Notes prepared for Michael Noonan have been published
Questions have been raised by Department of Finance officials about the current status of Permanent TSB Bank and about the current low 9% VAT rate for the Hospitality sector, according to recent briefing notes for the Minister of Finance.
The officials suggest the possibility of some form of merger and acquisition activity to drive value and improve the long-term viability of the bank which has faced competitive and cost challenges in its personal banking market since a stock market flotation of a 25% stake last year. The taxpayer still owns 75% of the bank.
The Minister remained tight-lipped about this at a NAMA briefing yesterday saying the bank was doing well. He also confirmed that a proportion of NAMA’s expected surplus of at least €2.3bn could be transferred to the Exchequer’s Rainy Day Fund, as noted in the Programme for Government
Meanwhile, Mr Noonan’s officials also suggest that rising prices in the tourism sector call into question the rationale for prolonging the special low VAT rate. Restoration of the previous 13.5% rate would raise €640m for the Exchequer.
"This was initially introduced on a temporary basis to give a boost to this area. While all the indications are that the measure has done its job with robust growth in visitors and employment in the tourism area. The general recovery of the economy and increasing prices in the sector raises questions about its future," the report reads.
Officials on Merrion Street have also told Mr Noonan that a ruling from the EU's probe into Apple's tax payments in Ireland could be released "soon."
The publication notes that it believes that Ireland's economic growth is "reasonably balanced with both domestic demand and exports making positive contributions."