Finance Bill 2022: Second Stage

Question proposed: "That the Bill be now read a Second Time."

Minister of State at the Department of Finance (Deputy Sean Fleming)

I am pleased to be here this evening to discuss the Finance Bill 2022. As Senators are aware, the annual Finance Bill provides a legislative basis for the provisions introduced in the budget as well as some further changes to the tax code. I understand that Senators have been provided with an updated summary of the Bill as passed by the Dáil so I do not consider that I need go through the Bill on a section by section basis. Instead I propose to look at the broad themes in the Bill and how it will provide the legislative basis for budget decisions already taken.

Budget 2023 is a cost-of-living budget, agreed by the Government to provide much needed support to households and businesses faced with increasing costs, particularly energy costs brought on by the Russian aggression in Ukraine. The budget must be considered in the round. It includes a combination of supports and tax reductions and only some of these are provided for in the Finance Bill. A total of approximately €4 billion has been provided across the economy in the form of temporary supports in the budget and this reflects the Government's determination to do as much as it can to alleviate the suffering caused by the effects of this invasion of Ukraine.

In relation to households, the Government believes that hard-working taxpayers enter the higher rate of income tax at too low an income level. Accordingly, for the second year in a row the budget increases the entry point to the higher rate of income tax for all income earners. For 2023 and subsequent years of assessment the standard rate cut-off point will be increased by €3,200, which represents an 8.7% increase. There will also be proportionate increases in the bands applying to married couples and civil partners as well as a number of other increases in tax credits. These increases in the tax credits will provide a real benefit to all individuals who pay income tax by reducing their overall income tax liability.

Some 2.1 million taxpayers, which equates to approximately 64% of all taxpayers, will benefit from the income tax changes introduced in this year's budget. Everyone who pays income tax will benefit from these changes to some extent, depending on their earnings and personal circumstances. The balance of 36% are exempt from income tax or their tax liability is fully covered by their tax credits.

These changes contribute to the Government's overall income tax strategy to reduce the tax burden on low and middle income earners. Over the two most recent budgets, on average the standard rate cut-off point has been increased by just over 13% and the main tax credits have been increased by just under 8%. These tax changes have been carefully tailored to ensure that workers do not find themselves in a position where they pay more income tax solely because of wage growth inflation.

The Bill also provides for the new income tax credit for rental payments which will benefit renters, as well as parents paying rent for children attending college.

The Bill provides for changes to the small benefits exemption. It increases the total value of qualifying benefits or vouchers an employer can give in a year to €1,000 tax-free and extends the combined number of benefits from one to two.

The extension of the mineral oil tax reductions to 1 March 2023, rather than 12 October 2022 as originally intended, will also assist households, as will the reduction in the NORA levy to offset carbon tax increases. The 9% reduced rate of VAT which applies to the supply of electricity and gas has been extended to 28 February 2023.

The Government is committed to addressing challenges around housing supply, which is one of the biggest challenges facing the country. The introduction of the vacant homes tax and changes to the residential zoned land tax aim to increase the supply of homes for rent and purchase. Further provisions of the Bill extend and enhance existing schemes. For example, changes to the pre-letting expenses regime should assist landlords preparing properties for rent.

The help-to-buy scheme will be extended for a further two years. This extension, which is in line with a recommendation of the recent independent review of the scheme, takes account of the need for certainty in the market pending an increase in new housing supply, as envisaged in the Government's Housing for All strategy.

The Bill provides for the extension of the living city initiative until 31 December 2027, with some enhancements to the relief for new owner-occupiers claiming the relief in future years.

The Bill also provides for a new tax incentive for small-scale landlords who undertake retrofitting works while the tenant remains in situ. The aim of this incentive is to attract and retain small-scale landlords in the private rental sector. This is a tax deduction against rental income for certain retrofitting expenses incurred by landlords on rented residential properties. The expenses that qualify for deduction are those in respect of which the landlord has received a home energy grant from the Sustainable Energy Authority of Ireland, SEAI.

As usual in finance Bills, a number of technical changes are being put in place to make changes to the legislation to ensure it functions as intended, to give sufficient powers to the Revenue Commissioners to ensure they can enforce tax legislation and to correct technical errors arising from previous Bills.

As well as supporting households, the budget and this Bill, which provides a legislative basis for it, make provision for supports for businesses. For example, the Bill provides for the application of a zero rate of VAT to a number of items including certain health products, period products and newspapers. It also extends the special assignee relief programme for a further three years to 31 December 2025.

A number of changes have also been made to the key employee engagement programme, KEEP, including extending the sunset clause for KEEP from the end of 2023 to the end of 2025, which is effectively a further three years. These changes are aimed at increasing the effectiveness of the scheme in helping the SME sector to retain employees and allowing SMEs to compete with larger companies for workers.

Finally, I draw Senators attention to the temporary business energy support scheme, TBESS, which was announced on budget day and opened for registrations over the weekend. I can confirm that state aid approval of the scheme was received last week from the European Commission. Guidelines on the scheme have been published on the Revenue website. The scheme follows the other successful schemes operated by Revenue to support businesses through the Covid crisis, which included the wage subsidy schemes, the Covid restrictions support scheme and the tax debt warehousing scheme.

To conclude, the Bill provides a legislative basis for the budget announcements in relation to taxation and makes a number of other necessary changes to tax legislation. I look forward to constructive debate on its provisions and I commend it to the House.

Senator Maria Byrne

I welcome the Minister of State here this evening to discuss the all-important issue of the Finance Bill and the budget for 2023. The aim of the budget is to put more money back in people's pockets with measures, as the Minister of State outlined, such as cutting income tax, increasing pension payments and increasing welfare payments for families, people with disabilities and carers. I welcome those measures because many people are marginalised.

