Finance Bill 2008: Report Stage.

I move amendment No. 1:

In page 11, between lines 11 and 12, to insert the following:



1.—The Ombudsman shall include in her annual report a special report on the overpayment of tax by PAYE taxpayers, and on the take up of credits by such taxpayers, and the branch of her office dedicated to ensuring that the take up of credits is readily available to all taxpayers, and refunds made as rapidly as possible where this arises, as well as ensuring the availability of a ready mechanism for informing taxpayers (particularly pensioners) who are entitled to a refund of DIRT tax, shall be known as the taxpayers' advocate office.".

The purpose of this amendment is to again ask the Minister for Finance to set up a taxpayers' advocate. That would be an independent unit within the Office of the Ombudsman, to ensure that as far as possible PAYE taxpayers get all their entitlements, in particular the tax refunds due to them for medical expenses, service charges and refuse charges, trade union subscriptions etc. We have debated this matter before with the Tánaiste and it has provoked quite clear action on the part of the Revenue Commissioners to considerably beef up their contact mechanisms, advise taxpayers of their entitlements and encourage them to claim. However, the system has an enormously long way to go. The Minister knows this, as do the Revenue Commissioners. We want an advocate to advise the Revenue Commissioners to the effect that although what they are doing is an improvement, they could do better.

Young people, in particular, are paying a good deal in rent or management charges, where they have bought an apartment in which service charges for bin and refuse collections are frequently wrapped up. Almost none of those people can get a tax break because this Government has no legislation on management companies. The management fee includes the refuse charges, but the Revenue Commissioners cannot provide a mechanism to claim for that because in most cases these management companies do not provide itemised accounts. Through no fault of their own — and limited blame for the Revenue Commissioners — it is impossible for people to collect the tax breaks that are due to them in this case.

The sums involved are not trifling. The average rent for a two-bedroom apartment or house in Dublin west, which is not the dearest of areas, is a minimum of €1,200 a month. In some areas where there is shortage of demand, it could be €1,500 or €1,600 a month. The tax rebate for rental expenditure is really important, and significant for people on a tight budget. Similarly, refuse charges in most areas are climbing above the €250 and €300 mark. For people such as the Minister, who is accustomed to providing tax breaks for the very wealthy, the notion of 20% on €300 may seem to be something of a joke, but it all adds up. Cumulatively, the Revenue withholds every year hundreds of millions from individuals who ought to be entitled to tax breaks.

The purpose of this amendment is to set up an ombudsman structure. This has been debated and even adopted in principle by organisations such as the Institute of Taxation. Whenever the Commission on Taxation reports, this initiative will be a recommendation of all those hard working tax advisers the Minister has loaded onto that body. As I said, even the Institute of Taxation has said that this is a decent proposal. It is pro the taxpayer, whether big or small. It is not really an issue for very wealthy taxpayers because, by and large, they can afford lawyers and accountants to do their returns and minimise their tax payments, as they are legally entitled to, under our system.

Effectively, there is a range of very modest tax refunds in our system, for ordinary people on relatively low incomes. We have a defined system of tax breaks for wealthy individuals. These wealthy individuals can afford the accountants. Most ordinary people cannot employ an accountant. I will revisit the example I gave the Minister and ask him to think about it. Someone on the average industrial wage of just over €35,000, married with two children, is very unlikely at the moment, in terms of the Government's policy, to qualify for a medical card. If a member of that family of four, as can happen frequently, has a bout of illness necessitating a number of visits to a GP, the standard fee on the north side of Dublin is €55. It is very easy for such a family without a medical card experiencing normal childhood illnesses and perhaps a bout of 'flu in the course of a year, to run up medical costs of between €400 and €700. The figure will obviously be much higher if somebody is more seriously ill or has a more protracted illness. However, just taking the ordinary household where children get sick, the breadwinner is entitled to a tax rebate at the standard rate.

Wealthy taxpayers can, and do, claim back their medical expenses. Their advisers put in for a rebate on every cent they are owed. That is what they are paid for, but when it comes to the ordinary taxpayer, he or she cannot do it. It is wrong that it has taken so long to make provision for medical expenses to qualify for a tax rebate at source. That is done for mortgages and it could be done for medical fees. However, there is no onus on the Revenue Commissioners to change the system because there is no independent watchdog telling them they could do better. The Revenue Commissioners are to be praised for what they have achieved in terms of text information, the use of friendly lines, e-mail usage and so on; these are all positive developments. However, the take-up on relatively small tax refunds, say, €20 to €200 typically for an average person, is very small. Essentially this means that every year the State holds on to €200 million, which would otherwise be refunded to individual taxpayers.

Yesterday's returns show we dropped €0.5 billion on taxes in the first two months of the year, so I can understand that perhaps there is a motive on the part of the Minister for Finance to hold onto the money, rather than give it back to the taxpayers. We might need that little nest egg of unclaimed tax rebates. Nonetheless, I strongly urge the Minister that if we want to change the compliance attitudes in this society, then if people on lower incomes are due to get some tax back, this should be made as easy as possible for them. If large amounts of unclaimed tax rebates remain in the State coffers, then the Government should address the issue. Other countries do it, by having a taxpayers' advocate office, as it is called in the United States. This office could be located in the Office of the Ombudsman, and so would be an extension of that role. As with the Ombudsman over the years addressing particular issues, where individual citizens have got less than their due, it is to be recommended in terms of the type of governance by consent we all want to see in this country.

Tax is a difficult technical area for most people. It is hard for young construction workers, for example, who until recently were making a fair bit of money to remember that at the beginning of the year they might have visited the doctor. They might hold a couple of receipts for €100 and perhaps could get a tax rebate in that regard.

