Finance Bill 2015: Second Stage

I move: "That the Bill be now read a Second Time."

When I made my 2016 Budget Statement in the Dáil three weeks ago, I stated the top priority was to keep the recovery going, while providing relief and better services for the people. The Finance Bill 2015 provides the legislative basis for the taxation measures. As I outlined on budget day, the taxation measures are just one element of the overall budget package designed to support families. The Social Welfare Bill the Tánaiste introduced to the House today includes key provisions that will support working families, including increases in family income supplement and child benefit. The increase in the minimum wage will be introduced on 1 January 2016 and the legislation to give effect to the provisions of the Lansdowne Road agreement will be dealt with by the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, on Committee Stage next week. The Revised Estimates Volume for 2016, due to be published in December, will outline in greater detail the expenditure allocations and programmes announced by the Minister, Deputy Brendan Howlin, in the budget.

Taken together, all of the budget measures are sensible, affordable steps that will keep the recovery going, increase the progressivity of the income tax system and bring benefits to every family. They have been designed to make work pay, support families and encourage entrepreneurship. The good news is that the economy continues to grow strongly, the public finances are in a strong position and we will exit the corrective arm of the Stability and Growth Pact this year.

The latest Exchequer return figures published on Tuesday are positive, but we know that the job of recovery is not yet complete. Our recovery is strong but we must continue to nurture it as the benefits of a growing economy have not yet been felt by all. There is work to do and the Government and the country continue to do it. We all know what has to be achieved and it is only natural that we may have different opinions at times as to how best to achieve our objectives. For me, one of the welcome aspects of Budget 2016 is the debate it has generated and the way in which so much information on how it was prepared is in the public domain. I see this as very positive as it reflects the Government's commitment to openness and transparency. It also reflects how much we value input from all sides.

I note, in particular, that Governor Honohan of the Central Bank provided me, as is the norm, with his insights and advice on the economy in advance of Budget 2016. He rightly highlighted some of the key risks facing the economy, including any potential for mismanagement of the public finances and the use of once-off revenue to underpin long-term expenditure commitments. I strongly point out that Budget 2016 represents the first budget under the new fiscal rules which are designed to prevent the boom bust cycles of the past from recurring. However, the economy is not yet performing at full capacity and for that reason, the Government has introduced a modest fiscal package to reduce unemployment, fix the supply side of the economy and reward and incentivise work. Under the EU fiscal rules which were adopted into Irish law after the fiscal stability treaty, Ireland must implement a 0.6% of GDP improvement in the structural balance in 2016. The Department of Finance forecasts show that Ireland will make a 0.8% structural improvement; we are, therefore, doing more than is required.

Furthermore, one-off proceeds from asset sales such as the State's shareholding in the banking sector cannot be used to finance day-to-day expenditure. The statistical treatment of such revenue is such that it will primarily be directed towards reducing Ireland's elevated debt level. This will help to underpin Ireland's fiscal sustainability in the medium term. I know also that Professor McHale of the Irish Fiscal Advisory Council, IFAC, initially suggested we make a 1% structural adjustment because of the position in the economic cycle. He later corrected the record and acknowledged that only a 0.6% adjustment was required and that Ireland was going beyond this by making an adjustment of 0.8%. The IFAC will publish a detailed response to Budget 2016 in the fiscal assessment report later this month and I look forward to its assessment.

I would now like to draw attention to some of the main themes of the Finance Bill. As Members know, the Government has set a key objective for the years ahead of ensuring every family will be better off in employment. We must strike the right balance between rewarding work for the very lowest paid and keeping the tax base as broad as possible. My aim is to make it more attractive to return to work, to stay in work, to ensure work rewards individuals adequately and to encourage emigrants to return home.

From 1 January next year, the Bill will increase the entry threshold to USC from €12,012 to €13,000, removing over 40,000 workers from the scope of the charge entirely. It is estimated that over 700,000 income earners will not be liable to USC at all from next year. It should be noted that this figure includes individuals with incomes in excess of €13,000 as not all income is within the scope of USC. Most social welfare payments are not liable to the charge. The Bill also provides for reductions in the three lowest rates of USC. The amount of income liable at the second USC rate is also being extended to ensure a full-time worker on the new increased minimum wage will not enter into the third rate of USC which is being reduced to 5.5%. The Bill also provides for the introduction of an earned income credit to the value of €550. This will be available to those with earned income who do not have access to the PAYE credit. This will be a significant benefit to small business-owners across the country, including small retailers, publicans, farmers and tradesmen.

As the Taoiseach stated, it is essential that work pays more than welfare. This is the second Finance Bill that has allowed me the opportunity to reduce taxes on low and middle income workers. The marginal tax rate has reduced to below 50%, to 49.5%, an important milestone on the path to making work pay.

The Finance Bill is also about putting more money in the pockets of individuals and families. These changes mean that every worker and pensioner who currently pays income tax or USC, or both, will benefit from the budget changes. Taking account of the tax and expenditure measures, for example, a family with two children on a single income of €35,000 will see take home pay increase by €57 a month owing to the budget; a single person working full time on the minimum wage, earning €17,542, will see an increase of 4.2%, or €708 a year; a family with three children, with the parents working in the civil or public service and earning €55,000 and €50,000, respectively, will have an additional €196 per month in their pocket; while a self-employed worker earning €40,000 will see a gain of €1,002 in his or her annual net income, an increase of 3.5%. I am sure this package which will deliver modest increases in people's wages from 1 January is one that is supported by the majority of Members.

I now turn to the further development of the economy. The Finance Bill will implement the knowledge development box, KDB, as announced in the budget. The knowledge development box will provide for a 6.25% rate of corporation tax to apply to the profits arising to certain patents and copyrighted software which are the result of qualifying research and development carried out in Ireland. The Government has committed that the KDB will comply with OECD rules once introduced. It will be the first and only OECD-compliant box in the world. The OECD rules allow a third category of assets to qualify in respect of very small companies, namely, those with annual income from intellectual property that is less than €7.5 million and a annual global turnover of €50 million.

This requires certification by an independent non-tax authority as "patentable but not yet patented". The Finance Bill allows this additional category of assets to qualify for the KDB, pending a commencement provision linked with the introduction of separate legislation by my colleague, the Minister for Jobs, Enterprise and Innovation, to amend the powers of the Irish Patent Office to allow it to make the certification for the purposes of the KDB.

To provide robust safeguards around the quality of qualifying patents, the legislation allows only patents that have undergone a substantive examination to qualify for the KDB. To ensure the KDB includes patents granted by the Irish Patent Office, the Minister for Jobs, Enterprise and Innovation will also be amending patent legislation to make sure Irish patents include a substantive examination for novelty and innovative steps. In the meantime, the Finance Bill will allow all unexamined patents - Irish and otherwise - that have been certified by an independent patent agent to be included in the KDB for one year only, until 1 January 2017.

Also announced in the budget was the introduction of country by country reporting as agreed as part of the OECD base erosion and profit shifting, BEPS project. This introduces a requirement for multinationals with Irish parent companies to file country by country reports on their income, activities and taxes with the Revenue Commissioners. This measure illustrates Ireland's commitment to implementing the OECD BEPS recommendations.

The Finance Bill also introduces a petroleum production tax. The Bill will bring into law the fiscal terms for oil and gas recommended in the Wood Mackenzie report published by the Government in June 2014. The tax will apply to licences issued from June 2014, including licences arising from the 2015 Atlantic margin licensing round. In another measure to support industry and entrepreneurs, the three year corporation tax relief for start­up companies is being extended to the end of 2018.

Before moving to examine the Bill in detail, I remind Deputies that, as I indicated in my Budget Statement, my Department will be examining the various proposals made in the report on the marine taxation review. As regards the recommendation on the provision of appropriate tax treatment in order to support a proposed new decommissioning scheme for fishing vessels, subject to examining the detail of any proposed scheme as approved by the European Commission and to the Government being re-elected, appropriate amendments will be made to the tax code in next year's Finance Bill to assist in maximising the take-up of such a scheme.

In respect of the recommendation to extend the seafarer's allowance to fishermen, my officials advise that this would not be permitted under state aid rules. However, they will work closely with the Department of Agriculture, Food and the Marine to consider if a different relief to target fishermen could be implemented in next year's Finance Bill.

I will now take Deputies through the Finance Bill. They will appreciate that in the limited time available I cannot describe every section in detail.

Part I of the Bill deals with the universal social charge, income tax, corporation tax and capital gains tax. Sections 2 to 4, inclusive, provide for the income tax and USC changes I have outlined. In addition, section 2 provides for an exemption for employees for USC on employer contributions to a personal retirement savings account, PRSA, to bring the USC treatment of such contributions into line with employer contributions to occupational pension schemes.

Section 6 provides that vouched expenses incurred by non-resident, non-executive directors travelling in the course of their duties will be exempt from income tax.

Section 8 extends the home renovation incentive for a final year, to end on 31 December 2016.

Section 10 provides that an employer may provide an employee with a single annual non-cash benefit to a maximum of €500 without applying PAYE, PRSI and USC to that benefit. It is intended that this measure will commence on 1 January; however, I will bring forward an amendment on Committee Stage to enable it to apply from the date of publication of the Bill.

Section 13 removes from the list of specified reliefs, for the purposes of the high earners' restriction, the exemption from income tax for profits and gains from the management of woodlands.

