I understand Deputies Mac Lochlainn and McDonald have been authorised to move amendments in the name of Deputy Doherty, who cannot be with us today. The first amendment in the name of Deputy Doherty arises out of committee proceedings.
Finance Bill 2012: Report and Fiinal Stages
I move amendment No. 1:
In page 11, between lines 18 and 19, to insert the following:
2.—The Minister shall within six months from the passing of this Act prepare and lay before Dáil Éireann a report detailing the financial impact of all measures contained in this Act on the general population by income group broken down by decile including all categories of earners including PAYE, self-employed and social welfare recipients and by household income type broken down by decile based on gross household income.".
The Economic and Social Research Institute produced a study on the distributional impact of this budget on all income groups. The report published on 24 February makes for very sobering reading. The conclusion stated that budget 2012 involved greater proportionate losses for those on low incomes, reductions of about 2% to 2.5% for those on the lowest incomes as against losses of about 0.75% for those on the highest incomes. Indeed, the report compared the impact of the budget on low income households with that of the previous Government's from 2008 and also concluded that the budget was more regressive.
Given the fact that this budget will have a disproportionate impact on lower income groups, in particular the additional charges and taxes, including the VAT increase, the purpose of this amendment is to provide for a detailed impact assessment of these measures on all income groups so that we get a full picture of the extent to which the Minister is seeking to punish low and middle income groups while regarding the better off in society.
I welcome the commencement of Report Stage. The only point I would make on amendment No. 1 in the name of Deputy Doherty is that if one is conducting an analysis of the impact of the budget - I assume that is the spirit in which this amendment has been tabled - then the Finance Bill does not represent the totality of those measures. If one is looking at the impact on every income group, then one would also need to take into account the changes in the social welfare code announced on budget day, the household charge, motor taxation increases and so forth.
While I support the spirit of the amendment, my concern is that it does not represent the totality of the budget package as it affects ordinary citizens. If we are to put the Minister and his officials to the trouble of doing a report, then it should take account of the entire picture and all of the impacts of the various elements of the budget on incomes groups.
Deputy Mac Lochlainn is correct in the overall point he made about the regressive nature of the budget which was a claim we made on budget day and which was subsequently supported by the ESRI and others. As was pointed out by the Minister of State, Deputy Brian Hayes, on Committee Stage, when one takes all the budgets since the fiscal retrenchment process commenced back in 2008, then they have been highly progressive but this particular one was not and that has been established.
This amendment is correct in its intent and is the very least we can do. There is significant dispute about how the Government's response to the economic crisis impacts on different sectors of society. Some of us on this side of the House have repeatedly made the point that all the pain and punishment is inflicted on the least well off in our society when other sectors could far better afford it and could, more justifiably, be taxed and have cuts imposed on their incomes. The Government ignores those points or tries to rubbish or dismiss them. Would it not be entirely reasonable to be a little objective and scientific about this and do a proper and full assessment of how the measures in this Bill impact on the different sectors of our society so that we can establish the truth as to who is really taking the pain in the austerity programme? I fully support the amendment.
I thank the Deputies for their contribution. I will read the speaking note first, to give the official view, and will then comment on the case the Deputies make.
As Deputies will be aware, in every annual budget, the budget book includes tables demonstrating the effects of budget changes in respect of income tax, PRSI and the universal social charge, USC, on single, married - with and without children, PAYE and self-employed income earners over a wide distribution of income levels. The tables in the budget book also demonstrate the effect of changes to some payments from the Department of Social Protection, such as family income support and child benefit. Furthermore, every budget book contains a section which outlines the effect of budget changes on illustrative cases. These illustrative cases examine the effect of budget changes on various categories of income earners, including single, married, lone parents and elderly in a variety of different occupations and with varying income levels.
In budgets where there have been changes to income tax or PRSI, the budget book contains a poverty impact assessment based on the guidelines set out by the Office of Social Inclusion and using the ESRI SWITCH model. The poverty impact assessment is normally in Annex B of the budget book. I remind Deputies that, in line with the commitment in the programme for Government, there were no increases in income tax or PRSI in budget 2012.
In regard to changes to payments made by the Department of Social Protection in budget 2012, I am aware that the Department undertook an analysis of the distributive and poverty impact of the welfare measures on individuals and families in advance of Budget 2012. It is my understanding that this analysis will be published shortly.
As I am sure Deputies are aware, the ESRI usually publishes an analysis of the budget. Most recently it published a study on the distributional impact of tax, welfare and public pay policies from 2009 to 2012. Therefore, given the amount of analysis already available in this area and the information published annually in the budget book, I cannot accept this amendment as I believe it would duplicate the work already being undertaken on the various reports and publications I have mentioned. Deputy McGrath pointed out that even if one argues that the effects of this budget in its totality were regressive, the effects of the fiscal correction over the years since it commenced were highly progressive. There is no doubt that those most in a position to pay have paid - in drastic amounts. As the correction is part of the one programme it is unfair to pick any particular year and not take the programme in its totality.
