As I was saying yesterday evening, careful economic and budgetary management provide the most sound basis for our future. That drives this Fianna Fáil-led Government's aim to secure a basis for further growth, reward work and effort, develop infrastructure, distribute resources fairly and create a society that can look forward with confidence. Over the past four and a half years, we were responsible for the most sustained and significant strengthening of the economy. We now enjoy the highest level of employment in our history. Fianna Fáil, and our junior partners, the Progressive Democrats, have generated over 350,000 jobs, cut employment to its lowest level since modern statistics commenced, substantially increased people's real incomes, boosted productivity of the workforce and successfully introduced major reform of the taxation system, while putting more money into people's pockets and improving their quality of life.
We ensured that our social inclusion policies were delivered on by utilising the fruits of economic success to benefit the socially excluded, the widowed, elderly, children, disabled and all in need. Our core promises at the last election were to cut unemployment, taxes, and crime, and to build a lasting peace on this island. We delivered spectacularly on all of them.
In the Forfás 2001 review, published yesterday, chief executive Mr. John Travers said that given the unexpected high level of downturn in the world economy, Ireland's overall economic performance and job creation and maintenance in 2001 was highly creditable. During 2001, the unemployment rate in an increasing labour force fell to under 4%, its lowest level since the foundation of the State. Mr. Travers said that, despite the threat from the current global economic downturn, there are positive features which can help Ireland navigate safely through the current stormy economic waters. These include the highest ever level of employment despite the setbacks of 2001; a trade in goods and services sector – both Irish and foreign owned – which is more competitive than it has ever been in terms of productivity, sectoral positioning, technology, marketing capability, and managerial competence; a capital investment programme under the national development plan which is making progress in addressing infrastructural deficiencies and which, in the medium term, will provide a high level modern infrastructural base for future growth; and the beginnings of the foundations of future high levels of growth and living standards through the significant increase in investment in research and development by Forfás, the Science Found ation of Ireland, Enterprise Ireland, the IDA, the universities and other research funding bodies.
Many politicians and commentators should take note of Mr. Traver's positive comments and should acknowledge and acclaim the positive achievements of the people and all Governments over the past ten years instead of downgrading our economic success. Criticism is welcome, provided it is constructive and we can learn from it but totally negative comment does not do the country any good.
Deputy McCreevy has marked himself out as an outstanding Minister for Finance who understood what had to be done to bring our taxation system into the third millennium and to progress the economy. I am proud to have been associated with him in the preparation of the Fianna Fáil taxation policy document prior to the last election from which 99% of the taxation changes of the past five years flowed. We were not dictated to by a political party which some claimed was the only one concerned with tax reduction. Every political party is concerned to reduce tax, but we acted upon our concern. We analysed what needed to be done to drive the economy forward and Deputy McCreevy, as the Minister for Finance, delivered, a fact recognised by workers and taxpayers who will show their thanks in the ballot box at the next election.
This Bill includes personal, business, housing related and other taxation matters designed to benefit individual taxpayers, promote business growth and ensure fairness in the tax system. As I said last night, the Minister provided for a further €634 million in personal tax reductions and his focus is directed at helping those at the lower end of the income scale. That means that in addition to the €3.5 billion in the previous four budgets, there is now another €634 million which shows there has been a tremendous amount of money given back to the people in the past five years.
The entry point to the tax system was raised from €183 last year to €209 this year, a 14.5% increase to a threshold of 90% of the current industrial wage. Give us another year and the entry point will be equal to the industrial wage; the mind boggles at what we will do for the following four years. We will reduce the tax burden more and more.
Income tax exemption limits for those aged 65 and over have increased by over 20% from €7,900 to €13,000 or £6,290 to £10,238 for a single or widowed person and this is to be welcomed. A single person over 65 would have to earn more than €13,000 before having any tax liability and a married couple would need to earn €26,000 before being liable for taxation. The exemption limits have doubled since 1997-8.
The single standard tax rate band has been widened to €28,000 or £22,000, an increase of €2,605 or £2,000 on last year. Personal taxation measures mean a further 79,000 low income earners have been removed from the tax net, while 57,000 have been taken off the high rate. This continues the movement out of the tax net of thousands of people on low incomes, a target we set on getting into Government and on which we have delivered.