Section 15 amends the film tax credit following the budget announcement of an increase in the cap on qualifying eligible expenditure to €70 million per production. It also clarifies the definition of broadcaster and amends the information that will be published on films qualifying for the credit. The latter change will bring our disclosure obligations into line with those specified in the relevant EU state aid guidelines. These amendments are subject to EU approval under state aid rules.

Section 16 makes a number of amendments to the employment and investment incentive, EII. Certain changes to the terms of the incentive are made in order to ensure it complies with the European Commission's general block exemption regulations from a state aid perspective. In addition, the incentive is being extended to companies which already own and operate nursing homes for the purposes of raising funding which can be spent on extending the nursing home or residential care units associated with that nursing home. These changes were included in a Financial resolution and came into effect on budget night. Therefore, the increased amounts companies can raise under the incentive in a single year and in their lifetime which I announced last year have come into effect.

Section 17 makes a number of amendments to certain tax reliefs for farmers. First, it extends the period for which stock relief is available until 31 December 2018. Second, it makes a number of amendments to the registered farm partnership regime. Third, it introduces limited tax relief for succession farm partnerships.

Section 18 gives effect to the legislation which implements the petroleum production tax, PPT, which I have mentioned. The PPT will be charged on net income on a field by field basis, on a sliding scale between 0% and 40%. In addition, a minimum PPT of 5% of the field's gross revenue, net of transportation costs, will apply to fields in each year of production, regardless of the profitability ratio. The tax will be payable annually, with the scope for more frequent payments in the light of developments in the Irish offshore. It will increase the maximum marginal tax take on a producing field from 40% to 55%.

Section 20 amends the due date for the filing of the annual encashment tax return which had been due on 20 January. This date is being pushed out to 15 February as the original deadline was proving difficult for industry to comply with.

Sections 24 and 26 make minor amendments to the Taxes Consolidation Act 1997 regarding the introduction of Irish collective asset management vehicles and alternative investment funds. These changes bring the tax regime into line with the regulatory regime and ensure Ireland will maintain its place as an internationally renowned centre for funds management and administration.

Section 25 amends the tax code in respect of capital allowances for certain aviation service facilities to comply with EU state aid de minimis guidelines. The amendments were brought into effect by a Financial resolution on budget night.

Section 27 provides that additional tier 1, AT1, capital instruments are to be regarded as debt instruments for corporate and withholding tax purposes. This will ensure the same tax treatment will apply to these instruments as in other European countries.

Section 28 extends the three-year start-up corporation tax relief for new start-ups commencing to trade in the next three years.

Section 30 contains the legislation that will implement the knowledge development box, as I announced in the budget and to which I referred earlier, and will provide for a 6.25% rate of corporation tax to apply to the profits arising to certain patents and copyrighted software which are the result of qualifying research and development carried out in Ireland.

Section 31 introduces country-by-country reporting in line with the approach agreed as part of the OECD BEPS project. This introduces a requirement for multinationals with Irish parent companies to file country-by-country reports of their income, activities and taxes with the Revenue Commissioners. It will apply for fiscal years beginning on or after 1 January 2016 and the first reports must be filed with Revenue by the end of 2017. The section also enables the Revenue Commissioners to make regulations setting out further details of the information required to be filed and to provide for reports to be filed by other group companies in certain circumstances.

Section 32 transposes an amendment to the EU parent subsidiary directive into the Taxes Consolidation Act 1997 to include a general anti-avoidance rule. Section 33 replaces the existing capital gains tax relief applying to disposals of qualifying business assets by individual entrepreneurs and business people with a simplified relief which will apply from 1 January 2016. It is a capital gains tax rate of 20% rather than the general rate of 33% to the first €1 million of qualifying gains.

Section 34 amends section 29 of the Taxes Consolidation Act 1997 under which a capital gains tax charge arises where a non-resident disposes of certain specified Irish assets - mainly land or buildings - or shares deriving their value or the greater part of their value from such assets. The amendment will prevent an avoidance practice whereby a substantial amount of cash is put into a company shortly before a sale of shares in that company so that on the date of the sale, the shares derive their value mainly from the cash and not from the land or buildings.

Section 36 amends an anti-avoidance provision designed to prevent individuals avoiding capital gains tax by transferring property to controlled companies abroad. This amendment will modify the section to allow for bona fide transfers undertaken for commercial reasons.

Section 38 amends tax provisions which provide for a deferral of tax when an Irish company is restructured and amalgamated involving the transfer of business to another Irish company or when there is a transfer of assets within a group of companies. The amendments are aimed at preventing the misuse of the reliefs to avoid the payment of capital gains tax on the chargeable gains arising when assets are disposed of to a third party.

Section 40 provides for the budget announcement that the reduced rate of alcohol product tax available for beer brewed in small breweries may be claimed up-front or by repayment. This is subject to a commencement order and will come into operation once the Revenue Commissioners have made the necessary changes to the collection system. This section also updates the definition of "counterfeit goods" to reflect the new definition in EU legislation.

Section 41 clarifies and extends the powers of Revenue officers to search premises, vehicles and computers, including mobile phones, for information which may be of value in the investigation of excise offences. This includes the introduction of new definitions and extends provisions for the retention and interrogation of computers and mobile phones for information which may be of value in the investigation of excise offences.

Section 42 gives effect to the increase in the rates of tobacco products tax which came into effect on budget night. Section 45 amends the definition of "motor caravan" in VRT legislation to provide that the Revenue Commissioners may prescribe the dimensions of what constitutes a motor caravan for VRT purposes.

Part 3 deals with value added tax, VAT. The VAT-related amendments in the Finance Bill do not signal any major policy changes and are largely technical in nature. Their primary focus is to prevent fraud, provide clarity and correct anomalies in the existing VAT consolidated Acts. Section 49 extends the VAT reverse charge mechanism to certain supplies in the wholesale gas and electricity sector and to gas and electricity certificates. This is a fraud prevention measure. Section 57 extends the VAT exemption for betting and betting exchange services to such services when provided to customers located outside the State.

Part 4 deals with stamp duties. Section 59 adds an additional qualification for the purposes of the young trained farmer stock relief. The new qualification is the Bachelor of Science (Honours) in Agriculture awarded by Dundalk Institute of Technology. Section 60 extends the relief from stamp duty on transfers of agricultural land, including farm houses and buildings, to young trained farmers until 31 December 2018.

Section 61 provides for the new stamp duty charge on cash cards, combined cards and debit cards. The current position is that stamp duty is charged annually at the rate of €2.50 for each cash and debit card and €5.00 for each combined card, subject to certain exemptions which are to remain unchanged. This flat rate charge is being replaced with a 12 cent charge on withdrawals of cash from ATM machines using these cards, which will be capped at either €2.50 in the case of cash and debit card withdrawals or €5 in the case of combined card withdrawals. The new basis of charge and the revised reporting requirements for issuers of cards are to come into effect on 1 January 2016.

Part 5 deals with capital acquisitions tax. Section 64 increases the group A tax-free threshold for transfers of gifts and inheritances from parents to their children and below which capital acquisitions tax does not apply by about 25% from €225,000 to €280,000 with effect from 14 October 2015.

Part 6 deals with miscellaneous matters. Section 66 will provide for the capital gains tax treatment of return of value payments received by those Irish shareholders in Standard Life whose options for such treatment got delayed in the post beyond the deadline date set by the company and who were defaulted into receiving payments which would otherwise be treated under income tax rules.

Section 67 inserts a new subsection into section 2 of the Taxes Consolidation Act 1997 following the signing into law of the Marriage Act 2015 to provide for the tax assessment of same-sex married couples. Section 70 implements Council Directive 2014/107/EU, which is known as DAC 2, into Irish law. This directive deals with the exchange of financial account information and is based on the OECD common reporting standard which Ireland legislated for in last year's Finance Act. The section also provides for the repeal of the savings directive. The savings directive has been effectively replaced by DAC 2 and is due to be repealed by the end of the year.

Section 71 deals with Revenue's powers to request information about taxpayers from third parties and financial institutions. The amendments will ensure that Revenue are able to seek the same information regardless of whether a taxpayer conducts business through their own name or through an online user name. As with Revenue's existing powers, information can only be sought by Revenue where it is reasonable to believe that the information is relevant to a tax liability. These amendments will also ensure that Ireland continues to comply with international best practice on the exchange of tax information.

Section 72 will require both property managers and public offices to return additional information on let property that can be used to assist the Revenue Commissioners in their profiling and targeting of tax non-compliant persons. Sections 77 to 80 provide for the new fuel grant to replace the excise repayment on fuel element of the disabled drivers and disabled passengers scheme, which was declared incompatible with the EU energy tax directive by the Court of Justice of the European Union. The introduction of the fuel grant will ensure that no beneficiary of the scheme loses out as the result of the court's decision. This measure will cost €10 million in 2016 and in a full year. These sections also ensure that the grant shall not be liable to tax and provide for an offence for furnishing false information for the purpose of receiving the grant.

Section 81 provides that the water conservation grant, administered by the Department of Social Protection, will be exempt from taxation. Section 83 relates to the National Treasury Management Agency's need to buy back and cancel securities as part of its regular operations.

At this stage, there are still a few matters under consideration for inclusion in the Finance Bill that I may bring forward on Committee Stage. I will, of course, also give consideration to the constructive suggestions put forward during our debate here this week.

