Finance Bill 2012: Second Stage (Resumed)

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

I welcome the Bill and acknowledge its important role in delivering commitments in the programme for Government, as well as tackling many of the pressing challenges that people are facing. In recommending a number of provisions in the Bill, I would ask the Government to do everything possible to pass and implement them for the benefit of home owners, businesses and citizens generally.

The first matter I wish to raise concerns the provision to attract people into the country and in return for them providing employment, a tax plan will be put in place to ensure they establish businesses so that particular skills needs can be met. A current example concerns requirements in the digital and ICT sectors. Many such companies across the world are seeking to invest in businesses, thus creating jobs in those sectors which are capable of employing Irish graduates and others. Having spoken to people involved in these industries, I know they are seeking the kind of measures contained in the Bill. The legislation, when enacted, will mean that Ireland is putting together a competitive offering so that our corporation tax rate and regulatory regime will be strengthened.

I also commend the measure which will strengthen arrangements for mortgage interest relief for those who bought homes over a certain period. Fine Gael made this commitment during the general election last year but prior to the budget there was some doubt as to whether it would be implemented. The fact that is has happened shows how seriously the Government takes the issue of negative equity. The Government also recognises the pressure on people who bought homes at a point in the property cycle when the former Government had abandoned any responsibility of care or any pretence to regulate the economy. The Government intends to do all it can to provide support for such people by implementing these measures.

In addition, income tax rates will not be increased, while tax bands and credits will not be changed either. This is an important decision in the context of the programme for Government and the challenges the public are facing. This is the first budget in recent years that will not result in a direct increase in income tax rates, the universal social charge or other payments. We are trying to do all we can to stimulate the domestic economy, as well as providing more confidence to boost consumer spending, so a measure such as this is of great importance.

One consequence of this decision has been that other additional benefits and supports have been changed. In the coming year, people will examine their available income after tax, and the vast majority will find that there is no change at all in their after-tax income as a result of this Bill being enacted. When the public have greater certainty about their money and more confidence to spend it, the delivery of this commitment in the programme for Government will be seen as hugely important.

The Bill must also be seen in the broader context of what is happening within the European economy and the commentary on what is happening here. In recent months, Opposition Members have quoted the fact that Irish bond yields were going up and were unsustainable. They also said that Ireland would not be able to meet its commitments in the programme for Government and would not be able to return to the financial markets in the near future. Of course, those Members are now silent about the international perception of Ireland and the recognition of what is happening with bond yields and Irish debt.

It was particularly significant yesterday that Wolfgang Munchau, a commentator with theFinancial Times, published an article on what could happen to countries with external aid programmes, and the grim prospects that await them. Ireland was not mentioned anywhere in the article. That was a clear recognition from a commentator - who had pretty pessimistic views on prospects for the European economy and members of the eurozone - that Ireland is now set on a different course. Mr. Munchau recognised that Ireland is doing all it can to exit the external aid programme and will find itself well placed to return to the financial markets in a graduated manner in 2014 and 2015. All of this is vital for our country.

We can see what happens when these commitments are not met, given the terrible vista unfolding for the Greek people and their economy. It is vital therefore for the Government to do all it can so that Ireland will not face such a prospect and instead puts itself on a path to sustainable economic recovery and job creation, as well as meeting the commitments in the programme for Government. I have no doubt that we will do so and the Finance Bill is an important part in that journey.

I also wish to comment on the commitment in the legislation concerning the universal social charge. For many people, the creation of that charge and the rates of income at which it was to be levied have created a major difficulty. In many cases, the USC's application rates were below income tax rates and also below the average paying wage in many sectors of the economy.

One of the Bill's measures that will have a beneficial effect on particular parts of the economy is the commitment given by the Minister for Finance to ensure those whose total annual income is around €10,000, coming from a succession of part-time roles or temporary working arrangements, are taken out of the brackets of the universal social charge, USC. It is important this is done because it is an issue of equity and fairness. Is it appropriate those at that level of income should be paying over a part of their income to the USC? It is also important because for those earning such a level of income their level of savings would be very low. It is likely, if not certain, that the income they get back from this exemption will not be saved but go directly into spending in the economy, in shops and in the local community.

Another measure in the Bill I commend is the innovative referencing to emerging market economies in which we are looking to grow our exports. Currently, our share of exports to these economies is low. At a time when developed economies across the world are seeing their rates of economic growth begin to go down, it is vital we incentivise and support Irish companies to find markets elsewhere and diversify our export base. The Bill's measure which allows companies, whether big or small, to be incentivised to go to Brazil, Russia, India, China and other markets in search of exports is to be welcomed. I hope organisations with a role in supporting our export performance, such as Enterprise Ireland, will dovetail together to ensure and incentivise Irish companies looking to win contracts or sell their goods abroad in these emerging markets. A significant challenge we are facing is we are very dependent on the performance of our exports. Last year, we exported over €160 billion worth of goods but as the economic growth rates of the markets to which we currently export slow down, it is vital we find other markets to which we can export and other peoples who will buy our goods and services. While it is a small measure in the Bill, it indicates the Government understands the potential vulnerability of our future export performance. It is incumbent on other State agencies to ensure Irish companies can access this measure and these emerging markets.

I welcome the Finance Bill 2012 which contains several particularly worthy measures. For the first time in several budgets we have not seen income tax rates increase. A vital programme for Government commitment to put in place additional measures to strengthen mortgage interest support for those who bought homes across the peak of the housing boom has been met. Many doubted this would happen but it did. Several other measures will strongly support our companies engaged in export markets by attracting individuals to work in Ireland who will be capable of generating jobs. An additional important measure will support companies selling goods and services to emerging markets. I hope the companies targeted by this measure will be made aware of it and do all they can to take advantage of it.

I welcome the unexpected opportunity to speak on this Bill. I hope to see its passage through the House and the implementation of many of its measures play an important role in ensuring the economy moves towards recovery.

In welcoming the Finance Bill 2012 introduced yesterday by the Minister for Finance, Deputy Noonan, I want to expand on two measures — the special assignee relief programme and the foreign earnings deduction — it contains to help business and to promote the Government's key objective, the creation of jobs.

The special assignee relief programme, SARP, is intended to reduce the cost to employers of assigning skilled individuals in their companies from abroad to take up positions in the Irish-based operations of the employer. As similar schemes are in operation in some countries with which we compete for foreign direct investment, for example the Netherlands and Sweden, it is important we respond. Such initiatives can be a persuading factor when companies decide where to locate investment projects and we need to compete strongly for foreign direct investment.

SARP will provide an exemption from income tax on 30% of salary between €75,000 and €500,000 for employees who are assigned for a minimum of one year. The exemption will be available for a maximum of five years. The scheme will operate through the PAYE system as a deduction from income tax but USC will continue to be payable on the full income amount. Social insurance will also be payable where the individual is not liable to it in his or her normal state of residence. The assignee must have been employed by the company in a country with which Ireland has a double taxation agreement, DTA, immediately prior to the assignment to Ireland, must be tax resident in Ireland and not tax resident in another state in the relevant tax year to qualify for SARP. One trip home per year will be allowed tax free. No other day-to-day expenses will be permitted free of income tax.

In recognition of differences in curricula taught and languages spoken by assignees and their children being brought to Ireland, vouched school fees of up to €5,000 per annum per child where paid for by the employer on behalf of an employee will be allowed free of benefit-in-kind taxation. Share-based remuneration can also qualify for the exemption and there are no restrictions on where the income can be remitted.

The scheme will be introduced for an initial three-year period ending on 31 December 2014 to allow for review. The scheme will be reviewed in 2014 before any decision is taken to extend it. Employees will have to apply to the Revenue Commissioners for the relevant tax treatment and provide clarification of their assignee status from their employer. In addition, employers will have to complete an annual return setting out the numbers availing of the scheme and the value of the salaries exempted.

It is difficult to forecast the take up of any new scheme and its associated costs. Excluding expenses, the maximum amount of exempt income that an employee could have per annum would be €127,500. This would equate to €52,275 in tax foregone for a taxpayer subject to the higher rate of 41%. Accordingly, for every 100 assignees who avail of the programme up to the maximum level of relief, the tax cost would be just over €5 million.

The exemption will be provided for an introductory period of three years at which point it will be reviewed. At that stage, additional information will be available on the number of individuals availing of the exemption, the sectors of industry that the individuals are employed in and the cost of the programme that can feed into the review. Depending on the outcome of that review, the Minister for Finance can decide whether the relief should be retained. This new programme replaces an existing incentive in the tax code that provided for the repayment of tax where the earnings were not remitted.

The number one priority for the Government is the creation of jobs. The introduction of this tax incentive is aimed at reducing the costs to businesses of locating key personnel in Ireland, thereby increasing the potential for additional job creation in new divisions or for new projects of the relevant business. Where an individual transfers from a jurisdiction with lower effective tax than Ireland, the employer often has to increase the salary payable in order to ensure that the relevant employee did not suffer a loss in net pay as a result of accepting the assignment. The requirement for increased salaries imposes additional costs on employers. Costs may also arise in temporarily moving a family to Ireland. In the absence of the incentive, it could be more cost efficient for a multinational to assign such individuals and any associated jobs to some of our competitor countries.

