Deputy Boyd Barrett was in possession.
Finance Bill 2015: Report Stage (Resumed) and Final Stage
Debate resumed on amendment No. 21:
In page 89, between lines 4 and 5, to insert the following:
“67. The Minister shall, within 3 months of the passing of this Act, prepare and lay before Dáil Éireann an analysis of the tax changes in this Act, and the total of tax changes and spending adjustments of Budget 2016, setting out the continuing impact on people based on their gender, income, age, marital and disability status.”.
- (Deputy Pearse Doherty)
Before the adjournment, I was concluding my comments on this amendment. To summarise, all that is being asked for here is that our budgets should be measured by the degree to which they contribute to equality or greater inequality. It should be obvious why that is a worthy and important thing to do. Recent years, in particular, have seen some of the most vulnerable sectors of our society hurt by an economic crisis which was not of their making. Most notably, more children - 137,000 of them - have been plunged into poverty. Women, particularly lone parents, have also been plunged into poverty.
The impact of austerity has contributed to rent allowance cuts resulting in a growing number of homeless persons unable to provide for a roof over their heads. One can go on through the list. This amendment says that as a standard feature of budgeting we need to have a measurement of budgets based on the degree to which they contribute to inequality or equality as the case may be. It should be done because those who suffer from inequality, deprivation and poverty need to be protected in budgets. This is particularly so when they can be hit by a multiple of different budgetary aspects or even the unintended consequences of budgetary changes. It is right and proper to have an eye to these matters as part of the budgetary process.
Next year marks the 100th anniversary of 1916. If honouring the aspirations of the Proclamation, including "cherishing all the children of the nation equally", is to mean anything, one way of honouring that centenary would be to state that equality is going to be an imperative for all governments in dealing with budgets.
On a macro-economic point, inequality is not just unfair, it is bad for the economy and makes for economic instability. This is increasingly the case across the world because inequality, including the gap between rich and poor, is growing internationally. Ireland is no exception to that trend which is dangerous and makes for an unstable economy and society. For that reason, it should be imperative for this Government to ensure that all future governments would see equality as an important measurement of the effectiveness of any budget.
In his heyday, Michael McDowell said that inequality was good for society and created incentives. That is a load of ideological, neo-liberal claptrap and rubbish. He was, however, honest enough to admit the prejudices of what one might call the economic far-right in terms of this view of a jungle society and jungle economy. If this Government does not subscribe to this view, and I hope it does not, then it should see equality budgeting as something good that would become a baseline for budgets with which all parties would have to comply.
I commend Deputy Doherty's amendment to the Government.
Deputies will be aware that this amendment was tabled on Committee Stage last week. I understand that on that occasion my ministerial colleague, Deputy Noonan, discussed the issue in some detail with members of the committee. In the initial debate on this amendment earlier today, Deputies Pearse Doherty and Richard Boyd Barrett referred to equality budgeting and the need to evaluate the impact of budgets on different groups within society. I am pleased to say, however, that a substantial amount of that analysis covering some of the groups the Deputies have listed has already been published.
Following on from the Government's undertaking in November 2014 to carry out a social impact assessment of the main tax and welfare measures in budgets, a number of improvements have been made to the social impact assessment which the Department of Social Protection conducts on each budget. I hope that is recognised by Members on both sides of the House. This year, the assessment was completed in consultation with the Department of Finance in respect of the income tax elements of the budget. The publication was also brought forward considerably to 4 November, just three weeks after budget day and in advance of the Oireachtas discussions on both this Bill and the Social Welfare Bill.
Using the ESRI's tax-welfare simulation model, Switch, the social impact assessment includes a breakdown between the impact of tax and welfare measures respectively, as well as presenting the overall distributional impact of budget 2016 by both income group and family type. It also examines the impact of the budget on the at-risk-of-poverty rate and on work incentives, as well as the impact of the change in the minimum wage.
Expansion of the Switch model has also, importantly, enabled the incorporation this year of investment in the early childhood care in education scheme, ECCE, into the social impact assessment. The distributional impact by family type in the family Switch model facilitates comparisons between the distributional impact of the budget on families with and without children, by employment or retirement status, and for lone parents. All of these are presented in the social impact assessment.
The full report is available on the Department of Social Protection's website. Deputies may wish to note some of the key findings of the assessment: in total 98% of households benefit from budget 2016; households with children are the biggest beneficiaries of the budget, in particular working lone parents; social transfers continue to perform strongly in reducing poverty; and, compared to previous years, budget 2016 delivers considerably bigger gains for the poorest households.
At this time, it is not possible to use the Switch model to assess the impact of budgets on groups of people based on their disability status which is, I accept, an important point. As the Minister for Finance has pointed out before, there are already significant efforts under way to expand the capacity of the model. This is evidenced by the work which has allowed modelling of medical cards and the ECCE scheme.
Deputies will also be well aware that the budget book includes a range of material addressing distributional issues and explaining the impact of budget 2016. There is a series of tables showing the impact of budgetary measures at a range of income levels for different income earners. There are a variety of illustrative cases providing examples of the change in net incomes for a variety of sample households. The extent to which income is redistributed through the tax and welfare systems, and the progressivity of the income tax system, are also addressed in that budget documentation.
