Finance Bill 2015: Second Stage (Resumed)

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

Before we adjourned this debate to take Leaders' Questions, I was speaking about outputs of the health service and the budget and how the health service, as a key public service, was being seriously negatively impacted by Government policy. Since 2008, approximately €3.3 billion worth of funding has been gouged out of the health service, a large chunk of it by this Government.

We have heard a number of serious, tragic, difficult cases today during Leaders' Questions.

I want to speak about one specific case and I would like if the Minister could listen to it. It shows how citizens are being impacted by the crisis in the health service. I know a 66 year old woman who has just retired from her work. She worked hard and raised her family. She lives about five minutes away from the hospital and had a stroke. It took 45 minutes for the ambulance to come to her house and take her to the hospital. As with a stroke, time is of the essence. She recovered very slowly and eventually reached a level of recovery where she needed access to the national rehabilitation centre. After being clinically discharged she had to wait 13 weeks in the hospital to gain access to the centre where she had rehabilitation and was able to go home although with much reduced mobility. A year later she had a stroke and went back into her local hospital. Two nurses took her to the shower one day to give her a shower. Given the pressure on the nurses, one was pulled away and the woman, who is now 67 years of age, fell, cracked her head on the shower and suffered a brain injury. She was transferred to a major Dublin hospital where she had brain surgery. The next day she had a blood transfusion. For an hour and half she was given the wrong blood which caused renal failure and other damage to her internal organs. She remained unconscious for eight weeks as a result of the brain injury and the incorrect blood transfusion.

This is a woman who, in at least five separate engagements in a period of three years, has been damaged by the HSE and the health service. After eight weeks she started to open her eyes and to communicate. She had a tracheotomy and started to breathe. She is now in serious difficulty. Her future is a nursing home. This is the damage, the vandalism that has been done to the Irish public services by the gouging of the money from these services and the reorientation of that money through budgets towards paying back the bondholders and so on. There are many other things wrong with the State as a result.

I mentioned earlier that we have reduced education investment, there are high levels of personal debt, low wages, precarious employment, rising rental costs, regressive taxation in regard to water charges and property charges, crippling child care costs and exorbitant mortgage repayments. A third of a million of the population has left the State in the past six years. One in six Irish people live abroad, one in four of the cohort between 20 and 30 years of age. The Sunday Business Post conducted a poll recently which found that 62% of the population felt that none of the benefits of the recovery had entered their lives in any way. At the same time the wealthy are getting wealthier. We heard Deputy Eoghan Murphy speak a few minutes ago. He felt that those in upper income range were being discriminated against by the taxation system and called for reform of the universal social charge, USC, so that they would get more money into their pockets.

In the budget, some €180 million was returned to those earning €75,000 and upwards through USC cuts, while there was a €24 million net extra investment in the health service. The difference in priority is clear. Some €69 million was invested in housing, a third of the actual amount of money that went back to that cohort earning more than €75,000, so the wealthy are getting wealthier. The wealthiest 250 individuals in the State saw their wealth grow by 16% to more than €75 billion in the past 12 months.

The week before the budget, Sinn Féin relaunched its alternative budget. Our budget simply sought to reduce the deficit in the same manner as the Government did within the fiscal rules. Our budget was fiscally responsible but it was also socially responsible, which is a key element. It allowed for a competitive economy but also a fairer society. Our budget would have invested twice as much as the Government in public services and the economy through the development of a fair taxation system which brought in a little more revenue to achieve these aims. It would also have put about €2,000 back in the pockets of ordinary citizens.

As the spokesperson on enterprise I am disappointed that so little was done for medium to small businesses in the budget. We in Sinn Féin believe that those who work hard, use their abilities and who take risks deserve to be economically compensated for those activities. Many very small micro enterprises around the country are being forgotten with regard to this type of compensation. We see the whole of the enterprise strategy skewed towards large FDIs. We welcome FDIs and there is no doubt they are important to this country but we need to strike a balance within the economy. If we do not do so we will not have sustainability. Our alternative budget sought to alleviate some of the tax challenges experienced by very small businesses as regards the tax credit earned through income, similar to the plans the Government introduced. We also sought that small businesses would not be penalised by the increase in the minimum wage. We would increase employer PRSI to 8.5% at the threshold of €377 per week. We also sought to differentiate between positive and active investments when it comes to capital gains tax to ensure that entrepreneurs who do invest in an active fashion in their business get to reap the rewards and that they are differentiated from speculators who simply invest in stocks and shares and seek rewards in that regard.

We also sought to extend the start-up relief for entrepreneurs to self-employed people who had not previously paid PAYE. That programme is aimed only at those who paid PAYE. There is a dichotomy of treatment between the two sectors even though we expect them to start up new business. We have also sought a reorientation in regard to people's spending patterns. One of the major trends in recent years is that people are spending billions of euro more online. That means that billions of euro are leaking out of the country as €3 out of every €4 spent online ends up in another state. What we need to do is increase the capability of local businesses to do e-commerce. We have sought a doubling of the current trading online voucher scheme to keep more businesses at home.

We also sought to speed up the administration of the tax system for businesses to resolve the excessive turnaround with regard to registration. Those delays are impacting on businesses and preventing economic activity from taking place. We also included in our budget that small businesses should be allowed to pay tax on accounts. Rather than having to pay all the tax in one instalment they would be able to pay it over and over, which would alleviate the pressures that exist with regard to cash flow within business.

We sought a 50% relief for indigenous craft beer producers to 35,000 hectolitres because it is an important growing sector of society. We sought to improve the opportunities for small and medium businesses to access public procurement. Currently, there is €20 billion annual public spend on goods, services and capital projects and most small businesses are locked out of that. One of the key changes that has happened in recent years that people do not realise is that governments have centralised that process further, thus making it more difficult for people in local authorities to be able to tender for work, which means that the income gets centralised also.

We proposed that tenders should be reduced to make sure they were more accessible to people. This is a very important point. This and the previous Government has divested massively from infrastructural spend in recent years. The Spring Economic Statement indicated that Government spend in this area would reduce from 1.8% to 1.5% of GDP by 2020. Most conservative economists will say that to maintain capital stock we need an investment of 4% of GDP in Government spend. The Government is divesting significantly, which is having an effect on competitiveness. We indicated in our alternative budget that there should be a €400 million extra spend in infrastructure, much of it in housing and some in transport infrastructure.

Added up over five years, that comes to €2 billion extra in our budget plan. We also want to increase the knowledge economy by putting extra funds into education, while scrapping the property and water taxes to create stimulus right through the economy.

The Finance Bill refers to the banking sector. It is important we examine what is a happening in the banking sector. Yesterday, we heard the disastrous news from Bank of Ireland that it is seeking new regulations which would prevent people from withdrawing less than €700 or lodging less than €3,000 at a bank counter. The reasons for this change of attitude in the bank include information technology developments and pressures due to the crash. However, another major reason is the Government has produced an oligopolistic banking market through its policy of two pillar banks with the rest being small players around these. This leads to oligopolistic behaviour from the banks. That means it is a sellers’ market, not a buyers’ market. In banking terms that means the banks dictate terms for everything to their customers. We see that with high mortgage rates, higher than they are abroad, as well as high interest rates for business, again higher than abroad, with closures of banks in provincial towns and with the prohibitions on withdrawals and lodgements.

For a viable banking system, one needs many small non-systemic players. This year, on behalf of Sinn Féin, I launched a policy document for the introduction of a public banking system. When some Members on the Government benches think of public banking, they think of reds under the bed stuff. Yet, a large chunk, some 40%, of Germany’s banking system is public banking. This is a normal element of most healthy banking systems. Such a development would bring banks back into the locality. In our particular plan, we had a plan for ten regional banks to take away from the concentrated oligopolistic nature of the banking system.

I heard the Minister of State, Deputy Kathleen Lynch, on the radio this morning discussing the health crisis. While she did not mention names, it was clear to anybody listening that she had several arguments with colleagues in government. The Minister of State and her party has only 12 weeks left to make a massive mark. It may be the last mark. If I was in her position, and this was the last opportunity I had to make a significant change on a whole range of policy outcomes from this Government, I would be not making just an argument or a case but a stand for these issues.

