Financial Resolutions 2011

An Ceann Comhairle

If I could have some ciúnas, we will proceed, as a limited time is available for this debate.

The Taoiseach

I move the following financial resolutions:

Financial Resolution No. 1: Excise (Mineral Oil Tax)

(1) THAT for the purposes of the tax charged by virtue of section 95 of the Finance Act 1999 (No. 2 of 1999), that Act be amended, with effect as on and from 8 December 2010, by substituting the following for Schedule 2 to that Act (as amended by section 64(1)(d) of the Finance Act 2010 (No. 5 of 2010)):

"SCHEDULE 2

Rates of Mineral Oil Tax

(With effect as on and from 8 December 2010)

Description of Mineral Oil	Rate of Tax
Light Oil:
Petrol	€576.22 per 1,000 litres
Aviation gasoline	€576.22 per 1,000 litres

Heavy Oil:
Used as a propellant	€465.70 per 1,000 litres
Used for air navigation	€465.70 per 1,000 litres
Used for private pleasure navigation	€465.70 per 1,000 litres
Kerosene used other than as a propellant	€38.02 per 1,000 litres
Fuel oil	€60.73 per 1,000 litres
Other heavy oil	€88.66 per 1,000 litres

Liquefied Petroleum Gas:
Used as a propellant	€88.23 per 1,000 litres
Other liquefied petroleum gas	€24.64 per 1,000 litres

Coal:
For business use	€4.18 per tonne
For other use	€8.36 per tonne

".

(2) It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 2: Excise (Air Travel Tax)

(1) THAT section 55(2) of the Finance (No. 2) Act 2008 (No. 25 of 2008) be amended by substituting the following for paragraph (b)—

"(b) Air travel tax shall be charged, levied and paid at the rate of €3 per departure of a passenger on an aircraft from an airport.”.

(2) THAT this Resolution shall have effect as on and from 1 March 2011.

(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 3: Excise (Vehicle Registration Tax)

(1) THAT, as on and from 1 January 2011—

(a) the repayment of amounts of vehicle registration tax in respect of the registration of certain new vehicles in accordance with the provisions of section 135BA of the Finance Act 1992 (inserted by section 107 of the Finance Act 2010)), be extended to such vehicles registered on or before 30 June 2011 up to a maximum amount of €1,250, and

(b) section 135BA of the Finance Act 1992 be amended in subsection (5) by substituting “that person’s spouse or civil partner (within the meaning of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010)” for “that person’s spouse”.

(2) THAT, with effect as on and from 1 January 2011, the Finance Act 1992 (No. 9 of 1992) is amended by substituting the following for section 135C (as amended by section 108 of the Finance Act 2010 (No. 5 of 2010) with effect from that date):

‘‘135C.—(1) In this section—

‘electric vehicle' means a vehicle that derives its motive power exclusively from an electric motor;

‘electric motorcycle' means a motorcycle that derives its motive power exclusively from an electric motor;

‘flexible fuel vehicle' means a vehicle that derives its motive power from an internal combustion engine that is capable of using a blend of ethanol and petrol, where such blend contains a minimum of 85 per cent ethanol;

‘hybrid electric vehicle' means a vehicle that derives its motive power from a combination of an electric motor and an internal combustion engine and is capable of being driven on electric propulsion alone for a material part of its normal driving cycle;

‘plug-in hybrid electric vehicle' means a series production vehicle that derives its motive power from a combination of an electric motor and an internal combustion engine, where the electric motor derives its power from a battery that may be charged from the internal combustion engine and an alternating current (AC) electric mains supply and is capable of being driven on electric propulsion alone for a material part of its normal driving cycle.

(2) (a) Where a person first registers a category A vehicle or a category B vehicle during the period from 1 January 2011 to 31 December 2012 and the Commissioners are satisfied that the vehicle is—

(a) a series production hybrid electric vehicle, or

(b) a series production flexible fuel vehicle,

then the Commissioners shall remit or repay to that person an amount equal to the lesser of—

(i) the vehicle registration tax which, apart from this subsection, would be payable in respect of the vehicle in accordance with paragraph (a) or (c) of section 132(3), or

(ii) the amount specified in the Table to this subsection which is referable to the vehicle having regard to its age.

(b) In this subsection ‘age’, in relation to a vehicle, means the time that has elapsed since the date on which the vehicle first entered into service.

TABLE
Age of vehicle	Maximum amount which may be remitted or repaid
New vehicle, first registration	€1,500
Not a new vehicle but less than 2 years	€1,350
2 years or over but less than 3 years	€1,200
3 years or over but less than 4 years	€1,050
4 years or over but less than 5 years	€900
5 years or over but less than 6 years	€750
6 years or over but less than 7 years	€600
7 years or over but less than 8 years	€450
8 years or over but less than 9 years	€300
9 years or over but less than 10 years	€150
10 years or over	Nil

(3) (a) Where a person first registers a category A vehicle or a category B vehicle during the period from 1 January 2011 to 31 December 2012 and the Commissioners are satisfied that the vehicle is a plug-in hybrid electric vehicle, then the Commissioners shall remit or repay to that person an amount equal to the lesser of—

(i) the vehicle registration tax which, apart from this subsection, would be payable in respect of the vehicle in accordance with paragraph (a) or (c) of section 132(3), or

(ii) the amount specified in the Table to this subsection which is referable to the vehicle having regard to its age.

(b) In this subsection ‘age’, in relation to a vehicle, means the time that has elapsed since the date on which the vehicle first entered into service.

TABLE
Age of vehicle	Maximum amount which may be remitted or repaid
New vehicle, first registration	€2,500
Not a new vehicle but less than 2 years	€2,250
2 years or over but less than 3 years	€2,000
3 years or over but less than 4 years	€1,750
4 years or over but less than 5 years	€1,500
5 years or over but less than 6 years	€1,250
6 years or over but less than 7 years	€1,000
7 years or over but less than 8 years	€750
8 years or over but less than 9 years	€500
9 years or over but less than 10 years	€250
10 years or over	Nil

(4) A category A electric vehicle or a category B electric vehicle first registered during the period 1 January 2011 to 31 December 2012 is exempt from vehicle registration tax where the Commissioners are satisfied that such vehicle is a series production electric vehicle.

(5) An electric motorcycle first registered during the period 1 January 2011 to 31 December 2012 is exempt from vehicle registration tax where the Commissioners are satisfied that such vehicle is a series production electric motorcycle.".

(3) IT is hereby certified that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 4: Excise (Vehicle Registration Tax)

(1) THAT, as on and from 1 January 2011, section 132(3) of the Finance Act 1992 (No. 9 of 1992), be amended by substituting the following for paragraph (d):

"(d) in case it is—

(i) a category C vehicle, or

(ii) a category N1 vehicle that, at the time of manufacture has less than 4 seats and has a technically permissible maximum laden mass that is greater than 130 per cent of the mass of the vehicle with bodywork in running order,

at the rate of €50,".

(2) IT is hereby certified that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

The taking together of Financial Resolutions Nos. 1 to 4, inclusive, was agreed by the House in the vote on the allocation of time motion. Financial Resolution No. 1, relating to mineral oils, petrol and diesel, provides for an increase with effect from midnight tonight to the rates of mineral oil tax on petrol and auto diesel which, when VAT is included, amounts to 4 cent on a litre of petrol and 2 cent on a litre of auto diesel. The rate of aviation gasoline, which is aligned to the petrol rate, and the rates for heavy oil use for non-commercial navigation and flying, which are aligned to the auto diesel rate, are increased accordingly. The expected yield from these increases, inclusive of VAT, is approximately €106 million in a full year. These measures will increase the consumer price index by approximately 0.13%.

Compared to Northern Ireland the price of petrol was around 10 cent cheaper in the State and auto diesel around 20 cent cheaper. While the increases being made tonight will narrow the differential, it will still remain significant.

It should also be noted that the UK is due to increase its standard VAT rate by 2.5% from 17.5% to 20% with effect from 4 January 2011. In addition, excise on petrol and auto diesel is due to increase by slightly under 1% from 1 January 2011. The overall effect of these changes will be to increase the price of petrol and auto diesel in the UK and Northern Ireland by around 4 cent per litre in early 2011.

Financial Resolution No. 2, relating to air travel tax, provides for the introduction, with effect from 1 March 2011, of a single rate of air travel tax of €3 per departing passenger on a temporary basis.

This new rate of tax replaces the existing distance-related rates of €2 and €10. People will recall that the €2 rate relates to trips of less than 300 miles and the €10 rate relates to those of more than 300 miles. Some 97% of the tax has been in respect of the €10 rate.

It is estimated this measure will cost the Exchequer approximately €56 million in taxation next year. Ireland is not unique in applying a tax on air travel and a number of countries within the EU apply similar taxes, including the UK and France. Going further afield, both Australia and New Zealand apply similar taxes. The US has introduced a tourist tax on tourists travelling there by air and furthermore, Germany and Austria are currently in the process of introducing an air travel tax to apply from January next year. The rates of tax applied by many of those countries are higher than Irish rates, and substantially so in some cases. The trend in Europe is towards applying a tax on air travel.

There have been calls to abolish the tax on the basis that it adversely affects the number of people travelling to Ireland. I have difficulty in accepting that proposition and consider that the impact of the air travel tax is being overstated. The numbers travelling appear to be more closely related to other factors, including the level of economic activity.

Notwithstanding reservations, it has been decided that a single revised rate of air travel tax of €3 will come into effect on 1 March 2011. Let me be clear that this is being applied on a temporary basis until the end of 2011 and the position will be reviewed next year; the rate will be increased unless there is clear and decisive evidence of an appropriate response from the airlines through increasing capacity and numbers travelling to Ireland by air. As the Minister for Finance stated in his Budget Statement, in conjunction with this initiative the Dublin Airport Authority is prepared to introduce an incentive scheme for 2011 whereby it will provide, subject to certain conditions, a full rebate of airport charges for additional traffic delivered above a certain threshold based on 2010 passenger levels. The DAA will provide further details of that scheme.

Financial Resolution No. 3 regards the car scrappage scheme and the vehicle registration tax, VRT, relief for hybrid and flexible fuel vehicles. This resolution amends sections 135(b) and 135(c) of the Finance Act 1992 to provide for an extension of the car scrappage scheme introduced in the 2010 budget until 30 June 2011, and to extend to 31 December 2012 the vehicle registration tax available with a lower threshold for certain hybrid and flexible fuel vehicles.

The key features of the extended scrappage scheme include it taking effect from 1 January next and running to 30 June 2011. Up to €1250 VRT relief will be provided and it is available against the VRT liability on the registration of new category A vehicles, or passenger vehicles, with a level of CO2 emissions of not more than 140 g/kg. This takes in bands A and B in motor tax. A passenger car over ten years old must be scrapped at an authorised treatment facility in the State and a certificate of destruction issued.

The scrappage scheme introduced in last year's budget has been successful in contributing towards a large increase in new car sales in 2010, as they have increased 57% on the same period the previous year. It has contributed to the maintenance of jobs in the motor industry. Approximately 16,500 low-emission cars have been sold under the scheme up to the end of November, and the scheme is being extended to allow the industry to get the maximum benefit from its traditionally busiest period for new car sales in the first half of the year.

The resolution also extends the VRT relief available against the purchase of series production hybrid and flexible fuel vehicles which is due to expire at the end of the December. It is being extended for a further two years until 31 December 2012, with the maximum VRT relief available in that period of €1,500. To the end of November 2010, approximately 3,000 flexible fuel and 1,200 hybrid vehicles have been purchased.

Financial Resolution No. 4 addresses an unanticipated consequence of a provision introduced in the Finance Act 2010 which was to amend section 130 of the Finance Act 1992, whereby a small number of light commercial vehicles which would previously have been charged at the category C VRT rate of €50 will from 1 January 2011 without this amendment be charged the category B rate of 13.3% of the open market selling price. In order to rectify this anomaly and ensure that these vehicles will continue to retain the low VRT rate, it is necessary to amend the charging provisions for category C vehicles to ensure that such light commercial vehicles remain within that category.

The revised classification for vehicles introduced in the Finance Act 2010, with effect from 1 January 2011, was introduced as an anti-avoidance measure, as in some cases people were altering the specifications of vehicles; for example, extra body weight may have been added to the vehicle so as to change the classification and thereby considerably reducing the VRT liability. Many such alterations are also seen to be a safety risk.

Deputy Simon Coveney

On the point on which we voted, it is unfortunate——

An Ceann Comhairle

I advise the House that we will have limited time to discuss these resolutions and there are many hands reaching towards me.

Deputy Damien English

The Ceann Comhairle should have said that to the Taoiseach while he was at it.

Deputy Enda Kenny

If the Taoiseach is going to read out a ten-minute script at the start of each one of these, the 20 minutes will not be long being used.

An Ceann Comhairle

The order of the House is quite specific.

The Taoiseach

I had to explain the matters. I am only being helpful.

Deputy Enda Kenny

I know the Taoiseach was doing the best he could to get through the speech.

Deputy Brian Hayes

It helps the debate.

Deputy Simon Coveney

I will try to be as concise as possible.

Deputy Enda Kenny

I am only making the point.

Deputy Simon Coveney

It is unfortunate that we must debate four resolutions at the same time because we support some but disagree with others. We must vote against all four as a result of the way this is structured. On the mineral oil excise, I do not understand why the cost of fuel is not being increased by applying an increase in carbon tax.. Perhaps the Taoiseach will explain why this is so. In the past number of budgets we have made a deliberate effort to introduce carbon taxation to Ireland to provide a cost for carbon and change the mindset towards carbon and its impact on the environment in terms of emissions.

There is no extra carbon taxation in the budget but there are increases in excises, and I do not understand why we are pursuing an excise increase when we could have raised the same amount of money by applying an increase in carbon taxation on fuel and by continuing to pursue the carbon strategy, which has now stalled. Perhaps I could get a response from one of the Government spokespersons on that issue.

The measure relating to air travel tax is the reason we are voting against this grouping. Fine Gael believes it is insane to charge people for the privilege of coming to Ireland on their holidays or on business while we are trying to stimulate activity in the Irish tourism sector. We raised approximately €105 million this year by charging people €10 to leave this island and next year we will continue to charge them €10 until March, although we know the measure does not work and is reducing passenger numbers through Irish airports. Even after this we will continue with the folly of charging people for the privilege of coming here while we spend considerable sums marketing Ireland abroad to get them here in the first place. It is a disincentive to people coming through Irish airports if we charge for the privilege, although it is difficult to calculate exact figures. Fine Gael has long made the case that we should abolish the air travel tax because it has not worked and is not working. The damage being done in terms of the tourist industry and visitor numbers to Ireland far outweighs the revenue stream provided for the Government.

The Taoiseach mentioned the incentive which the Dublin Airport Authority announced today, which is also flawed. If passenger numbers travelling through Cork, Dublin and Shannon airports next year go above a value of €23.5 million, the DAA will give a rebate to the effect of what it would have cost those extra passengers to travel through Irish airports. This will go to all the airlines, depending on the percentage of passengers attributable to different airlines. In other words they are not incentivising airlines to increase passenger numbers because even if that does not happen, an airline will get the benefit. If, for example, Ryanair provides extra passengers to get us past the €23.5 million value, all the airlines will get the benefit rather than the airline which provided the extra passengers. That makes no sense.

Deputy Enda Kenny

It is daft.

Deputy Simon Coveney

Each individual airport, whether Cork, Dublin or Shannon airport, should incentivise airlines.

Deputy Beverley Flynn

What about Knock Airport?

Deputy Simon Coveney

Today's announcement by the Dublin Airport Authority relates to Dublin, Cork and Shannon airports. The same position applies to Knock Airport.

Deputy Beverley Flynn

The Deputy is discriminating against Knock Airport.

Deputy Simon Coveney

I am not discriminating against anybody.

An Ceann Comhairle

I ask Deputies to refrain from engaging across the floor.

Deputy Simon Coveney

The Deputy's Government will shut down regional airports in the second half of 2011.

Deputy Beverley Flynn

I will make that point.

Deputy Damien English

Will Deputy Flynn vote against the motion?

Deputy Simon Coveney

The public service obligation for regional airports will be cut by 50% next year. Deputy Flynn should read what her Government is proposing.

Deputy Beverley Flynn

I know what I am proposing.

Deputy Simon Coveney

We need to have an aviation strategy that allows airports to incentivise airlines to increase passenger numbers.

I welcome the extension of VRT relief for electric transport, in particular, plug-in vehicles. I encourage the Government to be more proactive and aggressive in having a charging infrastructure established that such vehicles can use.

Deputy Eamon Gilmore

I will focus on two aspects of this group of proposals. Like the Fine Gael Party, the Labour Party proposed the abolition of the air travel tax. While I acknowledge that the Government has made a move in that direction by reducing the tax and has applied some conditionality to its application, this is one of the taxes, the disincentive effect of which is as much the fact that it is in place as it is the level at which it applies. While I understand that when the budget was being framed and calculations were being made, the Minister examined the amount and arrived at the proposal before us, in terms of its impact on passenger numbers and tourism leaving the tax in place means there is still a difficulty.

If the Government was moving in the direction of increasing excise on petrol and diesel, I, like Deputy Coveney, do not understand the reason this was not done by way of the carbon tax or carbon levy. This would have had a more general application than the use of the excise method. While I expected the budget to include an excise package — it is an understandable measure — I am puzzled as to the reason the excise measure is focused on petrol. Why, for example, was the Irish Cancer Society's recommendation on excise on cigarettes not taken up? Why were the various recommendations to increase excise on alcohol for health reasons not taken up? There were expectations and a certain amount of speculation that the budget would include increases on excise in these areas.

Increasing excise on petrol and diesel affects the one area where costs have increased significantly in recent times. Even in recent days, the price of petrol and diesel has increased on the forecourt. Such increases impact directly on working people. The cost of travelling to work, doing business or running a van or vehicle associated with work will increase as a result of this measure. The proposal is misplaced. If excise was to be increased, other options were available. If the Government wanted to focus on carbon, it should have increased the carbon levy.

Deputy Caoimhghín Ó Caoláin

On behalf of the Sinn Féin Deputies, I oppose outright the proposed increase in excise duties on petrol and automotive diesel. It is incredible that the Government has made this choice. There is no question that this is a further tax on work and business. When one considers that those fortunate enough to have work must travel ever greater distances to access their employment one realises the net impact of what is involved here. People no longer use their cars for social purposes. The bulk of car use is directly related to accessing employment or the furtherance of specific business pursuits. The level of car use for social activities and such like is limited.

The proposition will have a hugely detrimental impact in the Border counties where we already have evidence of retail petrol and diesel outlets closing or significantly curtailing their business throughput because of the exodus north of the Border across a variety of attractions. We are putting another nail in the coffin of business outlets throughout the Border region, from Donegal through Sligo, Leitrim, Cavan and Monaghan to Louth and for a significant distance beyond these counties. That is one of the most certain outworkings of what is proposed. The measure is anti-business and anti-employment and the Government has again made a very bad choice.

On the air travel tax, while the reduction from €10 to €3 is welcome, the abolition of the tax would have had a much more imaginative impact in terms of the tourism sector and tourism market overseas. For the sake of €3, the Government could have gone the whole hog and had a major impact on the consciousness of tourism providers and organisers globally in terms of Ireland as a more keen destination for tourist traffic. A golden opportunity was lost by applying the brake in reducing the tax from €10 to €3. The Government should have gone the whole way and abolished the tax. This would have given a valuable fillip to the tourism industry, one of the most important sectors in terms of having any prospect of rejuvenated economic activity over the short time ahead.

Deputy John O’Donoghue

I greatly welcome the Government's decision to reduce the travel tax for international flights to €3. While there is no hard evidence to show this measure will result in an increase in the number of visitors to the country, there is, nevertheless, a perception that this is the case. The air travel tax, allied to airport charges, has been advocated by the chief executive of Ryanair as one of the principal reasons we are unable to attract the number of visitors we should attract. It is also cited as a reason Mr. O'Leary and his company should abandon PSOs. The proof of the pudding is in the eating and it is now a matter for Mr. O'Leary, Ryanair and other low charge airlines to establish the fruit of their words by increasing the number of visitors coming to Ireland in response to these changes.

I was interested in Deputy Ó Caoláin's intervention. The old Sinn Féin philosophy of "only our rivers run free" has been extended to having our petrol and diesel and even our drink run free.

Deputy Arthur Morgan

Our gas runs free for Shell.

Deputy John O’Donoghue

The world, as we are probably all aware, does not work like that. I wish we could go to utopia and have a utopian time. Unfortunately, Deputy Ó Caoláin appears to be stranded at a crossroads somewhere between paradise lost and utopia, from which he has not returned.

With regard to Deputy Coveney's response to Deputy Flynn's legitimate intervention to the effect that she should read her brief, I resent that imputation. Deputy Flynn is one of our brightest young Deputies. Then again, coming from one of the few Cork men I know who does not know the difference between a pint of Guinness and a pint of Murphy's, his comment does not come as a surprise.

Deputy Simon Coveney

Deputy O'Donoghue should bear in mind what will happen to the PSO for Kerry airport.

Deputy Pat Breen

Speaking as a Deputy who represents a constituency that is deeply affected by the air travel tax, it is clear the Government does not understand the aviation business.

An Ceann Comhairle

The Deputy has made his point. I must call the mover of the motion.

Deputy Pat Breen

The cost of administering the tourism tax greatly outweighs the likely income from the tax. The Government has been selective in referring to countries which apply a similar tax. The Netherlands, for example, which has one of the busiest airports in Europe, Schiphol, abandoned its travel tax last year. It is one of the busiest airports around. There was a golden opportunity here but it has been missed. It is a sad reflection of how the Government——

An Ceann Comhairle

I must put the question.

Deputy Pat Breen

——treats tourism, the third largest industry in the country.

Deputy Joe Carey

On the same point——

An Ceann Comhairle

I would love to accommodate every Member in the House but I do not have the time. I must call the Taoiseach and I am affording him ten seconds to reply.

Deputy Joe Carey

This is an issue I have raised many times in the House.

Deputy Joe Carey

There was a golden opportunity——

An Ceann Comhairle

The Finance Bill will be debated in the new year and Deputies will have plenty of opportunities.

Deputy Joe Carey

It will be too late.

Deputy Joe Costello

May I ask the Taoiseach a question?

Deputy Joe Carey

What the Government has done in this regard does not make sense. It has actually increased the tax by one euro.

An Ceann Comhairle

Deputy, I have to implement the order of the House for today, as was agreed. Resume your seat.

Deputy Joe Costello

I have one question for the Taoiseach that has not been asked. What right does the Dublin Airport Authority have to provide an incentive scheme in regard to a Government tax? Surely it is the function of the Revenue Commissioners to collect the tax, which cannot be forgone by the DAA. Surely that matter is not appropriate to the authority.

Deputy Beverley Flynn

On the same issue, a Cheann Comhairle——

An Ceann Comhairle

The Deputy has 20 seconds.

Deputy Jimmy Deenihan

What about the rest of the country?

Deputy Beverley Flynn

I, too, am concerned about this. I mentioned it to Deputy Coveney because I thought he would be interested given that his party leader occupies the same constituency as I do. I would like to know about the impact of this decision. Has it been considered in terms of Knock Airport——

Deputy Enda Kenny

Agreed.

Deputy Beverley Flynn

——which is targeting the same core business as Shannon, Cork and Dublin Airports? I appreciate incentives must be provided but there should be a level playing field——

Deputy Pat Breen

We do not get a PSO, Beverley.

Deputy Beverley Flynn

——and I would like to see the issue addressed later in the week.

Deputy Pat Breen

Shannon does not get a PSO.

A Deputy

That was not part of Deputy Flynn's deal with the previous Taoiseach.

Deputy Joe Carey

A Cheann Comhairle, briefly——

Deputy Joanna Tuffy

May I ask why there is not——

Deputy Pat Breen

This is a very emotive issue for everybody.

An Ceann Comhairle

Deputy Carey, you have been on your feet but the House has picked up the issue. I call the Taoiseach.

The Taoiseach

I say to Deputy Carey, fair is fair. We have to move on.

Deputy Joanna Tuffy

What is the Taoiseach talking about?

The Taoiseach

If we were to go the carbon tax route that would increase green diesel, home heating oil, etc. Under the programme, carbon tax increases are due in 2012 and 2014 and for that reason the excise duty was brought in as a route that would avoid increasing the price of other fuels. Advocating further increases on other fuels would not be a very sensible way to go and that is why we are not taking the carbon tax route on this issue.