Whilst we may not agree on the budget and we may have different perspectives concerning it, there is clearly a lot of information out there on which we have built in recent years. On the basis that much of the analysis proposed in the amendment has already been published, the Minister does not propose to accept this amendment.
If all of this is done, as the Minister of State suggests, in the way the amendment is tabled, one would simply accept what is here. Because we have debated this at length in budget after budget, and have been faced by regressive budgets from the Minister, his party and the Government, the Minister of State knows that equality budgeting is far removed from his ideological position. We have proposed legislation on equality budgeting, but the Government voted it down because it is opposed to equality.
Not so.
The proof is in the pudding. We have seen the types of austerity the Government unleashed on citizens the length and breadth of this State without any concern for the impact on certain sectors of society, be they based on gender, income, age, marital or disability status.
The type of spreadsheets the Minister of State is talking about in the budget book or the analysis from the Department of Social Welfare, which is getting better, do not and cannot replace the concept of equality budgeting. That is an independent process that would examine the impact of the budget on certain areas and how it affects certain groups of individuals by status.
This is a clear issue. The Minister of State knows that the amendment is framed in a way that allows us to get past the out-of-date rules of this House. Those rules frustrate me more and more as the years go on. If the Government is serious about budgetary and institutional reform, it should stop the charade whereby the Opposition cannot even table amendments to a Finance Bill. They think we are going to come up with such mad ideas that we are not even allowed to table them for discussion on the floor of the Dáil.
This amendment is really about ensuring that equality budgeting which has already been, or is in the process of being, adopted by 60 countries is enshrined and embraced by this Parliament, the Government and our political representatives generally. This Government would therefore be tied to the idea that we have nothing to fear from equality. In addition, we would be willing to put our plans for the economy, including expenditure and tax-raising measures, before an independent analysis to look at how the chips actually fall because we have nothing to hide.
However, the reality is that the Government is against equality because it will expose the ideological position of the Fine Gael Party. This is a budget for the wealthiest in society. It leaves low and middle-income earners high and dry.
I do not know where to begin. Clearly, we are not opposed to equality. We are in favour of trying to get everyone in this country back into employment, thereby reducing the burden of tax on work. We have increased the minimum wage and we have tried to support people through the social welfare system during a number of difficult years. I imagine we are going to have many such debates in the coming weeks and months, but Deputy Doherty's rhetoric does not stand up to any scrutiny and I look forward to debating these issues with him.
We need to be careful when using terms like progressive and regressive. Members of the House in 2010 would have been able to produce the report of an independent think tank suggesting that the budget in 2010 was progressive. That budget introduced the universal social charge and cut all social welfare benefits, including the blind pension, payments to people with disabilities and payments to children. If that is the definition of a progressive budget, then Deputy Doherty should be careful when he throws around such terms.
As I have outlined, the reason we are not accepting this amendment is that there is a significant amount of the information in the public domain. At some point I would be interested in hearing the views of Deputies in respect of the social impact assessment that has been built up in recent years. The Department of Social Protection website provides significant information that can inform all of us in the development of our policies.
My next point does not relate to the Government but to our budgetary process in general. There has been recognition in the past of the good practice carried out in this country. Good practice and social impact assessment at European level has been identified in a number of reports. The Evaluation Partnership and the Centre for European Policy Studies produced a report in 2010 which indicated that Ireland is well-advanced compared with peer countries in Europe in the use and, more important, in the practice of social impact assessments.
While I do not dispute that the country, governments and the Oireachtas can always do better - I take those valid points - the amendment Deputy Doherty has tabled is not necessary. In fact, some of the information that he is requiring to be published within three months of the passing of this Act is already published today and is available on websites for all our citizens to see.
How can the Minister of State say with a straight face that the Government is for equality and then justify the claim by saying that those in Government want to get people back into work? That has nothing to do with it. That is not an example of equality. The Government punishes people who may be out of work. The rationale is that the Government is for equality because if people get a job then the Government will lower taxes for them. Is that the definition of equality according to the Minister of State? It is not a definition of equality that people understand.
The Minister of State went on to say that he is for equality and then listed a number of measures to suggest how the Government is for equality.
They were social welfare measures.
Those measures simply do not stack up. How was the Government for equality when it cut supports for lone parents? How was that an equality measure? What was it that ticked inside the Minister of State and made him think that was a good equality measure? It seems those responsible saw all the reports relating to the challenges that lone parents face but decided to give it to them in the sense of taking more from them. It seems those in government decided to see if people could still survive following those measures on the basis that Fine Gael is the party for equality.
Of course, there will never be an independent assessment of what we are looking for to expose that what the Government is doing as anti-equality, because the Government has voted this down previously. I expect the Government will do so again today. The Government did the same last year, the year before and in preceding years. The Government has voted down proposed legislation to introduce equality budgeting several times.