The office of the advocate, in the event, could constantly challenge the Revenue Commissioners to do more to get the rebates legally owed to taxpayers paid to them.

The amendment is particularly timely because the potential implications of yesterday's figures for the budget turnaround at the end of the year are truly catastrophic. In just two months we are €500 million off in terms of revenue. If this trend continues for the remainder of the year, we will be €3 billion off in our prediction, which would involve serious borrowing. We will be borrowing €8 billion and straining towards the limit of what is allowed under the stability pact.

The Minister published his monthly tax yield predictions just one month ago. It is truly amazing to find that the prediction is €500 million off within one month. I am amazed that he has not issued any explanation or statement on how he hopes to restore confidence. I warned at budget time that it was being framed in an extremely complacent fashion. I stated the Minister was content to persist with a very sloppy approach to public spending that allowed for considerable waste and that there was no impetus for reform in public services. There is no thrust to change the system so as to obtain value for money.

Unfortunately, there have been four budgets in a row under the Minister, many of which fuelled an overheating economy. They were produced for political reasons in the interests of winning an upcoming election but they have hurt the economy and made it uncompetitive. They have copperfastened the decline in our export market, which has featured for five years in a row, and we are losing market share. The Government must take a considerable amount of the blame for this loss of competitiveness.

There is a need for a serious strategy on the part of the Government because its programme for Government was based on tax revenue expectations that simply could not be met. The Minister is steering without a rudder in that the programme for Government, only six months after publication, is meaningless in terms of tax reform predictions and spending commitments. He needs to indicate how he proposes to bring about reform. I am not seeking knee-jerk responses and I am alarmed to see that the Health Service Executive is already seeking cuts of €300 million. As Deputy Kenny stated, that will inevitably affect discretionary front-line services because the bureaucracy will not be unwound.

Serious structural change is required in respect of how public money is spent and how value for money is obtained. It is a question of being able to live within what the economy is delivering rather than engaging in public spending at a rate 50% higher than the rate of growth of the economy. Such spending is not sustainable. We got used to it because stamp duty and other property taxes were the goose laying golden eggs but the goose is not laying golden eggs any more and the victims are the weakest members of our community.

The amendment is important because it would underline the obligation of the Revenue Commissioners to protect the ordinary tax-paying public. It would require the Office of the Revenue Commissioners to pay back what is due to the ordinary punter with the same determination it demonstrates in pursuing those who fail to honour their tax commitments. The Revenue Commissioners have moved a long way but have not taken this on board fully.

I repeat my request to the Minister to ask the Revenue Commissioners to undertake a study of the overpayment of taxes. Although I know he will complain about and object to what Fine Gael proposes, I have done such a study on the back of an envelope and considered the figures in the CSO household budget survey regarding moneys not compensated for through the drug refund and other schemes. It is a question of determining what is spent by ordinary householders on medical expenses. I estimate that tax relief is not claimed on approximately €500 million spent in this regard.

One will find that the number of rented properties, as reported by the CSO, is approximately two and a half times greater than that reported in the Revenue Commissioners' figures as qualifying for tax relief. This is not a one-way street for the Revenue Commissioners because there is no doubt that if they take seriously the restoration of money to those who are entitled to it, they will also catch landlords or other service providers who may not be honouring their obligations. It can be win-win for them. As Deputy Burton stated, there must be fair play on both sides. We give the Revenue Commissioners great powers to pursue those who are not honouring their tax commitments but we expect them to return to ordinary people what is rightfully theirs in equal measure.

I thanked the Minister last year and thank him again for the concession he made on medical relief. By removing the threshold, he made possible a move towards refunding taxpayers at source. He will argue that there are too many players but, with some ingenuity, we can at least begin to make it very simple to lodge a claim at source, even if the refund is not given at source. In other words, as soon as one enters a doctor's surgery, one could sign a form, obtain a receipt and have the transaction included in one's tax return data. At least, the expense would be on record as an expense and the Revenue Commissioners could process it in due course. With some ingenuity we can discover ways to provide refunds at source, particularly in the health sector, the main sector that does not provide for deductions at source.

Deputy Burton tabled the amendment previously and the Minister rejected it but we must make some progress in this matter. I hope the Minister will reinforce the welcome small change he made last year with a request to the Revenue Commissioners to produce a proper, objective report on the amount of tax overpaid and not, as occurred in the past, state it is a matter for taxpayers. He should also consider new ways to offer deductions at source. Can we now use the new provisions for medical relief to effect real change and allow individuals who are often on low or modest incomes to obtain tax relief on their expenditure?

It is somewhat ironic that, in the same breath with which Deputies are criticising the growth in public expenditure, they are supporting an amendment to establish yet another public office, the manning of which would require a considerable number of civil servants.

It is the same office.

The focus of the discussion wandered towards the financial outlook. The fact of the matter is that the public finances are characterised by their unprecedented, underlying strength, with a nominal general Government debt ratio of 25%. However, if there were a net general Government debt that took account of national pension fund contributions, it would result in a percentage of approximately 13% or 14%. On the nonsense about the catastrophic implications for our finances, memories must be very short if they forget what happened in the 1980s. I do not believe they are so short. What is required is a steady hand.

I can recall the Government being criticised as pro-cyclical. Thanks to the underlying strength of the economy, the budget was actually moderately anti-cyclical. This is confirmed by studying the Book of Estimates published in recent days which shows growth of 8% or 9%.

