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Dáil Éireann debate -
Wednesday, 9 Feb 2005

Vol. 597 No. 3

Finance Bill 2005: Second Stage (Resumed).

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

Deputy O'Connor was in possession and he has 17 minutes remaining in the speaking slot. He is sharing time with Deputy Gormley.

Before the break I spoke about the efforts of the Minister, Deputy Cowen. I praised his efforts 70 days ago in introducing the budget, which was well received on all sides. I want to examine the list of positive measures in the Bill. First, it removes completely a significant number of people from the tax net. It confirms a cut in stamp duty for first-time buyers of second-hand houses, thereby helping new buyers to become property owners. Members will be aware that this measure has been well received throughout the country, including in my constituency of Dublin South-West. On the one hand, the Bill gives greater powers to Revenue in pursuing major tax evaders while closing off a series of tax avoidance schemes and, on the other, for those compliant taxpayers, who form a majority of our citizens, it amends or extends a significant number of tax reliefs in areas such as pensions, foster care, farming and international financial services activities.

The Bill delivers on the core promises contained in the Fianna Fáil-Progressive Democrats Government's economic policy, but it gets better. Not only does it remove people entirely from the tax net and give significant benefits to all taxpayers, but the increased revenue provided under the Bill ensures that the Minister can make provision for greater public spending in vital areas such as health, social welfare and education. This is not a conjuring trick, but the result of increased tax revenue because of increased economic growth and a significant clampdown on tax evaders and tax avoidance.

The Minister can announce that we have one of the lowest rates of unemployment and one of the lowest rates of inflation in the European Union and that our rate of public debt to GDP is at an all-time low. Not only is it a balanced budget, but we can put aside savings for further contingencies such as pensions. Most of the Bill is of a highly technical nature, and I will discuss it section by section. However, I acknowledge that I am relying for my comments to a great extent on the Bill's explanatory memorandum.

The Bill could only have been framed against a background of a highly successful economy, and most of it is good news piled on good news. That is why I particularly wish to lend my support to the remarks made by the Minister, Deputy Cowen, about increased Government spending. This is not a question of simply letting the good times roll, rather it is one of recognising that these are good times but that they may not last forever and, therefore, we must ensure that we make the best of them. It has often been remarked in the past that a rising tide lifts all boats. Seán Lemass often made that point, and it is true. One of his successors, the Taoiseach, Deputy Bertie Ahern, has reminded us time and again of social inclusion ideals and the need to ensure that a rising tide can also set some boats adrift if they are not properly anchored, which is something to which we must give attention. Now that our economy is in good shape, we must ensure that we spend the benefits of our success wisely and build for a future where circumstances may not be so favourable.

We cannot expect the Minister for Finance to continue to come into this House every year with such a favourable package as that presented by the Minister, Deputy Cowen. Now that we have the chance, we should build for the future. This is particularly true in those vital service areas identified by the Minister, those of health, social welfare and education. These are not areas in which we can solve all the problems presented simply by spending money at them. I know from my experience of being a member of a health board from 1994 that health in particular is an area where increased expenditure takes time to deliver improved services. We must be patient as well as prudent and not squander the benefits of our new-found prosperity.

I endorse the policy of increased spending in these and other important areas. Improving services in the health and education is not the same as buying new helicopters for the rescue services or building new roads and bridges. We must identify the areas where spending increases can be directed to ensure that when economic circumstances become less favourable, as is inevitable, we have put the structures in place to ensure a continuity of improved services.

I do not propose to join the prophets of doom, of whom we have plenty, but exceptional economic performance must be acknowledged for what it is. It is sound policy to prepare for more normal times without being negative. We have not got where we are today by accident but by sound economic management such as is contained in this Bill. I look forward to the continuance of our economic management under the Minister, Deputy Cowen.

In presenting this Bill to the House, the Minister must be the envy of all his colleagues in Europe. While we acknowledge that these economic circumstances cannot last forever, let us accept them while they exist. In drafting this Bill, the Minister has been well served by his Department. In presenting it to this House, we have all been well served by the Minister. For a variety of reasons, I am happy to endorse the Minister's request that this Bill be read a Second Time and I look forward to voting in support of that.

This Bill gives legislative effect to many of the provisions of the 2005 budget. As Deputy O'Connor said, it was by and large perceived as a good budget across a wide section of the community. The delivery of its provisions did not simply happen overnight. In the run-up to the budget, all Members of this House were lobbied and influenced, and representations were made to them on a range of issues. Many of those more important issues that we debated in recent months are reflected in that budget. I want to focus on a number of these, in some of which I have a particular interest.

An area in which I am interested, which I was delighted was included in the budget, and to which this Bill gives statutory effect is the removal of stamp duty for first-time buyers of second-hand houses. Many people do not realise the significance of that measure. It is estimated to result in a saving of €11,000 or €12,000 on a second-hand house costing around €300,000. The cost of this measure to the Exchequer in a full year is estimated to be in the region of €60 million. This measure provides a significant saving for the people concerned and, on the social side, it is also beneficial. It allows first-time buyers and young families to move into areas where there are older houses and that creates a good social mix. There are many estates in my constituency where people have been born and reared and the next generation want to live in those areas but have found it more financially attractive to buy a new house. This measure has the beneficial effect of allowing people to buy second-hand houses in their own areas where they have grown up with their extended families. That is one of the knock-on effects of this measure and from that point of view it is to be welcomed.

The Minister said last night that this Bill is one of the major Bills introduced every year. It allows the House to express its views on economic, fiscal, tax and expenditure policies. It also allows tax proposals to be teased out and for Deputies, in a democratic way, to set out for voters what policies they wish to pursue. The Minister is all for such a debate and that is important. I am not here to be critical but to participate in the debate. I contest that one of the major issues about which our parliamentary party has spoken on an ongoing basis is housing. A first and significant move in this regard has been made with the reduction in stamp duty and the removal of it for first-time buyers of second-hand houses.

We need to go a little further than that and focus on where we can go to provide for the future, in respect of which I wish to suggest one possibility. It is the desire of the majority of people to own their own houses. As a public representative, housing is an issue we discuss with constituents on a regular basis. There are a range of ways in which people can participate in owning their own home. Whether one is seeking to secure a straightforward mortgage or to buy into a shared ownership-affordable housing scheme, one of the issues that arises time and again is that people find it a struggle to get a deposit. They might be in employment where they have a sufficient salary to meet the repayments on a mortgage but they might find it difficult to come up with the deposit. We need to look forward in this respect across all sections of housing provision, whether it be people trying to participate in an affordable housing scheme or trying to secure a standard mortgage.

A suggestion that might be advanced is the introduction of special savings schemes with tax incentives specifically designed and ring-fenced for mortgages. In other words, any tax savings or bonus that would accrue from such savings schemes could be cashed in only against a mortgage. Such schemes would be helpful. Many people who have the earning capacity to make mortgage repayments do not have the savings for a deposit. They are dependent on their families to give them the basic deposit. This is an area that should be addressed.

Another change in the Bill is in the area of income tax. Taking people out of the tax net gives the Opposition a line they like to throw at us, namely, that more taxpayers now pay tax at the top rate. That is not a fair argument. Some 1.9 million people are in employment here, of whom more than a third do not pay tax, but they cannot be excluded. That is a nice line that is thrown out regularly, particularly by the leader of the Labour Party, but it is factually misleading. As a result of the changes in the budget, more than a third of the 1.9 million in employment are now outside the tax net and, in respect of other employees, the tax bands have been widened by €1,400 per annum. In addition to that number having been removed from the tax net, some 50,000 employees no longer pay the higher rate of tax. The changes in income tax provisions in the Bill are welcome.

If we are to maintain low taxes across the board, it is important that everybody pays his or her fair share of tax. Two sections of the Bill are relevant to the Revenue Commissioners. Section 131 grants new powers to the Revenue Commissioners to sample the information, other than medical records, held by life insurance companies in respect of a class or classes of policies and their policyholders. The new powers are modelled on the powers given to the Revenue Commissioners regarding DIRT in the Finance Act 1999 and will enable them to investigate if certain life assurance products are being or have been used to shelter untaxed income. The Revenue Commissioners have expressed a desire for such a power before the Committee of Public Accounts and I welcome its inclusion in the Bill.

Section 133 introduces the offence of facilitating tax and duty evasion, which will be more capable of prosecution than the current offence of aiding and abetting. Revenue Commissioners are frequent visitors to the Committee of Public Accounts and their range of inquiries in recent years have recouped €1.6 billion in tax, penalties and interest for the State. Tens of thousands of people have had to make settlements with the Revenue Commissioners across a range of schemes. In that time, however, the Revenue Commissioners have not managed to bring a single charge of aiding and abetting and it is unbelievable that tens of thousands of people entered these schemes unaided, that ordinary people managed to invest their money in offshore accounts and unusual locations without advice. It is improper that institutions that assisted got away scot free while people paid a heavy price.

We are often told that tax reliefs are costly and have not been properly costed before they are introduced. They are currently under review and many of them are nearing completion. Most are every day tax reliefs such as mortgage interest or medical expenses reliefs and reliefs for business. The special reliefs were introduced deliberately as incentives to encourage economic and social development and some of the urban renewal schemes have made a significant difference in my constituency. In Rowlagh in north Clondalkin a new shopping centre is nearing completion. That project would never have started without those reliefs and the people of the area would have been deprived.

Too often we ask about the costs without asking about the benefits, which are real. In Clondalkin village the site of a hardware shop is being redeveloped and a day centre for senior citizens will form part of that new development. In the past developers were reluctant to put money into some of these sites. Too frequently these tax reliefs have been understated and the benefits to the community ignored. I agree, however, that the remaining schemes should be reviewed.

I listened to the contributions from our Fianna Fáil colleagues and Deputy Curran made some reasonable points. Deputy O'Connor, however, takes a much too sanguine view of the economy, the people he represents in Dublin South West and the impact this budget and Finance Bill will have on them.

During the budget, the Minister for Finance made great play of the fact that he is spending €45 billion, that our rate of expenditure is three times that of our European partners and that we have a low EBR and a GDP that will rise by 5%. These are valuable statistics but for decades there was fundamental under-investment in social services in the State. The Ceann Comhairle asked me to leave the House this morning when I tried to raise that very issue with the Taoiseach, a former Minister for Finance.

The chaotic scenes I saw last night of valiant staff trying to cope with a grossly overcrowded accident and emergency unit in Beaumont Hospital were the direct result of the refusal by a significant share of the most influential in society to pay their fair share of tax throughout the 1970s and 1980s. My party and the trade union movement were told again and again during that period that the money was not available. Luminaries such as the great Vincent Browne, journalists such as Paul Tansey and economists such as Seán Barrett from Trinity College lectured us relentlessly in the 1980s about how we should retrench and cut back. When the Ceann Comhairle was Minister for Health, we cut back in a frightening and, ultimately, fatal way for many people. We have been saturated for decades with ráiméis about the tax burden in this State and the grossly unfair way it has been levied. It is striking that once again when we look at the Finance Bill, only 19 sections relate to PAYE workers while the rest tweak the income tax, VAT, CGT and corporation tax to facilitate the vested interests in the State.

There is no instrument in the Dáil to address the naked economic power represented in this House primarily by Fianna Fáil and the Progressive Democrats and sometimes by Fine Gael. That naked power appears again and again in this Finance Bill. We have yet to see a Finance Bill that will try to transfer the burden of taxation fundamentally.

I welcome some of the measures being introduced here, particularly tax credits, the increase in the standard rate band and the removal of another tranche of taxpayers from the tax net. I remember when Proinsías De Rossa was a Member of this House and year after year, he would calculate the numbers of workers who Fianna Fáil Ministers for Finance told us had been taken from the tax net. When they were added up, the figures were equal to the size of the work force. The reality is that the majority of PAYE workers pay tax at the higher rate.

He was not very good at addition or multiplication.

Allow Deputy Broughan to finish without interruption

I have no problems dealing with interruptions from a Fianna Fáil Minister of State. Year after year the Minister's predecessors, Deputy Ahern, former Deputy McCreevy and others, spoke about taking 66,000 or 70,000 people out of the tax net. If we put them all together it is practically the whole workforce.

We increased the workforce.

The reality is that the PAYE worker still bears the greater burden of income tax in this State. Those of us who marched in this city 20 years ago to try to do something about that took, perhaps, very tiny baby steps. We must still deal with the reality of a grossly unfair taxation system.

I commend my colleague and friend, Deputy Burton, for the outstanding work she did last year and early this year in bringing it to public notice that some of the wealthiest people in this State did not pay tax. It was an astonishing revelation that 11 multi-millionaires did not pay tax and 40 other millionaires paid little or no tax. This frightening and appalling unfairness in our economy and the unfairness of the way this Administration runs its economic affairs were clearly revealed for all to see. In the forthcoming by-elections in Meath and Kildare the gross unfairness of our taxation system will be an issue.

I welcome the modest reliefs introduced for older people and widows. Deputy Curran referred to stamp duty. The exemption from stamp duty for first-time buyers of second-hand houses up to a value of £370,000 is very welcome. However, it is a very minor step forward, given the housing crisis. I have noticed that on the north side of Dublin the price of the average home has risen by approximately £20,000 over the Christmas period, particularly in the traditional areas to which Deputy Curran referred — the stamp duty exemption was absorbed into the price by vendors. In itself that measure goes nowhere near to properly addressing this critical issue of housing, particularly for people on very modest incomes who cannot afford a home anywhere even, in the case of workers in this city, in Portarlington, Balbriggan and other places 40 or 50 miles away.