The Minister of State referred to how an independent think tank suggested that the 2010 budget introduced by Fianna Fáil was progressive. He went on to list the regressive measures contained in that budget, including USC for low earners, cuts for disability and so on. Has it ever dawned on the Minister of State that in the following year the same independent think tank said that the current Government's budget was regressive? It said the same thing in 2012, 2013 and 2014. By God, the current Government must have pulled out all the stops if the think tank thought the Fianna Fáil budget was progressive but the subsequent budgets were regressive. That is the reality.
This is a simple concept. If those in the Government parties have something to fear from equality, then they should come to the House and vote against equality budgeting. If they embrace equality, support transparency and have nothing to fear, then they should vote for equality budgeting.
It is as simple as that. We need complete reform but we have been tinkering along the edges in respect of how we deal with our budgets. What happens in other jurisdictions? What happens up the road in the North, even with the limited fiscal powers they have? When certain departments there introduce their budgets, they announce them, but it is not taken as read that the measures correspond to what is going to happen. The measures are then independently proofed on the basis of a basket of indicators to see whether they hold up to certain benchmarks laid down in legislation. Those involved get a report which is then debated. Then they thrash it out again and the budget is approved. Technically, that is supposed to be what happens in this House. However, the reality is that what the Minister announces on budget day is what is going to be in the budget. That is, of course, unless the Minister decides to amend the legislation or changes his mind in the meantime. There is no independent analysis, bar the limited scope afforded to the ESRI in respect of the SWITCH programme.
I do not expect the Minister of State to change his mind. Sinn Féin and others who believe in equality, including groups outside this House, will continue to campaign for equality budgeting. We expected that the Labour Party would support the issue of equality. A valid point was made in this regard. We will celebrate the centenary of 1916 next year. We will celebrate the words of the Proclamation and the members of the Government will repeat them over and over again next year as they wave their tricolours and hope that the people do not read the Proclamation or what was said on the steps of the GPO almost 100 years ago. This is because what those people proclaimed is not what the Government is delivering. If those in government want even to try to get closer to what was proclaimed, they should have guts to stand up and support equality budgeting.
Amendment put:
The Dáil divided: Tá, 43; Níl, 74.
Tá
- Adams, Gerry.
- Aylward, Bobby.
- Boyd Barrett, Richard.
- Calleary, Dara.
- Collins, Joan.
- Collins, Niall.
- Colreavy, Michael.
- Coppinger, Ruth.
- Cowen, Barry.
- Daly, Clare.
- Doherty, Pearse.
- Ellis, Dessie.
- Ferris, Martin.
- Fitzmaurice, Michael.
- Fleming, Tom.
- Grealish, Noel.
- Halligan, John.
- Healy, Seamus.
- Healy-Rae, Michael.
- Kelleher, Billy.
- Kirk, Seamus.
- Mac Lochlainn, Pádraig.
- McConalogue, Charlie.
- McGrath, Finian.
- McGrath, Mattie.
- McGrath, Michael.
- McLellan, Sandra.
- Murphy, Catherine.
- Murphy, Paul.
- Naughten, Denis.
- Ó Fearghaíl, Seán.
- Ó Snodaigh, Aengus.
- O'Brien, Jonathan.
- O'Dea, Willie.
- O'Sullivan, Maureen.
- Pringle, Thomas.
- Ross, Shane.
- Shortall, Róisín.
- Smith, Brendan.
- Stanley, Brian.
- Tóibín, Peadar.
- Troy, Robert.
- Wallace, Mick.
Níl
- Breen, Pat.
- Burton, Joan.
- Butler, Ray.
- Buttimer, Jerry.
- Byrne, Eric.
- Cannon, Ciarán.
- Carey, Joe.
- Conaghan, Michael.
- Connaughton, Paul J.
- Conway, Ciara.
- Corcoran Kennedy, Marcella.
- Costello, Joe.
- Creed, Michael.
- Deering, Pat.
- Doherty, Regina.
- Donohoe, Paschal.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J.
- Farrell, Alan.
- Feighan, Frank.
- Ferris, Anne.
- Fitzpatrick, Peter.
- Flanagan, Charles.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Hayes, Tom.
- Heydon, Martin.
- Howlin, Brendan.
- Humphreys, Kevin.
- Keating, Derek.
- Kehoe, Paul.
- Kelly, Alan.
- Kenny, Seán.
- Kyne, Seán.
- Lawlor, Anthony.
- Lynch, Ciarán.
- Lynch, Kathleen.
- Lyons, John.
- McCarthy, Michael.
- McEntee, Helen.
- McFadden, Gabrielle.
- McGinley, Dinny.
- McHugh, Joe.
- McLoughlin, Tony.
- Mitchell, Olivia.
- Mitchell O'Connor, Mary.
- Mulherin, Michelle.
- Nash, Gerald.
- Neville, Dan.
- Noonan, Michael.
- O'Donnell, Kieran.
- O'Donovan, Patrick.
- O'Dowd, Fergus.
- O'Mahony, John.
- Penrose, Willie.
- Perry, John.
- Phelan, Ann.