I am pleased to have an opportunity to contribute to the Second Stage debate on the Finance Bill 2015. Under section 61, the Minister is making changes to the application of stamp duty on certain bank transactions, including the use of automated teller machines, ATMs. Under that heading, I raise Bank of Ireland's announcement today setting a minimum over the counter withdrawal limit of over €700 per transaction and a minimum over the counter lodgement of €3,000. The Minister has made a statement to the effect that he was surprised and feels the changes are unnecessary but he needs to go a step further because many older people, in particular, like to deal with a human being in the bank branch and not a machine. There is an important security issue at stake. If any undesirable person observes what is going on around a bank branch and sees an older person taking money out over the counter that person will know the Bank of Ireland the customer is taking out a minimum of €700. Similarly, small traders and farmers seeking to lodge money will have to amass a minimum of €3,000 before making a lodgement over the counter.

This raises a fundamental question about the direction of the banks and banking system which are becoming increasingly impersonal and faceless and the customer relationship is no longer at the centre of banking. That is why I have consistently called on the Minister to bring forward a White Paper on banking so that we can decide what the direction we want banking in Ireland to take. For older people, in particular, going to an ATM presents challenges and many simply do not want to do that. They would prefer to deal with a person in the branch. If they use an ATM, it will typically give out €50 notes, a €20 note is the smallest given out and people like to have smaller denominations for their every day business.

The Central Bank also needs to make its voice heard on this issue. It has a vital role in consumer protection and should be exercising that function robustly. If anyone had told the Minister or me even a few years ago that the minimum withdrawal over the counter in a bank would be €700, we would have thought that person had arrived from another planet. It is ridiculous and the Minister needs to deal with it because it is not fair on older people who rely on that personal contact in their local bank branch. I could not pass up the opportunity to raise the issue because it is broadly relevant to the Bill.

Fianna Fáil will be opposing the Finance Bill on Second Stage as it reinforces the missed opportunities in budget 2016. As I said in my budget day speech, this is the last throw of the dice by a deeply unpopular Government desperate to be re-elected. I want to put the budget in the context of what has been happening over the past 12 months and what is likely to occur in budget 2017.

Buried deep in the charts which accompany the budget document is a nugget of information that is particularly revealing about the Government’s strategy over the past 12 months. According to information provided by the Department of Finance, and confirmed to me in a reply to a parliamentary question, there will be just €500 million of "fiscal space" available in 2017. This is one sixth of the pre-election blowout that has taken place in the past few weeks and indicates a considerable slowdown in the level of tax cuts and expenditure measures which can be introduced after the election.

At the end of 2014, frightened by plummeting opinion poll ratings in the face of the Irish Water fiasco, the Government took a conscious decision to engage in a pre-election splurge. This began with a reversal of the planned €2 billion budget adjustment in 2015 and led to €1.1 billion of Supplementary Estimates at the end of 2014 and a €1 billion tax and expenditure giveaway for 2015.

Already this year the Government has signalled a further €1.7 billion in Supplementary Estimates, without any obvious improvement in services; quite to the contrary in some areas. It supplemented this with budget day measures amounting to €1.5 billion. The total of these measures represents an eye-watering €7.3 billion. So much for the Government’s supposed commitment to stability and fiscal prudence.

According to October’s Exchequer returns published yesterday, the State took in €2.47 billion more in taxes in the first ten months of the year than it expected. This is a very impressive figure but on closer examination, it is revealed that 82% of this additional revenue came from corporation tax which has proved to be one of the most volatile tax headings in recent years.

I note the comment of the Revenue Commissioners in The Irish Times today that the surge in corporation tax receipts is due to "strong trading conditions" and not "one off factors". However, it is indisputable that we have seen a boom in exports to record levels helped by a very benign international environment. The domestic elements of the economy are still below peak levels.

Ireland remains vulnerable to a change in international factors. We have benefitted, in particular, from the weak euro, low interest rates, falling energy prices and the European Central Bank’s quantitative easing programme. The reversal of any or all of these factors could hit Ireland particularly hard as a small, open, trading economy. The economic turmoil in China during the summer was a stark reminder of the unstable nature of the global economy.

A considerable proportion of the additional expenditure announced in the run-up to the election is being funded by corporation tax receipts and increased dividends from the Central Bank. These two windfalls may not be repeated in future years. The risk associated with treating corporation tax receipts as permanent can be seen from the fact that the top ten taxpayers account for about a third of overall corporation tax revenue. Should international trading conditions deteriorate, we could see these revenues evaporate. The Governor of the Central Bank, Professor Honohan, made warnings along similar lines before the budget.

By contrast, income tax and value added tax, VAT, were only marginally ahead of expectations this year to date while excise duty is actually below what was forecast. In fact, each of these categories underperformed in October but this was masked by the strong corporation tax receipts.

The Government has failed to articulate a strategy as to how to deploy this extra money effectively. Its record in four key domestic issues: housing, health care, mortgages and water, has been abysmal. It is unable to point to a single concrete achievement in these areas, despite spending being massively ramped up. There have been overruns in health expenditure, which have failed to deal with waiting lists and accident and emergency department overcrowding. By contrast the Minister for the Environment, Community and Local Government, for all his talk, has failed to spend one third of the capital budget allocated to him. All of this points to a Government without a proper plan for the management and execution of public spending.

There is now a real risk that an incoming Government will be forced into an immediate reining in of runaway spending in order to comply with EU expenditure rules. This will also considerably reduce the scope for any further tax cuts. In his speech to the annual Fine Gael presidential dinner in Dublin, the Taoiseach said, "if returned to Government, Fine Gael will put complete abolition of the USC at the centre of the most radical overhaul of personal taxation in a generation." He went on to commit to that within the lifetime of the next Government.

When I checked the data with the Minister for Finance he informed me that it would cost €2.64 billion to abolish the universal social charge on incomes up to €70,000 and a further €1.4 billion to abolish it completely. The same Minister for Finance has told us that the fiscal space for 2017 is €500 million and €1.1 billion for 2018. If the fiscal space continues at a similar pace for the following three years, it will be impossible for the Taoiseach to achieve his aim unless he intends to raise general income tax rates or starve public services of additional resources.

It would seem the Taoiseach's claim on the USC is as credible as his story of deploying the Army to protect ATMs.

I now turn to the tax changes introduced in this budget. The highest gain will be for people earning €70,000 and above. They will be better off by €902 a year, or 2% of net income. By contrast, someone on €25,000 will gain €227, or 1% of net income. I debated this point at length with the Minister on "Prime Time" on budget night. Fianna Fáil proposed an alternative tax package combining an increase in personal tax credit and an increase in the lower USC bands which would have seen every worker earning over €21,000 get an increase of €293 a year and the highest percentage benefit would have gone to those earning between €20,000 and €30,000.

This reason we took this approach for this budget is that we wanted to undo some of the damage that was done by the flat tax increases which were introduced in recent years. When the Minister for Finance was raising taxes, he abolished the PRSI allowance, costing every employee €264 a year, and introduced water charges and local property tax without reference to ability to pay. It is worth recalling that almost 60% of income earners earn less than €30,000 a year.

A further aspect of the Government's tax strategy which is worthy of highlighting is the failure to index tax bands and tax credits. This is a stealth tax as it has the effect of raising government tax revenue without explicitly raising tax rates. Taxpayers will pay more tax as the income tax bands are not being adjusted to take account of expected inflation. According to the budget document, the Department of Finance projects that inflation will be 1.2% in 2016. To protect taxpayers from the loss of real income from inflation, the entry point for the top tax rate should have been increased by €400 for a single person and €800 for a married couple. The various personal and PAYE tax credits should also have been increased to mitigate the impact of inflation. Presumably, the Minister felt he would get less of a publicity hit from using €300 million of the revenue he had available for tax cuts for the less glamorous option of indexing bands when compared to cutting USC rates. In simple terms, the Minister announced income tax reductions of €595 million but the budget booklet confirms the Department expects to claw back over half of this in 2016 by not indexing tax bands and credits.

However, on a relative basis, the biggest losers from this are those earning around the entry point to the top rate, €33,800. Many extra taxpayers will be now pushed in to the top tax bracket if they get a modest pay increase. In his response, the Minister might like to indicate how many middle income earners will now be pushed into the top tax rate as a result failure to index bands. He might also explain the basis of his calculation that an extra €300 million in tax will actually be collected by not indexing the tax system.

I welcome the introduction of an earned income tax credit for self-employed persons. It is something we called for two years ago. However, the budget announcement of an earned income tax credit falls well short of full equality for the self-employed and non-PAYE income earners. I understand that 111,600 people will benefit from the change in 2016. A previous parliamentary reply indicated that extending the PAYE tax credit to all non-PAYE income earners would cover 284,600 cases. As a result of the restricted nature of the measure being introduced in 2016, 173,000 people living on income derived from savings and other non-PAYE sources will continue to be discriminated against in the tax code. Not for the first time, we find that the Government is overselling a measure it announced on multiple occasions.

The tax change introduced in the budget to help the self-employed is a lot less generous than the Government would like us to think. Those who are living solely on income deriving from savings are effectively excluded. Those people exist and they will still be discriminated against, particularly so on low incomes. For example, in 2016, a person with €15,000 of income who does not qualify for the new tax credit will pay over ten times more in tax, PRSI and universal social charge than a PAYE employee. The actual cost of the measure to the Exchequer is just €18 million in 2016, which underlines its limited nature.