Underlying the amendment is the notion that we must interpose another group of civil servants between the taxpayer and the Revenue Commissioners. My experience of the Revenue Commissioners is that they are just as happy to assist taxpayers in claiming refunds as they are to assist them in meeting their obligations. Admittedly, there are geographical limitations in that one's experience relates to the particular office with which one deals. I simply do not believe the Revenue Commissioners would somehow be less inclined to assist taxpayers in obtaining refunds in the light of the Exchequer returns for the past two months. One should remember that the underlying financial position is strong. Incidentally, it is far too early in the year to make predictions. Very often, economic trends can alter course considerably in the course of a year. It is far too early to extrapolate from the figures for a two month period what the overall position for the year will be.

Personally, I do not see the necessity of establishing a new office. Unless it is an automatic refund system, a taxpayer must still contact a taxpayers' advocate office with details. Why would he or she not contact the Revenue Commissioners directly? I would have every confidence in their ability and willingness to help ordinary taxpayers, as Deputy Burton calls them, to claim their rights.

Reference was made to competitiveness. I presume Deputy Bruton saw the news in the past 48 hours or so that on the basis of the Lisbon Agenda, Ireland was the second most competitive of 15 countries in the European Union, after Finland. The position is not as bad as is sometimes made out.

I support the amendment and marvel at the fact that less than a year ago a number of parties in this House were advocating significant tax cuts. Of course, the difference is that this time last year we were facing into a general election and with the fear that the people might realise what was going on, it is probably understandable, if not forgivable, that tax cuts were being advocated in the face of the then emerging trend. The Minister's party was most culpable because it had access to the minutiae of the figures, considerably more so than any of the parties on this side of the House. Therefore, the sin is considerably bigger as a result. As we have seen, the promises have now been buried. They have been shelved, probably awaiting the next election when they will be wheeled out again, as they were in the past, in the full knowledge that they will not be honoured.

There is a need for a significant awareness campaign around people's rights and entitlements under the tax code. I accept, as others do, that there has been some movement on the part of the Department in recent years but, unfortunately, not enough. There should be automatic flagging systems in place developed through ITC in Departments to notify taxpayers of their entitlements. That should be a feature of all Departments. It is unfortunate that more has not been done to date in that regard and that the Exchequer continues to take people's money to which it is not entitled. I support the suggestion that right across the board, whether in doctors' surgeries or dental clinics, information be provided for taxpayers indicating their rights and entitlements to rebates. I, therefore, support the amendment.

I want to make two observations. First, Deputy Mansergh made the point that after two or three months it was too early to extrapolate what the overall position would be. If one was to look at the HSE's website, it held a board meeting at the end of February 2007 at which it was clearly indicated that there would be a deficit of €200 million or €300 million. However, no action was taken. We did not hear about the matter until after the general election. One can only judge on the information one has available. I would be interested to hear the Minister's reply to Deputy Bruton on what proposals he has to deal with public expenditure and the economy. Certainly, in terms of the assumptions made in preparation of the budget, the Minister based his figures on 55,000 house completions. At the time it was generally recognised in the marketplace that the figure would be as low as 35,000, which as the Minister well knows could result in a shortfall of €2 billion at a minimum.

On the amendment, thankfully, this morning I heard a radio advertisement on the issuing of tax credit certificates in which people were asked to log on to the Revenue website to check their entitlements. The amendment makes particular reference to pensioners, most of whom will not use the Internet. Such advertisements, many of which are being run on local radio, should be amended to include for the purposes of practicality a reference that people should contact their local tax office.

On the extra cost, we are looking to use public resources and services in the most efficient manner possible. Deputy Burton's amendment refers to the setting up within the office of the Ombudsman of a particular section to deal with PAYE taxpayers' rights. I do not see that costing a significant amount of money. It would be a highly efficient use of public resources. We should not have been in a position where there was a need for refunds of the order of €530 million in 2007 and €407 million in 2006. Looking back further, there were refunds of the order of €277 million in 2004 and €357 million in 2005. That amounts to approximately €700 per person on average. Nearly 520,000 persons applied for a tax refund in 2005. We should progress to a point where people could receive a refund by way of their tax credits rather than having to apply for it at the end of the year. The proposal is practical in orientation, would not cost the Exchequer a significant amount and would introduce a fair system. I await the Minister's comments.

As stated, this is an issue that was discussed on Committee Stage and during the debates on previous Finance Bills. Some recognition, in fairness, has been given to Revenue's efforts to improve the range of services it provides in order that taxpayers are made aware of their entitlements and assisted in every way possible in obtaining those entitlements.

Looking at the list of initiatives to inform taxpayers of their entitlements and grant reliefs automatically, in the autumn of 2007 there was a major advertising campaign undertaken in the national daily newspapers, on national and local radio, in DART and Luas stations, and on bus shelters, etc. Last year Revenue automatically granted age credits for those reaching the age of 65 years and automatically granted increased rent credits for those aged 55 and over. It opened DIRT-free accounts for those over 65 years or permanently incapacitated. The number of DIRT-free accounts was 47,218. The DIRT repaid last year to 920 claimants came to €2.2 million. Over €9 million was automatically refunded to 50,000 taxpayers based on details received by Revenue in respect of pharmacy costs.

As has been said, Revenue is advertising details on television and radio, whereby taxpayers can apply for tax credits and refunds using its on-line service. Local tax offices are also available to assist. In fact, many may go to the local office in the first instance. Revenue intends to be in the position where it can make automatic refunds in respect of tuition fees paid to third level colleges and universities. The feasibility of extending this approach to nursing home fees and medical and dental practitioner expenses will also be examined during the course of the year. Revenue has made available a wide range of publications and guides on its website, of which a major redesign will be undertaken this year to improve the quality and timeliness of the information available.