The Minister also announced the foreign earnings deduction scheme in the context of this Bill. This is a deduction from income for income tax purposes in respect of employees who travel abroad to certain countries as part of the duties of their employment. At his press conference last Wednesday to launch the Finance Bill, the Minister acknowledged the work done by these employees on behalf of this country and indicated that they should be encouraged. The new scheme will grant a deduction from salary of up to a maximum of €35,000 for employees travelling to the so-called BRICS countries, namely, Brazil, Russia, India, China and South Africa. This deduction will, however, remain chargeable to the USC. The individual claiming the deduction must be absent from the State for a minimum of 60 days in a tax year. These days can be accumulated from a number of visits. The individual must be present in the foreign state for a minimum of ten days per trip. This deduction will be proportional. It will be calculated based on the numbers of days spent abroad, the salary of the employee and the length of the employment. The relief will be provided by way of refund at the end of the tax year.

BRICS countries were selected because CSO data suggest that approximately 4% of Irish exports are currently made to them. The Minister believes there is potential for Ireland to increase exports of goods and services to the large populations of these countries. Anecdotal evidence would indicate that certain employers are encountering difficulties in encouraging employees to embark on trade missions to the countries concerned and it is against this background that the scheme has been proposed. According to CSO data the value of Irish exports in 2010 was €89.4 billion, of which €3.6 billion was exported to BRICS countries, representing approximately 4% of the total amount exported. With a combined total estimated population of 2.8 billion, these countries represent an enormous potential market for Irish businesses.

The deduction will be provided for an introductory period of three years until tax year 2014, at which point it will be reviewed. At that stage we should have additional information from the CSO regarding export levels to the targeted countries to feed into the review. Depending on the outcome of that review, the Minister will decide whether the relief should be retained. It is difficult to forecast the take up of any new scheme and thus the associated costs. The maximum amount of exempt income an employee could enjoy under the schemewill be €35,000 per annum.

These new schemes are aimed at helping Irish companies to export to some of the largest markets, with which Ireland currently does relatively little trade, and to encourage the relocation to Ireland of assignees who can generate further jobs through their work. These are progressive and useful measures which together will help us achieve our principal objective of creating jobs. The schemes are relatively cheap and we will see whether they work. In circumstances where there is very little money, they are worth trying and I hope they succeed.

I welcome the opportunity to speak on the Finance Bill 2012. Aspects of the Bill which particularly affect the public are the provisions for VAT increases, excise duty, carbon taxes and mortgage interest relief. The budget also introduced the household charge and changes to capital gains tax and DIRT tax.

Before addressing these issues, however, I wish to speak to the provisions of the Bill on business related matters. I welcome large portions of the Bill, although my party will be tabling amendments in respect of certain provisions. Its impact can be described under four categories. The research and development tax credit amendments mean companies will now have the option of using a portion of their credits to reward key employees involved in this activity. Essentially, they can allow employees to use the company's credit against their own tax bills. The special assignment relief programme is targeted at people who come to work in Ireland after spending at least five years outside the country. Certain returning Irish people will qualify for the programme. The foreign earnings deduction scheme will apply to employees who spend ten consecutive days working in Brazil, Russia, India, China or South Africa, providing they spend at least 60 days in those countries over a 12-month period. The deduction will be paid by way of a rebate towards the end of the year.

I welcome the research and development tax credit scheme. It will be important for small businesses and start-up companies. I have not studied the entire Bill in detail because, at 279 pages, it is the most voluminous Finance Bill in several years. I am not saying it is the best, however. The credit could ultimately be worth 37.5% if one adds the 25% allowance for research and development over previous years to the 12.5% corporation tax. Much of the research activity in smaller businesses is done by a limited number of key individuals who bring value to companies. As start-up companies in particular may not be in a taxable situation, the research and development tax credit is of no benefit until they become profitable many years later. The new scheme will help businesses with their cashflow in early years by offering the benefit to employees. It would also make it feasible to attract certain key people who might not otherwise move to Ireland. I understand there is increased provision for companies which contract out some of their research work.

The outbound assignee scheme is welcome if it helps exports to the countries concerned. If Fianna Fáil was still in government we would probably introduce it for a limited number of countries to see how it works before rolling it out to other countries with which we have double taxation agreements. However, the minimum and maximum presence requirements are somewhat bitty and I would like to see a more simplified way of administering the scheme. When I hear about people claiming tax relief based on the number days they live abroad, I am reminded of the Minister for Social Protection, Deputy Burton, who stood up time after time to raise the issue of people who were not paying taxes in Ireland on the basis of non-residency here and were jetting in and out of the country. They were allowed to be here for a certain number of days in a year.

The Deputy wanted to know whether customs officials or gardaí at airports, at private airfields and on the Border were checking them coming in and going out. I could write the script - I heard it 1,000 times. I hope the Minister is not as silent when it comes to this or maybe she will accept there is a more sensible practical middle ground.

The intention is correct but I believe the Bill goes into too much detail. I would simplify it and withdraw some of the nitty-gritty rules. A person could be on a ten-day sight-seeing trip to Brazil and decide to come back a day early in order to avail of more suitable interconnecting flights. I do not know how these days will be counted. I am not saying it will be abused but somebody will say it will be abused. They are generally large companies and will have good operations in place.

Some companies claim some of the mobile technology applications will probably prove where the person is by use of his or her dedicated company mobile telephone. It will show from what country the calls are being made. Nowadays there are ways of almost - I hate to say it - electronically tagging employees when one knows the location of their mobile phones.

Like Deputies.

We have not gone there yet. However, there are simpler ways of doing it.

Perhaps the Bill is so voluminous at 279 pages because it gets into such small details. There is a point in the level of detail where the law of diminishing returns sets in. I agree with the scheme, which should be made as simple and workable as possible. If a person is out for nine days on one occasion and 11 days the next time, the scheme should not be invalidated for such small details. It should be 60 days in the year without worrying if a person was five days or nine days on a particular trip. I suggest that in the interest of simplicity.

Last July the Government introduced what initially was to be a budget, then a mini-budget and finally it was relegated to the jobs initiative. Essentially it was a €2 billion raid on the private pension funds by taking 0.6% out of the all the private pension funds over a number of years, which was to be used for job creation purposes. We know all the money deducted last year was not used for that purpose - half of it was. There is a €200 million carryover into this year and it is important that it be used on job creation initiatives.

I table a series of amendments to that legislation in order to apply the pension levy to approved retirement funds. I pointed out that people such as Seán FitzPatrick and Michael Fingleton had large pension funds - allegedly more than €10 million although some claim it was closer to €30 million - which were not captured by the pension levy. I asked the Minister, Deputy Noonan, to consider that. I believe the Minister of State, Deputy Brian Hayes, might have been here in the Chamber during the debate. He said he would re-examine the issue and might return to it in the Finance Bill and increase the rate from 5% to 6% on the approved retirement funds, which would be another way of capturing a similar amount. I am pleased that the Government was listening to the very constructive amendments we proposed.

There was unfairness and Deputies were unhappy that when the pension levy was introduced, it excluded the wealthiest people who had the facilities to set up these approved retirement funds. The Minister took it on board and gave a commitment to review it for inclusion in the Bill before us. I understand that the annual imputed distribution from approved retirement funds has been increased from 5% to 6% on multiple ARFs exceeding €2 million on 30 November in the relevant year. The Bill clarifies in such cases that the 6% distribution rate applies to the entire approved retirement fund and not simply the excess above €2 million. The annual imputed distribution is the amount of the approved retirement fund which must be subjected to tax annually. The change has effect from 2012.

These matters can be transferred within families and I understand that where an individual transfers an approved retirement fund on death to a child aged over 21, the assets are to be taxed at 30% - it was formerly at the standard rate of 20%. I welcome this change which is in line with the spirit of the amendment we tabled in July and I support the Government in taking that route. In addition to the financial benefit there must be equity regarding people who have special retirement funds separate from ordinary citizens who have what we call the normal pension funds and who were being hit on that basis.

The increase in the rate of VAT to 23% flies in the face of what was announced six months earlier in the jobs initiative with the reduction in the VAT rate for certain sectors. If it was right to reduce the VAT rate, it is not right to increase the VAT rate. One or other is wrong and I believe the increase as confirmed in the Finance Bill is wrong. We all saw the impact it had on the January sales with the number of businesses and retail outlets closing down because people do not have the cash to spend. When we were doing our best to get inflation down and costs under control, the Government decided to increase the VAT rate on a large variety of items that people purchase on a daily or weekly basis. In a full year it is estimated that this will take in €670 million.

However, the Department has clarified and Minister has confirmed that it is done on the basis that there will be no changes in consumer spending patterns in arriving at this number. It would have been more prudent and honest if the Department had estimated there would be a small reduction in the amount of retail activity because of the increase in VAT and therefore reduce the estimate of the yield from this source in Budget Statement. While I hope it will not happen, I would be afraid there will be a fall-off in the yield from VAT during the course of the year.

The next issue is the 25 cent increase on a packet of cigarettes. While I am not a smoker, I understand the price has increased from approximately €8.65 to €8.90. I would support the Minister if he put a further €1 on top of that and introduced such an amendment on Committee Stage. Everyone knows the health case for doing so and I believe the only reason for not doing it is the amount of smuggling of illegal cigarettes. We all know anecdotally that if a person, who walks into an eastern European-run shop in any of our constituencies, is one of their own he or she will get the smuggled ones that came in the car, but an Irish person will pay the full rate. It is happening on a wide-scale basis and not just in one or two shops.