In so far as possible, people on the same income should pay the same level of tax. Restricting the credit to what is referred to in the tax code as case I and case II income earners is difficult to defend on equity grounds. This is not the only aspect of the tax and social welfare code where the self-employed are discriminated against. They are subject to a means test for jobseeker's support if their business fails and they have no entitlement to other essential welfare supports such as illness benefit and occupational injuries benefits, which employees can avail of from contributions made at the PRSI class A rate. As a country, we have a long way to go before we can say that we truly value the self-employed and their contribution to the economy.

I welcome the modest increase in the home carer tax credit in the budget, bringing it up to €1,000. A home carer tax credit may be claimed by a married couple where one spouse cares for a dependent person such as a child, an elderly person or a person with a disability. While Revenue makes efforts to automatically give this tax credit to some taxpayers, only 81,000 taxpayers benefited from it in 2015. I suspect that tens of thousands of people are not claiming this tax credit because they are simply not aware of it and the Government and Revenue need to do a lot more to make people aware of the existence of this tax credit and the ability to claim it. For example, a married couple with one earner is likely to be entitled to the credit if either spouse is engaged in the care of a family member, including a child in respect of whom child benefit can be claimed. In particular, Revenue should be obliged to explicitly bring this €1,000 credit to the attention of each taxpayer who may be entitled to benefit from it. Revenue has access to sufficient information to make a reasonable assessment as to whether a couple would be entitled to this credit, which would amount to an extra €1,000 in their pockets.

There is another way in which the tax code can be amended to help married couples with one earner. This goes back to the debate around individualisation. Currently, a spouse can effectively transfer just €9,000 of their standard rate band income to their spouse out of a total of €33,800. This has not been amended in a number of years and an increase in this amount would be recognition that work undertaken in the home is valued by the State.

We have heard a lot about housing and rent certainty, or the lack of it, since the budget. It is worth remembering that there was no mention of any form of tax relief for first-time buyers this year, despite the odds being stacked against them. The DIRT rebate scheme introduced last year has had no impact and mortgage interest relief is being abolished from 2017. A total of 118 applications from first-time buyers for a refund of DIRT paid over the previous four years have been received. Just 74 applicants have received a refund of DIRT, amounting to around €74,880. It is now clear that the scheme to provide relief from DIRT for first-time buyers has not worked. In fact, the outcome is an insult to the thousands of people who are struggling to buy their first home. A chronic lack of supply, exorbitant interest rates, which we have consistently highlighted, the abolition of mortgage interest relief and the new Central Bank rules on mortgage deposits have combined to make home ownership increasingly unaffordable and unattainable for young people. These are the real issues that the Government should be focused on if it genuinely wants to assist people who aspire to own their own home. The announcement of the scheme 12 months ago was well intentioned but it has failed to deliver.

The budget also failed to deliver for savers. The Minister for Finance is continuing to preside over a punitive tax regime for savers with no relief provided in the Finance Bill. The Government has increased the tax on deposit savings by a massive 14% from 27% to 41%. In addition, anyone with unearned income such as deposit interest, rent, dividends, etc., of greater than €3,174 has to pay an additional 4% PRSI on deposit interest, bringing the total tax on interest to a whopping 45%. Combined with effective zero rates of interest, it means people are effectively earning little or nothing from saving. This is a punitive tax on people who have prudently saved money which itself has already been taxed in full. Nearly €2 billion has been collected in DIRT since 2011. The combination of tax and inflation means returns for savers are now negative.

By contrast in the UK, the first £1,000 of interest on savings is fully tax-free. The rates offered on tax-free products by the NTMA in Ireland through An Post have been slashed under pressure from the banks, as has been revealed through responses to freedom of information requests. There has been no respite for savers looking for a decent return on their money in this country.

DIRT is a tax that is applied in a discriminatory manner. Any single pensioner earning just over €18,000, or €36,000 for a couple, is liable for DIRT at the full rate of 41% even if they are only subject to income tax at 20%. For low-income individuals under the age of 66, the situation is even worse. Low-income earners, who have put aside some savings, pay the same rate of DIRT as millionaires, which is unfair. Savers have also been hit in other ways through the hated levy on their private pension funds, which is now thankfully coming to an end, increased capital gains tax rates and the emasculation of the credit union sector. All in all, the Minister has made it increasingly difficult for families to put money aside for their future economic well-being.

Despite a report in The Irish Times prior to the budget that a separate inheritance tax threshold of €500,000 was to be introduced for the family home, the actual change to thresholds was relatively minor. Inheritance tax has been a bonanza for the Government coffers. Fine Gael and the Labour Party have increased the number of people liable to pay inheritance tax by 34% and since 2010, the amount raised has more than doubled. In 2016, the Government expects to take in €375 million in tax on gifts and inheritances even after the change to thresholds in the budget. This is €5 million more than the amount it expects to raise in 2015.

The coalition has twice reduced the threshold for CAT as well as increasing the rate from 25% to 33%. In the 2013 budget, the Minister, Deputy Noonan, justified these tax increases by saying, "I am introducing a number of measures in the area of capital taxes to ensure that people with wealth make a fair contribution to the State." The threshold that will apply in 2016 is still €52,000 below that which applied when the Government came to power.

Recent increases in property values mean that far more families are now being drawn into the inheritance tax net. In many areas, modest family homes can no longer be passed from parent to child without imposing a very large inheritance tax liability, which can often result in the forced sale of the property. This penalises those who have prudently saved their taxed income during their working life so that they can pass it on to their children. Our budget submission made proposals in this area which we will pursue further in coming months.

There is a need to apply an annual indexation to thresholds based on the residential property price index to give greater certainty in the application of CAT. The change made in budget 2016 was a step in the right direction but further reform of inheritance tax rules are needed in the years ahead. This should also encompass an easing of the restrictions on the dwelling home relief which allows a beneficiary to inherit a house free of inheritance tax if they have resided in that home for three years prior to the disposition and continue to live there for six years afterwards. Currently, there is a strict test that a parent cannot also have lived there during this period unless they are compelled by old age or infirmity to depend on the child. I take this opportunity to commend my colleague, Senator Mary White, on her ongoing campaign to lift the burden of inheritance tax on families in Dublin and throughout the country.

The extension of CGT relief in the Finance Bill is restricted to first €1 million of gains. In contrast, the UK has a simpler, clearer and more attractive relief which applies a flat 10% rate to entrepreneurial gains of up to £10 million. The £10 million limit has increased threefold since the relief was introduced.

I would like to raise a number of technical issues on the design of the draft measures. An individual may hold shares directly in a company which is engaged in a business or may hold shares in a holding company which in turn holds shares in companies engaged in business. The provisions currently recognise this. However, the manner in which the definition of "holding company" is framed means that it is practically impossible for someone to claim eligibility for the relief where the corporate structure for the business, which they have owned and grown, happens to have a holding company.

For example, it has been suggested by some professional advisers that, in addition to holding shares, holding companies also hold bank accounts to discharge their running expenses, raise debt and lend debt to their subsidiaries and often oversee and manage the activities of subsidiaries. In doing so, they may charge and recoup management expenses whether in the course of the conduct of a services trade or otherwise. This means that the assets of a typical holding company do not consist wholly of shares which comprise 100% of the shares in other companies engaged in business, as the draft provisions currently require.

As such, the owner of the company in this instance would not be eligible for the relief. One possible solution is to adopt a group definition approach similar to the UK approach which has worked successfully. In addition, the requirement for a three-year period of ownership ending on the date of disposal is too long and is uncompetitive. The restriction that in order to qualify shares are not listed on official lists of exchanges is an unnecessary limitation on the commercial freedom of a company as to whether to list its shares.

In other tax measures to assist with the creation of jobs, the Government has tinkered with the rules to allow companies to raise more finance under the scheme but has not made it more attractive for investors. This is the real difficulty with how it operates. The scheme could be improved by increasing the €150,000 annual investment limit for individuals, removing EII from the high earners' restriction permanently, providing full income tax, USC and PRSI relief in the year of investment and excluding EII shares from the charge to CAT.

There are currently two points at which personal retirement savings accounts are disadvantaged when compared with occupational pension schemes. The Finance Bill, as published, provides for an exemption for employees from USC on employer contributions to a PRSA to bring the USC treatment of such contributions in line with employer contributions to occupational schemes, which addresses the first major disadvantage suffered by PRSA holders. However, a second anomaly exists in that in the case of PRSAs, both employer and employee contributions are subject to Revenue limits allowable for tax relief. In the case of occupational pension schemes, only the employee contributions are subject to Revenue limits. I hope the Minister will examine this issue on Committee Stage.

The Companies Act enacted last year was a welcome consolidation and simplification in the law relating to how companies operate. It was particularly useful for small companies. One aspect the Minister may wish to consider is the apparent inconsistency between the rules governing when a company needs to carry out a statutory audit under the Companies Act and those required by Revenue. Under the new Companies Act, a company with a turnover of less than €8.8 million is not required to carry out a statutory audit. However, as I understand it, the rule applied by Revenue is that, once a firm has a turnover of greater than €100,000, a full audit is required. There is a clear case for consistency in how the law is applied and this issue should be examined.

Last year, I tabled amendments to the Finance Bill to provide an income tax exemption in respect of certain expense payments for relevant directors. I cited the example of a company based in Ireland which appoints an overseas director. If that director travels to Ireland several times a year for board meetings, Revenue's current position is that the director's flight and hotel costs represent a BIK and he or she ought to be subject to income tax on them. By contrast, a European civil servant coming to Ireland for a meeting with the Department of Finance would not pay BIK in such circumstances. Therefore, there was an inequality of treatment with businesses looking to avail of overseas expertise to improve their firm.