- Phelan, John Paul.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Reilly, James.
- Ring, Michael.
- Ryan, Brendan.
- Shatter, Alan.
- Spring, Arthur.
- Stagg, Emmet.
- Stanton, David.
- Tuffy, Joanna.
- Twomey, Liam.
- Wall, Jack.
- White, Alex.
Tellers: Tá, Deputies Aengus Ó Snodaigh and Pearse Doherty; Níl, Deputies Emmet Stagg and Paul Kehoe.
Amendment declared lost.
Amendments Nos. 22 and 23 have been ruled out of order.
Amendments Nos. 22 and 23 not moved.
I move amendment No. 24:
In page 103, between lines 14 and 15, to insert the following:
"Amendment to Section 10(A) of the Finance (Local Property Tax) Act 2012
86. The Finance (Local Property Tax) Act 2012 is amended in section 10(A) by substituting the following subsections for subsections (3) and (4):
"(3) Notwithstanding subsections (1) and (2) and subject to subsection (4), the Minister for the Environment Community and Local Government shall ensure in the making of regulations, that a residential property shall not, for the purposes of this Act, be regarded as a relevant residential property if a certificate has been issued in relation to it having a building condition assessment damage rating of 2, or a building condition assessment damage rating of 1 with progression, and has either been accepted by the Pyrite Remediation Board for remediation, or is in any area where the presence of pyrite has been established, regardless of whether a hardcore infill test has been carried out.
(4) Not withstanding subsection (3) and subject to subsection (5), a residential property shall not, for the purposes of this Act, be regarded as a relevant residential property in relation to five consecutive liability dates commencing with the first liability date on or before which a certificate under and in accordance with regulations under subsection (1) has been issued in relation to property, and in cases where the property has not been remediated for all subsequent liability dates until it has been remediated.".
The Minister of State might like to comment on why amendment No. 22 was ruled out of order. It was on the grounds the Opposition cannot move amendments which are a cost to the Exchequer, but seeing as this issue was flagged on Committee Stage I wonder why the Government did not think it important to restore some of the robbery from the pay packets of airport pensioners undertaken over the past period and why it did not table the amendment itself.
Amendment No. 24 is with regard to an issue I have discussed with the Minister on repeated occasions. I had to table amendments to last year's Finance Bill to try to get it addressed and it is a little disappointing that here we are this year and I must still table amendments to do it all over again.
The roots of the issue lie in the construction of the property tax legislation and the inadequate provision given to the exemption for homes affected by pyrite. If somebody has a home affected by pyrite he or she cannot sell, renovate or extend it. Essentially, the property is valueless. The idea of putting a property tax on this is absolutely reprehensible. We know that at the time of the legislation the Government boasted it had addressed the matter and given those homeowners an exemption. The reality was different because of the way in which it was constructed. Imposing an obligation on homeowners to carry out an underground infill test meant people would have had to expend thousands of euro to gain an exemption of hundreds. It was an absolutely ludicrous situation on which, over the past 18 months to two years during which I have highlighted it, the Minister kept agreeing with me.
Last year the Minister told he would imminently address it, early this year he told me it would be addressed by the summer and, of course, in the past month or so in the run-up to the budget he told me it would be addressed soon. In the budget he made the great announcement it would finally be addressed, but in actual fact when we discussed it last week he told me it was on its way to being addressed and that he will introduce measures which he has instructed Revenue to implement immediately in advance of guidelines being issued towards the end of the month and legislation following. I can tell the Minister of State that yesterday some residents from my area took the Minister's advice and contacted Revenue, on the basis it had been advised to introduce the new changes, and were told they could not gain the exemption. It did not do them any good, which is why I have tabled this amendment.
What the Minister proposes to do, although he has not yet brought forward the legislation, is that in situations where properties are damaged and a building condition assessment is carried out which shows a damage condition rating of two, or one with progression, those people can gain access to the exemption without an infill test being carried out if the pyrite remediation board or an insurance company has accepted their cases or in instances where a self-assessment will be accepted. I want to put on record that as of yesterday Revenue was not accepting self-assessment. The self-assessment is essentially the homeowner stating he or she has had a building condition assessment carried out, the damage is extreme and as a result he or she cannot sell the property and it is essentially valueless.
In any case, even if the Government had brought forward legislation, which it has not, it is not good enough. The amendment seeks to do this in a far simpler way. In essence, it states that where a property has damage if it is in an area known to have pyrite an infill test is not needed and should not have to be carried out. It also addresses the shortfall in the Government's legislation, whereby currently even if people can access the exemption they only get it for three years. This is not good enough. The amendment seeks to provide this exemption for a period of five years in cases of properties which have a damage condition rating of two and which, in essence, have been accepted onto the remediation scheme or have been remediated. In the case of all other home owners who have not reached this level of damage and who have not been given a commitment their properties will be remediated the exemption should be indefinite until the property is fixed. Why would a barrier of three years be put on it? It is just not good enough. It is on this basis I move the amendment.