Tá sé uafásach nach bhfuil seans ag gach duine sa Teach labhairt ar an mBille seo le linn an lae, go mbeidh an ghilitín ag teacht anuas ar an mBille seo chun bac a chur orainne ár gcuid smaointe a chur os comhair an Rialtais. Táimid tinn tuirseach ag éisteacht leis an Rialtas ag rá, "Jeekers, níl solution ar bith ag an bhFreasúra agus ní dhéanann siad aon rud ach bheith ag caitheamh anuas orainne mar gheall ar an ngeilleagar agus conas é sin a réitiú". Tá mé tar éis dul tríd a lán smaointe maithe mar gheall ar chúrsaí eacnamaíochta agus comhlachtaí agus conas gnó a chruthú. Impím ar an Rialtas stad a chur leis na gilitíní seo agus seans a thabhairt don Fhreasúra labhairt ar na rudaí sin. Níl an Rialtas ag cur bac ormsa, tá sé ag cur bac ar na 7,000 duine i gContae na Mí a thug vóta domsa a gcuid tuairimí a chur os comhair an Rialtais.

Deputy James Bannon is sharing time with Deputies Tom Barry, Anthony Lawlor and Brendan Griffin.

I have taken part in all of the budget debates since I became a Member of this House in 2007. Throughout those years, Ireland weathered its way through the worst economic crisis since the foundation of the State. Budget 2016 is a landmark budget because it marked the occasion when this country had money to spend for the first time since 2007. My contribution to this debate will focus on how budget 2016 delivered for our rural communities.

In the days after the Budget Statement, several people asked me what budget 2016 delivers for rural communities across the midlands. I summed it up with three points. It delivers relief for farmers, introduces new supports for local businesses and provides more gardaí. Coming from a constituency with a large farming community, and as a farmer myself, the measures introduced in budget 2016 will have an overwhelmingly positive impact, especially for younger farmers. One of the most positive aspects is the tax credit of €5,000 per annum for five years for farmers who transfer their land to successors over time, making it easier for farms to be passed from one generation to the next. Equally, the series of agri-taxation measures, like stock relief and stamp duty exemptions, will all make farming more attractive to younger people and families. This should be warmly welcomed by all sides of the House.

Supporting local business, the budget will encourage job creation and help employers. Throughout the economic crisis, local retailers were the key drivers in the economic recovery, as they were able to generate local employment and keep their local communities alive. Accordingly, it is only fair that this budget rewards those small retailers by reducing costs, which up until now have been hitting them hard. These reductions will come into effect on 9 December and will save retailers an estimated €36 million in fees per year. This budget is a positive one after what has been a stressful time for small business owners and the self-employed.

Rural crime has always been a serious issue, but it has become more widespread as highly mobile criminal gangs use our road networks to target isolated areas and escape with ease. The substantial investment in more gardaí in recent weeks, along with the budget announcement of 600 additional recruits, will boost the 550 who have already started work since the Government reopened Templemore Garda College. While I have raised this issue with the Minister for Justice and Equality already, I would like to put on the record again that I believe a majority of these 600 additional recruits should be stationed in rural communities, along with the introduction of additional community CCTV, closed-circuit television, schemes.

This is a constructive budget. Up to 410,000 fewer people will now pay the Fianna Fáil universal social charge, USC. The past few budgets have been hard, but they made it possible for Ireland to exit the bailout, reduce our debts and move into real recovery. This budget is affordable, responsible and consistent with the Government’s plan to eliminate Government borrowing by 2018.

It will drive job creation and support local businesses in rural areas. The Government has prioritised job creation since it took office. The more jobs created, the less tax for those already working and more revenue for providing better services for our people. We are also committed to ensuring work is rewarded and communities across Ireland benefit from this recovery. There is a feel-good factor in the country compared to five years ago.

I also welcome the recent announcement concerning the provision of an additional stroke machine in the Midland Regional Hospital at Mullingar. I also welcome the progress in the new accident and emergency unit in the hospital, with €6 million in funding provided by the Government for its completion.

The provision of 46 primary care centres by the Government is an important aspect for communities. This should be welcomed and is acknowledged by the general public.

I welcome the opportunity to speak about the Finance Bill. Looking back over recent years, one of the primary objectives of the jobs initiative was to introduce the 9% VAT rate, which has been a huge success. This success has been built on by the Action Plan for Jobs. Since the outset I was of the opinion that once we got the chance to reduce the universal social charge, we should do so, in particular for the lower paid first and then to work up along the income levels. It was an emergency tax that crippled many people. There have been discussions about those on higher salaries and the tax contributions they make. Many people had an awful lot of commitments before the financial meltdown because they felt the economy would continue to be strong. They have been through horrific times. It is good to see that the universal social charge will be phased out. It has been promised that it will be phased out and this gives a clear indication that the emergency is passing.

I have worked quite a lot in our campaign to support small businesses. I have been in business for 20 years and was delighted to see an earned income tax credit for the self-employed, which will help to level the playing pitch. I hope this new tax credit will yet equalise the tax treatment of PAYE workers and the self-employed and is to be welcomed. It should have been done a long time ago, but now we at least have made a start in that direction. I am also glad to see that the home carer's tax credit is increasing from €810 to €1,000.

I have said this before, but it is important that we look again at the tax relief on qualifying farming leases. One condition of the relief is that leases will only qualify for the relief when the parties to the lease are not related. This is a mistake because most farms are transferred between fathers or mothers and sons or daughters. Most transfers are within families. We need to encourage the transfer of land because the age structure in the farming industry is still far too high, but we are not unique in this regard. It applies across the world, but we now have an opportunity to address it. The conditions could be applied stringently and the scheme could ensure transfers were made done at arm's length and on a commercial basis. A trial period for two years could be considered to see how it would work. If it did not work, we could address the issue again. In effect, it would be a de facto retirement scheme.

With tax credits for farm transfers, we would be proactive in ensuring farming became a younger person's game. These are turbulent times in farming, but there is a feel good factor. Milk quotas are gone and we are in expansion mode, but we are also cognisant of the troubles. The capital gains tax exemption of €3 million needs to be examined closely and increased. Huge investment is taking place and the threshold will be reached very quickly. We do not want any impediment to the transfer of farms which creates huge levels of employment.

It did not happen this time and perhaps it might be looked at again, but I would like to see tax relief for people who want to invest in the sugar industry. It would cost approximately €120 million, but the return to the Exchequer would be far greater. It would also show that we were correcting one of the worst wrongs ever done in this country when the industry was removed.

I thank the Minister for Finance for reducing the tax on lorries to €900. This is a fantastic initiative that will benefit the whole industry. The country is involved in moving lots of goods. This is an exports-based economy and this one move will create a huge spin-off. Some people may not understand how important this reduction is. Bringing the tax from €5,000 to €900 makes transport more economical. It will also address the issue of tractors carrying heavy loads. Now it will be easier to do so by lorry.

It has been a good budget for SMEs. It encourages people to get involved in business. We have more to do, but we are making steps in the right direction.

I too welcome the Finance Bill. I have been speaking about Finance Bills in one way or another since I was first elected to the council in 1998. In those days I was dealing with the finances of the local authority. Here we deal with the finances of the nation. This is the first budget in eight years that is a little more expansionary and that expansionary focus is welcome, particularly on the capital side where we need to increase spending to build for the future. Whether it is housing, road infrastructure or broadband, this will ensure we will have a growing economy far into the future.

I welcome the maintenance of the home renovation incentive scheme. This is an excellent scheme which has benefited the small guy, not big property developers associated with Fianna Fáil during the years. It is a scheme for the small fellow with a small van on the side of the road. It has allowed people who could not afford to move from a three bedroom to a four bedroom house to extend their properties. I would have liked to have seen something done for retired people who do not have a mainstream income and are not paying income tax in order that they could benefit from the scheme also. Perhaps the Minister might look at the possibility of writing off the DIRT being paid on small savings as part of the scheme.