Much has been made in debate, in particular in the media, about ESRI studies, especially those on VAT increases and how they impact on different levels of income. It is true that much of the comment centred on the 2% increase in the standard rate of VAT, from 21% to 23%. It is true to state, as the ESRI showed, this impacts more on low income families than on high income families. The reason was also pointed out in the ESRI report but that has been left out of the debate. It is, essentially, that low income families spend a greater proportion of their income on tobacco, alcohol and public transport than they do in other areas. Therefore, a combination of VAT and excise increases plus carbon tax increases will hit lower income families. That bit of the argument is left out when the issue is being debated yet that is what was in the original ESRI assessment on the impact of VAT. I believe people should be allowed to spend their money on alcohol, cigarettes or public transport if that is what they want to do but it weakens the case about a budget being regressive when it is those incidents of spending that are subject to the hardest impact.
My main point is that what Deputy Doherty seeks in his amendment is really unnecessary because most of this information is already provided in the documents which accompany the budget. The impact of the changes in social welfare will be in the document that will be published shortly by the Department of Social Protection. The ESRI is carrying out ongoing work in this area and all that information is made public and is available to Deputies.
As a consequence, I will not accept this amendment.
Amendment put and declared lost.
Amendments Nos. 2 to 4, inclusive, are out of order.
Amendments Nos. 2 to 4, inclusive, not moved.
Amendment No. 5 arises from committee proceedings.
I move amendment No. 5:
In page 11, between lines 18 and 19, to insert the following:
2.—The Minister shall within 12 months from the passing of this Act prepare and lay before Dáil Éireann a report on a cost-benefit analysis of tax expenditures provided for by this Act, setting out the costs of tax foregone, and the benefits in terms of job creation or otherwise.".
The Acting Chairman is correct to state I tabled this amendment on Committee Stage. At the time I acknowledged that this amendment seems to be one that Opposition parties always table and Governments always reject. Perhaps we need to look at the reasons for that. When one looks back over the transcripts of previous debates on budgets, in particular on tax expenditures or reliefs, it is important to consider the outcome of the investment of tax expenditures in particular areas and to measure the effectiveness of such expenditure in an appropriate way, given the whole purpose of having various tax reliefs in place is to generate additional economic activity in certain sectors and generally assist in the economic recovery.
There are a number of new measures in the Finance Bill we may discuss in more detail when we come to the various sections, one of which relates to capital gains tax relief on the purchase of land or buildings before the end of December 2013. There is the special assignee relief programme or SARP, the foreign earnings deduction proposal which was put forward in the Finance Bill, and the expansion of research and development tax credits. The key point is how the Minister will measure the effectiveness of these, given the stated purpose of introducing them is to provide assistance in targeted areas where the Minister believes an intervention is warranted. They are quite targeted and we can discuss them in more detail when we come to the relevant sections but what mechanism or procedure will be in place to ensure they will serve the purpose for which they were established? How will the Minister measure the effectiveness of the various tax expenditures set out in this Bill?
I support Deputy McGrath's proposed amendments. The information would be useful, not only to Deputies but to the wider public and it is on that basis we support this amendment.
The value of this amendment is obvious in assessing whether this budget will help or hinder our progress towards economic recovery. There are a number of very controversial proposals in this Bill, most obviously, the increase in VAT. Some Members and many people in the wider public believe this will be very damaging to consumer demand and the ability of many SMEs to survive. There must be an assessment of whether that arises.
Similarly, there is outrage at the fact that the Government is planning to give tax breaks to corporate high fliers while everyone else is being hammered by austerity measures, cuts and new charges. Given the controversial nature of such proposals, the least the Government could do is assess whether new jobs will be created or we lose tax revenue as well as annoy huge numbers of people suffering under the impact of austerity. There are several measures in the budget that, at the least, require analysis further down the line to see whether they are beneficial or damaging to this country's prospects of economic recovery. On that basis, I support the amendment.
I do not propose to accept the amendment. However, I fully support the principal of ex ante and ex post economic impact assessments – including cost benefit analysis – in formulating and evaluating tax policy. I am opposing the amendment on a number of grounds. The main reason is the underlying principle of proportionality in cost benefit analysis. The level of resources invested in carrying out the analysis should be commensurate with the scale of the expenditure involved. For instance, the 2005 capital appraisal guidelines recommends full CBA analysis only for projects exceeding €30 million. Four measures contained in the budget exceed this threshold – the review of universal social charge, legacy property reliefs, mortgage interest relief and stamp duty measures. The review of the universal social charge and the legacy property reliefs were subject to a full economic impact assessment. The reports of both have been published. The economic impact assessment of the legacy property reliefs involved a full public consultation so as to take the views of all interested parties, as well as the publication of two reports, including an interim consultation report, an economic model and substantial data and analysis. This was a transparent and comprehensive process in line with best international practice for policy evaluation.
Each year, as part of the tax strategy group process, a paper on tax expenditures outlining any major changes is produced, discussed and subsequently published. The stamp duty measure was also considered as part of a tax strategy group paper on property tax. Mortgage interest relief was examined by my officials in the wider context of mortgage debt generally.