Some people do not become ill through their own fault and end up on invalidity or disability. They would love to be able to get up and go out to work. It is important that we look after people who genuinely fall on hard times. I pay tribute to the carers who look after family members or friends and help to keep them at home in their own environment. Certainly, that helps in terms of longevity. The population is living longer and it is down to the work of carers.

The Bill is also aimed at families. We have heard about the squeezed middle for many years. For young families, there is the cost of services such as childcare. The budget is a start towards bringing down such costs. It is also about giving payments to families. The reduction in college fees will help many older students as they are going to colleges.

There is something I would like the Minister of State to look at. While I am aware that there is a reduction in student fees, if one has two or three children, it is still the same reduction. I refer to those who have three people in college at the one time. I met a family recently and they have three children in college. They receive nothing extra for having three. It is quite expensive to have three. They are all in different colleges, which, I suppose, does not help. Some of them are travelling to where they were because of what they are studying. It is something that the Minister of State might be able to look at.

One of the important measures is the help for businesses. Businesses are going through such turbulent times. We have got to secure jobs but we have also got to make sure that businesses stay open. Certainly, we have had Covid. We have the war. I welcome the fact that there is money in the closet or in the safe if there is to be another unprecedented situation. The scheme has been operated through the Revenue and has been very successful but we need to ensure that if things go on longer, it will be reviewed in February. I would like a commitment from the Minister of State in that regard.

On the energy support grants, I welcome correspondence from Mr. Jennings of the Convenience Stores and Newsagents Association, CSNA, which represents convenience stores and smaller retailers. Certainly, they are concerned about the costs. I note that a number of their retailers were on the national media recently. Their costs have gone completely through the roof. One store keeper alone received a bill of up to €20,000. It is phenomenal. They are looking at the unit price. Currently, pay is the crux of the problem. They can show that their consumption is responsible and efficient but the multiplier of 57% per unit leads to bills that are 350% higher than 12 months previously. That is hitting many businesses, especially businesses where they have a lot of vans and cooling equipment. There are many businesses in that situation. They understand that the wholesale prices on the international market are declining but these lower prices cannot be availed of and passed on due to a mixture of advance spot contracts and currency calculations. Would the Government be in a position to suggest that it will not allow the energy companies to enjoy super profits from the crisis? The message we need to send out, loud and clear, is that we should demand they immediately reduce the unit prices they currently charge by that level.

On domestic bills, I had a phone call from a resident in Limerick yesterday. Two months ago, their bill was €257. They received a bill yesterday. They used fewer units than they had in the previous two months and it is €599. That is an extraordinary increase.

The extension of the Living City Initiative is welcome. I live just at the Georgian Limerick area of the city and this scheme is incentivising people to live in the city centre. We still, however, have many buildings derelict. I understand that the Croí Cónaithe scheme and dereliction tax measures are coming in. These are all going to help to incentivise people to live in our city centres. This is most important. Many city centres are suffering the same issues, in that there is not enough footfall and not enough people living in them. I certainly welcome this initiative as a start and it will help landlords. I refer as well to the retrofitting scheme and the provision of a tax relief in respect of carrying out works of this kind.

Another issue I would like to raise with the Minister of State, and it is under section 47, concerns the excise duty on tobacco. It is currently illegal for a retailer to sell above the fixed price, yet four different cigarette types are sold at a lower price because they are on special offer. This does not seem to be illegal while the cigarette packets are kept under the counter. It should not be illegal for a retailer to add on 10 cent or 20 cent. It should be up to retailers to charge whatever they want, because if there is a vending machine on the premises the cost is more expensive than the recommended prices. I would like the Minister of State to examine this aspect. Many retailers are curtailed in what they can charge. We are trying to get people to quit smoking, so this may be a win-win situation for all.

Overall, though, I welcome this year's budget. It is geared towards families, and young families, and people who may have fallen on hard times. We are also protecting jobs and working towards doing this is to be most welcomed. I would like to get a commitment that the temporary business support scheme, TBESS, if it were to continue in operation for longer in these unprecedented times, will be reviewed in March 2023.

Turning to the 0% rate on newspapers and magazines, many newspapers have welcomed this development. We also have, though, news magazines and publications like The Economist and The Financial Times used by businesses. I ask the Minister of State to consider a 0% rate of VAT on these as well because this would be most important.

Acting Chairperson (Senator Eugene Murphy)

I extend a céad míle fáilte to Mr. Vincent Jennings and his colleagues. We all understand the immense energy costs the retail sector is facing now. I call Senator McDowell.

Senator Michael McDowell

Cuirim fáilte roimh an Aire Stáit. Tosóidh mé leis an vacant property tax. This is a joke and it is a sick joke as well. The Government is putting this forward as a measure that is supposed to increase the number of properties available for rent, I presume, or else for sale in any given year. Let us, though, be clear about what we are dealing with now. We are dealing with a deeply ideologically confused Government. I am not referring to the Minister of State in this respect. I think he is clear minded on the subject. Some of his colleagues, however, need to take a look in the mirror.

We have changed the law in the last two years to provide that people letting houses for more than six months face the situation where they cannot, under any circumstances, get back those homes from the tenants, except for four stated reasons. Once people are there, they are there forever, effectively, unless landlords require vacant possession for one of four reasons. One of these is the desire to sell the house with vacant possession. The result has been that a large proportion of the houses that are now for sale - it is roughly 50% - are now being sold by landlords. The Government has now said it is worried about the increase in rents. If the size of the stock of rentable properties is diminished in the way it is being done now, the inevitable consequences are that we will have rising rents. There is no way out of this. If we cut the number of houses available for rent, and many people cannot afford to buy houses for one reason or another, then rents will increase.