I accept that taxation policy must be framed in terms of economic development. However, I was disappointed that the Minister did not address an issue in respect of which I represent my party, that is the roll-out of broadband infrastructure. In the UK, Chancellor Brown introduced certain concessions in the provision of broadband roll-out for employees. He did this two or three budgets ago. However, such an innovative approach is still shunned by our Minister.

In general terms, the PAYE sector continues to bear the burden of taxation. As Deputy Burton said, we continue to have a fundamentally two-tiered structure in which a section of society still relentlessly uses this type of legislation and the tax code generally to avoid its responsibilities. I commend Deputy Burton for bringing these matters to our attention so cogently and so well.

It is disappointing that the Minister did not avail of the opportunity afforded by the introduction of this Bill and the forthcoming debate in the Finance committee to introduce a tax ombudsman, somebody to represent people, especially PAYE workers who feel they got a raw deal or who, owing to the recent operation of the new tax credit system, have overpaid. There has long been a need for an advocate for people on low incomes especially in dealing with the tax system. We all welcome the section of the Bill that extends the operation of the ROS site on the Internet to PAYE workers. That is a step forward.

It is time we had a tax ombudsman, and it will be a key policy for my party. We are somewhat concerned about the section 44 tax breaks for third level institutions and about section 36. Deputy Burton will return to those on Committee Stage. In view of my recent comments, I warmly welcome sections 73 to 77, the sections relating to aiding and abetting tax evasion, and the Minister's promise to examine the single premium insurance policy. This is the thirteenth time I have had a chance to make a brief comment on the Finance Bill. I still look forward to a Finance Bill that is fair to PAYE workers and people on low incomes and to a time when the whole nation can celebrate a Finance Bill and not just a small group of moneyed and very wealthy individuals, many of whom do not live here.

I am delighted to have the opportunity to speak on the Finance Bill. The budget was introduced in December and the purpose of this Bill is to put the budget announcements into law. I listened to many speakers talking about the wonderful Government and how happy and joyful people were as a result of the budget. However, people had a different view after Christmas. They realised they had been conned by the spindoctors.

It is amazing how much taxpayers' money is spent on spindoctors to spin out misinformation to the public. It is bad enough that the tax is taken out of their pockets by the Government without the Government paying it to spindoctors to spin lies to them about how wonderful the Government is, what a wonderful country we have, and how well everything is going.

I met a businessman recently who runs a nursing home. His electricity bill used to be €1,060 per billing session. His first bill in January, in the wake of the recent increases, was €1,662. How can that be, if this Government is so great at controlling inflation? We got good news with the budget in December, but we got bad news in January.

All the local authorities held their estimates meetings. Most local authorities increased their service charges and rates by 5%, 6% or 7%. The Government is crucifying small businesses. More and more people are asking themselves why they are working, why they are in business, why they are employing people. Why is the Government coming down so much on small businesses?

The biggest single crisis relates to the ability of young people to get into the housing market. The exemption of first-time buyers of second-hand houses from stamp duty in the budget has helped, but it was not half enough. We should do more for young people. We should give them better tax breaks. We should help them to get into the market. We should penalise big builders who hoard land and decide how many houses are built in this State every year in order to control the market. It is all about supply and demand. If they are allowed to supply as few houses as they like, they control the market. Most local authorities failed to build the number of houses for which they had funding from the State. We must examine other ways of getting houses built.

Young people are doing their best. There are young couples who want to get married but cannot do so because they cannot afford a home. They look around every day to see how they can get into the market but they are taxed out of it. We see the builders at the Galway Races, Leopardstown and every other place and they do not know what to do with all their money. Some 25 years ago when things were bad, they did not know what to do with their money. As a result of tribunals taking place, we are getting some of the taxation that should have been paid at the time.

More people are getting out of business, such as running rural pubs, and leaving rural Ireland because of taxation. People cannot stay in business in rural Ireland because they are so heavily taxed. The stealth tax does the damage. Local authorities will have to pay 8.5% in benchmarking pay rises to their staff. That money will come from rates, road tax and funding from Departments. A limited number of people pay rates to local authorities. A day will come when councils will have to be more accountable for the way they spend the money.

I was disappointed there was no provision in the Finance Bill dealing with natural gas. The opening of the Corrib gas field off north Mayo is creating a great inconvenience for people and disturbing their way of life. Every cent being spent on infrastructure for setting up that gas field can be written off for tax purposes. The natural gas from the Corrib field, which should not be called the Corrib gas field but the north Mayo gas field because it is located off north Mayo, will go through Mayo to Galway and Clare and on out of the country. Bord Gáis will have to pay the top rate for the gas to the company operating the field, and the taxpayer has given this company an allowance in respect of every cent it pays to pipe gas.

We had an opportunity in the Finance Bill to impose some level on taxation on the company to recoup some money for the people, especially the people of north Mayo given that the gas comes from that area. However, when Mr. Burke was the Minister in charge of this area, and I do not like to kick anybody who is down, he concluded deals with these gas and oil companies who are the real winners now, not the State. I do not want to go back in history but we had an opportunity in previous finance legislation to impose some level of taxation on those companies. There are many good civil servants in the Department of Finance who are good at thinking of ways to take money from taxpayers. They must do it; that is their job.

Will the Minister explain why some measure was not put in place in the Finance Bill to provide for a return for the Exchequer given that we have sold our mineral rights and given the prospecting companies tax breaks? Rather than a company such as that in the Corrib field paying its fair share of tax to the Government, ordinary PAYE taxpayers effectively subsidise it in order that it can take the profits out of this country and reward its investors in New York, South Africa and London. The profits are being robbed from the country and sent abroad. I am disappointed the Minister for Finance did not see fit to put a measure in place to enable some tax to be levied on such a company. Even at this late stage, I call on the Minister, the Government and the officials within the Department of Finance to put a provision in place on Committee Stage to ensure we get some money from such a company. It has free access to this House and to every Minister. I ask it to give a fair share back to the Irish taxpayer.

The Deputy's time has concluded.

I was about to speak on the widows but I did not have the opportunity. They are the forgotten people and have been let down again by the Government. There is nothing in the budget for them.

I welcome the opportunity to contribute to the debate on the Bill. This is the first Finance Bill introduced by my constituency colleague, the Minister for Finance, Deputy Cowen. I wish him every success and hope the Bill has a smooth passage through the House in the coming weeks and is enacted as soon as possible. I have no doubt the Minister's many years' experience in the House will be demonstrated through the passage of the Bill. He has a mature broad view of all things related to the people and the economy. While it is his first time as Minister for Finance, he has ample experience that will see him through his first Finance Bill and continue a great record in that Department in the years ahead.

The purpose of the Finance Bill is to put into legislation the benefits announced in the budget. Deputy Ring says a great spin was put on it and people seem to have forgotten about it now. He said there was nothing in it for the ordinary people. That is good guff from a Deputy from north Mayo and I would not expect anything else from him. I would be disappointed if he made a reasonable statement on a budget such as this. He seems to forget that €682 million is the benefit of the taxation package alone for taxpayers during the course of a full year. That is in addition to the nominal amount of €874 million provided in the social welfare increases which go to those relying on the full range of social welfare payments. Approximately, €1.5 billion is being given to those at work or not during the course of a full year. I cannot think of a budget increase where one could give out more but, perhaps, that is a sign of the times. The more one gets, the more people will shout for more. Be that as it may, the figures will stand the test of time.

As Chairman of the Select Committee on Finance and the Public Service, I look forward to a detailed consideration of the Bill on Committee Stage in due course. Some of the increases that form part of the Finance Bill include the employee-PAYE tax credit which has increased by €230 to €1,270 per annum — that is a significant increase and has long been called for — and the personal tax credit which has increased by €60 for a single person and €120 for a married couple to €1,580 for a single person and €3,160 for a married couple in a full year.

The minimum wage has been removed completely from the tax net for the first time in the history of the State. Perhaps I should not speak about the history of the State when dealing with such an innovation as the minimum age. Prior to the previous general election, the Government introduced the minimum wage which was the highest in Europe. This is an issue we are pleased about and are happy to have introduced. That current rate of €7 per hour is exempt from tax. During the course of the year, the minimum wage will increase by approximately 10% to €7.65 per hour. I have no doubt that if people get increases in their wages, as a result, the Minister will deal with that in his budget later in the year.

The standard rate band increased by approximately 5% to €29,400 for a single person, €38,400 for a married one income family, €58,800 for a married two income family and €33,400 for lone parent, widow or parent. Deputy Ring ignored the increases for widowed parents. The exemption limits for those aged 65 and over increased to €16,500 for a single person and €33,000 for a married couple. The €33,000 per annum can be made up of their pensions and any other income at that age of their lives and still be fully exempt from income tax. This is very good.

The number of people in the workforce stands at more than 1.8 million. One third or considerably more than 600,000 are not liable for income tax and are outside the income tax net. Approximately 600,000 pay tax at the standard rate of 20% and fewer than 600,000 pay tax at the rate of 42%. Two thirds of the workforce either pay no tax on their income or pay tax at the standard minimum rate. This is a tremendous achievement. I am confident we can do better. I hope that in future budgets the Government will continue to increase the ratio by taking more people out of the tax net and out of the top tax rate. People working hard for their incomes are entitled to take home their pay and not have the Government of the day dipping into their pockets and taking 50% of their income in tax as was the case when previous parties were in Government. This is a contribution to overall improvements in society such as an increase in the numbers in the workforce and the growth in the economy.

I am pleased that the Bill allows for an increase in the tax relief for third level fees. The limit for which tax relief can be claimed is being increased from €3,175 to €5,000 per annum for the 2005-06 academic year. Next September and October, all Members will hear from people about the difficulties and costs of sending children to third level education. It is good to note that there will be a tax relief of €5,000 per annum for parents sending their children to third level institutions.

The Bill contains 140 sections but I wish to comment on a few. Section 9 is a very caring amendment to the Finance Bill and the stock of legislation. It exempts from income tax payments made by the Health Service Executive to foster parents in respect of care for foster children. Up to now, people who received money from a health board were in the situation that this income was subject to the income tax regime. The section states that where a family acts as foster parents to a child for a certain duration, that payment will now be exempt from income tax and this is as it should be. Foster parenting should be encouraged as there is a great need for it. Section 9 provides for certain other exemptions to former foster children who continue to reside with their foster parents, and this provision is to be welcomed.

Chapter 3 will have a positive effect for all PAYE taxpayers who will now be enabled to use the Revenue on-line system which up to now has been generally available to self-employed people and businesses to return income, corporation and VAT returns. Taxpayers will be able to access the service on the Internet from their own homes and amend personal details. They will be allowed reallocate tax credits between employments and between spouses and make payments and claims for repayment. Balancing statements and information will be provided on-line. A 24 hours a day, seven days a week automatic electronic telephone system will be available to help PAYE workers. This may not be as far-fetched as it sounds. People are accustomed to using mobile phones to access banking information.

Section 9 will also allow Revenue to make automatic repayments to PAYE taxpayers where it is satisfied that based on the information available to it, tax has been overpaid. This issue has been a bone of contention. Most PAYE taxpayers rely on their employer to calculate the tax due and are issued with their P60 at the end of the year. Tax relief on mortgage payments and health care insurance is now taken at source and PAYE taxpayers are even less inclined to seek a balancing statement at the end of the tax year. All these changes make a significant improvement.

Section 26 will provide changes for tax relief for certain expenditure on significant buildings and gardens. Fine houses and gardens are to be found in every county and constituency. Formerly the owners of these houses and gardens were allowed claim tax relief on expenditure properly incurred on the upkeep of these fine houses and which they may not have been able to do without the benefit of tax relief. It was always a condition that these properties would be open to the public for a certain number of days in the year. There have been cases where the tax reliefs were granted but the properties were not open to the public for inspection. Section 26 will insist that the owners and proprietors of these houses, buildings and gardens advertise the dates and hours of opening and the Revenue will carry out spot checks to ensure compliance. It is unfortunate that the owners did not act in good faith but this provision will tighten up the regulation.

I am very pleased that section 118 provides for a significant exemption for first-time buyers of second-hand properties up to the value of €317,500. This is higher than the price of the average house in Portlaoise or any of the towns in my constituency. Those who can afford to pay up to €800,000 for a house in my constituency should not be exempted from income tax because they cannot be poor if they can afford a house at that price. I am aware the pricing and market structure is different in the larger cities. However, I was horrified to hear Deputy Broughan and the Labour Party knock this new incentive and say it is not half enough. The party complained that this helped bring down prices by €20,000 and now the Deputy complains that the builders are raising the prices. Is it ever possible to satisfy a person with such a train of thought?

I have a particular interest in section 115. Will the Minister consider my point and reply at the conclusion of this debate or on Committee Stage? I seek further information on the provision to give legal effect to the budget day announcement to introduce stamp duty relief for the exchange of farmland between two farmers for the purpose of consolidating each farmer's holding. If two farmers in an area want to consolidate their farms by swapping 30 acres for 35 acres, rather than both individuals paying full stamp duty on the acreage they acquire, stamp duty will be payable on the net transfer, which in this case is five acres. This is an excellent development.

A full, detailed list of regulations on qualifying for this relief is specified in the legislation. A valid consolidation certificate is required from Teagasc and must be lodged with the Revenue Commissioners. Each farmer will have to spend at least 50% of his or her normal working hours engaged in farming and must continue in farming for five years. In addition, if either party opts out of farming, the relief will be forfeited. While these requirements amount to red tape, they are not unreasonable.