I would have liked to have seen more being done on capital gains tax for innovative companies which wish to use their knowledge boxes. The rate currently stands at 20%, but our competitors, in particular Britain and Northern Ireland, enjoy a 10% rate. I hope the Minister will signal that his objective is to reduce the 20% rate to 10%.

The innovation in the new motor tax rate for lorries is extremely welcome. A number of large companies operate in my constituency. They provide a service for various industries in the area, including the agriculture and business sectors, by moving material. It is hoped this change in the rate of road tax will have a knock-on effect to the benefit of the ordinary consumer on the street and that there will be a reduction in the cost of some of the products being shipped.

I wish to mention one thing the Minister may not be able to deal with directly but perhaps he will become involved in it at EU level. He said he would like to see every schoolchild have an iPad. In my area a number of schools, in particular for those just starting off, have introduced iPads. That kids are not carrying heavy books to school is a welcome innovation. There is an issue, however, with the VAT rate. The European Union regards the provision of electronic books as a service. No VAT applies to hard copies. If a school is using iPads and downloads books in electronic form, VAT applies at a rate of 23%. The French and Luxembourgish Governments received a knock back in the European court in seeking to reduce the VAT rate to a lower level for electronic books. The European Commission is now reviewing VAT laws. I would like us to make a strong submission to have a VAT rate of 0% applied to electronic books, particularly educational books. I hope the next time we have a Finance Bill introduced and delivered by the Minister for Finance, Deputy Michael Noonan, we will be reducing the VAT rate applied to electronic books to 0%.

The budget is welcome and slightly expansionary, particularly on the capital side, but the capital programmes will deliver. If we want the economy to keep growing, we need to invest in infrastructure for the future.

The Government got the headlines it wanted for the budget. The minor spat with Professor John McHale did it no harm in that respect. The budget was described widely as a giveaway budget, including by members of the Opposition. Unfortunately for the Government, that is not how it is perceived by the majority of ordinary people. Certainly, the indications in the opinion poll are that people in the Labour Party's base did not consider it a giveaway budget for them. I believe those people are more accurate than those who wrote the headlines and those who described it as a giveaway budget.

It is a giveaway budget for some, such as high earners and big business, and the continuation of a giveaway to the bondholders, but it is not a giveaway for working class people, middle and low income earners and people on social welfare. We saw in the rhetoric surrounding the budget a further step up in the Thatcherisation of the discourse of the Government regarding work and unemployment, with the suggestion that this was a budget for work and that we have a Government for work, just as the Labour Party presents itself as a party of work. This is about the demonisation of the unemployed and trying to get a benefit from some higher paid sections of society. The details in the Finance Bill confirm that assessment of the budget.

It is the fifth regressive budget in a row. It takes some doing by a government that includes the Labour Party to manage to transfer wealth, year on year, from the majority to the small rich minority. The income gap between rich and poor has been expanded by over €500 per year, and over the past two years it has been expanded by over €1,000. One can compare more extreme examples. When one compares a single unemployed person with a person earning €75,000 per year the gap is even more incredible. The single unemployed person gets €95 per year, which is €2 per week, and the person on €75,000 gets €900 per year, which is €17 per week.

The Government could do with being reminded of what an average income is in this State. It often talks about middle income earners as if the average person in the State earns approximately €70,000 or more each year, that is, the people at whom these budgets are aimed. Obviously, that serves a purpose in terms of the propaganda the Government is trying to get across. However, half of the people in this State earn less than €28,500 per year, and half of the people earn more than that. The reality is that middle income is between €25,000 and €40,000 per year. Those people got very little from the cuts to the USC. Somebody on the average income of €28,500 got an extra €5 per week. If they are in private rented accommodation, that is wiped out. If they were paying the water charges, which thankfully they are unlikely to do, it would be gone. It is also gone if they are paying the property tax. If they are suffering under all of the effects of the continuing austerity in health and education, and in some cases being pushed into the private sector in those areas, it would be gone. There is no giveaway budget from the point of view of low or middle income workers.

As regards the increase in the minimum wage, any increase is welcome. It is the first increase in the minimum wage in eight years. Our minimum wage is still 25% lower than the living wage of €11.50 per hour. The living wage is calculated on what a single person with no children basically needs to survive. There are huge numbers of people - one in four workers - living in deprivation as a result of being in work. In many of the homeless couples who seek my help one of the people will be in work. There is a flowering of low pay, short-term, precarious contracts and this budget does little to deal with it. It says it is okay to have a minimum wage that is 25% below what is needed simply to survive.

Then one looks at what was given, or not given, to people on social welfare, which is still a substantial section of the population. They got nothing, aside from a Christmas bonus. An extra €1.81 per week is all that was given to people who are finding it extremely hard to get by. In many cases they will be in the private rented sector, so they are given effectively nothing. That is the impact of the budget and this Finance Bill from the point of view of the majority.

Contrast the Government's approach to social welfare with its approach to corporate welfare in the budget. Approximately €15 billion is spent each year by the State on various elements of corporate welfare. It is huge expenditure. One never hears about corporate welfare fraud, wasters on corporate welfare or the like. That language is reserved for unemployed people. Corporate welfare was increased again in this budget. There is a cut in capital gains tax from 33% to 20% for SME owners selling their business for a capital gain of €1 million. Most small business owners are not selling their businesses for €1 million, whereby they can take advantage of this. This applies to the larger SMEs.

There is no increase in the bank levy, which remains at only €150 million per year. Banks can still write off the losses incurred during the crash, and bailed out by us, against their profits for corporation tax purposes. This means many of the banks will not be paying any taxes on their profits for years to come. In the case of Bank of Ireland, that is over €1 billion that it will not pay. There are also two cuts to employers' PRSI.

The cherry on the cake in the project of corporate welfare is the so-called knowledge development box. The knowledge development box is a replacement for the double Irish arrangement. It is a means of legal tax avoidance by the major multinational corporations, the developmental model employed by this and previous Governments. That model is about engaging in tax competition across the world to attract multinationals to this country, regardless of the impact on society, employment or anything else. It basically seeks to get them here with an offer that they pay no tax. There is a headline rate of 12.5%, but they do not pay anywhere that amount. Apple, Google, Facebook and so forth are paying approximately one tenth of that, or less. Now we are introducing a new regime with the knowledge development box, modelled on the British model, to facilitate them paying even less.

It is estimated that this will cost €50 million. That is equivalent to all of the increase in capital spend on housing in the budget. If that had not been introduced, the Government could have doubled that capital spend. Furthermore, will this figure expand? Will it cost more than €50 million this year? Will we be budgeting for €100 million for the next year and €200 million for the following year? Will this become the scheme that is central to selling Ireland as an attractive location for big multinationals, on the basis that they will not actually have to pay their corporation tax here?

I refer to the petroleum production tax. It appears to be a marginal improvement. However, if anything it highlights the incredible giveaway that has taken place in this State, particularly under the change of terms under former Minister, Ray Burke, and former Taoiseach, Bertie Ahern, whereby Shell, Statoil and other major multinational oil companies, really dirty big oil companies, were told they could have oil and gas for nothing. There are approximately 20 billion barrels of oil equivalent in Irish waters. At today's low prices that is worth approximately €1 trillion. Ireland has one of the most attractive regimes in the world in terms of a lack of taxation, a lack of royalties and so forth. Companies are allowed to write off all their exploration costs and so forth against their corporation tax. This tax will not change that. It will not make a fundamental difference.

Successive governments have presided over a massive giveaway of huge amounts of natural resources and have denied that they were there. We must have an alternative. That involves taking them into democratic public ownership, developing a State exploration company and, in particular, having a responsible attitude to what amount of oil and gas is taken from the ground. This world does not need more fossil fuels and we might be better off leaving it there.

To conclude, there was and remains an alternative. All the Thatcherite dogma of the Government is simply not true.