In helping taxpayers to pay the right amount and to avail of their entitlements, Revenue, over the course of its new strategy statement, plans to target better communication and information dissemination at individual needs. These initiatives during the course of the 2008-10 strategy statement period will include a major redesign of Revenue's website to improve the quality and timeliness of information and to present information and services on a more customised basis; running information campaigns on tax and customs systems, both locally and nationally, and to include programmes directed at non-Irish nationals; improving the quality of information based on a plain English standard available to all customers, validated by customer surveys and structured feedback from representative groups; easier to use PAYE self-service channels, leading to greater take-up; and tax credits and other reliefs increasingly given on an automated basis or prompted on foot of third party data. Much has been done in this area on the initiative of the Revenue Commissioners and prompted by the public debate ongoing in the House on successive Finance Bills with regard to making the maximum effort to ensure people get their entitlements.

The amendment is similar to one we had on Committee Stage regarding the need, as perceived by the Deputy, to establish a tax advocate's office. The statutory remit of the ombudsman already incorporates both of the roles proposed for a taxpayer's advocate, namely, acting for taxpayers and investigating actions that are contrary to fair or sound administration. Since the inception of the Office of Ombudsman, significant numbers of taxpayers have exercised their right to make complaints to that office. The ombudsman has carried out several special investigations on her own initiative under the Ombudsman Act 1980. When calls were made previously for the establishment of a taxpayers' advocate, the then ombudsman drew attention to the duplication of role and responsibilities that such a development would involve.

Apart from the statutory role and responsibility of the ombudsman, other avenues are open for taxpayers to make their complaints and to seek satisfaction for perceived unfair treatment. They can lodge a customer service complaint about the standard of service received in their personal contact with the Revenue Commissioners, by telephone, correspondence, fax, e-mail or in person, to a Revenue public office. They can request a review by Revenue of any aspect of the way in which their tax affairs have been handled. Such reviews are undertaken by a senior Revenue official who is not involved in the original decision, or, at the taxpayer's request, jointly by an external reviewer and a senior official. Taxpayers dissatisfied with specific treatment by Revenue can appeal under statutory provisions that grant access to the appeal commissioners, who are completely independent of the Revenue Commissioners.

In the Finance Act last year, I introduced a new scheme to allow the operation of DIRT exempt savings accounts subject to two conditions, that the account holder be 65 years of age or over or be permanently incapacitated and total income not exceed the relevant exemption threshold, €19,000 for an individual or €38,000 for a married couple. In 2007, Revenue arranged for an information leaflet to be issued to social welfare customers in receipt of State and other pensions. Some 100,000 leaflets were issued in that way. Revenue also continued to publicise the facility offered by the accounts through appropriate channels, including contact with representative bodies, other Departments and agencies and relevant advertising.

The Revenue Commissioners are satisfied that their ongoing efforts to inform taxpayers of their entitlements are having the desired effect. This is demonstrated by the substantial increase in the number of PAYE taxpayers seeking reviews of their tax liability in the context of claiming additional tax credits and reliefs. The number of reviews processed in 2006 was 1.14 million, as against 552,000 in 2005. The figure for reviews in 2007 is comparable to the 2006 figure and will be published in the Revenue annual report due in April.

Revenue staff in front offices dealing with the public and those manning customer help lines are trained to give full assistance to all customers. Where necessary, they will explain all areas of the tax code and the entitlements of individual taxpayers. There is also a wide range of information leaflets available, both in print and on line.

The fact that few people are enthusiastic about paying tax is all the more reason for effective channels of complaint and appeal by taxpayers against poor service or unfairness. Given the comprehensive and accessible system already in place for complaints or appeals by any taxpayer who feels unfairly treated by the tax system, I do not believe there is a case for putting in place the additional layer of a tax advocate's office.

With regard to other issues raised in the debate we have had on this section, there are issues of concern, for example, the weakness in CGT for the first two months of this year. There have also been adverse developments since the Budget Statement in December and in the international situation. We will monitor that situation and commit ourselves to watching expenditure levels closely during this 12 months. We will consider the situation after the first quarter and make further comment at that stage.

I am disappointed that the Minister's reply is so dull and unimaginative. The Minister seems very active with regard to facilitating well-off people who can afford accountants and tax lawyers to engage in tax planning and making it lucrative for them. The Minister will argue that this has its appropriate place in the system. It is sad that the Minister lacks the imagination to see what happens in terms of the majority of people who work for modest remuneration. These people are not facilitated.

I spoke about the issue with regard to health services. A family on the average industrial wage is unlikely to have a medical card, given the cutbacks in the number of medical cards by the Government over the past ten years. That number has fallen to an historic low. Many families on the average industrial wage have several hundred euro of medical bills per annum. In many cases they do not claim their tax back because, either they do not keep proper receipts or they do not know they can reclaim the tax.

What is at issue is not the fact that the Revenue Commissioners — after long debates in this House — now advertise in a variety of media that people can reclaim taxes, but that they are not active in encouraging and facilitating people to have these refunds paid. The easiest way would be to do it at source, but there has been little inventiveness on the part of the Revenue Commissioners during the Minister's reign to do this. Instead, the Minister's attention has been focused on boosting the property market, house prices and land prices to the point where that won him the election, but now we must live with the consequences of the fall. On the Minister's watch we have had the steepest decline in tax revenue, the largest increase in unemployment for a long time and serious signs of deterioration in the fortunes of the economy.

The Minister can bring in Deputy Mansergh to praise him all he likes, but self-praise is no praise.

I came in of my own accord.