I support Deputy Daly's amendment. It is part of the bureaucracy of the State and huge efforts have been made by many people to have the situation rectified over many years with many meetings and commitments. Now that we finally have the Finance Bill we are told we must wait further. It is very unfair to people and families trying to create a home for themselves by buying it or having it built. Through no fault of their own a situation developed in the structure of the home, and they are landed with a property tax after the property has been found to have a defective structure. It is a very serious condition. They are being put through a process of examination and proof with exhaustive tests because of a faulty product somewhere along the chain of supply which was not their fault. Surely to God we have some bit of compassion left in our institutions of State. Is there no compassion left in those who drafted the legislation? Is the Minister not in charge? Why is it coming across so cruelly in the legislation, with such a long delay and such an onerous request on homeowners and families?
The stress and trauma being caused to families is inexplicable. Any of us who, thankfully, have our own homes know it would be traumatic to have such a major defect even without property tax being levied on the property. Even if there is an effort to rectify the problem, there is no attempt made to be compassionate and understanding while admitting there is a structural problem that is no fault of the home owner. It should be dealt with now rather than put on the long finger, thinking "Live horse, get grass," and it can be done with different legislation. If this Bill goes through tonight without amendments seeking a review, there will be no review. The lads will be gone to the country, running up and down gaps, hiding from the electorate. They will not be heard of and the next Government will have to grapple with the issue. Unfortunately, the home owners will be left in their perilous position, paying property tax. It is robbery without violence.
I add my support to the amendment before us dealing with the pyrite issue. We know from replies to parliamentary questions that only 76 households have been excused from paying this levy, although 2,000 applied. The statistics demonstrate that fewer than 5% of these households have been successful in their application. It is well established that the scheme has been ineffective, to say the least. We know the estimated number of houses that could be affected is up to 20,000. When it was announced in the debate on a Finance Bill a number of years ago, it was indicated that this would be a great saviour.
Deputy Daly's amendment is necessary. I know the Minister stated on Committee Stage that he would deal with the scandal. To expand on the issue, the scheme also needs to deal with the residents in my home county of Donegal affected by muscovite mica. We know the Government eventually moved on the pyrite disaster, although the scheme is largely deficient, has not delivered and is currently under review. There must be a similar scheme for the mica problem and I ask the Government to consider the matter.
Other cases relevant to this amendment include Longboat Quay, Riverwalk Court and other estates that may, in real terms, have properties of zero value. The homes in those estates would have no value on the market if up for sale, and that is a burden for many of the mortgage holders in these estates, given the shoddy workmanship of developers in the period in question. When the issue was raised with the Minister, he turfed the responsibility onto home owners by saying the local property tax is self-assessed and if houses have no value it is possible to declare that to the Revenue Commissioners. I have spoken to residents and they are very concerned about that. They know there are fines for failure to pay or avoiding taxes and, because it is self-assessed, the Revenue Commissioners can come back at a later stage. This must be dealt with in a uniform way.
There are issues in a number of estates, and the Government is well aware of them. People are trying to find remedies, but that has gone on far too long. Where there are defects, as long as this tax applies, there needs to be a clear scheme to make such properties exempt from tax in the period when the homes have no value. That is instead of putting the burden on home owners.
I thank Deputy Daly, and I know she has raised the issue on several occasions because I have been here when the Minister of Finance has discussed it with her. I am aware of the issues that the Deputy is attempting to address with her proposed amendment. At the outset, I acknowledge the stressful situations that individuals face when building works are not completed to the required acceptable standard. I also accept that defects that manifest after completion and are not resolved have a significant impact on the lives of those affected. As the Minister has advised on many occasions in the past, a liability to local property tax should apply to all owners of residential property, with a limited number of exemptions. Limiting the exemptions available allows the rate to be kept low for those liable persons who do not qualify for an exemption.
It was made clear during the passage of the Finance (Local Property Tax) (Amendment) Act 2013 that the exemption being provided at the time for homes affected by pyrite would be restricted to properties with significant pyritic damage and that not all damaged properties would be able to avail of the exemption. Regulations made by the Minister for the Environment, Community and Local Government relating to testing, certification and the National Standards Authority of Ireland, NSAI, protocol were published in May 2013, and these restricted the local property tax exemption to properties with significant pyritic damage, where such damage had been proven by the appropriate testing and subsequently certified.
Section 10A of the Finance (Local Property Tax) Act 2012, as amended, now provides for a temporary exemption of at least three years from the local property tax for residential properties that have been certified under regulations made by the Minister for the Environment, Community and Local Government as having significant pyritic damage. The property owner is required to support a claim for the exemption by submitting a certificate to the Revenue Commissioners issued by a competent person as detailed in IS 398, dealing with reactive pyrite in sub-floor hardcore material, specifically Part 1, testing and categorisation protocol, published by the NSAI. This is the only type of certificate that is relevant under current legislation.