Every year, the costings for all policy changes are set out in section 1 of the summary of budget measures. The taxation annexes to the summary provide examples of the changes on different categories of income earners in substantial detail. While the costs associated with the legacy property reliefs and review of universal social charge certainly justified a major economic impact assessment, many of the tax expenditures in the Bill are not of sufficient significance in terms of cost to make the completion of such studies cost effective. Therefore, it would not be of benefit to commit time and scarce resources on such an exercise.
Amendment put and declared lost.
I move amendment No. 6:
In page 12, line 29, to delete " "€10,036" " and substitute " "€17,000" ".
The purpose of this amendment is to remove all those earning the minimum wage from the universal social charge. When the Minister announced the removal of 300,000 low-paid workers from the USC net last December, Sinn Féin welcomed the move but called on the Minister to go further and to remove the 500,000 workers earning the minimum wage or less from this regressive tax. The arguments for doing so are compelling, the first of which is that it is the right thing to do. Equally importantly, it will benefit the economy overall because it will provide a significant boost to consumer spending. There are plenty of better ways to raise the same amount of revenue, such as raising the marginal rate of tax to 40% for very high earners. Doing so would have less of a negative impact on the economy than leaving up to 200,000 low-paid workers in the USC tax net.
What is the cost of this proposal and where does it stand in the context of the efforts over recent years for the burden of taxation to be spread? Some 5% of income earners pay approximately half of the income tax take and 40% of income earners were outside the tax net. The universal social charge made inroads into that because it brought people on very low incomes within the net, which comes at great cost to the people concerned.
While we would like to see the exemption thresholds increased significantly, does the Minister intend to revisit the review of the universal social charge on an annual basis when preparing the budget? Does the change in the Finance Bill, which is welcome, represent the entirety of the Government's proposed changes to the universal social charge on foot of the review?
I support the amendment. On a moral level, it is unacceptable that the universal social charge was imposed on people earning the minimum wage or lower. The Government acknowledged the injustice at some level of hitting low-income earners by exempting the lowest income earners from the universal social charge but leaving people on the minimum wage and lower paying this punitive austerity tax is unacceptable. The universal social charge on low and middle income earners should go completely because it is damaging and unfair in the extreme. It is one of the major contributory factors to depressing consumer demand and its damaging consequences.
I do not understand why the Government refuses to look elsewhere, at high income earners, and impose higher taxes on them. We never get a straight answer. United Left Alliance proposed that people earning over €100,000 would pay 50% tax, those earning over €150,000 would pay 60% tax and those earning over €200,000 would pay 70% tax. In answer to a parliamentary question, the Minister acknowledged this would raise €1.1 billion. Is it not fair to do that and to impose higher taxes on those who can afford it? Would it not be economically far more sensible? If one earns in excess of €100,000, unless one lives a very lavish lifestyle, one does not spend it all. People can save it and in our case it is not going to the economy. We all accept the need to increase spending rather than the amount of money sitting on deposit. I do not see the rationale for not giving significant relief to people who have been hit with austerity taxes at the low and middle end while resolutely refusing to impose higher taxes on those who can afford them.
The amendment was tabled by Deputy Doherty on Committee Stage. The Bill already provides for an increase in the exemption threshold from €4,004 to €10,036. This will cost approximately €47 million for a full year and will remove nearly 330,000 people from the charge. While this is a significant cost I do not expect it to result in a reduced yield for the Exchequer because of the switch to an accumulative basis of deduction and payment by the Revenue Commissioners. From 1 January 2012 they will save a similar amount by avoiding the occurrence of underpayments of the universal social charge.
If the cost of Deputy Doherty's amendment, which is what was requested by Deputy McGrath, were to be implemented it would be in the region of an additional €117 million for a full tax year and would remove an additional 273,000 people from the charge. This is a significant net cost, particularly in the context of the current budget balance. Moreover, a figure of €17,000 would bring the exemption threshold for the universal social charge above the current entry point to income tax of €16.50 for a single person.
To accept this amendment would be to seriously undermine the rationale for the introduction of the universal social charge. This was to broaden the tax base from its narrow, unsustainable level with a relatively small proportion of income earners responsible for a disproportionate amount of the overall income tax yield and to ensure that most people will make some contribution, however small, to the provision of services and towards assisting in the correction of the public finances. The removal of an additional 273,000 people from the charge would effectively reverse the base broadening already achieved by the decisions made by my predecessor. I oppose the amendment.
Can the Minister clarify whether his consideration of the review of the universal social charge has been completed and that the change he has proposed in the Finance Bill arises from that review or is it something he intends to revisit on an ongoing basis? In terms of the issue with the way it was structured, and over time its structure will have to be examined, if the Minister increases the threshold and somebody tips over that threshold all of their income will become subject to the USC rather than it being on an incremental basis. What is the position on the review?
The review, in so far as it arose from the programme for Government, is now completed. Any Government can review any charge or tax on an ongoing basis but the review to which a commitment was made is now completed.
Question put: "That the figure proposed to be deleted stand."
The Dáil divided: Tá, 95; Níl, 23.
Tá
- Breen, Pat.