Deputy Mansergh adores all Fianna Fáil Taoisigh, past and to be. He is only continuing his tradition of incredible adoration of the late Charles J. Haughey——

I thank the Deputy for her respect for my arguments.

——his current adoration of the Taoiseach and his loyal adulation of the person whom we presume, according to the current Taoiseach, will be the next Taoiseach. That is all good fun and Fianna Fáil politics. We do not mind that, but we would like a fair deal for the ordinary taxpayer.

I am a bit more serious than that.

That is what the amendment is about. I urge the Minister to reconsider.

On the basis of this amendment, the case has been made for the establishment of a tax advocate's office by Deputies across the House and I have given a comprehensive reply as to why I am not convinced that would add to the situation in the way people suggest it would. I recognise the proactive and effective efforts of Revenue in terms of access and its ability to deal with the issues and the fact it is involved in a programme of trying to provide, as much as possible, payments at source. This is not so simple. The number of outlets where expenditure takes place impacts on the ability to provide a tax relief at source system. If there are 3,000 GPs involved or if there are different systems in different local authorities in respect of bin charges, we cannot assume that it can be done very easily. Revenue is in the business of ensuring compliance not only in terms of people's liabilities but also trying to ensure that people draw their entitlements where they are due. That is part of the definition of compliance. It involves trying to heighten public awareness and to be as helpful as possible to taxpayers in every way. The effectiveness of some of its initiatives is demonstrated by the level of response one could say has arisen as a consequence of its efforts.

Revenue has further plans in mind in its statement of strategy for 2008-2010 so this issue is being addressed. It is not a question of not acting to try to improve the situation or suggesting that everything is perfect in the garden. One must also put in the caveat that, at the end of the day, it is the responsibility of each individual taxpayer to bring to the attention of Revenue those issues to which they are entitled. Revenue cannot be assumed to have that information because it may or may not be relevant to the individual concerned. That is the whole idea. We are trying to ensure that the individual is aware of what he or she could seek in refunds under the tax code. That is the situation.

I do not accept the wider issues mentioned by the Deputy outside the scope of the amendment but I will not go into the detail of this when we are dealing with this amendment.

I am looking at the section in the strategy which deals with helping customers to pay their right amounts and to get their entitlements. I have no complaint with Revenue in respect of Internet access for people who wish to get the correct entitlements. However, I have a problem in respect of pensioners and older people in particular. I made reference to a particular advertisement run on local and national radio this morning. Like the banks, this advertisement effectively pushed elderly people towards Internet banking and other forms of electronic transfer. As a vulnerable section of the community, they should be looked after. What I am seeking is a very practical measure, namely, that the advertising campaign tells people where their local tax office is and that when they go there, their concerns will be dealt with. I ask the Minister to go back to Revenue, of which he is boss, and request that it makes its advertisements more accessible to old age pensioners.

I draw the issue of management companies to the attention of the Minister and his officials. Most of the many thousands of apartments and new housing developments in the greater Dublin region and most towns and cities around the country are subject to management companies which, typically, have charges of €350 to approximately €3,000 per year. If it is an apartment, the normal fee is plus €2,000. Average fees are now around €2,500 for anything in a gated apartment-style complex.

Refuse charges for the local authorities are normally incorporated in the charges for these gated complexes and apartments. In the context of these management companies, as far as I can find out, these charges amount to probably €300 to €500 on average per annum and may be higher in some areas where refuse charges are higher.

Essentially, the people paying these charges through the management company are entitled to a small tax break for paying their refuse charges. However, because management companies are entirely unregulated by this Government and are normally effectively controlled by the developer and the agent chosen by him or her, the residents in the complexes cannot get a detailed and itemised bill to present to the Revenue Commissioners to prove that they are paying refuse charges. This is not the fault of the Revenue Commissioners who must deal with a situation which has developed without any thought on the part of the Government but which was basically designed to provide another quick killing for developers, particularly when they were selling apartments and houses at the height of the boom.

Can the Minister acknowledge that a serious wrong is being done to the tens of thousands of people who have had no option but to buy an affordable or very expensive property in a development subject to a management company? They have no recourse. The Revenue Commissioners do not have the ability to take this up because to whom does it go? There is no legislation to deal with it. It is an area where, once again, the ordinary citizen is powerless but the developer and construction company who built the complex are probably loaded up to the gills with tax breaks. That is perfectly legal. They have an army of lawyers and accountants looking after it. This is their business and it is perfectly legal. The Minister and the Government cannot seem to take account of the issues of the ordinary person who is entitled to a relatively modest tax break and cannot be facilitated to do so.

That is Deputy Burton's right of reply. Strictly speaking, nobody else can come in at this point. Deputy Mansergh has asked to be allowed to say a few words. Each Deputy can speak twice and the mover of the amendment has the right of reply. The Minister can only speak twice so he is not entitled to reply to anything said by the Deputy after that.

I apologise for coming in so late but the rules for Report Stage are slightly different in the Seanad so I am adjusting to them in the Dáil.

Like Deputy Burton, I am a member of the Oireachtas Committee on Finance and the Public Service. Indeed, I have the honour of being Vice Chairman of that committee. On that basis, I consider it my duty to be here during discussion of the Finance Bill on Report Stage. I did not come in here by arrangement with the Tánaiste and Minister for Finance. I would like Deputy Burton to have a bit of respect for other Deputies in this House and acknowledge that, like her, they are here to discuss the issues.

In respect of the issue Deputy Burton raised, namely, the Government's regard for ordinary persons, the House needs to be reminded that over a period of several years, the lower and middle income earner has been and continues to be treated better by the tax code in this country than in any other EU country. That should be borne in mind as part of the context in which we are discussing this issue.