It is reported that up to 30% of the cigarettes smoked in Ireland are smuggled. I would like to see the emphasis on greater confiscation of the contraband coming into the country because we do not know the materials that make up those cigarettes. At least we have some idea of how harmful the legitimate cigarettes are. The Government should go harder on that. I accept that by increasing the price of cigarettes it increases the incentive for people to smuggle because of the bigger profit margin to be made if they are selling them at €5 a packet instead of €8.90 a packet. The emphasis should be on trying to reduce the illegal trade in that area.

The big issue affecting everybody is the increase in carbon tax. Diesel and petrol have increased to an enormous extent. Petrol is now approximately €1.60 a litre and diesel is €1.55 and it changes regularly. Every week in our constituencies people from the haulage industry talk to us about the cost of keeping a truck on the road, which is getting very expensive. That added to the road tolls means that people in the transport business must cut their costs. Those running lorries or company cars have a business cost which they must reduce. The rest of us who buy fuel at the filling station are paying the extra rate and everybody now knows how much it costs to fill a large car with petrol, which can be up to €100 in some cases. I have seen a pattern develop in the past six months whereby people are now buying €5, €10 or €20 worth of petrol or diesel, whereas previously they got €50 worth on the basis that it will keep them going for a couple of days. Many distributors are now selling home heating oil in 5 gallon drums.

People come in with 5 gallon drums and take home two drums which will do them for one or two weeks. They cannot afford for the lorry to deliver. Years ago, when people needed oil they asked for the tank to be filled up. Now the people at the other end of the telephone ask how many litres are wanted, whether 100, 200 or 300 litres. Some companies have a minimum delivery quantity because it is not economical otherwise. They must keep their trucks on the road. The cost of transport has gone up considerably.

I refer to one anecdotal situation. Deputy Tom Hayes and others who travel to Dublin will be familiar with it. There is a new toll road on the M7 and M8 at Portlaoise. Everyone from Limerick and Cork travels on it. I live on the old N7 road. There used to be a good deal of traffic on the main road in front of my house in Castletown village on the N7 between Mountrath and Roscrea. There was always a difficulty getting out of the village. However, for one year after the toll motorway was opened in Summer 2010 traffic on the road diminished considerably. In recent months I have found when I go out from my house that the traffic is nearly back at its old level on the old road. It is not that there are more lorries, vans or cars on the road but fewer are using the toll roads because they are so expensive, a further example of the costs of motoring and transport. This is pushing up the costs to businesses and making us less competitive. The Government increased motor tax rates in the budget. I realise they had been rather low but the percentage increase at the lowest level was severe and there should have been some way of alleviating the costs borne by individual motorists.

The Budget Statement included a €100 household charge and there are few exemptions. I wish to raise an issue relating to the charge and we have tabled parliamentary questions on the matter. There are many people, especially elderly people, who do not have access to an Internet or payment by credit card while using a computer when sitting at home in their kitchens at night. Many pensioners have come to me asking if they can go to the council to pay. An arrangement is in place whereby if one is sitting at home with a laptop one can pay €25 per quarter. However, if one goes into the local authority office to pay, the local authority will not accept the payment in instalments at the local authority cash desk. One must pay either €100 or nothing. This is a most unfair imposition, especially on elderly people and people who have low incomes and who are not exempt.

A mechanism should be in place to treat all citizens equally when it comes to paying new levies. There should not be one system for those who can operate the new modern high technology systems of payment but another for people who are unable to do so, who have not been trained and who do not have the resources, education or the financial wherewithal to have laptops in their houses. They should not be discriminated against and informed that they must pay €100 upfront. This is unfair and wrong and it is a nasty way of saying to certain people that they are not in the modern Ireland and they must pay €100 upfront when they go to the cash desk. I call for an amendment on this matter during the passage of the legislation.

For several years I have been unsuccessful with Ministers in calling for the imposition of an extra €1 at a minimum on every can of beer in every off-licence, supermarket and filling station. I support such a measure as do most sensible people. The idea of being able to get a slab of 20 beers, even if they are only 500 ml at 99 c each or 20 for €20 or 24 for €20, is too cheap. Too many young people are binge drinking at 12 and 13 years of age. The Minister of State need not try to tell me that they are too young to buy drink. They get their older brothers and friends to buy drink for them. It is cheaper than water or milk. Alcohol should not be the cheapest item in the supermarket. Even at this late stage I support an amendment whereby no can of standard sized beer could be sold in an off-licence for less than €2. I am unsure what mechanism the Government would have to introduce to do so but it should do so.

The Budget Statement was most unfair and harsh on one-parent families. The amount they can earn while still claiming that payment has been reduced on a weekly basis as has the amount they can earn for home help and community employment schemes. The fuel allowance has been cut by six weeks for everyone. This means the current season will end on Friday, 6 April and the full season for 2012 and 2013 will commence on 8 October 2012. There has been a six week reduction in the rate. The Government maintains it has not cut rates but it cuts the amount of money it gives to people. The Government can claim that is not a rate cut but it is. People know the money they get in their payment each week is less for six weeks of the year. That is a rate cut although the Government may wish to involve itself in semantics and say it is not.

The change to the age limit for one-parent family payments claiming for their children is changing and this will cause hardship as well. We support large aspects of the Bill. It needs significant improvement and we will be tabling amendments during the course of the passage of the Bill through the House.

The next speaker is Deputy Kieran O'Donnell. I understand he is sharing time with Deputies Tom Hayes and Simon Harris. Deputy O'Donnell has 7.5 minutes.

I am glad we have entered the decimal age. I would have said "seven and a half minutes" because I am something of a traditionalist. I am pleased to be able to contribute to the debate. This is probably the most important debate of the year aside from the budget because it puts flesh on the budget. I do not often agree with the Opposition but I agree with Deputy Fleming's comments on cheap drink. One can buy a bottle of beer cheaper than a bottle of water in a shop. That is crazy and it must be changed. However, my views differ from those of Deputy Fleming on other issues.

Unlike previous Governments, we have an integrated approach to bringing the economy around. The three strands are made up of the banks, which we have stabilised, the fiscal side, which involves balancing the books, and jobs. The budget and the Finance Bill are pro-jobs measures and this is what it is about. The action plan launched two days ago is on the same lines.

Section 2 of the Bill deals with the universal social charge. A further 330,000 workers will be exempt from the charge. This measure is welcome.

The Minister of State, Deputy Hayes, referred to the special assignee relief programme, SARP. People are missing the point of this. What is the opportunity cost for Ireland if we do not introduce it? There is no cost to Ireland otherwise but by bringing in the measure one gets the benefit of creating further jobs. One is bringing in people with skill-sets in research and development whether from the diaspora or others. The push and cry has always been for the multinational sector to get more into the research and development area. This measure promotes that field as does the fact that we are improving the tax credits on research and development in section 26.

The foreign earnings deduction for the BRIC group of countries is welcome. There is considerable growth in these countries especially in China and Brazil. We need to go to these countries and make the sales. We must think outside the box and that is what we are doing in this case. Before the election we committed to not increasing income tax because we believed that would be anti-jobs. We have honoured that commitment.

There is mortgage interest relief for people who bought houses at grossly inflated prices. I was a councillor for some time before I became a Deputy. Young people were forced to buy houses because they were told that if they did not get on the property ladder they would never be able to do so at a later date. Many bought one- and two-bedroom apartments with the intention of selling on and buying a home. Many of these are now trapped and probably will never be able to sell on. We are giving them 30% mortgage interest relief in cases where they bought a house or started to make first-time buyer mortgage payments between 2004 and 2008. That is a positive measure. We made that commitment and have honoured it.

I wish to refer briefly to the action plan. Legislation is being prepared for the partial loan guarantee scheme. Credit is hugely important for the SME sector and this scheme will be a positive measure. The micro-finance scheme, which will involve loans of under €25,000, is also a positive measure. There have been reports that we are dismantling the county and city enterprise board networks. I have a different perspective on that. One of the weaknesses of the system to date was that if one employed fewer than ten people, one went to the county or city enterprise board and if one employed more than 50 people, one went to Enterprise Ireland, but there was no enterprise board catering for anybody employing between ten and 50 people. The new model is simple. We are restructuring the enterprise boards and they will be a one-stop shop in which Enterprise Ireland will have both a micro and small business division. These one-stop shops will be located in local authority areas. This is important because local authorities are part of the business mix, but until now they often have not been included. They will now have a responsibility in this area. From now, businesses will be looked after from cradle to grave. Many of our companies are small, but we need to grow those companies above ten employees and encourage them to become involved in the export market.

I want to deal now with the banks, specifically the Anglo promissory note. This was an artificially created note with one institution for €30 billion. The practical implication of that note for the people is that in both 2013 and 2014, some €1.8 billion will hit current account expenditure for the State. This will affect people's lives. The Anglo note was put in place to avoid contagion in Europe. We did Europe a major favour with that note and it should now repay the compliment. I was part of a delegation to Berlin recently where I know the politicians understand what we have done. However, our diaspora need to engage more with the public in Germany and elsewhere on this, particularly now that many European countries are in general election mode. Negotiations on the Anglo promissory note are ongoing and I hope they go well. It is critical Europe realises we are in this together and that what is good for Ireland is good for Europe. A restructuring of the promissory note is a key step in that regard.