On foot of the report on the review of the local property tax, which the Minister for Finance commissioned and which was submitted to the Minister by Dr. Don Thornhill, the Minister decided to ease the qualifying criteria for reliefs from local property tax for home owners whose properties are severely impacted by pyrite. He accepts the points raised by Deputies on the need for such an easing of the criteria. The current pyrite exemption will continue in place and will remain confined to those properties having a damage rating of 2, or 1 with progression. However, where a property has been accepted for remediation by the Pyrite Resolution Board without testing, or a property has been remediated by a guarantee company or by a builder or developer, or where a party is compensated in lieu of remediation, without testing, the Revenue Commissioners will accept confirmation of remediation or compensation from the either the resolution board or the relevant party for the purposes of exemption without testing or NSAI certification.
It is not a question of individuals self-assessing in the absence of the board or a relevant body. The Revenue Commissioners have agreed to operate the change in local property tax procedures on an administrative basis pending the implementation of necessary legislative amendments, and they will apply these changes from 1 July 2013, when local property tax came into operation. The Deputy is no doubt aware that following Government approval, the Minister for Finance will introduce legislation in the coming weeks that will cover the deferral to 2019 of the next local property tax valuation date, and other issues, including pyrite, currently being dealt with on an administrative basis by the Revenue Commissioners. We will have that legislation in the coming weeks.
In addition, I reiterate that the local property tax operates on a self-assessment basis and it is a matter for the property owner in the first instance to calculate the tax due based on his or her assessment of the market value of the property. Where a property owner does not qualify for an exemption when making an assessment, issues such as the presence of pyrite in a particular area would be one of the factors that they could take into account in valuing their property.
The Minister believes the Deputy's proposal is too broad and could result in a compromise in the availability of reliefs to the target group and those which apply in the wider context of local property tax. He intends to deal with this in the legislation as outlined in the coming weeks. Accordingly, I am not in a position to accept the Deputy's amendment.
In some ways we heard the "change is imminent" response last year, but I realise it is more imminent this year. There is a disparity between circumstances in which citizens owe the Revenue Commissioners money and those in which the Revenue Commissioners owe citizens. The speed at which matters are addressed is not the same. That is a really cruel blow for people to take. We have heard of families who have had deductions for property tax taken from their wages despite the fact that their houses were included in the pyrite remediation scheme. There was the ludicrous position in which of one arm of the State was willing to spend €40,000 to remediate a property while the Revenue Commissioners, another arm of the State, could not give the owner an exemption of a couple of hundred euro per year because they argued there was no proof that the families were affected by pyrite. I am glad that is being addressed, with a statement from the Pyrite Remediation Board or Premier Insurance under the other guarantee being adequate. It is still not enough.
The Government is repeating the inadequacies that exist within the pyrite remediation scheme, which is geographically limited, does not take into account the other damage highlighted by Deputy Doherty, and is based on damage. The problem is that the people in what is probably the best position are those with the most damage. They can move and have their properties remediated. Those in the middle, whose houses are damaged but have been deemed not to be damaged enough despite being in a pyrite area, have it worse. They cannot sell or move and they will not have the property remediated. Nevertheless, they are hit with this bill because of the Government's failure to take up my amendment. That is regrettable, and I will press the amendment on that basis.
Amendment put and declared lost.
I move amendment No. 25:
In page 103, between lines 28 and 29, to insert the following:
“87. The Minister shall, within one month of the passing of this Act, prepare and lay before Dáil Éireann a report on options available for the charging of Deposit Interest Retention Tax at rate equivalent to the individual’s marginal income tax rate.”.
This amendment relates to the issue of deposit interest retention tax, DIRT. Deposit interest is income for an individual but it is not taxed in the normal way as all other forms of income are. The purpose of this amendment is to call on the Government to bring forward a report on the options available for the charging of DIRT at a rate equivalent to the individual's marginal income tax rate.
As the Minister of State knows, since 2008 the level of DIRT has gone up from 20% to 41%. It has more than doubled - an increase greater than any in any other taxation heading of which I am aware. It came at a time that coincided with a collapse in interest rates. For many elderly people in particular, who rely on deposit interest for their income and notwithstanding the very limited exemption that is available for elderly people in certain circumstances, those who have no income tax liability can end up paying 41% tax on their deposit interest, plus a further 4% PRSI in certain cases, if they have unearned income above a level of about €3,200. If one is paying income tax generally at 0%, 20% or 40%, one is paying DIRT at 41% on one's deposit interest. I know what I am suggesting raises administrative issues and is potentially complex, but there is an issue of justice and equity here and it affects many people, particularly elderly people. This amendment was debated on Committee Stage, but I wanted to ventilate the issue on Report Stage in the full Chamber and I hope the Government will reconsider this.
I thank Deputy McGrath. In his amendment, the Deputy is seeking to reduce the rate of DIRT to a rate equivalent to the taxpayer's marginal rate of tax, that is, 40%, 20% or 0%, if the person does not have a taxable income. The standard DIRT rate has increased significantly since 2008, as Deputy McGrath said. It has gone from 20% to 41% and is now 1% above the higher rate of tax. Up to budget 2009, the rate of DIRT was equal to the standard rate of income tax at 20%. The increases in recent years were introduced, as Deputies will appreciate, to generate additional yield and to encourage spending in the economy to stimulate both growth and employment.