Amendment put and declared lost.

Amendment No. 2 in the name of Deputy Burton arises out of Committee Stage. I remind Deputies that this is Report Stage. We spent three quarters of an hour on amendment No. 1. After Deputies speak on the first occasion, they have only two minutes to speak after that. Ideally, we should be moving much faster.

I move amendment No. 2:

In page 11, between lines 11 and 12, to insert the following:



1.—The Minister shall in establishing the commission on taxation include in its terms of reference the following matters:

(a) to examine anomalies arising from the tax treatment of married persons where one spouse remains out of paid employment in order to attend to child care duties;

(b) to examine the treatment of unmarried persons living together including gay couples in long term relationships;

(c) to examine the operation and possible reform of stamp duty particularly the capacity of property developers to avoid stamp duty on certain transactions and the exclusion of certain financial transactions (e.g. contracts for difference) from the lower rate of stamp duty applied to financial transactions;

(d) to examine the need to ensure that carbon tax proposals have due regard to the ability of less well off individuals including pensioners to meet the cost arising from increased taxation on carbon based fuels such as coal and gas;

(e) to inquire into the fairness and equity of the overall tax system and to provide for the evaluation of tax breaks and other provisions permitting tax payers to mitigate their tax liabilities and the impact in particular of provisions for exemption from tax and residency rules and shall publish at regular intervals the outcome of their enquiries into the tax system.”.

The purpose of this amendment is to ask the Minister to use the Commission on Taxation, which was a proposal put forward by the Labour Party, as a way of having an ongoing look at our tax system and its fairness or unfairness. This is a job that needs to be done on a continual basis, regardless of who is in Government, because what is effective in tax terms in one set of years is not effective some time later. Therefore, this needs to be continuously monitored.

One of the issues the Commission on Taxation should address is evaluating tax breaks. This follows the study done by the Minister's Department some years ago showing that many of the construction-based tax breaks — to use the language of a number of the reports — carried dead weight in terms of economic activity. In other words, the economic activity would have happened anyway and the tax breaks did not add anything extra. However, the political impact of the tax breaks, particularly for the Minister's party, has brought huge rewards, even though all the parties in the House have been party to tax rates being lowered. In the case of the Labour Party, the 12.5% corporation tax was agreed by then Minister for Finance, Deputy Ruairí Quinn, and subsequently implemented by the follow-on Fianna Fáil Administration and Minister for Finance. There was cross-party agreement in the House on this matter.

The Minister announced his Commission on Taxation which is weighed down with the great and the good of the tax world, so many people who are leading lights in the tax avoidance tax minimisation industry, as opposed to one or two persons personally appointed, in one instance with a trade union connection, are to be advocates for ordinary taxpayers. The only parallel in history that comes to mind is Dick Cheney's energy commission. It was set up to protect the environment, but it was loaded down with lobbyists and vested interests who basically wanted to get their hands on the US energy reserves. The Minister's approach is very much like Vice President Cheney's approach; the fox is going to raid the henhouse and the foxes are asked to sit on the committee. This is wrong. The Labour Party had in mind a broader commission which would examine what we are doing.

Since the catastrophic fall in tax revenues under the Minister's watch, this issue has become more important than ever. We are going to have less of the kind of tax revenues that were available to blow on any and every other fancy rather than to invest in serious infrastructure which this country requires. We also have an ideological rift running through this Government with the diminishing presence of the Progressive Democrats over the past ten years. This has been to privatise health care at all costs.

I was saddened to read the Minister's proposal on the hospice movement. When I was a teenager, my mother died very slowly and painfully from a very severe form of cancer. There was no hospice movement available at that time to help people like her who did not have money. Twenty years later, when her unmarried older brother was dying with lung cancer, the availability of hospice services had improved and he was able to access such services as a single man, which included male nurses to attend him when he was in his late 80s.

The hospice movement in this country is more than worthy of Government attention, investment and assistance, and this would have my strong support. If the Minister were to propose in the Finance Bill that for every euro the not-for-profit hospice movement raised, the Government would match it by VAT refund — which is the subject of a Labour Party amendment — we would applaud such a proposal because there is no dispute about the fact that the hospice movement has brought a dimension to palliative care in this country which is simply not available in the normal hospital services. The Minister is proposing to complete the circle of privatising our health services by essentially privatising and offering a for-profit investor-led service.

I draw the Minister's attention to four pages of amendments all to do with the investor in palliative care. I understand the technical reasons for the Minister's amendment referring to investors. However, what is the advantage to society of privatising the hospice movement? A developer wishing to invest in hospices will get a 41% tax break for every €1 million used to build a hospice. Over a period of 15 years, a developer will receive at least €410,000 back if he or she is a top rate taxpayer and a bit more if he or she also has a PRSI liability. What is the point of this proposal?

The Minister already privatised and attempted to introduce tax breaks for private hospitals, nursing home care and psychiatric facilities last year. His predecessor as Minister, Mr. Charlie McCreevy, with whom I debated the issue, had a crude view that it would produce more beds. This is an argument that has to be addressed. What has it done to the health services as a whole? Why are we listening, day after day, to so many tragic stories? What does it say about a country when the Government proposes privatising people in their last stages of illness? What does this say about this country as we march on to 2016? If the Minister wished to incentivise the development of hospices there were better ways of doing so, which the Labour Party would have supported on a euro for euro basis, rather than yet again giving tax breaks for investors.