I welcome the changes that have been introduced in the Finance Bill as a positive step towards acknowledging the critical role that non-executive directors and boards play in the leadership and governance of businesses in Ireland. However, I note concerns that have been expressed about the inequities created by the restrictiveness of its application to non-resident non-executive directors only and the serious anomalies that such a restriction will create for domestic Irish business and Ireland's entrepreneurial culture in general.

There is an increasing demand for contractors across the ICT and health care sectors. However, multinationals looking to expand are finding it increasingly difficult to fill posts. The current interpretation of the normal place of work by Revenue is disallowing professional contractors their business travel and accommodation expenses for tax purposes. This is being done even though the expenses are incurred wholly and exclusively in undertaking their work. Contractors are not freely moving to sites where the work is. Instead, they are trying to find work locally even if it is not the most suitable. This means that skills are not being deployed where they are most needed. This is an area on which submissions have been made to the Minister and I ask him to examine them very closely.

On Committee Stage, we will deal with the issue of the knowledge development box and some outstanding issues concerning the local property tax. While I welcome the deferral of the revaluation which was meant to happen in 2016, I am very disappointed that Dr. Thornhill has done a U-turn, as such, on the deductibility of the local property tax for income or corporation tax purposes by landlords of rental properties. I will also comment at a later date on the fiscal council comments, which the Minister addressed in his opening remarks on Second Stage. Overall, I look forward to a constructive and detailed engagement with the Minister and his officials on Committee Stage of Finance Bill 2015.

For the fifth year in a row we are presented with a regressive budget followed by a regressive Finance Bill. This is the also the fifth year in a row for us to get the big lie that there is no alternative. When one takes a step back and looks at the Finance Bill in its entirety and asks who benefits the most, the answer is very clear. This is a budget and Finance Bill for the multinationals, big business, the banks and high earners. It is a Fine Gael budget and Fine Gael Finance Bill from start to finish. There is no alternative to that in Fine Gael's eyes. This is a slightly smaller Finance Bill than that to which we have become used in recent years, but the unfairness crammed into it is all the more remarkable for that. The Government plays around with figures on percentages lost and gained, but it cannot deny the fundamental fact that the Finance Bill will make the wealthy even wealthier while doing very little for low earners or for the real middle-income earners. This year, once again, my party was the only one to provide a costed alternative. Quite literally, Sinn Féin is the only alternative to regressive budgets.

In the interest of a fairer society we proposed to remove regressive taxes such as the water charge and property tax, to take workers earning under €19,572 out of the USC net and to provide relief to the self-employed. We also sought to ask those who earn upwards of €100,000 individually to pay a little bit more. However, that runs contrary to everything that Fine Gael and Labour stand for. They went down another path, one that is clear in the Bill, namely, rewarding the top 14% of taxpayers, 27,996 of whom earn more than €200,000, by €902 each at a cost to the State of almost €182 million. That is the choice the Minister made when faced with all the choices presented by society. Today, we read on the front page of newspapers about elderly people on hospital trolleys. That is not unique to today; it will happen tomorrow, the next day and the day after that. The situation will continue to get worse and deteriorate in the coming weeks and months because of the decisions the Government has made.

Time and time again we hear from Fine Gael and Labour about the difficult choices they have made. The choices in budget 2016 seem like natural reflexes to them. When one has favoured the wealthy five times in a row it must become less of a hard choice. According to Social Justice Ireland, budget 2016 widened the gap between rich and poor by €506 a year. This measures the gap between the disposable income of a single unemployed person and a single person on €50,000 per annum, but if compared with people on higher salaries the gap between rich and poor has widened even more.

Sinn Féin’s alternative budget was crafted with the intention of creating a fair society. We proposed to increase the provision and quality of public services, the removal of regressive taxation such as the water charge and property tax, and to take thousands of workers out of the USC net, while at the same time supporting and encouraging the self-employed. What is wrong with asking those with the deepest pockets to pay a little bit more? It would have meant that those individuals earning more than €100,000 would pay a little bit more. However, that runs contrary to what Fine Gael and Labour stand for. They went down another path, one of rewarding the top earners. That is their choice. It is not the republican choice. Our choice would be different. Once again the choices have been made and the Government tries to stand over them. It stands over the non-abolition of water charges and instead gives €182 million of tax breaks to the top 14% in society. The Government stands over the non-scrappage of the local property tax while allowing another loophole for multinationals to avoid paying their fair bills. The Government had choices but in the same way as it did every year, it went for the regressive choice. This year is no different.

While we welcome the introduction of the self-employed tax credit, it lacks the progressive nature of the Sinn Féin proposal in our alternative budget, namely, where the credit for the self-employed would be tapered off between €80,000 and €100,000. I also note the Minister’s lack of commitment to alternative funding routes for self-employed entrepreneurs. Sinn Féin is fully committed in that regard. We proposed that the startup relief for entrepreneurs, SURE, scheme would be broadened to allow the self-employed access the scheme. I encourage the Minister to take the suggestion on board.

In the removal of income from woodlands from the high earner's restriction and the broadening of the employment scheme it is clear that Fine Gael and Labour have once again shown their commitment to the high earners in the State through their weakening instead of strengthening of the high earner's restriction. The high earner's restriction was introduced for the specific purpose of limiting the use of certain tax reliefs and exemptions by high income individuals. However, Fine Gael and Labour think it pertinent to remove income from woodlands from the list of tax reliefs subject to the restriction, as if high earners are under big pressure at the moment and need access to more money which is exempt from taxation.

Furthermore, Fine Gael and Labour made the tough choice to increase the overall investment limits under the employment investment incentive, which allows investors to obtain income tax relief on investments of up to €150,000 per annum. Broadly, the Government has increased the annual and overall investment limits for a company from €2.5 million to €5 million and from €10 million to €15 million, respectively, and extended the required minimum holding period from three years to four years.

The Bill also expands the availability of the relief to allow companies that already own and operate nursing homes to raise funds for the purposes of expanding their existing facilities. Let us compare that to Sinn Féin’s commitment to restrict the high earner's loopholes. We will table amendments on Committee Stage but, as I have said every year since taking on the role of finance spokesperson for Sinn Féin, we will go through the farce and the motions on Committee Stage. The debate will be good, as it always is. I enjoy the debate across the committee room, but we are not allowed to propose certain amendments. Most of the amendments we propose will be ruled out of order by the Chair. This year will be no different because the Government refused to accept the legislation I put before this House to allow for a constitutional amendment to allow for Members other than on the Government side to propose motions or amendments to legislation that would place a charge on the State. We must do that if we are serious about political reform. The Minister made the same argument when he was on the Opposition benches a number of years ago. If we are serious about political reform then that constitutional restriction should be lifted.

The accelerated scheme of allowances for industrial buildings provides for tax depreciation over a seven year period instead of the normal 25 year period. That is something we must examine. Accelerated tax deduction is allowable on buildings costing up to €5 million where the expenditure is incurred by a company and €1.25 million where the expenditure is incurred by an individual.

When I initially heard about the changes to the petroleum production tax, I thought the Minister had finally done the right thing with regard to ensuring the proper taxation of earnings from natural resources, in particular given the report issued by the Joint Committee on Communications, Natural Resources and Agriculture which recommended a major overhaul of Ireland’s tax terms for its offshore oil and gas. The committee recommended that the tax for future licences would be increased to 40% for small commercial discoveries, 60% for medium commercial discoveries and 80% for very large discoveries.

What is proposed here clearly falls short of what the committee recommended and Ireland still has one of the lowest tax returns from natural resources of any state. In addition, there is no discussion or mention of retrospective action being taken against existing oil and gas fields, including the Corrib gas field, as these changes will apply in the case of any oil and gas exploration licences first awarded after 18 June 2014.

Deputy Michael McGrath mentioned the issue of Bank of Ireland and I ask the Minister to outline what he intends to do with Bank of Ireland. What will the Minister do, given he has a major shareholding in that bank which he holds in trust on behalf of the people, as this bank again has turned around and is screwing the very same people who rescued it? The changes announced today that are being defended by Bank of Ireland simply are not acceptable. It is not acceptable that it has closed the door to thousands of its customers in respect of over-the-counter services below certain thresholds. I ask the Minister to do something in this regard. The Minister sat on his hands in respect of mortgage distress, bankruptcy terms and all the rest but on behalf of people who are contacting my office and, I am sure, those of other Deputies, I ask him to do something. These people are deeply concerned that a bank that was rescued by this State and which only exists today because a Government stepped in and rescued it, is shutting its doors on customers because they simply do not have enough euro to deposit across the counter or because their withdrawals are below €700. This matter must be addressed and the Minister should make strong comments and should face down the bank in this regard.

I find it disturbing that the Minister did not see fit to support my legislation concerning mortgage interest rates, which would have benefitted thousands of hard-pressed families, but did find time in this Bill to legislate for further tax deductions for the banks. The Finance Bill 2015 proposes to allow a deduction for certain interest-dividend payments made in respect of capital instruments issued by banks to satisfy their tier 1 capital requirements. As no deduction has been permitted for interest payable with regard to any tier 1 capital until now, this represents a significant change of course. The Bill confirms that banks will now be able to get a tax deduction for costs associated with a tier 1 instrument held for capital requirements and furthermore, as a result of this Bill, an exemption from interest withholding tax for the banks also will apply to some of these instruments. If there is one ideological commitment holding this coalition together, it is a commitment to the banks. I welcome the extension of the bank levy but as the Minister is aware and as Sinn Féin has advocated, it could have been significantly increased.