We will see an increase in VAT rates from the British Exchequer. This is to keep the differential. What we are doing is presaging a change that is happening in the United Kingdom. Deputies will know that the price of diesel and petrol at filling stations is much less on the Republic side of the Border. I do not know what way it is with other operations.

It is important that we ensure this measure for the DAA where there is an increase in overall numbers. As an airport authority, it is entitled to incentivise airlines and has often done so.

Deputy Pat Breen

Then why not abolish the tax?

Deputy Joe Costello

It is a Government tax.

The Taoiseach

The Government tax is separate. This is about increasing numbers. We must find a public-private arrangement that will help taxpayers generally by bringing more tourists to the country, perhaps even sending them down to parts of the county from where the Deputy comes. If we are to do that we must provide some incentivisation. The European Union is opposed to different rates or amounts being charged for different journeys. We can bring this to a uniform rate, to €3.

Deputy Flynn raised a very important question which needs to be addressed in the Finance Bill, namely, that we ensure airports that are not within the DAA remit but which have services available to the UK and elsewhere and would have attracted the higher rate heretofore are not disadvantaged as they seek to innovate and prosper.

Deputy Beverley Flynn

Hear, hear.

An Ceann Comhairle

As it is now 7.40 p.m. I am required to put the following question in accordance with the order of the Dáil of this day.

Tánaiste and Minister for Education and Skills (Deputy Mary Coughlan)

I move the following Financial Resolutions:

Financial Resolution No. 5: Income Tax

(1) THAT section 790A of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended —

(a) with effect as on and from 1 January 2011, by inserting the following after subsection (3)—

"(4) Notwithstanding subsection (2), for the purposes of subsection (1) the earnings limit for the year of assessment 2011 shall be €115,000.",

and

(b) as respects the year of assessment 2010, by inserting the following after subsection (4) (inserted by this Resolution)—

"(5) Notwithstanding subsection (2), for the purposes of subsection (1) the earnings limit for the year of assessment 2010 shall be deemed to be €115,000 for the purpose of determining how much of a contribution or qualifying premium, as the case may be, paid by an employee or an individual in the year of assessment 2011, is to be treated by virtue of section 774(8), 776(3), 787(7) or 787C(3), as the case may be, as paid in the year of assessment 2010.".

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 6: Income Tax

(1) THAT Chapter 2C of Part 30 of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended—

(a) in section 787O—

(i) in subsection (1)—

(I) in the definition of "maximum tax-relieved pension fund" by substituting "7 December 2005" for "the specified date",

(II) in the definition of "personal fund threshold"—

(a) by substituting the following for paragraph (a):

"(a) (i) where the individual is an individual to whom the Revenue Commissioners have, before the specified date, issued a certificate in accordance with subsection (5), the amount stated in that certificate as being the individual’s personal fund threshold, and

(ii) in any other case, for the year of assessment 2010, as on and from the specified date, and for the year of assessment 2011, the lower of—

(I) €5,418,085, and

(II) (a) where no benefit crystallisation event in relation to the individual has occurred on or after 7 December 2005 and the individual has uncrystallised pension rights on the specified date, the amount of the uncrystallised pension rights on the specified date in relation to the individual, where the amount of those rights on that date exceed the standard fund threshold, or

(b) where one or more than one benefit crystallisation event in relation to the individual has occurred on or after 7 December 2005 and the individual has uncrystallised pension rights on the specified date, the aggregate of the amounts crystallised by those benefit crystallisation events and the amount of the uncrystallised pension rights on the specified date in relation to the individual, where the aggregate amount of those crystallised and uncrystallised rights exceed the standard fund threshold, and”,

and

(b) in paragraph (b) by substituting the “year of assessment 2011” for “year of assessment 2006”,

(III) by substituting the following for the definition of "specified date":

"‘specified date' means 7 December 2010;",

and

(IV) in the definition of "standard fund threshold"—

(a) by substituting the following for paragraph (a):

"(a) for the year of assessment 2010, as on and from the specified date, and for the year of assessment 2011, €2,300,000, and”,

and

(b) in paragraph (b) by substituting the “year of assessment 2011” for “year of assessment 2006”,

and

(ii) by substituting the following for subsection (2)(b):

"(b) Where the administrator of a relevant pension arrangement has, before the specified date, used a valuation factor (in this subsection referred to as the ‘first-mentioned factor’) other than the relevant valuation factor referred to in paragraph (a), then, in such a case, the first-mentioned factor is the relevant valuation factor for the purposes of this Chapter and Schedule 23B.”,

(b) in section 787P—

(i) by substituting the following for subsection (1):

"(1) An individual's maximum tax-relieved pension fund shall not exceed—

(a) the standard fund threshold, or

(b) the personal fund threshold, where—

(i) the condition set out in subsection (2) is met and the Revenue Commissioners have issued a certificate in accordance with subsection (5) or a revised certificate in accordance with subsection (6), or

(ii) the Revenue Commissioners have, before the specified date, issued a certificate in accordance with subsection (5).",

and

(ii) in subsection (5)—

(I) by substituting "Subject to subsection (6), the Revenue Commissioners" for "The Revenue Commissioners",

(II) by substituting the following for all of the words from "shall, on being satisfied" to the end of the provision:

"shall, within 30 days of receipt of the notification or, as the case may be, the late notification, or such longer time as they may require for the purposes of this subsection, issue a certificate to the individual stating the amount of the personal fund threshold.",

and

(III) by inserting the following after subsection (5):

"(6) Notwithstanding subsection (5), the Revenue Commissioners may at any time withdraw a certificate issued in accordance with that subsection (in this subsection referred to as the ‘first-mentioned certificate') and issue a revised certificate if, following the issue of the first-mentioned certificate, the Commissioners are not satisfied that the calculation of the personal fund threshold contained in the notification referred to in subsection (2) or, as the case may be, the late notification referred to in subsection (4) was correct.",

(c) in section 787Q(1) by substituting “7 December 2005” for “the specified date”,

(d) in section 787R—

(i) by substituting the following for subsection (2):

"(2) The persons liable for income tax charged under subsection (1) shall be the administrator of the relevant pension arrangement under which the benefit crystallisation event arises and the individual in relation to whom the benefit crystallisation event occurs and their liability shall be joint and several.",

and

(ii) in subsection (4)—

(I) by deleting "on or after the date of passing of the Finance Act 2006",

(II) in paragraph (b) by substituting “7 December 2005” for “ the specified date”, and

(III) in paragraph (d) by inserting “whether issued before or after the specified date,” after “under section 787P(5),”,

and

(e) in section 787S—

(i) by substituting the following for subsection (1):

"(1) The administrator of a relevant pension arrangement shall, within 3 months of the end of the month in which the benefit crystallisation event giving rise to the chargeable excess occurs, make a return to the Collector-General which shall contain—

(a) the name and address of the administrator,

(b) the name, address and PPS Number of the individual in relation to whom the benefit crystallisation event has occurred,

(c) details of the relevant pension arrangement under which the benefit crystallisation event giving rise to the chargeable excess has occurred,

(d) the amount of, and the basis of calculation of, the chargeable excess arising in respect of the benefit crystallisation event, and

(e) details of the tax which the administrator is required to account for in relation to the chargeable excess.”,

(ii) by deleting subsection (2), and

(iii) in subsection (7)(b) by substituting “0.0219 per cent” for “0.0273 per cent”.

(2) THAT Schedule 23B to the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended—

(a) in paragraph 2(d) by substituting “7 December 2005” for “the specified date”,

(b) in paragraph 4 by substituting “7 December 2005” for “the specified date” in each place, and

(c) in paragraph 5 by substituting the following for subparagraph (2):

"(2) The adjustment referred to in subparagraph (1) is the amount crystallised by the previous benefit crystallisation event multiplied by the higher of 1 and the number determined by the formula—

A

B

where—

A is the standard fund threshold or, as the case may be, the personal fund threshold at the date of the current event, and

B is the standard fund threshold or, as the case may be, the personal fund threshold at the date of the previous benefit crystallisation event,

and where an individual did not have a personal fund threshold at the date of the previous benefit crystallisation event, the standard fund threshold at that date shall be used for B in the formula.".

(3) THAT this Resolution shall have effect as on and from 7 December 2010.

(4) IT is hereby declared that it is expedient in the public interest that this resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 7: Income Tax

(3) THAT, as respects an amount regarded as a distribution of a specified amount made on or after 31 December 2010, the formula in section 784A(1BA)(c) of the Taxes Consolidation Act 1997 (No. 39 of 1997) for determining the specified amount be amended by substituting “5” for “3”.

(4) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 8: Income Tax

(1) THAT the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended by substituting the following for section 790AA:

"Taxation of lump sums in excess of the tax free amount.

790AA (1) (a) In this section—

‘administrator', in relation to a relevant pension arrangement, means the person or persons having the management of the arrangement, and in particular, but without prejudice to the generality of the foregoing, references to the administrator of a relevant pension arrangement include—

(i) an administrator within the meaning of section 770(1),

(ii) a person mentioned in section 784, lawfully carrying on the business of granting annuities on human life, including the appointed person mentioned in section 784(4A)(ii), and

(iii) a PRSA administrator within the meaning of section 787A(1);

‘excess lump sum' shall be construed in accordance with paragraph (e);

‘relevant pension arrangement' means any one or more of the following—

(i) a retirement benefits scheme, within the meaning of section 771, for the time being approved by the Revenue Commissioners for the purposes of Chapter 1,

(ii) an annuity contract or a trust scheme or part of a trust scheme for the time being approved by the Revenue Commissioners under section 784,

(iii) a PRSA contract, within the meaning of section 787A, in respect of a PRSA product, within the meaning of that section,

(iv) a qualifying overseas pension plan within the meaning of Chapter 2B,

(v) a public service pension scheme within the meaning of section 1 of the Public Service Superannuation (Miscellaneous Provisions) Act 2004 (No. 7 of 2004),

(vi) a statutory scheme, within the meaning of section 770(1), other than a public service pension scheme referred to in paragraph (v);

‘specified date' means 1 January 2011;

‘standard chargeable amount' means the amount equivalent to the amount determined by the formula—

(SFT) - TFA

4

where—

SFT is €2,300,000, and

TFA is the tax free amount;

‘standard rate' means the standard rate of tax in force at the time the lump sum is paid;

‘tax free amount' means €200,000;

‘tax year' means a year of assessment within the meaning of the Tax Acts.

(b) (i) For the purposes of this section, a reference to a lump sum is a reference to a lump sum that is paid to an individual under the rules of a relevant pension arrangement by means of commutation of part of a pension or of part of an annuity or otherwise.

(ii) Without prejudice to the generality of subparagraph (i), the reference in that subparagraph to the commutation of part of a pension or of part of an annuity, shall, in a case where an individual opts in accordance with section 772(3A) or, as the case may be, section 784(2A), be construed as a reference to the commutation of part of the pension or, as the case may be, part of the annuity which would, but for the exercise of that option, be payable to the individual.

(c) For the purposes of this section, references to a lump sum that is paid to an individual include references to a lump sum that is obtained by, given to, or made available to, an individual and references to a lump sum which was, or has, or had been paid to an individual shall be construed accordingly.

(d) For the purposes of this section—

(i) a lump sum (in this subsection referred to as the ‘first-mentioned lump sum') shall be treated as paid before another lump sum (in this subsection referred to as the ‘second-mentioned lump sum') if the first-mentioned lump sum is paid before the second-mentioned lump sum on the same day, and

(ii) a lump sum shall not be treated as paid at the same time as one or more than one other lump sum and, where but for this subsection they would be so treated, the individual to whom the lump sums are paid shall decide on the order in which they are to be deemed to be paid.

(e) For the purposes of this section the excess lump sum, if any, in respect of a lump sum that is paid to an individual on or after the specified date (in this paragraph referred to as the ‘current lump sum’) shall be—

(i) where no other lump sum has been paid to the individual on or after 7 December 2005, the amount by which the current lump sum exceeds the tax free amount, and

(ii) where before the current lump sum was paid, one or more lump sums had been paid to the individual on or after 7 December 2005 (in this section referred to as the ‘earlier lump sums'), then—

(I) where the amount of the earlier lump sums is less than the tax free amount, the amount by which the aggregate of the amounts of the earlier lump sums and the current lump sum exceeds the tax free amount, and

(II) where the amount of the earlier lump sums is equal to or greater than the tax free amount, the amount of the current lump sum.

(2) Where a lump sum is paid to an individual on or after the specified date, the excess lump sum shall be regarded as income of the individual in the tax year in which the lump sum is paid and shall be chargeable to income tax in accordance with subsection (3).

(3) Subject to subsection (4)(b)—

(a) where the excess lump sum arises in accordance with subsection (1)(e)(i), (1)(e)(ii)(I) or (1)(e)(ii)(II) (insofar as the amount of the earlier lump sums referred to in subsection (1)(e)(ii)(II) is equal to the tax free amount), then—

(i) so much of the excess lump sum as does not exceed the standard chargeable amount shall be charged to income tax under Case IV of Schedule D at the standard rate, and

(ii) so much of the excess lump sum, if any, as exceeds the standard chargeable amount shall be regarded as a payment to the individual of emoluments to which Schedule E applies.

(b) Where the excess lump sum arises in accordance with subsection (1)(e)(ii)(II) (insofar as the amount of the earlier lump sums referred to in that subsection is greater than the tax free amount), then—

(i) where the amount by which the earlier lump sums is greater than the tax free amount (in this paragraph referred to as the ‘first mentioned amount') is less than the standard chargeable amount—

(I) so much of the excess lump sum, as does not exceed an amount equivalent to the difference between the standard chargeable amount and the first mentioned amount shall be charged to income tax under Case IV of Schedule D at the standard rate, and

(II) so much of the excess lump sum, if any, as exceeds an amount equivalent to the difference between the standard chargeable amount and the first mentioned amount, shall be regarded as a payment to the individual of emoluments to which Schedule E applies, and

(ii) in any other case, the excess lump sum shall be regarded as a payment to the individual of emoluments to which Schedule E applies.

(4) (a) The administrator of a relevant pension arrangement shall deduct tax from an excess lump sum payment in accordance with this section and remit such tax to the Collector-General.

(b) In so far as any part of an excess lump sum—

(i) is to be regarded as income of the individual for a tax year and charged to income tax at the standard rate in accordance with subsection (3)(a)(i) or (3)(b)(i)(I)—

(I) such income—

(a) shall not be reckoned in computing total income for the purposes of the Tax Acts, and

(b) shall be computed without regard to any amount deductible from or deductible in computing income for the purposes of the Tax Acts,

(II) the charging of that income in such manner shall be without any relief or reduction specified in the Table to section 458 or any other deduction from that income, and

(III) section 188 shall not apply as regards income so charged,

or

(ii) is to be regarded by virtue of this section as a payment to the individual of emoluments to which Schedule E applies—

(I) the provisions of Chapter 4 of Part 42 shall apply to any such amount, and

(II) the administrator of the relevant pension arrangement under which the lump sum is paid shall deduct tax from the payment at the higher rate for the tax year in which the payment is made unless the administrator has received from the Revenue Commissioners a certificate of tax credits and standard rate cut-off point or a tax deduction card for that year in respect of the individual.

(5) Subsection (2) of section 787G shall apply in respect of any income tax, being income tax deducted from an excess lump sum by virtue of subsection (3) of this section, by an administrator of a relevant pension arrangement of a kind described in paragraph (iii) of the definition of ‘relevant pension arrangement' in subsection (1)(a) of this section, as it applies to income tax referred to in subsection (2) of section 787G.

(6) Where a lump sum is paid to an individual, on or after the specified date, under the rules of a relevant pension arrangement of a kind described in paragraph (iv) of the definition of ‘relevant pension arrangement' in subsection (1)(a), the excess lump sum, if any, shall be charged to tax under Case IV of Schedule D for the tax year in which the lump sum is paid to that individual at the rate or rates determined in accordance with subsection (3).

(7) This section shall not apply to a lump sum that is paid to —

(a) a widow or widower,

(b) a civil partner (within the meaning of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 (No. 24 of 2010)),

(c) children,

(d) dependants, or

(e) personal representatives,

of a deceased individual.

(8) Section 781 shall have effect notwithstanding the provisions of this section.".

(2) IT is hereby declared that it is expedient in the public interest that this resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 9: Income Tax

(1) THAT, as respects any payment to which section 123 of the Taxes Consolidation Act 1997 (No. 39 of 1997) applies (in this Resolution referred to as the "lump sum") made on or after 1 January 2011—

(a) notwithstanding the provisions of section 201 of, and Schedule 3 to, that Act, income tax shall be charged by virtue of section 123 of that Act on the amount of the lump sum which exceeds the lesser of either—

(i) that part of the lump sum which, apart from this Resolution, would be exempt from income tax by virtue of section 201 of, and Schedule 3 to, that Act, including any deduction in computing the charge to income tax under paragraph 6 of that Schedule, and

(ii) €200,000,

(b) the amount of €200,000 referred to in subparagraph (a) of this paragraph shall be reduced by an amount equal to the aggregate amounts exempted from income tax, including any deduction in computing the charge to income tax under paragraph 6 of Schedule 3 to that Act, in respect of all payments to which section 123 of that Act applied which were paid before or at the same time as the payment of the lump sum,

(c) the amount determined in accordance with subparagraphs (a) and (b) of this paragraph shall be determined without regard to subsections (1A) and (2) of section 201 of that Act, and

(d) where 2 or more payments in respect of which tax is chargeable by virtue of section 123 of that Act are made to or in respect of the same person in respect of the same office or employment, or in respect of different offices or employments, for the purposes of this Resolution this paragraph shall apply as if those payments were a single payment of an amount equal to that aggregate amount and the provisions of subparagraph (a) of this paragraph shall apply to that amount accordingly.

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

I propose to speak on Financial Resolutions Nos. 5 to 8 together as they relate to pensions and on Financial Resolution No. 9, which concerns a related area, the taxation of tax-free termination lump sums. Against the very difficult and challenging budgetary situation facing this country, and as outlined in the national recovery plan, the tax base must be broadened and tax expenditure must be curtailed or abolished. Given the continuing very significant costs of pensions tax reliefs, such reliefs cannot escape attention in that regard. The national recovery plan specifically mentioned a number of the pension-related changes the Government has committed to making, in 2011 and over the three remaining periods of the plan. The changes announced in the Budget Statement today deliver on the commitment as regards 2011.

Apart from contributing to curbing the overall tax expenditure, these changes will bring further equity to the system by impacting, for the most part, on higher earners. Deputies will recall that the Commission on Taxation recommended that a pension lump sum taken on retirement should be tax free up to €200,000 and taxed at the standard rate of income tax on any balance above that amount. The commission also recommended that the correlation between the maximum tax relieved pension fund that can be built up by an individual, known as the standard fund threshold, and the annual earnings limit for pension contribution purposes should be maintained. This correlation has been broken in recent years as the earning limits fell from €275,000 in 2008 to €150,000 in 2009, with no corresponding contraction in the standard fund threshold. The commission recommended that ex gratia termination lump sums should also be tax free up to €200,000 and that any amount in excess of this should be taxed.

As flagged in the national recovery plan and as specified in the budget speech today, it has been decided to act on the commission's recommendations. A further reduction in the earning limits for pension contribution purposes is being made and the rate at which the national distribution for approved retirement funds is to be calculated is to be increased. The elimination of employee PRSI and pension contributions in 2011 and the changes to employer PRSI relief on employee pension contributions, which were announced today, will be dealt with in the context of legislation with which my colleague the Minister for Social Protection will deal. The Financial Resolutions before us give legislative effect, therefore, to the following budget measures pending the passing into law of the finance Bill of 2011.

Financial Resolution No. 5 provides for the reduction in the earnings limit which, in conjunction with age-related percentage limits, governs the maximum amount of tax relieved contributions an individual can make in any one year to pension products. The limit is being reduced from €150,000 in the current year to €115,000 for 2011. Deputies may be aware that the pension tax legislation provides for an individual who pays a pension contribution after the end of a tax year but on or before the return filing date for that tax year to elect to have the contribution treated as if paid in the earlier year. Clearly, with the reduction of the earning limits for 2011, individuals may well be tempted to retrospectively maximise their tax relief for 2010 where they have not done so already by allocating contributions made next year to 2010. This would give rise to significant tax refunds in 2011 that we simply cannot afford. Accordingly, the resolution seeks to limit such exposure by deeming the earning limits for this year to be €115,000 as well for the purpose of such elections.

Financial Resolution No. 6 provides for the reduction from €5.4 million to €2.3 million, with effect from today, in the limit on the maximum tax relieved pension fund that can be built up by an individual. This is known as the standard fund threshold. Individuals with pension rights in excess of this new lower standard fund threshold on budget day will be able to protect the capital value of those rights by claiming a personal fund threshold. Such transitional measures were also recommended by the Commission on Taxation to deal with circumstances where an individual's pension rights had already exceeded any revised lower limit. The legal advice to the Government was to the effect that the absence of such grandfathering arrangements, which also applied when the standard fund thresholds were first introduced on 7 December 2005, would be difficult to defend against constitutional and legal challenges. The personal fund threshold will be calculated on the aggregate of the capital value of pension benefits to which the individual has already become entitled since 7 December 2005 plus the capital value on budget day of any uncrystallised pension rights that the individual has — in other words, pension rights that the individual is building up but to which he has not yet become entitled. Where this amount exceeds the standard fund threshold of €2.3 million, that higher amount will be the individual's personal fund threshold.

However, that is subject to not exceeding the existing standard fund threshold of €5.4 million which would have been the maximum tax relief pension fund such individuals would have been able to build up before today. As before, a personal fund threshold will have to be claimed from the Revenue Commissioners by way of a notification and certification procedure. An individual who already has a personal fund threshold under the old regime will be able to retain it.

The resolution also ensures that the standard capitalisation factor for use in determining the value of defined benefit pension rights, for the purposes of estimating an individual's personal fund threshold and for the purposes of valuing pension rights when eventually drawn down, is to be 20 as before.

Financial Resolution No. 7 provides for an increase in the annual notional distribution for approved retirement funds which is calculated on the value of assets in an approved retirement fund as of 31 December each year. The amount of the notional distribution will be 5% of the value as compared to 3% as currently provided for. This new rate will apply to asset values at 31 December 2010.

Financial Resolution No. 8 provides for the taxation of pension lump sums above €200,000 with effect from 1 January next year. This resolution replaces the existing provision in the Taxes Consolidation Act of 1997 which already places a lifetime limit on the amount of tax free pension lump sum that can be taken by an individual from 7 December 2005. This limit was set at 25% of the old standard fund threshold and amounts to €1.3 million.

Under the new approach the maximum lifetime pension tax free sum will be €200,000 as from 1 January 2011. Amounts in excess of this tax free limit will be subject to tax in two stages. The portion between €200,000 and €575,000 will be taxed at the standard rate of 20% while any portion above that will be taxed at the individual's marginal rate of tax. The figure of €575,000 represents 25% of the new lower standard fund threshold of €2.3 million mentioned earlier and retains the link to the old approach. The standard rate charges effectively ring-fence to ensure that no reliefs, allowances or deductions may be set or made against that portion of a lump sum subject to that charge.

It should be appreciated that tax free retirement lump sums taken on or after 7 December 2005 when the original limit was introduced will count towards using up the new tax free amount. In other words, if an individual has already taken tax free retirement lump sums of €200,000 or more since 7 December 2005, any further retirement lump sum paid to the individual on or after 1 January 2011 will be taxable. There is no question of those individuals somehow getting an additional tax free amount. These earlier lump sums will also count towards determining how much of a lump sum paid on or after 1 January 2011 is to be charged at the standard or marginal rate as appropriate.

It is also important to note that this is a lifetime limit and therefore it will apply to a single lump sum or where an individual is in receipt of lump sums from more than one pension product to the aggregate of those lump sums. The restriction applies to all pension arrangements including occupational pension schemes, retirement annuity contracts, PRSAs, public sector and statutory schemes. As before, there are certain exclusions from the pension lump sum tax charge. It will not apply, for example, to lump sum death-in-service benefits paid to widows.

Resolution No. 9 sets out the basis for the imposition of a lifetime limit on exempt ex gratia lump sum payments made primarily in respect of termination of employment as recommended by the Commission on Taxation. With effect from 1 January 2011, where an individual is in receipt of an ex gratia payment from their employer the aggregate amount which can be paid tax free will be €200,000, taking into consideration the tax free elements of any previous payment that individual had received. This restriction will have no relevance to the majority of employees. Its impact will primarily be confined to those in receipt of large ex gratia payments. I commend the resolutions to the House.

Deputy Damien English

I again register our objection to taking four or five resolutions together. It is not necessary to do that and it means that when we are in a position to agree on something with the Government, as with some of these, we cannot vote for it because we do not agree with lumping the resolutions together.