- Broughan, Thomas P.
- Browne, John.
- Buttimer, Jerry.
- Byrne, Catherine.
- Byrne, Eric.
- Calleary, Dara.
- Carey, Joe.
- Coffey, Paudie.
- Collins, Niall.
- Conlan, Seán.
- Connaughton, Paul J.
- Conway, Ciara.
- Corcoran Kennedy, Marcella.
- Costello, Joe.
- Coveney, Simon.
- Creed, Michael.
- Daly, Jim.
- Deering, Pat.
- Doherty, Regina.
- Donohoe, Paschal.
- Dooley, Timmy.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J.
- English, Damien.
- Farrell, Alan.
- Feighan, Frank.
- Ferris, Anne.
- Flanagan, Charles.
- Flanagan, Terence.
- Fleming, Sean.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Hayes, Brian.
- Hayes, Tom.
- Heydon, Martin.
- Humphreys, Heather.
- Keating, Derek.
- Keaveney, Colm.
- Kelleher, Billy.
- Kelly, Alan.
- Kenny, Seán.
- Kitt, Michael P.
- Kyne, Seán.
- Lawlor, Anthony.
- Lynch, Ciarán.
- Lynch, Kathleen.
- Maloney, Eamonn.
- Mathews, Peter.
- McCarthy, Michael.
- McEntee, Shane.
- McGinley, Dinny.
- McGrath, Michael.
- McHugh, Joe.
- McLoughlin, Tony.
- McNamara, Michael.
- Mitchell, Olivia.
- Mitchell O’Connor, Mary.
- Mulherin, Michelle.
- Murphy, Dara.
- Murphy, Eoghan.
- Nash, Gerald.
- Neville, Dan.
- Nolan, Derek.
- Noonan, Michael.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- Ó Ríordáin, Aodhán.
- O’Donnell, Kieran.
- O’Donovan, Patrick.
- O’Dowd, Fergus.
- O’Mahony, John.
- O’Sullivan, Jan.
- Perry, John.
- Phelan, Ann.
- Phelan, John Paul.
- Rabbitte, Pat.
- Reilly, James.
- Ryan, Brendan.
- Sherlock, Sean.
- Shortall, Róisín.
- Smith, Brendan.
- Spring, Arthur.
- Stagg, Emmet.
- Stanton, David.
- Timmins, Billy.
- Troy, Robert.
- Tuffy, Joanna.
- Twomey, Liam.
- Wall, Jack.
- Walsh, Brian.
- White, Alex.
Níl
- Adams, Gerry.
- Boyd Barrett, Richard.
- Collins, Joan.
- Colreavy, Michael.
- Crowe, Seán.
- Donnelly, Stephen S.
- Ferris, Martin.
- Halligan, John.
- Healy, Seamus.
- Healy-Rae, Michael.
- Higgins, Joe.
- Mac Lochlainn, Pádraig.
- McDonald, Mary Lou.
- McGrath, Mattie.
- McLellan, Sandra.
- Murphy, Catherine.
- Nulty, Patrick.
- Ó Caoláin, Caoimhghín.
- Ó Snodaigh, Aengus.
- O’Brien, Jonathan.
- O’Sullivan, Maureen.
- Pringle, Thomas.
- Stanley, Brian.
Tellers: Tá, Deputies Emmet Stagg and Joe Carey; Níl, Deputies Aengus Ó Snodaigh and Richard Boyd Barrett.
Question declared carried.
Amendment declared lost.
Amendment No. 7 is out of order as it is declaratory in nature. Amendment No. 8 is out of order as there would be a charge on the Revenue. Amendment No. 9 is out of order as it is declaratory in nature.
Amendments Nos. 7 to 9, inclusive, not moved.
I move amendment No. 10:
In page 26, between lines 30 and 31, to insert the following:
"(4) The Minister shall, within one year of the passing of this act, prepare and lay before Dáil Éireann a report detailing the volume of relief sought and secured under this section and the increased volume of trade in the relevant states secured during the period of time for which the relief was claimed.".
This relief is one of a number of tax reliefs the Minister introduced, claiming that they will lead to job creation. Amendments Nos. 10 and 11 seek to ensure this is the effect of the tax reliefs. Previous Governments were very fond of introducing tax reliefs to enrich small groups of people, while claiming that they would be good for the economy as a whole. As a result, the Exchequer lost billions in revenue foregone every year with little, if any, social or economic gain to the State.
While we are not suggesting that this is the Minister's intention with respect to this section of the Bill, it is only right that those seeking to avail of this relief should do more to demonstrate they are deserving of the substantial tax windfalls they will secure. Failure to do this will lead many people to conclude that the Government is simply following in the same footsteps of its predecessors by placing the majority of the tax burden on low and middle income earners while reducing the tax burden on those already very well rewarded for their employment.
