Finance Bill 2016: Report Stage (Resumed)

I move amendment No. 6:

In page 7, line 36, to delete “Schedule E.” and substitute “Schedule E.”.”.

This is a technical amendment which corrects a minor error in the Bill which resulted from the acceptance on Committee Stage of an amendment from Deputy Michael McGrath. It reinserts necessary punctuation that had been inadvertently deleted when the end date of the tax credit was removed.

Amendment agreed to.

I thank the Minister for accepting the amendment. I also thank other Deputies for supporting it. This is a potentially important amendment and innovation in the Finance Bill for people who are tenants in local authority houses throughout the country. As Members are aware, local authorities have ceased to do a huge amount of maintenance in local authority properties and it does not look as if they will return any day soon to carrying out routine large-scale maintenance in properties other than, for example, to change windows from time to time. I am strongly of the view that the amendment should be made as people have come to me who want to do up their houses.

They may have wanted to install a new kitchen, extra bathroom facilities or other facilities like heating and windows, if there was no window refurbishment programme in their estate. They found that, having seen all the builders providers, merchants and so on advertising the home improvement scheme, they were barred from it. The Minister's amendment means that those people will now be able to avail of the scheme. As people are aware, the scheme has been enormously popular among home owners as a way of getting some VAT back on the spend on significant home improvements and repairs.

I thank the Minister. I hope he will write to local authorities to advertise the change so they are fully advised of the situation. The permission of local authorities, as the owners of properties, will be required when any structural work is done to ensure it is carried out to a proper standard and, in particular, in accordance with fire safety regulations. I ask the Minister to talk to the Minister for Housing, Planning, Community and Local Government, Deputy Simon Coveney, about this matter.

A number of local authorities, in particular Dublin City Council and Cork City Council, need to change their approach when a tenancy is given up or the council buys old local authority houses from tenants or families who wish to sell them on. It is shocking to see that the first thing local authorities do is park large skips in the gardens of local authority houses, to the intense annoyance of neighbours. They proceed to board up the windows and doors with steel shutters so that the houses are safe if left vacant for a period of time. This has gone on for years in some local authorities. Nobody has been able to influence them until recently. The local authorities then rip everything out of the houses.

I and other Deputies, I am sure, have had people telling us they are moving to another house, perhaps as a tenant in the case of a retired persons' unit. They tell us they would like nice families to get their houses which they have left perfectly clean and in good order. People are heartbroken because we cannot tell them that the councils will respect the homes they have lived in and created over 30 years. Instead, one sometimes has to break it to people gently that the councils may choose to strip a house back to its original condition and then months, or even years, later bring in a team of builders to refurbish the house from top to bottom. As everybody knows, the new occupants of the house can be seen not long afterwards visiting large DIY shops on the outskirts of all our large towns and cities, fitting new kitchens, fireplaces and anything else they can afford. The whole thing is an exercise in wasting money.

The Minister is aware that when I was Tánaiste there was a special programme for, and resources allocated to, councils to end the scandal of boarded-up houses. Over the past two years or so, we brought 5,500 houses, which had been voids, back into use for letting or allocation. Some local authorities are taking their foot off the pedal again in regard to this. As I said, they are also buying other properties, in particular older local authority houses. It is a good policy and they are in areas where many people want to live. Those houses, having been purchased, then end up being boarded-up. It is scandalous.

The Minister needs to put the boot in in regard to any local authority which is carrying out that practice. We are all aware that in large local authority estates there are many risks around anti-social behaviour. A house that is boarded-up and shuttered for protection as it is being left vacant over a long period of time is a magnet for anti-social behaviour, as are front gardens and skips. A measure to deal with this would be popular with people.

I introduced small loan schemes via credit unions which the Department of Social Protection guarantees. The Minister and I co-operated to develop the scheme. It has proven to be very popular and is keeping people away from moneylenders by using local credit unions. People are repaying loans via social welfare payments through the post office payment scheme. It is good for business all around.

In the context of the Minister's amendment, I propose to withdraw my amendment.

I welcome the amendment, which is a result of an amendment tabled by Deputy Burton on Committee Stage and will expand the scheme to local government properties. It is probably regrettable that we are in a situation whereby an amendment like this has to be proposed. I will support the amendment, but it should not be the norm. The normal practice is that if houses are owned by local authorities, the work should be carried out by them. As a result of inadequate funding across local authorities, essential works are not being carried out.

I am sure we have all visited houses where windows have to be replaced, cornflake boxes are used to try to fill gaps and stop drafts coming in, doors are leaking or chimneys are cracked. Local authorities, because of a lack of resources, cannot carry out work. Individuals are forced to turn to credit unions, moneylenders or other financial institutions to take out loans in order to carry out work.

This amendment would allow them to have the VAT returned or a tax rebate, but only in certain circumstances. We all know some rent for local authority housing is based on people's level of income. This scheme is very much based on one's taxable income. Some people do not have a taxable income. Despite the amendment, they would carry out work on State properties but because of their level of taxable income they would not be able to avail of the scheme. That goes to the heart of one of the problems with the scheme. I mentioned this problem on Committee Stage and I am disappointed the Government has not come forward with an amendment to deal with the matter.

I ask the Minister to give us some indication that his Department will examine the facts I put on the record on Committee Stage in terms of the very low uptake of the scheme over the past three years in many counties outside of large urban areas. I cited the examples of Monaghan, my county of Donegal and many other counties - the Minister provided me with a list of relevant counties in response to a parliamentary question. Over a three-year period, 200 or 300 properties have availed of the scheme. The issue is the threshold. Another issue is something the Minister pointed out, namely, the fact it relies on taxable income. Counties where people earn very low wages mean that the taxable income may not be worthy of eligibility for the scheme.