There was no need to do this. Worse still, the Sinn Féin Party is proposing that it would not even be possible for people to get back their properties for the purposes of selling them with vacant possession. This means it would only be possible to recover possession of one's property if it was intended to redevelop it or spend a huge amount of money refurbishing it, in which case, under the present law, there is a requirement to offer it back to the original tenant. This also means that we are in the situation now which means that tenants, under the laws brought in by this Government I am sad to say, can bring in fellow tenants and landlords are not entitled to object to this process unless it is possible for them to show reasonable cause as to why those fellow tenants should not be regarded as tenants. The original tenants then depart the scene. What kind of results do we think this creates for most landlords? They are effectively being dispossessed of their properties and being told in rent pressure zones, RPZs, that they must continue to let the properties at way below their market value in circumstances where the alternative is to sell. The inevitable consequences is that these properties will be sold.

Through the Minister of State, then, I wish to tell the Minister for Housing, Local Government and Heritage, Deputy Darragh O'Brien, to get his act together. If he wants private landlords to make properties available for letting, then he should do something to help them. The steps in this Bill do not do anything for landlords looking five or ten years ahead and wondering whether they will have a valuable asset at the end of the time. I wish to lay it down on the line that this is an opportunity missed. The remedial measures in the form of the vacant property tax will do nothing. I looked at the Bill, and for a house to be deemed vacant it must have been unused as a dwelling, by whomever, it does not matter if it is the owner or not who uses it as a dwelling, for less than 30 days in a year. This is so easily avoided. An owner's child could be asked to dwell in a house for a few weeks and the property owner then escapes this measure. The penalty provided here is that instead of local property tax the owner is obliged to pay four times the amount of the local property tax charge. This is the great incentive to get people to let their properties on the open market.

Landlords are not stupid. They are intelligent people. They have an asset. In many cases, it is probably people's only major asset and their retirement fund. These people are now seeing their assets being slowly expropriated by this Government because of deep ideological confusion. Additionally, if Sinn Féin gets anywhere near the levers of power, then these people will be completely expropriated. If we look at the figures, they are shocking. Some 5,600 landlords have left the market this year. Half the houses on the market are accounted for by landlords selling off their property. The response of this Government has been to say we will have a vacant property tax. I can imagine it might apply to some multinational American company holding on to a block of flats that was empty or something like that and in that case it might persuade the organisation to get off its backside and let its property. I can imagine that it could, possibly, have that effect, although I do have a doubt about this aspect as well.

In the real world, however, in which most of us live, this measure will have no effect at all. It will be easily avoided and it is just there as a piece of propaganda being thrown out to allow the Government to say it has introduced a vacant property tax. I would love to see what the yields of this self-assessed tax will be in two years' time.

Nobody in their right mind, if they had a vacant property, would allow it to be totally vacant for the prescribed period. It is so easy to avoid the tax. One does not even have to be the occupier. A friend or a friend's child could be asked to live in the property for a few weeks, thereby avoiding the tax completely. This is propaganda and a sticking plaster solution to a real problem. I am sorry if I am concentrating on one aspect of the Bill, as there are good aspects to it and important things are being done, which I support.

Our function in respect of finance Bills is pretty minimal in the Seanad. I am laying it on the line. The vacant property tax is a sick joke and is a stunt by a government that is deeply confused about the residential property market and the shortage of rentable accommodation, in particular. I ask, through the Chair, that a message be relayed to the Minister, Deputy Darragh O'Brien: get your act together and act sensibly and in the real world. This is fantasy politics.

Senator Pat Casey

I welcome the Minister to the House. Today’s Bill is further evidence that the number one priority of the Government is to protect all the people facing an unprecedented cost-of-living crisis caused by the continuing plague of populist politics, in particular the illegal invasion of Ukraine by the Putin regime. Older people trying to heat their homes, families trying to feed their children and make ends meet and businesses trying to keep their doors open and retain jobs do not need fantasy policies that have wrecked other economies, such as the UK's. These communities need targeted funding and tax measures are needed to ensure all homes remain warm, families can cherish their children and Irish businesses can face what will be a difficult winter given the rising costs of energy, food and supply chain goods.

We are seeing how the cost-of-living supports are helping to ease the pressure on families, with more than 77,500 families in County Wicklow alone benefiting from them, including the first of three €200 energy credits. We are talking about child welfare benefits, living alone benefits and the fuel allowance, double payments in autumn and another double payment coming shortly. Senator Maria Byrne identified several other measures that have targeted the most vulnerable in society.

Fianna Fáil welcomes and supports the Bill, which implements the taxation changes announced on budget day and introduces some necessary administrative and technical changes to the tax code. The Bill sets out legislative provisions to introduce the tax measures announced in budget 2023. This is a cost-of-living budget that underlines the Government's commitment to assist individual families and businesses in dealing with the challenges faced by rising prices.

The Bill introduces a range of targeted tax changes and includes specific measures to support families and business and to address climate change. A specific policy announced in the budget was the TBESS. The Bill provides details of the scheme, which will be available to trading and professional businesses experiencing significant increases in energy costs. As the Minister mentioned, Revenue published guidance on the scheme and opened it for registration recently. Being in business, I understand the impact the cost of energy is having on the viability of businesses. As Senator Maria Byrne said, this is probably the biggest challenge faced by businesses today. While retail is a high-energy consuming sector, hospitality is equally a high-energy consuming sector and our industry will struggle over the winter period. There is a need to look at the cap under the energy support scheme. Some larger businesses will reach the cap rather quickly, and whether they can move to the other scheme needs to be considered.