I have one important question on the issue, however. This topic was raised in the context of land compulsorily acquired for motorways during pre-budget discussions between the Minister and members of the IFA in my constituency. Farmers pay 20% tax on land compulsorily acquired under CPO for motorway purposes. Their complaint is that they will have to pay 9% stamp duty if they buy replacement land. They ask whether, in the case of a farmer who forfeits 50 or 60 acres and does a land swap with a farmer on the other side of the motorway whose land has been severed, relief will be given on the stamp duty payable.

Perhaps I am wrong but my understanding of the Budget Statement is that the provision giving relief on land exchanges between farmers would help farmers whose land was being compulsorily acquired for a motorway and who needed to rejig their financial holdings because the motorway had interfered with various farms along its route. The Bill, however, does not refer to such circumstances. I fear the legislation, as framed, specifically precludes such circumstances because it refers to an exchange of land between two farmers. A CPO, by definition, will involve the State, through a local authority, compulsorily acquiring land. A person may be free to resell the land to a neighbouring farmer and vice versa but it would not be a direct transaction between two farmers because the NRA or local authority would come between them. Based on the current wording, I fear the exemption will not apply to land being acquired for road purposes under the CPO method. I ask for clarification and seek an extension of the exemption to include transactions resulting from CPOs.

Other cases will arise involving land that is genuinely consolidated between farmers. I ask that provision be made for circumstances in which land is consolidated as a result of CPOs. Now that the Minister has accepted the principle involved, I hope he will go further.

Section 158 deals with microbreweries. I welcome the measure to give relief to these companies by way of payment of half the alcohol product tax paid on beer brewed by breweries which produce 20,000 hectolitres or less per annum. Due to changing circumstances in the farming sector, some farmers in my constituency are interested in examining the possibility of entering this sector and have requested the introduction of tax incentives. This is a worthwhile and welcome minor tax incentive specific to a particular area.

I am particularly happy with section 120, which provides for an exemption from stamp duty for second or subsequent charge cards. There has been considerable legitimate criticism in recent years of the fact that one is liable for stamp duty each time one changes one's credit or charge card during the year. This acted as a disincentive to shopping around and changing banks. It is good the Minister is introducing a change with regard to credit and charge cards with effect from 2 April 2005. As soon as the Bill is passed and signed into law by the President, the provision will take effect.

I note the changes regarding ATM, laser and combined cards will only take effect from 1 January 2006. Will the Minister explain the reason different dates apply? Perhaps there are technical reasons related to the financial institutions but I request an explanation of the specific reason.

I wholeheartedly support section 134. To put it in a nutshell, people had their names published if the total liability for tax, interest and penalties arising from a settlement with the Revenue Commissioners exceeded €12,700, or £10,000 in the old days. The Bill increases the threshold to €30,000. People should not get excited about this provision because the threshold above which one had to go to have one's name published was much higher when the legislation was first introduced. In practice, due to the diligent job being done by the Revenue, it is possible somebody could be caught——

The Deputy should conclude.

I welcome the Finance Bill. I look forward to further debate on it in the Houses and to its early implementation.

I wish to share time with Deputies Eamon Ryan, Healy and McHugh.

Is that agreed? Agreed.

Sinn Féin welcomes a number of the measures in the Finance Bill. Chief among these must be the increase in tax credits to exclude those earning the current minimum wage from paying tax. I hope the Minister will maintain this principle in his next budget to exclude those on the new rate set on foot of the current recommendations. I support the demand of the ICTU that the minimum wage be set at €8.75 per hour.

A further issue is the high rate at which many of those on PAYE continue to pay tax. This must be set against the continuing ability of certain sections of society to enjoy massive tax breaks and other concessions, not to mention those who seem to be able to avoid paying tax.

Sinn Féin makes no bones about advocating an increase in the level of corporation tax. While it has been claimed this would act as a disincentive to business, a higher rate is sustainable, as has been proven by the experience of other countries. The major beneficiaries of our low rate of corporation tax are non-national companies which earn large profits because of the skills and other resources made available to them. Despite this, many of them contribute little in the way of direct tax.

We also have the position regarding our natural mineral resources, whereby companies such as Shell, which has the licence for the Corrib field, are provided with terms unknown anywhere else in the world. We must bear in mind that the current terms are the consequence of changes made in 1987 and 1992. When we revisit those circumstances, we must also acquaint ourselves with the fact that some of those involved in these changes are known to be corrupt. It is necessary in the interests of all citizens that an investigation is carried out into what happened during the period when our natural resources were effectively sold off to multinationals.

It has been claimed that the terms are a necessary incentive to multinationals to commence exploitation of our mineral deposits but the evidence suggests these companies are content to maintain their licences and initiate operations at their leisure, with little or no input from the State or reference to the needs of people. It is grotesque that multinational oil companies are able to write off in tax the cost of exploration undertaken anywhere in the world against dividends which may be forthcoming from Irish waters. It is also grotesque that oil companies working off our shores are doing nothing to engage Irish labour and are actively working against employing Irish men and women on oil rigs because they are afraid their workforce will unionise. That this was allowed to happen is an indictment of successive Governments.

Norway is an example of a country which has used its natural resources in a manner that has allowed it to develop into one of the most successful economies in Europe without the necessity to join the European Union. Norway is also proof that exploration companies will not up sticks if they are asked to pay a proper rate of tax or if the State maintains an active interest in natural resources on behalf of its citizens. What has been done in Norway is an example for this Government and for aspiring Governments. It has managed to exploit its resources for its people.

I wish to raise a specific item which, if it cannot be addressed in Government amendments to this Bill, should be catered for with a Supplementary Estimate. There is a definite need for a Supplementary Estimate of €7 million for front-line women's services, including refuges and services which deal with victims of sexual assault and other physical abuse and crises for women. This would bring the total to €9 million in 2005. I also urge the introduction of a ring-fenced multi-annual funding package for these services from 2006 onwards. This is not much to ask but it would make a massive difference to the lives of many women. Indeed, it could help save lives.

Another issue Sinn Féin would like to see included is an increase in overseas development aid to ensure the target of 0.7% of GNP is reached, as promised, by 2007. There is also the need to ensure the second €10 million for tsunami emergency humanitarian relief is additional spending and does not come from the existing emergency humanitarian assistance budget.

An area where the Minister can play a major role in promoting a sector that could potentially have massive benefits for the economy is in regard to biofuels. With the coming into effect of the EU directive which will require that 2% of all transport fuels are obtained from this source by the end of this year, rising to 5.75% by 2010, this country will need to actively promote measures to encourage this.

I welcome the opportunity to engage in this broad debate for which the Minister asked when introducing his first Finance Bill. In the time available to me, it is difficult to properly engage in that full debate. I can only give a couple of pointers on the fact that this ship, or this State, should be steered in a different direction.

Reading the Minister's speech, it is clear he is thrilled to bits with how things are going. Indeed, over the past 20 years and under different Governments, this country has been, and continues to be, a successful one. The policies put in place by T. K. Whitaker and others 40 years ago have borne great fruit and have served us well. However, as we are on the deck of this ship and looking forward, our job is to look forward and not just to be happy with how well the ship is running at present. The Government is completely blind to the bad weather, the dangers and the perils ahead of us and is steering us straight into a course of great difficulty without regard to the future prospects of our economy and our society.

Foundations of our success include the flexible entrepreneurial strategy we have been able to develop and the flexible Government we have had, the joined-up thinking, the ability of our Government to act swiftly and the success of Governments on the world stage. It is remarkable that the previous Minister for Finance has, in one single move, done more than anything else to dismantle that flexibility and connection our Civil Service provides by scattering civil servants to the four corners of this country in the worst thought-out and most destructive plan ever developed for the Civil Service.

On the one hand, the enterprise strategy review group is saying we have a flexible, joined up Government while on the other hand, a Minister for Finance destroys the prospect of joined up thinking in Government. I wish the new Minister for Finance would avail of the opportunity of the departure of his predecessor to right that wrong and to recognise this is a disastrous scheme which will never work and will do huge damage to the long-term development of our economy.

I also wish the Minister was more radical in recognising the other great democratic deficit in our country, that is, the ability of local government to effectively provide good decision-making in local councils. That will not occur until there is secure and proper funding of local government rather than the piecemeal approach adopted at present. Solutions such as the site value tax proposed by the Green Party and Dublin Chamber of Commerce would be one step in that direction. It is regrettable that the Minister said nothing in response to public calls in that regard.

The reefs I see ahead of us, and the difficulty we will have in steering a course through them, are the environmental and resource issues facing the planet. The broad issue to which the Minister has increasingly alluded in his speeches, the future price of oil, is one which is hugely significant. It is incredibly disappointing in that regard to see a budget that does nothing, or little, to prepare our economy for the future depletion of oil supplies, which I believe is imminent. The small scale measures in terms of extension of excise reductions on hybrid cars is a token gesture compared with the magnitude of the changes we will need to make. In this regard, our party, in particular, believes that the Government is doing the people a huge disservice through its incompetence, ineptitude and blindness in respect of the future.

The Government is completely remiss in respect of the social agenda. This Finance Bill misses opportunities to address the social imbalance developing in our society due to policies set by the Government. I find it remarkable to see in the budget and in this Finance Bill that the level of indirect taxes, the value added taxes which are highly regressive and which hit those on the lowest incomes most, are due to increase by €2 billion over the next two years.

Deputy Bruton was right when he pointed out that this supposedly low tax Government was actually a high tax Government, one which taxes by stealth and by cute manoeuvres. It keeps the certain base line rates in income tax, which we all welcome, but behind that simple, initial figure, it taxes increasingly and spends willfully. I think we will start to see a warm-up to the next election which, as we know, Fianna Fáil does only too well. We will see current expenditure increase by 9% or 10% per year — Lord knows what the actual outturn will be — as Fianna Fáil ramps up spending ahead of the next election, but it will hit the people afterwards.

There are a number of social issues that should be, and could be, addressed by this Finance Bill. One is the disgraceful segregation and apartheid regime set up through the individualisation of the tax system. It means that for those who are not in the paid economy but who are doing hugely important work, there is little or no recognition. That policy is hugely destructive for the long-term future development and welfare of our economy. I wish this new Minister would recognise that and move away from it rather than, as this budget does, put further distance between those who decide, for whatever reason, to be involved in voluntary or caring work or to raise a family, about which the Government does not care and on which it does not put a value.

The huge issue the Government ignores, to which it is blind, which is hugely destructive to society, is the property boom it is fuelling because it is a Government which basically will always look after builders and developers. I welcome the reduction in stamp duty for second-hand homes but it is only a small fraction of what the Green Party in government would do to try to dampen down the bubble the Government has created.

I will oppose Second Stage but I welcome the chance for debate. Perhaps I will raise some of the issues I have addressed on other Stages.

I welcome the opportunity to contribute to the debate. One of the surprising things about this Bill and the preceding budget was the reduction in moneys available for flood relief schemes throughout the country. Obviously, I have a particular interest in that because over the past ten years, there have been four major floods in Clonmel with over 200 homes and businesses flooded on each occasion costing householders and business people hundreds of thousands of euro. None of these householders nor business people can get insurance cover and, as I said, they were hit on four occasions. The Minister of State, Deputy Parlon, promised that the scheme would go to public consultation last summer and that it would start before the end of the year, but that has not happened. Unfortunately, we were hit by another flood in November 2004. Now we have been told by the Minister of State that public consultation will go ahead in spring of this year. It is well into the spring of this year but there is still no sign of this public consultation. Will the Minister of State, Deputy Treacy, contact the Minister of State as a matter of urgency to get a decision and a timescale for us in respect of the consultation process for the Clonmel flood alleviation scheme to ensure it starts this year?

Another matter which comes to the attention of a constituency such as mine is decentralisation. It was announced with much ballyhoo and, thankfully, Tipperary town was listed among towns to which Departments were to be decentralised. However, we have heard nothing since. The town is not on the latest list and is not included in the reports from the body dealing with decentralisation. I ask the Minister of State to ensure that Tipperary is included on the decentralisation list, which will be issued by the Flynn group in the next four to six weeks. Everything is available in Tipperary town, including a site, and approximately three quarters of the staff complement have been accounted for by indications of willingness to go there. This is one of the highest indications of job transfer feasibility in the entire process.

The income tax package included in this Bill is very disappointing. A person on the industrial wage, approximately €29,000, continues to pay tax at 42%. This is the same rate at which a millionaire pays tax, if he or she pays any tax. The Government promised that only 20% of taxpayers would pay at the higher rate but the figure has increased from 33% to 42% in recent years. We are going in the wrong direction in this regard. It is unacceptable that an employee earning the average industrial wage must be subjected to a tax rate of 42%.

The removal of those workers on the minimum wage from the tax net is welcome. However, so little has been done that any increase in income by way of wages will ensures that these workers will be within the tax net in a short time.

The Bill is wide ranging but I propose to confine myself to a few issues. The first I will address is the area of tax allowances, reliefs, exemptions and deductions, including those in respect of property. It must be tempting to use the various investment tax reliefs for the purpose of achieving headlines. However, they are sometimes not well researched. We must be balanced in this and, in that regard, I welcome the decision of the Minister to carry out an evaluation of the effect of all tax incentive reliefs and exemptions to enable him to introduce measures in the 2006 budget that will balance the benefits of such reliefs as against the extent to which they are used by high earners to reduce their tax liabilities.

I do not agree with those critics who say the Minister should have acted to terminate or alter the schemes in the absence of such an evaluation. Too often, Ministers act first and evaluate later. An example is the previous Minister for Finance's decision to outline decentralisation proposals in the previous budget without any strategic examination of the proposals and evaluation of their impact on the integrity of the Civil Service. That is not the way to proceed. For this reason, I fully endorse the method employed by the Minister to deal with this issue.