There is need for a review of the scheme in light of the statistics, rather than whether it should be extended for another two years or so. We need to examine why there has not been sufficient uptake in many counties compared to other areas. A commitment from the Government to deal with that issue in terms of the threshold and the fact that it is based on taxable income is required.

For instance, although two people could get the same contractor and carry out the same work, if one does not pay tax because his income is so low and his tax credits cover his liability, he will not get a benefit from the State, but his neighbour, who has a larger income, will. There is an unfairness in that. The Minister can argue that it is a tax rebate but the reality is that the person on the low income would be paying tax through VAT on the products, which is what this scheme is supposed to be about. There is an issue here, particularly in terms of the thresholds. While people may know that they can roll this up, when carrying out work, they will think about the immediate work to be carried out, whether it is the replacing of windows at a cost of €2,000 or €1,500, and they will not think that next year they might be doing something else and that it will all add up and so they may decide to go with a contractor that may not be registered for VAT. As the Minister stated in his opening remarks, one of the reasons for the scheme is to try to bring those on the black market into a registered system where everyone is paying the appropriate taxation.

We are supportive of the amendment tabled by the Minister. We spoke in support of Deputy Joan Burton's amendment on Committee Stage. Those living in local authority homes that are most likely to avail of the home renovation scheme are those who intend to avail of the tenant purchase scheme and buy their home. This raises an issue because my reading of the new tenant purchase scheme, which is in place since the beginning of this year, is that the discount that applies to the market value, which is between 40% and 60%, appears to be purely based on income. If the household income is more than €30,000, the purchaser will get a discount of 40%. However, there does not appear to be recognition for work done by the tenant to the house. Under previous schemes, this would have happened. I ask the Minister or his officials to raise that issue with the Department of Housing, Planning, Community and Local Government. The reality is that local authority tenants are unlikely to be willing to invest a lot of money to upgrade their homes if, ultimately, they will not be in a position to own it. That issue needs to be teased out.

To pick up on Deputy Pearse Doherty's points, we have a good grants system in place for private homeowners, namely, the housing adaptation grant schemes for older persons and those with disabilities and the mobility grant scheme. For tenants of local authority houses who are unable to afford to upgrade their homes themselves, the amount of funding local authorities have to carry out adaptations to their own stock is disgraceful. We all know of so many cases of people with very serious and, in some cases, profound disabilities whose local authority homes need to be adapted, but the council simply does not have the funding to do it, whereas we are, quite rightly, providing grant support for private homeowners to carry out the same works. This is a real issue. It is not an issue for the Minister, but one that needs to be raised with the Department of Housing, Planning, Community and Local Government. However, I ask the Minister to comment on the interface between the tenant purchase scheme and the improvement works that people may carry out now under this scheme.

I thank all Deputies for their contributions. It was a good proposal on the part of Deputy Joan Burton and I am glad to be able to respond to it. We had further consultations with the Department of Housing, Planning, Community and Local Government, which had some observations on the extending of eligibility to local authority tenants as against private tenants. It said local authority tenants may be more inclined than private tenants to carry out home improvements because they hold a lifetime tenancy. Also, the local authority tenants might be inclined to carry out home improvements as they generally have an option to purchase the home at a reduced price at some point in the future. It is interesting that the life tenancy would be an incentive to tenants to carry out works. It is obvious, but worth remarking on.

Deputy Pearse Doherty made the point about some people not having a taxable income. This tax relief can be carried forward as a credit. If the person has a taxable income at some point in the future, it can be used as a credit against that taxable income. If a person were to go back to work after a period of unemployment, it might be helpful.

Deputy Doherty is correct about the uptake being different from county to county. The large urban areas around Dublin and Cork have the highest levels of uptake, followed by counties such as Wicklow and Kildare. The national average is one per 118 people availing of the home renovation incentive. The Deputy's county of Donegal has the lowest uptake, with one in 573 availing of the scheme. However, if we look at the amount of money spent under the scheme, Donegal has the highest average of €27,000 per valid application, which is close to the maximum allowable qualifying expenditure of €30,000.

A number of issues have been raised which are really matters for local authorities and so on. Members can take those up with the relevant Minister.

I accept the comments by Deputy Pearse Doherty. One of the problems is lack of information. Since the development of the Department of Social Protection's arrangements with the credit unions to provide for small-scale loans, the credit unions have advertised them, but I am not aware of the local authorities having done so. There has been a strong and solid uptake of that scheme, which is a great opportunity for those who need to borrow smallish sums of money for various family purposes. In particular, coming up to Christmas, it helps to keep people out of the clutches of money lenders. The Minister for Finance might speak to the Minister for Housing, Planning, Community and Local Government and the Minister for Social Protection about the need for information that is easily accessible in county offices such as the banners and information leaflets on the loan scheme in the credit unions using the scheme. This would encourage people to avail of it. Many people borrow to make refurbishments to their homes, but do not get any support when doing it. If they get the home in the condition they want, given that they have long-stay tenancies, it is also very nice that, as noted by Deputy Michael McGrath, they may, particularly if they are working, opt to purchase the house. If they continue to rent, they may stay long term in the estate, thus adding to the stability of the estate and to the success of social housing.

Does the Minister wish to respond?

Amendment agreed to.
Amendment No. 8 not moved.

Amendment No. 9, in the names of Deputies Paul Murphy and Richard Boyd Barrett, proposes the deletion of section 8 of the Bill, which provides for the introduction of the help-to-buy scheme. The amendment, when judged against the provisions of the Bill, is restricting a proposed relief and would involve a potential charge and, accordingly, must be ruled out of order.

Amendments Nos. 10 to 12, inclusive, and 14 to 17, inclusive, in the name of Deputy Stephen Donnelly, propose to extend the help-to-buy scheme to those in negative equity as well as those who are currently defined as a first-time purchaser. The effect of this would be an extension of a proposed relief which, consequently, has the potential to impose an additional charge on the Exchequer, as more people would qualify for the proposed tax relief. These amendments would involve a potential charge on the Exchequer and accordingly must be ruled out of order in accordance with Standing Order 179(3).