On income tax, the Bill gives effect to budget measures to increase the standard rate band by €3,200 and personal tax credits by €75, including personal credit, employee tax credit and earned income credit. Furthermore, the home carer tax credit will increase by €100.

Landlords were mentioned earlier, so I will mention the rent tax credit. Section 12 introduces a €500 tax credit for renters, for which tax-paying tenants in particular properties are eligible in their own right.

Senator Maria Byrne also mentioned the living city initiative, which is critical, and its extension for a further five years to 2027 must be welcomed.

I refer to pre-letting expenses for landlords. Section 97 provides for the limited deduction against rental income for pre-letting expenses incurred in residential premises that have been vacant for more than 12 months. This will double the allocated expenditure limited for deductible pre-letting expenses for landlords on vacant properties from €5,000 to €10,000, and it will half the period for which the property must be vacant prior to letting.

On the subject of landlords, I refer to Senator McDowell's contribution. I honestly believe we have got the balance wrong. Landlords are a critical and integral part of the housing market and are part of the solution to the housing crisis. The vilification of landlords over recent years is wrong. Many of us had hoped the budget would bring something positive from a landlord's point of view, but it did not deliver on that. We cannot blame landlords for exiting the market when we see what they are facing. As we heard, 5,600 have left the market this year.

I am concerned about where some of these homes are going. Many of them are being placed on short-term letting platforms, about which I have had a major concern since I first sat in the Lower House in 2016. I was the first person to raise the issue of short-term lettings and their impact on the housing crisis. Fáilte Ireland published a report in the first quarter of 2022, and it identified 14,000 homes on short-term letting platforms. Believe me, that is only the tip of the iceberg when it comes to the number of homes on short-term letting platforms. I raised this issue with the then Minister of State, Eoghan Murphy, who said it was the responsibility of the then Department of Transport, Tourism and Sport because it was a tourism product, but he got no traction with the then Minister, Shane Ross. It was disappointing to read newspaper reports that the Minister for Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media has delayed legislation on short-term letting platforms by another five months. This is emergency legislation that is needed to get people back into the rental market. I agree we got the balance is wrong and that is why landlords are exiting the market. I will, therefore, not go on to praise the vacant home tax after making such a statement.

There has been an extension to the VAT rate on electricity and changes to VAT on newspapers. A nice measure in the budget was the zero-VAT rate on automated external defibrillators. Many of us met with community groups across the country that are trying to raise the funds for these defibrillators on their own. That was a nice measure included in the budget. While on the subject of VAT, I cannot pass up the opportunity to mention my sector, hospitality. The VAT rate was not extended in the hospitality industry in respect of accommodation and food. I have raised the matter of decoupling these different services on several occasions. They are completely different products and they should be looked at differently.

From a Wicklow point of view, I welcome the extension of the section 481 film tax credit and the measures relating to the knowledge development box.

As for agri-tax relief, several key measures have been extended by three years to 2025, such as the young trained farmer stamp duty relief, the farm consolidation stamp duty relief and the farm restructuring relief.

Facts matter. Policies and choices facing the Government must be based on facts. The Irish people deserve to know the facts. Our economic management through Covid, and now in the post-Covid world, is one of the greatest success stories in the world. Respected UN data prove time and again the massive success of the economy and the political management of our redistribution under progressive budgetary policies. A successful economy creates the tax yield that must be spent wisely and that supports society to ensure the values of our Republic are given real and practical purpose.

The Minister for Public Expenditure and Reform, Deputy McGrath, and the Minister for Finance, Deputy Donohoe, have consistently been practical politicians who avoid the showboating and negative populism of others in order to concentrate on doing the job that the Irish people wanted and elected them to do.

Senator Paul Gavan

I will start where the last speaker left off. Facts are important as well, so I will start with some facts. Those facts, the latest homelessness figures, were announced last Friday and are the worst homelessness figures in the history of the State. Some 11,397 people are homeless, including 3,480 children. They are the highest figures ever in the history of the State. I checked the figures earlier. In 2016, when Fianna Fáil and Fine Gael first came together to support each other, the homeless figures were very bad at 5,000. In the seven years since, they have more than doubled them and they keep getting worse.

Average rents are up 14% in a year to €1,688 per month. House prices and rents have reached historic highs and are still rising. Some students, and Members will all know this, have had to give up college courses because they cannot find accommodation. We have children sleeping not only in hostels, but in cars and tents. Of course, we have the spectre of emigration back.

I was chatting to colleagues from University Hospital Limerick this evening and they told me directly, first-hand how nurses are voting with their feet now. They are leaving University Hospital Limerick - some to take jobs in factories. Senior nurses are leaving to take jobs in factories. Others are leaving the country because they simply cannot afford to live due to the price of accommodation. We have a maternity ward in Limerick that has been closed since the summer because they cannot staff it with the people they need. The Irish Nurses and Midwives Organisation, INMO, has called on the Government to provide accommodation supports to enable nurses to stay in their jobs and be recruited. That is an issue that was not responded to in this budget.

I want to quote Pat Dennigan from Focus Ireland. After those horrendous figures on Friday, he said:

In the face of these shameful figures, it is important to remind ourselves that homelessness is not inevitable. It is not a natural phenomenon, it is the result of bad policies and can be ended, over time, with better policies delivered with urgency. ... the failure of successive governments has led to a crisis where nearly 3,500 children will spend Christmas in emergency accommodation.