The Deputy tabled amendments Nos. 10 and 11 on Committee Stage and my response remains the same. The focus behind the provision of the relief in question is to assist in the development of new markets for Irish exports in the BRIC states. The Deputy seems to be proposing that where an employer is either unable to demonstrate an increase in the volume of trade with the relevant state or where there has been no increase in the volume of such trade, the relief should not be granted to employees who work abroad seeking to generate new business or market share. Apart from my being conscious of the practical difficulties the proposed requirement would impose on claimants, I am conscious that preparatory and substantive work in the relevant states would not always yield measurable results. I do not propose to accept the amendments. It would be wholly unreasonable and impractical to impose such requirements on employees or employers.
Given that I do not propose to accept amendment No. 11, it would not be possible to provide the detail suggested in a report for Dáil Éireann as proposed in amendment No. 10. However, information regarding the volume of relief claimed under the section will be available through the usual channels.
Amendment put and declared lost.
I move amendment No. 11:
In page 26, line 43, to delete "income, profits or gains."," and substitute the following:
"income, profits or gains.
(6) As part of the assessment for eligibility for the relief outlined in this section the authorised officer shall request evidence that the period of time for which the relief is claimed resulted in a clear and demonstrable increase in the volume of trade in the relevant state. The Minister shall set out by ministerial order the basis on which the authorised officer shall request and assess this evidence before making a determination on the claim for relief.",".
Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.
Amendments Nos. 12 and 13, in the name of Deputy Pearse Doherty, are out of order because of a potential charge on the people. Amendments Nos. 14 and 15, in the name of Deputy Pearse Doherty, are also out of order because of a potential charge on the Revenue. Amendment No. 16, in the name of Deputy Pearse Doherty, is out of order because of a potential charge on the people.
Amendments Nos. 17 and 18, in the name of Deputy Pearse Doherty, are related and are to be discussed together.
I move amendment No. 17:
In page 171, to delete line 22.
On Committee Stage, my colleague Deputy Doherty was broadly supportive of the proposed changes to VRT, specifically the proposal to allow individuals to claim back a portion of tax on vehicles brought into the State and sold outside the State. Deputy Doherty is very keen that the proposed €500 charge for the facility be removed as their is clearly no logical or fair basis for the charge. This is what the amendments to the relevant section aim to achieve.
The proposed administration charge of €500 is necessary to defray the costs of development and ongoing administration required for the efficient operation of the export refund scheme. The fee will enable development costs to be recouped as quickly as possible to minimise the burden on the taxpayer. In other countries, such as Denmark, where a similar scheme exists, an administrative charge of 15% of the value of the vehicle is charged. The administration fee also protects the State from individuals who might use the export refund scheme for cash-flow purposes.
It will not be possible to have the scheme up and running from 1 April 2012 as a significant amount of preparatory work is required within Revenue, including the development of a new IT system. Procedural and operational changes will need to be addressed, not just within Revenue but also among other stakeholders such as NCTS and those responsible for the national driver and vehicle file at Shannon. Consequently, I oppose amendments Nos. 17 and 18.
Question put: "That the words proposed to be deleted stand."
The Dáil divided: Tá, 83; Níl, 31.
Tá
- Breen, Pat.
- Broughan, Thomas P..
- Buttimer, Jerry.
- Byrne, Catherine.
- Byrne, Eric.
- Carey, Joe.
- Coffey, Paudie.
- Conlan, Seán.
- Connaughton, Paul J..
- Conway, Ciara.
- Corcoran Kennedy, Marcella.
- Costello, Joe.
- Coveney, Simon.
- Creed, Michael.
- Daly, Jim.
- Deering, Pat.
- Doherty, Regina.
- Donohoe, Paschal.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J..
- English, Damien.
- Farrell, Alan.
- Feighan, Frank.
- Ferris, Anne.
- Flanagan, Charles.
- Flanagan, Terence.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Hayes, Tom.
- Heydon, Martin.
- Humphreys, Heather.
- Keating, Derek.
- Keaveney, Colm.
- Kelly, Alan.
- Kenny, Seán.
- Kyne, Seán.
- Lawlor, Anthony.
- Lynch, Ciarán.
- Lynch, Kathleen.
- Maloney, Eamonn.
- Mathews, Peter.
- McCarthy, Michael.
- McEntee, Shane.
- McGinley, Dinny.
- McHugh, Joe.
- McLoughlin, Tony.
- McNamara, Michael.
- Mitchell, Olivia.
- Mitchell O’Connor, Mary.
- Mulherin, Michelle.
- Murphy, Dara.
- Murphy, Eoghan.
- Nash, Gerald.
- Neville, Dan.
- Nolan, Derek.
- Noonan, Michael.
- Nulty, Patrick.
- Ó Ríordáin, Aodhán.
- O’Donnell, Kieran.
- O’Donovan, Patrick.
- O’Dowd, Fergus.
- O’Mahony, John.
- O’Sullivan, Jan.
- Perry, John.
- Phelan, Ann.
- Phelan, John Paul.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Ryan, Brendan.
- Sherlock, Sean.
- Shortall, Róisín.
- Spring, Arthur.
- Stagg, Emmet.
- Stanton, David.
- Timmins, Billy.
- Tuffy, Joanna.
- Twomey, Liam.
- Wall, Jack.
- Walsh, Brian.
- White, Alex.