Revenue estimates that the cost of charging DIRT at a rate equivalent to the individual's marginal income tax rate - in other words, 40% or 20% - would be of the order of €77 million for 2016, based on a forecasted DIRT yield of €298 million. This is a necessarily tentative estimate as it cannot, for instance, account for any individuals moving bands. This represents a substantial loss to the Exchequer, especially as under the terms of the Stability and Growth Pact Ireland may not introduce discretionary revenue reductions unless they are matched by other revenue increases or expenditure reductions. This means the Government must consider carefully any tax changes, as any reduction will have to be offset elsewhere. I am further advised that there would also be significant administrative issues, as in fairness the Deputy appreciates, and costs associated with such measures, both for Revenue and for financial institutions in such a development. In these circumstances, on this occasion I am not in a position to accept this amendment.
I thank the Minister of State for his reply, which is very similar to the debate we had on Committee Stage, and I acknowledge that. I acknowledge that it would take time to introduce a system of this kind because of the cost involved and the complexity that would necessarily be involved in introducing such a system. However, it is unfair to tax this form of income in a fundamentally different way from how other forms of income are taxed. While there is an exemption for people over the age of 65, for example, whose income lies within the overall income exemption limits for that age category, it still represents a significant burden and the increase in the rate has coincided, as I said, with a collapse in the actual interest rates, so people who have been dependent on interest income are now very badly affected by the combination of both these effects. I will press the amendment. I know the Government will not change its mind, but it is important to flag this as an area that is in need of reform in the future.
Amendment put and declared lost.
I move amendment No. 26:
In page 103, between lines 28 and 29, to insert the following:
“87. The Principal Act is amended by insertion the following section after section 195A:
“195B. (1) In this section—
‘expenses’ means vouched expenses;
‘normal place of work’ means the location where an employee or director undertakes the majority of the activities of their employment/office;
‘relevant employee or director’ means an employee or director who undertakes activities at a temporary place of work and whom incurs additional travel and subsistence expenses arising from that fact, other than that which they would have otherwise incurred.
‘temporary place of work’ means a location where an employee or director is required to travel to undertake activities for a temporary period not exceeding 24 months;
(2) This section applies to payments made by a company to or on behalf of a relevant director or employee of that company in respect of expenses of travel and subsistence incurred by the employee or director solely for the purpose of undertaking activities at a temporary workplace.
(3) So much of a payment to which this section applies shall be exempt from income tax and shall not be reckoned in computing income for the purposes of the Income Tax Acts.”.”.
Again, this issue was debated on Committee Stage and the amendment arises from that. This issue relates to the taxation of certain independent contractors. As the Minister of State knows, the nature of work practice and employment has changed very considerably in this country and an increasing number of people are self-employed. They are establishing their own companies and offering their services as independent contractors. That has raised certain taxation issues. I know the Revenue Commissioners have paid quite a lot of attention to this area and they have had what they call the national contractors project, which has identified issues whereby individuals have not been paying the correct amount of tax. This raises serious issues for the individuals and their tax advisers. I am certainly not holding a candle for anybody who is deliberately evading their taxation responsibilities, but we need clarity in respect of travel and subsistence payments for independent contractors who are self-employed.
I acknowledge that the Department and Revenue held a public consultation exercise earlier this year. That was a very important step forward and it recognised that where large multinationals are undertaking major capital projects, particularly in areas such as ICT and health care, they are finding it increasingly difficult to access the pool of expertise they require from contractors. That is why we need a transparent system in respect of the taxation of travel and subsistence payments for those working away from home. There is the rule of thumb that for an expense to be tax deductible in an employment sense, it has to have been incurred wholly, exclusively and necessarily in the performance of the person's duties. This issue relates primarily to the costs associated with working away from a person's normal place of work and the amendment seeks to address that issue. I am putting it on the agenda because there seems to be a lack of clarity.
Revenue is putting a certain interpretation on the taxation law as it applies to this sector which is having an impact. It is obviously having an impact on the individuals, but it is also having an impact on multinationals which are seeking to invest in the country and to ensure that major capital projects can be delivered, which projects necessarily involve a significant input from independent contractors. We need clarity, transparency and consistency of treatment. That is primarily what this amendment seeks to achieve.
I thank Deputy McGrath. I know there was a debate about this on Committee Stage with my colleague, the Minister for Finance. Based on that, I do not propose to accept the amendment. As stated by the Minister on Committee Stage, section 114 of the Taxes Consolidation Act 1997 provides for a tax deduction in respect of travel expenses that an employee or office holder is necessarily obliged to incur in the performance of the duties of their office or of their employment. This proposed section would mean in practice that an employee or office holder of a company may be reimbursed expenses of all travel and subsistence without any regard to the criteria set down in section 114, which I am sure is not the intention of the amendment.
It would also mean that the long-standing principle that return travel from home to work is not an allowable expense is not maintained. At present, where an employee or office holder incurs the expense of travelling from his or her normal place of work to attend a temporary place of work, those expenses will generally qualify for a tax deduction and an employer may pay or reimburse such expenses free of tax. The reason for this is that the individual is travelling from his or her normal place of work to another work location and is travelling in the performance of his or her duties.
