representative of Mr O’Brien, Mr Devitt revealed that he had included Mr O’Brien’s name in the press release even though Mr O’Brien’s name was not mentioned, referred to or raised in any of the documents on which the index for 2012 was based..when asked who took the decision to introduce Mr O’Brien’s name he [John Devitt, Transparency International] responded: ‘I would have taken the final decision’” The Irish Times also reports “But a statement released by Mr O’Brien last night said Mr Devitt had admitted earlier yesterday there was no reference to the businessman’s name in the surveys used to compile the index. “This is despite a number of mentions of Mr O’Brien in the press release” on the index, the statement said.”

There was also

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