We have a serious problem with Resolution No. 5, which I will address, but I want to first comment on Resolutions Nos. 8 and 9. While the tax changes to the lump sum are welcome, most people have a problem with the lump sum itself, especially when they see the figures being paid out to retiring Ministers and various top civil servants. That is something not addressed in this budget bar through the tax system. The wrong message is going out on that but that is a separate discussion we can have during the debate on the entire budget. People become very annoyed when they see those lump sums being paid out at a time when they are struggling.

As a party we have a concern with Resolution No. 5. We proposed many changes to the pensions area in our alternative budget published last Friday. Some of them are very good but we tried to tackle the overall pension fund in a different way to individual people contributing into it. My concern is that this measure limits the amount of money a person can put into his or her pension fund in certain years. Fine Gael's proposal was to allow a person accumulate a fund that will give him or her an annual maximum pension of approximately €60,000 a year. We would discourage above that figure but we said we would facilitate a person accumulating enough of a fund to have a pension of €60,000 a year. That means that if a person is late starting to contribute to a fund he or she might not get a chance to accumulate enough money for that payment. The Government is preventing that.

In the current climate it is quite common for self-employed people to stop paying into their pension fund for several years because they just cannot make the contributions. They cannot even pay a wage, other than cashing in other investments and so on to survive. In a few years time when Fine Gael is in government, the country has recovered and those in self-employment have a chance to earn more money, they will be discouraged from putting money into their pension fund to pay out a pension to which they are entitled based on their years of work. This measure is unfair in that regard. It is penalising the wrong person.

The Government must realise the times in which we now live. Not everybody in business made money in the good times but certainly in recent years many people in business could not pay into their pension fund. They should be allowed to pay extra in years to come but they will not be able to do that because this measure will restrict them in that it will not be worth their while. It is a pity the Minister has lumped these resolutions together because we will oppose this one.

Deputy Róisín Shortall

I welcome the fact that finally the Government has recognised a need to do something on the pensions front. For years it has been in denial about the fact that our pensions system was more about facilitating tax avoidance than encouraging pension provision. The way in which it operates, as the Minister and her officials will be aware, has been inequitable. That is the reality. A total of €3 billion has been spent per year on tax relief on pensions and the vast bulk of that has gone to the top 20% of earners.

Side by side with that outrage, as I would regard it, almost 50% of workers do not have any private pension provision and therefore as a policy it was ineffective while the manner in which it operated was inequitable. I welcome these first steps in implementing reform in this area, but overall the Minister is not going anywhere near far enough.

The Labour Party, in its pension proposals, has estimated that it would be possible to save a minimum of €400 million in the coming year, and possibly up to €600 million, if there was a proper root and branch reform of the pensions tax relief system. That could be done in a way that would not impact on people with incomes of up to €100,000. We could ensure that there was still a major incentive for people on middle and modest incomes to make pension provision but, unfortunately, the Government has chosen to take a different route.

I find it extraordinary that in each of these five measures the Minister has a costing and a figure for each one of those. The Labour Party is extremely concerned that we have spent the past three years trying to get costings from the Minister for Finance, the Department of Finance and the Revenue Commissioners for different aspects of our pension provision and on every single occasion we have been refused and told that no figures were available. The reply to my last parliamentary question a few weeks ago denied that figures were available anywhere. I was told the Department was now approaching the pensions industry to try to get some estimates.

The Minister was not in a position to provide figures to the Labour Party in spite of the fact that a service was offered that she would cost our pre-budget proposals, and today she could come up with figures for each one of those measures. How did that come about? If she was unable to provide those figures last week and was unable to provide them over the past three years when we have been asking for them, can we believe these figures now? Are they accurate and how is it that the Government can just come up with them suddenly?

In respect of the individual proposals, we will not oppose the annual earnings limit but it could have been done in a much better way. We should take our example from what is happening in the UK where a cap is being introduced on the total amount of tax relief that can be claimed, whether the contribution is made by the employee or the employer. That is the weakness in these proposals and in the proposals signalled in the four year plan. All the Minister is talking about doing is limiting the employee contributions. The really big money, as the Minister well knows, is in the employer contributions and it makes no sense to exclude those from any new limits. Let us stop codding ourselves on what is happening in the pensions area. Why does the Government continue to facilitate persons in jobs where their employers can fund their pensions generously and what is the rationale for not applying the same kind of limits to employer contributions as employee contributions?

On Financial Resolution No. 6, the maximum allowable pension funds, the Minister proposes to reduce the maximum standard fund threshold from the current €5.4 million to €2.3 million. It is a move in the right direction, but why has the Minister not gone further? A fund of €2.3 million will entitle a person to a pension of €100,000. I see no justification for taxpayers subsidising pensions for persons who end up with a pension of €100,000 at a time when the Minister introduced the universal social charge, which will impose additional taxes on persons on modest pensions. Pensioners with an income of under €40,000 will now be hit for an additional €2,000 through the universal charge and through the tax changes, and yet the Minister is saying it is acceptable that somebody would be subsidised to the tune of the top rate of tax relief to enable him or her to have a pension of €100,000. There is no justification or rationale for that. The Labour Party favours reducing the total fund to €1.6 million.

Financial Resolution No. 7 is a reasonable proposal and we do not have a difficulty with that. On Financial Resolutions Nos. 8 and 9 on the retirement lump sum, my party agrees with reducing the lump sum. The current lump sum of €1.3 million, that the wealthiest in society are entitled to take without paying a single cent of tax, is indefensible. It is an outrageous amount of money. There is no justification, socially or economically, for having such a regime. It is about time that lump sum was lowered. In recent years when we have had to take such austerity measures and when there is such hardship being caused to persons on low incomes, how can the Minister defend a situation where the wealthiest are walking off with €1.3 million tax free on retirement? It is scandalous that it was ever the case and it is scandalous that the Minister has allowed it to continue up to now.

I welcome the fact that the Minister is talking about now reducing that maximum tax-free lump sum to €200,000. I still think it is too high. It should come down below €150,000. That would be reasonable still.

I refer to the Minister's proposals for the transitional arrangements for persons who currently have funds in excess of the new threshold being proposed where he is allowing them to take a tax-free lump sum. He is changing this tonight — we are voting on it shortly — but the Minister will still continue to allow persons who have bigger funds to withdraw tax-free lump sums of €575,000. There is no justification——

An Ceann Comhairle

I am anxious to accommodate Deputy Morgan.

Deputy Róisín Shortall

——for allowing that additional generosity. There is no basis for doing that.

However, the worst aspect of Financial Resolutions Nos. 8 and 9 is that they do not take effect until 1 January. Essentially, the Minister is telling those wealthy individuals to——

Deputy Ruairí Quinn

Move their money fast.

Deputy Róisín Shortall

——move their money fast. They have three weeks to take €1.3 million tax-free and run. At a time when people cannot afford to put food on the table for their children and people are having their electricity cut off and cannot afford to heat their homes, the Minister is telling the wealthiest people coming up to Christmas to take the money and run, and the Government is prepared to allow them to take €1.3 million tax-free. It is a scandal. It is a disgrace that the Tánaiste should allow that to transpire.

Deputy Arthur Morgan

I will be brief because I appreciate that others want to get in as well.

On Financial Resolution No. 5, my party would like to see the pension cap reduced. We propose its reduction to €100,000. I note the Minister has provided for €115,000 here. We also propose standardising pension tax reliefs, which, unfortunately, is not in this document.

On Financial Resolution No. 6, the Minister is allowing for a maximum pension fund on retirement for tax purposes to be set a €2.3 million. I suppose €2.3 million is not bad, really, when one measures it against the Minister's expectation that somebody can survive on €186 per week on jobseeker's allowance. Given the evidence, I remain to be convinced on a fair society.

On the retirement lump sums cap of €200,000, I note that has come down substantially in recent years. Not that long ago it was €500,000. There has been a significant move here but, in fairness, it should have been lower.

Deputy Mary Coughlan

There is a difference of perspective on a number of these issues that have been raised. In Fine Gael, there is a view that the sum, which will be €2.3 million and which was previously €5.4 million, might not even be adequate to deal with——

Deputy Róisín Shortall

Address the points made. We know the policies.

Deputy Mary Coughlan

Deputy English raised this issue and he is entitled to an answer.

Deputy English's view was that perhaps this would be more restrictive on persons who at a later stage in life may not be in a position to get an adequate pension.

Deputy Damien English

If they lost a couple of years.

Deputy Mary Coughlan

I suppose our perspective is that it was €5.4 million and it is now moved down to €2.3 million, and there would be adequate space in that for persons——

Deputy Damien English

No. It was the yearly amount.

Deputy Mary Coughlan

——to address their financial needs, which, perhaps, is an opposing point which Deputy Shortall would have.

Deputy Shortall is correct in stating that this is a progressive tax measure being introduced into pension legislation. We now see a €200,000 limit as opposed to what was there heretofore. Anything over and above that will be taxable.

She raised an issue on others who have an established right to the money that they have accumulated. The legal advice to the Department of Finance is that these persons have their provision grandfathered and they have established a legal right to their entitlement.

Deputy Róisín Shortall

Why does that not apply to public sector pensioners? The Tánaiste seems to think it was all right to dip into public sector pensions.

An Ceann Comhairle

Allow the Tánaiste continue.

Deputy Mary Coughlan

After that, the changes will take place.

On the other issue Deputy Shortall raised, which is the employer's contribution, which is an argument which has been traditionally made by many on applying limits to the employer contribution, which would prevent the funding of certain individual pensions, there are issues being considered by the Department at present. It is under consideration.

Deputy Ruairí Quinn

Are these legal issues?

Deputy Mary Coughlan

No. This issue is being considered by the Department and the Minister in the context of the finance Bill which will be prepared for later on. The overarching message from these measures is that those who have acquired and who would prefer to acquire larger lump sums tax-free will not do so. We are now setting a threshold of €200,000.

Deputy Róisín Shortall

It is a bit late in the day.

An Ceann Comhairle

Deputy Shortall.

Deputy Mary Coughlan

We are also preventing situations whereby people obtained large ex gratia payments which were not taxed. This matter has also been addressed. Many of the concerns raised in providing an equity argument in the context of pension legislation are now being addressed in these resolutions being put to the House.

An Ceann Comhairle

We need to move on and make a decision. As 30 minutes have now elapsed I am required to put the question in accordance with an order of the Dáil of this day.

Minister for Health and Children (Deputy Mary Harney)

I move the following Financial Resolutions:

Financial Resolution No. 10: Income Tax

(1) THAT section 15 of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended in the following manner for the year of assessment 2011 and each subsequent year of assessment :

(a) by substituting “€23,800” for “€27,400” in subsection (3),

(b) by substituting “€32,800” for “€36,400” in column 1 of Part 1 of the Table to that section,

(c) by substituting “€36,800” for “€40,400” in column 1 of Part 2 of the Table to that section, and

(d) by substituting “€41,800” for “€45,400” in column 1 of Part 3 of the Table to that section.

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 11: Income Tax

(1) THAT the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended in the following manner for the year of assessment 2011 and each subsequent year of assessment :

(a) where an individual is entitled to a tax credit under a provision of the Taxes Consolidation Act 1997 mentioned in column (1) of the Table to this Resolution the amount of the tax credit shall, instead of being the amount specified in column (2) of the Table, be the amount of the tax credit specified in column (3) of the Table opposite the mention of the amount in column (2).

TABLE
Statutory Provision	Existing tax credit	Tax credit for the year 2011 and subsequent years
(1)	(2)	(3)
Section 461
(basic personal tax credit)
(married person)	€3,660	€3,300
(widowed person bereaved in year of assessment)	€3,660	€3,300
(single person)	€1,830	€1,650

Section 461A
(additional tax credit for certain widowed persons)	€600	€540

Section 462
(one-parent family tax credit)	€1,830	€1,650

Section 463
(widowed parent tax credit)
(1st year)	€4,000	€3,600
(2nd year)	€3,500	€3,150
(3rd year)	€3,000	€2,700
(4th year)	€2,500	€2,250
(5th year)	€2,000	€1,800

Section 464
(age tax credit)
(married person)	€650	€490
(single person)	€325	€245

Section 465
(incapacitated child tax credit)	€3,660	€3,300

Section 466
(dependant relative credit)	€80	€70

Section 466A
(home carer tax credit)	€900	€810

Section 468
(blind person’s tax credit)
(blind person)	€1,830	€1,650
(both spouses blind)	€3,660	€3,300

Section 472
(employee tax credit)	€1,830	€1,650

,

(b) in section 461, by substituting “€3,300” for “€3,660”, in both places where it occurs, and “€1,650” for “€1,830”,

(c) in section 461A, by substituting “€540” for “€600”,

(d) in section 462, in subsection (2), by substituting the following for “€1,830” and all the words following that amount to the end of that subsection:

"€1,650, but this section shall not apply for any year of assessment—

(i) in the case of a husband or a wife where the wife is living with her husband,

(ii) in the case of civil partners (within the meaning of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010) who are living together, or

(iii) in the case of cohabitants (within the meaning of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010).",

(e) in section 463(2)—

(i) in subparagraph (i), by substituting "€3,600" for "€4,000",

(ii) in subparagraph (ii), by substituting "€3,150" for "€3,500",

(iii) in subparagraph (iii), by substituting "€2,700" for "€3,000",

(iv) in subparagraph (iv), by substituting "€2,250" for "€2,500",

(v) in subparagraph (iv), by substituting "€1,800" for "€2,000", and

(vi) by substituting "cohabitants (within the meaning of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010)" for "a man and woman living together as man and wife",

(f) in section 464, by substituting “€490” and “€245”, respectively, for “€650” and “€325”,

(g) in section 465, by substituting “€3,300” for “€3,660” in subsection (1),

(h) in section 466, by substituting “€70” for “€80” in subsection (2),

(i) in section 466A, by substituting “€810” for “€900” in subsection (2),

(j) in section 468, by substituting “€1,650” and “€3,300”, respectively, for “€1,830” and “€3,660” in subsection (2), and

(k) in section 472, by substituting “€1,650” for “€1,830”, in both places where it occurs, in subsection (4).

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 12: Income Tax

(1) THAT section 188 of the Taxes Consolidation Act 1997 (No. 39 of 1997), in relation to income tax age exemption and associated marginal relief, be amended for the year of assessment 2011 and each subsequent year of assessment by substituting "€36,000" for "€40,000" and "€18,000" for "€20,000" in subsection (2).

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 13: Universal Social Charge

(1) THAT—

(a) in this Resolution—

"aggregate income for the tax year", in relation to an individual and a tax year, means the aggregate of the individual's—

(i) relevant emoluments in the tax year, including relevant emoluments that are paid in whole or in part for a tax year other than the tax year during which the payment is made, and

(ii) relevant income for the tax year;

"Collector-General" means the Collector-General appointed under section 851 of the Principal Act;

"employee" and "employer" have the same meanings as in section 983 of the Principal Act;

"excluded emoluments" means emoluments which have been gifted to the Minister for Finance under section 483 of the Principal Act;

"income tax month" means a calendar month;

"PAYE Regulations" means the Income Tax (Employments) (Consolidated) Regulations 2001 (S.I. No. 559 of 2001);

"Principal Act" means the Taxes Consolidation Act 1997 (No. 39 of 1997);

"relevant emoluments" and "relevant income" shall be construed in accordance with paragraphs (a) and (b), respectively, of the Table to paragraph (2) of this Resolution;

"similar type payments" means payments which are of a similar character to social welfare payments but which are made by—

(i) the Health Service Executive,

(ii) the Department of Community, Equality and Gaeltacht Affairs,

(iii) the Department of Enterprise, Trade and Innovation,

(iv) the Department of Education and Skills,

(v) the Department of Agriculture, Fisheries and Food, or

(vi) An Foras Áiseanna Saothair, in respect of schemes mentioned in clauses (I), (II) and (III) of section 472A(1)(b)(i) of the Principal Act,

"social welfare payments" means payments made under the Social Welfare Acts;

"tax year" means a year of assessment within the meaning of the Tax Acts;

"universal social charge" has the meaning assigned to it by paragraph (2) of this Resolution,

and

(b) other words and expressions used in this Resolution have, except where otherwise provided or where the context otherwise requires, the same meaning as in the Tax Acts.

(2) THAT, with effect from 1 January 2011, there shall be charged, levied and paid, in accordance with the provisions of this Resolution, a tax to be known as "universal social charge" in respect of the income specified in paragraphs (a) and (b) of the Table to this paragraph.

TABLE

(a) The income described in this paragraph (in this Resolution referred to as “relevant emoluments”) is emoluments to which Chapter 4 of Part 42 of the Principal Act applies or is applied, including-

(i) any allowable contributions referred to in Regulations 41 and 42 of the PAYE Regulations,

(ii) the initial market value (within the meaning of section 510(2) of the Principal Act) of any shares, excluded from the charge to income tax by virtue of section 510(4) of that Act, appropriated in accordance with Chapter 1 of Part 17 of that Act,

(iii) the market value (determined in accordance with section 548 of the Principal Act) of the right referred to in section 519A(1) or 519D(1) of that Act, and

(iv) any gain exempted from income tax by virtue of section 519B(3) or 519D(3) of the Principal Act,

but not including—

(I) social welfare payments and similar type payments,

(II) excluded emoluments,

(III) expenses, in respect of which an employee may be entitled to relief from income tax, which fall within Regulation 10(3) of the PAYE Regulations,

(IV) any amount in respect of which relief is due under section 201(5)(a) of the Principal Act and paragraphs 6 and 8 of Schedule 3 to that Act,

(V) emoluments of an individual who is resident in a territory with which arrangements have been made under subsection (1)(a)(i) or (1B)(a)(ii) of section 826 of the Principal Act in relation to affording relief from double taxation, where those emoluments are the subject of a notification issued under section 984(1) of that Act.

(b) The income described in this paragraph (in this Resolution referred to as “relevant income”) is income, without regard to any amount deductible from or deductible in computing total income, from all sources as estimated in accordance with the Tax Acts, other than—

(i) relevant emoluments,

(ii) any emoluments, payments, expenses or other amounts referred to in clauses (I) to (V) of paragraph (a) of this Table,

(iii) any gains, income or payments to which any of the following provisions apply:

(I) Chapter 4 of Part 8 of the Principal Act;

(II) Chapter 5 of Part 8 of the Principal Act;

(III) Chapter 5 of Part 26 of the Principal Act;

(IV) Chapter 6 of Part 26 of the Principal Act;

(V) Chapter 1A of Part 27 of the Principal Act;

(VI) Chapter 4 of Part 27 of the Principal Act,

(iv) where section 825A of the Principal Act applies in respect of an individual for a tax year, an amount equal to the difference between—

(I) the individual's total income for the tax year had that section not applied for that year, and

(II) the amount of total income which if charged to income tax for the year would have given an amount of income tax payable equal to that which would be payable by virtue of the operation of that section,

(v) where section 1025 of the Principal Act applies in respect of an individual, the amount of any deduction for any payment to which that section applies, made by an individual pursuant to a maintenance arrangement (within the meaning of that section) relating to the marriage for the benefit of the other party to the marriage, unless section 1026 of that Act applies in respect of such payment,

(vi) where an individual is entitled to an allowance under section 284(1) of the Principal Act, other than where such an allowance is made on a lessor and an allowance made on an individual who is not an active partner (within the meaning of section 409A of that Act), an amount equal to the amount of that allowance,

(vii) where an individual is entitled to an allowance under subsection (3) of section 272 of the Principal Act of an amount determined in accordance with paragraph (a), (b), (c)(iii), (da), (db), (e) or (g) of that subsection, other than where such an allowance is made on a lessor of an industrial building or structure and an allowance made on an individual who is not an active partner (within the meaning of section 409A of that Act), an amount equal to the amount of that allowance, and

(viii) where an individual is entitled to an allowance under subsection (2) of section 658 of the Principal Act of an amount determined in accordance with paragraph (b) of that subsection, or an allowance under section 659(2)(a) of that Act determined in accordance with subsection (3A), (3AA) (3B) or (3BA) of that section, other than where such an allowance is made on an individual who is not an active partner (within the meaning of section 409A of that Act), an amount equal to the amount of that allowance,

and as if sections 140, 141, 142, 143, 195, 232, 234 and 664 of the Principal Act were never enacted and without regard to any deduction—

(a) in respect of double rent allowance under section 324(2), 333(2), 345(3) or 354(3) of the Principal Act,

(b) under section 372AP of the Principal Act, in computing the amount of a surplus or deficiency in respect of rent from any premises,

(c) under section 372AU of the Principal Act, in computing the amount of a surplus or deficiency in respect of rent from any premises,

(d) under section 847A of the Principal Act, in respect of a relevant donation (within the meaning of that section), or

(e) under section 848A of the Principal Act, in respect of a relevant donation (within the meaning of that section).

(3) THAT universal social charge shall not be payable for a tax year by an individual who proves to the satisfaction of the Revenue Commissioners that his or her aggregate income for the tax year does not exceed €4,004.

(4) THAT for the tax year 2011, and for each subsequent tax year, an individual shall be charged to universal social charge on his or her aggregate income for the tax year—

(a) at the rate specified in the second column of the Table to this paragraph corresponding to the part of aggregate income specified in the first column of that Table where the individual is aged under 70 years, and

(b) at the rate specified in the third column of the Table to this paragraph corresponding to the part of aggregate income specified in the first column of that Table where the individual is aged 70 years or over at any time during the tax year.

TABLE
Part of aggregate income	Rate of universal social chargeIndividuals aged under 70 years	Rate of universal social chargeIndividuals aged 70 years or over
The first €10,036	2%	2%
The next €5,980	4%	4%
The remainder	7%	4%

(5) THAT—

(a) an employer shall be liable in the first instance to pay universal social charge due in respect of any payment of relevant emoluments,

(b) as respects any payment of relevant emoluments made to or on behalf of an employee on or after 1 January 2011, universal social charge shall be deducted from such emoluments by the employer at any or all of the following rates:

(i) 2 per cent where the amount of the relevant emoluments does not exceed €193, in the case where the period in respect of which the payment is being made is a week, or a corresponding amount where the period is greater or less than a week;

(ii) 4 per cent on the amount of the excess:

(I) where the amount of the relevant emoluments exceeds €193, but does not exceed €308, or

(II) where, in the case of an employee who is aged 70 years or over at any time during the tax year, the amount of the relevant emoluments exceeds €193,

in the case where the period in respect of which the payment is being made is a week, or a corresponding amount where the period is greater or less than a week;

(iii) 7 per cent on the amount of the excess where the amount of the relevant emoluments exceeds €308, in the case where the period in respect of which payment is being made is a week, or a corresponding amount where the period is greater or less than a week,

and notwithstanding that the relevant emoluments are in whole or in part for some tax year other than that during which the payment is made,

(c) the provisions of Part 4 of the PAYE Regulations, with any necessary modifications, shall apply to universal social charge in respect of relevant emoluments and universal social charge payable by an employee shall only be recoverable from him or her by his or her employer by deduction in accordance with those provisions,

(d) within 14 days of the end of every income tax month the employer shall remit to the Collector-General the total of all amounts of universal social charge which the employer was liable to deduct from relevant emoluments paid by the employer during that income tax month,

(e) the Collector-General may, in writing, and unless the employer objects, authorise the employer to remit to the Collector-General, within 14 days from the end of such longer period (if any) but not exceeding one year, as may be so authorised, the total of all amounts of universal social charge which the employer was liable to deduct from relevant emoluments paid by the employer during that longer period,

(f) where a remittance referred to in subparagraph (d) of this paragraph is made by such electronic means (within the meaning of section 917EA of the Principal Act) as are approved by the Revenue Commissioners, that subparagraph shall apply and have effect as if “within 23 days of the end of every income tax month” were substituted for “within 14 days of the end of every income tax month” but, where that remittance is not made within that period of 23 days, subparagraph (d) shall apply and have effect without regard to the provisions of this subparagraph, and

(g) on payment of universal social charge, the Collector-General may send, make available or cause to be made available to the employer concerned a receipt in respect of the payment.

(6) THAT—

(a) an employer shall, in the case of an employee to whom he or she makes a payment of relevant emoluments, give to the employee, on the cessation of the period of employment to which the payment of universal social charge in respect of the employee relates, a certificate showing—

(i) the total universal social charge as respects the employee which the employer was liable to remit for the tax year in which the cessation occurs up to and including the date of cessation,

(ii) the dates of commencement (where applicable) and cessation within that year of the employment of the individual,

(iii) the rate of universal social charge payable as respects the employee, and

(iv) the total relevant emoluments paid to the employee in that year up to and including the date of cessation,

and

(b) the certificate specified in subparagraph (a) of this paragraph shall be in such form as may be provided or approved of by the Revenue Commissioners.

