I welcome the opportunity to speak on the Finance Bill 2013, which puts into legal effect the measures announced in the Budget Statement in December 2012. Part and parcel of the budgetary process is the passing of legislation in the House, some of it by way of the Finance Bill, some by way of special legislation for the family home tax and some by way of social welfare legislation. It is one overall package and for various reasons, the passing of legislation is subdivided into different areas. It is always important to remember when we are talking about any aspect of the budget that we are talking about the overall budget in that context.
I agree with many of the commentators who argued that the budget was unjust and regressive. It was a policy decision of this Government to make more of the adjustment by way of cutting expenditure than by increasing tax. It was a political choice. I suspect that the Minister of State, Deputy Sean Sherlock, and the Labour Party would have been happier if the balance had gone the other way but, as the smaller party in Government, effectively the Labour Party had to either like it or lump it. That is the coalition Government we have at the moment and the smaller party has to lump it in all of these situations. As a result, we got far more cuts than increases in taxation. That was the Fine Gael approach and that party is pushing forward with this agenda. The only surprise, possibly, is that the Labour Party has been so willing to go along with it.
For the second year in a row, the Government has introduced a budget that is deeply regressive, both socially and economically. It does nothing to foster economic recovery or to provide a vision and direction for the country. Low-income family households have taken a wide range of hits and the cumulative impact of the changes in the budget will be devastating for low to middle income families. The change in PRSI, for example, will hit the working poor far harder than it will hit those with incomes above €100,000. One must ask if that is fair and I do not think that anybody thinks it could be so. However, it suits a particular agenda and that is why that decision was made.
The budget is economically regressive because it does not address unemployment. The unemployment rate is stubbornly high and there will be hardly any increase in domestic demand this year. The only reason unemployment rates are falling is that, unfortunately, some of our brightest and best are continuing to emigrate. Without emigration, the unemployment problem would be much worse.
Budget 2013 had a phenomenal impact on families and contained multiple measures that will impact negatively on them, particularly those with children and those on lower incomes. Such measures include the reduction of €10 per month in child benefit for the first two children, €18 for a third child and €20 for a fourth or subsequent child. The budget also abolishes the PRSI allowance which increases PRSI by €264.16 for those working and liable to pay PRSI contributions. It also introduces the family home tax which is being dealt with under separate legislation. The budget trebles the prescription charge for medical card holders to €1.50 and increases the monthly cap for a family to €19.50. If one multiplies that figure by 12, one can clearly see the impact it will have on families on low incomes or social welfare payments. The increase in the drugs payment scheme threshold from €132 to €144 will also hit those on the lowest incomes hardest. The abolition of the cost of education allowance of €300 will affect the unemployed and lone parents especially. In addition, there is a cut of €325 in the respite care grant. The Minister for Social Protection, Deputy Joan Burton, presided over all of these cuts. She initiated all of them and cannot blame Fine Gael, Fianna Fáil, the troika or anyone else for them. These were her choices in her budget. She chose to make those individual cuts and decided it was necessary to do so, in an effort to support the agenda of not asking those who could afford to pay a little bit more to do so. The thrust of these measures is to cut payments to those relying on State support rather than making those who can afford it pay a little more.
On the issue of the decisions of the Minister, Deputy Burton, the meanest, nastiest and worst aspect of this Finance Bill is the proposal contained in section 8 to tax maternity benefit. In addition to that, it may have escaped the notice of some that the Minister also wants to tax adoptive benefit and health and safety benefit. Now, for the first time ever, the Government is proposing to tax maternity benefit. I intend to comment on four specific sections of this legislation, some of which are fine, some which require clarification and some which require amendment, but this section must be deleted. This House should not pass this legislation with the section proposing to tax maternity benefit in it. The legislation states that maternity benefit payable after 1 July 2013 will be taxable. That means that for those women who went on maternity leave in January of 2013, any payment they receive up until the end of June is not taxable. However, if their maternity benefit payments run into July, the amount payable in July is taxable. That is a disgrace and should not be done. My party will be opposing this section. The Minister for Finance may talk about some transition arrangement to handle that situation but no transition arrangement is required. All that is required is the dropping of section 8 of the Bill.