Níl
- Adams, Gerry.
- Boyd Barrett, Richard.
- Browne, John.
- Calleary, Dara.
- Collins, Niall.
- Colreavy, Michael.
- Crowe, Seán.
- Dooley, Timmy.
- Ferris, Martin.
- Fleming, Sean.
- Halligan, John.
- Healy, Seamus.
- Healy-Rae, Michael.
- Higgins, Joe.
- Kelleher, Billy.
- Kitt, Michael P..
- Mac Lochlainn, Pádraig.
- McDonald, Mary Lou.
- McGrath, Mattie.
- McGrath, Michael.
- McLellan, Sandra.
- Murphy, Catherine.
- Ó Caoláin, Caoimhghín.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- Ó Snodaigh, Aengus.
- O’Brien, Jonathan.
- O’Sullivan, Maureen.
- Smith, Brendan.
- Stanley, Brian.
- Troy, Robert.
Tellers: Tá, Deputies Emmet Stagg and Joe Carey; Níl, Deputies Aengus Ó Snodaigh and Seán Ó Fearghaíl.
Question declared carried.
I move amendment No. 18:
In page 171, line 48, after "order" to insert "but no later than 1 April 2012".
Amendment put and declared lost.
Amendment No. 19 in the name of Deputy Michael McGrath has been ruled out of order because of its potential charge on revenue.
Amendment No. 19 not moved.
I move amendment No. 20:
In page 221, between lines 30 and 31, to insert the following:
137.--The Minister shall within 12 month from the passing of this Act prepare and lay before Dáil Éireann a report on the contribution made to the Exchequer by the domicile levy and in particular the contribution in that regard as a result of the measures introduced in this section by the Finance Act 2012.".
As the Minister knows, the former Minister for Finance, the late Brian Lenihan, introduced the domicile levy. It is fair to say that the yield from it has been disappointing, to say the least, with only €1.5 million collected on foot of the levy last year, paid by just ten individuals. I welcome the change to the operation of the levy as proposed by the Minister in the Finance Bill. He is undertaking an overall review of how the levy operates and how the Exchequer can get a fairer contribution from the wealthiest in our society. I welcome the review and look forward to participating in it.
The purpose of my amendment is to seek a report on the operation of the domicile levy. In particular, it seeks to measure the effectiveness of the Minister's proposed changes in the Bill in respect of the tax residency requirement. I support the overall review and the Minister might like to take this opportunity to provide the House with an overview of it.
The Deputy's amendment proposes to introduce a new section in the Bill. This new section would require the Minister for Finance, within three months from the passing of the Finance Act, to prepare a report on the contribution made to the Exchequer, in particular the contribution as a result of the measures introduced by the Finance Act 2012, and to lay that report before Dáil Éireann.
The basic reason I cannot accept the Deputy's amendment is that the impact of the domicile levy changes in this Bill will not be known until next year. As such, it will not be possible to report on this matter within the next three months. Before I get into the details, there is much misunderstanding as regards the tax treatment of tax exiles.
The taxation of individuals in the State is broadly in line with that prevailing in most other OECD jurisdictions. In general terms, individuals who are resident in the State for tax purposes are taxable in Ireland on their worldwide income and gains, and individuals who are not resident in the State for tax purposes pay tax in Ireland only on income arising in the State, income derived from working here and from certain assets in the State or from certain assets that derive their value from certain assets in the State. Also, not all non-resident individuals who file tax returns in Ireland are tax exiles. This includes, for example, "ordinary" Irish nationals who have moved abroad for work reasons but who prudently retain their homes in Ireland. Their tax returns are generally only in respect of rental income on their family homes in the State. This also includes foreign nationals who never resided in the State but who have investments, including property, here and foreign nationals who worked here for a period and who may not have acquired Irish tax residency for that period during a relevant tax year, for example, individuals who worked here on a temporary assignment.
In an Irish context, the discussion on what is termed "tax exiles" generally focuses on individuals of Irish origin who are perceived to be largely based in Ireland, but who arrange their affairs so that they are not tax resident in the State and, hence, pay less tax than they would if they were Irish tax resident. As the House may be aware, I stated in my Budget speech that I intended to keep the contentious issue of the tax treatment of tax exiles under constant review. Contained within the taxation measures for introduction in 2012 accompanying the budget is a commitment to publish in early 2012 a set of proposed amendments to the current tax regime as it applies to non-residents and to put out such proposed amendments to public consultation to inform preparation for further changes in 2013. The Deputy has sought a wider statement from me on this matter.
Reverting to the amendment, section 136 of the Bill gives effect to the proposal announced in the Budget Statement that citizenship be removed as a requirement for payment of the domicile levy. This means that, regardless of citizenship, the domicile levy will be payable by Irish-domiciled individuals whose Irish assets exceed €5 million, whose worldwide income exceeds €1 million and whose liabilities to Irish income tax for the relevant year is less than €200,000.