(7) THAT an employer shall record the following particulars in respect of each employee to whom payment of relevant emoluments has been made in a tax year—

(a) the amount of each payment of relevant emoluments,

(b) the amount of universal social charge deducted from each such payment,

(c) the total amount of universal social charge which the employer is liable to remit in respect of each such payment, and

(d) the dates of commencement and cessation within the tax year of the employment of the individual, where applicable.

(8) THAT the records specified in paragraph (7) of this Resolution shall be in a form approved of by the Revenue Commissioners and shall be retained by an employer for 6 years after the end of the tax year to which they refer.

(9) THAT sections 989, 990, 990A, and 991 of the Principal Act shall apply to universal social charge payable on relevant emoluments as they apply to income tax.

(10) THAT, where universal social charge is payable for the tax year 2011 in respect of aggregate income of an individual for that year, section 958 of the Principal Act shall apply and have effect as if, in accordance with this Resolution, universal social charge was payable for the tax year 2010.

(11) THAT universal social charge is under the care and management of the Revenue Commissioners and Part 37 of the Principal Act shall apply to universal social charge as it applies to income tax.

(12) THAT repayments of income levy (within the meaning of section 531A of the Principal Act) paid for the tax years 2009 and 2010 shall, to the extent that insufficient income levy has been paid in 2011 or a later year, be made out of universal social charge.

(13) THAT—

(a) where any income levy (within the meaning of section 531A of the Principal Act), in relation to an employee, remains unpaid for the tax year 2009 or 2010 and is not otherwise recovered (in this subparagraph referred to as the “underpayment”), the employer shall be treated, on receipt of a notice from an inspector of taxes or other officer of the Revenue Commissioners to the effect that this paragraph applies, as making a payment of relevant emoluments (within the meaning of paragraph (1) of this Resolution) to the employee in the tax year 2011 of an amount equal to the amount referred to in subparagraph (b) of this paragraph (in this paragraph referred to as “notional emoluments”),

(b) the amount of the notional emoluments shall be an amount which would produce an amount of universal social charge equal to the amount of the underpayment and which amount shall be set out in the notice issued under subparagraph (a) of this paragraph,

(c) where an employer is treated as making a payment of notional emoluments in the tax year 2011, the amount of the notional emoluments for the tax year shall be apportioned over the tax year to each week, in a case where relevant emoluments are paid weekly, or such corresponding period where relevant emoluments are paid for a period either greater or less than a week, and

(d) the employer shall deduct universal social charge in accordance with this Resolution by reference to the part of the notional emoluments for the tax year apportioned to each such week or a corresponding amount where the period is greater or less than a week and, for the purposes of determining the amount of universal social charge to be deducted in accordance with this subparagraph, the part of the notional emoluments so apportioned shall be treated as the highest portion of the employee’s relevant emoluments (within the meaning of paragraph (1) of this Resolution) for that week or other period.

(14) THAT, where any income levy (within the meaning of section 531A of the Principal Act) or universal social charge, as the case may be, remains unpaid after the end of a tax year, the amount of tax credits (within the meaning of the PAYE Regulations) and the standard rate cut-off point (within that meaning) appropriate to an employee for any subsequent tax year may be adjusted as necessary by an inspector of taxes or other officer of the Revenue Commissioners to collect unpaid universal social charge or income levy which is not otherwise recovered.

(15) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act (No. 7 of 1927).

Financial Resolution No. 14: Income Levy

(1) THAT the tax known as income levy imposed by section 531B (inserted by section 2 of the Finance (No. 2) Act 2008) (No. 25 of 2008) of the Taxes Consolidation Act 1997 (No. 39 of 1997) shall cease to be charged with effect as on and from 1 January 2011.

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act (No. 7 of 1927).

In 2010 it is estimated that almost 45% of income tax earners will be exempt from income tax and only 14% will pay income tax at the higher rate. For a single individual, the entry point to income tax is €18,300. A married, one income family does not start paying income tax until income levels are in excess of €31,950. It is evident that this situation has become unsustainable. We arrived at this situation by the very generous increases in credits and bands over several years. The combined value of the personal tax credit and the PAYE tax credit has increased by 92% since 2001, from €1,905 to €3,600 in 2010. The single standard rate band has increased from €17,780 in 1999 to €36,400 in 2010. This is an increase of 105%.

It is clear that we cannot afford such generous tax reliefs on income. In this budget, therefore, we have reduced the personal and PAYE tax credits by approximately 10% to €1,650 each from €1,830. We have reduced the single standard rate band to €32,800 from a value of €36,400. The married one income band has been reduced to €41,800 from €45,400 and the married two earner band has been reduced to €65,600 from €72,800. These measures will reduce the entry point to income tax for a single individual to €16,500 and for a married one income family to €28,800. These measures will return tax credits and bands to where they were in 2006. As a result of these measures, the numbers exempt from income tax in 2011 will be reduced to 38% from 45%. The numbers exempt will be reduced to 843,400 from the 2010 figure of 982,900 — a reduction of almost 140,000.

Most important of all in these difficult times, it is estimated these measures will raise €830 million in 2011 and €1.1 billion in a full year. We will also reduce the age exemption limits from €20,000 for a single person and €40,000 for a married couple to €18,000 and €36,000, respectively. It is not unreasonable in these difficult times to reduce the entry point to tax for a married couple aged under 65 years with no children to €24,750 but maintain the entry point to tax at €40,000 for a couple over 65 years.

A new universal social charge is being introduced to replace the income levy and the health levy. The universal charge will be applied at a rate of 2% up to €10,036, 4% above that amount but below €16,016 and 7% above €16,016. A lower exemption threshold of €4,004 will apply. Income earners over 70 years of age will not be liable for the higher rate of 7%. As with the levy, payments made by the Department of Social Protection will be exempt from the universal social charge. The charge is more equitable and has a wider base and lower rate when compared with the combined income levy and health levy. It is designed to apply across income levels in a smoother progression while addressing the irregularities caused by the step effects in the current system of levies and PRSI. The current combination of income levy, health levy and PRSI creates a number of anomalies due to the entry point steps to each of these charges. The health levy has a step of 4% to €26,000, which results in an anomaly whereby an individual earning €25,500 per annum can receive an increase in income of €1,000 but only €320 in net pay. The introduction of the universal charge will resolve this issue. An individual on €25,500 who receives an increase of €1,000 will now be €690 better off. The charge is the first step in removing the irregularities due to the combination of levies and PRSI in the current system. The charge is revenue neutral in 2011 and will yield €420 million in a full year.

Financial Resolution No. 10 reduces the level of the standard bands. The single standard band is reduced from €36,400 to €32,800. Financial Resolution No. 11 reduces the level of income tax credits by approximately 10%. Personal PAYE credits will be reduced from €1,830 to €1,650. Financial Resolution No. 12 reduces the threshold for the exemption limit for persons aged 65 or older to €18,000 for a single or widowed person and €36,000 for a married couple where either spouse is aged over 65 years. Financial Resolution No. 13 gives statutory effect to the budgetary announcement that a new charge called the universal social charge will be introduced on 1 January 2011.

Deputy Enda Kenny

The Government got it completely wrong in this case. We oppose this group of Financial Resolutions because they will hit low and middle income earners. The imposition of income tax as proposed by the Government will destroy the traditionally low level of tax levied on the wedge between the employer's bill and the take home pay of the employee. The Government is going to force down the standard of living for those on low and middle incomes.

Fine Gael proposed not to increase income taxes in 2011 and we demonstrated this could be done by making savings of €250 million through 6,000 further redundancies in back office and administration throughout the public sector. There are further alternatives for making savings, such as greater cost reductions and further changes to the public service.

Under this imposition, a single person on the minimum wage will be worse off by €879 annually or €17 per week. If one takes account of the changes made in respect of income tax and the universal charge, such an individual will lose twice as much as if he or she was on welfare. This is a savage imposition on the lowest earners. It is not the kind of progression we need and, from that point of view, must be rejected.

According to the figures outlined in the budget, the income tax that is now to be imposed means a couple with three children and a single gross income of €50,000 will be worse off by €1,800. Such a family would be better off by €1,600 under the alternative plan proposed by Fine Gael, which makes it clear that it is not necessary to increase income tax in 2011.

The Minister for Health and Children, Deputy Harney, was previously an advocate of streamlining income tax and reducing the tax burden. She will be aware, therefore, that these proposals are short-sighted, lack ambition and will force down the living standards of people on low and middle incomes. They contain a series of landmines which were never acknowledged by the Minister for Finance. They are appallingly short-sighted and retrograde and, for these reasons, I oppose them resolutely.

Deputy Joan Burton

I wish to ask the Minister some questions about the universal social charge, which represents a significant change to our tax code. In effect, people will be charged for what they commonly understand as social provisions. I acknowledge that the PRSI rate of 4% is not being touched for most people but the universal charge is described in paragraph 2 of Financial Resolution No. 13 as a tax. It replaces the old health contribution and the levies that have applied since the advent of the financial emergency. As a tax, it will go into the general pool of taxation, whereas its name gives people to understand that it will be dedicated to social provision, including the areas of health and children.

The current health contribution is charged at a rate of 4% on income up to €75,000 but employees earning up to €500 per week, or €26,000 per year, are exempt. Under the new system, everyone with an income over €4,000 will be subject to the universal social charge at a higher rate. The rate of the levies in 2010 for an individual earning less than €75,000 was 2%. The universal social charge comes in at a very low level and individuals who earn more than €4,000 must pay the levy on their entire income.

The levy is reduced slightly for those who are aged 70 years and older. Every Deputy will be aware that medical card holders, including those who are aged 70 years or older, were exempt from the health contribution. I would be delighted to hear that the small print provides for this.

There are eight pages of text dealing with this levy, but I cannot find where it says that people in receipt of a medical card or who are over 70 are exempt from this new universal social charge. It is called a charge because it is general taxation and breaches the contributory principle that is at the heart of the social welfare contributory system, which is that one contributes when one works and receives entitlements in one's old age. I am surprised that Fianna Fáil opted for this measure. Perhaps it is a Progressive Democrat or a Green Party idea. I am surprised at the severity with which this measure is set out.

Can the Minister tell me I am wrong about medical card holders? As we all know, getting a medical card at present is pretty tough.

Deputy Brian Hayes

May I ask two questions, a Leas-Cheann Comhairle?

An Leas-Cheann Comhairle

Very good.

Deputy Brian Hayes

In the Budget Statement, the Minister for Finance gave us information I had heard a month ago when I was in the Department of Finance with my colleagues. The Minister said those earning more than €75,000 represent approximately 8% of all income tax payers and those 8% of taxpayers pay 60% of all income tax. Following the changes to income tax rates, how is that figure likely to change?

Second, Deputy Burton has made an important point. It is my understanding that the social insurance fund works on the basis that an individual makes a pay related social insurance, PRSI, contribution and that contribution goes into the social insurance fund. This is not a finance measure; it is a social welfare measure. In good times we take money from the social insurance fund and in bad times we supplement it. What will now happen to the social insurance fund? Will it remain in place? With the abolition of the two levies, will the new charge go into that pot of money?

Deputy Seán Sherlock

The Minister for Finance said those earning the new reduced minimum wage would not be brought into the tax net. I seek clarification in this regard. Financial Resolution No. 12 states:

That, with effect from 1 January 2011, there shall be charged, levied and paid, in accordance with the provisions of this Resolution, a tax to be known as "universal social charge".

This is an acknowledgment that the universal social charge is a tax.

What is the situation in respect of the minimum wage? The charge will not be levied on incomes up to €4,000, at 2% on incomes up to €10,036 and at 4% on the next €5,980. There needs to be further clarification of the position of people who are earning the minimum wage. The Labour Party interpretation is that this charge is a tax to be levied on those in receipt of the new reduced minimum wage. If that is the case, it is grossly unfair.

Deputy Arthur Morgan

The Minister described these measures as more equitable. This is completely wrong because low income earners will be paying a substantially higher proportion of their incomes than high income earners. That is grossly unfair. The Government could have introduced a wealth tax but it chose not to do so.

The universal social charge is not a social charge. It is a tax, and that is the end of it. A person earning the minimum wage has already been tapped for €40 per week. The Government now proposes to go back to the economic carcass of that person for a further €360 per annum. Can the Minister for Health and Children confirm that people on the new minimum wage will have to pay a charge of €360 per annum under this so-called social charge? This is far from fair or equitable.

I welcome the abolition of the income and health levies, which were unfair. However, they did, at least, contain some element of relativity in that they captured higher income individuals.

Deputy Denis Naughten

What has been done with regard to tax credits is appalling. They have been cut by 10%, as the Minister for Health and Children has outlined. This is more than the percentage cut to ministerial pensions. A tax credit applied to carers, who save the taxpayer an average of €40,000 per year. We are not giving them basic recognition in the taxation system. Given the anomalies in the respite care grant, the tax credit is the only recognition some carers receive. That recognition is now being reduced by the proposal before us.

People with a disability and those who are visually impaired incur additional costs in going to work, and have a low rate of employment in any event. The visually impaired have additional costs in making adaptations to allow them to live independently or to get to and from work. It does not make sense to penalise the small number of people who avail of this tax credit, which will be the effect of the proposed measures.

The lowest cut of all is the reduction in the tax credit for a widowed person in the year of assessment. In the year when a person loses his or her spouse, we are cutting their tax relief by 10%, which is greater than the cut to the pensions of Ministers who will be leaving Government in a few months' time.

I ask the Minister for Health and Children to justify these measures and explain why she, if she decides to retire, should be entitled to less of a cut than a widowed person in the year he or she becomes widowed. This is unacceptable, as is the cut in tax relief to someone looking after an incapacitated child. Some 64% of children with a disability must remain at home, saving the taxpayers €70,000 per year.

Deputy Seán Barrett

What will contributors get in return for the universal social charge? This is a con trick. It is more taxation.

Deputy Joan Burton

It is a tax.

Deputy Seán Barrett

The income levy was imposed as an emergency measure because of the financial circumstances the country was in. It was accepted on the basis that it would be dispensed with at some point. We are being asked to facilitate a con trick. We are being asked to pretend we are doing something that will give services to the public. We are about to concrete the income and health levies forever.

I can see an argument for breaking up the PRSI fund among the various health, pension and social welfare entitlements. That would have made sense to me. However, this universal social charge is an absolute con trick. I sincerely hope the public will see through it. How can the Minister for Health and Children stand over this income levy being consolidated into our tax code on an ongoing basis?

Deputy Kieran O’Donnell

Does the universal social charge relate exclusively to the income and health levies being combined or will it encompass all PRSI payments? The Minister for Health and Children says the charge is revenue neutral. Will the tax be progressive or will the lower paid be charged a greater percentage of their incomes than higher earners?

The Minister says all taxpayers will suffer an equal hit. However, people earning approximately €16,000 will be coming into the tax net for the first time since 2006. They will also be liable for the universal social charge. How will revenue from the charge be used? The health levy was originally introduced for health use but I am not certain it was ever used for that purpose.

Deputy Róisín Shortall

I agree that this is a complete con. It is a new tax. We have been given all kinds of assurances about people on minimum wages not being included in the tax net. They are not in the income tax net but they are caught in the net with this charge. This charge started as a universal social contribution with an element of contributing and getting something back but this recently changed to a charge. It is a new tax, a new way of squeezing money out of people. It is shifting the burden of taxation from the better-off to low income people. This is the whole purpose of this charge and the Government should be honest about this purpose.

A number of points of clarification are required. Will the current exemptions applying to the health and the income levies apply to the universal charge? How will it interact with family income supplement? This charge kicks in for low income people at the level of €4,000. It is designed to bring people with incomes in the region of €4,000 into the tax net and it is fundamentally unfair. Pensioners are now going to be caught with the combination of this universal charge and the lowering of the age exemption, so that a pensioner couple, with an income of just under €40,000 will be caught for an additional tax of €2,000 a year as a result of this measure. This is about hammering people on low and modest incomes and nothing else.

Deputy Kathleen Lynch

I refer to people on very low incomes being taxed because that is what this charge does. To continue the point made by Deputy Barrett, what are the benefits of this tax? We all know that PRSI, pay-related social insurance, provided certain benefits which were available when needed but where are the benefits of this charge? Who decided on the different categories? It was always accepted that certain groups with particular needs were exempted. However, it now seems there are two categories of people with regard to social welfare, the old-age pensioners — who, in this weather, would begrudge them the couple of bob they receive — and all the others. I could never understand how widows under 66 years and left with young families through no fault of their own and on a meagre income, have not been given the household package.

A friend of mine asked me to raise this question. I refer to those employed before 1995 and post-1995 in the public sector and to whom different rates of PRSI apply. The people employed after 1995 were given an increase in their salary because it was recognised they were paying a higher contribution. Will all of those people be caught for the one charge if they earn €75,000?

Deputy Mary Harney

I refer to the tax wedge mentioned by Deputy Kenny. Even after the changes made today, Ireland will have the lowest tax wedge in the EU for a single person, at 31.4%——

Deputy Seán Barrett

The Minister is joking.

Deputy Mary Harney

——and the tenth lowest in the OECD. The rate of 31.4% places Ireland first in Europe and tenth in the OECD.

Deputy Enda Kenny

There was no need to do it.

Deputy Mary Harney

We are taking income tax, or take-home pay, back to where it was in 2006. With regard to the questions raised by Deputy Burton, it applies to all income other than income of less than €4,000. It does not include welfare income.

Deputy Joan Burton

It includes an occupational pension.

Deputy Mary Harney

Any income less than €4,004 is excluded but all income over €4,004 is included. This is applied at 2% up to €10,000, at 4% between €10,000 and €16,000 and at 7% above that.

Deputy Róisín Shortall

It is really a poverty trap.

Deputy Mary Harney

No, I mentioned in my opening comments that if somebody on a salary of €26,000——

Deputy Joan Burton

People on €26,000 were exempt from the old health contribution.

Deputy Róisín Shortall

What about the salary of——

An Leas-Cheann Comhairle

Please allow the Minister to answer the questions.

Deputy Mary Harney

The health levy only applied to salaries over €26,000 and the income levy applied to salaries over €15,000. The minimum wage will still be excluded from tax but will be included in this charge.

Deputy Seán Sherlock

The Minister is catching them at 4%

Deputy Mary Harney

Yes, that is correct.

Deputy Ruairí Quinn

The Minister's script describes this charge as a tax. The Minister's statement is——

Deputy Mary Harney

I will explain. The health levy is going and approximately €2 billion from the health levy will go into the health service.

An Leas-Cheann Comhairle

Please allow the Minister to respond to a whole series of questions as we have only three minutes left.

Deputy Mary Harney

The health levy goes to fund the public health system, a total of approximately €2.1 billion in 2010 with a shortfall of €400 million because of the level of unemployment. We recently moved a Supplementary Estimate to provide for this. Instead of this being an appropriation-in-aid from the Revenue and the Department of Social Protection, it will go into the central Exchequer and will be re-diverted back. This means an element will go to fund the health system but PRSI is not being included. The Minister said last year that he intended to include PRSI but it became very complicated to do this in one year so it is not being done at the moment.

In reply to Deputy Naughten, it is not——

Deputy Joan Burton

A person on a medical card was exempt from the contribution but that exemption does not apply now.

An Leas-Cheann Comhairle

Please allow the Minister to apply.

Deputy Mary Harney

The medical card exemption does not apply for anyone.

Deputy Joan Burton

That is very tough.

Deputy Mary Harney

The medical card should be for medical needs and it has become a passport for school transport and many other things. We need to decouple it. One of the reforms being examined is to have a higher element of medical need attached to the medical card rather than the pure income which is not always fair.

Deputy Joan Burton

That is very tough.

Deputy Mary Harney

Deputy Naughten referred to Members' and Ministers' pensions being hit by 4% but the figure is 12%. Pensions at our level will be hit by a 12% reduction. When the Minister referred to 4% he was referring to an average of 4% but we will be subject to a reduction of 12% in pensions. All credits are being reduced by 10%.

Payments to haemophiliacs, hepatitis C victims and thalidomide victims will be exempt.

An Leas-Cheann Comhairle

I will allow a brief question from Deputy Creighton who has not contributed.

Deputy Arthur Morgan

The new minimum wage will be charged at €306 per year.

Deputy Mary Harney

The new minimum wage will be €15,000 and it will be outside the tax net.

Deputy Damien English

It will not be outside the tax net.

Deputy Róisín Shortall

The social charge will apply to it.

Deputy Mary Harney

The charge will apply but I said the income tax will not apply.

Deputy Róisín Shortall

It will be taxed.

Deputy Damien English

Income tax will apply.

Deputy Mary Harney

The income levy applied to it previously.

Deputy Róisín Shortall

Does the Minister regard that as fair?

Deputy Seán Sherlock

The minimum wage is subjected to tax.

Deputy Mary Harney

I take the Deputy's point.

Deputy Róisín Shortall

So they lose €40 a week and then they are taxed on top of that. That certainly incentivises people to work all right.

Deputy Lucinda Creighton

There is much confusion with regard to these measures. I refer to the example of income tax proposed on a single person with no children and taxed under schedule D with a gross income of €10,000 per year. The proposed income tax would amount to €230, with PRSI of €400. A person would lose €480 per year. The percentage change of net income is 5.3%, whereas for a person on €175,000 gross annual income it is as little as 0.9%. I find it very difficult to understand how the Minister could stand up earlier and inform the House that this is an equitable or fair budget, because it clearly targets low paid workers and there is no incentive for them to work on that basis.

An Leas-Cheann Comhairle

It being 9.20 p.m., I must put the question in accordance with the order of the Dáil of this day.

Minister for Health and Children (Deputy Mary Harney)

I move the following Financial Resolutions.

Financial Resolution No. 15: Stamp Duties

(1) THAT for the purposes of stamp duty charged by virtue of the Stamp Duties Consolidation Act 1999 (No. 31 of 1999)—

(a) the following sections of that Act shall cease to have effect—

(i) section 83A (inserted by the Finance Act 2001 (No. 7 of 2001)),

(ii) section 91A (inserted by the Finance Act 2004 (No. 8 of 2004)),

(iii) section 92, and

(iv) section 92B (inserted by the Finance (No. 2) Act 2000 (No. 19 of 2000)),

and

(b) Schedule 1 to that Act be amended—

(i) under the Heading "CONVEYANCE or TRANSFER on sale of any property other than stocks or marketable securities or a policy of insurance or a policy of life insurance."—

(I) by substituting the following for paragraphs (1) and (2):

“(1) Where the amount or value of the consideration for the sale is wholly or partly attributable to residential property and the instrument contains a statement certifying that the consideration for the sale is, as the case may be— (a) wholly attributable to residential property, or (b) partly attributable to residential property, and that the transaction effected by that instrument does not form part of a larger transaction or of a series of transactions in respect of which, had there been a larger transaction or a series of transactions, the amount or value, or the aggregate amount or value, of the consideration (other than the consideration for the sale concerned which is wholly or partly attributable to residential property) would have been wholly or partly attributable to residential property:

1 per cent of the first €1,000,000 of the consideration and 2 per cent of the balance of the consideration thereafter but where the calculation results in an amount which is not a multiple of €1 the amount so calculated shall, if less than €1, be rounded up to €1 and, if more than €1, be rounded down to the nearest €.”,

for the consideration which is attributable to residential property

(II) in paragraph (3)—

(A) by substituting "paragraph (1) does" for "paragraphs (1) and (2) do",

(B) by substituting "paragraph (1)" for "paragraph (2)" in each place, and

(C) by substituting "shall, if less than €1, be rounded up to €1 and, if more than €1, be rounded down to the nearest €." for "shall be rounded down to the nearest €.",

(III) in paragraph (4)—

(A) by substituting "2 per cent" for "9 per cent", and

(B) by substituting "shall, if less than €1, be rounded up to €1 and, if more than €1, be rounded down to the nearest €." for "shall be rounded down to the nearest €.",

and

(IV) in paragraph (15) by substituting "Where paragraphs (7) to (13) apply" for "Where",

and

(ii) under the Heading "LEASE."—

(I) by substituting the following for clauses (i) and (ii) of paragraph (3)(a):

“(i) the amount or value of such consideration for the lease is wholly or partly attributable to residential property and the instrument contains a statement certifying that the consideration (other than rent) for the lease is, as the case may be— (I) wholly attributable to residential property, or (II) partly attributable to residential property, and that the transaction effected by that instrument does not form part of a larger transaction or of a series of transactions in respect of which, had there been a larger transaction or a series of transactions, the amount or value, or the aggregate amount or value, of the consideration (other than the consideration for the lease concerned which is wholly or partly attributable to residential property and other than rent) would have been wholly or partly attributable to residential property: for the consideration which is attributable to residential property

1 per cent of the first €1,000,000 of the consideration and 2 per cent of the balance of the consideration thereafter but where the calculation results in an amount which is not a multiple of €1 the amount so calculated shall, if less than €1, be rounded up to €1 and, if more than €1, be rounded down to the nearest €.”,

(II) in clause (iii)—

(A) by substituting "clause (i) does" for "clauses (i) and (ii) do", and

(B) by substituting "clause (i)" for "clause (ii)" in each place,

and

(III) in clause (iv)—

(A) by substituting "2 per cent" for "9 per cent", and

(B) by substituting "shall, if less than €1, be rounded up to €1 and, if more than €1, be rounded down to the nearest €." for "shall be rounded down to the nearest €.".