That is the view of the head of Focus Ireland, who is someone I hope the Minister of State would respect.

I was at the housing protest in Dublin along with thousands of other people on Saturday. I was very struck by what Phil Ni Sheaghda of the INMO said:

We know that rents in this city and in other parts of our country have now gone beyond the salaries of many reasonably [priced] workers ... nurses, midwives, teachers, guards and all other professionals that are very necessary to keep our society going, who now are paying over 50% of their wages [in] rent. That’s simply not affordable [and] they will not stay.

That is what the head of the nurses’ organisation in this country said. The depth of this crisis is absolutely horrendous. To be absolutely clear, I am dealing with facts here. The Government failed horrendously on housing and, unbelievably, it gets worse month after month.

While I will not agree with most of what Senator McDowell said, he is right, as is Senator Casey, about the vacant homes tax. It is absolutely hopeless. Indeed, colleagues from Fine Gael have said to me off the record they can see it will not do anything to change the situation. There was an opportunity to do something in relation to the vacant homes, but the Minister of State did not do it. It is another failed opportunity.

I want to talk about the cost of living. I do not know whether the Minister of State listened to “Morning Ireland” this morning and heard the report on Mid West Simon in Limerick, where the food banks are now facing unprecedented demand. Some 7,000 people are now dependent on food banks, including 2,000 children. That is not Sinn Féin propaganda; those are the facts as presented by RTÉ this morning. They interviewed a worker from Mid West Simon who explained how one woman, with tears in her eyes, approached the door of Mid West Simon to ask whether she could get a bag of porridge. That worker then asked whether we have really come to this in this day in age, that people are so desperate for even basic necessities. I refer to the 7,000 people across Limerick, north Tipperary and Clare, including 2,000 children. It is not a natural phenomenon; it is the result of failed policies. Let us be very clear on that. It is very clear that this budget does not deliver enough in relation to the cost-of-living crisis.

Equally, I want to recognise the fact that in terms of the challenges being faced by small and medium enterprises, again, this budget does not deliver. SMEs are the backbone of our community and local economies. The Government must continue to look at more measures to support them at this difficult time. In Limerick, where I live, a number of businesses have already closed or announced they will close soon. Next month, we will be losing Miss Marples Tea Room after 11 years, La Fromagerie cheese shop closed last week and Bakehouse 22 closed last month after 27 years in business. It is sad and I wish all of the owners of those businesses well. I know that every one of them had a very heavy heart having to make that decision to close their doors. We are acutely aware of the challenges that SMEs are facing right now, particularly the impact of rising energy costs. We proposed solutions, such as the business energy support scheme, and in our alternative budget call for the creation of a new credit guarantee scheme led by the Strategic Banking Corporation of Ireland, SBCI, and backed by the State to help energy-intensive sectors, especially SMEs, microbusinesses and family businesses that are facing the brunt of these increased costs. If the Minister of State does not take further action on that particular issue, we will see a horrendous level of closures in the new year. Again, while the Government has taken some measures, it has not done enough.

I want to take the Minister of State up on that tax issue briefly. He said in his speech that his focus is on low and medium taxpayers. However, here is the thing. In section 9, the changes made to income tax will mean that someone with an income with €35,000 will benefit by €191 from changes to income tax and the USC, while someone with an income of €100,000 will benefit by €831. How on earth does that benefit low and medium taxpayers? It clearly benefits the well-off much more than that. We proposed a series of tax cuts that focused on low-income and middle-income workers, in reality, but again the Government rejected that.

While we are on the topic of tax, once again – the Minister of State might address it this time, because in the past he has ignored the issue – I refer to the special assignee relief programme, which is absolutely scandalous. This is a tax break to reward millionaire bosses across the State. It allows them to write off up to two thirds of their income tax because they happen to be in positions of power in multinational companies. It costs €42 million. At a time when that woman is reaching and begging for a bag of porridge and people are facing unprecedented poverty, how in God’s name can the Minister of State justify this outrageous subsidy to the richest millionaires in this State? It is absolutely outrageous. I will tell you what it shows. We were talking about class politics in this Chamber. I will note that there is not one whit of difference between Fianna Fáil and Fine Gael. They are as one at this point in time, and that speaks volumes.

Senator Emer Currie

I thank the Minister of State for the opportunity to speak on the Finance Bill, which is a continuation of the supports that we provided during Covid. In the round, this budget has been accepted positively by the public. We are showing that we are as committed to helping families, businesses and people through this crisis like we did the last. In addition, it shows that we are responding to poverty and the needs of families and businesses under pressure. I am reminded of the Tesco jingle “every little helps”, because the power of the statement was that one when adds up all of the savings that people get, it means a sizable chunk coming off the bills coming into people’s home and more supports to deal with them across child care, transport and college fees.

Of course, there is also investment in the Garda and in education. We are seeing all that through income tax measures and positive initiatives such as rental tax credits.

I will focus on the TBESS because the feedback I am getting from businesses is that we are in tune with how much pressure they are under. The fact that businesses experiencing a 50% increase in their energy bills can claim 40% relief, up to a maximum of €10,000, is a great help. I ask that we show some stability. This scheme should be extended beyond February because of the energy crisis and the insecurity around that.

I will also mention the hot meals scheme, which I know is not exactly the Minister of State's area. That scheme has been expanded to include childcare providers. I ask the Minister of State to convey to the Department that it should also be expanded to special schools. We have 140 special schools in the country. They should also have access to that scheme.

Acting Chairperson (Senator Eugene Murphy)

I apologise for cutting the Senator short but I want to ensure that Senator Lombard gets a bit of a say.