I tabled this amendment which speaks for itself. It asks the Minister to evaluate those tax breaks. It is not too late for the Minister to defer his proposal. I suggest he ask the commission, weighted and all as it is by people who have been involved in one or other element of the taxation advisory industry, to undertake that evaluation. In most other parliaments, anyone being appointed to a commission would be subject to scrutiny by a parliamentary committee such as the Joint Committee on Finance and the Public Service, of which my colleague, Deputy Mansergh, is Vice Chairman. One of the questions such an appointee would be asked is whether he or she had a vested interest. Who are the vested interests that are the predominant force on this committee? They are the people in the taxation advisory industry.

I do not have a problem with the taxation advisory industry. I am originally an accountant by profession. However, we must try to define what is in the broader public interest rather than what is in the direct interest of a select few. This is what the Cheney commission did in America in the early 2000s with regard to energy policy and developing areas such as Alaska. The Cheney commission has not been successful and I do not really expect this Commission on Taxation to be particularly successful. It is headed by somebody for whom I have a lot of time, the retiring chairman of the Revenue Commissioners. He is just one person on the commission, with one or two others who might represent the interests of ordinary taxpayers.

I refer to the impact of individualisation on families, particularly families with two or more children. They are now paying extra taxes of approximately €7,000 a year if one partner chooses to stay at home and mind the children. I will not rehearse the various points I made on Committee Stage.

The commission should provide an opportunity to examine the treatment of unmarried persons who are living together, including gay couples in long-term relationships. The Labour Party has published a Bill on civil unions, which has been put before the House twice. The programme for Government promises to legislate for civil unions as a prelude to giving gay people the full entitlements others get in terms of recognition of their relationships. There are big tax issues that need a cool examination to ascertain how we can give people their just entitlements, which is what a proper tax system ought to be about.

We want to consider the reform of stamp duty. The Minister's two attempts, which were too little and too late, to change stamp duty more than anything else wrecked the housing market. There it is going to sit probably for at least another two years. We all wanted a soft landing. For political reasons prior to the general election the Minister chose to boost the housing and land market to unsustainable norms. We could have had the soft landing. However, unfortunately once the general election was over and reform of stamp duty had to come, the Minister took two bites at the cherry, despite having said when Fine Gael made a proposal that if it was done piecemeal it would be a disaster. The two bites at the cherry on stamp duty reform really damaged the housing market.

Did the Deputy not support the Fine Gael proposal?

We need to consider the matter in some detail. The Minister also made several disastrous decisions off his own bat in previous Finance Bills. The first was the 1% stamp duty on contracts for difference. When representatives of the investment houses and brokers contacted the Minister to say they would not have it, the Dublin exchange became a bubble for contract for difference transactions. That bubble has also burst and many high net worth individuals are nursing very significant losses. I understand that most of them can sustain those losses. However, it is still not pleasant to see people with losses estimated to be in excess of €600 million on the market the Minister helped to boost.

In this Bill when the Minister inserted the securitisation of carbon credits again he omitted the 1% stamp duty from those transactions in order to try to boost a flagging stock market. Deputy Mansergh talked about counter-cyclical measures. They were not counter-cyclical measures. They were measures designed to boost an already inflated market and inevitably they mean that when the crunch has come, the crash and difficulties are worse that they might otherwise have been. All of us wanted a soft landing from the high boom. However, the Minister has conspired to produce a much rougher ride particularly for the people at the bottom of the housing market, many of whom unfortunately are left with degrees of negative equity of up to approximately €70,000.

I ask the Minister to give consideration to the Labour Party's proposal and in particular to reconsider today's move regarding hospices. It is not worthy of the not-for-profit voluntary sector and the history of hospices in the country, which every Deputy in the House supports. Most of us have considerable experience of hospices and of fundraising for them.

The one point on which I strongly agree with Deputy Burton is the value of the hospice movement. That is without prejudice to any measures to encourage the construction of hospice buildings.

I found the discussion about the privatisation of the health service somewhat ironic. I am unclear as to the status of this policy at this stage. However, the Labour Party policy was to make the health service entirely insurance-based. Most of the insurance companies would be private. I have some little experience of the system in one continental country and I am not sure I want to see insurance companies effectively determining health policy and what will and will not be reimbursed. We have a very substantial public health service in the HSE. A comprehensive insurance-based policy could represent a wholesale privatisation of the health service and take it away from the public accountability it has.

The spirit behind the amendment is that the commission on taxation should be a standing body. I am not sure about that. We should be wary, not least in these times, of establishing more permanent agencies. Much could be said for asking a commission to do a job and when it has done its job to disband. I deprecate repetition this morning. The attempt to portray an essentially politically and ideologically neutral body as some enormous right-wing conspiracy and picking the most right-wing figure one can think of who is active in the political world, US Vice President, Dick Cheney, is grossly unfair to the commission and simply not objectively justified. Of course practitioners with experience of the system are needed on the commission along with others. Inevitably as many of the issues that will be discussed, including tax breaks, are technically pretty complicated, I do not see how one could do without such experts.

I will not go into great detail on the individualisation debate — nor did Deputy Burton. It must be pointed out that the pre-individualisation situation was unfair to many people. Single workers on the average industrial wage tended to be taxed at the higher rate and with younger married couples, the second working spouse would be paying the higher rate immediately on taking up work. It was not satisfactory and there seems to be a persistent wish on the Opposition benches to reverse that completely. I do not believe that is practicable or desirable. It is distorted by portraying it as the spouse staying home paying more tax as if that was something imposed on them.

At least the wording of section (b) of the amendment is broader than sometimes occurs. We have debated the matter on the Labour Party Private Members’ Bill. A great deal about the question of civil partnership, domestic partnerships or whatever one calls them, has to do with taxation consequences. The tax revenue from people who are not married is considerable. I take the view that two people living for the long term under the same roof should not be treated differently depending on what sort of sexual relationship, if any, they might be in.