(2) THAT, subject to paragraph (3) of this Resolution, paragraph (1) of this Resolution shall have effect as respects instruments executed on or after 8 December 2010.

(3) Paragraph (1) of this Resolution shall not apply as respects any instrument executed before 1 July 2011 where—

(a) the effect of the application of that paragraph would be to increase the duty otherwise chargeable on the instrument, and

(b) the instrument contains a statement, in such form as the Revenue Commissioners may specify, certifying that the instrument was executed solely in pursuance of a binding contract entered into before 8 December 2010.

(4) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 16: Income Tax

(1) THAT, as respects any payment or crediting of relevant interest (within the meaning of Chapter 4 of Part 8 of the Taxes Consolidation Act 1997 (No. 39 of 1997)) made on or after 1 January 2011, the definition of "appropriate tax" in section 256(1) of the Taxes Consolidation Act 1997 be amended-

(a) in paragraph (a) by substituting “27 per cent” for “25 per cent”,

(b) in paragraph (b) by substituting “27 per cent” for “25 per cent”, and

(c) in paragraph (c) by substituting “30 per cent” for “28 per cent”.

(2) THAT, as respects any dividend paid or credited to a special share account or a special term share account (within the meaning of Chapter 5 of Part 8 of the Taxes Consolidation Act 1997), section 267B of the Taxes Consolidation Act 1997 be amended in respect of dividends paid or credited on or after 1 January 2011—

(a) in subsection (2)(b) by substituting “27 per cent” for “25 per cent”, and

(b) in subsection (3)(b) by substituting “27 per cent” for “25 per cent”.

(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 17: Income Tax

(1) THAT section 730F(1) of the Taxes Consolidation Act 1997 (No. 39 of 1997), as respects the happening of a chargeable event in relation to a life policy (within the meaning of Chapter 5 of Part 26 of that Act) on or after 1 January 2011, be amended—

(a) in paragraph (a) by substituting “30 per cent” for “28 per cent”, and

(b) in paragraph (b) by substituting “(S+30) per cent” for “(S+28) per cent”.

(2) THAT Chapter 6 of Part 26 of the Taxes Consolidation Act 1997, as respects the receipt by any person of a payment in respect of a foreign life policy (within the meaning of Chapter 6 of that Part) or the disposal in whole or in part of a foreign life policy (within that meaning) on or after 1 January 2011, be amended—

(a) in section 730J (a)—

(i) in clause (I) of subparagraph (i) by substituting "27 per cent" for "25 per cent",

(ii) in clause (II)(A) of subparagraph (i) by substituting "(S+30) per cent" for "(S+28) per cent",

(iii) in clause (II)(B) of subparagraph (i) by substituting "30 per cent" for "28 per cent", and

(iv) in clause (I) of subparagraph (ii) by substituting "(H+27) per cent" for

"(H+25) per cent",

and

(b) in section 730K—

(i) in paragraph (a) of subsection (1) by substituting “(S+30) per cent” for “(S+28) per cent”, and

(ii) in paragraph (b) of subsection (1) by substituting “30 per cent” for “28 per cent”.

(3) THAT Chapter 1A of Part 27 of the Taxes Consolidation Act 1997, as respects the happening of a chargeable event in relation to an investment undertaking (within the meaning of section 739B(1) of that Act) on or after 1 January 2011, be amended—

(a) in the formula in section 739D(5A) by substituting “(G x 30)” for “(G x 28)”, and

(b) in section 739E(1)—

(i) in paragraph (a) by substituting “27 per cent” for “25 per cent”,

(ii) in paragraph (b) by substituting “30 per cent” for “28 per cent”, and

(iii) in paragraph (ba) by substituting “(S+30) per cent” for “(S+28) per cent”.

(4) THAT Chapter 4 of Part 27 of the Taxes Consolidation Act 1997, as respects—

(a) the receipt by any person of a payment in respect of a material interest in an offshore fund (within the meaning of Chapter 4 of that Part), or

(b) the disposal in whole or in part of a material interest in an offshore fund (within that meaning),

on or after 1 January 2011, be amended—

(i) in section 747D—

(I) in paragraph (a)(i)(I)—

(A) in subclause (A) by substituting "(S+30) per cent" for "(S+28) per cent", and

(B) in subclause (B) by substituting "27 per cent" for "25 per cent",

(II) in paragraph (a)(i)(II)—

(A) in subclause (A) by substituting "(S+30) per cent" for "(S+28) per cent", and

(B) in subclause (B) by substituting "30 per cent" for "28 per cent,",

and

(III) in paragraph (a)(ii)(I) by substituting “(H+27) per cent” for “(H+25) per cent”,

and

(ii) in section 747E(1)—

(I) in paragraph (b)(i) by substituting “(S+30) per cent” for “(S+28) per cent”, and

(II) in paragraph (b)(ii) by substituting “30 per cent” for “28 per cent”.

(5) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 18: Capital Acquisitions Tax

(1) THAT, as respects a gift or an inheritance taken on or after 8 December 2010, the definition of "group threshold" in paragraph 1 of Part 1 of Schedule 2 to the Capital Acquisitions Tax Consolidation Act 2003 (No. 1 of 2003) be amended—

(a) in subparagraph (a) by substituting “€244,000” for “€304,775”,

(b) in subparagraph (b) by substituting “€24,400” for “€30,478”,

and

(c) in subparagraph (c) by substituting “€12,200” for “€15,239”.

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

These financial resolutions set out measures which build upon previous budget measures in broadening the tax base and form part of a move away from taxes on labour and consumption to wealth and sources of wealth. Financial Resolution No. 15 provides for a major reform of the change to stamp duty on transactions of residential property. The change involves simplification of the system by lowering the rates of stamp duty and abolishing a number of exemptions and reliefs. The stamp duty reforms, as announced by the Minister for Finance in the budget, have two aims — stimulation of the property market and commencing the necessary infrastructure for the commitment in the national recovery plan for a site valuation tax.

A new 1% rate is being introduced for all transactions of residential property valued up to €1 million. This represents a significant reduction from the current rate of 7% for amounts between €125,000 and €1 million. A new rate of 2% will apply to amounts above €1 million, replacing the current rate of 9% for these properties.

The changes in rates will act as an important stimulation to the property market by removing uncertainty and will have a positive knock-on effect on connected activities leading to increased revenue for the Exchequer. It will also significantly reduce the cost of house purchase for persons seeking to move home or purchase their first home. For example, the stamp duty on a property valued at €200,000 is €5,250 at the current rate and this will fall to €2,000, representing a saving of €3,250, or 62%. Similarly, a house valued at €300,000 will now be charged at €3,000 instead of €12,250.

In line with the base-broadening measures in this budget and to pay for the new rates, the Minister will abolish all existing reliefs and exemption stamp duty on residential property including first-time buyer's relief, relief from stamp duty on new houses under 125 sq. m, reduced stamp duty on new houses over 125 sq. m, relief in respect of residential property transfer and exemption for residential property valued under €127,000.

In addition, he is abolishing the site to child relief from stamp duty, which is the relief applying to transfers of site from a parent to a child under an acre in size and below €500,000 in value for the purposes of building a house for occupation by the child.

Some house purchasers will now be liable to stamp duty and a small number purchasing second hand houses valued below €145,833 will have to pay more than previously. However, the recent fall in property prices means the overall cost in the transaction for purchasers is much lower than the majority of purchasers would pay.

The new rates will apply to property transfers on or after 8 December 2010. A transitional provision will be put in place to ensure anyone who has entered into a binding contract to purchase a residential property before 8 December and who executes the transfer of that property before 1 July next will not be disadvantaged. It should be noted that as a result of the changes, stamp duty will now be payable in all residential property transactions, and this information will be used to compile a database of house valuations which will underpin the development of the new site value tax announced in the national recovery plan. The finance Bill will contain details of this database, which will be established in advance of the site valuation tax.

Financial Resolution No. 16 amends section 256(1) of the Taxes Consolidation Act 1997 to give statutory effect to the new rates of DIRT applicable to deposits held in banks and other financial institutions. The changes in rates are as follows. The general 25% rate which applies to deposit interest, including deposit interest arising on special savings and special terms accounts, will be increased by two percentage points to 27%. In addition, the 28% rate is also being increased by two percentage points to 30%, and this rate applies to interest not payable annually or at more frequent intervals, or where the interest cannot be calculated until maturity of the investment. This includes investments such as tracker bonds, where the amount of interest payable depends on the changes in the financial or other index over a number of years. The resolution also amends section 267B of the Taxes Consolidation Act.

The measures relating to DIRT in this budget build upon measures undertaken in earlier budgets by the Minister. The rate increased from 20% to 23% in the 2009 budget and from 23% to 25% in the 2009 supplementary budget. These changes form part of a move from taxes on labour and consumption, as I stated earlier. In overall terms, the combined projected additional yield from the budget DIRT exit tax changes is estimated to be €22.5 million in 2011 and €30 million in the full year.

Financial Resolution No. 17 gives statutory effect to the budget announcement that the rate of tax applying to life assurance policies and investment funds is being increased with effect from 1 January. This amendment applies to the rates of exit taxes on domestic life assurance policies and investment undertakings under the gross roll-up regime introduced in the Finance Act 2000. It also increases the rates of taxes which apply to profits and gains on life assurance policies and investment funds in other EU member states, EEA states and OECD countries with which Ireland has double tax agreements.

Under gross roll-up investments, investments may accumulate without the imposition of a tax. However, an exit tax applies when a chargeable event occurs, such as the receipt of payments from or the disposal of investments in the life policy or fund, or the ending of each eight-year period following the acquisition of the policy or the units in the fund. There are varying rates of tax in these investments, depending on the frequency of payments to the investor, and additionally in the case of the foreign investments, on whether the income or gains are correctly included in the investor's tax return.

An Leas-Cheann Comhairle

There are many speakers looking to contribute to the section.

Deputy Mary Harney

Financial Resolution No. 18 relates to capital acquisitions tax. This modifies group (a), (b) and (c) tax-free thresholds by 20%. These group thresholds depend on the relationship of the person making the gift or inheritance to the beneficiary of that gift or inheritance. The current thresholds are €414,799 for group A, and this will be reduced to €332,084; group B is reduced from €41,481 to €32,108; and group C moves from €15,239 to €16,604.

An Leas-Cheann Comhairle

I ask Deputies to be as brief as possible.

Deputy John O’Donoghue

I very much welcome the Government's decision to introduce the new flat rates of 1% and 2% for stamp duty, as it is a progressive move. Unfortunately, over the years successive Governments began to recognise stamp duty as a revenue gathering exercise but historically it was never meant to be so; it was originally introduced in order to keep a record of the housing stock and sale and purchase of same. As the years rolled on it became a tax-collection exercise. The fact that there were different percentages for different valuations illustrated beyond any doubt that what I am saying was the intention.

As the property market expanded, the return from this tax, as it became, increased. As the volatility of the market surged, the amount of tax yielded from stamp duty increased in parallel. It gave a false impression and heralded false dawns, and the fact that it was meant in the first analysis to be a register of properties as opposed to a revenue gathering exercise was forgotten, and to be truthful, it became a convenient and subtle way — if I might use the term — to collect funds from citizens. Naturally, there was a tendency by all Governments not to upset the apple cart and it was never upset to any great extent until today.

The new provision will create a great deal of certainty in how to proceed in future on valuations and allow us to understand, perhaps for the first time in many decades, precisely how we stand regarding the value of property in this country. It will also provide us with a valuation base for property.

I am not given to the overestimation of officials in the Department of Finance, no more than I am given to underestimating the proficiency of the Department, nor would I for one moment accuse them of subterfuge because I know them to be very honest and decent civil servants. However, I am slightly concerned about the statement to the effect that today's provision helps us to form a valuation base. I hope that in future this will not be a valuation base or springboard to a property tax.

Deputy Pat Rabbitte

I do not disagree with the history provided by Deputy O'Donoghue on stamp duty and how it came to play such a significant role in the property transactions which took place here over the past 15 years in particular. It is not quite true to say nobody upset the apple cart as I remember a former colleague of the Minister for Health and Children famously announcing that his party had decided to abolish stamp duty. The quote is indelibly framed in my mind as he said we "did not need the money". How things have changed, as we need it now.

The only question which arises is how fair is this provision. Is this preparatory to the introduction of a property tax? Is this an interim measure or is this likely to be a permanent feature of the landscape? I ask the Minister to address that issue.

The current exemptions, which it is proposed to abolish, are not entirely to be sneezed at. The reliefs and exemptions which applied for property below a certain valuation and, in the case of first-time buyers, to houses below a certain square footage are not inconsequential. I ask the Minister to address that issue.

On the issue of DIRT, I am not sure I understand the difference between the two DIRT rates. What is a long-term DIRT account as distinct from an ordinary DIRT account? Are the former savings accounts which mature after three or five years and to which the higher DIRT rate applies? In the circumstances in which we find ourselves we cannot very much disagree with the measure.

The subsequent resolutions in respect of tackling the increase in the rate of life assurance exit tax and reducing the thresholds for capital acquisitions tax are not designed to yield a great deal of income and the Labour Party does not take particular exception to them.

The debate should focus on stamp duty. Is it envisaged that the proposed changes will be permanent? I ask the Minister to respond on the exclusion of current exemptions and indicate how the changes will knit into the finance Bill in terms of the property tax about which the Government gave a commitment to Ajai when he was here. Will Mr. Chopra be on the telephone to find out how this tax is to be implemented if we depart from it in any way?

Deputy Enda Kenny

He may not get through.

Deputy Brian Hayes

The accompanying documentation provided indicates that revenue from stamp duty in 2011 is expected to be €36 million over the full year. On how many transactions is this estimate based? I am not aware of many transactions being completed last year. Certainly the difference between the projected figure and the many billions of euro collected in stamp duty in the past ten years is significant.

I concur with Deputy O'Donoghue that the introduction of levies of 1% on all transactions up to €1 million and 2% on all transactions of more than €1 million will bring some element of certainty to the stamp duty regime. I suspect, however, that there are few houses in my constituency or that of the Minister which will sell for more than €1 million.

The debate on the stamp duty measure ignores one group which is about to be clobbered again. I refer to those who are caught in negative equity. Let us consider the case of a couple who bought their home for €400,000 or €500,000 at the height of the boom and paid the guts of €50,000 to the State by way of stamp duty. The value of their asset will have reduced by 40% or 50% and may be worth €300,000. If they are fortunate enough to be able to afford to sell their home, they will be hit a second time. Changes in the stamp duty regime and measures elsewhere in the budget do not do anything for those, including many of our constituents who are caught in negative equity.

Not once in his Budget Statement did the Minister for Finance refer to those caught up in this position. Notwithstanding that the measures will move us towards a better stamp duty system, one group is trapped in a nightmare. They were hit by the initial stamp duty they paid to the State, hit a second time by a substantial fall in the value of their asset and will be hit a third time if they are lucky enough to sell their house.

Deputy Arthur Morgan

Some of the proposed changes, especially the measures on stamp duty, are somewhat academic because I do not envisage they will deliver a substantial increase in revenue to the Exchequer. People cannot secure loans to purchase a second-hand car, much less obtain substantial mortgages to purchase homes. I used the qualification "somewhat" when I described the changes as academic because the second element of this measure is that it will function as an intelligence gathering exercise. I concur with Deputy O'Donoghue that the proposal lays a foundation for a property tax as it will provide some indication of house values. It is typical of the Government to seek to introduce a property tax rather than a wealth tax. Taxing people who can barely pay their mortgages or in some cases cannot pay them is hardly a correct or wise approach.

I welcome the proposal to increase DIRT tax from 25% to 27%, although I would have preferred the rate to increase to 30%. Such a measure could be a little unfair but it would encourage people to utilise their money by investing it or putting it to uses other than allowing it to lie idle in banks. To that extent, the 2% increase in DIRT tax is useful.

Deputy Seán Ardagh

I support the reduction in the stamp duty rates to 1% and 2% and hope the measure will boost the housing market. The banks must come up to the mark following this measure because people who are seeking loans and are capable of repaying them are being stymied by banks' refusing to lend to them.

While I acknowledge Deputy Rabbitte's point regarding the abolition of exemptions for first-time buyers and purchases of houses with certain floor areas and so forth, all taxes should be made as simple as possible. In this respect, the introduction of a 1% rate of stamp duty for properties sold for less than €1 million and a 2% rate for properties sold for in excess of €1 million is the correct approach.

Deputy Noonan suggested that the National Asset Management Agency should dump a couple of billion euro worth of housing on the market to achieve floor prices. I agree with the thinking behind the Deputy's proposal, albeit not the process. Recently, a number of housing estates were placed on the market by receivers or liquidators at low prices. NAMA and the banks should exert pressure to accelerate the process in respect of companies that are in dire trouble from which they will not be able to emerge. A housing bank should be placed on the market to create a floor in prices.

I concur with Deputy Morgan on the changes to DIRT tax. An increase of 2% in the rate is reasonable because a substantial amount of the money held in savings should be invested in businesses to create employment.

An Leas-Cheann Comhairle

I call Deputy Ciarán Lynch and ask him to be brief.

Deputy Ciarán Lynch

I would like to speak for as long as previous speakers.

An Leas-Cheann Comhairle

As only ten minutes are available, I would like to leave some time for the Minister to respond.

Deputy Ciarán Lynch

We are witnessing a deathbed conversion by the Government on the question of tax versus property reliefs and a belated admission that the latter are unsustainable. The exemption threshold for stamp duty is set at €127,000, a modest price to pay for a house even in today's deflated market. Why was consideration not given to introducing a baseline threshold of 1% on house purchases? A threshold creates circumstances in which people become fearful of exceeding the sum in question and inhibits prices from exceeding a certain level.

I would like to hear what consideration was given to introducing a 1% tax on the first euro spent on the purchase of a house.

Another issue mentioned by Deputy Hayes and other speakers was negative equity which, according to figures, will generate an estimated income of €36 million next year. I am not sure how that figure was arrived at given that the market is not active in any way and when there are people are in negative equity the chances of second-hand home sales taking place next year will be very low. A particular concern is repossession whereby a person's home is sold against his or her will. Will the 1% tax apply? Will the person be taken to the High Court, have the home repossessed and when banking and legal fees are cleared remain in negative equity after the sale with a tax to pay as an additional penalty?

The language used by the Minister today is very worrying. He spoke about stimulating the property market. This was the type of language that got us into the difficulty in the first instance. The situation was that investment property was favoured over residential home occupation. I am very concerned to hear this sort of language being reintroduced. What we need to see in the housing market is normalisation whereby residential ownership is preferred over investment development. Key to that, although it seemed to be secondary in the Minister's presentation, is the issue of a house price register database. That appears to be an aside to the taxation model after which, when the taxation measures are put in place, we will consider having a house price register database. We should have heard about such a database tonight because it is a key issue and an immediate priority. It would provide the sort of normalisation that would bring back confidence to the housing market.

Deputy Joanna Tuffy

When the Government tinkered with stamp duty previously the predicted consequences did not happen. What was said would happen did not transpire; very often the opposite effect was seen in the property market.

We are being given very little information as to the reasoning of the Government in this respect and it would have been much more helpful, for example, had we been given a table with the old stamp duty rates being compared to the proposed rates. I note, for example, that, on page 33, 2% is substituted for 9%. Will the Minister clarify what the 9% figure comprised? Why is 2% being substituted? I have a vague idea what may be the reason but perhaps the Minister will clarify. The point needs to be made that whatever were the wrongs of the previous stamp duty regime, it did not cause the property bubble. The fact that we were getting so much money from stamp duty may have made the Exchequer too reliant on the property bubble but stamp duty of itself did not cause the bubble. One point about the old regime was that people were differentiated. First-time buyers were differentiated from investors. That seems to have gone now and everybody is to be treated the same way. We may want to get the property market moving again but we do not want to encourage and help vulture investors to come here and buy property on the cheap. Will the Minister explain what the 9% charge was so that we may be sure about what we are doing?

Deputy Noel Ahern

I welcome the change. I understand the point some Members are making. They regret that first-time buyers will not get the benefits they previously did. Traditionally, we always tried to stand up for and support the first-time buyer but, to be fair, such buyers are no longer the most needy group.

Deputy Joanna Tuffy

Are investors the needy group?

Deputy Noel Ahern

If such buyers can get a loan, they do rather well. The group people want to help now are those who bought houses or, in particular, apartments, some years ago and now want to trade up and buy a family home but are in negative equity. We probably cannot do anything very positive for them but at least we are now asking them to pay only 1% if they trade up with their negative equity rather than whatever the rate was — 5%, 7%, 9%, or whatever. This measure goes some way towards rectifying the situation for the group which is most needy at present.

Deputy Mary Harney

The Commission on Taxation recommended that we substantially lower the rate of stamp duty but broaden its base and the Minister clearly took that on board in his budgetary decision to make the rate 1% or 2%. I am trying to remember what the previous higher rate applied to; I believe it was €655,000. The first €125,000 had a zero rate, the next €875,000 was at 7% and for a price higher than that the rate was 9%. As I understand it, when one went over that price one paid 9% on everything. I remember during the last election, which seems such a long time ago, my colleague suggested that instead of jumping from 7% to 9% and paying 9% on everything that the rate be tiered. The situation may have changed even since then. At the time we were running enormous surpluses, as everybody knows.

The idea now is that everybody will pay something, either 1% or 2%, which is reasonable. In order to broaden the base there are to be no exemptions, including for new houses or lower-priced second-hand houses. It is not a prerequisite for a property tax but will provide key information and a database in regard to site and property values which we have not had before. I have no doubt that such a database will be important in informing all of us about the upcoming site valuation tax which is mentioned in the four year plan.

Deputy Rabbitte raised the issue of DIRT. As I understand it, there are differences in products sold by insurance or investment holding companies, such as collective investment undertakings where interest is not paid on an annual or fixed basis but is rolled up and paid infrequently or on the maturity of the investment. When I asked if the 30% rate equates with the 28% rate on deposits and savings accounts where interest is paid frequently I was advised it is not scientific but is as close as possible to equating the two situations, as between——

Deputy Pat Rabbitte

I also intended to ask the Minister about age exemptions.

Deputy Mary Harney

We dealt with that before. They are being reduced by 10% and 25%, namely, 10% on credits and 25% otherwise. The same reduction of 25% applies to DIRT.

An Leas-Cheann Comhairle

Does Deputy Rabbitte wish to speak again?

Deputy Pat Rabbitte

I ask specifically about DIRT and about people who are retired or on pension, who have a nest egg or whatever. They saw the tax gradually rising from 20% in recent years to virtually 30% in some cases. I ask the Minister to clarify at what age exemptions will apply after this measure is implemented.

Deputy Brian Hayes

I have a brief supplementary question. There was a reference in the Minister's speech to a new discounted tenant household purchase scheme in which an additional discount would be given to tenants who wished to purchase their local authority home. Will the new stamp duty regulations apply in that case, given that the transactions are less than €1 million?

Deputy Mary Harney

I will have to take advice on that because I understand the officials, too, must reflect on it.

Deputy Ciarán Lynch

Perhaps I may be of assistance to the House. The Minister proposes that the current tenancy purchase programme, at 3% for a maximum of ten years, will now be extended to 15 years, giving a 45% reduction in the purchase price of the local authority house. Two years ago during discussion on the Housing (Miscellaneous Provisions) Bill we proposed this to the Minister but he did not accept it at the time. If a person purchases a property from a local authority through a tenant purchase programme, will stamp duty apply?

Deputy John O’Donoghue

It is the €1 million question.

Deputy Mary Harney

Off the top of my head, if we are talking about everybody being equal, I would imagine it does, once one takes off the discount on the amount one actually pays. The officials will clarify that for me.