This issue needs close examination so that incentives that are not beneficial to the economy can be eliminated and those that are of benefit are maintained. When tax incentives are properly focussed, they are important in stimulating investment in areas where such investment is deemed necessary. They help to attract investors to take part in schemes that are beneficial to society but that would otherwise not be attractive to investors. I am aware of locations in my constituency where incentives have been responsible for investment without which those areas would still be in the doldrums. We must be careful and should not rush. It is difficult to fathom how, in 2001, 11 people with gross incomes exceeding €1 million had no liability for tax. These people were legally able to pay no tax through extensive use of property-based capital allowances.

I welcome that this review will also take into account certain exempt incomes, for example, those relating to stallions, greyhounds and artists. Stallions and greyhounds have had a fair run but little has been said about the exempt incomes available to artists. When the former Taoiseach, Mr. Charles Haughey, introduced this exemption for artists, it was generally welcomed and the thinking behind it has merit today. However, the scheme cost €32 million in 2001, which was the short tax year, with 1,300 people benefitting. It cannot be overlooked that some of these people earn vast sums of money and do not merit inclusion under the scheme. The exemption should only apply to struggling artists on low incomes.

Is that agreed? Agreed.

Is cúis áthais dom é an deis seo a bheith agam cuidiú sa díospóireacht seo ar an mBille Airgeadais 2005, agus déanaim comhghairdeas leis an Aire, an Teachta Cowen, as ucht na sárcháinaisnéise a chuir sé faoi bhráid na Dála. Is Bille iontach leathan é atá os ár gcomhair an tráthnóna seo. I value the opportunity to contribute to this important debate. Deputies are aware that in a busy legislative schedule, the Finance Bill is one of the major Government Bills to come before the Oireachtas each year. This is the Minister's first Finance Bill at the helm of the Department of Finance, having succeeded Commissioner Charlie McCreevy who, over seven Finance Bills, steered the economy on the vigorous course that has seen it become one of the most dynamic in the world. I have no doubt the Minister, Deputy Cowen, will build on and enhance this rich legacy of achievement over the coming years.

Some months ago, the Minister rose to give his first budget as Minister for Finance. By the time he sat down, the downcast faces in the benches opposite spoke volumes that the Government had again got it right and was determined to ring fence and protect the growing strength of the Irish economy, while at the same time targeting resources at those who were most in need.

If Government members say that often enough, they will start to believe it.

The Finance Bill sets into law many of the landmark policy decisions outlined in the Minister's first budget speech. This was one of the most generous budgets ever for old age pensioners, those struggling to get by on social welfare, those on the minimum wage and, perhaps most significantly, those with a disability and their families.

This was not evident at the meeting that took place last night in the RDS.

I will not comment on that. There may be other motivations for that collective group. I listened with great interest to what colleagues have said and I am disappointed some of them have left after speaking because I wished to respond to their contributions. How can Deputy Eamon Ryan claim the Government is anti-family when we have passed into law, and will copperfasten in the Finance Bill, the highest payments ever for child benefit and old age pensions?

That is fine so long as the Government is not considering removing those benefits.

We have no record of ever having deducted welfare money from any sector of society in the history of this great nation or this great party.

The RDS was the place to be last night.

As well as taking thousands of lower paid people out of the tax net and substantially increasing all welfare payments, including child benefit, hard-pressed first-time home buyers have got a significant boost through major changes in stamp duty payments for second-hand houses. This is a generous measure that offers incentive and opportunity for first-time buyers by recognising and supporting the reality of the situation and the necessity of ensuring——

This measure has come after seven years of broken promises.

——younger people setting up in life will be able to acquire their first home.

Young people are still excluded.

This is the hallmark of the great Fianna Fáil tradition of maintaining, with its Progressive Democrats partners in Government, the commitment to building more houses and providing homes for more families than in any other state in the EU. We have the highest rate of private home ownership by tradition.

We had before the Government helped to change that.

We have maintained and expanded that and will continue to do so. The Bill will give effect to the major tax and fiscal aspects of the budget and will build on the substantial achievements of the Fianna Fáil and Progressive Democrats Governments since 1997. Last year, the Government was denigrated by the Opposition as being uncaring and bereft of vision. We were criticised for taking hard decisions, but as the passing of time and current economic indicators show, we were right, because we were responsible. Rather than surrender to the quick fixes and short-term soundbites of the Opposition——

Fianna Fáil would certainly never resort to quick fixes.

——the Government demonstrated steady leadership, in the context of the worst economic global downturn in 20 years. Despite the irresponsible carping from the Opposition, a short-term course was set that faced the reality that the level of public spending heretofore could not be sustained as less revenue was at the Government's disposal. The Government realised that by controlling spending and targeting it at areas of greatest need, the economy would be best positioned to take maximum advantage of the economic upturn when it happened.

As we now know, the leadership of the Government, as with most things, got it right. Had we folded to the bleating opposite me, the steady path of forward momentum, to which this country has returned, would simply not be happening. It was precisely this assured and capable leadership during more challenging economic conditions that allowed for one of the most generous budgets in living memory and led directly to the Finance Bill we are now debating.

I have been in this House long enough to remember what it was like when the main Opposition parties, Fine Gael and Labour, were last elected to Government. That was a time when the economy was on its knees——

Does the Minister of State remember the period from 1977 to 1980? Does the Minister of State remember who was in government then?

——a real basket case, or "the poorest of Europe's rich", as we were famously described in 1987.

Does the Minister of State remember back that far?

I can remember back to the 1970s and the 1980s. I remember a change of Government in November 1982 and a doubling of the national debt——

Public expenditure was out of control for two years and Fianna Fáil had not the courage to stand before the people.

——a crippling of the economy and a maximisation of emigration.

We had inflation rates of 18% to 20% when Fianna Fáil left office in 1981.

The brightest and best left our shores. Thankfully, my party returned to Government in March 1987 and set about pulling the country out of the doldrums of the previous five years.

As the Minister of State has revised every part of history, he might as well revise that part as well.

Due to utter mismanagement and incompetence, Fine Gael had presided over a situation where taxes were gone through the roof, with personal taxation rates of 52%——

That was the way the Fianna Fáil Government had left us in 1979.

——rampant inflation of19.3%——

The Minister of State only has memories going back a little while. Does his longer-term memory not function?

——industrial unrest widespread, with strikes and industrial difficulties everywhere, and the planes full of our best and brightest, leaving our shores.

No one should take a bit of notice of that raiméis.

Our young people were leaving in search of jobs in numbers not seen since the 1950s. The facts of history also show that in 1987, faced by an economic wasteland of incompetence and mismanagement, the present Taoiseach, then Minister for Labour, crafted the first social partnership agreement. This first agreement became the template on which stability and prosperity was built and continues to be a crucial aspect of economic and social policy.

The Government has consistently shown that it has the vision and the resolve to keep our country competitive and sustain the conditions that give us low taxes, low unemployment, low inflation and low interest rates, which are the lowest ever.

We have no housing, no hospital services, no educational services and no law and order.

That is not true anymore. In simple terms our strategy is about more money for pensioners and those on social welfare, more money for child care, more money for the low paid——

We have no hospital beds——

——more money for young couples starting out on the property market——

——and have stretchers in hospital corridors.

—— more money for hospitals and schools——

The Government's major achievement is mobile beds and people being treated in hospital car parks.

——and more money for roads, railways, transport and housing, while all the time maintaining conditions that promote and sustain economic competitiveness. The Finance Bill carries forward the policies of a Government deeply conscious that in an increasingly prosperous Ireland no boundaries should be placed on giving people the opportunity to enjoy the fruits of this prosperity. I have listened with interest to what has been said on the Opposition benches. I listened to Deputy Ferris, who believes we should leave the oil under the sea rather than extract it and pump it into the national economy to re-energise the nation.

Deputy Ferris has a quicker way of getting it up altogether.

I listened to Deputy Eamon Ryan who talked about increases in tax revenue when the buoyancy in the economy is as a result of Government leadership. Solid sound fiscal financial and economic policies drive, underwrite and enhance the expansion of our economy——

While we know he believes it, the Minister of State should take it easy.

——and create the buoyancy to add the extra billions forecasted in our economic future. We have the confidence to make a positive economic forecast unlike in the past when it was all done in negative terms and concentrated on what we would lose, how much we would be short and whether we had any hope. It was all despair. That has all changed and we continue to forecast a positive position into the future. I heartily congratulate the Minister for Finance, Deputy Cowen, on his inspired first budget and this Finance Bill, which contains many far-reaching new powers for the pursuit of tax evaders. It is fair, balanced and very much in keeping with the visionary strategic approach of the Government to the economy. I commend it wholeheartedly to the House.

A massive speech.

At times I think I would like to be in opposition, although I do not think such an opportunity will be afforded to me in the near future, having listened to what passes for heckling at the moment. An Opposition Deputy can basically slag off everybody, get on a high horse and lash out at everything. Sometimes a Government backbencher is jealous about having to tow the line so much of the time. However, during last December's budget, for once, I had some pity for members of the Opposition, who looked a forlorn lot. They could think of absolutely nothing to shake at the Government over the contents of the budget. Similarly in the Finance Bill we hear much hollow shouting and hollering, with Opposition Members getting indignant and self-righteous. However, nobody really believes them.

We believe nothing that comes from the Government.

The budget is a great achievement for the Minister for Finance, Deputy Cowen, and its generosity is also to the credit of his predecessor, Mr. Charlie McCreevy. We all know that if this budget had taken place six months before a general election the Opposition would have accused us of trying to buy votes.

It could not have been further from their minds.

However, here we are in the middle of the term of this Parliament with no election in the course of the next 24 months at the very earliest.

The Government read the research quickly enough after last year's elections.

I hear no comment from the other side about buying votes. That rings a little hollow. Fine Gael should forget the auction politics it tried to use at the last general election. I think it learnt a very hard lesson when the people did not buy all the baubles and delights it offered them at the last general election. This is not an election budget, but one borne out of the passion of the Minister for issues he has followed in his time in the Department of Health and Children and is now following in the Department of Finance, for which I commend him.

One of the highlights of the budget was the additional relief afforded to first-time house buyers through the reduction of stamp duty. Fianna Fáil Members have campaigned for this ever since the abolition of the first-time buyer's grant in 2002. We are delighted to see the Minister has been proactive on the matter. As every speaker has said, it has had a real effect on ordinary people trying to get on to the property ladder. For a house worth just under €317,000, the saving in stamp duty is approximately €11,000 or €12,000, which is triple what the old grant was, and shows how generous and helpful it has been. In in his most generous moments, even Deputy Durkan would acknowledge that was a good step regarding housing.

The Deputy thinks I am generous. I am overwhelmed.

This is especially true for young people throughout County Kildare who would thank him if he had made the change.

The poor people who have waited for the past ten years might have a look at a house now.

It should not have surprised people that the Minister made such radical and generous proposals on disability funding. While the disability consultative group still has concerns about the legislation to accompany this package, nobody is arguing about the funding. This is a clear indication of the commitment of the Government to that sector.

I wish to follow up a small point made by Deputy Ardagh on tax relief and charities. A huge amount of money has been raised in the country in the past six weeks since the tsunami affected south Asia.

Many people have contributed more than €250. Charities have reported that they have sent out tax relief forms to such subscribers, but they have not received many of them back. As a consequence, a great deal of money that should be on its way to south-east Asia in some form is being held by the Revenue Commissioners. I echo Deputy Ardagh's comments of yesterday by asking the Minister for Finance, the Department of Finance, the media and the charities to highlight this problem.

The main issue I would like to discuss is child care, about which I feel strongly. I do not doubt that quality affordable child care is needed in this country. Quality child care can benefit children, but bad child care can have a negative effect on children. The UK Labour Party considers child care as a core issue in the forthcoming general election in that country. Over 1 million people in the UK benefit from the child care tax credit that has been successfully established there. The Government should consider introducing a child care tax credit in this country in the next budget.

The UK plans to provide 3,500 "sure start" centres by 2010. Not only will such centres provide child care, but they will also facilitate access to health and education services and tackle problems associated with poor infant health, early learning difficulties and other forms of deprivation. Paid maternity leave is extended for an entire year in the UK. Such a universal child care policy should be considered in this country.

The Finance Bill 2005 increases child benefit, which is welcome. Approximately 20% of the average earnings of parents in this country is spent on child care, compared to just 12% in the rest of the European Union. It is clear, therefore, that this country has a problem with the provision of affordable child care. The actual cost of child care for many people is between €600 and €900 per month. I spoke today to a constituent who pays €812 per month for a single child. That might surprise Deputies who are not from Dublin, but I assure them that child care costs in Dublin are extremely high. The costs faced by many people in this city who have two or three children are prohibitively high. Those who have more than one child save very little money when paying for the child care of their second and subsequent children.

Child care expenses are paid for from after-tax income, which means in many cases that parents encounter a great deal of pressure and suffer a great deal of stress. Some 220,000 Irish children are in need of child care, but that demand is expected to increase by between 25% and 50% by 2011. Although child care places are being provided and the Government is taking proactive action in the form of certain strategies, it is clear that we will face a significant problem in this regard in the future. I hope the Minister will take some steps in next year's budget and Finance Bill to alleviate the problem, in tandem with the action being taken by the Departments of Health and Children and Education and Science.