I am pleased to have the opportunity to speak on this Bill, which is one of the most important pieces of legislation issued by the Government. I say " Well done" to the Government on this Bill. We live in extremely tough and difficult economic times and people are under extreme pressure. People who were once well-off, people with businesses, people rearing families and people across the board are finding times difficult. The country's finances are in turmoil and this Bill was never going to be good news. The challenge for the Government was not to focus solely on what to cut and tax, but to give people hope and help them in their hour of need.

I am aware the Opposition will point out the less palatable decisions made in the Bill and pretend that we could, somehow, regain economic sovereignty without taking the necessary measures. The truth is different, however, and the hard fact is that we must take these measures. Fine Gael was elected to do what is right, not what would make us popular. I believe doing what is right is the cornerstone of what the Government has been doing since it came to power. It is difficult to make these decisions, but whether we are Ministers or backbenchers, we are not afraid to do the right thing.

Changes in taxation and the change to increase from €4,000 to €10,000 the exemption threshold in the universal social charge will help some 330,000 low paid people. This has gone unnoticed and no Member of the Opposition has said this was a good decision, although they know in their hearts and souls it was. I cannot understand how some Members of this House, along with others involved in campaigns outside of the House, can say that people should not pay certain taxes. I see posters all over the country urging people not to pay the household charge or the €5 septic tank registration charge. These are fair charges. No matter how we crib about it, the household charge is a tax levelled on everybody. If there is anything wrong with that charge, it is that it is the same for all households, but the Government will move to adapt it so that people with more expensive houses will pay more, and I welcome that. Property tax is a fact of life in almost every country. It is a fair system of taxation and for that reason it is unfair and wrong for some Members of the Opposition to advise people not to pay it. It is a fair tax and will help the country straighten itself out of the economic mess.

There are young people in the Visitor's Gallery looking down on us here week in and week out. I am more concerned about those people and about the need to straighten out the economy for them. We have come a long way in 12 months. I say to the young people listening in the Visitors' Gallery that in two or three years' time, this will be a better Ireland, provided we stay on the road we are on and do not Mickey Mouse around and advise people not to pay this or that tax. If we all muck in together, we will come out of our difficulties. In any business that was ever in trouble, if the employees and management worked hard and pulled together and if they paid their debts, the business improved. Running a business and running a country is not much different. What we need to do is to get Ireland out of the current mess so that those in business will keep their jobs and there will be jobs for young people throughout the country.

There are huge opportunities in the food or tourism industries and for our educated workforce. There is potential, and this is clear from the announcements made by the Taoiseach some weeks ago. I spoke to the Taoiseach in the Chamber this morning and I could hardly believe him when he told me the number of jobs that will come to this country in the coming months and years because we are a competitive nation. If anything is to come from these difficult economic times, we must work together. The Opposition must stop opposing changes. I spent 12 years in Opposition and know it is the norm to shout at Government telling it that it is wrong. We need a better and more parliamentary approach that will come up with sound suggestions as to how the country can come out of its difficulties. If we do this, I have no doubt we will be in a better place.

I live in the heartland of the food industry. People are waiting in every parish in Ireland to expand their businesses, particularly in the food industry. Tourism is similar and I could talk about it for hours. There is potential in the country and we must believe in that and stick with it. Ireland is the place for me and for those who come after me, children and grandchildren. This is the place for us and this is the Ireland we want. It is the best place in the world in which to live and to do business.

I very much welcome the opportunity to contribute some brief thoughts on the Finance Bill. It is important we do not consider this Bill in isolation as to do so would be to miss the point. The Bill before the Dáil is the latest piece in the large jigsaw that must be assembled by this Government, the State and its citizens in order to bring about the economic recovery that Deputy Tom Hayes spoke about so passionately and to restore fiscal autonomy to this country.

As a Government we recognise that job creation will be at the core of any sustainable recovery in this country. Since coming to office we have introduced the jobs initiative, which Deputy Fleming almost sneered at earlier. That was the same jobs initiative which restored the minimum wage that his Government so cruelly cut and which brought in targeted lower VAT measures for a number of our businesses and small firms involved in the tourism area and the provision of services. We recapitalised the banks, as difficult as that was, as every functioning economy needs working banks. We have been involved in intensive ongoing negotiations with our partners in the European Union and the IMF.

This week we launched an action plan for jobs; this is not just rhetoric and lovely glossy document rather 270 specific proposals that will be overseen by the Department of the Taoiseach, the highest Department in the land. There is a timeframe and oversight mechanism and this will give real hope to small businesses, entrepreneurs and employers throughout the land that this Government is committed to working with them.

Specifically, I welcome in the Bill the special assignee relief programme to reduce the cost of employers in bringing in skilled individuals from abroad to take up key positions. The Minister of State, Deputy Brian Hayes, has already debunked a number of the myths surrounding this concept, of which there have been a few in the media. As Deputy Kieran O'Donnell stated, there is no cost to the Irish State in this measure rather a potential gain if we bring in more skilled professionals. The existing employees of companies in this country will be able to develop their own skills and gain further expertise from these highly specialised areas. The initiative will enable the country to compete, and the country must become more competitive. We must be able to stand shoulder to shoulder with other nations across this European Union in trying to bring new business and investment to the country.

The Finance Bill also provides further incentives to small and medium enterprises to engage in research and development, and I welcome that Opposition Deputies have joined with Deputies on this side in welcoming this initiative. We must do everything possible to encourage small and medium enterprises to play their full part in bringing about economic recovery. We must support and encourage them in every possible way and the ability of companies to use this tax credit to reward employees central to research and development will encourage skilled workers to remain in Ireland, which is an important point. We cannot afford a brain drain in the country and we need highly skilled people to stay and play their part in restoring our economic sovereignty.

It is important to note this Bill is not just about business, tax or technicalities. It is also a Bill about people, and it gives a clear intention about where this Government stands when it comes to Irish citizens, fairness and helping struggling homeowners and those on lower income. When we came into office people argued that we would not restore the minimum wage. I sat through Leaders' Questions when Opposition Deputies time after time accused the Taoiseach of reneging on the promise to restore the minimum wage but it was restored.

Another key commitment in the programme for Government was to review the universal social charge. We cannot abolish it as the State needs the revenue but we wanted to take the lowest earning individuals out of the charge's catchment. We have done so and that should be welcomed by people as it is a key commitment in the programme for Government that has been fulfilled.

I come from the commuter belt county and I know the introduction of the 30% mortgage interest rate relief for first-time buyers who purchased homes between 2004 and 2008 is a particularly welcome development. In my home town of Greystones, in Bray and throughout County Wicklow we saw massive development during the boom years, with many people, including first-time buyers, purchasing apartments and homes at extremely exorbitant prices. They were enticed and seduced by banks convincing them that they could afford these homes but many now face unemployment or live in negative equity. The 30% mortgage interest rate relief is a key commitment and sign that this Government is listening, will help and will acknowledge the problem being experienced. We would all like to see it extended but within the limited available resources, it is a targeted measure and the Government should be commended on it. We must follow up on that initiative with the personal insolvency Bill, which will allow people a way of working out their debts so they do not feel like prisoners in their own home. An implementation plan for the Keane report is also important.

A matter I should raise with the Minister of State is an unintended consequences of the introduction of VAT on admission to stately homes, gardens and tourist destinations. I understand there is an EU directive mandating this change but there is an anomaly in the rate of VAT being levied. In my own constituency there is a well known tourist destination which has seen its VAT rate jump from 0% last year to 23% under the new proposals, which is obviously a severe hit for any business. This Government has put so much attention on the tourism area that this anomaly must be considered. The Finance Bill already acknowledges the need to address the anomaly on page 141, when it refers to open farms, and I have written to the Minister for Finance about the issue. On Committee Stage I ask him to consider rectifying the anomaly beyond open farms to take in tourist destinations, as tourism will play a crucial part in our recovery.

We have all heard in this House and in the media that Ireland is the "good boy" in Europe. We are playing our part and the Finance Bill is the next stage in the State doing everything possible to restore our economic sovereignty, repay our debts and create employment. It is now time to recognise our being the good boy or girl in Europe and I call on the Government do everything it can - as I know it is - to seek concessions in Europe.

I wish to share time with Deputies Colreavy and McLellan. I welcome the opportunity to speak to the Bill. I firmly believe one cannot divorce the social from the economic, as economic decisions directly impact on people's lives. I note the previous speaker on the Government benches stated that people mattered in the Finance Bill but the problem is that they only matter a small bit.

The economics contained in this Finance Bill will have a very negative social impact and already one can see a sorry harvest being reaped in many working class communities. This Bill and the economics in it will further divide communities, fuelling the race to the bottom. With deepening cuts to the public service and growing poverty it will greatly increase the pressure on the community sector, which must now provide more services to greater numbers with fewer resources. This is a direct result of the politics pursued by this Fine Gael-Labour Government and the previous Fianna Fáil Government.