Amendment No. 13, in the name of Deputy Joan Burton, proposes to restrict the relief available under the help-to-buy scheme by reducing the qualifying period. It would involve a potential charge and accordingly must be ruled out of order in accordance with Standing Order 179(3).

Amendment No. 18, in the name of Deputy Michael McGrath, would require the Minister to prepare and lay before the Oireachtas a report on the cost of delivering a new home and the options available for reducing that cost. The amendment is not relevant to the provisions of the Bill, as read a Second Time, and must be ruled out of order in accordance with Standing Order 154(1).

Amendment No. 19, also in the name of Deputy Michael McGrath, would require the Minister to prepare and lay before the Oireachtas a report on the effectiveness of the activate capital development finance for residential redevelopment schemes under the Ireland Strategic Investment Fund and set out the options for a sustainable finance model for the construction of new residential homes. This matter was not discussed in the Committee Stage debate and, consequently, the amendment does not arise from Committee Stage proceedings and must be ruled out of order.

Amendments Nos. 9 to 19, inclusive, not moved.

This issue was discussed at some length on Committee Stage when the Minister, in response to amendments tabled by me and other Deputies, gave a commitment to carry out an impact assessment of the help-to-buy scheme. I expressed the view on Committee Stage that an impact assessment should have been carried out in advance of the roll-out of the scheme. In view of the failure to do so, an impact assessment should be carried out now. We proposed that an independent impact assessment be completed by the end of next September and should be carried out at arm's length from the Department and the Government in general. It should examine the impact of the scheme on house prices, the supply of new homes and the property market generally. I am sure the commitment the Minister gave in this regard will be honoured and look forward to seeing the outcome of the impact assessment in due course.

While I support the amendment, the proposal is much different from that which I advocated on Committee Stage. To produce a report on the impact of a scheme on house prices one year after it has been introduced is to do things arseways. The Government should have made the analysis of the impact of the measure on property prices before its introduction. The Minister informed us that he had liaised and that his officials had engaged with all of the banks in which the State had a stakeholding. I asked the chief executive officer of Bank of Ireland, Mr. Richie Boucher, about this matter when he and his colleagues appeared before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach. Mr. Boucher indicated that he knew nothing about such engagement, although he also stated he would ascertain after the meeting if departmental officials had spoken to other individuals in the bank and revert to the committee on the matter. It was interesting to have the Government inform us that it had consulted the Governor of the Central Bank on this flagship scheme when the Central Bank stated it had been consulted on only one aspect of it. Mr. Boucher and his officials knew nothing about Government consultations with Bank of Ireland when they appeared before the joint committee despite assertions to the contrary by the Government. We will see what the other banks have to state on the matter.

That, however, is background noise as the real issue is the evidence which shows that the measure will push up house prices. Developers are not building because they claim they cannot achieve the expected profit margins of between 10% and 15%. Builders need to have a profit margin and would clearly not be in business if they were operating at a loss. The Government has introduced a scheme knowing fine well that its effect will be to push up property prices, resulting in developers achieving the profit margins they seek. It has presented the scheme as some form of support for homeowners and others who want to get onto the property ladder. That is the lie at the heart of the scheme.

As I stated, if it is the case that the purpose of the help-to-rent scheme is to ensure it is profitable for developers to build houses, there are two other ways of achieving this objective, the first of which is to increase house prices which would cause profit margins to increase, while the second is to reduce building costs, which is what we must do.

Everybody knows this is a supply side issue. The Government's attitude is that by bringing in this measure, demand will increase and, therefore, supply will follow. When we put this to Bank of Ireland, it was interesting Richie Boucher responded that not only does the bank deal with mortgage borrowers, it is the financier of the developers as well. It gets to see it from both sides. Bank of Ireland made it clear there is demand. The issue is supply and the profitability of the developers.

The Minister's scheme should not go ahead and there is enough evidence to suggest that it should not. It should be frozen. Fianna Fáil has criticised the scheme. For the record, the only amendment it put forward which directly affected the scheme was to expand it. Like the universal social charge and water charges, the party wants to have it both ways. There is no evidence that the scheme will work. Instead, the evidence is pointing in the other direction, namely that it will drive up house prices. Already in the past year, house prices have increased at a rapid rate.

Today, it is expected the Governor of the Central Bank will come out with new changes to the macro prudential rules for mortgage lending. Again, the Government claims one of the reasons behind this scheme is to help first-time buyers gather in the deposit required. There is no awareness in the public discourse about the limits, however. People are of the view that 20% of the deposit to buy a house is required but there is no scenario where one would need 20%. It goes to 20% after €220,000. The overall rate would actually never hit 20% as it is always less than that.

The Government instead should focus on the exceptions to this. Up to 15% of all lending is outside or can be outside the hard loan-to-value limits. On top of that, 20% of all lending can be outside of the loan-to-income limits. Accordingly, 35% of the value of all new mortgage lending in this State does not have to comply with the hard loan-to-value or loan-to-income limits. We are focused on the loan-to-value end which is 15%. The Government claims it wants to create demand for first-time buyers. We had evidence from Bank of Ireland, which was before the finance committee last week, and Permanent TSB this week, that of the 15% exemptions in mortgage lending, only one third of them are going to first-time buyers. If the Government wants to support first-time buyers getting into the property market and to get mortgages - there are questions as to whether it is as widespread as the Government believes - we should be encouraging the Central Bank to introduce tweaks which would mean that the 15% exemptions would not be for people buying their second, third or fourth home. Instead, it should be focused on those who want to get on to the property ladder. At the moment, the rules are that it is 15%. We do not care how the banks decide to divvy it up. What we have, however, is evidence from the two institutions which have been before the finance committee - I expect the same from AIB - that one third of exemptions are going to first-time buyers while two thirds are going to non-first-time buyers.