Senator Tim Lombard

I thank the Chair. I welcome the publication of the Bill and its passage through the Houses. It is a significant statement of intent by the Government. I welcome the boost it will give to the economy.

It is significant legislation. It is nearly 250 pages long and, with legislation of this nature, there are always anomalies within it that the Minister of State might look at. I will reference two of them. One is the issue of the VAT rate pertaining to publications. It is a significant development that a 0% VAT rate on publications will be introduced from 1 January. The Minister of State might clarify why magazines and periodicals are not included in that. The marketplace is becoming unfair when we compare a magazine in west Cork, for example, Bandon's The Opinion, which comes out every month and does the exact same as other publications, with a weekly newspaper such as the Southern Star. One has a 0% VAT rate and one does not. The Minister of State might clarify how that is workable, even on competition lines. It is a serious issue. We have done a good job in bringing the VAT rate down to 0% but we can do more on that issue.

The Bill is a significant document so there will always be anomalies. There is another anomaly regarding excise, in particular, on cider. An excise relief has been brought forward for specially branded cider. However, other fermented products, for example, Kinsale Mead, which produces a unique product, does not qualify for that excise relief because it does not produce a cider-based product. The Minister of State might look at this other anomaly in the legislation.

There are a few anomalies in the legislation that are important for the Minister of State to consider. I ask him to revert to me, if he can.

Acting Chairperson (Senator Eugene Murphy)

Senators Dolan and Seery Kearney are sharing five minutes.

Senator Aisling Dolan

In government, Fine Gael is the party that has brought this country through the Covid crisis and the lockdown to 2.5 million people back at work and the highest ever population in Ireland at 5 million. It is the party people rely on and trust in every town and village in this country. We do not talk the talk that suits when we are in Dublin and a different talk when we are in Belfast-----

Senator Jerry Buttimer

Well said.

Senator Aisling Dolan

-----and there is a totally different ball game. How does Sinn Féin stand over its councillors when they vote against housing? How does that work?

This is a cost-of-living Bill because this Government, and all parties in it, realise the challenges that face people, families, communities and businesses. At each and every step, the Department of Social Protection and its Minister, Deputy Humphreys, have delivered packages that target every member of the community. We look at people aged over 70 and the challenges around fuel allowance and the lump sums for carers. We are looking at what is being delivered through the Department of Education, when it comes to delivering equality of opportunity in schools, DEIS, funding for our schools. One in four schools now get DEIS funding through the Department. The school meals programme, again, under the Minister, Deputy Humphreys, is delivering meals for children in schools throughout Ireland. This party is looking after people who are in need and the Government has put a budget in place to do exactly that.

I am proud that this budget will meet the needs of families in Ireland today through the electricity credit, the rental credit and the energy support scheme that will benefit businesses. Those businesses will have registered for that scheme by this coming Saturday. They are putting in their claims this week and it is to be hoped, and we aim and target, that they will get their payments by the end of December. The Government is yet again acting in the face of a crisis. The Government has brought forward these policies.

Acting Chairperson (Senator Eugene Murphy)

I have given the Senator a lot of extra time. I am sorry for interrupting her. I do not think anybody deliberately interrupted her earlier. It was just a little joke that went around.

Senator Seán Kyne

The Minister of State is welcome. I said previously that everything we did in this budget, we did because it needed to be done and we were in a position to do it.

We were in a such a position because of the way the finances were thanks to the stewardship of the economy, the strong rebounding from Covid and the supports put in place when we were in a position to do so. There was the impact of ensuring the link between employees and employers was maintained, ensuring employers were able to keep going through Covid and maintaining the level of near full employment we have, as well as the strong showing of our corporations. All of that is important to say.

We are a long way from the budgets when this Government first came to power and what we had to deal with. The finance Bills on those occasions were not as pleasant as this one, other recent finance Bills and, I hope, those finance Bills to come. There are a number of very positive initiatives. One such initiative is the changes to the personal tax bands to ensure we keep pace with wage growth. If we stood still and did not change the thresholds and bands, everybody would eventually end up paying the higher rate of tax, and that makes no sense. It is important and welcome to increase the threshold for the higher rate to €40,000. It will benefit so many people, especially those in the squeezed middle. There was a debate on proposals to introduce a 30% rate and the Minister referenced them in his budget speech. There is probably work being done in the Department on the possibility of that for next year. Perhaps the Minister of State will give us an update on that as well. It is an issue that has gained some popularity because it is deemed to be the right thing to do to ensure people have more of their take-home pay.

On some of the other changes, the extension of the help-to-buy scheme has been very much welcomed. It has been so important in allowing people get onto the property ladder. I welcome also some of the other initiatives that have taken place over the last number of months, including the Croí Cónaithe towns scheme and its extension to rural areas, which is hugely important.

The changes to the income tax bands will increase people's take-home pay, as will the changes to the USC. It is important that when the minimum wage increases, we keep pace with the thresholds for USC. It ensures the 2% rate of USC is the highest rate a person on the minimum wage must pay. This is the ninth increase in the minimum wage since Fine Gael came into government and that is to be acknowledged as well.

The €500 rental tax credit, which will go to 400,000 people in 2022 and 2023, is another important initiative, as is the extension of the rebate on petrol and diesel. The latter is something people may not see because it is taken off the price they pay but it is hugely important. They would see it if it had not been reduced but it is obviously a cost and must be acknowledged as well.