With regard to the exemption from DIRT, the annual exemption limit is currently €20,000 in the case of a single person and €40,000 in the case of a married couple. That has now been reduced to €18,000 and €36,000 respectively.

An Leas-Cheann Comhairle

As it is now 10.10 p.m. I am required to put the question in accordance with the Order of the Dáil of this day.

Minister for Defence (Deputy Tony Killeen)

I move the following Financial Resolutions:

Financial Resolution No. 19: Corporation Tax

(1) THAT Schedule 24 to the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended in paragraph 4 by adding the following after subparagraph (5)—

"(6) (a) The provisions of subparagraph (5), in relation to the allocation of deductions, shall not apply to relevant trading charges on income.

(b) For the purposes of clause (a) ‘relevant trading charges on income’ has the same meaning as in section 243A.”.

(2) THAT this Resolution shall have effect—

(a) for an accounting period of a company for which the return under section 951 of the Taxes Consolidation Act 1997 for the purposes of corporation tax is made by the company on or after 7 December 2010, and

(b) for any other accounting period, in relation to any claim to repayment of, or reduction of liability to, corporation tax for that accounting period where such claim is made on or after 7 December 2010.

(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 20: Income Tax and Corporation Tax

(1) THAT section 372AP of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended with effect as on and from 7 December 2010—

(a) in subsection (1), in the definition of “relevant period”—

(i) in paragraph (b)(ii) by substituting “after the date of such completion,” for “after the date of such completion;”, and

(ii) by inserting the following after paragraph (b)(ii):

"but in relation to a premises which is not a qualifying premises or a special qualifying premises on 30 June 2011 solely by virtue of not being let on that day under a qualifying lease, the relevant period shall begin on that day and this Chapter shall apply accordingly;",

(b) in subsection (2) by substituting “Subject to subsections (3), (4), (5), (8A), (8B) and (8C),” for “Subject to subsections (3), (4) and (5),”,

(c) in subsection (3) by inserting the following after paragraph (b):

"(c) For the purposes of paragraph (a) and notwithstanding paragraph (b), no deduction shall be given under subsection (2)(a) for any chargeable period which begins after the chargeable period in which the relevant period ends.”,

(d) in subsection (8) by inserting the following after paragraph (b):

"(c) Notwithstanding any other provision of this section, paragraph (a) shall not apply where the event mentioned in subsection (7)(b) occurs on or after 1 January 2011.”,

and

(e) by inserting the following after subsection (8):

"(8A) Where the relevant period in relation to any qualifying premises or any special qualifying premises ends in any chargeable period ending—

(a) before 1 January 2011, or

(b) at any other time,

then section 384 shall not apply to the amount of any excess (within the meaning of section 384(2)) in respect of eligible expenditure on that premises which is carried forward from that chargeable period—

(i) where paragraph (a) applies, to the chargeable period ending in 2011 and each subsequent chargeable period, and

(ii) where paragraph (b) applies, to the next subsequent chargeable period and each subsequent chargeable period.

(8B) (a) Where, by virtue of subsection (2), any eligible expenditure to which this section applies falls to be taken into account for any chargeable period ending on or after 1 January 2011 in computing, under section 97(1), a deficiency in respect of any rent from a qualifying premises or a special qualifying premises, then, notwithstanding subsection (2), only so much of that eligible expenditure as does not exceed the amount of that rent shall be so taken into account and paragraph (b) is to apply as respects each subsequent chargeable period to any excess of that eligible expenditure over the amount of that rent (referred to in this subsection as ‘excess expenditure’).

(b) Where, as respects each chargeable period to which paragraph (a) applies, there is an amount of excess expenditure, that amount shall be treated, for the purposes of subsection (2) and this subsection, as if it were eligible expenditure to which this section applies which, by virtue of subsection (2), falls to be taken into account for the next succeeding chargeable period in computing under section 97(1) a surplus or deficiency in respect of any rent from the qualifying premises or the special qualifying premises.

(8C) For the purposes of subsections (8A) and (8B), section 485C(3)(ab) and paragraph 4 of Schedule 25C shall apply in determining the amount of any relief, to which this Chapter applies, to be carried forward from any chargeable period to each subsequent chargeable period.”.

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 21: Income Tax and Corporation Tax — Property Incentives (Capital Allowances)

(1) THAT in this Resolution—

"active partner" has the same meaning as in section 409A of the Principal Act;

"active trader" has the same meaning as in section 409D of the Principal Act;

"area-based capital allowance" has the meaning assigned to it by paragraph (5) of this Resolution;

"balancing allowance" means any allowance made under section 274 of the Principal Act;

"capital allowance" means any allowance or part of any allowance specified in paragraph (2) or (5) of this Resolution;

"chargeable period" has the same meaning as in section 321 of the Principal Act and a reference to a chargeable period or its basis period shall be construed in accordance with section 321(2) of that Act;

"Principal Act" means the Taxes Consolidation Act 1997 (No. 39 of 1997);

"relevant interest" has the same meaning as in section 269 of the Principal Act;

"residue of expenditure" shall be construed in accordance with section 277 of the Principal Act;

"specified capital allowance" has the meaning assigned to it by paragraph (2) of this Resolution;

"specified relief" has the same meaning as in section 485C of the Principal Act;

"Tax Acts" has the same meaning as in section 1 of the Principal Act;

"tax year" means a year of assessment within the meaning of the Tax Acts;

"writing down allowance" means any allowance made under section 272 of the Principal Act and includes any such allowance as increased under section 273 of that Act.

(2) THAT in this Resolution "specified capital allowance" means—

(a) any writing down allowance made for a chargeable period, including any such allowance or part of such allowance made for a previous chargeable period and carried forward from that previous chargeable period in accordance with Part 9 of the Principal Act,

(b) any balancing allowance made for a chargeable period, including any such allowance or part of such allowance made for a previous chargeable period and carried forward from that previous chargeable period in accordance with Part 9 of the Principal Act, or

(c) any allowance made under Chapter 1 of Part 9 of the Principal Act as that Chapter is applied by section 372AX, 372AY, 843 or 843A of the Principal Act for a chargeable period, including any such allowance or part of such allowance made for a previous chargeable period and carried forward from that previous chargeable period in accordance with Part 9 of the Principal Act,

that is a specified relief.

(3) THAT, notwithstanding any other provision of the Tax Acts, as respects the tax year 2011 and each subsequent tax year, the amount in relation to a building or structure of any specified capital allowance that is carried forward in accordance with either section 304 or 305 of the Principal Act to the tax year 2011 or any subsequent tax year, being a tax year that is—

(a) 7 years after the year in respect of which such a capital allowance was first made in relation to the building or structure, in a case where the first such allowance was made at a rate equal to 15 per cent, or

(b) 10 years after the year in respect of which such a capital allowance was first made in relation to the building or structure, in a case where the first such allowance was made at a rate equal to 10 per cent,

shall, subject to paragraph (9) of this Resolution, be zero for all the purposes of the Tax Acts.

(4) THAT, notwithstanding any other provision of the Tax Acts, the amount in relation to a building or structure of any specified capital allowance that—

(a) is available to be carried forward, in accordance with section 308(3) of the Principal Act, to an accounting period beginning on or after 7 December 2010, or

(b) may, in accordance with section 308(4) of the Principal Act, be set against the profits of an accounting period preceding any accounting period beginning on or after 7 December 2010,

being an accounting period that begins—

(i) 7 years after the year in respect of which a capital allowance was first made in relation to the building or structure, in a case where the first such allowance was made at a rate equal to 15 per cent, or

(ii) 10 years after the year in respect of which a capital allowance was first made in relation to that building or structure, in a case where the allowance was made at a rate equal to 10 per cent,

shall be zero for all the purposes of the Tax Acts.

(5) THAT in this Resolution "area-based capital allowance" means—

(a) any allowance made under Chapter 1 of Part 9 of the Principal Act as that Chapter is applied by section 323, 331, 332, 341, 342, 343, 344, 352, 353, 372C, 372D, 372M, 372N, 372V, 372W, 372AC or 372AD of the Principal Act for a chargeable period, including any such allowance or part of such allowance made for a previous chargeable period and carried forward from that previous chargeable period in accordance with Part 9 of the Principal Act, or

(b) any allowance made under Chapter 1 of Part 9 of the Principal Act as that Chapter is applied by virtue of paragraph 11 of Schedule 32 to the Principal Act for a chargeable period, including any such allowance or part of such allowance made for a previous chargeable period and carried forward from that previous chargeable period in accordance with Part 9 of the Principal Act.

(6) THAT, as respects any chargeable period beginning on or after 7 December 2010 and notwithstanding any other provision of the Tax Acts—

(a) the amount of any area-based capital allowance, other than such an allowance made under section 274, for a chargeable period (in this paragraph referred to as the “first-mentioned chargeable period”) to be made in relation to a building or structure shall, instead of being determined in accordance with the provisions of the Tax Acts as they applied immediately before the passing of this Resolution and subject to subparagraph (c) of this paragraph, be an amount determined in accordance with subparagraph (b) of this paragraph,

(b) the amount referred to in subparagraph (a) of this paragraph is an amount given by the formula—

A ×1

B

where—

Ais the residue of expenditure calculated as if the relevant interest in the building or structure had been sold on the last day of the chargeable period or its basis period that immediately preceded the first-mentioned chargeable period, and

Bis the number of years or accounting periods, as the case may be, remaining in the period of 7 years beginning with the year or accounting period in which a capital allowance was first made in relation to that building or structure,

(c) the amount of any area-based capital allowance to be made in relation to a building or structure, including any allowance made in accordance with paragraph (a) of this paragraph, shall, for all the purposes of the Tax Acts, be reduced, subject to paragraph (9) of this Resolution, to an amount that is equal to 80% of what that allowance would otherwise be if this subparagraph did not have effect, and

(d) where subparagraph (c) of this paragraph applies in respect of any capital allowance it shall not apply again as respects that allowance or any part of that allowance that is carried forward in accordance with section 303, 304 or 308, as the case may be, of the Principal Act to any other chargeable period that falls into the remaining period referred to in the meaning of “B” in subparagraph (b) of this paragraph.

(7) THAT, notwithstanding any other provisions of the Tax Acts, as respects the tax year 2011 and each subsequent year—

(a) the amount of any area-based capital allowance to be made in relation to a building or structure, and

(b) the amount of any area-based capital allowance in relation to a building or structure to be carried forward in accordance with either section 304 or 305 of the Principal Act as those provisions are applied or modified by any other provision of the Tax Acts,

shall, subject to paragraph (9) of this Resolution, be zero for all the purposes of the Tax Acts where the allowance is made for, or carried forward to, a tax year that is 7 years after the tax year in respect of which a capital allowance was first made in relation to that building or structure.

(8) THAT, notwithstanding any other provision of the Tax Acts—

(a) the amount of any area-based capital allowance to be made in relation to a building or structure,

(b) the amount of any such allowance that is available to be carried forward in accordance with section 308(3) of the Principal Act to an accounting period beginning on or after 7 December 2010, or

(c) the amount of any such allowance that may be set, in accordance with section 308(4) of the Principal Act, against the profits of an accounting period preceding any accounting period to which subparagraph (a) of this paragraph applies,

shall be zero for all the purposes of the Tax Acts where the allowance is made for, or carried forward to, an accounting period that is 7 years after the accounting period in respect of which a capital allowance was first made in relation to that building or structure or is available for setting against the profits of a preceding accounting period that is 6 years after the accounting period in respect of which a capital allowance was first made in relation to that building or structure.

(9) THAT—

(a) paragraphs (3), (6) and (7) of this Resolution shall not apply to an individual where any specified capital allowance or area-based capital allowance is made in taxing a trade in relation to which trade the individual is an active partner or an active trader, and

(b) paragraph (6) of this Resolution shall not apply to a company where any specified capital allowance or area-based capital allowance is made in taxing that company’s trade.

(10) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 22: Income Tax and Corporation Tax — Property Incentives (Restriction of Capital Allowances)

(1) THAT in this Resolution—

"active partner" has the same meaning as in section 409B of the Principal Act;

"active trader" has the same meaning as in section 409D of the Principal Act;

"balancing allowance" means any allowance made under section 274 of the Principal Act;

"capital allowance" means any allowance or part of any allowance, to which paragraph (2) of this Resolution applies;

"chargeable period" has the same meaning as in section 321 of the Principal Act and a reference to a chargeable period or its basis period shall be construed in accordance with section 321(2) of that Act;

"Principal Act" means the Taxes Consolidation Act 1997 (No. 39 of 1997);

"specified amount of rent", in relation to a building or structure and a person for a chargeable period, means the amount of the surplus in respect of the rent from the building or structure to which the person becomes entitled for the chargeable period, as computed in accordance with section 97(1);

"specified relief" has the same meaning as in section 485C of the Principal Act;

"Tax Acts" has the same meaning as in section 1 of the Principal Act;

"writing down allowance" means any allowance made under section 272 of the Principal Act and includes any such allowance as increased under section 273 of the Principal Act;

"year of assessment" has the same meaning as in section 2 of the Principal Act.

(2) THAT this paragraph applies to —

(a) any writing down allowance made for a chargeable period, including any such allowance or part of such allowance made for a previous chargeable period and carried forward from that previous chargeable period in accordance with Part 9 of the Principal Act,

(b) any balancing allowance made for a chargeable period, including any such allowance or part of such allowance made for a previous chargeable period and carried forward from that previous chargeable period in accordance with Part 9 of the Principal Act,

(c) any allowance made under Chapter 1 of Part 9 of the Principal Act as that Chapter is applied by section 323, 331, 332, 341, 342, 343, 344, 352, 353, 372C, 372D, 372M, 372N, 372V, 372W, 372AC, 372AD, 372AX, 372AY, 843 or 843A of the Principal Act for a chargeable period, including any such allowance or part of such allowance made for a previous chargeable period and carried forward from that previous chargeable period in accordance with Part 9 of the Principal Act, and

(d) any allowance made under Chapter 1 of Part 9 of the Principal Act as that Chapter is applied by virtue of paragraph 11 of Schedule 32 to the Principal Act for a chargeable period, including any such allowance or part of such allowance made for a previous chargeable period and carried forward from that previous chargeable period in accordance with Part 9 of the Principal Act,

that is a specified relief.

(3) THAT, notwithstanding any other provision of the Tax Acts, as respects the year of assessment 2011 and each subsequent year of assessment where, in the case of an individual who carries on a trade, including a trade carried on by 2 or more individuals in partnership, otherwise than as an active trader or an active partner, a capital allowance, in relation to a building or structure, is made to the individual either in taxing that trade or by means of discharge or repayment of tax to which the individual is entitled by reason of the individual carrying on the trade concerned, then—

(a) the capital allowance shall be made to the individual only in computing the income or profits from the trade concerned, and

(b) the capital allowance shall not be made in computing any other income or profits or in taxing any other trade or in charging any other income to tax.

(4) THAT, notwithstanding any other provision of the Tax Acts, as respects any chargeable period commencing on or after 7 December 2010, in computing the amount of profits or gains for the purposes of Case V of Schedule D—

(a) any capital allowance in respect of a building or structure to be made to a person shall —

(i) not exceed the specified amount of rent from the building or structure for that chargeable period,

(ii) be made in charging the specified amount of rent under Case V of Schedule D for that chargeable period, and

(iii) be available in charging the specified amount of rent,

(b) section 278 of the Principal Act shall apply with any modifications necessary to give effect to subparagraph (a) of this paragraph, and

(c) section 305(1)(c) shall apply in relation to a capital allowance to be made in accordance with subparagraph (a) of this paragraph.

(5) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 23: Income Tax — Artists’ Exemption

(1) THAT section 195(3) of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended as respects the year of assessment 2011 and each subsequent year of assessment-----

(a) in paragraph (a), by substituting “subject to paragraphs (aa) and (b)” for “subject to paragraph (b)”, and

(b) by inserting the following after paragraph (a):

"(aa) The amount of the profits or gains which shall be disregarded for the purposes of the Income Tax Acts by virtue of paragraph (a) shall not exceed €40,000 for a year of assessment.”.

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

I wish to deal with Financial Resolutions Nos. 19 to 23, inclusive. Financial Resolution No. 19 deals with the treatment of relevant trading charges on income and the compensation of the relief due in respect of foreign tax paid by a company on its foreign income. In general, relevant trading charges on income are paid on royalties paid in the course of a trade. Schedule 24 of the Taxes Consolidation Act 1997 sets out how the amount of such relief is computed.

Paragraph 4(5) of that Schedule 24 permits a company to allocate certain charges on income as it thinks fit for this purpose. It has been generally accepted that paragraph 4(5) does not permit a company to allocate relevant trading charges on the income in this matter. This financial resolution puts the position beyond doubt. The resolution will be effective as from today. It will apply to, first, all returns for corporation tax, second, all claims to repayment of corporation tax and, third, all claims to reduction of liability to corporation tax made to the Revenue Commissioners from today.

Financial Resolutions Nos. 20 to 22, inclusive, deal with the restriction and the phased abolition of property based legacy reliefs related to section 23 type reliefs on capital allowances. In the period since budget 2006, virtually all the area based and property tax incentive schemes have been terminated. Subject to transitional arrangements on projects already in the pipeline, all of the urban renewal, town renewal, rural renewal, accelerated capital allowances for hotels, capital allowances for holiday cottages, student accommodation, multistorey car parks, third level educational buildings, sports injury clinics, park and ride facilities and general rental refurbishment schemes have by now come to an end. In addition, most of the remaining property reliefs in the health and child care areas have been abolished, with similar transitional arrangements.

Different variations of these schemes have been in existence in one shape or another since the early 1980s and even though the schemes have, by and large, ended, there is still an ongoing legacy cost to the Exchequer as the various tax reliefs which were originally given are gradually being used up by the investors. The Government has clearly stated in the national recovery plan that in current circumstances it is no longer acceptable that measures abolished as far back as 2006 should continue to cost almost €400 million per annum. We have committed to the phased abolition of these legacy reliefs over the period of the plan.

The restriction of reliefs measure which was introduced in 2007 and further enhanced in 2010 has already curtailed the ability of individuals to utilise these reliefs, thereby spreading the cost over a much longer period. Although the annual Exchequer cost of these schemes is expected to decline in future years anyway, the way in which the reliefs are claimed against taxable income means it may take considerable time before the tax system is finally clear of them. In the context of the national recovery plan, the Government has decided to take steps to curtail this legacy cost over a much shorter and definite time period. These steps are provided for in Financial Resolutions Nos. 20 to 22, inclusive, which will commence with immediate effect.

There are two broad categories of tax relief which are addressed in these measures and they apply equally to companies and to individuals. These are tax relief for residential rental accommodation, commonly known as section 23 type relief, and accelerated capital allowances in regard to the provision of a wider variety of buildings and structures. These allowances can be made over seven, ten and greater than ten year periods, depending on the circumstances. The third category of residential relief which applies to owner occupiers is unaffected by these current measures. There is a natural end date to this form of relief in any case.

Under the heading of section 23 type relief, the following changes are being introduced with immediate effect. The current rules require that to avail of the relief the property must be let under a qualifying lease for the first ten years. From 1 January 2011 any relief which is not used in the ten year period will be automatically lost. Properties which have already passed the ten year deadline will not be allowed to carry unused relief forward in 2011 while all other properties will lose it once the ten year deadline has been reached.

Until now, section 23 type relief can be set against all rental income of that person. From 1 January 2011 the use of the relief will in all cases be restricted solely to rental income from the section 23 property itself. Currently, when a person sells a section 23 property within the ten year period, any relief already given to him or her is clawed back and given to the new owner, who only has to hold the property for the balance of the period. From 1 January 2011 the claw-back will continue to apply but the new owner will get none of the relief.

Finally, for section 23 properties which remain unsold as of 30 June 2011, the ten year period will begin on that day. If such a property is not sold for a further two years, for example, there will only be a further eight years in which to claim the relief. In effect, this new measure will ensure that all section 23 type relief will end by 30 June 2021.

Under the heading of capital allowances there are two discrete but interlinked classes of changes which are being introduced in these financial resolutions. The first change will narrow the range of incomes to which the allowances can apply while the second change will curtail the ability of the person to carry forward unused allowances beyond certain deadlines. All of these measures apply with effect from today. The measures will only apply to capital allowances arising under the various incentive schemes to which I referred earlier and only to persons who are passive investors in the relevant businesses. By that, I mean those who are not actively engaged in the conduct of the respective businesses. These prescriptions are already well understood and are already provided for in a related context in tax law.

With immediate effect, where any individual becomes entitled to capital allowances in respect of a building or structure for use in a trade, those allowances may only be set against the income of that trade. The allowances can no longer be used against income from another trade or against any other form of income. This restriction will apply to allowances arising in any particular year as well as those carried forward from a previous year.

Where a person has let a building or structure and is receiving rental income from it, capital allowances may only be set against the rental income from the building or structure itself. This restriction is analogous to one restricting the use of section 23 type relief. Currently, the rate at which normal capital allowances for industrial buildings is given is 4% per annum over 25 years. Under the various property and area based tax incentive schemes, this period can be shortened to seven or ten years, and in some cases to periods greater than ten years but less than 25 years. Obviously, the annual rate of allowances is higher when the period is shorter, and these are commonly known as accelerated capital allowances.

The changes which are being introduced will apply with effect from today and are as follows. For the seven and ten year schemes, any unused capital allowances carried forward beyond the seven or ten year end dates will be lost. This will apply both to circumstances where the end date has yet to be reached and those where the date is already passed. In the latter case, the carried forward amount will be lost immediately. Where the capital allowance is given over a period greater than ten years, this period is now being revised downwards to seven years from the year it was first claimed. The consequences of this are that, in circumstances where this seven year period has already elapsed, any capital allowances which have yet to be given, as well as those carried forward in the current year, will be lost. Where the seven year period has not elapsed, the aggregate of capital allowances not yet given by that time will be reduced by 20% and given over the balance of the seven year period. In all cases, any capital allowances carried forward beyond the seven-year period will be lost.

The reason for introducing the amount of future capital allowances by 20% in these circumstances is to take account of the fact that these allowances are now being made available faster than would otherwise have been the case. In fact, these types of schemes tended to frontload the allowances, typically with 50% of the total allowance being made available in the first year. The impact of the 20% reduction in these circumstances is modest.

A guillotine will be introduced to terminate all unclaimed and unused capital allowances arising after or carried forward from 2014 as well as unused section 23 relief carried forward from 2014. An impact assessment will be undertaken of the effects of the phased abolition of the property based measures and the guillotine provision.

In conclusion, I accept these are radical changes to the terms of these property schemes. However, the current economic circumstances demand that these radical steps be taken now rather than later. I am confident that, over the course of the national recovery plan, the Exchequer impact of the legacy of these area based and property tax incentive schemes will have been significantly reduced by this series of measures. On that basis, I commend these financial resolutions to the House.

Financial Resolution No. 23 amends section 195 of the Taxes Consolidation Act 1997 in regard to the income tax exemption which currently applies to the earnings of artists. The effect of the resolution will be to limit for the tax year 2011 and subsequent tax years the amount of the exempt income to €40,000 per claimant per annum. In section 195 there is currently no limit on the amount which can be claimed per annum, although the high earners restriction introduced in 2007 and extended in 2010 may limit the amount of an artist exemption in cases where gross income reaches €125,000. Over a full tax year, this measure is expected to produce a saving of approximately €14 million.

Deputy Brian Hayes

With regard to Financial Resolutions Nos. 20 to 22, inclusive, the Minister is correct to state this is quite a radical change. Nonetheless, it is a change that has been largely supported on this side of the House, at least in respect of bringing to an end some of the reliefs that have been in place for some time. How is it possible that a figure of €100 million is given as a potential saving in a full year? It presupposes that we know the total number of individuals who have been able to obtain the section 23 relief thus far. If the Minister claims that a saving of €100 million can be made in a full year, will he inform the House as to the number of individuals affected by the roll-up?

The Minister stated that the guillotine provision will be introduced by 2014, by which time all the unused capital allowance must be lost. Why was 2014, which is three years from now, selected as the date? Given the desire to have a greater yield, why was an earlier date not set? The Minister said the full impact statement has yet to be determined. One would have expected that it would have been in place before the decision was arrived at.

With regard to the changes to the artists' exemption, many people have been arguing for some time that we should have been moving in this direction. I hope the change will not destroy the possibility of Ministers on the other side of the House writing their memoirs when they move to this side of the House in the next few weeks or so.

Deputy Michael Creed

Would the Deputy call that a work of art?

Deputy Brian Hayes

A work of art and creativity will be very much in vogue at that stage.