The AAA budget statement outlined how the Government could have reversed all of the cuts that have taken place in health, education and social welfare, and cut the regressive taxes on ordinary people, and it could have done it by going after the wealth that exists in our society through income tax, financial transaction tax, millionaire's tax, corporation tax and so on.

This Government’s budgetary strategy continues to prioritise high earners and industry at the expense of vulnerable people, people on low incomes and those on social welfare. Despite a few relatively positive initiatives in the Bill, such as the increase to the home carer tax credit, the fuel grant for disabled drivers and country by country reports on parent companies filing their tax returns, there is actually very little in the Bill that attempts to reform our current tax system and make it reflective of a fairer, more equal society.

I would be naïve in thinking this would ever be Fine Gael or Labour’s way. I do, however, want to counter the argument that the Bill is a progressive one. I will start with the notion that the new petroleum production tax is a progressive measure when, in fact, the Government took the option that affected industry the least. I sat on the Oireachtas committee on communications, energy and natural resources and I read the report on oil and gas exploration published in 2012, which recommended that, on smaller-scale petroleum fields, the tax should be 40%. The Government proposes a rate of 30% in the Finance Bill, which is giving effect to a decision made by the former Minister for Communications, Energy and Natural Resources last year. That 30% is 10% less than the recommendations of the joint committee. Worse still, the report recommended that for large profitable fields, the tax should be 80%, but the Minister, Deputy Noonan, in this Bill puts the maximum tax on productive fields at 55%. It would not be fitting to call this a progressive tax as it is far removed from the committee recommendations, where rates were in line with the Indecon report findings. It is also a perfect example of the Government’s loyalty ultimately lying with industry and compromising its policies to kowtow to industry needs.

Another anomaly in the Bill is in regard to the annual stamp duty charge of €2.50 on ATM and debit cards, which is being abolished from 1 January 2016, when it will be replaced with a new 12 cent ATM withdrawal fee. While this might seem progressive, it will impact most on those who do their business through cash transactions and will also attack vital services such as the post offices, which work mainly through cash transactions. What we should do in the Finance Bill is make it cheaper for retailers to do their business. There should be incentives to support post offices, alongside the introduction of this measure. That would show the Government is serious about economic recovery across rural Ireland.

Most of the supports and tax benefits in the Bill are oriented towards the tech giants, which get preferential treatment for bringing in the jobs and putting Ireland on the global tech map. When will we see progressive policies to bring about indigenous industries that do not end up getting bought out or exported? Fostering local industry and alternative industries like biomass and renewable production has the potential to grow local and sustainable rural jobs. These industries would foster companies that could be established in peripheral counties, like Donegal and the counties of the western seaboard. The introduction of the tax exemption for the felling of trees will actually benefit larger operators more than the family farmers in the forestry industry.

A first step could have been introducing a measure in this Bill that would prioritise the rollout of broadband to rural peripheral areas, working its way from rural areas into urban areas and offering scope for people to create their own jobs and grow their businesses. The impact broadband connectivity could have on the growth of SMEs and start-ups in rural constituencies in Donegal and across the country is huge. ISME recently published statistics stating that only 14% of SMEs are currently capable of fully trading online, while a further 8% can take orders but not payments online. This presents small businesses and potential start-ups with a disadvantage and should have been reflected in this legislation.

The introduction of initiatives such as the knowledge development box, providing for a 6.25% rate of corporation tax for multinationals which avail of it, is basically another way of assisting them to avoid tax and avoid paying their fair share. We could have included in the Bill a measure to introduce a minimum effective corporation tax rate across the economy, for example, setting a minimum effective rate of 6% on corporations, which would be less than half of the headline figure of 12.5% and would bring an extra €1 billion into the Exchequer. This could then be used to the advantage of many people across the country.

There is an issue with capital gains tax for farmers whose land is subject to a compulsory purchase order, CPO. I ask the Minister to consider exempting the purchase of land through CPO from capital gains tax. In these cases, the farmers are not looking to gain on their asset; instead the asset is being taken from them without their consent and being compulsorily purchased. There is no doubt this is done to progress vital infrastructure projects such as road developments. However, I do not believe farmers should be penalised by having capital gains tax levied on the income from the CPO. It is different when someone sells an asset in order to profit from it and in such cases this should attract a tax liability.

On an issue that affects the Border area, where one partner of a separated couple has custody of the children in the Six Counties and the other partner lives in the South and has access to the children, they are not able to avail of the single person tax credit. This should have been dealt with in the Bill. While it does not affect a huge number of people, for those it does affect, it has a big impact on their ability to support their children when living outside the State.

Beyond the packages outlined in the Bill, the Government has missed an opportunity to present a more progressive stance on the areas of taxation and regional development. While the USC increase in tax credit to €13,000 means that 700,000 people will be taken out of the USC net, and this is good for them, it shows we are focused on a low pay economy in this State. Some 700,000 workers represents about 35% of the entire workforce and this highlights the low income focus of this Government and the number of people who are struggling. Instead of finding quality jobs for people to work in, and making the transition to get that work easier, the Government is subsidising low income jobs. We are developing into a low pay economy and it means rural areas like Donegal will remain with incomes well below the national average. I do not believe this is progressive but we should not have expected anything better from the current Government.

Deputy John Deasy is sharing time with Deputies Patrick O'Donovan and Michelle Mulherin.

I would like to talk about the knowledge development box and the issues surrounding foreign direct investment. It is fair to say we needed to do something once the Government agreed to abolish the double Irish tax relief, which is being phased out over five years. The partial solution arrived at is the knowledge development box, otherwise called a patent box. It is nothing new. Other countries have used and are using them. It amounts to a tax relief based on the amount of innovation and research a company undertakes. We already have an R&D credit which allows for a rebate on salaries. My understanding is the new relief will strictly adhere to the OECD guidelines. This is important, because it can only apply to intellectual property developed in Ireland domestically and will allow a company to lessen its tax bill on its profits. Therefore, it is fairly narrow and, on the face of it, does not seem to match even remotely the potential downside of ending the incentive of the double Irish tax relief, however one feels about that tax relief.

The fact companies will not be able to claim relief for research and innovation outside the jurisdiction but within their own company makes the impact of this fairly limited. It will, of course, be of interest to some companies, but we have to ask ourselves whether it will have mass appeal to multinationals. The answer is "No", one of the reasons being that many other countries, particularly in Europe, are doing exactly the same thing. For example, the Dutch patent box has an effective rate of 4% to 5% whereas the rate in the Finance Bill is some 6.5%.

Why are we doing this if it has a limited impact? I believe the answer has to do with the controversy that surrounds companies like Apple and Google paying little or no tax, which has not gone away yet. It probably seemed wise to make some changes to try to avoid repercussions down the line before the idea of a consolidated European tax base rears its head again. This leaves us in a situation where in four years' time, when we arrive at a level playing field, we may be as attractive, or unattractive, as every other European country in this regard.

This brings me to the matter of Paddy Cosgrave and the web summit. I listened to Mr. Cosgrave on "Morning Ireland" on Tuesday and since then, I have heard him described as being petulant and lecturing. My first impression was that senior civil servants would not be used to being spoken to as they were and certainly would not like being questioned in that manner and I am around long enough to be aware of that. However, when we analyse what Mr. Cosgrave sought, it was not so mad at all. In fact, his WiFi and traffic management requests seem downright reasonable. He may have been a bit in the face of civil servants used to dealing with people in the old style of "Begging your pardon, Sir" but we should remember what this man has done. He co-founded an event that has grown from 400 people to 40,000 in four years and he probably did not achieve this by being pushover.

This country is not yet in a position where we can afford to lose this kind of business. Why were other countries allowed the opportunity to poach this summit? It is clear we did not take the organisers of the web summit seriously when they threatened to pull out. Ten years ago, we were the ones poaching business from other countries. We had the edge and grabbed the multinationals and landed them, in the face of intense competition from around the world. As a country, we still act as if we are significantly larger and richer than we are. I guess that if the web summit scenario occurred in the United States, it would have been dealt with swiftly, face to face and there would have been no need for the million e-mails between Mr. Cosgrave and the Department of the Taoiseach. Looking in from the outside, I think what was needed in this situation was common sense, a bit of pragmatism and a desire to solve the problem.