I thought it was a very mean proposal when it was announced on budget day but this week we have learned where it is coming from. Over the weekend there was much publicity surrounding the fact that the Mangan report on child benefit is to be published this week. That report has been on the Minister's desk for over 12 months. I believe the Minister, Deputy Burton, wants to tax child benefit and would have done so in the budget but for the fact that the Revenue Commissioners were far too busy drawing up the plans for the family home tax. I believe Revenue made some remarks to that effect last year, namely, that it took all of its resources to deal with the preparation and implementation of the system for the family home tax and it could not have taken on another big logistical task in the same period. Therefore, the taxing of child benefit was not done but I believe the Minister will try to get her way in the next budget.
I would have been happy to have a proper debate with the Minister but she did not let the issue of taxing child benefit go. She said that if she could not tax child benefit this year, she would start by taxing maternity benefit. She did not get to tax child benefit but is starting the process by taxing children before they are born. This is a forerunner to taxing child benefit. If one is taxing maternity benefit, it is logical that one will follow on by taxing the next payment the mother will receive from the State, namely, her child benefit. The woman will get her maternity benefit while she is on maternity leave and when she starts receiving child benefit she will already be in the tax system for her maternity benefit and so will pay tax on her child benefit too. Who will pay the tax? What of the complexities of those who are cohabiting, those on separate tax assessments, of married couples, single parents and so forth? Who will bear the tax? Will it fall on the mother? I suspect it will because she will be the recipient. We are now seeing the forerunner to taxing child benefit and the burden will fall on the mother, who is primarily the one in receipt of the payment.
A tax on maternity benefit is effectively a tax on childbirth. It is anti-women, anti-child and anti-family. Some people might think it is a good idea to tax maternity benefit but I do not. It is also anti-work because it makes it more difficult for women to participate in the workforce. If women take time out to have children, they will be taxed on the small amount of money they receive from the State. I urge the Minister to remove this section from the Finance Bill. I particularly ask the Labour Party to reconsider this measure because taxing maternity benefit is the Minister, Deputy Burton's forerunner to taxing child benefit and that must be stopped in its tracks as quickly as possible.
Section 12 of the legislation deals with benefit-in-kind as it relates to travel passes. I ask the Minister in his reply to give further information regarding what is involved here. The legislation is complicated and makes reference to benefit-in-kind and approved transport providers, including some private bus operators. As I understand it, if a company provides a travel pass for an employee for travel that may be required in the course of his or her work, there may be a benefit-in-kind implication. Section 12 extends this to the Civil Service, An Garda Síochána and the Defence Forces.
How many people are in receipt of these travel passes? How many people are paying benefit-in-kind tax in respect of them? Has this applied in the public service before now? Is this a new measure or is it clarification of the legislation relating to benefits-in-kind? Is there a change regarding approved transport providers? Why would some employers provide a travel pass to be used in the course of a person's work? Who pays for it? Is this another way for public bodies to subsidise transport companies?
I could mock, but now that rural Garda stations are being closed, are gardaí to be given travel passes and told to get the bus? Will gardaí be given travel passes to go from Portlaoise to Rathdowney, Mountrath, Ballacolla or Ballinakill, where Garda stations have been closed at night or completely? With Garda stations closed during the night must we hope that some of the bus companies will operate during the night? In Portlaoise, we have an out-of-hours bus service from Portlaoise to Dublin Airport. Are the gardaí expected to use a travel pass and travel on these buses, now that the Garda stations are no longer open? I say that facetiously, but I would like to know what is behind this measure, how many are claiming the allowance and what are its benefits. I ask the Minister to shed some light on this area.
Section 12(j) changes the "specified rate" from 4% to 5% and from 13.5% to 12.5%. The explanatory memorandum does not give details of this measure, except to say it relates to preferential loans. Does it refer to preferential loans given by financial institutions to their staff? There is nothing wrong with that. These loans carry a benefit-in-kind charge, which is correct. A person who gets a loan at 4% while the rest of us would be charged an overdraft rate of 10% should be liable for a benefit-in-kind charge. The Minister seems to be changing the rates here.
I ask the Minister to clarify this matter when he speaks at the conclusion of this debate. Preferential loans were issued to employees in the financial services industry, many of whom have been made redundant or are facing redundancy as a result of liquidations, of IBRC for example. Are these people required to repay those loans because they are no longer employees of the companies that granted the loans? Were new loans issued to them? Were their gratuities or lump sums reduced accordingly? The Minister has information on the number of employees of financial institutions who are in receipt of preferential loans because people have been paying benefit-in-kind tax on them. All redundancies have been voluntary to date but that may not always be the case. There is a benefit-in-kind tax implication for those people. I do not have a problem with this section, but I would like more information on the area.