Some measures, particularly those in Financial Resolutions Nos. 20, 21 and 22, have been advocated for some time. I am interested in hearing answers to the questions I have posed.

Deputy Pat Rabbitte

The Minister stated, in introducing the measures on property-related legacy issues, that the cost was €400 million. Is the yield of €100 million a quarter of this? Does it mean the changes being made to the schemes will result in a yield that is 25% of the yield that might accrue if the pruning were more severe? What are the considerations in trying to make the restrictions more severe? Are there contractual issues or others that constrain one? Reliefs in this area fuelled the system that resulted in much of the overhang of housing and apartments. The section 23 relief, which is probably the best known, will be restricted in application to income from section 23 property as distinct from rental income.

The wish is to try to have some kind of market operating again in terms of disposing of the overhang in urban areas, where there is undoubtedly pent-up demand. However, young people and first-time buyers do not want to move if they believe that, in six months, values will have fallen by another 7%. It is very difficult to know the floor in circumstances such as these. It is important that some kind of market be regenerated where there is a population and demand, for all the obvious reasons, but some of what are referred to as legacy relief schemes have outserved their usefulness and ought to have been brought to an end or pared back long before now. Why is €100 million the figure determined for a full year? Why not €200 million in a full year? What difference would the latter figure make? Are there contractual or constitutional impediments in the way of pruning more severely?

What judgment was brought to bear on the capping of the earnings threshold for artists? As with many exemptions that served a very useful role at one stage, the artists' exemption came to be abused. I do not know the result of the cost benefit analysis. If one makes the threshold relatively harmless, is the exemption of any value in attracting artists to live here who might not otherwise consider doing so? Does the Minister believe the threshold of €40,000 is well judged?

Deputy Aengus Ó Snodaigh

Ba mhaith liom déileáil leis an exemption ó thaobh ealaíontóirí. As with Deputy Rabbitte, I would like the Minister to explain where the €40,000 figure has appeared from. It seems to have come from nowhere. It does not account fully for the context in which artists earn their money. A sum of €40,000 may sound like a lot of money but if one is an artist working on a commission that takes two years, one must pay tax for one year rather than two years when one gets paid.

The circumstances of many artists must be borne in mind. Most of them will not even reach the threshold. Certain artists who formerly enjoyed the artists' tax exemption disappeared from our shores as soon as there was a hint of capping the exemption. Some big bands are included in this regard. I do not believe the exemption was ever intended for rich artists, but perhaps it was. It may be the only good legacy of Mr. Charlie Haughey. Ireland has benefited from it.

There needs to be a cost benefit analysis. The Minister referred to encouraging tourism. One attraction of having internationally famous artists here or their works is that people will travel to view where an author grew up or to see a work of art. Will the Minister explain where the figure of €40,000 came from? We should not have an open-ended exemption but should bear in mind that a threshold that would benefit tourism and artists would be higher than €40,000.

Deputy John O’Donoghue

Every Member of the House will agree that the perception of today should never be utilised for formulating the policy of tomorrow, but that reality should. In that context, it is extremely important that in dealing with the financial resolutions, we remind ourselves that behind every collapsed developer and building company are thousands of workers, including plumbers, carpenters, bricklayers, brick carriers and many others who——

Deputy Enda Kenny

And carpet fitters and carpetbaggers.

Deputy John O’Donoghue

——find themselves unemployed and who have little prospect of working in the construction industry in this country in the foreseeable future.

I fully understand why the Government has brought forward the provisions it has introduced this evening. As implied by Deputy Rabbitte, the market was over-fuelled. There are more than 2,000 ghost estates, not just in urban centres but in other centres across the country. Seán Lemass, the former esteemed Taoiseach, reputedly said, "Tell me how many bags of cement you sold last year and I'll tell you the state of your economy." I appeal to Members of this House, in accelerating our desire to ensure a property bubble of the nature that occurred does not recur, to remind ourselves that one day not so far away a future Government will have to come into this House and ignite the spark of the construction industry again. Its failure to do that at some stage in the future will mean a continuum of unemployment for thousands of ordinary workers. When we use euphemisms to describe the collapse of the building industry, let us also ensure we remind ourselves of where precisely we are coming from, where we are and to where we must get back.

Deputy Enda Kenny

And that when it is reignited it will not get out of control like the last time.

Deputy John O’Donoghue

With regard to the artists' exemption, it would be remiss of me and of Members of the House, and I compliment Deputy Ó Snodaigh on doing so, not to remember the contribution the artists' exemption has made to Ireland and its people. It was the brainchild of the great Irish poet, Anthony Cronin, who happily is still with us, who inspired Charles Haughey, the then Taoiseach, to bring forward this relief. It was not meant to make millions for any given individual. It was not meant to set up record companies, and it certainly was not meant to create an elite. It was meant to give expression to Ireland's unique cultural identity and in that context it was also meant as a haven for great artists who might come into this country and give expression through painting, poetry, novels or other ways to Ireland's history and cultural heritage. To that extent, let it be said, it was an enormous success.

I understand the economic exigencies which see the ceiling come down to €40,000 and I understand the philosophy behind that, but I am greatly minded of the words of William Butler Yeats who said one should never seek to extract the marrow from the bone. He wrote:

What need you being come to sense,

But fumble in a greasy till

And add the halfpence to the pence

And prayer to shivering prayer, until

You have dried the marrow from the bone.

Deputy Michael Creed

I remind Deputy O'Donoghue that Yeats also wrote: "All changed, changed utterly: A terrible beauty is born." Regrettably, that is the reality we are coming to face in painful and stark terms in the context of this year's budget.

I am particularly interested in two issues, the first of which is the changes in section 23 reliefs. What is the basis for the Government's decision to restrict the rowing back of reliefs just to the section 23 developments? For example, we have developments in the student accommodation area which were equally attractive and which fuelled extensive provision, overly extensive in certain locations. What is the basis for the singling out of section 23? Why is it that others were or were not looked at as the case may be? Is the figure of €100 million a guesstimate or is there some scientific basis behind it?

I am also interested in the artists' relief, although not so much on the basis of the figure of €40,000. I would preface my remarks along the lines of the previous speaker and Deputy Ó Snodaigh to say that in times such as those in which we now live, very often the only ray of hope and light relief we get is from the artistic community. It is very important that especially those who are struggling to make a living, many of whom have operated on incomes at or below the minimum wage, are given every assistance possible.

I am interested in what constitutes artistic endeavour, and the Minister might address this in his response. We have ghost written autobiographies of former leaders of this country which qualify currently for exemption under the artistic endeavour clause in this scheme. That is not for what it was ever intended. It must be about creativity. It must be about fostering a climate of——

Deputy Pat Rabbitte

There was a fair amount of creativity in one of two of them to which the Deputy is referring.

Deputy Michael Creed

Yes, certainly, but——

Deputy John O’Donoghue

And in ones to which the Deputy is not referring.

Deputy Michael Creed

We have strayed a long way from the original raison d’être for it. This is an attempt to go back to basics but critical to that would be a clear definition of what constitutes artistic endeavour. As I understand it, it is a question of a negotiation or a conversation between the Revenue Commissioners and the artist. That is too loose an arrangement to be acceptable. I note the former Minister is nodding his head to the effect that it may not be that loose an arrangement but that is the impression that has been given. The Minister might clarify that matter.

Deputy Seán Ardagh

I want to declare an interest in that I claim relief under section 23. I want to refer to this measure not in regard to my case but to a more general case. Deputies Ó Snodaigh and I are in an area where there are hundreds if not thousands of empty section 23 apartments along Cork Street and in that vicinity. Many people who have purchased and are the landlords in those apartments are civil servants, public service workers and people who earn a PAYE income. They are good landlords who look after their tenants. Some of them operate through the rental accommodation scheme. The amount of trouble that emanates from the section 23 measure is minimal in comparison with the rogue landlords who sometimes operate in the multi-unit old houses who act in a totally different manner. If those hundreds of apartments are to sell in my constituency, for a two-bed apartment one is talking about €250,000 and if one gets a rental income of €1,000 a month, €250,000 at 5% is €12,500, the interest on the loan would not be covered by the rent, leaving aside management charges, insurance cover and all the other items.

I would like the Minister to consider in the Finance Bill the implication of the loan that has been taken out on the understanding that there would be the wherewithal to pay it from other rental income that would have offset to some extent the tax that would otherwise have been paid. There is no way that in ten years the capital cost of any section 23 apartment will be covered by the rental income from that apartment. It is inconceivable, unlikely and cannot be done.

In regard to the artists' exemption, most of the artists in this city earn significantly less than €40,000. They are more likely to earn €20,000, €25,000 or €30,000 per annum. Taking into account actors who are resting, which is the term commonly used, for a long period, the idea of having a €40,000 base is excellent. At the same time it means that those such as Bono and other members of U2 and major authors who can afford it will be able to pay on the basis of what they can afford.

Deputy Pearse Doherty

Ar Rúin Airgeadais 20, 21 agus 22, iarraim ar an Aire an faoiseamh cánach atá ar fáil faoi alt 23 a shoiléiriú. Nuair a bhí mé ag éisteacht leis an Aire Airgeadais níos luaithe, dúirt sé go gcuirfí deireadh leis an bhfaoiseamh seo i 2014. Ag amharc ar na sonraí, áfach, tá sé soiléir go mbeidh cuid dóibh ar fáil go dtí 2021. Iarraim ar an Aire é sin a shoiléiriú. Níl dabht ar bith go bhfuilimid ag bogadh sa treo ceart. Tá mo phairtí ag rá le fada an lá gur cheart dúinn deireadh a chur leis an bhfaoiseamh seo. Is mór an trua gur ghlac sé an oiread ama seo don Rialtas tús a chur leis an bpróiseas sin.

Ba mhaith liom cuid de na pointí atá déanta agam a shoiléiriú i mBéarla. I note in this speech earlier today the Minister for Finance, on the property based reliefs, stated, "This last provision will effectively terminate all property-based reliefs in 2014." He went on to state that all details are set out in the Summary of Budget Measures. When one looks at the Summary of Budget Measures, it does not seem that all those property reliefs will be finished in 2014. If we look at the section 23 reliefs for properties that have yet to be sold, what is being proposed here is that the ten year qualifying period for unsold properties will kick-start on 30 June 2011, regardless of them being sold. Therefore, the summary continues, "in such cases no Section 23 relief will be available after 30 June 2021." Is it the case that section 23 reliefs will still be made available to people ten years from now, and further than that, up to 30 June 2021? How does that correspond with the Minister's statement today that this will effectively terminate all property based reliefs in 2014? That takes me to the second point. Why are we looking at 2014 for the guillotine? Why can we not introduce the guillotine earlier?

Even in the case of the section 23 properties that are not sold, why are we starting the effective ten year period on 30 June 2011? Why are we not starting it tonight, next week or in January? Why are we giving that additional six month period? Are we serious about phasing out these reliefs? What are the blocks here? Are there legal blocks to stop us introducing the guillotine earlier? Can we not phase out these reliefs any quicker?

These people gambled on property. I disagree fundamentally with one of the previous speakers, Deputy O'Donoghue, when he spoke about fuelling the construction sector. We want to fuel the construction sector. That is why we are arguing to build schools, hospitals and roads, but we will not start building property again to lie idle and then provide reliefs for the next ten or 11 years on the back of which persons may claim tax exemptions. I seek clarification on those points.

Deputy Tony Killeen

There were a number of questions on the section 23 and other property reliefs. As participants joined the schemes at different stages, many have availed of some of the reliefs at this point. Others have availed of less of them. That is why 2014 was selected as a median date in terms of addressing all of the considerations, which are many when one considers the various schemes and the differences that arose between the various properties. Some of them, I understand, are as old as 20 years. The belief was that some measures which were introduced in 2006 would have the impact of finishing these schemes much quicker than has been the case but, because of the nature of their design over several years that has not been possible and the decision to go with 2014 is a median that seems to be acceptable, and reachable, which is an important consideration.

Deputy Rabbitte asked about the constitutional and legal considerations, if there are any. The legal advice is that the restriction on the property reliefs is legally sound. However, there is also advice that the speed in closing down the reliefs needs to be proportionate. That is a standard consideration in matters of this nature in any event. The advice also suggested that it was appropriate to have a full assessment of the impacts before the complete shutdown of the scheme in this instance.

Deputy Pat Rabbitte

Is the Minister stating that a €200 million saving as distinct from a €100 million would not be proportionate?

Deputy Tony Killeen

I will come in a minute to how the €400 million and the €100 million is reached.

The final close down in 2014, the guillotine which I mentioned, is designed to allow for this assessment to take place on the full impact of the way they are being wound up and to ensure that all possible impacts are identified and taken account of in view of the considerations mentioned by Deputy Rabbitte and others.

Based on the latest data, the cost of the legacy reliefs was estimated at €400 million and when developing the initiative to terminate the schemes, the timescale of four years was taken as being a median being acceptable in terms of achieving the assessment and in terms of winding down in a proportionate manner, and on that basis the €100 million arises as a quarter of the €400 million.

The points made by Deputy Ardagh were considered when this proposal was being developed and the view was taken that, no more than anybody else in society, those who were involved with the section 23 schemes ought also to make a contribution towards the financial adjustments being made currently.

Deputy Creed asked about student accommodation and all of the other schemes which I listed at the beginning of my contribution — there are approximately a dozen of them in all. They all are restricted by the capital allowances restriction and, in fact, in most instances have been restricted previously, both in 2006 and earlier this year. The figures are based on the Exchequer costs in recent years, and the Exchequer costs have dropped in the past year.

D'iarr an Teachta Ó Dochartaigh ceist faoin na bhfaoiseamh cánach a chríochnóidh i gcoitinne i 2014. Dúirt sé go mairfidh cuid acu go dtí 2021. Baineann an faoiseamh áirithe leis na foirgnimh faoin scéim seo nach bhfuil díolta go fóill, agus nár thosaigh an tréimhse deich mbliana a bhaineann leo go fóill. Mar a dúirt an Teachta, caithfimid iarracht a dhéanamh bheith cothrom do dhaoine sa scéim ghinearálta. Ní chóir go gcuirfí deireadh leo anois láithreach, de bharr na fadhbanna a luaigh an Teachta Rabbitte agus Teachtaí eile. Is é sin an fáth go bhfuil cuid dóibh, a bhaineann leis an chás a luaigh an Teachta Ó Dochartaigh, á choinneáil.

Most of the Deputies mentioned the exemption in reliefs for artists. The first point to bear in mind is that the Commission on Taxation recommended that this exemption be finished and the Government took the view that there were some benefits, as outlined by several Deputies. Luaigh an Teachta Ó Snodaigh cuid díobh nuair a bhí sé ag caint.

Deputy John O’Donoghue

I would say there were not too many votes on the Commission on Taxation.

Deputy Tony Killeen

Deputy O'Donoghue will appreciate that one must take a balanced view of these matters.

That was the background against which the decision was taken. It is well to bear in mind that the Commission on Taxation recommended the abolition.

The average income of the artists availing of the scheme is of the order of €32,000. This is a little above the average. Many Deputies will have heard from various artists that the benefits from participation in, or having the availability of, the scheme are considerable for those on fairly low or modest earnings. On that basis, the Government considered that going with the Commission on Taxation proposal was not a good idea. I can assure Deputy Brian Hayes that I have no plans to write memoirs. I regret somewhat that I did not keep a diary of some of the events.

Deputy Enda Kenny

There are others over there who will write them.

Deputy Tony Killeen

In any event, no doubt there will be plenty.

Deputy Enda Kenny

They are already half-way through them.

Deputy Tony Killeen

I think I have answered most of the questions.

Deputy Pearse Doherty

I return to the section 23 reliefs for properties that are not sold. The Minister spoke of proportionality, but it is wrong if the Government is willing to allow for section 23 reliefs to be paid up until 2021. The whole country is demanding that we end these property based reliefs. I stated already that the Government is moving in the right direction, but it is fundamentally wrong to allow property based tax reliefs to continue for a period of 11 years.

If we park that point to one side now and say that I will lose the argument that we should introduce a guillotine on these the same as we are doing in terms of the 2014 measure, it may be proportionate for us to only allow the reliefs for the houses that are not sold for a five year period so that at least they would be phased out over half the period that the Minister is accepting. Why can we not introduce the ten-year period for these reliefs now? Why are we allowing six months prior to the ten-year period kicking in? I refer back to the Minister's statement today which he made to the Dáil but during which he spoke to the nation when he said that effectively all property tax reliefs will be finished by 2014. This is simply untrue given the measures contained in these resolutions which will allow property tax reliefs until 2011 and a grace period of six months before the start period kicks in.

Deputy Tony Killeen

I should have made clear that in the assessment and measure of what is proportionate — which is somewhat difficult to measure from this perspective — it may well be that the closing date about which Deputy Doherty complains may come under the 2014 guillotine, but at this point the assessment has not been carried out; it will be carried out during that timescale and may well impact on the closure date for the cases about which the Deputy has expressed concern.

An Ceann Comhairle

We have reached decision time on this group. I am required to put the following question in accordance with the order of the Dail of this day.

Minister for Defence (Deputy Tony Killeen)

I move the following Financial Resolutions:

Financial Resolution No. 24: Income Tax

(1) THAT section 120A of the Taxes Consolidation Act 1997 (No. 39 of 1997), providing for exemption from income tax of certain childcare facilities, shall cease to have effect for the year of assessment 2011 and each subsequent year of assessment.

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 25: Income Tax

(1) THAT section 472C of the Taxes Consolidation Act 1997 (No. 39 of 1997) shall cease to have effect as on and from 1 January 2011.

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 26: Income Tax

(1) THAT subsection (5E) of section 118 of the Taxes Consolidation Act 1997 (No. 39 of 1997), providing for exemption from income tax of expenses incurred by a body corporate in connection with the payment of annual membership fees of a professional body on behalf of a director or employee, shall cease to have effect for the year of assessment 2011 and each subsequent year of assessment.

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 27: Income Tax

(1) THAT section 473 of the Taxes Consolidation Act 1997 (No. 39 of 1997), in relation to income tax allowance for rent paid by certain tenants, be amended—

(a) as respects the year of assessment 2011 and each subsequent year of assessment by substituting, in the definition of “specified limit” in subsection (1)—

(i) "€3,200" for "€4,000" and "€6,400" for "€8,000" in paragraph (a), and

(ii) "€1,600" for "€2,000" and "€3,200" for "€4,000" in paragraph (b),

(b) by inserting after the definition of “appropriate percentage” the following definition—

"‘new claimant' means any individual who is not entitled to relief under this section on 7 December 2010;",

and

(c) by inserting the following after subsection (10)—

"(11) The reduction in income tax provided for by subsection (2) shall not apply for any year of assessment in the case of an individual who is a new claimant.".

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 28: Income Tax

(1) THAT, as respects approved share option schemes, section 519D of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended by inserting the following after subsection (7):

"(8) The exemption from income tax authorised by subsection (2) in respect of the receipt of the right referred to in subsection (1) shall not apply where the right is received on or after 24 November 2010.

(9) The exemption from income tax authorised by subsection (3) in respect of any gain realised by the exercise of the right referred to in subsection (1) shall not apply where the gain from the exercise of the right is realised on or after 24 November 2010.".

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 29: Income Tax

(1) THAT, as respects relief for new shares purchased on issue by employees, section 479 of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended by inserting the following after subsection (8):

"(9) The deduction authorised by subsection (2) shall not be made in respect of eligible shares where those shares are subscribed for on or after 8 December 2010.".

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 30: Income Tax

(1) THAT, as respects the application of section 985 of the Taxes Consolidation Act 1997 (No. 39 of 1997) to certain perquisites, section 985A of that Act be amended—

(a) in subsection (1A) by substituting “Subject to subsection (IB), subsection (1)” for “Subsection (1)”, and

(b) by inserting the following after subsection (1A):

"(IB) Subsection (1A) shall not apply to shares or stock referred to in that subsection received on or after 1 January 2011.".

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 31: Income Tax

(1) THAT section 248 of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended by inserting the following after subsection (5):

"(6) Notwithstanding subsection (5), the deduction authorised by that subsection shall not exceed—

(a) as respects the year of assessment 2011, 75 per cent of the deduction that would but for this subsection be authorised by that subsection,

(b) as respects the year of assessment 2012, 50 per cent of the deduction that would but for this subsection be authorised by that subsection,

(c) as respects the year of assessment 2013, 25 per cent of the deduction that would but for this subsection be authorised by that subsection, and

(d) as respects the year of assessment 2014 and each subsequent year of assessment, zero per cent of the deduction that would but for this subsection be authorised by that subsection.

(7) This section shall not apply to a loan made after 7 December 2010.".

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 32: Income Tax and Corporation Tax

(1) THAT section 141 of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended, as respects distributions made out of disregarded income (within the meaning of that section) on or after 24 November 2010, by inserting the following after subsection (10):

"(11) This section shall not apply to distributions made out of disregarded income on or after 24 November 2010.".

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 33: Income Tax and Corporation Tax

(1) THAT section 234 of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended, as respects income from a qualifying patent (within the meaning of that section) which is paid to a person on or after 24 November 2010, by inserting the following after subsection (8):

"(9) This section shall not apply to income from a qualifying patent which is paid to a person on or after 24 November 2010.".

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 24 relates to section 120A of the Taxes Consolidation Act 1997 which provides for an exemption from benefit-in-kind charge for employer-provided child care. The capital cost of the provision of certain free or subsidised child care facilities by employers is exempt from benefit-in-kind charge on the employees that avail of such facilities. This relief was introduced in 1999 to encourage employers to invest in child care facilities and thus increase the overall supply of child care places. At the time of its introduction there was a scarcity of child care places and the costs associated with child care were increasing. The provisions were amended in 2001 to permit a number of smaller employers to come together in the provision of child care facilities. However, the Revenue Commissioners have indicated that in practice only larger employers avail of the relief. The Commission on Taxation in its report recommended the abolition of this exemption citing equity due to the likelihood that only large employers have the ability to make the necessary investments. It is now proposed that this provision be abolished with effect from 1 January 2011. The cost to the employer of providing such a benefit in kind for each individual employee will now be assessed as part of the employee's emoluments for the year and the appropriate taxpayer levies will be collected through the PAYE system. The estimated yield to the Exchequer will be €3 million in 2011 and €6 million in a full year.

Financial Resolution No. 25 relates to section 472C of the Taxes Consolidation Act 1997 which was introduced in 2001 to provide income tax relief for trade union subscriptions for trade union members. The amount of relief at present is €350 at the standard rate of tax which is equivalent to a tax credit of €70. As part of the national recovery plan and with a view to widening the tax base it has been decided that this relief will be abolished for the tax year 2011 and subsequent tax years. The estimated yield to the Exchequer will be €19 million in 2011 and €26 million in a full year.

Financial Resolution No. 26 relates to section 118(5E) of the Taxes Consolidation Act 1997 which provides for an exemption from benefit-in-kind charge where an employer meets the cost of professional fees or subscriptions on behalf of an employee or a director where the membership is relevant to the employment. This exemption is being removed with effect from 1 January 2011. In future, when an employer pays such fees the amount will be treated as a notional pay and PAYE and PRSI shall be deducted accordingly. Details will be published in the finance Bill.

Financial Resolution No. 27 is with regard to section 473 of the Taxes Consolidation Act 1997 which provides for tax relief at the standard rate in respect of rent paid by individuals for private rented accommodation which is their sole or main residence. Rent relief was introduced in 1982 and has been increased a number of times since its introduction. The provisional cost of rent relief in 2008 was €97 million. However, since 2008 rents have fallen considerably. CSO figures for the first ten months of the year show that rents fell by 14.5% in 2009 and a further 5.9% in 2010.

The level of rent qualifying for relief depends on an individual's marital status and age. The maximum tax credit available under the scheme for those over 55 years of age is €1,600 for a married couple and €800 for a single individual and it is €800 and €400 respectively for those under 55. The Commission on Taxation was of the view that in the same way that mortgage interest relief increased the cost of housing, rent relief increases the cost of private residential accommodation. For this reason, the commission recommended that rent relief should be discontinued.

Deputies will recall that in the budget for 2010 the Minister abolished mortgage interest relief for new mortgages taken out after 1 January 2013. Those entitled to that relief at present will retain it until 31 December 2017. It has now been decided to abolish rent relief on a phased basis over the same period. In order to maximise the Exchequer yields from this measure, new claimants will not be able to claim the relief with effect from today. Withdrawal of the relief over this period will be achieved by reducing the amount of rent that can be relieved by 20% in the years 2011 and 2012, with further annual reductions of 10% thereafter until 2018. Based on 2008 provisional figures, the annual yield to the Exchequer for such a phased withdrawal will be €19.4 million in 2011, €38.8 million in 2012 and the yield thereafter will increase annually until 2018 when the relief will be completely withdrawn.