This Bill aims to put into law a regressive budget, which is clearly seen as an extension of the previous Government's policies of austerity and cutbacks. This Government came to power 11 months ago on a ticket of change, openness and hope. Labour promised to take the edge off Fine Gael Tory policies but it is now the helping hand of government; we are still seeing the iron fist of austerity. We have a coalition of forces protecting the wealthy and punishing low and middle income families. Unfortunately, the most vulnerable sections of our community are coming in for some vicious attacks, which are well recorded. They include attacks on lone parents, those on community employment schemes, home help and the fuel allowance. The list goes on.

We can see the expansion and invention of more tax breaks and the Finance Bill legalises further tax evasion. The introduction of the foreign earnings deduction will allow employees based in Brazil, India, China, South Africa or Russia from select companies a tax break of €35,000 per annum. The new special assignee relief programme allows for multinationals to operate tax relief of 30% for select employees coming to work in Ireland. Although this programme has operated previously, no evaluation has been carried out and no research has shown that this brings jobs or talent to Ireland. In reality, the opposite is true, as the contradictions are glaringly obvious. We have graduates filling aeroplane seats heading to Australia, Canada and the US for work but this Government feels it is right to fill the aeroplane on the return journey with those receiving tax breaks on earnings between €75,000 and €500,000 per year.

As if that was not enough, the Government has dreamed up a further tax break, the research and development credit for key employees. Companies can now utilise part of their research and development tax credit to pay key employees on a tax free basis but there is no evidence that this will create jobs or stimulate the economy. In addition to introducing such tax breaks, the Government is bringing people on illness benefit, occupational benefit and a range of other benefits into the tax net. This is no more than a schoolyard bully tactic, as it involves punishing and putting the boot into the weakest.

Like its predecessors, this Government is focused on protecting those who protect it. It makes sure the wealthy get wealthier and the rest of us suffer. To make matters worse, Fine Gael and Labour Party will rub salt into the wound by paying a further €3.1 billion to Anglo Irish Bank next month. There is no obligation to pay this money, but there is an obligation to look after those who are weak and to cherish "all the children of the nation equally". That is not simply a quotation from the Proclamation. It should not be seen as a mere aspiration. We should be trying to make it a living reality across the island.

The Government has choices. This Bill attempts to deal with mortgage relief, but it fails to apply relief where it is most needed. It does not attempt to solve the crisis in local authority loans, four out of ten of which are in serious distress. Many families that have fallen on hard times have been evicted. Many others face legal action and live in daily fear of losing their homes. I raised this issue on a number of occasions last year, but the Government has chosen to sit on its hands. It is time for the Government to introduce solutions, based on workable proposals, to deal with local authority loans in distress.

Fine Gael is pretending to be a job creation party. The Finance Bill 2012 will further depress the economy and impose hardship, unemployment and emigration on citizens. One cannot expect the economy to grow when one is taking money out of people's pockets. Consumer spending has decreased by 15%. Jobs cannot be created in that type of economy. The 23% VAT rate is having a serious impact on jobs. It does not have to be like this. Sinn Féin knows that different decisions can be made. More importantly, Ministers and Government backbenchers know it as well.

When Sinn Féin presented its pre-budget submission, it was serious about its implementation. Our primary focus was on protecting the most vulnerable, investing in jobs and supporting communities. We set out our plan to create jobs by means of a €7 billion stimulus package over a number of years. We outlined how we would put money into people's pockets through a household stimulus package. The budget we would have introduced would not have included increased student fees, water charges, stealth taxes or higher VAT and excise duty. We would have abolished the universal social charge. We would have made the necessary €3.5 billion deficit adjustment by taxing wealth and cutting spending. We would have narrowed the gap in the State deficit. The Anglo Irish Bank promissory notes would not have been paid. Our budget would have been good for families and low income earners.

Where would Sinn Féin get the money from?

We would not have handed it over to the banks. We would not have paid the Anglo Irish Bank promissory notes.

That would not be enough.

We would have reduced the burden on low earners by abolishing the universal social charge and taking half a million people out of the tax net. Our plan to introduce refund tax credits would have helped the poorest people in society, particularly those with gross earnings of less than €15,000 per annum. Our budget proposals would have removed the charge on medical card prescriptions.

The Minister, Deputy Quinn, has been attacking the education system. We would not have done that. Our budget proposals would have given a free lunch to every child in the State. We would have reversed the cruel decision to cut the number of special needs assistants by 200. Where we have had an opportunity to make changes, we have done so by using our limited powers in the Northern Assembly. Deputies must remember that Sinn Féin is part of a four-party arrangement in the North. Nonetheless, we have put in place a social investment fund of £96 million, a hardship fund of £28 million to protect people against Tory welfare cuts and a fund of £15 million to deal with rural poverty and isolation.

Sinn Féin has cut capital budgets in Northern Ireland.

A further £14.5 million has been provided for a child care strategy.

It has reduced the number of public servants by 20%

They have been sacked.

All this has been done even though the block grant from the Tory Government in Westminster has been cut by almost £5 billion.

Sinn Féin should hand the grant back if it does not want it.

It is a myth and a lie to say we cannot make decisions to protect the most vulnerable, the needy and the poor. We can cherish all the children of the nation equally if we choose to do so.

Thanks to British taxpayers.

Governments can do so by making the right choices. The social cannot be divorced from the economic - they have to be brought together. The economics of this Government would rest comfortably with the Tories.

Sinn Féin is implementing their policies.

It would be stuck without them.

I advise the Labour Party and Fine Gael not to rest easy on the laurels of office. People are angry. The cuts are having an effect. The Bill before the House will serve to increase that anger.

It is a little unedifying to see a Minister of State behave in such a childish way during a debate. I am glad there are no school children in the Gallery watching what passes for debate in this Chamber.

They are all in school.

Frankly, it is embarrassing to listen to the Minister of State. I will confine my remarks to my brief of agriculture, food and fisheries. The Deputies opposite should prepare for a shock because I am willing to acknowledge that welcome improvements to the agricultural sector have been outlined in the Finance Bill 2012. I recognise the attempt that has been made to give attention to agriculture, which is one of Ireland's most valuable resources. For example, the rate of stock relief for farmers operating through a farming partnership is to be enhanced to 50% for all registered partnerships and to 100% for certain young trained farmers forming such partnerships. That is good and progressive. The Government wants to increase the number of jobs in the agriculture, fisheries and food sectors by helping them to diversify. That links in with the action plan for jobs that the Government announced recently. Although such efforts are good, I do not believe they go far enough.

Ireland is sitting on a goldmine of agricultural and marine wealth. These sectors can be the vehicle for achieving national economic recovery. Under Food Harvest 2020, which is a very good project, the Government aims to increase milk production by 50% and add 20% to the value of the beef sector. These aims are admirable, but agriculture is about more than that. Sinn Féin is keen to point out that farms in the BMW region are much less capital intensive then those in the rest of the country. There is a wide variance throughout the State. Although the BMW region contains almost 53% of all farms in the State, those farms only have 36.7% of all farm machinery in the State. There is an imbalance between different areas. More has to be done to bring smaller farms in more disadvantaged areas to maximum production.

Equally, the Government needs to do more to support indigenous tourism businesses in more disadvantaged areas. The agriculture sector goes hand in hand with the natural beauty of the Irish countryside. We should not forget that what the BMW region does not produce in agricultural output, it makes up for in unblemished landscapes. Agriculture is very much linked with tourism. This has to be fostered and developed. The Government needs to do more to aid grassroots tourism. The Bill before the House needs to go further in giving farmers an opportunity to engage in diversification. If the encouragement of tourism activities is to flourish, basic services such as roads and broadband are essential for rural areas. Funding for the conservation and upgrading of rural heritage sites is required. Training for those who are or wish to be involved in tourism has to be provided.

If we are serious about protecting the beauty of our landscape and the future of people in the north west and the rest of the BMW area, we should not permit fracking for the gain of a few wealthy individuals. It would be unforgivable if the Government were to permit the destruction of a beautiful area of north Leitrim by turning it into an industrial wasteland.

Fracking should be taken off the agenda immediately.

I will stray a little from agriculture to discuss briefly rural development. I attended a briefing this morning provided by the good people of Ireland West Airport Knock who outlined the facts underlying the excellent service the airport provides and its economic and social contribution to the region. Ireland West Airport needs and deserves State support to enable it to continue to expand and improve. It was interesting to note the emphasis the airport places on the need for integrated infrastructural and tourism development throughout the region. Improving infrastructure and tourism is a win-win scenario for everyone concerned. We must invest in local economies if we are to improve the national economy. Achieving the latter objective is not possible in any other way.

I welcome the opportunity to speak on this important Bill, which will affect virtually every home in the State. This legislation will give legal effect to many of the budget 2012 proposals and provides the detail of these and many other proposals. The devil, as always, is in the detail. Many families are only now starting to feel the effects of the first tranche of budget 2012 cutbacks. Letters are starting to arrive in the post and the pain is becoming more apparent. People are devastated and on their knees. Having experienced one cut after another, they do not have any more to give.

We all agree that in the run up to the budget many people were concerned and anxious about what was coming down the tracks. They were nervous about what the budget might hold for them and their families. Newspapers were full of leaks which, according to journalists, emanated from Ministers and their advisers. People were scared for many reasons, with most of them concerned about how they would pay the bills. Many people were also frightened about their jobs, while the few who had something to spare in the bank were concerned that the euro would fail.