This brings me to the issue of problem solving in the context of industrial development. This fits in with my view that we must adapt to attract foreign investment. Take for example the situation in which I have found myself in my home town of Dungarvan. For the past six months or so, we have been attempting to get the IDA to take over an empty factory in Dungarvan. This project was initiated when the IDA was testifying at the Committee of Public Accounts. We put a proposal to the IDA to have the building included in its property portfolio in order to market it abroad. This proposal has progressed but some horse trading needs to be done, amounting to a cost of approximately €200,000. We have a tender to refit ready to go and the submission has been made to the IDA but we need somebody to make a decision. We are beginning to feel a little like Paddy Cosgrave - a million e-mails but no action. The organisation involved in this idea is a good one and is headed by somebody who is highly regarded. I called him about this issue and he called me back but we have not yet met. Issues like this take too long to resolve. I need somebody in a senior position in the IDA to sit down and make a deal with my county manager and somebody to come up with an arrangement, to be done with it and to move on. Too many e-mails are sent but too few decisions are made.

The budget announced a regional building programme for the foreign direct investment alluded to in this Bill. That is great but in the case of the project in Dungarvan, we already have the building. If we had to cost an equivalent new build, it would amount to approximately €1.5 million. Where are we going in regard to this? The Government needs to take an interdepartmental look at how attractive or unattractive we may be in a few years, based on changes in our tax code and pressure from the European Commission and the OECD. It must also take a look at decision-making and at how it interfaces with local authorities and those involved in private industry in this country.

The development of the knowledge development box is useful but limited. We will need to come up with a lot more if we are to make up for the ending of the double Irish tax relief.

I wish to draw attention to the amateur theatrics we had here less than an hour ago and to the false indignation and so-called concern in regard to the Finance Bill and the time allocated for this debate. Neither the Sinn Féin nor Fianna Fáil spokespersons on finance, nor anyone from either party is present now. They will come in and huff and puff about the level of debate on this Bill but it is not important enough for either of their spokespersons to be in attendance. As the Minister for Public Expenditure and Reform said earlier regarding the discourse on Second Stage, he would encourage Members to get into more detailed discussion on Committee Stage. They, of course, went through the motions of their false indignation and outrage but now when push comes to shove, they do not even turn up here.

I welcome the opportunity to speak on the Finance Bill and the provisions announced in the budget. Much of what was in the Budget Statement has carried over into the Social Welfare Bill and the Finance Bill. There is no doubt that this is a bad day to be in opposition. Anybody who would have said four and a half years ago that we would be presenting a budget and set of financial measures now that reclaim many of the difficult impositions enforced on people following the mess the country was landed into by the previous Government would have had to be forgiven for engaging in wishful thinking. However, that is what we are doing. We are in a situation where the hated universal social charged introduced by the previous Government is being reduced and where the effective rate of tax is less than 50% for the first time in a long time.

Other tax measures are also being taken, for example, measures regarding taxes that affect the self-employed and farmers. Farmers play an important role in my constituency and the Irish Farmers' Journal summed up how the budget would be perceived in rural areas with its banner headline, "Farmers' Budget". Farmers are the backbone of many of our constituencies and some Members bemoan the constant running down of rural communities. The economy of rural communities is being driven very effectively by what is happening inside the farm gate and this has had a knock-on effect in recent months and years outside the farm gate.

I only need to look at my native town of Newcastle West to see this. Following State and private investment in the past 12 months, confidence is returning to the area. This is mirrored in towns across the mid west and is driven by the large urban centre in Limerick. It is no coincidence that the Minister for Finance has his eye very much on the ball in regard to the work being done in the mid west, particularly in regard to Shannon Airport and Foynes, and is aware how the economy can be driven forward with investment through the capital plan.

This is probably a bad day from the point of view of the Opposition, because the Bill contains none of many of the measures it sought, such as flat taxes, land taxes, tax on work and increases in the USC and employers' PRSI. None of this was needed. Instead, in simple terms the Minister delivered a budget that provides that everybody who works will be better off to the tune of an additional week's take-home pay.

That is a lot and will be welcomed by anyone who has looked back over the last four years. Previous speakers have alluded to the Bill itself. I compliment Fianna Fáil Deputy John McGuinness, who summed up the value of the Minister for Finance and the legislative end of the Bill. He was very positive, unlike some of his colleagues who were engaged in opposition for opposition's sake.

There is an issue for disabled drivers which needs to be examined. Several people have referred to it already. I had a case recently of a blind civil servant who was relying on his parent to take him to work, until the point at which the parent was no longer in a position to drive him. He works in County Clare. Under the current rules, a blind person is not eligible for the disabled drivers' tax exemption. Through his good offices, the Minister for Finance was able to accommodate a very important issue in this but more needs to be done to flesh it out. What greater disability could one have in terms of getting to work than not being able to see? If people are to be encouraged to have an active, normal role in the community and a full life, they should be encouraged to work. In the case of a blind person who needs a car to get to work, the exemption should be available for a family member, carer or trusted driver. I ask that this measure be considered.

There are now 700,000 fewer people paying the USC. Deputy Pringle was right in welcoming this, but then decided he was going to have a go at it. Maybe he would prefer the people to be back paying the USC. He might have an issue with the current Government exempting them. Government measures such as the Low Pay Commission, the increase in the minimum wage announced by the Minister for Public Expenditure and Reform, the Action Plan for Jobs and the 1.5% reduction in several bands of the USC will make a real difference in houses where there are low-paid people. Like the measures for the self-employed and hauliers, on whom we all depend to transport goods around the country, these are real, tangible improvements.

I do not want to take any more time from Deputy Mulherin. I welcome the Bill. Its provisions show that the recovery is working. I challenge all of the representative organisations - farmers, employers, unions and everybody who meets us over in Buswell's hotel in the weeks running up to the budget - to start looking at everybody's proposals. They should look at those of the Fine Gael and Labour Government and those of the Opposition with its land taxes and everything else and do an honest appraisal. They should then advise their members as to what should and should not be done to continue the recovery. It is fragile, very open and susceptible to outside shocks. The biggest outside shock the recovery could get is from the Opposition benches.

Go raibh maith agat. I welcome the opportunity to speak. The Finance Bill takes cognisance of so many issues on which we have been lobbied, as Deputy O'Donovan has said. The pupil-teacher ratio has been reduced, there are provisions on child care, more people have been taken out of the USC net, income tax is reduced and so on. Money is being put into services. It was not concocted overnight; the Government and the backbenchers have been listening. There has been dialogue with stakeholders and individuals. On the whole, it is a very hopeful budget and the Finance Act will fulfil that.

One area which needs a very focused approach is the situation regarding our market towns. This is particularly obvious in rural Ireland but also applies throughout the country, as I know from talking to backbench Government Deputies. There has been a lot of investment in farming and we have a dynamic Minister in Deputy Coveney but that is all inside the farm gate. Market town centres throughout my own County of Mayo are dilapidated. A number of years ago there were people living in these towns and the places were buzzing, but very few live in them now. We see old townhouses, very fine commercial buildings, in a state of decay.

This did not happen with the collapse of our economy and the banking crisis, it was going on during the Celtic tiger. Shopping trends changed and people wanted new houses further out. No matter how good things are in certain areas and how much improvement we see, we go back to the same point. These monuments of decay, as I call them, are quite depressing. The Minister of State, Deputy McHugh is a rural representative as well and will have seen it.

We need spatial planning involving perspective and impetus from local government, along with tax breaks to encourage people to come back, do up these properties and live in the towns. We have, I believe, 200,000 empty private properties in the country, not to mention those owned by local authorities. A lot of these are in town centres. An incentive, not investor-developer led but offered to individuals who chose to come back to live in town centres, in the form of either a tax break or a grant, should be seriously considered. Why would we not want people to live in town centres? It makes more sense than building out in the country where services and all the rest have to be brought out. We have fine buildings in the town centres. Let us take the same approach as all of those lovely European villages we like to visit on holidays in Spain and France. We should renovate the buildings, put in the facilities and give them some TLC. We should make town centres vibrant places again, such as people would want to go to.