Financial Resolution No. 28 gives statutory effect to the budget announcement that tax relief for certain share option schemes will cease from 24 November 2010, the date of publication of the national recovery plan. Employees who are given options to purchase shares in their employer company at a predetermined price can make a gain when they purchase shares that have increased in value since the option was vented. Such gains are exempt from income tax where the employer company meets certain conditions and receives formal approval for the scheme from the Revenue Commissioners.

The Commission on Taxation was tasked with reviewing all tax expenditure with a view to assessing the economic and social benefits they deliver and to recommend the discontinuation of those that are unjustified on cost benefit grounds. It is recommended that this scheme be discontinued on the basis of the low employee participation rate compared with participation in unapproved share option schemes that do not allow such income tax exemption. The termination of this scheme is also motivated by the requirement to rebalance the public finances and to broaden our tax base. The scheme is estimated to have cost €500,000 in 2009, the most recent year for which estimates are available.

Financial Resolution No. 29 gives statutory effect to the budget announcement terminating the scheme that provides for a single lifetime income tax deduction of up to €6,350 for an employee who purchases shares in his or her employer company where those shares are retained for a period of three years without being sold. The Commission on Taxation recommended that the scheme be discontinued on the basis of the low employee participation rate. The most recent figures are for 2008 when 280 individuals participated at a cost to the Exchequer of €300,000.

Financial Resolution No. 30 gives statutory effect to the budget announcement that the taxation of an employee's emoluments in the form of shares or stocks would be brought within the PAYE collection system. Where an employee does not pay full market value for shares, the shares are treated as perquisites for income tax purposes and taxed at remuneration of the employment. However, unlike other types of remuneration the income tax charged on the value of such shares is paid through the self-assessment system and not through the PAYE system. This resolution brings the payment and collection of income tax and share rewards into the PAYE system and aligns the tax treatment with that of other types of benefits-in-kind received by employees. This measure will not increase the amount of income tax charged but may, depending on when shares are received, result in earlier payment of tax. In the case of employees, the payment of PRSI is linked to whatever remuneration is payable through the PAYE system. In addition, this resolution will bring the share rewards within the charge of PRSI.

Financial Resolution No. 31, on section 248 of the Taxes Consolidation Act 1997 was introduced in 1974 to incentivise individuals to invest in Irish companies by giving them tax relief in respect of interest paid on moneys borrowed to purchase an interest in or make a loan to a company. The relief was reviewed by the Department of Finance in 2005 when there was a general review of tax incentives. The findings at the time included that there was little evidence to show that the relief led to increased employment or had any notable effect on economic growth. It was also found that companies benefiting from the relief were not in general operating in sectors being actively supported by the State through Enterprise Ireland and that the majority of those individuals using the relief earned in excess of €200,000.

As a result of this review, the relief was curtailed in the budget for 2006 to exclude relief on interest for loans to acquire shares in certain companies. Despite this change, there has been a lack of evidence which demonstrates a return from this relief in terms of employment and growth. Given the cost of the relief, which was estimated at €48.5 million in 2008, and the need for the income tax base to be widened by the elimination of inefficient reliefs and incentives it has been decided that interest payable on such loans taken out after 7 December 2010 will not qualify for relief.

The relief in respect of interest on existing loans will be phased out. For the tax year 2011 relief will be given in respect of 75% of the interest paid; for the tax year 2012 relief would be given in respect of 50% of the interest paid; for the tax year 2013 relief will be given in respect of 25% of the interest paid; and for the tax year 2014 and subsequent years the relief will be abolished. It should be noted that the Government's commitment to supporting investment in small and medium Irish companies by their owners and other potential investors is not diminished by the winding down of this inefficient and expensive relief. The new business investment targeting employment incentive will employ a better focused scheme of tax relief to incentivise owners and others to invest in small and medium Irish companies.

The estimated yields for the Exchequer will be €12.1 million in 2011; €24.3 million in 2012; €36.4 million in 2013; and €48.5 million in 2014.

The purpose of resolutions Nos. 32 and 33 is to abolish the tax exemption for patent royalty income and the related exemption for distributions made by a company out of exempt patent royalty income. This is provided for in the four year plan and will yield an estimated €50 million in a full year. The measure takes effect from 24 November, the date of publication of the plan. The tax exemption for patent income which is available to Irish resident individuals and companies is provided for in section 234 and 141 of the Taxes Consolidation Act 1997. Section 234 provides a tax exemption for royalty in respect of a qualifying patent, subject to an annual limit of €5 million. A qualifying patent is a patent in relation to which all the research, planning and development work leading to the patented invention was carried out in the State or in another country which is part of the European Economic Area.

Section 141 provides a tax exemption, subject to certain restrictions, for distributions made to Irish resident persons from companies' exempt patent income. The relief is being abolished on foot of a recommendation to this effect in the report of the Commission on Taxation, which recommendation the Government has accepted. As part of its terms of reference, the commission was asked to review all the expenditure to determine if the continued operation of the exemptions was justified on cost benefit grounds. The commission concluded that the relief has not resulted to any great extent in companies carrying out research and development activity and that the relief was being used in some cases by companies as a tax avoidance device to remunerate employees. It considered that there was a significant dead weight element to the relief and that it provided a windfall gain after a successful invention rather than an incentive to encourage new research and development. The Government agrees with the conclusions of the commission that available resources should be focused instead on the research and development tax credit scheme. That scheme provides a more direct and effective incentive for enterprises to innovate and invest in research and development activities and the scheme has been enhanced significantly by the Government in recent years for this purpose.

Deputy Michael Creed

I wish to address the issue of the removal of the benefit in kind exemption for employer provided child care. The yield is expected to be approximately €6 million in a full year. Access to and affordability of child care is a major issue as the cost of child care is the equivalent of a second mortgage and more for many families. I know of someone in Dublin who pays €2,400 a month for three children under school-going age. Child care facilities provided by an employer may seem to place employees in an enviable situation but we should consider what the consequences for employees would be of not having access to child care at an affordable price. Often people without affordable child care cannot take up employment opportunities.

Another aspect we should consider is community child care facilities that are scattered throughout the country. I must declare an interest in this area as one of my children is in such a facility. These facilities are subsidised through a tiered system and Deputy O'Donoghue, as a former Minister, can take some credit for the network of such facilities. However, we only have a patchwork arrangement. Some communities are well served with such facilities, while others have no access to child care. We could argue that the optimum provision is where employers provide a facility for their employees.

The expected yield from the removal of the exemption is only €6 million. Rather than remove it, we should be striving to provide a much more comprehensive pre-school child care arrangement at an affordable price. Instead, this proposal dismantles a positive development. I agree that it may only be public service employees or the employees of large corporations who benefit from employer provided child care and that the majority of employees of small companies do not have access to this type of facility. However, that does not mean that affordable child care provision is not laudable or should not be encouraged.

It seems that we have not thought through the issue of the affordability of child care. Given that we are going through a crisis, the Minister has with the stroke of a pen dismantled one of the most innovative provisions in terms of child care and is penalising beneficiaries without having put in place a comprehensive child care programme. This is a retrograde step. In terms of the minuscule amount of money this move will save, the Minister should step back from it.

We should be striving for a nationwide, comprehensive, community not-for-profit provision of child care that was subsidised in a tiered way relative to employment status. In the interim, we should not penalise employers who had the foresight to avail of the incentives that were there to provide a service for employees. In light of the costs involved for child care for young couples, the removal of the exemption is a seriously retrograde step. I appeal to the Minister, in the interest of the children and of the ability of parents to be able to afford to go to work, to revoke this decision. One could argue that subsidised community child care facilities sometimes act as a disincentive for people to take up employment opportunities but in this case we are talking about people who are working and availing of a service that has been provided by employers. Now, in one fell swoop, the Minister will dismantle this progressive service for the sake of a relatively small amount of money.

By its nature, child care affects younger people. These are the same people who are in negative equity and up to their necks in debt with mortgages they cannot afford and in danger of having their houses repossessed. Many of them are also in vulnerable employment situations. They already suffer enough stress, financial and otherwise. I appeal to the Minister not to dismantle what was an innovative provision in terms of child care, all for the sake of a minuscule amount of money in the context of the problems we face.

Deputy Eamon Gilmore

These resolutions deal with the abolition or phasing out of a batch of reliefs, the abolition of most of which were recommended by the Commission on Taxation. In general, the Labour Party agrees with the removal of many of those reliefs, particularly in the circumstances in which we find ourselves. However, I have an issue with regard to the abolition of two of the reliefs. The first is the same one that has been raised by Deputy Creed. I agree with what he has said on that. The abolition of the exemption from benefit in kind for employer provided child care is a mistake. It is a mistake because it will hit a relatively small number of working parents. The provision of child care in places of employment is something that should be encouraged by the State. Working parents must go to considerable expense to provide child care and make child care arrangements. Many parents have to take a child to a child minder, drop another child to school and then get to work on time. The provision of child care in places of employment is the route we should be taking, particularly for very young children.

We should remember that it is not so long ago since we had a problem in this country with regard to maintaining staff in the workforce, particularly working mothers. Some years ago, much emphasis was placed on the measures that needed to be taken in order to provide adequate child care or incentives and supports for working mothers. Employers were encouraged to provide dedicated facilities in places of employment. It is a retrograde and mean step to row back on that provision. Not only is the amount involved, €6 million in a full year, relatively small but I also do not believe it will be realised. If the benefit-in-kind is removed, some employers who currently provide child care facilities may decide to discontinue doing so and the elimination of the arrangement will be the tipping point that causes some people to leave the workforce. As a country, we do not provide much encouragement for working parents, and working mothers in particular, to stay in the workforce. In many cases, child care is subsidised for parents who are not working, and rightly so. This exemption to benefit-in-kind helps parents who are working. It is not a sound argument to claim that only the larger employers offered child care. We should be trying to encourage more rather than fewer employers to likewise. I strongly support Deputy Creed on this matter and the Labour Party is opposed to the elimination of this relief. If necessary, we will oppose the financial resolution on those grounds.

The abolition of rent relief will, again, hit working people, and young workers in particular. Rent relief benefits young people who were frozen out of the housing market. These are the very people who are at present contemplating whether they will stay in this country or throw in the towel and emigrate. They are the people who will be affected by the 10% reduction in salaries of new entrants to the public service. I get e-mails from young graduates who ask me why they should be put on a lower rate of pay when they start working as teachers. Rent relief applies to people who are at work. Those who are not at work qualify for rent allowances.

The Taoiseach challenged the Labour Party on where we stood in regard to working people. These two provisions will directly hit working people and will be a disincentive for work. Many of the young people to whom I speak are starting despair for the future of this country. On top of cuts in pay and tax measures, the little bit of rent relief they received will now be taken away from them.

Deputy Aengus Ó Snodaigh

Aontaím le cuid mhaith den méid a bhí le rá ag an Teachta a labhair romham. I am surprised the Labour Party Deputy did not mention a third measure in this group of financial resolutions that will hit the working person, namely, the removal of tax relief on trade union subscriptions. Now is the very time when we should be encouraging those who still have jobs to retain their trade union membership so that they can have proper representation in a time of recession and ensure their pay and conditions are not further undermined. Removing the relief will make it more expensive to be a member of a trade union, which is a retrograde step.

The other two measures only add to the pain this budget will inflict on the working poor, as well as those who have just about been getting by until now. Employers will be forced to discontinue providing child care facilities. Tax reliefs were supposed to benefit everybody by encouraging good practices. Many tax reliefs were, however, introduced to line the pockets of a small number of people in our society. We lack a system of universal child care which is free or, at least, cheap for young couples who labour under huge mortgages because of the property boom and the shortage of social housing. They must meet the high costs of child care simply to stay in work and pay their bills.

The rent charged on properties in Ireland is higher than in any other European country of which I am aware. Rent relief was a limited mechanism for those who could not avail of social housing because local authorities were not funded sufficiently. The budget further reduces the grants paid to local authorities, regeneration projects and social housing initiatives. People will as a result be forced to remain in rented accommodation but the tax relief they enjoyed to date will now be lost. We have not seen substantial reductions in rent in all parts of the country. Rents in Dublin have not decreased at the lower end of the market to the degree that would justify the removal of the relief.

The State has not yet ensured that all landlords are properly registered and inspected. Rent relief would have provided a mechanism to enforce standards among landlords. Once it is abolished, we will revert to the old practice of paying into the black economy because there will be no need for registration. These three measures are detrimental to the public good and should be opposed.

Deputy Seán Ardagh

I fully support Financial Resolutions Nos. 28 to 33, inclusive. Some of them were used in the past for tax avoidance purposes. These financial resolutions will simplify the tax code and put everybody on an equal footing. PAYE income is now involved, whether one is paid in shares or patent royalties. Those who are in a position to put this type of tax avoidance scheme in place should not be favoured. We are going some way towards improving the situation in that regard and I commend the Minister on that.

I take on board what Deputy Gilmore said about benefit-in-kind. It appears, however, that only larger employers have put these benefits in place. Other issues have arisen recently with regard to large employers who can give favourable treatment to employees. The question of the ESB and free electricity is a case in point. Large employers who are in a position to avoid tax because they have the necessary resources are favoured. It is unfortunate that some people will now have to pay benefit-in-kind tax on child care, but this is fair and equitable.

The Minister stated that abolishing tax relief on trade union subscriptions will save €26 million in a full year. Some trade union members may pay tax at 41% but I suspect the majority pay at 20%. Some may not pay tax at all. This implies an income to trade unions of approximately €130 million per year. This raises the question of what trade unions do with €130 million. Should there be more regulation, accountability, transparency and reporting of trade union funds and what they use them for? Like all well-governed institutions, they should be up-front with their members and with the public.

Deputy Emmet Stagg

They are totally up-front. Why is the Deputy casting a slur?

An Ceann Comhairle

Deputy Stagg, please allow Deputy Ardagh to speak.

Deputy Emmet Stagg

Trade union accounts are audited and published and Deputy Ardagh knows that. That is a deliberate slur on people who are not here.

Deputy Seán Ardagh

I know of two firms who received several million euro for professional services relating to NAMA. They are the accountancy firm, PricewaterhouseCoopers, and solicitors, Arthur Cox. Will the fees paid by Arthur Cox to the Law Society of Ireland and by PricewaterhouseCoopers to professional accountancy bodies no longer be exempt from tax? Professional bodies, such as the Law Society of Ireland, often provide services such as continuing professional development courses. Could one differentiate between fees which support the administration of such bodies and those which are used for education and training?

It is unfortunate that a number of people do not claim tax relief on the rent of private property because they do not know about it. I accept the need to reduce the relief because of the reduction in rents. This relief should be advertised more widely in order that those who are entitled to it actually get it.

Deputy Pat Rabbitte

I support the remarks made in respect of the Financial Resolution No. 24, especially by Deputies Gilmore and Creed. I do not know of any other member state of the European Union where a complete 180° flip on public policy could be done overnight. We are going from an entire system based on tax reliefs and incentives and tax-driven development to a razed earth where they will all be wiped out. The Minister's reply will be that the Commission on Taxation recommended this. We are all then supposed to bow the head and accept that we must do it. It is not as simple as that. One cannot even ask a Fianna Fáil colleague how long the bad weather will last but he will say: "We appointed Professor Patrick Honohan to the Central Bank, and he is really fantastic. No one could slur that man. He is marvellous."

Deputy John O’Donoghue

Deputy Stagg knows as well as I do that the Green Party has been in charge of the weather for some time.

Deputy Michael Creed

They have sorted out global warming.

Deputy Seán Power

Since the late Deputy Michael O'Leary was the first minister for snow.

Deputy Pat Rabbitte

Many incentives are completely overcooked, have outlasted their productivity and are unwise. The big ones, such as pension relief and property-based incentives are finally beginning to be dealt with. The ones we are talking about here, however, are largely Mickey Mouse measures. The savings are not worth talking about.

I understand why people outside this House call for leadership, authority and good example. We are in no position to contest that call. It is a reasonable and deserving proposition, but there is also a fair amount of begrudgery around. Why begrudge parents who happen to work for a good employer who has gone out of his or her way to provide child care in a fashion that qualifies for this exemption from benefit-in-kind tax? Why do we want to shut them down? Do we presume they will continue to provide child care if they do not get the tax exemption? For the sake of €6 million in a full year, I do not see the point of it.

I wish the Commission on Taxation had gone down through each of its proposals and said that each should be implemented. It did not do so. The commission pointed up certain things and gave background and information regarding individual tax breaks, shelters and incentives, but it was not prescriptive with regard to priorities.

I take Deputy Ardagh's point on tax avoidance. I agree with bringing the transfer of share awards into the PAYE system and making them subject to tax at PAYE rates. I remember when tax relief for the purchase of new shares in an employing company was introduced. The Minister for Finance, Deputy Bertie Ahern, said this was a great idea designed to encourage industrial peace and good industrial relations in that type of company. The entire yield from this measure in a full year is €300,000. It is not long since we were following Mrs. Thatcher's property owning democracy. Now, everything has to go. I do not see the point.

I refer to Deputy Ardagh's point about the notional income of the trade union movement. As I understand, the trade unions are regulated by the Registrar of Friendly Societies, if that is still the case. The trade unions have to produce audited accounts. However, given the hole we have been landed in, I cannot make an argument to resist the change that is proposed here. It raises some meaningful income as distinct from something like the new shares purchasing scheme which raises damn all. People may point to the banks as a good reason for not having such a scheme but that is a different problem.

Deputy Gilmore highlighted the rent relief, which will hit a lot of low-paid people very hard. We are going in one direction with housing policy. We use tax as an instrument of social policy and then we change direction and go in the opposite direction. It is a little like the earlier discussion where Deputy Ardagh highlighted the unreasonableness, for example, of the write-down of section 23 reliefs against the section 23 property only. Not unreasonably, he pointed to examples in his own constituency where the new owner would not be able to pay the interest on the mortgage in return for the amount of rent he or she might get. That is very probably true but the question it raises is whether this is good housing policy.

It seems to me that like this proposal, they were all designed to drive the output of private housing and to transfer our social housing need into private housing and create and expand the need for housing supplement, which is hugely uneconomic and which has produced an entire category of person who is trapped in that apartment because if she goes to work, she loses her housing rental supplement. There are significant implications, policy-wise and it is now proposed that we reverse engines.

Deputy Ó Snodaigh is right in that it is also my experience in my constituency that at the lower end the rents have changed damn all although they have changed at the higher end. It is now proposed to end on a phased basis the rent relief to match the mortgage interest relief for young people who find themselves housed in these circumstances. They ended up there because they could not get a mortgage at the time, the price of housing was inordinate at many times their salary.

We have moved from one extreme to the other and we are all searching around for where savings can be made to contribute to something like the ball-park figure that is required. I am not so sure it is good leadership from this House to induce good employers who have gone out of their way to provide child care to either shut it down or to charge for it, or make whatever new arrangement they wish to put in place, no more than it is good industrial relations to kill off the share scheme which was probably minimally subscribed in this country. There are young workers in that €97 million the Minister hopes to save in a full year who are on the rent relief on that type of housing. When the sums are being done in The Irish Times tomorrow morning, this should be factored in because it will be a significant factor for many young people who have started work, such as young nurses and teachers.

An Ceann Comhairle

Three Deputies remain to speak, Deputies John O'Donoghue, Ciarán Lynch and Pearse Doherty with five minutes to accommodate them.

Deputy John O’Donoghue

On a day such as today and in recent times, it is very easy to forget the progress which we have made in recent decades. It is less than 50 years ago since, for example, a working woman in the public service had to retire on marriage. I recall that there were very few women in the workplace. I became Minister for Justice, Equality and Law Reform in 1997 and one of the first acts I had the privilege of performing was to introduce the equal opportunity programme, which provided in excess of €450 million for the provision of child care across the State.

It was an equal opportunity measure, the object of the exercise being to provide equality of opportunity, not to discriminate, nor to force anybody to do anything which he or she did not wish to do, but to provide equality of opportunity. It did that to a large degree. I accept it could have been better but insofar as the funding was available it was utilised well. Today, almost an equal number of women as man are in the workplace and this is a very welcome development. I predict that in a matter of years, there will be a greater number of females in the workplace than males. It is very important that equality of opportunity be maintained. The relief is small beer in that context and it is not of massive relevance. Nonetheless, the support in particular of community child care services is of fundamental importance as we look at the make-up or the components of our workplace today.

With regard to the issue of the trade union subscriptions, I greatly support trade unionism and the tradition of Larkin and Connolly. It would be a very bad day for any democracy were it to be the case that a trade union could not gather lawfully and protest on behalf of its members. However, I found it ironic and feel obliged to comment on the statement of Deputy Ó Snodaigh. I agree with the right of people to protest, I agree with trade unionism and I would always defend trade unionists but what I could never defend and what I could never stand over in a democracy is an elected representative of this House going out onto the street with a mob, seeking to break down the gates of Government Buildings to which he is entitled, as a Member of this House, to walk through——

Deputy John O’Donoghue

That is the road to anarchy and anarchy is the road to ruin.

Deputy Aengus Ó Snodaigh

Deputy O'Donoghue should look at the video and he would see the opposite is the case.

Deputy Ciarán Lynch

I will speak on the issue of rent relief. The Minister proposes to phase out this relief over a period of eight years. I ask him for an explanation of how this can be achieved. Does it mean that people will need to remain in singular accommodation over the next eight years or is it aimed at people who are currently in receipt of rent allowance in a multiple of locations over that period?

My colleague, Deputy Rabbitte referred to the fact that in the past decade and a half there was significant incentivisation in the property sector where investment properties were prioritised over residential properties. While this may have been redressed in the budget, it is ironic that those at the bottom end of tax reliefs are the first to face the chop on this issue. Those in receipt of rent relief are in income limbo. They are not earning enough to buy a home but they are earning too much to qualify for rent supplement. This vulnerable group is being targeted.

The Minister for Finance indicated that a property price register database would be introduced. Perhaps it is about time we saw similar reform in the area of rent where we have a rental database and rents are calculated and identified in a more accurate and measurable way. Reform in this area is long overdue so that rents, as they are in other jurisdictions, are tied to the CPI and other matters. Ultimately people joining the workforce need to have some level of flexibility which can often mean travelling from one part of the country to another in order to take up work and in doing so not wanting to purchase a home meaning that rents are a critical factor. I ask the Minister redress the matter.

An Ceann Comhairle

I will have to leave Deputy Doherty and fit him in at another stage.

Deputy Pearse Doherty

May I speak briefly?

An Ceann Comhairle

Just very briefly.

Deputy Pearse Doherty

I listened to Deputy O'Donoghue earlier. There are many things I do not understand in the week I have been in this House. One thing I cannot understand is Deputy O'Donoghue sympathising with people who are losing their incomes because of these levies given that he is the same person who bled the expenses system dry, travelling to horse race meetings all over the world——

An Ceann Comhairle

The Deputy must speak to the motion.

Deputy Pearse Doherty

——and had to be kicked out of the position in which you now sit, a Cheann Comhairle.

Regarding the tax relief——

An Ceann Comhairle

I must put the question.

Deputy Pearse Doherty

——on trade union subscriptions, never did we have greater need for reliefs on such subscriptions, which should be at the lower rate of tax. At a time when the Government will reduce the minimum wage and employers will use it as a guise to drive down wages, I cannot understand how any party that claims to be on the left would support such a measure as getting rid of union tax reliefs.

An Ceann Comhairle

I must deal with another resolution before midnight.

Deputy Pearse Doherty

The Minister talked about phasing out rent reliefs. In effect in the next 20 minutes somebody entering into a rental contract will have no rent relief because new claimants into this system will not have rent reliefs after midnight.

An Ceann Comhairle

Deputy, please.

Deputy Pearse Doherty

Where is the proportionality in that? How do we allow section 23 property speculators——

An Ceann Comhairle

I am putting the question.

Deputy Pearse Doherty

——to continue up to 2021, but yet rent relief will be finished by tonight?

An Ceann Comhairle

The Deputy will be able to elaborate on budget debate tomorrow and on following days.

Deputy Pearse Doherty

How do we allow the owners of those buildings to continue to get mortgage interest relief but people in their own domestic homes do not get it, people in private rental accommodation will have it phased out and people entering the system from midnight will not get it? Where is the proportionality?

Dáil Éireann debate - Tuesday, 7 Dec 2010

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Dáil Éireann debate -
Tuesday, 7 Dec 2010