Under section 5, the allowance in respect of a person caring for an incapacitated family member has been significantly increased from €12,700 to €30,000 with tax allowable at the marginal rate. I welcome this provision and also welcome the extension of the medical relief claims under section 9 to include payments not only to immediate family members but to other family members, as outlined in the section, and non-relatives. This is very wise and will be beneficial to society in general.
Under section 15, the BES and seed capital schemes have been extended for a further two years, while the company limit has been increased from €317,500 to €750,000. It was reduced some years ago but is now being extended again. This is welcome in order to ensure continued growth in indigenous industry. Despite our successes over the past five years especially, there is still a need to increase the number of indigenous industries and to put them on a sound basis so they will continue to produce jobs and wealth for the years ahead. Increasing the time frame and financial limits for the BES is welcome, as is the extension of the seed capital scheme refund period from five to six years. I have discussed this with my constituents and that extra year will be very helpful. The seed capital scheme has been very beneficial to many people in setting up their businesses. The reduction of employers' PRSI contributions will also help to save and create jobs.
Following the Bacon reports, overheating in the house market was quenched. However, there were also negative aspects to that, such as the decision by many investors to send money abroad and purchase houses in Spain and the south of France. I wish them success though they will be dealing with tax authorities in those areas if they need to sell those properties and those authorities may not be as soft and lenient as ours. That is another day's work. The money going abroad meant there was a shortage of rental property here resulting in an increase in rents. It was necessary to change the system and the Minister for Finance took wise decisions by reintroducing interest relief for investors and changing stamp duty. There has been an increase in housing and that industry is now in a fairly satisfactory condition. Student accommodation is something all Members will know about. It comes to the fore every September, when our sons, daughters and constituents have problems finding rented accommodation. I welcome the extension of the tax incentive scheme to September 2005 because it is important that accommodation is available to students.
Capital allowances, as we are well aware, were available over a seven year period at 15% per year for the first six years with the balance due in the last year. The Minister has reduced the write-off period to five years. That is more sensible and is in keeping with what happens in business. It will be 20% in a straight line following this Bill which I welcome. I also welcome the clarification that, with certain conditions, milk quota purchases after 1 April 2001 will qualify for capital allowances.
Section 39 is a new provision which gives relief to individuals and companies for donations to certain sports bodies for the funding of capital projects. Over the last number of years there has been a drying up of funds for capital programmes in localities because of the large demands on people in their parishes for many different types of building projects. GAA, soccer and rugby clubs must collect money to buy pitches before doing some work on them. Their members then demand more sophisticated facilities and that means more money is needed but one cannot keep going back to the well. This section's tax relief will be of benefit to those looking for funds, as companies and individuals can see they will get something out of it. This should help to raise funds for sports projects.
Regarding capital gains tax, I welcome the extension of the rollover relief, particularly in relation to farmers who have had land taken from them under compulsory purchase orders due to road developments. Many farmers were extremely worried about the consequences of facing large tax bills under the old system. However, the Minister has alleviated the problems by introducing changes in the Finance Bill.
As regards capital gains tax, perhaps the Minister would consider granting tax relief to owners of caravan sites. They are not allowed any relief if they transfer their caravan business to their sons or daughters. For many people that is their only business and I ask the Minister to consider their request for relief.
The VAT ceiling for registration of services is £20,000, while it is £40,000 for trading in goods. That has been the ceiling for many years. It is time to review that and perhaps to increase it to keep in line with inflation. Some £20,000 is a small sum of money, given the extra costs faced by small business people, such as electricians and fitters, who will not make a large profit if they have a turnover of £20,000 or £25,000. I ask the Minister to table an amendment to that effect on Committee Stage.
The Fine Gael Party was always considered to be solid, mercantilist and the legal bastion of our society. However, panic has struck at its heart. It has made outrageous promises in recent weeks, such as that to pay back Eircom shareholders who lost money. If people had sold their shares when they were at a high price, they would have made money. If the Vodafone shares had increased and people had been paid back their losses, would the Fine Gael Party have tried to recoup the money paid to them?