We also need a reality check. There is not going to be a corner shop everywhere as retail has changed. People want to go to multiples and shop online. We have to be more focused on the niche sectors. In conjunction with councils, we need to decide what the town centres are and support independent traders and small businesses. In the UK they took an initiative called the "Tesco levy". Multiples are very welcome here as they provide a lot of employment, but there has to be a balance. We cannot treat multiples like small independent traders. We should consider bringing in a similar "Tesco levy" which would see multiples such as Tesco, Aldi and so on pay rates on a higher basis than the small independent traders. Small traders and commercial premises in the centres of towns should then get a reduction in their rates. Why are they on the same playing field when there is no comparison? A small shop pays the same amount for its cigarette, wine or petrol licence as Tesco. I do not mean to single out Tesco. UK studies showed that 50% of money spent in multiples leaves the local economy, while 90% of money spent at small independent traders stays there.

I appeal to the Minister for Finance on this. Let us have a vision for rural Ireland and get the local authorities involved. Let us incentivise and have tax breaks, not for investors or developers but to make a meaningful impression on rural Ireland and give it a boost. Normal market forces during the Celtic tiger did not help the situation. Are we going to be forever looking at decay in our town centres? Let us do something. Finance and taxation form a crucial part of addressing this issue.

I am sharing time with Deputy Billy Timmins. I welcome the opportunity to speak on the Bill. The budget has, in fairness, tried to reward work and encourage people off the live register and back into employment. This morning we were circulated with the Department of Social Protection's assessment of the budget, which states that 80% of those unemployed would be substantially better off in work.

There are anomalies in that. Family income supplement is not being promoted the way it should be. We need to assist people and show them where the incentives are and where the anomalies are to take them out of the system.

I welcome the Minister for Finance's announcement in the budget that retailers will be supported by reducing the processing costs of electronic payments. This is a welcome development that will support approximately 280,000 jobs in the retail sector, which is the largest sector in the indigenous economy. However, I cannot understand why this measure is kicking in on 9 December. The Minister of State knows that 8 December is the Feast of the Immaculate Conception and that on that date, people from the country traditionally came to Dublin to do their shopping. It was always one of the busiest shopping days of the year and yet this particular measure is kicking in the day after. Things have changed dramatically in recent years and Christmas shopping now starts on 1 December and runs right through to 24 December. I cannot understand why this measure was not introduced from 1 December. Why was the date of 9 December picked out of the sky? I know this is coming in as part of an EU directive and that to a certain extent, the EU is forcing the Government to do it. In the UK, this measure is being implemented this month. It is not waiting until December. I ask the Minister to amend this introduction date and give retailers an additional boost by allowing this to commence from 1 December. This additional boost would be approximately €1.4 million in savings to retailers across this country, many of whom are struggling to keep their doors open. It would be a significant support for them in the run up to the Christmas period and would help and promote electronic transactions, so I again ask the Minister to look at this issue before this Bill is enacted.

The second issue I wish to raise concerns small businesses and access to cashflow. The difficulty is that some clients of small businesses know that once the service has been provided or the work has been done, it is very difficult for the debtor to get the money out of that client, particularly if the value is less than €2,000. The person who is owed the money has two choices. They can write it off as a bad debt or take legal action. They must then go through the courts and pay a solicitor's fee and there is no guarantee that at the end of this process, they will actually get paid, so many of them end up writing it off as a bad debt. I suggest that we open up a small claims court to deal specifically with these small debts of less than €2,000. If a business is owed €200 by ten companies, that is a week's wages and there is nothing that business can do to access that money. It would be a significant step forward in supporting local small businesses in improving their credit flow.

I know that the Minister for Finance was very critical yesterday of Bank of Ireland, as were other members of the Government. Bank of Ireland basically does not want cash customers any more. I am in possession of a provision under the mandatory electronic filing and payment of tax regulations of 2014 from the Revenue Commissioners. A letter was sent to a 75 year old widow who is severely arthritic in her limbs and joints telling her she would face a fine of €1,520 if she failed to make her tax returns by electronic means. This woman has never switched on a computer, let alone used one. She has no Internet and no computer skills or training. At the bottom of the letter, it states that Revenue may exclude a taxpayer from their obligation to file and pay electronically if the taxpayer applies for this. However, it does not make sense to send letters like this to pensioners. This woman is 75 years of age and is getting over the loss of her husband who did all her financial transactions. Now she must cope with making tax returns and receives a letter from the Revenue Commissioners demanding she makes an electronic return when she does not even know where to access a computer. We need to look at the approach that is being taken right across Government and society in trying to force people who are not electronically literate, and who may not even be literate, down this road, regardless of whether it is the banks or the Revenue Commissioners. There should be an easy and accessible mechanism to get a waiver in respect of this rather than having to write in and apply. Many people, particularly those who have not been used to this up to now, tend to panic once they get the letter from the Revenue Commissioners. I urge the Minister to withdraw this letter, which has been sent out to quite a number of older people across the country. What is sauce for the goose is sauce for the gander. While the Minister is correctly lecturing Bank of Ireland about what it is doing, he has a responsibility to ensure that his Department and the agencies under its control do not send out letters such as this. I hope that on Committee Stage, an amendment is tabled so that this particular regulation is redrafted in a responsible manner, taking into consideration those people who are receiving these letters.

The Deputy must conclude.

I have another two minutes left.

It is 2.17 p.m. and I should have called on the Minister of State to reply at 2.15 p.m.

I will conclude.

This is the first "others" slot on the Finance Bill. I did not have the opportunity to speak on the budget as we only got one slot on that. It is in Standing Orders that our grouping is entitled to contribute to these debates and it is a disgrace that we are not even getting one full slot to discuss this. I want this recorded and brought to the attention of the Ceann Comhairle.

The next speaker is Deputy Timmins, who has two minutes.

I am sorry but I am not satisfied with two minutes.

As a courtesy to him, I am allowing the Deputy two minutes but according to the Order of Business, I should have called on the Minister of State to reply at 2.15 p.m. If the Deputy does not want to take the two minutes-----

This is probably the most important legislation to go through the House this year. I will not make reference to the commitments that were given in the past about democratic accountability and the democratic revolution. I was a party to them myself. I deeply regret that the Government has chosen to adopt this approach and at the eleventh hour, to put out an amended order to guillotine this most important legislation.

Deputy Naughten made a point about a certain cohort of people in this House having virtually no access to speaking time. It is not just the Government that is at fault. Our so-called friends in the Technical Group - the great defenders of democracy - are quite guarded in respect of the time they are allocated and will not give time to our grouping, which is known as "others".

I ask the Acting Chairman to use his position to request the Minister to give me a full ten minute slot. I have listened to Deputy O'Donovan lay down a challenge to the interest groups that come to Buswells Hotel or wherever he mentioned to actually examine the proposals of the Opposition and what it has to say about the budget. Renua Ireland published its pre-budget submission but this is the only real forum we have in which to articulate our views. We do not have access to State funding, unlike the other groupings in here. We cannot hire a big hall with our big green sign stating "Action Plan for Jobs" or "Measure No. 167 now taken" behind us, invite the media and put on a big display. We do not have that access but this is the one place where we should be treated in an equal manner. I have listened to a lot of hot air inside and outside this House about equality and recognition of ethnic groups.

Some Government spokespeople last night spoke in favour of a motion and they had not the courage to turn up and vote for it. I am sick and tired of the approach of letting what the Government does go by. It has become almost a standard procedure that there is nothing unusual or abnormal about the Government because it has a big majority rubberstamping legislation and letting it through. This House has become increasingly irrelevant, day by day.

It has become irrelevant because the Government has made it so and because many sectors of the Opposition, including the Technical Group, have been complicit in making it irrelevant.