The amendment applies to the domicile levy chargeable for the year 2012 and subsequent years. It should be noted that payment of domicile levy for a particular year can be made at any time up to and including 31 October in the year immediately following the year in which the levy was chargeable. This means that payment of the levy for 2012 can be made up to and including 31 October 2013. As the impact of the changes made to the domicile levy by the Finance Bill will not be known until after 31 October 2013, I regret I cannot accept the Deputy's amendment.
There was much comment on Committee Stage about the small number of individuals who paid the domicile levy and the low yield from the tax. It should be noted that, if an individual pays more than €200,000 in income tax in a particular year, he or she does not need to pay the levy as well. Given that the levy sets a minimum level of tax payable in such cases, it should not be relied on as an indicator of the actual amount of tax paid by "tax exiles".
I accept in good faith the Minister's comments. I welcome the fact that the report to which he alluded will be published. Most reasonably minded people want to see fairness in our taxation system. At times, this issue attracts more debate than is warranted. Various efforts have been made by Revenue to extract as much of a return from these individuals as possible. This process should continue.
The Minister should avail of the best taxation advice available to develop a revised scheme that people cannot circumvent. Those people will be certainly availing of the best professional taxation expertise at their disposal in an effort to minimise the amount of tax they pay in Ireland. We should avail of similar advice to ensure the Exchequer receives its fair share and that the burden of the adjustment we are going through is spread fairly.
Amendment, by leave, withdrawn.
We have reached the end of the amendments. I understand the Minister would like to make a short announcement.
Yes, with the Acting Chairman's permission. My note is addressed to the Ceann Comhairle but, before we conclude today's proceedings, I would be obliged if, in accordance with Standing Order 140, the Acting Chairman would direct the Clerk to make the following minor drafting corrections to the text of the Bill. On page 50, lines 20 and 26, to change the lower case Roman numerals to upper case Roman numerals. On page 60, line 39, to change the reference from subparagraph (i) to subparagraph (ii). On page 121, line 15, to remove the words "available for surrender". On page 121, line 21, to insert "of the Principal Act" after "section 4(6)". On page 165, line 40, to insert "of subsection (1)" after "Paragraphs (s), (v) and (y)". On page 206, line 17, to substitute "within" for "with". These changes are being made in the interests of textual clarity and do not affect any substantive amendment.
Is that agreed? Agreed.
Bill received for final consideration.
Question proposed: "That the Bill do now pass."
I thank the Minister for Finance, the Minister of State at the Department of Finance, Deputy Brian Hayes, and their officials for the work they have done on this Bill. This has been my first opportunity to deal with a Finance Bill as Opposition spokesperson.
We have been debating the budget since it was announced in the first week of December but it is now time to get on with it. We have our political differences but the country has a good chance of meeting its fiscal targets for 2012 without further adjustment. While I sincerely hope that will be the case, it is more important to measure how our people are doing and how our domestic economy is performing. Given the weak start made in retail sales and other measures, I am concerned about the performance of the domestic economy in 2012. Many of the measures contained in the Bill are designed to support the export industry, including the foreign earnings deduction and the SARP proposal, but this is a challenging time for our people. I hope the Bill will give hope to the Irish people, help to make inroads into the unacceptable unemployment situation and, ultimately, bring about economic recovery. We will continue to engage positively with individual aspects of that recovery and bring forward our own proposals on an ongoing basis.
On behalf of my colleague, Deputy Doherty, who has been absented from the House in recent days, I thank the people who worked on this Bill as it progressed through the House.
The approach this Government has taken followed the same path as its predecessor. This Bill reflects its insistence on austerity without a real strategy for jobs and growth. How can we achieve growth when we are taking billions of euro from the real economy every year? The Minister is as wise as anybody in this House and I am sure he is hearing the same complaints as the rest of us from his constituents, small businesses and people with vision and energy who want to create jobs. At some point there will have to be space and air for our people to breathe.
The Government is at present negotiating with the ECB on the €3.1 billion due on the promissory notes at the end of the month. That is €668 for every man, woman and child in this State every year until 2023. How can we successfully implement any strategy in that framework? If the Minister were having a private pint with somebody I believe he would admit the answer is beyond him.
Our country is struggling. The people with vision and energy, our entrepreneurs and small business and those who desperately want to return to the labour market are being failed by the framework the Government is implementing. At some point there will have to be a radical redirection of policy.
I pay tribute to the officials who have had to wade through the tax codes while preparing the Bill. This is my first time to study the tax codes but from what I understand of them they cross-reference legislation all over the place. It is an impressive achievement for anyone to apprehend this level of detail.
As regards the substance of the Finance Bill, most of it is irrelevant to the situation the country currently faces. The framework in which this Bill has been prepared results from the decision to allow the EU, IMF and ECB to determine the economic and social future of our country. The interests of the bankers, bondholders and financial markets who wrecked the European economy are to be protected while the cost is imposed on working people, the unemployed and the vulnerable sectors of society. The last Government signed up to the agreement and this Government has decided to adhere to that utterly unfair and economically suicidal approach.