The last person to accuse of having destabilised the property market by the stamp duty debate is the Tánaiste and Minister or Finance. He certainly did not start that debate which initially began in the media. Various sides contributed to it and it was irresponsible. The fact is that house prices have now eased. Therefore, there is no evidence of or basis for talking about a hard landing in the property market. As far as I can judge, the number of repossessions seems to be minimal. What seems to be more important than whether in a limited number of cases there may be a marginal degree of negative equity is the fact that there has been a significant and substantial fall in house prices for those who want to purchase them. Therefore, they are more affordable. That accounts, potentially, for a much larger group.

While I do not wish to repeat the points I made on Committee Stage, it is self-evident that if a carbon tax were introduced, its social welfare implications would have to be dealt with at the same time. That is not really a matter for the Commission on Taxation, however, but the responsibility of the Minister for Social and Family Affairs.

I have been following with some fascination the action of the German authorities concerning the tax haven of Liechtenstein, detailed accounts of which have appeared in some German publications. I welcome the fact that information will be made available to the Revenue Commissioners. There is an ethical debate ongoing in Germany as to whether the actions of the authorities are justified; they are entirely justified.

We need a degree of stability in the tax system. I do not agree with the last part of Deputy Burton's amendment which suggests the regime should be subject to constant change and fluctuation. A reasonably settled system would be of most benefit to the economy. In the past few years the Minister has considerably tightened and, in some cases, abolished tax breaks. It is more than likely that we will be chary, particularly in the current situation, about adopting schemes without a demonstrable public benefit that would have the effect of narrowing the tax base.

I will leave our discussion of health aspects until later because there is a Government amendment on the issue. Therefore, I will not try to explain to Deputy Mansergh how an insurance-based health scheme does not have to be a free for all promoting just for profit medicine. However, we can revert to that topic.

I have no problem with the principle of establishing a commission. We have much expertise on the Select Committee on Finance and the Public Service, of which Deputy Mansergh is the eminent Vice Chairman, which could examine tax policy. However, no vehicle is provided by the Government to debate it. The Minister does not introduce, as is the case with the Estimates, an annual statement of tax policy indicating how much various concessions cost, what they are worth and how they perform. In that way, we could have a serious debate about the direction our tax code should take.

We do not have the opportunity to look seriously at how we treat different families. Many couples are not married but if one partner stays at home, he or she is treated deplorably. The one breadwinner is treated like a single person, even though he or she may have children and an adult dependant. Similarly, it is crazy that if a married couple separate, they suddenly have four tax credits, whereas if they had stayed together, they would have two. There are big anomalies in the way we treat different people and the Dáil needs to move forward on the matter.

We would not always need to have a commission to tell us what we should do if the Minister and his colleagues provided an arena for serious debate on taxation policy, including the dilemma of what to do about equity in pensions. We do not need the social partners or the Commission on Taxation to tell us it is unfair that 80% to 90% of tax relief on pensions goes to 20% of the population. We do not need to be told this by some gurus, from wherever they come, although I am sure they are worthy individuals. We should have some self-confidence as elected representatives with a mandate. The Minister should facilitate a more open debate on taxation matters. The Select Committee on Finance and the Public Service could do this because its membership is drawn from parties with various perspectives. It is a good committee which could make a significant contribution in this regard.

There are serious issues about the way in which we treat children. Public policy towards them is a vital issue. As this becomes a greyer society, we will depend on a more narrowly based workforce to support us, yet we have a niggardly approach to helping parents to bring up children. The Government has taken a particularly narrow view of the approach to child policy but that is a debate for another day.

We have the competence in this House to develop policy in some of these areas if only the Government had the confidence to allow elected representatives to play a more important role. I have laboured on committees, as have Deputies Mansergh, Burton and others. I have produced rapporteurs’ reports on interesting reforms that we need to undertake, yet Departments do not pay a blind bit of attention to what Oireachtas committees state. Until this changes, we will still ask consultants and committees to tell us what we should do, whereas we should have the self-confidence to deal with such political issues. I am not saying the Minister does not take on certain issues — he has taken good decisions in some areas, on which I compliment him. However, there is expertise all around us if we had the confidence to avail of it.

I have no problem with the principle of a commission and support Deputy Burton's amendment which outlines matters that need to be seriously examined. Although we are asking the Commission on Taxation to look at the balance between income, spending and capital taxes, it is remarkable that the Minister has prominently omitted his own commitments from the terms of reference to cut PRSI and the top rate of income tax. They looked to be core statements of the Government's strategy on the balance between income, capital and spending taxes, yet they have been omitted from the terms of reference. Whether they are being air-brushed out, I do not think the revenue will be there in the next few years to honour some of the commitments made, which will probably colour the situation. Commissions are grand but let us have confidence in ourselves too.

I endorse what Deputy Bruton said with reference to the amendment. In the budget the Minister gave 2.25 times more, in terms of an increase in tax relief, to a two-earner family than to a single-earner family on the same income, which amounts to an extra tax credit of €164 per year. The difference between the two is approximately €4,600 a year.

Deputy Bruton's point concerned the high dependency ratio. Other European countries are trying to encourage an increase in the birth rate, whereas there is an impediment here. The Minister should reconsider the issue. I see no reason he could not broaden the terms of reference of the Commission on Taxation to include these issues.

On Committee Stage I referred to stamp duty reform. The Minister should re-examine this matter for people with disabilities who are required to move to a second-hand house, as they cannot move to a new one. The Minister should provide for some alleviation in that respect.

Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.