I want to make a speech on the budget. I have used up a couple of minutes and have about eight minutes left in my ten minute slot.

No, the Deputy does not. I am allowing the Deputy two minutes. I told him when he started. I asked the Minister of State at the Department of Arts, Heritage and the Gaeltacht, Deputy McHugh, and he says he wants eight minutes. According to the order of the House today I must bring this debate to a vote at 2.30 p.m. That is what I intend to do. The Deputy has two minutes.

Where does it say the Minister must have eight minutes to wrap up?

It says not alone eight but 15.

Where does it say that?

According to order No. 125.

It is not in the order that was voted on.

That is what I have here in front of me and that is what I intend to do.

What is in front of the Acting Chairman?

It says in accordance with the order of the Dáil today consideration must be brought to a conclusion at 2.30 p.m.; therefore, the Minister should be called to reply no later than 2.15 p.m.

That is not what was voted on, the bit that says “therefore” the Minister gets eight minutes to wrap up.

I can only do what I have in front of me.

What is the status of what is in front of the Acting Chairman? I had a similar experience a few weeks ago when my time was cut short because a Minister was given a wrap-up time. What is the basis for that ruling?

It comes from the officials of the day, under rule No. 125. That is what I must adhere to, according to what is in front of me.

Deputy Timmins has two minutes.

I appreciate that the Acting Chairman is one of the fairer Members of the Oireachtas and he understands what has happened here, which has been happening over recent months. I thank him for affording me some time.

With respect to the budget, just because a Minister says something is so does not mean it is actually so but I acknowledge that the economy has improved and is heading in the right direction. There are many groupings responsible for that. It is important to recognise the role of the troika although it was depicted as cramping our political system, and the role of the late Brian Lenihan, and if I may make so bold, the former Taoiseach, Brian Cowen. Notwithstanding the many errors they made and that their Government destroyed the economy here, at the 11th hour, at one minute to midnight, when they had no choice a system and policies were put in place. Many people have suffered in their implementation. The current Government has carried through those measures.

It is equally important to recognise that the economic collapse resulted in the setting up of certain bodies, one of which was the Irish Fiscal Advisory Council. The role of the Central Bank was changed. The Minister for Finance acknowledged in his opening paragraph that we pay heed to such bodies as were set up to ensure that politicians do not run away with themselves.

The accountancy trick with respect to the Supplementary Estimate and the spending on budget day was not in keeping with the spirit of the way business was supposed to be carried out in this House. We in Renua Ireland believe that Irish people pay too much tax and brought forward a flat tax proposal of 23%.

The Deputy has one minute left.

I know it might not suit some of the Acting Chairman’s Labour colleagues but I know that he would be very amenable to it because he is a progressive, positive Deputy. We brought it forward because we believe welfare and low wage traps have existed here for many years. We can pontificate and articulate about, and throw money at, our welfare problem but successive governments, particularly the two or three preceding this one, used it as a political bribe addressing the material aspect of welfare instead of addressing its motivational aspect. Until we give a hand up rather than a hand out we will have that difficulty. There are many marginalised people in this society, over several generations, and that will remain so unless we change policy. We have to bring in a flat tax rate. This Government’s tax policy is progressive but penal. We want one that is progressive and fair, that will get rid of the wage trap, encourage employment and, equally important, will bring the 200,000 young people who are abroad back to this country.

On the issue of housing-----

The Deputy must conclude.

I thank the Acting Chairman for his indulgence. I have a small pragmatic point to make, which does not involve rent supplement, pension funds or development properties. Why does the Minister for the Environment, Community and Local Government not tell the local authority directors of planning and housing to approach the people who had lodged planning applications and ran into difficulties in recent years to bring forward proposals to build houses? We need housing supply. From what I have seen of local authorities, with the best will in the world, they will not solve the problem.

The Minister of State has five minutes.

Three minutes.

I thank the Acting Chairman for the introduction to the new Kildare-Wicklow two minutes.

I will not have time to cover all the points but I will try my best.

On a point of order, where is the Minister for Finance?

It is customary that the Minister for Finance would wrap up the Second Stage debate and address many of the points that Deputies have raised. It is not acceptable, with all due respect to the Minister of State, that the Minister is not here to wrap up Second Stage, which has already been guillotined. It is not acceptable.

The longer we continue with this the less time I will have.

The Minister of State is here to respond and that is the order of the House.

It is a joke, a complete joke.

The Minister for Finance, Deputy Noonan, has already said that the changes announced by Bank of Ireland around in-branch lodgements and withdrawals represents a commercial decision for the bank but he considers these changes surprising and unnecessary. The Minister notes that the bank has given a commitment to assist more vulnerable customers in their branches and he does expect the bank to honour fully this commitment and ensure that customers will be facilitated through the existing arrangements where required.

In reference to Deputy Michael McGrath’s proposal for a White Paper on banking, this Government already has a banking strategy that is working. The successful outcome of this policy can be seen in the annual increases of new sustainable lending to households, small and medium enterprises, SMEs and industry. It is particularly important that the increase in new lending is occurring in tandem with a reduction in the overall stock of debt due to the risk posed by high levels of private indebtedness to our economy.

Deputy McGrath referred also to the Central Bank and its guidelines. The purpose of these new macro prudential measures is to mitigate systemic risk and promote financial stability, to increase the resilience of the banking sector and households to the property market and to reduce the risk of credit spirals from developing in the future. These new measures are a crucial and fundamental part of the new more intrusive bank regulatory framework put in place to prevent future systemic banking problems. There is, of course, an appropriate balance to be struck. The Central Bank recognises this, and is committed to monitoring the operation of the system on an ongoing basis.

Turning to the Bill itself and further to Deputy McGrath’s suggestions in relation to the indexation of the standard rate bands, this was an option Minister Noonan considered in the course of his budget deliberations. In view of the limited fiscal space available, he chose instead to focus the budget package on reduction of the three lowest USC bands, as this benefitted every taxpayer with USC-liable income of €12,012 and above.

Deputy McGrath asked for an estimate of the number of additional taxpayers who will enter into the higher tax rate as a result of wage inflation, who would not have done so if the rate bands had increased by €400 per person. The Revenue Commissioners have estimated that such an increase would remove approximately 10,000 income earners, each earning over €33,800, from the 40% rate in 2016, at a maximum benefit of €80 per person. The Minister would, however, note that these same individuals will see a benefit of €227 per annum as a result of the cut in the 7% USC rate to 5.5%, which will apply from 2016 on incomes from €18,668.

Deputies McGrath and Murphy noted that the earned income credit falls short of full equality, and the Minister agrees that significant differences remain between the taxation of employees and the self-employed. However, some of these differences are to the benefit of the self-employed and any attempt to equalise fully the positions of the employed and self-employed would need to be examined carefully.

Deputy McGrath also asked about the measures taken by Revenue to ensure that qualifying families receive the home carer tax credit, which the Minister has increased in this budget to €1,000. Revenue has, for a number of years, taken steps to allow automatically the credit wherever possible, including the use of data received from the Department of Social Protection on child benefit payments.

A number of Deputies, including Deputies Pearse Doherty, Richard Boyd Barrett and Clare Daly, questioned why taxpayers with incomes of €70,000 and over would benefit from the budget. Ireland has one of the most progressive income tax systems in the developed world, something which we know these Deputies support. A progressive system ensures the burden of taxation falls most heavily on those with a higher ability to pay. Following the budget 2016 changes, it is estimated that the top 25% of income earners will pay 81% of total USC and income tax revenue, while the top 1% of income earners will pay 22%. In this regard, Deputy Eoghan Murphy's comments on the influence of high marginal tax rates on the economic cycle and job creation must also be borne in mind.

It is also important to point out that the effects of the budget package as a whole, including both taxation and social welfare expenditure measures, must be taken into account when examining distributional impacts. The Minister draws Deputies' attention to the social impact assessment of the budget. This analysis shows higher than average gains for the bottom two quintiles, or fifths, of income distribution, while the smallest gain is in the top quintile.