Ministers assured anyone who wanted to listen that this would be a reforming budget, with one Minister suggesting it would not be as bad as we thought and we should consider taking a holiday. Words and phrases such as "adjustments", "austerity", "painful process", "fiscal adjustment", "consolidation", "sharing the burden" and "heavy lifting" punctuated the rhetoric. When we hear the word "reform" it usually brings to mind efforts to improve or enhance what currently exists or perhaps to abolish a wrong or bring about change. I do not see evidence of any of these scenarios in the budget. To describe the budget or Finance Bill as "reforming" is wrong as they represent more of the same failed politics and policies.

In his television address to the nation the Taoiseach stated the budget, which I presume he had seen, would seek to look after the most vulnerable. Given that the cuts announced in it are being imposed on school children, the elderly, lone parents, young people and those with a disability, I do not know on what his statement was based. If there is any guilt, it is that the Government is guilty of implementing the same ill-thought out, regressive policies as its predecessors. This is not what people voted for when they voted for change in the belief that there would be a difference. People are still scared. They are adding up the figures and wondering what they can cut back in their shopping baskets. They are facing new bills and realising the true effects of the Government's plan.

The decisions implemented in the Finance Bill will undermine the rights of children and young people to access a fair standard of education. It is a Minister of the Labour Party who will oversee the implementation of these cuts. We have seen a complete U-turn on pre-election promises.

The most outrageous proposal in the Bill is the special assignee relief programme, which allows companies to bring in highly paid individuals from outside the State and have their tax liability on earnings of between €75,000 and €500,000 written off by 30%. Over the five years of the period the benefit will be allowed, the individuals concerned will earn up to €635,000 tax free. All this has been done without introducing the slightest obligation to create a single job.

Despite its claims on job creation, the Government has sadly settled upon what it believes to be acceptable levels of poverty, unemployment and emigration. The evidence is its statement that 400,000 people will be unemployed in 2015. The Government claims it will be able to create 100,000 jobs in the interim. However, based on the figures it has provided, the net decrease will be brought about by emigration. It is a shocking indictment that any Government would accept this level of unemployment, poverty and emigration. While the figures may be acceptable to well insulated Ministers, they are not acceptable to people, businesses or the economy.

To add insult to injury, the Minister for Finance tells us the market is flexible and 125,000 people have come off the live register. The inconvenient truth is that under this Government the level of long-term unemployment has grown. The implementation of the Finance Bill will undoubtedly deliver a body blow to the 450,000 people who are unemployed and the 76,000 people who will emigrate this year.

I will share time with Deputy John Lyons.

I welcome this pro-jobs Bill, which includes a host of smart measures that will make Ireland stand out against its competitors and give us an advantage over those with whom we go head to head in foreign investment terms. If this legislation and the Government's very welcome jobs plan announced earlier in the week are about reorienting the country and refocusing the economy on entrepreneurial activity, the next budget should be about broadening the burden of recovery and growth. It would, however, be wrong and ill-conceived at this sensitive time in our recovery to excessively tax work.

That the Government previously restored the national minimum wage to a decent rate and moved in this Bill to take 330,000 working people out of the clutches of the universal social charge is a fair reflection of the wide view in the Government that we need to ensure we have a floor of decency beneath which no one will be allowed to fall. Work should be rewarded and encouraged rather than disincentivised.

The Bill introduces about €1 billion in new tax measures. All the evidence suggests there is likely to be an increase in the tax take from €36 billion in 2012 to more than €43 billion in 2015. However, based on these figures, it is anticipated that taxation as a percentage of GDP will remain fairly constant, at around 35% of gross domestic product. In any person's language, these figures show that taxation is low by international standards and likely to remain low. However, what the figures also indicate is that there is room to make our taxation system fairer and more progressive. Morally and ethically, those who have the most should make the largest contribution. Key public services, namely, our schools, colleges, hospitals and the Garda Síochána, do not run themselves.

It amuses and confuses me in equal measure when I hear some Deputies, including Government Deputies, challenging Ministers, as has been the case in recent weeks, for example, about adjustments being made to community employment schemes, as if the tough decisions taken across Departments are being made in a politically and fiscally neutral environment. It is trite to decry the types of changes we have had to preside over this year, while simply refusing in some instances to countenance any bold or meaningful changes that could impinge on the assets or vast taxpayer subsidised reliefs enjoyed by the very well-off who, the last time I looked, were doing a good job fending for themselves. We can and should ask more of those who have most to give more. The Government needs to grapple with this question as part of our fairness and recovery agenda.

I accept that the Minister for Finance decided to leave income tax alone this year. He did so for good reason as there is a strong and compelling case for taking such a decision at this highly sensitive time in our recovery, particularly in respect of those who are on low and middle incomes. The last thing the Irish main street needs is an assault on the modest pay packets of some of our less well-off citizens. However, we are fast approaching the stage at which we will have to devise new ways of raising revenue which require the better-off to play a much greater role in our recovery. For example, further progressive changes to capital taxation rates and exemptions could yield several hundred million euro for the Exchequer. Changes to a standard rating of pension tax breaks could raise more than €400 million, while other reforms of pension tax law which were alluded to by many interest groups in advance of the budget also have the potential to raise several hundred million euro.

In these times, more than ever, boldness and imagination are required to help get the country on the right road. None of us can say on the one hand let us protect the services on which we all depend and on the other refuse to engage in the notion that there is a better and fairer way of raising the money to do the things we all want to see happen. We need to have an honest and reasoned debate on where the heavy lifting should be done and on whose shoulders it is most appropriate to place that responsibility.

We have long since moved past the stage where the budget announcements should be protected like the third secret of Fatima. It is incumbent on us, as an open, transforming and reforming Government, to facilitate a genuine national debate on our economic direction and what sort of society we want to see emerge from the mess we inherited from the previous Government.

Presenting the budget here in this House as afait accompli and all the set pieces from Government and, in some cases, the staged outrage from the Opposition, that goes with the annual budget carnival is an anachronism and belongs in the past.

This form of government has no place in a modern parliamentary democracy and an opening-up of the budgetary system would also allow for genuine engagement with the Opposition, and allow it and backbench Government Deputies to engage constructively at a much earlier stage of the process than has previously been the case. There are supporters of this concept at senior level in government, in both Fine Gael and the Labour Party, and I look forward to developments in that regard shortly.

I listened intently to Deputy Stanley's contribution earlier. As always from his party, all we hear is empty rhetoric but no workable solutions for the crisis in which we find ourselves.

We published our own comprehensive budget.

The contributions from Sinn Féin are always heavy on analysis, I will give Deputy Stanley that, but are deficient in real solutions. A new and open approach to the budgetary process will expose the fact, whether they accept it or not, that the Sinn Féin emperor has no clothes when it comes to the real budgetary process in this country.

There is, as I stated earlier, much in this Bill of which we and the Government can be proud. The new measures for those who bought their homes between 2004 and the end of 2008 are welcome. The changes to the domicile levy removing the citizenship requirement are also to be welcomed. This is an element of taxation policy that needed reform that has received an amount of reform and it is scandalous that last year only €1.5 million was raised this way. While the new measures contained in the Bill are to be welcomed, in terms of the yield it is probably too early to say what we can anticipate might be generated but it is important that we keep a close eye on it.

In my constituency of Louth, the provisions in the Bill designed to assist the Revenue Commissioners to clamp down on the activities of illegal fuel laundering will be welcomed by legitimate forecourt operators whose business is haemorrhaging as a result of criminally inspired fuel rackets that are particularly pronounced in the Border area. This is costing jobs, costing millions of euro to the hard pressed Exchequer in lost revenue and causing environmental havoc, much to the cost of Louth County Council and other local authorities across the country. I am pleased that the legislation supports the excellent work of Revenue, operating in a hostile environment in many cases, in its work to crack down on the laundering trade.

I thank the Acting Chairman, Deputy Catherine Byrne, for the opportunity to speak on the Finance Bill.

I want to speak today about what I consider to be the positives of the Bill and where we can do better in the future. In any finance Bill and any type of provision, we must look at the decisions we make and at how we can improve the outcome next time around. As Deputy Nash stated, the time for all secrets being kept until the last day must be over and there must be a new process. There are certain aspects which will allow that to happen for future budgets.

First and foremost, the context in which the decisions in this Bill were made is important. The economic collapse that has happened in Ireland since the property bubble burst has cost us our economic independence and impacted greatly on people's lives in many ways, such as through unemployment, falling living standards and negative equity. Every day we all meet people facing these challenges and we use this interaction to inform and direct our work, and to inform Ministers as well.

We all, no matter on what side of the House we sit, want to put right the problems facing our country but we may disagree on how this is to be done. The facts, however, are the same for us all. This year we will spend €16 billion more than we take in and the only willing lenders to us are the EU and the IMF. As the House will be aware, these loans come with conditions and we are required to reduce our borrowing by an agreed amount each year. This year it meant reducing our borrowing by €3.8 billion.

Any budget that takes €3.8 billion out of the economy will impact heavily on families and individuals by asking them to contribute more and make even greater sacrifices, and we have heard Members speak about some of those already. I reiterate what other Members have stated in that these are not decisions we would normally consider, as we know their effects. We have, however, been elected with a mandate to address these challenges. This means making the decisions that will put us back in charge of our own affairs, but it also gives us an opportunity to make improvements where we can and to learn for the future.