Section 49 deals with the mineral tax rebate on auto diesel for haulage and bus operators. I welcome this provision. Many people feel it will benefit the transport industry and will allow transport companies to buy fuel in Ireland rather than buying it when they are on the Continent, perhaps at a cheaper rate. Fuel will be purchased in Ireland, the Government will gain tax and jobs will be maintained in fuel depots. It is good that the measure also applies to bus operators, who may be entitled to a rebate on the auto diesel used. It will help keep their costs down and I welcome that.
This amendment to the Finance Act 1999, however, has an unintended consequence. Who is a qualifying road transport operator? Section 49 defines a qualifying road transport operator as a person who holds a national or an international road haulage operator's licence or an equivalent EU licence, or a person who holds a national or international road passenger transport operator's licence or an equivalent EU licence. There are people in the haulage business who, because of Department of Transport, Tourism and Sport legislation, do not have one of those licences and are not, therefore, qualifying road transport operators. I ask the Minister to take this into account and to ask his officials to do so. I welcome the provision but there is an omission here. Perhaps IBEC did not fight the case strongly enough.
The Department of Transport, Tourism and Sport has issued a leaflet for the guidance of applicants for road haulage licences. The first paragraph of the leaflet is headed, Who needs a road freight carrier's licence. It says a licence is required when goods are carried for hire or reward. The leaflet then clarifies:
Hire or reward haulage arises when you are paid for carrying someone else's goods. If you only do own-account work, i.e. carriage of your own goods in your own vehicles driven by yourself or your employees, you do not need a carrier's licence.
The word "not" is underlined in the Department of Transport, Tourism and Sport document. Many companies in the transport business, therefore, do not have a road freight carrier's licence because the Department of Transport, Tourism and Sport says they do not need one if they are drawing their own goods. The second page of the document lists those who are exempted and do not require a road freight carrier's licence. The document states:
If you propose to carry any of the following commodities in this State only, a carrier's licence is not required: cattle, sheep, pigs, turf; milk to a creamery or a cream separating station; milk containers to or from a creamery or a cream separating station; livestock by farmers for neighbours locally; newly harvested wheat, oats or barley during the period 1 August to 30 November each year from a farm to a place of storage, assembly or processing.
Again, the word "not" is underlined in the document.
Many companies in the agricultural area have their own transport lorries and do not subcontract their haulage to independent contractors. They do not have a road haulage licence and cannot, therefore, avail of the rebate. We want the Minister to widen the definition of those eligible for this measure to include the two categories the Department of Transport, Tourism and Sport says do not need a road freight carrier's licence. I am thinking of my local quarry, Carroll Quarries in Castletown. They own their own lorries and deliver their own goods. They do not qualify for the fuel rebate. If they subcontracted their haulage to a transport company that company would qualify. The same is true of many cement manufacturers. I suspect many bakeries and companies in the confectionery business carry their own goods in their own lorries. As they are not required to have a road freight carrier's licence they do not qualify for the fuel rebate. We want that situation redressed.
The Bill, as drafted, will force companies to contract out their transport. The tax incentive can be granted to a subcontractor but not to a company that is carrying its own product. I accept that this consequence is unintended and that our proposal might make matters slightly more complicated. However, if two lorries are drawing from a quarry, cement factory or bakery, one owned by the company itself and another by a licensed haulier, it is not fair that the driver of one lorry qualifies for a fuel rebate while the other does not. That must be looked at.
Section 29 deals with the living city initiative. I support urban regeneration. The section gives a good summary of the scheme. It is important that we have proper, integrated area plans conducted by local authorities and an independent advisory panel to assess the areas to be included. It is not good enough for a Minister to walk up a street and decide that a certain 40 houses should be included. That is not the way to do business. It is also important that all the buildings be listed.
All work, internal and external, now requires planning permission. There will be a major cost in doing the cost-benefit analysis of the scheme.
The scheme must then be designed, must secure EU approval and then must go through the planning process. That cannot be done in 12 months. Preparatory work should have been done and the scheme announced so that it could move quickly. People in those areas who may have intended refurbishing some of those properties for commercial or residential purposes will now put the projects on hold until they secure EU approval. A stay has been put on the development of some of those houses by announcing such a process at such an early stage. There should be an independent and more transparent method of identifying the locations and cities that are to be included in the scheme.
Overall, however, I am happy with the scheme. It is good to regenerate urban areas but we need information, clarity and a shorter timescale.