This scheme is wrong. It is reported the Central Bank will introduce tweaks to the macro prudential rules by increasing the exemptions from 15% to 20%. We will have to wait until this evening to see if that is the case. The rights and wrongs of this measure are for another debate. However, it has already been speculated that such a move in itself will push up house prices. When the Minister introduces this measure, it will exaggerate the issue. From March of this year, we have seen a steady increase in the number of mortgage approvals from our financial institutions. Mortgage approvals are running at a rate of twice mortgage drawdowns. The point is that access to credit generally is not the problem but that there is not enough supply. Twice as many people who have been granted mortgages from financial institutions are actually deciding to draw the mortgage down to buy a property. That is the question we need to be asking. We do not need to increase that number by three times or four times but to make sure that those who have been approved are drawing down their loans and buying properties. The way one deals with that is through supply.

How does one address the core of this issue? In our view it is done through reducing the cost and incentivising the vacant site tax. There is no reason why that tax is not brought forward to 2017. There are other areas which need to be examined. Deputy Michael McGrath touched on this with his amendment, which was ruled out of order. It appropriately proposed to take on board the housing committee's unanimous agreement across the political divide to have an assessment done as to the cost of building a house in this State. There are different figures from different agencies and groups which give different breakdowns. This is a matter with which the Housing Agency should be tasked. For some reason, the Minister for Housing, Planning, Community and Local Government has turned his nose up at this recommendation, a recommendation which was supported by Members of his own political party on the committee.

If it were introduced, data would then become available as to where the real problems lie. Then the challenge to the State and Members would be to see if we can reduce the cost of building houses. Reducing the cost would have a twofold effect, namely profit margins for developers would be in the realms where they would start to build and the cost of purchasing a home for the average individual would be brought down to a reasonable level. In turn, this would mean the amount of credit they would have to take out from a financial institution would be less.

I support this amendment because we need to know what effect this scheme will have on house prices. I would like included in any such report, the impact not just on first-time buyers, which the Minister hopes will be positive, but on the negative equity generation. On Committee Stage, the Minister said he would look at help for the negative equity generation. His office sent me on the current rules. It is true the 10% and 20% rule does not apply if one is in negative equity from the Central Bank's perspective. That is a minimum guideline put down by the Central Bank. The banks, however, still apply it. Nearly ten years on from the collapse, people who bought apartments between 2004 and 2008 are still trapped. On Committee Stage, the Minister identified that this help-to-buy scheme was a targeted intervention to help first-time buyers deal with the fact they could not save 10% to 20% deposits. While I do not agree with the Minister, it is a coherent rationale for helping that group of people. At the same time he said we have to help those who are trapped and cannot buy homes in which to raise their kids, he has completely excluded the negative equity generation. Accordingly, we are forced to table amendments on Report Stage because Parliament is not allowed suggest tax changes to the tax Bill.

Take the case of someone stuck in negative equity trying to buy a new house. The argument the Minister is using for not including them in his help-to-buy scheme is that they do not have to meet the Central Bank's deposit rule. The banks say one has to hit a deposit rule for their own potential lending, however. One cannot sell and buy or keep the negative equity apartment and buy because the rules applied to stress testing mean that one does not get a mortgage whatsoever. They are trapped. One way I am looking to alleviate this, which seems reasonable, is to end the double taxation of accidental landlords.

It was supported by Fianna Fáil and, I believe, Sinn Féin. I do not know whether Deputy Burton was in the Chamber at the time but there was broad agreement that parents who bought apartments during the bubble are stuck and trapped by double taxation. We had a debate on this and the Minister raised the concern that if we stopped the double taxation, it might help the people it is intended to help but that there are others who might be able to game the system. Therefore, I tabled an amendment that was very restrictive. It proposed that if one has but one property, in which one lives and which is in negative equity having been bought during the bubble, and one is seeking to sell it and buy another that is a bit bigger and has an extra bedroom, one should not be double taxed. In other words, if one is trying to move from a one-bedroom or a two-bedroom apartment to a two-bedroom or a three-bedroom semi-detached house, one should not be double taxed.

I was very disappointed the Minister did not accept the amendment. He has not helped people in negative equity, who are completely trapped by the taxation system. We hear from him time and again that high taxation is a disincentive to work. Couples in their 30s and 40s with children and stuck in tiny apartments are being hit with a €5,000 tax bill because they say they cannot raise their children in them. They wish to move out of the two-bedroom apartment and rent a three-bedroom semi-detached house in which to raise their children but the tax system is such that if they do so, they will be hit with a tax bill of an extra €5,000. Therefore, one will either stay where one is, which is not suitable for the children, or try to proceed without paying tax, which should not be done under any circumstances. Alternatively, one will do so and resign oneself to never having the money to save for a deposit or pay down the negative equity.

In the Minister's response to Deputy Burton's amendment on a report, why has he chosen to abandon these people in negative equity? He has not tabled any amendment. There was broad support across the House for something to be done, particularly on the double taxation of accidental landlords. Will the Minister please tell us why he has chosen not to do anything? He has not chosen to table his own version of my amendment. Why is he choosing to allow a taxation system to bury these people in an unanticipated tax and leave them trapped in negative equity?

As I outlined in detail on Committee Stage, the help-to-buy incentive is an important element of Government policy on housing. It is one part of the many actions to develop a fully functioning housing market that responds adequately to the needs of our citizens included in Rebuilding Ireland - Action Plan for Housing and Homelessness, which was launched last July. It is in this context that the help-to-buy scheme should be considered. Its role would be to complement the other measures in the action plan. The extent to which the market responds will very much depend on the speed and efficiency with which structural supply constraints are eliminated and residential building activity increases. Considering the importance of the scheme, however, I agree it would be prudent to undertake an additional analysis to examine aspects of the scheme, including those raised by the Deputies on Committee Stage. That was why, during that debate, I committed to commission an independent impact assessment of the help-to-buy incentive with a view to examining its general impact.