Only those parents who avail of on-site child care facilities in their place of employment receive any form of tax relief in this area. The conditions attached to the scheme are quite restrictive and ensure that it is of minimal use. Home-based child care is chosen by almost 70% of families. The cost of such care depends on the age of the children being cared for. In many cases, no tax relief is available to parents who employ a child minder in their own homes, even though they have to make the usual PAYE and PRSI contributions. It is another example of the pressures and stresses faced by parents whose children are looked after by child minders. There is no co-ordinated approach to such matters.

I do not doubt that benefits can accrue from tax relief for on-site child care, but I am not sure whether the system is having the desired effect. Should such a tax relief not encourage employers to create on-site crèche facilities? I would argue that it should encourage the establishment of such facilities, but it does not seem to have that effect. The incentive to employers, who should be encouraged by means of tax relief to provide facilities of this nature, to take such action does not seem to exist because the facilities seem to benefit parents only.

I welcome the section of this Bill that increases the funding made available to the Department of Justice, Equality and Law Reform's equal opportunities child care programme. The provision of child care worth €90 million up to 2009 under the programme is welcome. It is estimated that 17,000 extra child care places will be created by 2009, but I am concerned that it will not be enough. It should be noted that the programme does not fund pre-school services because they are considered to be part of the early education system. I consider that to be a failing of the programme. There are gaps in the manner in which services are provided under the programme.

Much has been made of the increases in child benefit. No Member of the House would argue that the increases are not welcome. All Deputies are aware that the increases apply to everybody who has children, regardless of income or need. It is worth noting that the National Children's Nurseries Association argued in its pre-budget submission that child benefit is not necessarily the same thing as child care. I agree with the association in that regard. The Government should consider more global ways of dealing with child care issues. For example, it should establish an interdepartmental group to analyse the issue and to give us something to compare to the excellent UK model.

I agree with many of the arguments made by Deputy Andrews about child care. We can all throw political insults across the floor, but I agree with the Deputy that child care is one of the biggest problems we face. I had not intended to discuss the matter because I have chosen to highlight another issue, but I emphasise that the child care system needs to be improved. That can be done in many ways. Many young couples with substantial mortgages and significant child care costs are unable to meet both expenses at the same time. Such people are found in provincial towns as well as in Dublin.

I sincerely hope that the major national issue of child care will be tackled by the Government at a time when a great deal of money is available to it. There were many years when the Government of the day could not afford to address this matter, but it is certainly possible to do something positive at this time. We should ensure that it is practically and financially possible for young people to access good child care, which is a very important aspect of rearing children.

The Minister, Deputy Cowen, said in his speech last night that he is trying to ensure that the tax system plays a positive role in supporting economic development. He does not plan to detract from the major review of tax relief that is under way at present ahead of budget 2006. As Deputies on all sides of the House have said during this debate, it is not necessarily the case that all tax reliefs are deserving of a bad name. It is not true that every relief has been introduced with an ulterior motive in mind. All Governments since the foundation of the State have decided to introduce certain tax reliefs to overcome certain perceived economic problems. Some of the thousands of such reliefs that were introduced over the years have worked well, but others were not so successful. The reliefs that worked well did not receive the same level of press coverage as those that did not work.

I would like to discuss a particular tax relief with which the Minister of State, Deputy Treacy, who represents the same constituency as me — Galway East — is familiar. I do not intend to speak about what the rural renewal scheme, which was introduced in 1998, tried to do because the reasons for its introduction are well known. In fairness to the Government and its predecessor, the scheme had a positive impact in many of the areas in which it was introduced. It is fair to say that it had an uneven impact, but it worked extremely well in some places.

The purpose of offering tax reliefs, exemptions and incentives is to facilitate economic development which would not occur otherwise. In many areas, the economy would only be overheated by offering such reliefs. It would simply be daft to offer State assistance of this kind to many of the building projects around Dublin, for example, but doing so in towns such as Carrick-on-Shannon, Roscommon or Ballinasloe would be a different matter. Ballinasloe has been left out of everything.

I fully appreciate that the European Union will have a direct bearing on what will happen but I hope that when the Government and everyone else with an input reviews the tax incentives, it will be on the basis that the beneficiaries who need not be in receipt of such incentives will be the ones whose reliefs are axed. I do not have the time to list them all because there are hundreds. From the many urban and rural renewal schemes of recent years under which some towns did particularly well and others did not, we should have gathered enough information to know what is likely to work or fail. If certain towns are not given a kick-start of some kind, they will never take off. Everybody points to Carrick-on-Shannon in County Leitrim as an outstanding example of a town in which the rural renewal scheme worked well. It must have had a great effect because it was dormant for years before the commencement of that scheme.

I, the Minister of State, Deputy Treacy, and others were with the Minister for Enterprise, Trade and Employment in Ballinasloe recently. In recent years, the business people of the town have held the belief, which I share, that their interests would be very well served by an extension of the rural renewal scheme to the town. While this will be regarded as a parochial matter pertaining to east Galway, it must be noted that there are several other towns in much the same position. They are not covered by the national spatial strategy, are certainly not hub towns and are not connected to any gateways. They are left hanging. To the shame of the Government, Ballinasloe has been hung out to dry and is connected to nowhere.

Having said that, it is obvious that the national spatial strategy will not be changed. Therefore, we must ask what can be done for a town that has lost more than 1,000 workers and to which it seems to be impossible to attract an anchor industry. We are told every week that one might locate there but none has done so yet. Moreover, there is a lack of confidence in the business community throughout the region.

I do not understand why a case cannot be made for a tax incentive for communities such as Ballinasloe when the file is eventually sent to Brussels. It can be proven conclusively in economic terms that if such towns are not given a kick-start, economic development will not occur. I do not understand why we must wait longer to prove that economic development has not begun in Ballinasloe. It is certainly evident to everyone that it has not begun.

When the Finance Ministers talk about the various EU-backed tax incentive schemes for which approval must be obtained from Brussels, several of those Ministers will be from countries with exactly the same problem as we have. I know of no country in the expanded European Union that does not have the sort of disadvantaged areas and towns to which I refer. I do not understand why a case cannot be made to assist them. I fully appreciate that the problem to which I refer is not the be-all and end-all, but tax incentives can serve as a vital tool in the development of a reasonably good economic structure for places such as Ballinasloe.

Tuam, which is in my constituency and which I know very well, did reasonably well from an urban renewal scheme. There were some dramatic investment projects, some of which did not work out too well. However, I know full well that over the next five to ten years, towns such as Tuam, which is a hub town and a RAPID town, could suffer from certain social and economic problems that beset towns of that size. I hope a tax relief will be made available to them. Regardless of where this issue is aired, even if it is in the Office of the Comptroller and Auditor General, a case can be made for towns like Tuam based on the logic of good economics.

Many people say to me and to the national press that they believe all tax exemptions, reliefs and incentives are wrong. This cannot be correct because all Governments since the foundation of the State have used them as an economic tool. The Minister of State should say this to the Minister for Finance so that when he meets the other EU Finance Ministers, he will be able to advocate my case. Although I am highlighting my constituency, there is nowhere in the country that could not benefit from my proposal. I am afraid that people will be swayed by public opinion to the effect that the aforementioned incentives are wrong.

Some years ago, the European Union officials, in their wisdom, appeared to suggest that tax incentives were uncompetitive. I had understood that the incentives were available to all member states. I hope that, in the interest of sound regional development, the renewal scheme to which I refer and other similar ones will not be forgotten about over the next 12 months. The scheme is necessary if we are to give a kick-start to towns such as Ballinasloe. It is not a hub town and is not connected to a gateway. It has been left out of the loop and in no man's land. IDA Ireland states it is doing its best, yet the town lost three significant industrial projects in the past five or six years and did not regain a single job. Fianna Fáil and the Progressive Democrats can blow their trumpets all they like about our great economic climate, but if one happens to live in Ballinasloe, one will realise there is nothing dramatic about our economy. Economists and advisers will turn up their noses at the rural renewal scheme, but we are able to point to developments in areas that would not have attracted commercial interest had it not been for that scheme. I have not heard of anyone becoming a millionaire because of the system. I congratulate the Government on extending the stamp duty exemption for young farmers by a few years. That is very important.

An effort to solve the problem of farm fragmentation was raised in the budget and appears in sections 113 and 114 of this Bill. I have spent a lifetime speaking on this topic, but in this instance I am not sure the Government intends what I thought it intended. Years ago when I was in charge of land policy, this effort began with a tax incentive for farmers in a townland whose land was scattered around the area. From a technical point of view, fragmented land is difficult to manage because of difficulties with driving stock on the road and fencing and so on. Anybody who knows rural Ireland understands this. In the intervening years, that tax incentive was forgotten but this Bill reintroduces it.

The Minister's speech, however, gives the impression that the stamp duty exemption that would normally be part of any sale applies only when two farmers come together to exchange land. I may be mistaken but if I am correct, the Minister need not be concerned because it will not cost much money in 2005 as there would be a poor uptake. If it involved a major rearrangement in a village, such as those the Land Commission effected between several farmers, it would be very important. I hope that whoever responds to this debate will explain in detail for whom this is intended.

We all remember floods in Clonmel, Drumcondra and Gort a few years ago. Wherever there is a flood it is bad news, irrespective of compensation.

For the Ministers too.

That is right, for the Ministers too. It is similar to the outbreaks of BSE, TB or brucellosis in the world of farming which are bad news no matter what compensation is offered because the person concerned always loses out. That is the way life is. If flood water passes through one's house, that is bad news. The Government or another agency may compensate one but one's house remains in the path of the water and may be flooded again in the next storm.

Does the Government have a national contingency fund for exceptional cases? For example, in Ballinasloe three houses were badly flooded for the fourth time over several years. They will receive no further insurance cover. One house owner said the flood-water came up from under the floor, bursting the floorboards. No matter what compound was placed outside the house, the flood-water would come in. Does any Department have a scheme, to be executed as usual by the Red Cross, to compensate such a family to enable them leave that house and build a new one on a dry site? This would not happen in all floods. I hope there is an answer to this question because people say there is a fund somewhere until one looks for it and then it disappears. Does a fund exist for exceptional circumstances which, after due scrutiny, show there is no alternative but for people to move house?

The last budget recalls the curate's egg; it was good in spots. It was poor in other spots. The Minister of State is fortunate to be in Government when so much money is available. I supported and congratulated the Government on giving millions of euro to the disabled, which should have been done ten or 15 years ago. The Government, however, should take note of the meeting of representatives of the disabled in the RDS last night who believe they are drawing the short straw. The Government will have to make major changes to the Disability Bill or any work it has done heretofore will go for naught.

I wish to share time with Deputy Michael Moynihan. Deputy Connaughton indicated the flavour of the Bill. The last budget was possibly the first to be passed without a vote. It is commendable that the Opposition did not put it to a vote because of the good provisions it contained. The Opposition says it is easy to be generous when the money is in the bank, but it is important to generate the money before giving it out. I commend the Minister on his budget and this Bill.

Deputy Sargent spoke about the lack of provision for biofuels, a topic on which I share his passion. The Taoiseach said there are no provisions for the industry in this Bill because the Finance Act 2004 provided for it. To date nobody has gained tax relief under that provision, which is lamentable. We need to consider why. The Taoiseach said that it is due to procedures. Acquiring state aid clearance is a necessary measure but Germany and France make very generous provisions for the industry which is flourishing as a result. Those countries meet the targets set by EU directives with which we must all comply in respect of the Kyoto Protocol and the development of a biofuel sector. By the end of this year 5% of our transport fuel must come from a biofuel source. We have a great deal of catching up to do.

While I accept provision was made for this last year, the Government cannot take comfort from the fact that the industry has not developed. Although state aid clearance has been in place since last August, some people should be availing of the tax relief at this point. Many co-operatives and organisations were set up when the provisions were introduced with an eye to diversification which complements the development of our agriculture policy.

When I was in school, diversification was the key to the future of the agriculture industry. This is one key way in which agriculture can be helped. If we consider the difficulties at Greencore in Carlow at present, there is an obvious solution to the problems of the workers and the future of the factory. We would benefit from looking at international best practice before seeing what we can do about it. We should not reinvent the wheel in doing this. We need simply to select the best and decide that if it is available to other countries under EU law and legislation, it should be available to us here. For example, last year British Sugar announced it was to build a £20 million plant to turn sugar beet into bioethanol, a type of biofuel which can be used in cars. This is the future and the way we need to go. The workers in Greencore in Carlow need comfort and the Government should provide the comfort that this is a solution to the potential factory closure.

In making this part of the future for a more diverse agriculture, the Government should use the tax system to stimulate markets. This is highlighted to great effect in regard to the much maligned stallion tax relief. While the Minister for Finance last year indicated this was under review, which is correct, it stimulated an industry at a time when this was needed. All of us are grateful that Ireland leads the way in the thoroughbred racehorse industry, which is a major industry here. However, given that the stimulation has taken place, we may need to review the relief.

The tax reliefs that worked for the thoroughbred industry should be applied to the biofuels industry. This would tie in with agricultural policy as well as dealing with our obligations and targets in regard to the Kyoto Protocol and developing a biofuels industry.

It is understandable the Department of Finance, which is charged with collecting money, never likes to see taxes forgone. However, the amount that might be in permitting the elimination of excise on biofuels would pale into insignificance compared with the benefits for the country in terms of employment. There is a live example of this in the instance of Greencore. It would reduce carbon dioxide emissions and help avoid punitive fines which will probably be imposed as a result of the Kyoto Protocol. We must plan well in advance and not take decisions when a crisis faces us full on. We need to plan now, which is why I welcomed this provision in 2004.