The knowledge development box is a matter that will be dealt with in great detail on Committee Stage but it illustrates the Minister's lack of commitment to domestic small and medium-sized enterprises, which still face a myriad of problems from legacy debt to problems accessing credit. I am informed by industry sources that this regime will be of limited benefit to the domestic corporate sector given the significant costs associated with investing in and generating the qualifying intellectual property, as well as the requirement to engage in substantive operations that have a high added value for the Irish economy. One must be upfront and not shy away from the debate on Ireland's corporation tax regime and reputation. Sinn Féin is for an all-Ireland corporation tax rate. It is for Ireland being a responsible member of the international community with no cloud hanging over its tax reputation. Sinn Féin is for foreign direct investment and for domestic indigenous enterprise. It is for being a responsible member of the international community and not simply a cog in the system that deprives the developing world of tax due to it. However, I am far from convinced that the Government shares that aim and am deeply concerned, as I have stated repeatedly, at what the Government is planning with regard to the knowledge development box.

Budget day also saw the announcement that the local property tax would be frozen until 2019, that is, until after the next general election. Is it not a strange commitment for a tax that is based on value to be frozen for so long? The truth is this tax is unpopular and rightly so. As a system of funding local government, it has failed miserably and likewise, the attempt by the Government to remove the burden of this tax from houses infected by pyrite has been a disaster and this should be remedied as soon as possible. I also take this opportunity, given the dreadful situation that has emerged for the residents of Longboat Quay, to call again for them to be exempt from the property tax until their homes are safe. When I put this question to the Minister, the reply was not satisfactory. Basically, as if the residents of Longboat Quay did not have enough problems, the reply from the Minister states it is up to each individual to determine whether his or her home is habitable and therefore to make that decision for himself or herself. If the residents make the wrong decision or if they read the legislation wrongly, then the Revenue could come after them. Second, it is up to them to decide what is the value. The Minister needs to lead in this regard. It is not the fault of the residents of Longboat Quay that they found themselves in this position. These homes are not supposed to be habitable but as people are living in them at present, the Minister should make a clear statement to the effect that these homes should be exempt from the local property tax and each resident should notify the Revenue that his or her accommodation does not fall under the terms set down in the legislation. However, the Minister has not done this and basically has placed the responsibility on the individuals, which carries consequences in respect of the Revenue itself. If anyone from the Revenue is listening, perhaps the Revenue Commissioners might take a lead on this by examining the legislation and, given what is known about Longboat Quay, writing to some of these individuals to tell them their homes are not eligible under the local property tax.

The best the Minister could have done about the housing crisis in this Finance Bill was to increase the tax clearance threshold. It is incredible that the Government had no announcements on alleviating pressure for renters struggling to make ends meet or to deal with the issue of supply in the housing market. However, once again showing where the priorities of Fine Gael and the Labour Party lie, the Minister did find time for an amendment that has been made to increase the threshold for obtaining a CG50 tax clearance certificate from €500,000 to €1 million for houses. The CG50 clearance provisions provide for a deduction of 15% from the purchase price of certain property-related assets, to be paid over to the Revenue Commissioners in certain circumstances where a tax clearance certificate is not provided by the person disposing of the assets. However, there is an exemption where the proceeds are below the threshold, which now has been expanded by the Minister. Many people look to the budget to see where the priorities of the State lie. These people would quite rightly have been disgusted by the lack of action on rent certainty or house building in the budget. At a time of a severe housing emergency, the total capital spend next year will decrease. This is a damning statistic, which shows where the priorities of the Government lie.

I welcome, following Sinn Féin's lead, the reduction in this Bill to the administration charge applying to the export of a vehicle for the purposes of the vehicle registration tax, VRT, export repayment scheme, from €500 to €100. However, the Minister did not go as far as Sinn Féin, which called for its complete abolition. Sinn Féin welcomes the amendment regarding the alcohol products tax rebate for microbreweries, which may now be claimed at source. Unfortunately, the Minister again did not go as far as Sinn Féin's proposal in its alternative budget, which was to broaden this relief by 5,000 hectolitres. Sinn Féin fully supports this burgeoning indigenous industry, which is a good example of a fine indigenous industry.

On budget night, I supported the move to lower the burden of commercial road tax. However, I must now ask whether the urgency behind the motion passed that night had anything to do with the then pending Supreme Court decision, of which Members now are aware, in which that court ruled that for the purposes of motor tax, the trailer weight of a vehicle should not have been included in the weight. This is a major rule that could have serious repercussions on revenue and the entire commercial motor tax system. Does the Minister intend to bring forward legislation on foot of that decision? Is the State liable in respect of repayments or may there be calls on the State to deal with overpayments of motor tax by certain individuals?

I note the abundance of amendments in relation to the funds industry. Had the Minister focused as much time on legislating for those facing home repossessions or being screwed by high mortgage repayments as he did on the funds industry we would all be in a better place. The effect of the changes announced in the Bill is to apply to the Irish Collective Asset management Vehicle, ICAV, the same tax treatment from which Irish fund structures that are defined as collective investment undertakings currently benefit, and includes the application of tax exemptions in respect of Irish income and chargeable gains. Elsewhere the Bill clarifies that the appointment of an Irish Alternative Investment Fund Manager, AIFM, to a non-Irish alternative investment fund does not bring the AIF within the charge to Irish tax in respect of income or gains from the fund solely as a result of the AIF being managed by an independent Irish manager. I am on record expressing doubt about the need for the ICAV legislation and the manner in which it became law. Only months later we are back fine-tuning it. Sinn Féin will be keeping a close eye on these sections.

The increase in the minimum wage is welcome but we all know that this 50 cent increase will soon disappear. Sinn Féin called for a €1 increase in the minimum wage but, again, all we got was a minimalist approach by the Minister and the Government in this regard. I welcome other positive aspects of this Bill. For example, I am happy that the home renovation initiative has been extended and I welcome the introduction of country by country reporting. I welcome also the increased powers for Revenue, which will hopefully yield greater income for the State. The increase in the carer's credit is also welcome.

I recently reviewed the statistics on lending over the last couple of months by our financial institutions. It is clear that the banks are not lending to households. There has been a decrease month-on-month in regard to mortgage lending for homes. Short-term lending of less than one year is the only area in respect of which there is growth, although in the context of overall contraction. I assume this relates to extension and renovation of houses under the home renovation scheme. There is a serious problem in regard to lending to households by our financial institutions which needs proper scrutiny in order that we can identify what needs to be done in this regard.

Last week to little fanfare the Central Bank published an economic letter which states that the affects of austerity were underestimated because many households cannot borrow at low interest rates and that the crisis in financial markets caused by zero interest rates also affected others - which were unstated but are presumably businesses. In its jargon, "The cumulative multiplier over the 2011-2013 period amounts to 0.7 and 1.0 in the baseline, but increases to 1.3 with a reasonably calibrated financial accelerator and a crisis-related increase of the share of credit constrained households". It goes on to say, "In the latter scenario, fiscal consolidation would be largely responsible for the further decline in GDP relative to its pre-crisis trend during 2011-2013". This is just one of the latest reports that shows up the argument that austerity did not work and that it was not necessary. Members on the benches opposite seem to think they have done the right thing, that all the cuts were just hard choices they had to make. No right thinking person would, of course, agree. What is clear is that when some fiscal space does become available the priority is not to build a fair recovery, rather it is to cut taxes in a way that makes the wealthy even wealthier.

The budget, we were told by the Minister and the Taoiseach, would be pay-back time. Were water charges or the property tax abolished? The answer is "No", because when they said it was payback time they meant it was payback time for the top earners. Fine Gael and the Labour Party have sold the family silver. They have watched hundreds of thousands of our people emigrate and have stripped our communities of resources in the name of austerity. They now have no intention of building a fair recovery. The Government has decided on one policy and one policy only and that is tax cuts. It has set out its stall. It is about hollowing out our society and building an unfair and an unjust Ireland for our children.

We have all heard the harrowing stories in regard to services. We hear all the time in our constituency offices of children with disabilities being unable to access the type of supports they need from the health services. We have all heard the stories about children going to school without breakfast. We have heard from teachers that these children are easily identifiable because they are the children who cannot concentrate, who grip their pencils weakly and who continually turn around because they are unable to focus owing to a hunger in their bellies. The Government could have addressed all of these issues or it could at least have begun to address them. It could have started by addressing some of the issues that present in this capital city, including that right now, at 8 p.m., there are many parents who, because they and their families are homeless, are tucking their children into bed in a one bedroom hotel room, similar to the type of room in which I stay while in Dublin when on Dáil business, and all because this Government had different priorities.

I do not understand why we have a Finance Bill before us that provides €182 million of tax breaks to those individuals that earn over €70,000 per annum. It does not make any sense. At the same time, there were over 400 people on hospital trolleys today. The Minister can pretend as the Taoiseach did earlier today that this is the result of hospital managers not doing their jobs. The Taoiseach said earlier that he did not know why this problem is not being solved given hospitals have been provided with sufficient money, nurses and doctors to do so. I am sure when it comes to the housing crisis the same will be said, that the county council managers and councillors will be accused of not doing their job despite the fact they are being given the money and so on to do so. That is all bull and we know it.