I also remind the House, as Deputy McGrath has outlined, that officials in the Department of Finance continue to examine the submissions received in response to the recent consultation exercise on the tax treatment of expenses. Should any further legislative changes arise from that consultation exercise in respect of the taxation of expenses and should they be identified as necessary, the Minister will take the appropriate steps. In light of that body of work being carried out currently, on the basis of the consultation exercise and for the logistical reasons I have outlined, I do not propose to accept this amendment.
Does the Department intend to produce a report on this aspect? The public consultation period ended and various submissions were made. It is fine that, as the Minister of State stated, the issues raised continue to be examined but is it the case that, if the Minister of State believes no further action is warranted, we will not hear about the matter again? Will a report be published by Revenue or the Department of Finance setting out the assessment of the issues raised to let us know whether the Department believes any changes are required to bring certainty and clarity to this area? If the Minister of State can answer that question, I may be satisfied.
It is an important question and I assure the Deputy that the Department of Finance will publish that report in the coming months. Regardless of the findings, a report will be published. Alongside that, all the submissions received will be published.
On that basis, I will withdraw the amendment.
Amendment, by leave, withdrawn.
Bill, as amended, received for final consideration.
Question put: "That the Bill do now pass."
The Dáil divided: Tá, 78; Níl, 45.
Tá
- Breen, Pat.
- Burton, Joan.
- Butler, Ray.
- Buttimer, Jerry.
- Byrne, Eric.
- Cannon, Ciarán.
- Carey, Joe.
- Coffey, Paudie.
- Conaghan, Michael.
- Connaughton, Paul J.
- Conway, Ciara.
- Corcoran Kennedy, Marcella.
- Costello, Joe.
- Coveney, Simon.
- Creed, Michael.
- Deenihan, Jimmy.
- Deering, Pat.
- Doherty, Regina.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J.
- Farrell, Alan.
- Feighan, Frank.
- Ferris, Anne.
- Fitzgerald, Frances.
- Fitzpatrick, Peter.
- Flanagan, Charles.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Hayes, Tom.
- Heydon, Martin.
- Howlin, Brendan.
- Keating, Derek.
- Kehoe, Paul.
- Kelly, Alan.
- Kenny, Enda.
- Kenny, Seán.
- Kyne, Seán.
- Lawlor, Anthony.
- Lynch, Ciarán.
- Lynch, Kathleen.
- Lyons, John.
- McCarthy, Michael.
- McEntee, Helen.
- McFadden, Gabrielle.
- McGinley, Dinny.
- McHugh, Joe.
- McLoughlin, Tony.
- McNamara, Michael.
- Mitchell, Olivia.
- Mitchell O'Connor, Mary.
- Mulherin, Michelle.
- Nash, Gerald.
- Naughten, Denis.
- Neville, Dan.
- Noonan, Michael.
- O'Donnell, Kieran.
- O'Donovan, Patrick.
- O'Dowd, Fergus.
- O'Mahony, John.
- Penrose, Willie.
- Perry, John.
- Phelan, John Paul.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Reilly, James.
- Ring, Michael.
- Ryan, Brendan.
- Shatter, Alan.
- Spring, Arthur.
- Stagg, Emmet.
- Stanton, David.
- Tuffy, Joanna.
- Twomey, Liam.
- Wall, Jack.
- White, Alex.
Níl
- Aylward, Bobby.
- Boyd Barrett, Richard.
- Broughan, Thomas P.
- Browne, John.
- Calleary, Dara.
- Collins, Joan.
- Colreavy, Michael.
- Cowen, Barry.
- Doherty, Pearse.
- Dooley, Timmy.
- Ellis, Dessie.
- Ferris, Martin.
- Fitzmaurice, Michael.
- Fleming, Sean.
- Fleming, Tom.
- Grealish, Noel.
- Halligan, John.
- Healy, Seamus.
- Healy-Rae, Michael.
- Kelleher, Billy.
- Kirk, Seamus.
- Kitt, Michael P.
- McConalogue, Charlie.
- McDonald, Mary Lou.
- McGrath, Finian.
- McGrath, Mattie.
- McGrath, Michael.
- McLellan, Sandra.
- Mac Lochlainn, Pádraig.
- Moynihan, Michael.
- Murphy, Catherine.
- Murphy, Paul.
- Ó Fearghaíl, Seán.
- Ó Snodaigh, Aengus.
- O'Brien, Jonathan.
- O'Dea, Willie.
- O'Sullivan, Maureen.
- Pringle, Thomas.
- Ross, Shane.
- Smith, Brendan.
- Stanley, Brian.
- Timmins, Billy.
- Tóibín, Peadar.
- Troy, Robert.
- Wallace, Mick.
Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Pearse Doherty and Seán Ó Fearghaíl.
Question declared carried.
This Bill, which is a certified money Bill in accordance with Article 22.2.1° of the Constitution, will be sent to the Seanad.