My point in concentrating on the biofuels sector, although it is not covered by the Bill, is to demonstrate that having the provisions in legislation is an important first step and an important signal on the part of Government as to what its policy will be. However, this must be underpinned by political will and, most importantly, the confidence and support of the Department of Finance. Without that Department moving swiftly on new provisions, they will not succeed, and I hope this fate does not befall any of the provisions in the Bill.

I am disappointed nobody has benefited to date despite that I get numerous telephone calls from people seeking to develop this industry and very keen to make progress. It is not that nobody is offering themselves. Rapeseed is grown in County Wexford through a provision of the Department of Agriculture and Food which provides a subsidy of €45 per acre. However, what is produced must be exported because our market has not been developed. We must kick-start the biofuels industry. Provisions in the Finance Bill 2004 paved the way but we need commitment and drive on the part of the Department of Finance to ensure these provisions become a reality.

I welcome the opportunity to contribute on the Bill. I congratulate the Minister on his first budget and Finance Bill and wish him well. He is probably one of the first Ministers of Finance to introduce a budget on which there was no vote on budget day.

The Bill provides for a number of changes to enact the budget of 1 December last and it must be enacted by the Oireachtas before 1 April. The main provisions of the Bill are to reduce income tax and stamp duty, to remove those on the minimum wage from the tax net and to extend the powers of the Revenue Commissioners to deal with major cases and crack down on certain tax avoidance schemes.

The removal of all those on the minimum wage from the tax net has been long sought by all and is welcome. The Bill also confirms the cut in stamp duty for first-time buyers of second-hand houses. While any incentive taken by Government to reduce stamp duty or other excise duty for first-time buyers seems to increase the price of houses, it is a welcome initiative. The Bill also seeks to upgrade the tax administration to the benefit of all taxpayers, especially those in the PAYE sector, which will help to deal more quickly with tax payments and repayments. It also gives effect to the tax reliefs and reductions announced in the budget.

A particular focus has been on the new powers of the Revenue Commissioners to pursue major tax evaders, including the addition of the offence of aiding and abetting to the list of revenue offences to assist the Revenue Commissioners take proceedings against those who actively assist others in tax avoidance. The Bill will also implement a number of recommendations of the revenue powers group that reported last year.

Some Members raised issues in regard to tax relief. There has been much media and other speculation on tax reliefs of one form or another which has led to a belief in some quarters that any schemes to help generate growth through the provision of tax incentives are wrong. However, for many years tax relief and incentive schemes generated growth throughout the country and were welcome.

The town renewal scheme was introduced in 1999 and enacted in 2000. Many people noted there was limited take-up of the scheme in the approximately 100 towns included. However, sections of any town included received investment because of the tax reliefs available. As other speakers noted, this would not have happened unless the scheme was in place. The knock-on effect was that the towns that received the relief benefited from it, none more so than my town of Kanturk. Properties which were designated benefited, which leads to other issues. To condemn all tax reliefs and call for all loopholes to be closed off is not the way to proceed.

In recent years we have witnessed a welcome explosion of growth throughout the country. Some towns and villages that heretofore did not witness growth now face inadequacies in infrastructural services as a result of the explosion in housing which is taking place. This will require further State investment. As a buoyant and growing economy is welcome, it is great that services are required throughout the country.

Major changes have taken place, particularly in rural Ireland. As I come from a predominantly rural constituency, I have witnessed major changes taking place in rural Ireland over the past eight or nine years, which is welcome. Too often over the past 40 or 50 years, emigration ruled rural Ireland. Perhaps one or two members of a family remained in the local community while the others had to either emigrate or travel elsewhere. This has been the pattern for almost 100 years. Given that for the first time in many generations we are able to provide full-time employment for people in their local communities or within Ireland, there are issues in regard to planning and other services which must be tackled.

In 1995-96, small rural schools were closing and the number of teachers was reduced. However, the numbers in schools have been increasing in the past two or three years. Areas are not just depending on the native population. The country has now become more multicultural and multi-denominational, which is welcome. We must ensure that services are provided throughout the country, not just in the large cities.

In recent years, there has been a great reduction in the amount of tax paid. Tax has been reduced from 28% to 20%, yet we are told that more tax is being taken. However, people are paying less tax individually. One of the greatest incentives introduced by the Government over recent years, particularly since 1997, was a reduction in corporation tax. We were berated for reducing this tax from 36% to 12.5%. This measure has continued to generate economic activity by enticing entrepreneurs to come here to set up business, thus ensuring jobs for our young people. This means they do not have to emigrate as was the case in the past.

Decentralisation was announced in budget 2003. The first phase of the decentralisation programme was announced in Phil Flynn's report in the fall of the year and we are awaiting the announcement of the second phase. For far too long State and Government bodies have been paying excessive rent for properties in Dublin and other large centres. The country can be run as efficiently from provincial towns as from large urban areas. Some commentators said at the time that Government should remain in the capital city and that if Departments were dispersed throughout the country, we would not have a cohesive form of government. If Departments are dispersed throughout the country, when policies are being drawn up, particularly at departmental level, and being brought to Cabinet and to this House, people living in rural communities and small towns throughout the country would have a greater impact on the decision-making process. It would ensure a more balanced nationwide view of legislation or regulations introduced.

For far too long people throughout the country, particularly people who live great distances from Dublin, have said that the rules and regulations have been enacted by Dublin people for Dublin people. The decentralisation programme will go a long way towards redressing the imbalance in this regard. I hope the Government will ensure that the full decentralisation programme is rolled out as soon as possible.

Much has been achieved over the past seven or eight years but there is still a long way to go. Issues such as child care, social housing and special educational needs are still outstanding in achieving an inclusive society. Despite some adverse comments recently, we have gone a long way towards achieving an inclusive society.

I am pleased to have had an opportunity to contribute to the debate on the Finance Bill and I commend the Bill to the House.

I wish to share my time with Deputy Durkan and Deputy Hayes.

I would like to begin on a positive note by welcoming the innovations by the Revenue Commissioners in providing an on-line service allowing members of the public to manage their tax affairs directly. This extension is provided for in the Finance Bill. However, tax relief and tax credits place the onus on individuals to draw down the benefits available from Revenue. While many people can manage the system very well and avail of all their entitlements, unfortunately, a section of the population is less able to do so, and very often they miss out on the benefits to which they are entitled. For example, they may have literacy difficulties and-or lack the confidence to tackle revenue matters. This section of the community repeatedly do not get what they are entitled to, even though these are the people most in need of help.

The very wealthy can call in professional advice and competent tax advisers to help them minimise their obligations, which they do much of the time. I would like to see a general tax advocacy service on offer to members of the public to advise them on how to ensure they receive their entitlements. MABS, for example, has been very valuable and productive in advising people on managing their money matters generally. A similar provision would be very welcome in helping people with their tax concerns.

There is a need for greater equity in the tax system, especially as it relates to the two-tier taxation system. Just over half of PAYE taxpayers will be caught in the higher tax bracket of 42%. It is wrong that a single person who earns just over €30,000 starts paying tax at the higher rate of 42% on overtime or a small additional amount of work they might do. It is inequitable that this group of people are taxed at the same rate as the very wealthy. The Department of Finance appears to have taken a policy decision that half the PAYE sector should be caught in the higher rate, thereby taking the burden of taxation, while the very wealthy are allowed to escape paying their share.

The PAYE sector is a dependable source of income. They are an easy target for Revenue. As they are taxed at source, they cannot avail of tax avoidance schemes. To that extent, the Finance Bill is unfair to PAYE workers. My colleague, Deputy Burton, highlighted the success of some very wealthy people in reducing their tax obligations to zero. This is because of the loopholes left open by the Department of Finance and by the expertise that becomes available to the very wealthy. Such revelations have highlighted the need for ongoing reform.

The Labour Party has called for the establishment of a separate tax commission or tax reform commission, which I support. Departments and agencies such as the Revenue Commissioners too often downgrade consideration of policy choices in favour of crisis management and administration. This inevitably leads to poor long-term strategic planning and an absence of transparency as to how decisions are made. The announcement by the Minister, Deputy Cowen, of a review of tax or even exemption for high earners is welcome. I look forward to the outcome of this process in budget 2006. However, such a process of reform should not depend on local election results, but should be an ongoing process. It is the sort of work a tax commission should do on an ongoing basis.

We should examine innovations such as hypothecated contributions to pay for public services and new public projects. There is currently little or no discussion of possible new ways of organising taxation. Taxation policy is based on policy choices. Under the current system these choices are made behind closed doors. There is little public acknowledgement of the policy aims sought by the Department. There is also little accountability as to the effectiveness of taxation measures. For example, Deputy Burton highlighted issues regarding tax reliefs for private hospitals. An independent tax commission would bring the policy choices behind taxation policy to the fore and it would allow for transparent consideration of policy choices as well as the monitoring of relief already in place. The Minister, his Department, officials and Revenue would have nothing to fear from such an independent tax commission. We are very much in favour of transparency.

I welcome the comments of my constituency colleague, Deputy Ardagh, on the skewed use of retirement reliefs by a number of wealthy individuals. I agree with the proposal for an upper limit on the level of income that can be used as a basis for calculating pension contributions for tax relief purposes.

I would like the Minister to address an anomaly regarding the operation of the disabled drivers' and disabled passengers' tax concession scheme. I raise this specifically on behalf of the Walkinstown Association which provides services for people with an intellectual disability from the wide Dublin 12 area. The association has a landmark facility on the Longmile Road and it provides an excellent outreach service for people with an intellectual disability. Part of its service involves providing transport, in particular, as many of its clients are adults living at home with their elderly parents. The Walkinstown Association has brought to my attention the anomaly that this organisation cannot avail of VRT and VAT concessions for providing services simply because its clients have an intellectual rather than a physical disability. It is incongruous that these concessions are available only to those organisations which provide services to people with physical disabilities. I raised this matter with the Minister's predecessor and I would be grateful if this issue could be revisited.

The recent First Active share payout also highlighted a discrepancy in the exemptions available to older people in paying capital gains tax. Customers of First Active received payments of €3,000 in January 2004 following the acquisition of First Active by the Royal Bank of Scotland. However, many of the long-serving customers were elderly and not fully aware of their tax liability. This share payout was a once-off benefit to this elderly group of people who saved all their working lives. It is unfair that they were subject to capital gains tax on the same basis as everyone else.

According to tax law, preferential treatment is already given to older people in assessing liability for capital gains tax where the sale of home, business or farm is involved. Older people also benefit from more generous exemption rates in calculating income tax. This exemption should have been extended to share pay-outs to pensioners up to a maximum amount. I would be grateful if the Minister would re-examine this issue.

The tax code could be used to encourage volunteerism. Many social and health services would benefit from the supplementary assistance of people with high skills. The tax code could be used in an imaginative and more effective way to foster volunteerism and encourage people to give up their time for others. I appreciate that volunteers are just that and are not seeking to be paid, but some tax exemption might encourage more people to become volunteers, as we badly need them.

I wish to address some agricultural matters. The ICMSA sent the Minister a detailed submission recently outlining its concerns and I would like to highlight a number of issues on its behalf. Section 27 of the Bill deals with the taxation of certain farm payments, but the table on page 54 lists the schemes included for the purposes of this section. It appears that the dairy premium scheme is missing from the table and I would be grateful if the Minister would examine this. I would also be grateful if he would examine the liability of farmers to capital gains tax and land swaps, which some of my colleagues have mentioned.

While the stamp duty issue has been addressed such transactions may still be liable to capital gains tax. The Minister should also examine the liability for capital gains tax on the purchase of lands by farmers for the purposes of consolidating holdings — this issue has been raised a number of times — and such liability in respect of lands that are the subject of a CPO.

Under the early retirement scheme, tax relief is not available where land is leased within a family but is available if leased to strangers. Perhaps this anomaly will be reviewed. This provision seems to be somewhat discriminatory against families.

The ICMSA has requested that 100% stock relief should be available to all farmers to allow for the expansion of farms. Given the times that are in it and the somewhat uncertain future for many farmers, it is important that these tax issues are addressed in a sympathetic way.

I thank Deputy Upton for sharing her time and giving me the opportunity to speak on this important Bill. Deputy Moynihan said that there were no votes on resolutions on the night of the budget, which has not happened for a long time. That was regrettable. There was no vote that night because there was no increase in excise duties or in taxation on petrol, diesel, cigarettes or alcohol or in respect of whatever are the usual ways of gaining finance by imposing tax increases. However, the Government has found a new way, by the introduction of stealth taxes across the board, particularly by local authorities.

The Government is a major beneficiary of the tax bonanza in the economy. The big spend in our vibrant economy has resulted in an increase in taxation from €36 billion a few years ago to nearly €47 billion now. That represents a significant increase. In recent years consumers have been paying increased amounts through stealth taxes in respect of transport, medicines, child care, VHI, ESB, road tolls — the list goes on. The worst taxes and those that have the harshest impact are the planning charges imposed by local authorities, particularly on people building houses in rural areas. The population is falling in rural areas, particularly in CLÁR areas, and we have the figures on that. People have to fork out huge sums in planning charges to local authorities before they can build a house.

There are many issues I wish to address in the Bill in the short time available. One issue that has been the subject of much discussion in recent years and in respect of which there has been much political point-scoring is that of relief on stallion fees. My part of the country is a major beneficiary of that measure and it would be deplorable to remove it without a proper assessment of it. I heard a person give an assessment of it only yesterday. If the Government changed that regulation, the extra revenue take would be approximately €3 million. Members of the Government should think long and hard about changing that regulation. The truth of the matter is that there has been pressure from Europe in recent months in this regard and the Government is reacting to it. It should note from where the pressure is coming.