Deputy Michael McGrath raised some issues in connection with the capital acquisitions tax changes announced in the budget and the yield from this tax. As part of budget 2016, the Minister raised the group A tax free threshold applying to gifts and inheritances from parents to their children from €225,000 to €280,000. This represents an increase of about 25%. The Deputy says inheritance tax is forcing people to sell the family home. There is an exemption from CAT to ensure that, subject to certain conditions, those inheriting the family home in which they live can do so tax free. The Deputy made reference to a particular condition of the relief, but that condition only applies in the case of gifts, not inheritances, and is in place to prevent abuse of the exemption. The Minister has, however, indicated that he sees the change to the group A tax free threshold in the budget as the start of a process.

Deputy Pearse Doherty made reference to the provisions of section 39 of the Bill and seemed to have an impression that some form of capital gains tax concession was being provided for individuals disposing of valuable houses. That is not the case. Section 39 amends an anti-avoidance provision which is in place to ensure non-resident sellers of certain assets in the State, including houses, cannot escape liability to CGT on such disposals. Such individuals will only receive a clearance certificate from the Revenue Commissioners where they are satisfied that either there is no liability or that a liability will be paid where it arises.

Deputy Pearse Doherty mentioned the high earner's restriction and the forestry amendment. The Minister agrees with the Deputy that it is important that this measure remain a strong restriction on high earning individuals. In this instance he is satisfied that the amendment can be justified when viewed against the overall benefits. He notes also the Deputy's comments on the additional tier 1, AT1, capital. The new bank regulatory capital requirements are prompting banks to issue AT1 capital instruments as part of their capital reserves. As these instruments have characteristics of both debt and equity, there is a need to explicitly provide for their treatment as debt. The Minister notes that the Deputy commented on the withholding tax issues. The requirement to operate DWT on these instruments would limit the tradeability of AT1 instruments.

A number of Deputies also addressed the employment and investment incentive. The particular issues about which Deputies have concerns are not fully clear, but the Minister hopes to discuss the scheme in significant detail on Committee Stage.

Several Deputies, including Deputies John Paul Phelan, Peadar Tóibín and Richard Boyd Barrett, referred to the recent increase in CT receipts. Corporation tax in Ireland is highly concentrated, with a high proportion of receipts coming from the multinational sector. We have been advised that the increased corporation tax from the multinational sector is attributable to a variety of reasons, including improved trading conditions and positive currency fluctuations. Furthermore, it is fair to say the improvement is relatively broad based, with improved receipts in other sectors and across different sized firms. For example, there has been an increase of over 20% in the number of companies paying between €100,000 and €1 million. There has also been an increase of about 20% in the amount of tax paid by medium-sized companies.

Deputies Richard Boyd Barrett and Clare Daly raised concerns about the knowledge development box, which is simply replacing the so-called "double Irish". Let me, first, be clear that Ireland is not a tax haven. Our competitive rate of corporation tax has been an important part of our industrial policy since the 1950s and has attracted real and substantive operations to Ireland since. Ireland does not encourage the establishment of so-called "brass plate" operations which seek simply to avail of our competitive corporate tax rate. The Minister has always been clear that the double Irish was not part of the Irish tax offering and was just one example of the many international tax planning arrangements which have been designed and developed by tax and legal advisers to take advantage of mismatches between the tax rules in two or more countries.

In contrast to the double Irish, the knowledge development box, KDB, is a positive measure for Ireland. Putting in place an attractive tax offering for intangible assets is, therefore, important to encourage companies to develop their knowledge-based capital in Ireland and for our success in attracting foreign direct investment, but the KDB is not all about the multinational sector. Contrary to what Deputy Pearse Doherty said, because of the operation of the OECD modified nexus formula, the KDB will be of most benefit to single companies which carry out their research and development activities in Ireland. In addition, the Government has committed that an additional category of qualifying assets will be available to give particular support to small companies and ensure they will be able to access the KDB.

A number of Deputies, including Deputy Patrick O'Donovan, raised the matter of the eligibility criteria for the disabled drivers and disabled passengers scheme. This is not a matter to be dealt with in the Finance Bill as the criteria are provided in secondary legislation. However, the Department of Finance reviews tax expenditures regularly and in that context, the Minister will take cognisance of the points raised.

I will conclude by noting, as the Minister mentioned in his opening statement, that there are still a small number of matters under consideration for inclusion on Committee Stage.

Question put:
The Dáil divided: Tá, 69; Níl, 41.

  • Bannon, James.
  • Barry, Tom.
  • Breen, Pat.
  • Butler, Ray.
  • Buttimer, Jerry.
  • Byrne, Catherine.
  • Byrne, Eric.
  • Cannon, Ciarán.
  • Carey, Joe.
  • Coffey, Paudie.
  • Collins, Áine.
  • Conaghan, Michael.
  • Conlan, Seán.
  • Connaughton, Paul J.
  • Coonan, Noel.
  • Costello, Joe.
  • Creed, Michael.
  • Deasy, John.
  • Deenihan, Jimmy.
  • Deering, Pat.
  • Doherty, Regina.
  • Dowds, Robert.
  • Doyle, Andrew.
  • Ferris, Anne.
  • Fitzpatrick, Peter.
  • Griffin, Brendan.
  • Hannigan, Dominic.
  • Hayes, Tom.
  • Heydon, Martin.
  • Howlin, Brendan.
  • Humphreys, Heather.
  • Humphreys, Kevin.
  • Keating, Derek.
  • Kehoe, Paul.
  • Kelly, Alan.
  • Kenny, Seán.
  • Kyne, Seán.
  • Lawlor, Anthony.
  • Lynch, Kathleen.
  • Lyons, John.
  • McEntee, Helen.
  • McGinley, Dinny.
  • McHugh, Joe.
  • McLoughlin, Tony.
  • McNamara, Michael.
  • Mitchell, Olivia.
  • Mitchell O'Connor, Mary.
  • Mulherin, Michelle.
  • Murphy, Dara.
  • Murphy, Eoghan.
  • Nash, Gerald.
  • Naughten, Denis.
  • Neville, Dan.
  • Nolan, Derek.
  • Ó Ríordáin, Aodhán.
  • O'Donovan, Patrick.
  • O'Dowd, Fergus.
  • O'Mahony, John.
  • O'Reilly, Joe.
  • Penrose, Willie.
  • Perry, John.
  • Phelan, John Paul.
  • Rabbitte, Pat.
  • Reilly, James.
  • Ryan, Brendan.
  • Stagg, Emmet.
  • Stanton, David.
  • Wall, Jack.
  • White, Alex.

Níl

  • Aylward, Bobby.
  • Boyd Barrett, Richard.
  • Broughan, Thomas P.
  • Browne, John.
  • Calleary, Dara.
  • Collins, Joan.
  • Colreavy, Michael.
  • Coppinger, Ruth.
  • Creighton, Lucinda.
  • Crowe, Seán.
  • Daly, Clare.
  • Doherty, Pearse.
  • Donnelly, Stephen S.
  • Dooley, Timmy.
  • Ferris, Martin.
  • Fitzmaurice, Michael.
  • Flanagan, Terence.
  • Fleming, Tom.
  • Halligan, John.
  • Higgins, Joe.
  • Kelleher, Billy.
  • Kirk, Seamus.
  • Kitt, Michael P.
  • Mac Lochlainn, Pádraig.
  • McGrath, Finian.
  • McGrath, Michael.
  • McGuinness, John.
  • McLellan, Sandra.
  • Murphy, Catherine.
  • Murphy, Paul.
  • Ó Cuív, Éamon.
  • Ó Fearghaíl, Seán.
  • Ó Snodaigh, Aengus.
  • O'Sullivan, Maureen.
  • Pringle, Thomas.
  • Ross, Shane.
  • Smith, Brendan.
  • Timmins, Billy.
  • Tóibín, Peadar.
  • Troy, Robert.
  • Wallace, Mick.
Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Aengus Ó Snodaigh and Seán Ó Fearghaíl.
Question declared carried.