A number of elements of the Bill on which I want to focus will make a significant difference in the lives of tens of thousands of people. Some Members, including Deputy Nash, mentioned some of these already. There have been no changes to income tax bands, rates or exemptions in this budget, as promised in the programme for Government. Also, although it is not included in the Bill, it is worth repeating that we delivered on our commitment not to cut headline social welfare rates.

Changes have been made to the universal social charge where the income exemption level has been raised from €4,004 to €10,036 removing, as Deputy Nash stated, approximately 330,000 low income earners from the USC tax net. This change will mean that these workers, who are mainly seasonal and part-time workers, will no longer have to pay the USC. As well as delivering on a key element in the programme for Government it is also the right thing to do. Restoring the minimum wage in July last, to €8.65 an hour, was also the right thing to do for low income workers.

On mortgage interest relief, another programme for Government promise was to increase mortgage interest relief to 30% for first-time buyers who took out their first mortgage in the period from 2004 to 2008. This increased rate of relief will apply up until the end of 2017 and will benefit approximately 214,000 mortgage holders. This move will help those who bought at the height of the boom, many of whom are experiencing negative equity and difficulties with their mortgages.

On first-time buyers, I also welcome the moves to increase reliefs for those intending to purchase homes this year. First-time buyers will be able to avail of relief at a 25% rate, with a sliding scale to 20% on ceilings of €10,000 for a single person and €20,000 for a married couple. Non first-time buyers will be able to avail of relief at a rate of 15% on ceilings of €3,000 for a single person and €6,000 for a married couple. Looking at the current position in the housing market, and by extension the construction industry, this is a measured approach to encourage activity in the market.

Approximately 170,000 construction workers have lost their jobs since 2007 and construction activity as a percentage of GDP has gone from excessive levels to below what would be considered normal levels, with a disastrous effect on employment. These time-limited measures are reasonable efforts to encourage activity which may lead to increased employment in the sector.

Turning to some business supports as well as measures to help individuals, the Bill also includes new business and enterprise supports that aim to create employment and grow economic activity. The first of these is the foreign income earnings deduction. If we are to continue the growth in exports, in particular exports for indigenous companies, we need to capture market share in emerging economies. Much has been written about the BRIC economies' growing share of global economic activity and the need for business to capture a share of this. The foreign income earnings deduction for employees who develop these markets is a welcome support to Irish businesses to expand into these markets with the potential to create jobs.

This measure ties in with the focus of the Action Plan for Jobs and other innovative ideas like the Bord Bia marketing fellowship, where Irish graduates are paired with exporting businesses to promote agri-food exports in new markets. This is the type of joined-up approach necessary to enable Irish businesses expand and create jobs.

The special assignee relief programme, SARP, is another welcome measure. This programme will provide an incentive to foreign executives to relocate here.

Deputy McLellan feels differently about this. It will act as an incentive for multinationals to stay here and expand. While it is a tax break for a specific category of worker, I welcome it as it is designed to give us a competitive advantage in crucial growth sectors. For example, this week the action plan for jobs focused on the potential for job creation in sectors like digital gaming and ICT. In certain sectors like these, a concentration of expertise is required to grow a development hub. Canada is a good example, having given tax breaks to gaming developers for a number of years to kick start its gaming industry. It is now a world leading gaming centre. This incentive is also time limited and has the potential to bring jobs to Ireland as well and keeping existing jobs here.

This Bill also includes changes to the research and development tax credit to spur new business ideas. More flexibility in the allocation of the tax credit has been provided for and this, along with our corporation tax rate, will add to our attraction in the highly competitive sectors we are targeting for job growth.

A range of measures have also been included in this Bill to grow employment in the financial services sector. Despite our recent experience of banking and financial incompetence, financial services are still a huge employer here and an area with high potential for future job growth in areas like the green IFSC.

We must learn from mistakes and solve them in the future. These measures are designed to aid job growth and for that they are welcome. There must be more focus on equality within the budgetary process. Equality means different things to different people. It is very easy to get lost in the figures around our economic situation and this Bill is no different. To the ordinary man and woman, the feeling of fairness is always foremost in their minds and, likewise, it should be in ours. All budgetary decisions should be equality proofed and it is imperative that Departments carry out equality audits on future budgetary process to ensure an even distribution of any pain and future gain.

We have a revised budget cycle timetable with aims for a multi-annual approach that provides increased oversight and aims to allow certainty regarding investment and decision making. I appreciate this new focus but I would like to see greater analysis of how these decisions are made, the concepts underlying the decision making process and, fundamentally, whether equality is at the heart of the decision. This must be the focus of future decision making especially on budgetary matters as equality must be our focus and our goal.

I welcome this Finance Bill in the context of our financial position and the measures to promote job creation. Our priority is to exit the EU-IMF programme and restore our economic independence. The decisions in this Finance Bill are a step in this process and we have sought to share the burden fairly. In a budget that takes €3.8 billion out of the economy, it is almost impossible for it to be seen as completely fair but we must always strive to have equality at the heart of future budgetary processes.

I propose to share time with Deputies Luke ‘Ming' Flanagan and Donnelly. The Government said that this Finance Bill is geared towards creating jobs but I would have liked to see less emphasis on foreign direct investment and more on indigenous industry. Jobs and exports will come from foreign direct investment but, if we are serious about creating jobs, we must look more closely at the domestic economy. Introducing tax reliefs for high earners coming from abroad and paying for private schools is not the right way to go. Mortgage interest relief is a good idea for people who bought homes in 2004 and 2008 but it should have been more selective. The crisis has hit the majority of the population but a minority of people paying for properties bought in that period could afford to do without the mortgage interest relief. I thought the Government would have looked at it in that light.

Rates are one of the things killing the domestic economy. A revision of rates has begun in Dublin and will spread around the country. The link between rates, local government and lack of funding at local government level is a major problem. Local government is so dependent on rates that they are impossible to reduce unless it can be done in a different way. Many rents have halved while rates stay the same and it seems there is no connection with the market. Rates are far too high. The rents that have not changed involve upward-only rent reviews and properties such as restaurants, which commanded rents of €100,000 four or five years ago, now have a market rate of €50,000. However, because of the upward-only reviews rule, they are not allowed to change the rent and it is really killing them. The Government walked away from this matter because there is an issue with contract law. It is difficult to make illegal a law that was legal a couple of years ago. However, there is a way around it if the Government had a mind to do so and it should consider introducing a prohibitive tax where there is a difference between high rents and the market rent. The benefit accruing from the rents should be worked back to the person suffering, the person renting.

The biggest problem is the lack of finance. On five occasions, I asked about the strategic State investment bank that the Government said it would introduce. A year later, there is no word about a date for when it will be established. A proper investment bank would recycle savings within the Irish economy rather than using tax revenue to buy credit at commercial rates, which is what happens with Enterprise Ireland and the IDA. So many small businesses cannot access credit. History shows that banks have never been kind to innovators. Banks like to give money to those who least need it, safe bets. Banks have never been good at giving money to those who really need it, such as innovators who need cash. There is no one better to stimulate this than the Government., which has the financial clout. It says it has no money today but, when the banks ran into trouble, who did they run to? They ran to the Government because that is the one strong force that can deal with all these problems. The domestic market is screaming out for a stimulus from the Government and I do not see a huge improvement in unemployment rates until we tackle the problems in the domestic economy.

We are one of the weakest in Europe in terms of indigenous enterprises and too much of our foreign direct investment results in low employment. The pharmaceuticals industry exports over €60 million yet it employs less than 2% of the workforce. Too much foreign industry is not sourcing goods at local level; it is importing 85% of the produce it uses, which is a huge problem.

I will start with what is positive. I welcome the change to the threshold for the universal social charge. However, no more than knocking on a person's door to sell him or her something at a good price while someone else is kicking in his or her back door and robbing him or her, it is not a lot of good. The Government changed things for people on the low end of the income scale in terms of the universal social charge but unfortunately it increased VAT, which will affect the poorest the most.

According to Social Justice Ireland, the increase of 2% in the top rate of VAT will have a disproportionate effect on the living standards of households with low incomes. The poorest 10% of Ireland's population spend 14.9% of their income on VAT and more than three quarters of that was paid through the 21% VAT rate. In effect, the increase in budget 2012 will reduce their disposable income further. I thank the Government for giving a few quid back but it is taking it from people again.

By contrast, the richest 10% of the population paid less than 7% of their total income on VAT. It is a regressive tax which is bad for the economy. We should forget about the idea that the budget is fair because it is not if it affects the poorest the most. From the point of view of local economies, the budget will take more money out of the pockets of people, on top of the €100 bondholders charge. As a result we are going nowhere with the budget.

The Government has a habit of getting what is in essence a good idea, such as local or carbon taxation, and dirtying it. Local taxation does not end up in local economies and services, rather it goes to bondholders. The money raised through carbon taxes should be ring-fenced to retrofit houses to mitigate against the increased cost of fuel and do something about global warming without affecting people's pockets. The Government has used it to raise more money for the bondholders. People no longer believe in carbon or local taxes. How will the Government get over that hump? It will not.