This country has been starved of resources for the last number of years. What the Minister is now doing is setting us down a very dangerous path. We know that tax receipts have increased and that an additional €2 billion in corporation tax has been taken in so far this year. That might continue for the next number of years because with the introduction of country by country reporting, for which we have been calling for many years, companies will be trying to get their act together before they have to start reporting next year. Under questioning from me the officials in the Department of Finance said they could not understand why there has been a 40% increase in corporation tax. It is not that companies are 40% more profitable. We all know that they could not all be 40% more profitable. There are serious questions remaining around the economy yet this Government has set out a stall of cutting stable taxes, which is income tax, while at the same time starving public services of necessary funds to deal not only with demographic pressures but enhanced service provision and to address crises in a number of key areas such as housing, education and, in particular, health. We all know that there are other crises coming down the road in terms of the pension time-bomb and a number of other issues.

If all of this goes belly-up the Minister, Deputy Noonan, will be long gone. He will be sitting back enjoying his pension and, hopefully, his retirement. If this goes belly-up who will pay the price? What the Government is now doing is exactly what Fianna Fáil did. Professor Honohan and others, including members of the Irish Fiscal Advisory Council, have pointed out to the Minister the dangers of what he is doing in terms of cutting stable taxation and starving public services of the type of investment needed. What he is doing is reckless.

When we make the claim to the Taoiseach that homelessness is this Government's policy, that patients on hospital trolleys is its policy, we do so because we believe that these are the choices made in this Finance Bill.

The Government has chosen to cut taxes for the wealthiest in our society. It cannot have it both ways. We cannot fix the crisis in these areas if the Government continues to cut taxes for people who are not demanding that it do so. The Government can tinker around the edges of the homelessness crisis, the health crisis and the trolley crisis but it will not solve those crises if it does not have the political will to invest the necessary resources. It is very clear that the Government has done what it has done and that it believes it is popular in terms of the forthcoming election. However, it is playing with fire in terms of the economy. The Government has chosen a very dangerous road, one which it has stated it will continue to go down over the coming years. Deputy Michael McGrath was right when he asked how the Government would abolish the universal social charge without increasing taxes in the next five years. It must be remembered, however, that his party is saying the same thing, namely, that it will also abolish the universal social charge. The Deputy is right in saying that the Government cannot do it but he is not acknowledging that his party cannot do it either.

Deputy Clare Daly is sharing time with Deputies Richard Boyd Barrett and Michael Fitzmaurice.

The Deputies have ten minutes each.

I want to focus on a few points. First, I would not underestimate how outraged people are about the decision of Bank of Ireland to essentially exclude most of its customers from doing business in its branches. This sums up everything that we have done wrong and it will be a constant theme in all the points I want to make about this Bill. What people find infuriating is that this is a case of here we go again. The banks we bailed out - which brought the country to its knees and which cost us six or seven years of cruel suffering - have decided to just turn around and spit at us in the face. It is as simple as that. This bank is spitting at us in the face. People are outraged about it and I do not blame them. This is on top of the banks' refusal to give proper debt relief to those who are in mortgage arrears. People find the latter nauseating. Somebody texted me before I came to the House and suggested that Bank of Ireland customers should be outside its branches tomorrow picketing, protesting and taking their money out of their accounts. I could not agree more. What is happening is disgusting. However, those in government allowed it to happen because of their determination to nurse the banks back to health, sell them off to the private sector and allow them to be a law unto themselves in order that they can do it all over again to us. It is the small things that sometimes cause explosions and the Government may find that this will become a focus for some of the accumulated anger about the way it has let the banks off the hook.

In my initial response to the budget, I made many of the points about the generally unfair and regressive impact it will have and the laughably so-called tax give-away or "give-back". The points I made on budget day have been underlined by previous speakers. However, I will put it very simply: why does somebody earning in excess of €70,000 need €1,000 more when there are people who cannot afford to pay their rent, who are ending up sleeping in cars, tents, hostels or on the street and to whom €1,000 would make a considerable difference? Why did the Government need to give €1,000 back to people who have more than enough to pay the bills? That amount is ten times more than the Government gives to somebody on social welfare. It is cruelly unfair and it shows the callousness of the Government and its complete lack of understanding of what is happening to many thousands of families. Some 130,000 families are on housing waiting lists, thousands of people are in emergency accommodation and tens of thousands of others are in mortgage arrears and fear the loss of the roof over their heads because they cannot pay the bills. These people literally cannot keep the roof over their heads. They should have been the sole focus of the Government's budget changes in terms of giving anything back but instead it is giving multiples to the people earning in excess of €70,000 a year. That is obscene.

As I said on budget day, in some ways all of that is small beer compared to the really big-ticket item contained in this Bill. As I noted previously, it is like the magician's trick - one hand is keeping people occupied with the smaller detail while the other is doing the real business. That is how magicians work and that is how this Government works. The really big-ticket item, the real give-away, is contained in this Finance Bill in something that, relatively speaking, has received little attention, which is focused on only in the business pages, and that is the knowledge box. This is where we reveal the true colours of the Government in its determination to continue the wholesale transfer of wealth from the poor and the less well off to the super rich, to accelerate this process and to frustrate the efforts of a growing chorus of international voices demanding that something be done about this concentration of wealth in the hands of the multinational corporations. The concentration to which I refer has reached obscene levels. Just as the noose is beginning to tighten on these people, the Irish Government gives them another way out by means of a new double Irish mechanism. Let us not forget that the double Irish mechanism, which has allowed them to avoid tens upon tens of billions of euro in taxes in recent years, will be phased out up to 2020. As of the beginning of next year, they will have two ways to avoid tax, they will have the knowledge box and they will have the double Irish mechanism, just so they can work out exactly how they are going to operate this tax system to ensure they do not have to pay any extra at all.

That is part of the explanation for the mystery of the sudden appearance of €2 billion in tax revenue, the unexplained €2 billion. From where did it come? It has come from the corporations which, courtesy of the Government, have been using the double Irish to avoid tax for the past number of years. Then, because the whistle was blown by some of us who became Members of the Dáil and by a growing number of people around the world who said "This stuff has to stop", money mysteriously appeared which now can potentially be taxable income. This money will not, of course, be taxed because even though it will be included on the books, it will benefit from the knowledge box provision. Previously, this money was siphoned off. It could not be clearer what is going on. It all centres around precisely the abuse, exploitation and manipulation of things such as intellectual property and patents, which are at the centre of the knowledge box, and that is precisely what was at the centre of the double Irish, whereby increasing billions of euro were siphoned out of the system through the so-called trade charges - or royalties - on intellectual property and patents. The Minister's Department even produced a paper on this matter for the sub-committee that was examining it. Again, that was prompted by some of us who demanded that it be investigated, although the Minister refused to allow some of the main players involved to come before the Joint Committee on Finance and Public Expenditure. So terrified is he of these multinationals, he would not even allow a discussion about the suggestion that they should come before the committee to happen in public - the cameras had to be switched off.

The figures have again been buried in these papers that nobody reads. They show that the amount of income that was siphoned off under the category of trade charges increased from €5 billion in 2006 to €21 billion in 2011. Some €16 billion extra each year was siphoned off through royalties and patents under the double Irish. Now the same will be done with the knowledge box. Billions and billions of euro will be siphoned off.

Why are the people not grateful for the so-called budget giveback? Why has it not given us a bounce in the polls? Why is Labour still going to be obliterated in the coming election? The Government could have saved itself from that if it was just willing to make some of these guys in question pay some extra tax and, in so far as it got a little bounce from them this year, given it back to the people who actually needed it.

Our alternative is for an extra fiscal space of €2.2 billion. This includes adding in the €700 million that under the EU fiscal rules one is not allowed to. That €2.2 billion would cover the cost of abolishing property tax, water charges and reversing almost all of the social protection cuts imposed since this Government came into office. If, in addition to that, one made the multinationals pay the actual 12.5% on corporation tax, imposed the financial transaction tax and imposed a third level of PRSI on employers and employees who earn in excess of €100,000 a year, then the Government would get an extra €4.3 billion which would cover the cost of giving €1.5 billion extra to education, €1 billion extra to health, and abolishing the universal social charge, USC, for everyone earning less than €70,000 a year. People would be grateful for that.

Now goes the magician.

When he launched his budget, the Minister for Finance told us proudly that he was concentrating his available resources on tax reductions for low and middle-income families by reducing the marginal rate for people earning less than €70,000 per year. From this, we can deduce he believes that somebody just shy of earning €70,000 a year is a middle-income earner. While I do not believe that is an excessive amount of money, we have to be very clear that the number of people in this society earning above that amount is tiny. In fact, only 3.3% of households have a single PAYE earner with an income of €75,000 or more and only 6.6% of dual-income families do. The scandal that we really should be discussing is the fact that 60% of all of those people who pay tax in Ireland have an income of less than €35,000 a year. Someone earning €70,000 a year in that context is far from being in the middle.

Labelling them so, however, is yet another attempt to hide the fact the Government’s budget this year, like all of its other ones, is a Robin Hood in reverse budget. It is a budget that benefits high earners more than it does middle and low-income earners. The points have been well articulated. The USC cuts being introduced in this Bill will give the top 20% of households on average nearly twice the benefit to their disposable incomes as that given to those who are actually in the middle. It is probably not surprising given that the Taoiseach told us at one stage that he believed the minimum wage was €35,000 a year, which it is obviously nowhere near.