This report will be completed by September 2017, in time for next year's budget. It will involve a general assessment of the entire scheme, including of issues the Deputy has raised, to ensure that the incentive can achieve the socio-economic objectives at which it is targeted. It could be argued that by accepting this amendment and enshrining specific methods of analysis of the scheme into legislation, the potential scope of the proposed review could be narrowed. At the moment, the scope of the proposed review remains quite broad, as befits such a wide-ranging incentive. Therefore, I cannot accept this amendment but I hope that the Deputy will accept my previous commitment to commission this independent impact assessment.

A number of other items were raised, principally by Deputy Stephen Donnelly. As I explained on Committee Stage, the amendment he tabled was unworkable in practice. It was not targeted in a way that would be efficient and it left open the possibility of its being used for tax avoidance purposes. I could not come up with a construct that targeted efficiently people in negative equity who are renting out a small apartment and renting larger accommodation for themselves. I am open to advice, however, on how such amendments could be constructed or on how such a measure could be included in tax law in the future. Thus far, however, the approach that has been taken was to work with and take the advice of the Central Bank. As rightly mentioned, the Central Bank has modified its prudential rules in respect of persons in negative equity to make it easier for them to raise a loan. It is true that some banks may vary the prudential rules on a case-by-case basis. Recent data published by the Central Bank indicate that negative equity mortgage loans amounted to €121 million, or 660 loans, from the introduction of the micro-prudential rules until the end of quarter two of this year. The modifications made by the Central Bank are working to the extent of €120 million worth of mortgages to help persons in negative equity to move out of it. I am open to other suggestions. As I stated, I have not come up with anything to meet the need identified by the Deputy.

A number of other items were raised in the discussion. Many are matters for the Minister responsible for housing. I am dealing only with the tax side. The help-to-buy scheme is a targeted scheme for first-time buyers of new homes. It is quite limited. I expect that it will work efficiently for the particular category for which it is designed. I am not advancing it as some kind of overall cure for the housing crisis, of which we are all aware. We know it is multifaceted in its causes and effects. The plans published by the Minister for Housing, Planning, Community and Local Government in the summer comprise a range of initiatives to deal with the problem. I am sure the Deputies opposite are aware of the scope of the proposals. This is one specific tax proposal targeted at helping first-time buyers of new homes to put a deposit together to enable them to get a mortgage. I hope the announcements by the Governor in the afternoon will reinforce this. This is not connected to the help-to-buy scheme but I hope the modifications to the prudential rules will be of further assistance to persons who want to acquire a home.

I thank the Minister for responding. I could not quite catch everything he said but, as I understand it, he is suggesting that there be a broad impact assessment report that would be made available to the Dáil at the end of September.

In that case, I certainly accept it.

I agree strongly with the points Deputy Donnelly has made. We have similar constituencies in the sense that they have tens of thousands of new homes, many of which were purchased in the period 2000 to 2008. Many of the purchasers are in good jobs and some of the families have two people with jobs. They purchased when prices were at their highest. Where a couple had an apartment, or where each partner had an apartment, as was sometimes the case, they found it impossible to sell.

Many of them have let their apartments and rented. Due to the lack of rent controls, they are renting at increasingly exorbitant rents. The Central Bank should include in its assessment their complex situation and advise the banks to do likewise.

As values rise, negative equity decreases, which is helpful, but we are discussing people who have two or three children and who are the heart and the soul of the community, committed to local schools, doing everything that society expects of them and trying to make successful lives for themselves and their children, and they are in a bind. They are caught between having to rent out an apartment because they cannot sell it yet. I call on the Minister to do something for this group and to advise the Governor of the Central Bank, as I have done in my submission. Otherwise, what will we have learned from the crash? Mr. Chopra, the head of the IMF team, stated repeatedly that it wanted evidence-based policy from Ireland.

I am glad that the Minister is accepting that we need to reassess the help to buy scheme. As such, I will not press the amendment and will instead accept the Minister's proposal, if that is acceptable to other Deputies.

I welcome that the Minister has reaffirmed that there will be an impact assessment in ten months' time. I expect it to examine issues such as the impact on house prices, the supply of new homes and the property market generally. If the independent impact assessment finds that this intervention in the market is directly contributing to house price inflation, the Minister will have to end the scheme. We all should be clear that there will be no other option but to discontinue the scheme.

My amendment on the cost of delivering new homes was ruled out of order. I raised this issue on Committee Stage, when the Minister committed to speaking with the Minister for Housing, Planning, Community and Local Government, Deputy Coveney. I am aware of comments that the latter has made in the past week or so to the effect that the Housing Agency is undertaking an audit of the cost of delivering new homes. The Minister, Deputy Noonan, might inform us of whether he had that discussion with his colleague and whether it led to the audit.

I acknowledge and support the sentiments expressed by Deputy Donnelly regarding those who are in negative equity, no longer live in the sole property that they own and are renting elsewhere. There is justification for a targeted measure. Previously, we made proposals whereby the rent that people were paying could be offset against the rental incomes that they were receiving. I accept that it is difficult to construct such a scheme and there is always the capacity for abuse, but it would be possible to do this in a targeted way in order to assist the people in question.

By the time that the review is done, not one property will have been built that was not already intended to be built. There is at least a two-year lead-in period comprising planning permission, site development, construction and sale. No property will have come on board as a result of this scheme by the time that the review is undertaken.