There is one interesting element in the Bill. People are crying out for money and compensation. However, the only people the Government seems to want to listen to are those who do not want it and are not looking for it. I did not think turf cutting would ever be mentioned in a finance Bill but it is. The Government will not charge capital gains tax on turf compensation, which is great. However, we do not want compensation. Some people do, but as the Government will discover in time the vast majority of people who take it do not actually cut turf and are codding the Government. The money is not going to people to get them to stop cutting turf. No matter what 99% of turf cutters are offered, they will not take the compensation, whatever is done about capital gains tax. It was spun by the Government as a wonderful thing and described as a great deal for turf cutters.

If I went to a mart in Carrigaline or Castlerea in Roscommon and bought a beast next Saturday for €800 I would not go back the next week and offer the seller €900 because I got the deal at €800. However, this brilliant deal, which everyone is taking up, is so good the Government is improving its terms. It will not charge capital gains tax and now the rumour is that it will double the amount of compensation and time involved. We do not want it. The Government should realise money does not solve everything and not everyone can be bought off.

I do not know whether the Government has seen the film "The Field". If it had not charged Bull McCabe capital gains tax would he have sold the field? He would not. We will not get rid of our field. We will not be bullied into anything. The Government could give us €1 million an acre but we would not to take it. Some people are not for selling their heritage.

I would not be certain about that.

I would like to address three specific areas in the Bill. First, the approach to Government is taking. Second, the impact it will have. Third, some alternatives which would be better to some of the decisions made.

In terms of the approach, the budget is technically unsound and incompetent. It has had inadequate parliamentary oversight and mangles basic economics in arriving at its conclusions. I will cover two examples of technical incompetence. One is VAT. The projected Government take from the 2% increase in VAT is €670 million. It turns out that does not include the fact that consumption and employment will fall and small and medium enterprises in Wicklow and around the country will go out of business and lay people off. It also does not take account of reduced corporation tax.

Conservatively, if one added in those three factors the €670 million projected take by the Government would be reduced to €300 million to €350 million, which is one third of the entire projected increase in the tax take. A 15 year old studying economics could tell one that should be in the analysis. It is mind-boggling in its incompetence that it is not in the Bill. I discussed the matter directly with the Tánaiste in this House and he confirmed none of it is in the Bill.

The second element is the growth target. There is a budget deficit target of 8.6%. The Taoiseach seems to be standing over the growth forecasts of 1.3% on which this is predicated. He stood over it in the House even when a vast array of organisations downgraded it. Finally, the Central Bank has downgraded it to 0.5%.

I have two examples of inadequate parliamentary oversight. One is the lack of technical appendices. There are no decision criteria, cost benefit analyses or basic analysis that any parliament in a developed country would expect in order to be able to interrogate the Government proposals. In 2008 a World Bank report looked at budgetary processes and we were ranked second from bottom in the OECD.

There are two interesting metrics. The first is the amount of technical detail supplied to parliaments in order to allow them to interrogate government proposals. Out of ten we scored zero. The second is the amount of time parliament is given to interrogate government proposals on a finance Bill. The minimum recommendation is three months. Out of ten we scored zero. It is another example of the most centralised decision-making process in Europe. It is disgraceful.

The third area in the approach is the extraordinary misunderstanding of economics. It is like someone at the Cabinet table sent someone down to Hodges Figgis to buy an introduction to economics who read the first chapter, which said if one wants to promote employment one should not tax labour, but then the book was lost and a decision was made to do that. There is no elasticity analysis. There is nothing to say were we to increase income taxes this is the number of people who would leave the country or choose to stop working.

I met a senior lawyer recently and put this to him. He said he is already being taxed at a margin of over 60%. He earns an awful lot of money and if the Government increased tax to 70% he would probably stop working for a few weeks of the year. I asked him what the problem was with that. There are a lot of unemployed lawyers who would love to work those hours.

The Government is utterly misusing economics, which it does not seem to understand. It has no analysis to back up the ridiculous, flawed assertions it is making. Even if, at the margin, people at the higher end did 5%, 10% or 20% less work, that is fine. There are a lot of unemployed people who need work.

Let us accept we have a highly progressive tax system. I understand we have the most progressive tax system in Europe. If one compares someone earning €100,000 to someone earning €25,000, the person earning €100,000 pays 20 times more tax than the other person. That is a highly progressive system.

The Government said we could not possibly increase taxes on people earning over €120,000 because they would all moveen masse to Australia for some reason it did not back up. First, that is nonsense. Second, we are in survival mode. A lot of money has to be found quickly. The principle applied should be to find the money we need that does the least social and economic harm. On those criteria this budget and this Government has failed entirely.

Last week I visited the community centre in Fassaroe in Bray. Fassaroe is one of the most disadvantaged communities in Wicklow and I was shocked by what I saw. The staff told me the Finance Bill and the cuts the Government has made so far are hitting the most vulnerable in that community so much that children are now being sent to the drop-in centre to get food. We are setting up proxy soup kitchens in our most disadvantaged communities in a country of abundance, even though we are insolvent. The staff told me they are now using their tea money to buy school jumpers and shoes for some of the children returning to school because their parents do not have the money.

If the Government Members think I am making this up, I will run through a quick case study of a single mother with four children who lives on the estate. She has a new-born baby, a three year old, an eight year old and a 12 year old. She was on lone parents' and community employment scheme allowances but because of the consolidation she has lost €3,525 per year, because of the cut in the fuel allowance she has lost €120 per year, because of the child benefit cut she has lost €432 per year, because of the cut to the back school allowance, she has lost €305, because of the confirmation and communion grant cut, she has lost a further €180. This is a total of €4,562 in cash that a single mother with four children in my constituency must take. We should compare that reduction of €4,562 with someone earning €150,000 who faces a total hit of €100.

It gets worse. The woman works on a community employment scheme that is threatened because of the 66% cuts to material and training and her child care is provided by another community employment scheme that is also under threat. That is a choice this Government has made. It decided to take €4,500 off a single mother trying to raise four children while another person who lives a few miles down the road who earns €150,000 will have €100 taken off him for the household charge. Why? It is because the chapter of the book Ministers read said that under no circumstances should labour be taxed.

I have spoken to and respect many people in Fine Gael but some weird, right wing, incompetent cabal has taken over the party. This is not the action of the party of Garrett FitzGerald. What is the Government doing taking €100 from a high earner while taking €4,562 from a single parent? To the Deputies and the leaders the Labour Party, whom I know personally and admire and respect, I must ask what they are at. They were put in Government to stop Fine Gael from doing this sort of thing to our people. Where are they? They must stand up to these people.

That is what the Finance Bill is doing but there are alternatives. I appreciate that it is easy for me to stand on this side of the House and shout and say what the Government is doing is unfair so I will offer a few ideas. Increments should be frozen; that would save €250 million. The top increment should be reduced by one, saving €350 million. Higher end pay should be further reduced, saving another €200 million. Already we have €800 million. We should introduce a time-bound emergency tax, which would find several hundred million euro and cut waste further.

I cannot understand how the Government can stand over this. It is morally abhorrent and cowardly.

This is a totally new experience for me. I have spoken on the budget debate in Kildare County Council and taken an active part in the local authority system. It is challenging to do that because here we can debate the issues in the Finance Bill but at local level the budget is presented to us and we have very little input into it.

The Deputy puts up with that.

I agree with Deputy Nash that the more input there is from backbench and Opposition Members, the better the Bill will be, particularly if Deputies will be positive in their contributions.

When the Minister for Finance presented his budget, a constituent contacted me about mortgage interest relief. We pursued this matter and I was grateful the Minister took it on board as an amendment to the Finance Bill. It goes to show that when a Deputy has something positive to contribute to the Bill, the Minister is willing to take it on board. The issue related to first-time buyers who purchased a house towards the end of 2008 and got a deferred payment so they did not have to make their first payment until January or February the following year. It was felt those people would not get the benefit of the increase in mortgage interest relief but the thrust of the Minister's speech was about those who purchased their houses between 2004 and 2008 and these people had purchased their houses then. In fairness, the Minister accepted that as an amendment in the Finance Bill. If Members have a positive contribution to make, the Minister will take it on board.

Two of our key natural resources are tourism and agriculture. In our earlier jobs initiative, we introduced a lower rate of VAT and reduced employers' PRSI for new employees. That has had a positive impact on the tourism sector in that we have seen numbers increasing and more competitiveness in the hotel trade. There is much greater domestic interest from those taking short breaks in this country, a positive development.

I also welcome the reduction in the stamp duty rate to 2% for the transfer of farmlands to young farmers. It is vital that agriculture, a dynamic industry, is allowed to drive the economy. I remember in the 1970s live cattle being shipped out with no added value given to the product but now virtually every part of the animal is used, with added value being given to it. That sort of export is vitally important for our economy. I welcome that we now have in place a reduction in stamp duty for young farmers so lands can be transferred to them and it is vitally important to keep that dynamic industry going.

Deputy Wallace was involved in construction and there has been a reduction from 200,000 to around 100,000 people employed in that industry. I welcome the property incentive the Minister has introduced for commercial property. It is good there is a cut-off point in 2013. Section 23 development should have been cut off to prevent the situation that now exists where section 23 properties were built in areas that are rarely used. I welcome the Minister's incentive for commercial properties and the fact there is a cut-off point for the scheme, although he may review it after 2013.

This is the first time I have spoken on the Finance Bill. It has been a long and difficult Bill to read but I have enjoyed participating in the debate and I will make further contributions on Committee Stage and beyond that.

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