The doubling of the expenditure limit for deductible pre-letting expenses for landlords of vacant properties is also of benefit because, unfortunately, we have seen landlords exiting the market. Incentives are needed to ensure we maintain the majority of landlords currently letting. Most of them are accidental landlords with one or two properties. They are the foundation stone of the rental sector and supports are needed to ensure there is not a wholesale exodus of landlords from the market.

I welcome also the extension of the living city initiative until 31 December 2027. It is a popular and positive initiative. I again thank the Minister of State for attending the House.

Acting Chairperson (Senator Eugene Murphy)

I thank Senator Kyne for being spot on in his timing. Senator Buttimer is next and has five minutes.

Senator Jerry Buttimer

I will accept the points Senator Gavan heckled me with about the issues and challenges around housing. I fully subscribe to the fact that the Government has put forward the highest spend on housing in a budget in the history of the State. I think 150,000 houses were built last year. I will come back to that figure in a minute, but there is a challenge. The reality is that we must ensure people are supported. If we want to have a comparative analysis of the budget proposals of the Government and the main Opposition party, we need only look across the way. Senator Gavan said there is nothing between Fine Gael and Fianna Fáil, but there is nothing between Sinn Féin and Liz Truss and the Tories in the UK. Nothing. The proposals are the same there and here.

Senator Paul Gavan

Absolute nonsense.

Senator Jerry Buttimer

I know the Senator would say that because, in fairness, that is what he is going to say. It is the single transferable speech that he and his colleagues are given. This Finance Bill is about putting money back into people's pockets with a fairer income tax package for everybody. That is the fundamental point.

On Committee Stage, we will look at different sections of the Bill. I wish to raise a few points on the hospitality sector in the time available to me. Today the Cork branch of the Irish Hotels Federation, IHF, together with the federation itself, presented to many of us a document on supporting tourism jobs and the uncertainty in the future of the hotels sector. I am not a member of the IHF, nor do I fly a flag for it, but it is a hard-pressed industry that is important to the fabric of the city I come from. It is important in creating and providing employment and in helping the economic outlook of the city. We must look at this in the context not just of the 9% VAT rate but of the escalating business costs for the hospitality sector. During our debate on the Credit Guarantee (Amendment) Bill earlier, I made the point about costs going up with respect to energy, food suppliers, beverages, laundry and insurance. We are facing into an economic headwind. Our domestic tourism product is facing challenging forward-looking booking numbers. I say that in the context of the review of national aviation policy that is being undertaken.

I welcome the opportunity to debate this important Bill and I hope that, in time, we will be able to examine its various sections. I commend the Bill to the House.

Senator Eugene Murphy

I will only speak for two and a half minutes because, at this point in such debates, there tends to be a great deal of repetition.

I support and commend the budget. In excess of 2 million people, or 64% of all taxpayers, will benefit from the income tax changes. Many welfare supports and extra payments have also been given to people. We all know what they are. This is year 3 of the most extraordinary situation that any Government has had to face. We had two years of Covid, during which most would agree the Government did an excellent job in ensuring there was money in people's pockets, our economy remained steady and people in employment were protected. We then moved into the war in Ukraine. No matter what anyone says, that war is having a terrible effect on Europe, including our economies. Despite the challenges we face, the experts say that the economy is sound and, albeit with a note of caution, will more than likely not go into recession. I hope that we will not.

Most people I meet acknowledge that this budget has been good and has looked after those who need to be looked after. Perhaps we could sometimes do more for low-to-middle-income earners. Energy costs are one matter, but the cost of having to travel long distances to work is serious. I know many people in the west who still have to come to Dublin daily. Paying for diesel and petrol remains an extraordinary cost for them and does not leave them with much income at the end of the week if they are not receiving expenses from their employers. I am mainly referring to private sector workers, but this also affects public sector workers. If they are travelling long distances to work in their own vehicles, it costs them a great deal of money.

I do not disagree with everything Senator Gavan said, but none of us is happy with the housing situation. The Minister is doing a lot, but no one has an overnight solution to the housing crisis. I watched a documentary on Sky News the other night in which I saw the appalling circumstances that many people in Britain were experiencing. Thousands upon thousands of them are losing their homes with nowhere to go. I do not like comparing us to anyone else because everyone in this Chamber would say that we should be doing better than everyone else, and I do not disagree totally with Senator McDowell about landlords, the vacant property tax and so on – there was a certain amount of truth in what he said – but I am satisfied that the Government will do everything in its power to sort this matter out. None of us wants to see homeless children and people out of their houses, particularly at this time of year. It is my wish and that of everyone else that we act as quickly as possible, but no matter who comes into power, they will not be able to solve this matter overnight.

I believe it was Senator Casey who referred to the 9% VAT rate for the hospitality sector. I hope that the Government will retain it. The sector is facing major challenges, and we need to acknowledge that, particularly through the VAT rate. I remind the House of what our hotels and restaurants do for our student population. Thousands upon thousands of students rely for their college money on hotels and restaurants in the main. This is an important point to take into account, as hotels and restaurants provide a great deal of employment in this regard. I saw that in my own family when my children were going to college. One is still going to college.

Given the times we are in, this is a good budget. I acknowledge that there are problems and that not everyone will be satisfied, but the Government has done a good job in general.

Minister of State at the Department of Finance (Deputy Sean Fleming)

I thank the large number of Senators who contributed on this debate. I will touch on as many of their points as I can in the short time available to me.

Senator Maria Byrne and a number of others mentioned general cost-of-living measures that were not specifically budgetary or Finance Bill matters but were part of the package announced on budget day and, therefore, it was reasonable that they were mentioned in this debate. They might be connected to social protection legislation, but they were part of the overall budget package.