I hope that I am wrong, but the independent report will show that the scheme has led to house price increases. We do not need an independent report. Politicians need something so that they can say that there is a review and so on. There is already enough evidence to suggest that it is pushing up house prices. Deputy Michael McGrath's party and its spokesperson have been on the record as saying that the scheme is doing that, yet it will allow this scheme to become law. There will be the fig leaf of a review in ten months' time and the assertion that the scheme must end if it is pushing up house prices, but there is no chance that the Government will end it in ten months' time when the evidence comes through. Instead, there will be talk of legitimate expectations, people saving and entering into contracts, etc. I will table a parliamentary question on when was the last time that the Government introduced a time-limited tax relief that was cut early. The trend has always been to extend, extend, extend.

If the report shows that the scheme is pushing up house prices, what would be the legal implications of turning it off, given that the expectations created by the Finance Bill will lead to people purchasing within these dates, only for it then to be denied to them? The appropriate action would be to stop this now. Carry out the analysis that is required. Have proper, meaningful and thorough consultation with the Central Bank. Discuss the issue with the banks' heads from the developer and mortgage points of view. Let us wait to hear what the Central Bank will do to ease lending restrictions. Let the Department conduct a proper economic analysis. If the evidence stacks up, introduce such a measure in next year's Finance Bill, but doing so at this time is madness. It is back-of-the-envelope stuff. This is a hunch. In fairness, this is the Government trying to do something about housing, but it is doing it at the wrong end of the spectrum. The scheme should be cancelled. A report after the fact is no good. We are clear on this. At this late stage, I appeal to Fianna Fáil to stand up and be counted. It has the power to stop this scheme being introduced and increased property prices inflicting damage on many future house buyers.

Speaking on behalf of those trapped in negative equity and who are being hit with these large tax bills, the Minister's response is not enough. Imagine if the tax law was to the effect that, if someone got his or her first job between 2002 and 2008, that person would have to pay an extra €5,000 in tax per year even though that would not be the case for anyone else.

I hope that not too many people will be affected, but for those in this situation, it is not a marginal issue. Their futures have been destroyed by this. Due to getting hit with a €5,000 tax bill every year, they will be stuck in a two-bedroom apartment, stuck renting or stuck avoiding tax and hoping that they never get caught, and they will never be able to sell and buy. This affects their entire future financial security.

The Minister's response referred to an amendment that I tabled on Committee Stage, which I accept was broad, but I listened to the Minister's comments and I have now tabled a very targeted measure. It only applies if a person bought an apartment or house between 2002 and 2008. The apartment or house would have to be smaller than 113 sq. m, which is the average size of a three-bedroom semi-detached house, and it only applies to first-time buyers who bought one property.

On the basis that the Minister's refusal to act is destroying people's lives ten years after a crash, what is wrong with the amendment that has been proposed? Why is it not targeted enough and why is it not sufficient to release people from the trap of a tax policy that is destroying their futures?

We are dealing with the help-to-buy scheme section of the Bill. Negative equity problems are not referenced anywhere in the Bill. I have already replied to the points made by Deputy Donnelly.

Regarding Deputy Pearse Doherty's point that no construction activity will take place in the next ten months, he is not correct. Many sites have been opened and builders pace their developments to correspond to demand. They will build three houses between now and the summer or they will build 23 houses between now and the summer. On sites that are already open, builders can expand supply when they believe that there is a demand that they can meet profitably. There will be additional houses between now and the review.

In response to the point made by Deputy Joan Burton, the prudential rules already take into account the capacity of people to pay. According to the bank, it works as follows. While it is not specifically referenced in the prudential rules, on the issue of people paying rent in excess of what it would cost to service a mortgage, when banks are assessing ability to pay, they take this into account. Therefore, when they are adjudicating on a mortgage application, one of the things at which they look is the ability of the applicant to service the mortgage subsequently. A major consideration is if they are already paying rent which exceeds the repayment on a mortgage. They are then seen as being in position to so do. It is taken into account on the bank side but not-----

It is not working.

The Central Bank has a different view. We have evidence this morning from Deputy Pearse Doherty who quoted Bank of Ireland as stating before the committee that it was sanctioning a lot of mortgage applications, but that the mortgages were not being taken up because a supply of starter homes was not available.

Does the Deputy wish to press the amendment?

Given the Minister's commitment on the presentation of a report, I will not press the amendment.

Amendment, by leave, withdrawn.

Amendment No. 21 in the name of Deputy Stephen S. Donnelly has been ruled out of order as it involves a potential charge on the Exchequer, as do amendments Nos. 22 and 23, in the names of Deputies Paul Murphy and Richard Boyd Barrett.

Amendments Nos. 21 to 23, inclusive, not moved.

I move amendment No. 24:

In page 27, between lines 22 and 23, to insert the following:

“14. The Minister shall, within 3 months of the passing of this Act, prepare and lay before Dáil Éireann a report on the possibility of extending the TaxSaver Commuter Ticket Scheme to include parking costs associated with public transport.”.

The objective of the amendment is to request a report on the possibility of extending the taxsaver commuter ticket scheme to include parking costs associated with public transport. The objective should be self-evident and is straightforward, namely, to promote the use of public transport. There would be many benefits, not least tackling climate change, addressing gridlock in cities, improved quality of life for commuters and general support for a public policy that is already well established.

The amendment seeks to include parking costs associated with commuting on public transport as part of the taxsaver scheme. I come at this issue from a direct personal perspective because I have been a commuter for 15 years at this stage from Sallins, near Naas, to the city centre. I also represent Kildare North which is in the commuter belt and probably one of the main areas from which people commute. It includes towns such as Leixlip, Confey, Maynooth, Sallins, Naas, Clane, Kilcock and Celbridge. According to the CSO, more than 50% of the working population of County Kildare commute to Dublin city centre. I have seen the difficulties they experience. There have been welcome improvements to public transport in recent times, but there is still a long way to go.

