The Finance Bill reaches the floor of the Dáil in the wake of the latest National Economic and Social Forum report published on Monday. The report confirms in the starkest of terms the gross inequality in this society after over a decade of the Celtic tiger and nearly a decade of continuous Fianna Fáil-Progressive Democrats Governments.
The NESF makes clear we now have a wealthier but more unequal society than before. The richest 20% of the working age population is earning 12 times as much as the poorest 20%, one of the highest levels of income inequality among OECD countries. That is a shameful level of inequality, especially in a small country such as ours. Extravagant wealth and avoidable poverty are living side by side on this small island, and it is little wonder given the revelations in the review of tax reliefs also published on Monday. That report reinforces everything that has been said, not least by Sinn Féin, in identifying the use of tax reliefs by the Government to further enrich those prospering most in this economy.
The review of tax reliefs is a catalogue of daylight robbery of the ordinary PAYE taxpayer and of those on or below the poverty line. It is robbery of the poor by the rich facilitated by this Government. Reading the report is like assessing one's losses after the burglars have left one's house; it is too late to do anything about it. The robbers have fled with the loot, cheered on by former Minister for Finance, Charlie McCreevy, whose echoes are still going around this Chamber.
What we have in the review of tax reliefs are three substantial volumes cataloguing the amount of tax revenue squandered on a plethora of tax breaks that has primarily benefited the highest earners. In the case of pension reliefs, the biggest beneficiaries have been able to stash away pension funds of up to €100 million and enjoy the tax benefits, in one case withdrawing a bounty of €25 million tax free. This has been going on for years.
These tax breaks have rewarded developers and speculators and were introduced and continued without any cost-benefit analysis. Only now are we getting an estimate of their cost. It is scandalous that after years of these schemes the report should have to make the following recommendations: first, all tax incentive schemes should require full disclosures of key information to the Exchequer by investors/promoters via a certification scheme or other mechanism to enable the full cost and impact of the schemes to be monitored; and second, the decision to introduce any new tax incentives should be informed by a formal assessment of the likely costs and benefits.
Most ordinary taxpayers must be incredulous that tax relief schemes which bestowed such massive sums on wealthy individuals were not subject to such basic requirements as disclosure of information and analysis of cost and benefit. The report makes clear that these tax reliefs have been seen primarily as incentives for the construction industry. However, they have poured public money into a booming private sector for developments that would have happened anyway, as is clear from the report. This is public money that should have been spent directly on providing the infrastructure and social services we need. Instead, it has mostly benefited individuals who, the report estimates, earn at least €100,000 per year.
The general recommendations of the review also include the following: "Where there is justification for Government incentives the option of direct public expenditure as an alternative to tax incentives should be considered". The option of direct public expenditure should have been the approach with regard to child care facilities. While the report contends that the relief for child care facilities contributed to increasing the supply of places, it did nothing to make those places more accessible or affordable.
The social impact is not considered in the report and the lack of social impact analysis across the range of reliefs is one of its major flaws. However, we know that private child care facilities, subsidised by tax breaks, follow the money. Like general practitioners, there are many more of them in wealthier urban areas while poorer areas suffer a lack of child care places or, where places exist, they are not affordable for many people.
The Finance Bill promises to bring many tax reliefs to a close, with an extension to 2008, but others remain open or are being extended. The Bill sees the Minister cleaning out the trough after most of the pigs have eaten their fill but for others there is more swill to come. It is disgraceful and totally unacceptable that in this Finance Bill tax relief for developers of private hospitals and nursing homes is to be consolidated and extended. This is a huge subsidy to the thriving private health business that needs such support least. Profit-driven operators are being rewarded again at a time when all State spending on health should be invested in public health and social services that care for everyone based on need alone and not on ability to pay and the profit motive.
The extension of the tax relief to those providing private mental health services is perverse, as spending on publicly-provided mental health services is still totally inadequate. Are we now to have a profit-driven mental health care sector which provides privileged care to those able to pay for it, while patients dependent on the public system continue to suffer?
Some €37 million has been spent on tax breaks for private hospitals so far, rewarding wealthy operators of the thriving private health industry and reinforcing the two-tier public-private system. No public money should have been spent on such private hospitals, yet the Finance Bill actually extends this tax relief. Taking just one set of reliefs, almost €330 million in tax reliefs has been given to developers of private hospitals, private nursing homes, hotels, holiday cottages and multi-storey car parks. While the review of reliefs pulls its punches, it can only be read as a damning indictment of Government policy when it recommends, as I have pointed out, that "The decision to introduce any new tax incentives should be informed by a formal assessment of the likely costs and benefits".
One of the key points about these reliefs is that they were pocketed by developers and speculators and no benefit was passed on to the consumer. In the context of child care, places increased but accessibility and affordability did not. The property-based tax reliefs have fuelled the spiralling price of residential property and have contributed to the housing crisis for so many people on average or above-average incomes who cannot afford a mortgage. It is an obscenity that developers of massive shopping centres and luxury apartments have benefited hugely from these tax breaks. Meanwhile there are 43,600 families on local authority waiting lists. This equates to more than 100,000 of our citizens.
The Minister has made much of his scheme in this Bill to encourage SSIA account holders on low incomes to invest in pensions. This is a modest measure and it is almost laughable when one considers the massive sums awarded to the highest earners through pension fund relief as highlighted in the tax review. The SSIA itself was kinked in favour of higher earners who could put more money into these accounts. What is to be done for those workers who could not afford to take out SSIA accounts? What proposals does the Minister have for those workers in his overall package? What is to be done for their pension provision? There are no answers to those questions that I can see in the Bill.
Yesterday, I listened to the Taoiseach talking during Leaders' Questions about the issue of tax reliefs and he was totally disingenuous. He portrayed those tax reliefs as old-fashioned measures dating back to an era before the Celtic tiger, putting money into disadvantaged areas and promoting development that would not otherwise have taken place. That is a compete misrepresentation. This Finance Bill does nothing to disturb the night's sleep of those who have pocketed plenty over the years from these reliefs.