Questions were raised about how long this package would last. The Government has made it clear that this budget will take us to the spring, at which point we will need to see what the situation is. There is no commitment to introduce new measures. Rather, there is a commitment to review the situation in the spring and see what needs to be done.

We in Ireland are fortunate and every cent of the €11 billion in budgetary measures is being paid out of current resources. Not a single euro of it has been borrowed. We will still see a surplus. According to figures from last month and this month, the surplus for this year so far is €7 billion. Much of that is being held aside for a rainy day fund should the need arise in future. It is important that we are in a position to do so without needing a recourse to borrowing.

The issue of energy companies' super profits is being addressed. We want to work on it at European level. The ESB is a fully State-owned company that can pay a dividend to the Government. When the need arises, the Government can request and receive an additional dividend from it without having to go through a legislative process.

Senator Maria Byrne mentioned the living city initiative, which must be close to her heart in Limerick city. The former Minister, Mr. Michael Noonan, introduced the scheme on a pilot basis in Limerick. I am pleased to hear that it is still going and that more work remains to be done.

I was asked whether shops could increase the price of tobacco as a disincentive to smoking. I am informed that, under the tobacco products tax directive, importers and manufacturers of cigarettes are free to determine their maximum retail selling price. It is up to the manufacturers and importers to set the price, not the retailer. As such, a retailer has no extra flexibility in this regard.

The vacant home tax was mentioned. I listened carefully to what was said. This is a new tax and the Government has to consider every possible option for dealing with the situation. We must see how the tax operates. The Revenue Commissioners will be able to give a clear position on the matter within a reasonable time. If changes are necessary because the tax is not proving effective, they can be considered. This tax is just one element of an overall package dealing with this situation. If it is looked at in isolation, all the points that have been raised are valid, but it needs to be looked at in conjunction with the other measures.

Many Members share the concerns raised about landlords selling their properties and the balance that is required between their rights and the rights of tenants.

Agri-relief was mentioned. The extension of the five agri-tax reliefs referred to by Senator Casey will be for six months and take them up to the end of June 2023, as the position has not been fully clarified with the European Commission. When the situation has been resolved, the Minister, Deputy Donohoe, has announced that the intention is to provide for the extensions listed by the Senator. Some discussions have to happen at EU level, which is a regular feature of finance legislation.

The TBESS was raised by a number of Senators. It is to run until the end of February, but there is provision in the legislation that gives the Minister the flexibility to extend it by ministerial order to the end of April. Through ministerial order, there is also the flexibility to amend the legislation's cap of €10,000 to €30,000. As such, there is flexibility by way of secondary legislation to address some of the points raised.

The issue of short-term letting platforms and Fáilte Ireland's role in that regard was mentioned. In the short time I have been a Minister of State, I have seen that the only way to get things done at Government level is usually to take a whole-of-government approach. A job does not get done if Departments do their own thing and say that something is a matter for another Department.

The job does not get done that way. It is only if the Cabinet sets up a subgroup, chaired by a senior Government figure, the Taoiseach or the Tánaiste, and brings together the three or four relevant Ministers that three or four Departments work cohesively. For that to happen, somebody at a senior level is required to chair a particular group. I take the point but my suggestion is it can work only if the relevant Ministers are sitting around one table about that one particular issue. I appreciate the comments that were made in respect of the zero VAT rate for defibrillators.

The special assignee relief programme was mentioned and the most important thing relevant to this Finance Bill is that we are introducing restrictions. There was no mention of that whatsoever. We all know we are competing to get senior people to come to Ireland to manage multinational companies. The more senior people from those multinational organisations living and based in Ireland, and committed to staying, the better chance we have of holding onto those jobs if there is a global downturn. It is important for very senior people to be here and not in other countries with lower level staff here. It is important to have those senior people here and that is a priority. It is in the long-term interests of the 250,000 people who are employed in those sectors.

This legislation increases the threshold for eligibility for the scheme from €75,000 to €100,000. That is a 33% increase in the threshold. I want to put that on the record because it was not mentioned during the discussion of that particular issue.

I will take on board all the points that have been made and bring them back to the Minister. The issue of VAT on periodicals was raised. EU VAT legislation deals specifically with newspapers. I have taken careful note of the other points that have been raised. When we come back for further discussion at the next Stage, we will be able to respond further.

Question put: "That the Bill be now read a Second Time."

The Seanad divided: Tá, 22; Níl, 5.

Tá

Buttimer, Jerry.
Byrne, Maria.
Carrigy, Micheál.
Casey, Pat.
Conway, Martin.
Crowe, Ollie.
Cummins, John.
Currie, Emer.
Davitt, Aidan.
Dolan, Aisling.
Fitzpatrick, Mary.
Gallagher, Robbie.
Garvey, Róisín.
Hackett, Pippa.
Horkan, Gerry.
Kyne, Seán.
Lombard, Tim.
McGahon, John.
Murphy, Eugene.
O'Reilly, Joe.
O'Reilly, Pauline.
Seery Kearney, Mary.

Níl

Boylan, Lynn.
Flynn, Eileen.
Gavan, Paul.
Ó Donnghaile, Niall.
Warfield, Fintan.

Tellers: Tá, Senators Seán Kyne and Robbie Gallagher; Níl, Senators Paul Gavan and Niall Ó Donnghaile.

Question declared carried.

The Seanad adjourned at 9.15 p.m. until 10.30 a.m. on Wednesday, 30 November 2022.

Seanad Éireann debate - Tuesday, 29 Nov 2022

Finance Bill 2022: Second Stage

Tá

Níl

Seanad Éireann debate -
Tuesday, 29 Nov 2022