My focus is on parking at train stations. Until a couple of years ago there was no charge for parking, certainly at Irish Rail stations, while there was a small charge at Luas stations when light rail services were introduced. There are different systems in place for different travel options. The introduction of paid parking at stations was resisted at the time as it was seen as a retrograde move. However, the system is now in place at railway stations and the cost has increased again recently. The cumulative effect is another reason for commuters not to park at a station and use public transport. It is sometimes easier to stay in one's car and keep on driving to one's place of work, particularly if the traffic is moving. The alternative is to pull into the station and pay the fee.

The benefits of including parking costs in the taxsaver scheme would be many, including convenience for the individual commuter, affordability in the sense that there would be a small rebate and the routine and simplicity associated with the system. By routine I mean that instead of having to fumble for change each morning when someone is running into the station or trying to get his or her bearings, he or she could purchase an annual parking ticket as an add-on to the commuter ticket, which is already a well-established scheme; it would be a one-off annual payment and he or she could rely on using the train, bus or Luas every day. If someone does not do it in that way, one is likely to take an ad hoc approach. He or she might pay for parking today and tomorrow, park somewhere else the following day, or drive to work on other days and so on. The convenience of being able to pay upfront would be a major factor.

Irish Rail did introduce a pilot scheme about three years ago under which one was able to buy a parking ticket as part of the annual rail ticket. It was so popular that it had to discontinue the offer temporarily while it upgraded its administration system because it did not have the resources to cope with the demand. It did not anticipate how popular the scheme would prove to be. There would be many benefits for the individual commuter who tries to figure out his or her path to work each morning. Many commuters already buy an annual ticket and there would be a benefit in buying an integrated ticket which means that it would be one less thing to worry about in the morning. Convenience is a big consideration on a daily basis, as is advance purchase.

There would also be benefits to communities. All public representatives in this House and certainly those of us who were members of local authorities are aware of the problems for residents who live adjacent to railway, bus and Luas stations as commuters often park in neighbouring estates and on neighbouring streets. Encouraging commuters to use the parking options provided for, including the integrated taxsaver scheme, would partly address that problem. I hope the benefits to society are obvious at this stage. I set them out at the start of my contribution, but they are well established in some areas. I refer to action on climate change, avoiding gridlock and promoting the use of public transport, including sustainable transport. Encouraging commuters to do so using an integrated scheme seems to be very reasonable, sensible and progressive. The amendment calls for a report to be prepared to examine the feasibility of this option. It is reasonable to ask for this to be done. I, therefore, urge the Minister to consider the amendment.

Section 118(5A) of the Taxes Consolidation Act 1997 exempts employees and directors from benefit-in-kind taxation where an expense has been incurred by an employer in the provision of a monthly or annual bus, train or Luas pass for the employee or director. The exemption also includes passes for travel on commuter ferry services which operate within the State on journeys which begin and end in the State. The exemption does not extend to car parking charges which are incurred as part of a combined travel pass which includes car parking charges, nor does it include ad hoc parking charges such as daily charges.

The Deputy will be aware that we discussed this issue on Committee Stage. While in theory I could agree to prepare a report, as he suggests, as I said at the time, I am not at all convinced of the merits of the underlying proposal. If we were to allow individuals with a taxsaver travel pass to gain further tax relief on car parking fees, this would be an additional benefit for someone already gaining significant tax relief on his or her commuting costs. Again, as I said on Committee Stage, it would be very difficult for the Revenue Commissioners to administer such a scheme. The existing travel pass or taxsaver scheme is transparent in that the providers are listed in the legislation and the cost of the pass at the start of the year is known. On the other hand, parking facilities are provided by a multitude of providers, from multi-storey car parks to waste ground, and at various rates.

I know where the Deputy’s constituency is located and while I accept that many people may need to drive to a station or a bus stop, nonetheless I am still concerned that such a change might perhaps have the unintended effect of increasing the distance driven by commuters before they make their switch to public transport. In addition, while it is not a matter for my Department, I note the recent NTA decision to reclassify certain stations in the short hop zone and the savings this will produce for some commuters. I am sure that must be a source of great satisfaction for the Deputy and some of his constituents.

I note that there could also be difficulties in minimising any opportunity for misuse of such an extension. For example, if an annual parking fee was paid, how would the Revenue Commissioners know who was using the pass? For all of these reasons, I would be reluctant to contemplate an extension on the lines proposed by the Deputy. The existing taxsaver scheme works well and provides people with a generous incentive to use public transport. I do not think it would be practical to extend it to car parking charges for the reasons I have outlined. Therefore, I am not inclined to ask my officials to prepare a report on the matter.

I thank the Minister for his response. I anticipated some of the arguments he would advance and will try to address his concerns.

One of the concerns articulated by the Minister is that it may give rise to a double benefit and that people who are already using the taxsaver scheme may benefit again. However, it seems to be permissible and perhaps even encouraged for a cyclist to avail of a double benefit but somebody driving to a station cannot avail of it. I would not put it as a double benefit; rather, I would put it as an integrated ticket. Somebody buys an annual ticket that allows them to include their car parking space, which has recently been charged for in the past couple of years, along with their travel pass so it is really one ticket. I do not see it as two separate things. Doing it that way encourages consistency and usage of that ticket and makes it a more attractive option for people overall as a package.

Although I fully support cycling and have seen it done very well in cities like Copenhagen and Amsterdam and would like to see Dublin reach that stage, the reality is that my constituency is not a city constituency, as the Minister has acknowledged. It is a commuter belt constituency. The idea of a mother in Naas, which is between 4 km and 6 km from Sallins rail station, cycling to the station with three children who need to be dropped off at a crèche or a school along the way is not practical. While cycling should be encouraged, we must be cognisant of the real needs of people. These are people who are going to work - taxpayers commuting to work who are already coping with multiple demands. The mother I referred to needs to drive the 6 km to the station and possibly stop two or three times along the way if she has children.