Much of the Bill merely shifts the deck chairs on the Titanic. The ship is sinking because of austerity and the people are drowning. I am amazed to hear people claim that austerity is working when people are leaving the country in their tens of thousands. The only reason the unemployment figures are not higher is that of the despicable valve of forced emigration. This catastrophe has been inflicted on the economy to protect bankers and bondholders. It is beyond me how anyone can suggest the situation is getting better when the least vulnerable are suffering so appallingly.
Much of this Bill is simply decoration because policy has been already determined by the decision to pay off bondholders and adhere to this disastrous austerity strategy. In so far as it has anything of substance, it reveals that the Government has the same flawed mindset as the EU, ECB and IMF in giving further opportunities to the corporate elites who caused the mess in the first place. Even if the money is not huge compared to the overall public finances, it is nauseating that the Government is giving tax breaks to corporate high fliers on already large salaries.
Where is the incentive for public sector workers or for low and middle income workers? Why are they not given incentives? Instead, they are hatcheted while, at the same time, we have to give incentives to the corporate high flyers. What about the plan to incentivise carbon trading, which is about turning our environment into the same sort of casino into which the financial system was turned and which had such disastrous consequences, or to give further breaks in corporate tax by extending out the ridiculously low level of corporate tax to other companies that did not benefit from it and which are trading outside the EU?
It will not make much difference because the Government has signed away the country's future for austerity and bank bailouts. In so far as there is any substance, it all points in the wrong direction. Most importantly, the Government resolutely refuses to tax the wealthy in our society, who, as The Sunday Times rich list shows, got richer by €6 billion last year and have vast billions. The Government refuses to tax those people. Instead, it keeps hitting low and middle income earners and small and medium enterprises and it keeps protecting the rich. As long as it continues in that vein, there is no way out of the economic mess this country faces. I will certainly oppose the Bill.
Question put:
The Dáil divided: Tá, 80; Níl, 33.
Tá
- Breen, Pat.
- Buttimer, Jerry.
- Byrne, Catherine.
- Byrne, Eric.
- Carey, Joe.
- Coffey, Paudie.
- Conlan, Seán.
- Connaughton, Paul J.
- Conway, Ciara.
- Corcoran Kennedy, Marcella.
- Costello, Joe.
- Coveney, Simon.
- Creed, Michael.
- Daly, Jim.
- Deering, Pat.
- Doherty, Regina.
- Donohoe, Paschal.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J.
- English, Damien.
- Farrell, Alan.
- Feighan, Frank.
- Ferris, Anne.
- Flanagan, Charles.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Hayes, Brian.
- Hayes, Tom.
- Heydon, Martin.
- Humphreys, Heather.
- Keating, Derek.
- Keaveney, Colm.
- Kelly, Alan.
- Kenny, Seán.
- Kyne, Seán.
- Lawlor, Anthony.
- Lynch, Ciarán.
- McCarthy, Michael.
- McEntee, Shane.
- McGinley, Dinny.
- McHugh, Joe.
- McLoughlin, Tony.
- McNamara, Michael.
- Maloney, Eamonn.
- Mathews, Peter.
- Mitchell, Olivia.
- Mitchell O’Connor, Mary.
- Mulherin, Michelle.
- Murphy, Dara.
- Murphy, Eoghan.
- Nash, Gerald.
- Neville, Dan.
- Nolan, Derek.
- Noonan, Michael.
- Ó Ríordáin, Aodhán.
- O’Donnell, Kieran.
- O’Donovan, Patrick.
- O’Dowd, Fergus.
- O’Mahony, John.
- O’Sullivan, Jan.
- Perry, John.
- Phelan, Ann.
- Phelan, John Paul.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Ryan, Brendan.
- Sherlock, Sean.
- Shortall, Róisín.
- Spring, Arthur.
- Stagg, Emmet.
- Stanton, David.
- Timmins, Billy.
- Tuffy, Joanna.
- Twomey, Liam.
- Wall, Jack.
- Walsh, Brian.
- White, Alex.
Níl
- Adams, Gerry.
- Boyd Barrett, Richard.
- Broughan, Thomas P.
- Browne, John.
- Calleary, Dara.
- Collins, Niall.
- Colreavy, Michael.
- Crowe, Seán.
- Donnelly, Stephen S.
- Dooley, Timmy.
- Ferris, Martin.
- Fleming, Sean.
- Halligan, John.
- Healy, Seamus.
- Healy-Rae, Michael.
- Higgins, Joe.
- Kelleher, Billy.
- Kitt, Michael P.
- Mac Lochlainn, Pádraig.
- McDonald, Mary Lou.
- McGrath, Mattie.
- McGrath, Michael.
- McLellan, Sandra.
- Murphy, Catherine.
- Nulty, Patrick.
- Ó Caoláin, Caoimhghín.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- Ó Snodaigh, Aengus.
- O’Brien, Jonathan.
- Pringle, Thomas.
- Smith, Brendan.
- Stanley, Brian.
Tellers: Tá, Deputies Emmet Stagg and Joe Carey; Níl, Deputies Aengus Ó Snodaigh and Seán Ó Fearghaíl.
Question declared carried.
This Bill, which is certified to be a money Bill in accordance with Article 22.2.1o of the Constitution, will be sent to the Seanad.