What the Government has done in this budget is not only reduced the tax burden of those at the top of society - it was not very burdensome on them in the first place - but it has failed to target the massive sources of that wealth which could be harnessed to deliver vital public services and a transformation of living standards. The budget contains not a single extra measure to tackle those at the top of society, however. We have that against the backdrop of the scandal that the top 100 individuals in this society saw their personal wealth grow by €12 billion in one year alone. Now we have an Ireland where the top 20% has a 70% share of the wealth, while the bottom 20% has a 0.2% share. The policies put forward in this Bill and the budget are only going to aggravate that situation. It is a total scandal that we have not sought to go after that wealth in any shape or form.

Like Deputy Boyd Barrett, I believe one of the key parts of this Bill is the so-called knowledge box. This is one thing and one thing only, namely another weapon in Ireland’s already impressive armoury of tax avoidance schemes for corporations and big business. We have activities that can be loosely defined as research and development, qualifying to be taxed at only 6.25%, a minuscule amount. In David McWilliams’s recent television programme on wealth in Ireland, he pointed to studies from the American bureau of economic statistics which showed many of the multinationals operating in Ireland earn $970,000 profit per employee but only pay $25,000 in tax per employee, meaning a 4% effective tax rate on that wealth. Obviously IBEC, the Irish Business and Employers Confederation, welcomes the knowledge box. The Minister has said it is a “significant enhancement to our corporation tax regime [which] shows Ireland’s ability to retain our core strengths, while keeping a keen competitive edge in attracting and retaining quality jobs and investment to our country.”

That simply is not the case. What we have been subjected to is a rehash of the argument that the corporation tax regime in this State is crucial to our economy, the cornerstone of our economic policy. The reality is that it is not. The number of jobs dependent on the multinational sector is relatively small by comparison to the overall scale of the economy. Of course, we welcome the jobs that are provided. However, they are only a tiny part of the economy. They disproportionately impact on our economy because of the amount of moneys washing in and out through these companies and inflating our GDP, gross domestic product.

According to the US Congressional Research Service, the profits of US-controlled corporations, as a percentage of GDP in Ireland, was a massive 42% in 2010, up from 7.6% in 2004. In Germany, as a point of comparison, the percentage was 0.4%. Germany is a productive economic powerhouse while Ireland is a country that prostitutes itself out on enticing money in to engage in tax avoidance schemes. Not only is it a shoddy set-up, it is destructive because of the huge figures involved, the inflation of our GDP and the smoke-and-mirror effects of the movement of the big sums of money through the large companies locating their European headquarters here. These all give a cover to the Government to take attention away from the real discussion we need to have on the lack of a proper indigenous and local industrial economic policy. That has been part of the ploy in this.

Our tax and foreign direct investment policies, aggravated by the Bill, have actually turned Ireland into a service platform for flighty and transient international capital with little consideration for the domestic economy. Michael Taft put it very well when he pointed out that the multinational sector has been grafted on the domestic economy but is indifferent to its long-term health. In that context, the knowledge box is really just the latest attempt to convince everybody that what is happening here is not industrial scale tax avoidance. However, no one believes that. Ireland is a tax haven and everyone knows it from the US Congressional Research Service to the UN Special Rapporteur on Extreme Poverty and Human Rights to Dr. James Stewart, associate professor of finance at Trinity College Dublin. He said, “This is complex, and multinationals love complexity because it allows them to develop tax avoidance strategies. The last thing they want is simplicity.” The New York Times has described the knowledge box as something akin to an onshore alternative to the double-Irish tax arrangement that this year’s budget was supposed to be doing away with.

This knowledge box proposal is a sham. The cornerstone of the Government’s economic policy is not productive capacity, investment or job creation but tax avoidance, which is pretty shameful when one thinks about it. While we could give the country-to-country reporting measures included in the Bill a guarded welcome, we know the Government only brought them in under duress and extreme international scrutiny. What impact, if any, they will have is really unknown at this stage. We will not be holding our breath in that regard.

There are loads of sleights of hand which mark this Bill as a total policy in neoliberalism which has hallmarked this Government. With one hand, it tinkers around with the tax credits for home carers. That is fair enough. However, with the other hand, the carer’s allowance was cut by 8% over the Government’s term.

Home help hours have been cut, with 600,000 hours being taken from the service, yet the Government is giving tax breaks to nursing homes under the guise of encouraging small business. The Government is exempting them from paying tax and giving them access to cheap credit. This Government is incentivising the privatisation of the care of the elderly. It is madness.

It sickened me to hear the Minister when moving this Bill reference for possibly the fifth time a measure people are already entitled to, which is an exemption from paying local property tax when the house is affected by pyrite. The Government said it brought in this exemption three years ago but people have not been able to claim it because of the clumsy way in which it was introduced. People would have had to spend thousands of euro to get an exemption worth hundreds of euro, which is obvious lunacy. The ridiculous situation is that the State did not require testing in order for people to be included in the Government's remediation scheme but required them to have a test carried out in order to get a tax exemption. I see nothing in this other than the Minister's words, again, that this will be addressed. It is not good enough.

Deputy Michael Fitzmaurice has been allocated ten minutes but we will adjourn the debate at 8.30 p.m. and he will carry forward any remaining time.

I have been actively involved over the past few months in something that was contained in the budget, which is the cutting of the tax on vehicles, and I acknowledge this measure on behalf of the haulage industry. For the past two to three years, the haulage industry has been haemorrhaging jobs. Northern Ireland had a tax rate of €900 for a lorry. The equivalent in this country was €4,500 to €5,000. The measure will repay in its own way because it will create jobs. It is a badly needed boost for the haulage industry which has been struggling severely. I advocated the introduction of a measure similar to that introduced by England, which was a £10 sterling tariff on every one of our lorries that went over there. I have spoken about the introduction of such a measure but we have not done it yet.

I welcome the provision of an extra year for children in preschools. Parents in middle Ireland have been struggling with large mortgages and the banks have done nothing about the situation except to put a gun to their heads and not listen to them. The provision of an extra year of child care is a small relief for these parents.

A first step has been made on behalf of the self-employed. I would have preferred if all the steps had been taken in introducing a tax credit equivalent to that enjoyed by PAYE workers. We speak of middle Ireland and the ordinary PAYE worker earning €30,000 to €40,000 a year. These people are being crippled by the universal social charge. They have struggled over the past three to four years to rear families and keep going, day to day, with expenses creeping up on them. They struggled to survive. I would have preferred to see more given to them because they kept this country going over the past few years. They are the people who in the hour of call put their shoulders to the wheel. Everyone in this category is tortured by the universal social charge. They hate this unjustified charge and should have benefitted more from the changes introduced.

At a time when we talk about the country improving, it was sad to see in the area of agriculture €1,000 cut from the areas of natural constraints scheme, or the disadvantaged areas scheme, as it was once called, when our country hit a crossroads. I do not know if the Minister for Agriculture, Food and the Marine lobbied the Minister for Finance but he did not achieve anything in this regard in the budget. To put it simply, there was nothing other than the €550 tax credit for the small farm family. There were measures in respect of transferring the farm to the next generation but that refers to bigger farmers only. It does not affect the small farm family. All we got in terms of the agriculture portfolio was the beef data and genomics scheme. This is a ferociously complicated scheme that is going nowhere except to bring us down a dangerous road. We are telling Europe we will produce quicker something that eats less and dies sooner. This concerns carbon and in four or five years time we will be caught out on this issue.

Sadly, the same Minister was not able to deliver anything for farmers in this budget in respect of the GLAS scheme. Forecasts on the different types of measures that would be introduced were given to Europe but these were not projected correctly. There has been no solace in the budget for the small farm family, which is my concern and not the landlord farmer. I do not know if it is the Minister for Agriculture, Food and the Marine or someone else that we should hold responsible but it is sad to see this budget deliver nothing for small farm families.

The country is starting to recover and there are green shoots here and there but they are scarce in many a part of the country, especially down my neck of the woods. I do not know if the issue is one of more money, although I do not think it is, but hospital services at the moment are in chaos. I do not know if we need someone who can handle the situation better or whether managers are the problem, but something needs to be done quickly because people are being treated horrendously.

Prior to the budget, I spoke about the credit union movement. After the people of Ireland coming to its aid today we saw the arrogance of Bank of Ireland when it told people not to come to the teller at the counter if they are not withdrawing €700 or more. Let us think of a pensioner on €200 or so a week. These people may on a Friday go to a bank. They are not used to bank cards. Many of them are not used to computers. These people are now being turned away. Will the Minister for Finance please give the reins to the likes of the credit unions? The Minister might not believe or understand this but the banks, once they got the money, have abandoned rural Ireland. The last things left are the post offices and the credit unions. The credit unions need facilities to provide direct debit facilities and cards for transactions. When a person walks into a credit union, someone will be there to greet an elderly person and ask if he or she needs help, which means so much to those people. At the moment, all we see in a bank is a machine. We have to press buttons, as if it were a piano, to lodge or withdraw money. Now if customers go to the counter and are withdrawing less than €700, which might not even be in their accounts - there might not be €300, or €200 even, in the account - the bank expects them not to attend at the counter.

The housing crisis is chaotic. On my first day in this House a year ago, the budget was announced. I heard lovely figures on housing being thrown about. Like many things in here, there was a lot of talk but little happened. Nothing has been solved in the housing crisis over the past year. Huge numbers of people are being housed in temporary accommodation. It is time for someone to take the bull by the horns. Someone needs to roll up his or her sleeves.

The Ceann Comhairle would like me to finish.

I will allow the Deputy one last breath and then ask him to move the adjournment.

Debate adjourned.