From the Deputy's prospective partners in government.

It is coming from the French and the Germans because we are the leaders in this industry not only in Europe but in the world. I point out to people whether they are on the left or the right that I come from the town of Fethard in which not a bob was spent by anybody except the people who invested in this industry. The constituency of south Tipperary has benefited from such investment and anyone who visits that area will notice that. Many young people are employed in this industry and many have been trained in it and made their way on to the world stage from small beginnings. I record that the position I outlined will remain my position for as long as I am a Member of this House. People should keep a cool head in this debate.

Another major issue I want to raise is decentralisation, which was the subject of a major announcement in last year's budget. That programme was badly handled by the current Administration. It floundered because road and rail infrastructure is not in place. Any capital investment in that infrastructure will be productive. At a time of economic buoyancy, this Government should not be afraid to roll out investment in our infrastructure to allow people to decentralise. The decentralisation programme floundered because people were afraid to move to other parts of the country because of a lack of infrastructure.

Significant changes have taken place in the agriculture sector. I listened to the debate on the nitrates directive at the Joint Committee on Agriculture and Food. There is a fear in rural areas about the impact that directive will have on the agricultural economy. The Government must consider funding to help those people and provide the means for them to compete in the agricultural world. Many of those people, particularly the top class commercial farmers who are the backbone of this country, need help to get over this hump.

Far from the accolades the Government was bestowing on itself because there was no vote on the budget, the debate was truncated and there was no opportunity for a vote. That is also the case in this debate.

Government Deputies have been patting themselves on the back but what about the motorist? The motorist now contributes €4 billion per annum in tax without including the proceeds from new toll roads. To what extent does he get value for the money he puts into the economy?

People mentioned tax relief for spouses in the home, which is inadequate in terms of any sort of recognition. There are spouses of either gender who have given up their careers to look after the household and they get no recognition for the contribution they make to society on an ongoing basis.

Government Deputies get goose pimples when they hear decentralisation being mentioned. This is no surprise because it was the core of the 2004 budget when there was a competition between Government Deputies about who could announce it the quickest, but it has turned out to be a damp squib. The homework has not been done. The budget was weak and this was thrown onto the wagon as it passed to soften up the public in the run-up to the local elections, but it simply did not work. There is nothing wrong with the concept of decentralisation but this was done in a daft way.

I have not seen debates on stallions get people so agitated for many years. Stallions are sensitive animals but they are quite capable of giving account of themselves. The incentives were given to encourage owners of such animals to come into the country and improve the quality of the racehorse industry. That has happened and any changes in the area will have an impact. It is just as easy for those people to locate their horses in Newmarket or similar places. They do not have to keep the horses here. I support equity but, just like other industries we support, if we hammer them just because they appear to be doing well, we could pay a price in the long term.

There are some positives in the Finance Bill, which merely gives the imprimatur to the budget. Unfortunately, it was much ado about nothing. It was not an election budget and this is not an election Finance Bill. I am sorry the Government could not come up with something better.

I welcome the opportunity to contribute to the debate on the Finance Bill 2005, the first introduced by this Minister for Finance. The Minister holds the primary position in the Cabinet after the Taoiseach so there has been great interest in how he would set the tone both in the budget and in this Finance Bill. Many people were interested in seeing how Deputy Cowen would adapt to his new portfolio. On the basis of comments from across the board, he has played a blinder. In my time in the House I have never heard of such consistent approval from so many different sources, including Opposition spokesmen, for his short period in the Department of Finance. The Minister is already widely experienced and is bringing that experience to bear quickly.

The Minister is building on the strong foundations laid by the former Minister, Charlie McCreevy, but he has also indicated that he brings his own philosophy, expertise and experience to the post. He stated in his speech that he looks forward to a constructive debate and the speakers I have heard so far have been positive in their approach.

There are differences of opinion. Deputy Durkan said this is not an election Bill but only 30 minutes ago, Deputy Eamon Ryan, who wanted to be President, told us the Bill is a warm-up for an election. It is either an election Bill or it is not. It is, however, getting on with the business of Government.

I am also concerned about Deputy Eamon Ryan's approach to decentralisation, which is the typical Dublin-based Deputy's approach in that nothing should move outside the capital. Is Deputy Boyle of the same opinion? I heard every argument that has been trotted out this time around when the Central Statistics Office was moved to Cork. We were told that staff would not move and transport was insufficient. People were still clamouring to move.

This Bill could be summed up under four headings: reducing income tax and stamp duty, removing minimum wage earners from the tax net, extending Revenue powers to deal with major cases and cracking down on certain tax avoidance schemes.

I have been a PAYE worker all my life. I have a slightly jaundiced view of some of the so-called tax shelters, tax concessions and pro-development schemes that have been introduced from time to time. I do not mind admitting that I have mixed views. I recognise fully the need to develop indigenous industries and that concessions might have to be made to enable businesses to survive. I also recognise the need to encourage the supply of certain facilities, such as student accommodation, health centres and so on. That can be done by way of tax incentive. I subscribe to the original thinking behind the scheme to encourage the arts by way of non-application of income tax requirements to certain performers. My greatest difficulty with such schemes is that they are deliberately abused, they are left in place although they have outlived their usefulness, or the return allowed to any single source is excessive. That has been referred to by other speakers.

I do not suffer from the begrudgery syndrome, but I was one of the unfortunate people who in 1986 and 1987 paid 67% of earnings in stoppages, with nine to feed from a single source of income. I might have developed a chip on my shoulder because of that, but I did not. However, it is wrong that someone pays no tax because they happen to be a performing artist, even though they may be able to offer from €10 million to €15 million for a premises.

There has been a tendency to lump all schemes together and to suggest that everyone involved in them is a crook. That is unfair and helps no one. Some of the most vocal in that regard have held ministerial office. What sickened me is that several of those who spoke against the stallion scheme led the charge last year and the year before in pursuit of the same concession for the film industry. That displays a total lack of consistency. It is playing to the gallery, it is a manifestation of begrudgery. It is playing all sides on the issue.

As has been suggested by the previous three speakers, what is needed is a cool and calm examination of each scheme. To take an example, the scheme for artists is worthwhile. It saw the State replacing the patronage that was bestowed on struggling artists by landowners and wealthy people. The public agrees with promoting and assisting culture and art. However, it is obvious that there should be an income limit. There is a case for keeping the scheme almost as it is, imposing a cut-off and ring-fencing the income for the arts in general or for some level of redistribution. I believe the public would subscribe to such an idea, but it must be sickening for them, no matter how popular artists may be, if they are among the highest earners in the world and pay no tax in Ireland. That scheme should be examined with all the other schemes.

Deputy Connaughton and others mentioned that the good schemes seldom get a headline. The areas mentioned are the ones that get the headlines. Some schemes, such as the derelict sites scheme, have been very good for the public. We need to examine all schemes. In the area of taxation there are the tax avoidance schemes and the issue of tax compliance. It is worth noting when discussing these schemes that the record on tax compliance has been second to none since 1997. Since 1997 as many as nine different issues were dealt with in successive budgets and Finance Bills to ensure tax compliance. That is a very positive approach. Schemes were introduced by different Governments. The designated seaside resort scheme was introduced in 1995 and finished in 1999. The Temple Bar scheme was introduced in 1991 and finished in 1999.

The objective of the measures introduced since 1997 was to ensure tax compliance. In doing that we have also, through successive Finance Acts, broadened the tax base, closed off loopholes and discouraged tax avoidance. In the meantime revenue to the State has increased greatly, the primary reason being the creation of hundreds of thousands of extra jobs. Individuals are earning more and paying less tax. What is important is that more people are paying tax.

There is a third strand, and that is tax evasion, which is a criminal act. This is the area where offshore accounts and other schemes come into play. We are now well aware of what was happening in many areas and of the reason I had to pay 67% of my income in 1987, getting only £33 out of every £100 I earned. The reason I had to pay so much was that so many others were paying nothing.

We have dealt with offshore accounts through the DIRT inquiry and with other issues. I compliment the Minister for including in this Bill a very important measure for dealing with those issues. The Revenue Commissioners have outlined to the Committee of Public Accounts, of which I am a member, the difficulties that were faced, the figures and the numbers of people who had offshore accounts or other ways of hiding money. The case has been made consistently that most of these people, many of whom are now very old, were ordinary workers, perhaps shopkeepers, getting on with their lives and with some money coming in, and they saw a way of hiding away some of that money in order not to have to pay too much tax on it. A consistent aspect of that trend was the presence of advisers, whether they were professional tax advisers bank officials or other professionals in the financial area. They were present, they were advising, and to date it has been impossible to do anything about prosecuting or in any way reprimanding any of them.

The Chairman of the Revenue Commissioners outlined to us over the past 12 months that there had to be a change in the definition of facilitating tax avoidance. He consistently made the point that under the existing legislation Revenue could not possibly deal with the cases that were arising because although the figures suggested that some of these people had committed criminal acts and had aided and abetted tax evasion, it could not be proved. What the Minister did was outline in the Finance Bill what is needed, and he will put it into practice. With every other Deputy here, I have friends in the financial sector who are accountants. They all have the same fear that in some way they could fall into the wrongdoing side of the business by error. I do not think that will happen. They had concerns but the Minister has been around long enough to assure them and help them.

I have seen the Revenue present its case. I do not think there will be any attempt at entrapment or to coerce people or push them one way or the other. The law will be laid down. The bottom line will be that where people carry out honest transactions they will have no difficulty. If people deliberately manipulate the system, hide or falsify figures they will be in trouble. I do not believe that people will be falsely accused of facilitating tax evasion. I am open to correction but it is highly unlikely it will happen. The Minister and the Revenue are big enough to look at the position if any provision needs to be amended. It is one of the most important aspects of the Bill outside of the good news concerning the reduction in taxes and stamp duty. Most of the time we are working on the historical side and are looking back over a number of years and asking why this, that or the other was not done, but we find the laws were not in existence to enforce the particular course of action. I am glad we are moving on that issue.

An issue that has been hitting the headlines — it is a handy headline catcher — is the tax exemption for stallions. I am concerned at the way in which this has been presented in reporting that Ireland is in the dock. That is denigrating us as a nation and is the wrong approach. The issue is under examination as are many other issues throughout the EU. The bottom line is that when we bought into a single currency and accepted all the regulations we presented and argued our case on corporation tax, VAT rates or whatever and got agreement, and we have to comply with that agreement. When the EU seeks to examine an issue it does not always mean we are wrong. I appeal to the media to be more patriotic and to present the case properly when an examination is taking place.

I referred previously to being in the dock. Approximately four years ago, when Minister for Finance, Mr. McCreevy, argued on the issue of the 3% expenditure regarding the GDP and what we could spend, he made a simple case to Mr. Prodi and others which was that Ireland was doing well, had money to spare and should be able to spend more, but he got into trouble. The EU said he was wrong and he had to argue his case, as any Irish Minister would, but the reaction here was terrible. He was the Irish Minister and he had to be wrong. Members asked how could he talk down to the rest of the Europe and they said we would suffer for it. The amazing outcome is that three years later — this month or next month, whenever it gets around to it — the EU will change the regulation exactly as he had asked that it be done. It is slackening its requirement exactly to meet the case put by Mr. McCreevy. I make that point, not for the purpose of scoring a political point, but to ask people to have more confidence in our Ministers and in ourselves as a nation.

This is a time when I would hate to be on the Opposition benches. This is the second battering it has got, first with the budget and now the Finance Bill. It must be hard on a spokesperson or even a humble backbencher like myself to get up and make a case against it. Given that we have accepted from Deputy Durkan that it is not a budget Bill, let us try to imagine what the position will be like in two years' time, please God.

I thank all Deputies who contributed to the debate yesterday and today. Clearly there is much interest in this Bill, and rightly so. I thank everyone who gave time and consideration to their contributions. I welcome all the opinions I heard from all sides in our attempt to improve the position for those we represent, regardless of our political persuasion.

Deputy Bruton referred to the relationship between Government expenditure and tax levels and the delivery of public services. I do not accept the rather gloomy picture he paints of an overtaxed economy which gets nothing for its taxes. Tax must be looked at relative to income. For instance, the income of a person on the average industrial wage rose by over £11,000 between 1997 and 2005 while the total tax, PRSI and levies for a person on that wage was cut by more than £200 in that period.

Looking further we see that since 1997 average income tax rates for all individuals at all income levels have dropped by an unprecedented amount. For a person on the average industrial wage, the average tax rate will be 10 percentage points lower than it was in 1997 — less than 17% in 2005 as compared with over 27% in 1997. For 2005, the percentage of the income tax yield coming from those earning at or under the average industrial wage is estimated at just under 6% as compared with over 14% in 1997. In 2005, over 34% of income earners — 657,000 earners approximately — are entirely out of the tax net, as compared with approximately 25%, or 380,000, in 1997. Those simple statistics set out the facts so far as individual taxpayers are concerned.

The most recent OECD data show that Ireland, in 2003, had the lowest tax wedge in the EU and one of the lowest in the OECD for the average single worker. For the average production worker who is married with two children with a carer in the home, Ireland now has the lowest tax wedge in the entire OECD. The OECD data show that the tax wedge for such workers has fallen more sharply in Ireland than in any other OECD country, reflecting the progress that has been made in this area.

Deputy Bruton referred to an increase in the overall tax burden. Tax as a percentage of GDP went up from 28.1% in 2002 to 29.3% in 2003 according to the OECD. However, this increase was due to increases in capital gains tax receipts and the extra revenue from property taxes. Tax on ordinary income as a percentage of GDP fell.

However, I share the concern of Deputy Bruton and others about achieving value for money. That is something we must continuously strive to improve. I believe that this Finance Bill will continue the Government's focus on ensuring equity and competitiveness in our economy.

I wish to refer to some of the specific measures touched upon by Deputies. On the aiding and abetting provision which is being introduced, I am glad there seems to be a general welcome for changes proposed to section 1078 of the Taxes Consolidation Act, which deals with revenue offences. I agree with Deputies that we must learn from past experience in dealing with tax evasion, and strengthen the law where necessary.

I am also pleased that there appeared to be a general welcome for the measures to allow Revenue to make inquiries in relation to single premium life policies. It is too soon to say what the tax yield from these inquiries may be. However, this is a useful measure that will help to clear up some of the legacy of past evasion. I note in passing that the proposed provision contains important safeguards against inappropriate access to personal data, such as medical records.

Some Deputies suggested that the review of tax schemes I announced in the budget is not necessary or that I should have made certain decisions in advance of this review. The Government is undertaking the review to determine what we can learn from past experiences and whether it should seek to bring about any changes, given the current level of economic and sectoral development. Those are matters to be decided upon based on what emerges from the review. The questions include the role for a wide range of tax relief schemes, in particular those availed of by high earners; what targeted incentives we would consider to be merited or that can deliver the community benefit where there is a deficit that cannot otherwise be filled by the marketplace, by way of public provision or otherwise. The Government must also look at balancing the benefit of such reliefs with the need to ensure that all taxpayers make an appropriate contribution to their society. Various issues raised by Deputies in respect of the benefits to high earners will be examined as part of the review.

Deputy Burton referred to the difficulty in obtaining data relating to the cost of certain tax reliefs. A number of provisions have been introduced in recent Finance Acts to help address shortcomings in this area. The Revenue Commissioners introduced a number of changes to the forms relating to the annual return of income by PAYE and self-employed individuals and companies in respect of 2004 as well as to the P35 form which is returned to Revenue by employers at the end year with totals for earnings and deductions for each employee in respect of the tax year 2005.

Deputy Burton referred to the relief for third level buildings. This relief was introduced in 1997 on Report Stage of the Finance Bill by the then Minister for Finance at the request of the then Minister for Education and Science. I do not intend to extend the relief in this Bill. The Finance Act 2004 provided that expenditure incurred up to 31 July 2006 would qualify for the relief, provided that a ministerial certificate regarding the financing of the project was issued by 31 December 2004. A small number of outstanding applications for certificates were under examination by my Department in December 2004 and it was not possible to complete the detailed examination and assessment by the cut-off date of 31 December 2004.

My announcement of 22 December stated that the applications had to be received by 31 December 2004 instead of the previous requirement for the ensuing ministerial certificate issuing by that date. It would have been unreasonable to preclude the institutions concerned simply because the examination process had not been completed. The three cases in hand are to do with public institutions. I do not wish to comment on whether the applications will be successful since they are being examined, but the three proposals were from the University of Limerick, the Waterford Institute of Technology and St. Angela's College, Sligo.

The question of overpayments by PAYE taxpayers was raised by a number of spokespersons and Deputies. I recognise the concerns which have been expressed. The PAYE system has served the country well for 45 years and the Revenue Commissioners are satisfied that the vast majority of PAYE workers receive their full entitlements each year. These entitlements are, in the first instance, reflected in the tax credit certificates issued at the beginning of each year. Revenue is currently in the process of issuing over 2 million certificates to PAYE taxpayers for the 2005 tax year. These certificates reflect the most up-to-date information Revenue has on an individual and they are accompanied by a leaflet giving details of the credits or reliefs to which taxpayers may be entitled.

While it is right and proper that Revenue seeks to make sure that taxpayers receive their entitlements, it will always be important that taxpayers bring changes in their circumstances to the attention of Revenue. Many of the reliefs mentioned in recent weeks, such as medical expenses, tuition fees, service charges and union subscriptions, are not known to the Revenue until the individual claims for them.

Revenue is currently engaged in a comprehensive modernisation of its PAYE computer system, which will include the ability to make amendments and claims over the Internet and much closer computer links with the Department of Social and Family Affairs. When the roll-out of the new system commences later this year it will provide a greatly improved level of service for PAYE taxpayers, including, subject to defined parameters, a facility for automated reviews of liability where Revenue is satisfied that the figures are correct. The Finance Bill includes provisions in sections 20 to 24 to underpin this new service. These provisions can be discussed in more detail on Committee Stage.

Deputy Boyle suggested that the increase which the Bill proposes in the limit for publication of settlements with tax will lead to widespread low level tax abuse. I do not accept this argument. Deputies Crawford and Ardagh also discussed the question of these thresholds, although they took a different view. It is a question of balance. The limit of €12,700 has not been changed since it was first enacted at a rate of £10,000 in 1983. If indexed according to the consumer price index, the figure would be a little more than £26,000. In many recent publication cases, the bulk of the settlement consists of interest and penalties rather than tax underpaid, which could often be relatively small sums relating to periods many years ago. This goes against the original purpose of the provision when it was introduced in February 1983. It was said to be for "the larger back-duty cases involving default by the taxpayer". The new proposed level strikes a good balance.

Deputy Connolly is of the opinion that the excise duty on tobacco should have been increased in view of the known effects of tobacco on health. No one can say that the Government has been soft on smoking as we introduced the smoking ban in the workplace and since coming into power in 1997, the excise duty on a pack of 20 cigarettes has increased by €2. However, there is a limit and it must be taken into account when setting excise rates that the volume of cigarettes released from bond has fallen by 24% in the past two years.

Deputy Boyle raised the issue of biofuels. There was a provision in last year's Bill in this regard. The Government is making good progress in discussions with the European Commission on the detail of the scheme to be introduced. I am as anxious as the Deputy to get the scheme up and running.

Various Deputies raised the issue of tax relief for child care. Over recent years the Government has considered carefully the whole area of child care. The Government has increased child benefit by very substantial amounts since 2001. It has been increased by nine times the CPI in that period.

The equal opportunities child care programme funds capital development to increase places, support staffing costs for facilities targeting disadvantage and the improvement of the quality of child care. Over the next five years, 2005-09, the capital envelope for the planned programme of continued investment in child care facilities will be €313 million, which is expected to create about 17,000 places, 3,400 per annum for each of the next five years. The 2005 allocation for the EOCP provides €83.4 million of which €43.8 million is current funding and €39.6 million is capital funding. This is all new spending since 1997. Prior to 1997, the only equivalent provision was a pilot scheme which ran from 1994 to 1997 at a total cost over the three years of €1.6 million.

The Government has also undertaken measures to favour the supply of child care by tax incentives to set up facilities, providing 100% capital allowances available in year one for expenditure on the construction, refurbishment or extension of child care premises which meet the required standards of the Child Care Act 1991. There is also relief from benefit-in-kind taxation for free or subsidised child care where this is provided by employers. Taken together these represent substantial measures from a start-up in 1997, to assist with the cost of child care, in stark contrast to Deputy Ó Caoláin's suggestion that nothing of substance was being done.

Deputy Bruton also referred to indexation in the capital gains code. After indexation relief was introduced in 1978, there was high inflation in the 1980s and high capital gains tax rates. At the time, these high rates were a major deterrent for people considering disposals of assets. Now that the tax rate has been lowered to 20%, and inflation is consistently low, there is no cogent need to retain indexation relief in the capital gains tax system. Most countries do not apply indexation relief to the taxation of capital gains. As regards abolition of roll-over relief, referred to by Deputies Bruton and Crawford, roll-over relief made sense when CGT rates were 40% and above. As the Deputies will be aware, the rate was halved from 40% to 20% in budget 1998. In budget 2003, it was announced that no roll-over relief would be allowed for any purpose on gains arising from disposals on or after 4 December 2002.

The abolition of this relief is in accordance with the overall taxation policy of widening the tax base to keep direct tax rates low. It is logical to tax capital gains when they are realised and this change brings CGT into line with other areas. As regards the question of CGT in a compulsory purchase order situation, the CGT due on a disposal of land under a CPO is calculated in the same way as for any other disposal of land, that is, the total sum received will be the amount to be assessed for tax.

As regards the points made by Deputies Deenihan and Glennon and others in regard to the Gaelic Players Association, I have given a commitment that this will be thoroughly examined.

In answer to comments made by Deputies Ardagh, Glennon and Curran regarding stamp duty for first-time buyers of second-hand houses, I am glad to note that the stamp duty for first-time buyers of second-hand houses has been genuinely effective in helping these buyers take a first step on the property ladder.

Deputy Perry expressed some criticism of preliminary corporation tax payment dates. I note in this regard that, as he acknowledged, the Irish tax system is not over-burdensome for companies. The Government is trying to bring payment dates into line with international standards.

Deputy Deenihan referred to the issue of VAT deductibility for entertainment expenses and I note his plans to propose an amendment. This form of deductibility was available in the past and appears to have been widely abused.

I thank Deputies for their contributions to the debate. Time does not permit me to respond on all the points raised. I look forward to Committee Stage which will offer an opportunity for a more detailed discussion.

Question put.
The Dáil divided: Tá, 75; Níl, 56.

  • Ahern, Michael.
  • Ahern, Noel.
  • Andrews, Barry.
  • Ardagh, Seán.
  • Blaney, Niall.
  • Brady, Johnny.
  • Brady, Martin.
  • Browne, John.
  • Callanan, Joe.
  • Callely, Ivor.
  • Carey, Pat.
  • Carty, John.
  • Collins, Michael.
  • Connolly, Paudge.
  • Cooper-Flynn, Beverley.
  • Coughlan, Mary.
  • Cowen, Brian.
  • Cregan, John.
  • Cullen, Martin.
  • Curran, John.
  • Davern, Noel.
  • Dempsey, Noel.
  • Dempsey, Tony.
  • Dennehy, John.
  • Devins, Jimmy.
  • Ellis, John.
  • Fitzpatrick, Dermot.
  • Fleming, Seán.
  • Fox, Mildred.
  • Gallagher, Pat The Cope.
  • Glennon, Jim.
  • Grealish, Noel.
  • Hanafin, Mary.
  • Haughey, Seán.
  • Hoctor, Máire.
  • Jacob, Joe.
  • Keaveney, Cecilia.
  • Kelleher, Billy.
  • Kelly, Peter.
  • Killeen, Tony.
  • Kirk, Seamus.
  • Lenihan, Brian.
  • Lenihan, Conor.
  • McDowell, Michael.
  • McEllistrim, Thomas.
  • McGuinness, John.
  • McHugh, Paddy.
  • Moloney, John.
  • Moynihan, Donal.
  • Moynihan, Michael.
  • Mulcahy, Michael.
  • Nolan, M. J.
  • Ó Cuív, Éamon.
  • Ó Fearghaíl, Seán.
  • O’Connor, Charlie.
  • O’Dea, Willie.
  • O’Donnell, Liz.
  • O’Donovan, Denis.
  • O’Flynn, Noel.
  • O’Keeffe, Batt.
  • O’Keeffe, Ned.
  • O’Malley, Fiona.
  • O’Malley, Tim.
  • Parlon, Tom.
  • Power, Peter.
  • Power, Seán.
  • Roche, Dick.
  • Sexton, Mae.
  • Smith, Brendan.
  • Treacy, Noel.
  • Wallace, Dan.
  • Wallace, Mary.
  • Walsh, Joe.
  • Wilkinson, Ollie.
  • Woods, Michael.

Níl

  • Boyle, Dan.
  • Breen, Pat.
  • Broughan, Thomas P.
  • Bruton, Richard.
  • Burton, Joan.
  • Connaughton, Paul.
  • Costello, Joe.
  • Coveney, Simon.
  • Crawford, Seymour.
  • Deenihan, Jimmy.
  • Durkan, Bernard J.
  • Enright, Olwyn.
  • Ferris, Martin.
  • Gilmore, Eamon.
  • Gogarty, Paul.
  • Gormley, John.
  • Gregory, Tony.
  • Harkin, Marian.
  • Hayes, Tom.
  • Healy, Seamus.
  • Higgins, Joe.
  • Higgins, Michael D.
  • Howlin, Brendan.
  • Kehoe, Paul.
  • Kenny, Enda.
  • Lynch, Kathleen.
  • McCormack, Padraic.
  • McGinley, Dinny.
  • McGrath, Finian.
  • McManus, Liz.
  • Mitchell, Gay.
  • Mitchell, Olivia.
  • Morgan, Arthur.
  • Moynihan-Cronin, Breeda.
  • Naughten, Denis.
  • Noonan, Michael.
  • Ó Caoláin, Caoimhghín.
  • Ó Snodaigh, Aengus.
  • O’Dowd, Fergus.
  • O’Keeffe, Jim.
  • O’Shea, Brian.
  • O’Sullivan, Jan.
  • Pattison, Seamus.
  • Penrose, Willie.
  • Perry, John.
  • Quinn, Ruairí.
  • Rabbitte, Pat.
  • Ryan, Seán.
  • Sargent, Trevor.
  • Sherlock, Joe.
  • Shortall, Róisín.
  • Stagg, Emmet.
  • Stanton, David.
  • Twomey, Liam.
  • Upton, Mary.
  • Wall, Jack.
Tellers: Tá, Deputies Browne and Kelleher; Níl, Deputies Kehoe and Stagg.
Question declared carried.
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