In terms of managing the scheme, I understand the concern about the unregulated spaces and ad hoc spaces. That is not suggested. In the same way as the taxsaver scheme currently operates, it is suggested that it involve approved parking providers, typically Irish Rail and Luas stations and other stations the Department may see fit to designate. The taxsaver scheme already operates this very well so I do not see why there should be a difficulty identifying that.

Concern was raised about how one would know whether somebody was abusing the scheme. The same could be said for a ticket. How do we know that a person is using the ticket? Typically in car parks, and I have direct practical experience because I do this every day, the vehicle registration number is recorded and if a different vehicle parks in that space, it is clamped so there is a pretty straightforward and immediate way to detect that.

I ask the Minister to keep an open mind on this. It is worthy, there are practical arguments for it and it is part of a packaged approach to public transport. It is an add-on, not a separate benefit, so I ask the Minister to consider it again this year. If not, I ask him to keep an open mind. It is worthy of further consideration.

There are very valid arguments with regard to this. The issue of a report is something we should never turn our faces against. It allows us to reach a more informed decision.

As we are dealing with drivers in this regard, I take this opportunity to highlight a concern relating to one of the best pieces of technology I have seen in a long time from any Department, namely, the Revenue On-Line Service, ROS. Somebody wishing to register with ROS who wants their pass code issued immediately has to provide two forms of identification. One of them is a driving licence while the other is details from the person's P60 or a notice of self-assessment. Many people do not drive and do not have driving licences so there should be another form of identification. For example, a passport number should suffice as well. The idea of the taxsaver scheme is to encourage people to use public transport. If we in Donegal had the opportunity to jump on a train, it would be great but I think it was 1963 when the last train rolled into or out of Donegal. The point stands. There is a barrier in terms of registering for and instant access to ROS. I ask Department officials to take this up with Revenue.

I thank both Deputies. I will ask my officials to take the matter raised by Deputy Pearse Doherty up with the Revenue Commissioners and see whether the form of identification they are requesting is too restrictive. Deputy Lawless made a good case, so between now and next year's finance Bill, we will examine the situation and see whether any progress can be made.

I thank the Minister for saying he will consider it between now and the next finance Bill. On that basis, I am happy to withdraw the amendment.

Amendment, by leave, withdrawn.

I move amendment No. 25:

In page 27, between lines 24 and 25, to insert the following:

"14. The Minister for Finance is to order a study to be carried out on the operation of Relevant Contracts Tax, particularly in relation to rise in self-employment in the construction industry, and is to report to the Dáil within six months of the enactment of this Act on the findings of the study.".

I have raised this issue with the Minister on many occasions. It concerns what I and, more importantly, many working in the construction sector believe to be rampant abuse of the category of self-employment, particularly in the construction sector, to wrongly categorise workers as self-employed when they are in fact being employed by the main building contractors. These contractors are wrongly categorising workers they take on as self-employed in order to avoid paying tax, proper wages, sick pay and holiday pay and to get employees on the cheap. That allegation would be backed up by the sort of advertising made by recruitment agencies. I may have quoted from one I have with me previously but it gives a flavour of the sort of thing that is going on where recruitment agencies recruiting people in construction are setting out in clear and black-and-white terms how people who work through them can avoid paying proper tax for their employees. An advertisement from one recruitment agency advertises the fact that if a company works through the agency, the company will not have to pay PRSI, holiday pay, pensions, sick leave, redundancy payments or administration costs of payroll, PAYE or PRSI. In addition, the advertisement states that the company will not have to pay recruitment or advertising costs, there will be no dispute with employees or unfair dismissal actions and the company will have the ability to hire and fire staff at one hour's notice throughout the country. The agency says that it can provide labour and staff during busy periods of the year when companies have shortfalls and the company can then get rid of them at an hour's notice. The advertisement goes on to explain how the biggest advantage is cash flow and that paying staff on a weekly basis and PAYE and PRSI on a monthly basis can put a strain on a company's cash flow. With this agency, companies do not have to worry about any of these aspects.

This happening on a huge scale. There is flagrant abuse of the tax system in order to avoid paying tax for the benefit of employers, particularly big employers in the construction industry. We had to do a bit of work to get the figures out of the Department because we got different figures on how many people are categorised in the relevant contracts tax, RCT, system. When I asked about how many there were, I was told the number was 35,000. We subsequently discovered that it was 75,000. When it is considered that there are approximately 130,000 or 135,000 people working in construction - the number is increasing - that means more than half of the people working in construction are apparently self-employed. That is nonsense. It is clear evidence of abuse.

If the amount of revenue that is not coming in from this tax head is considered, the figures are extraordinary. In 2008, the revenue coming in from RCT was minus €67 million. I do not know how many people were employed in construction at that stage.

I think it was about 90,000 or 100,000 and we got minus €67 million. In 2009 we got minus €53 million. It was a bit better in 2010 and 2011, but it was still minus €9 million and minus €6 million. The latest figures available to me are for 2014 where there is a positive figure, but it is derisory at €27 million even though at that point there were up to 110,000 or 120,000 working in construction - the figure is even higher now - with 60,000 or 70,000 people categorised as self-employed and we only get €27 million back in tax. The tax for the Exchequer from 75,000 PAYE workers would be multiples of that, but we are getting derisory figures and even, incredibly, minus figures for Revenue because whatever tax they pay they get back in offsets and repayments.

We know from the dispute involving JJ Rhatigan which caught the headlines - it was one of many disputes - that this sort of abuse was going on with one of the biggest contractors in the country, which was building a school for the State. That company was wrongly classifying bricklayers as being self-employed when they were nothing of the sort. They were not self-employed entrepreneurs, but people who had been taken on by the contractor as bricklayers only to discover five or six weeks into their employment that they were not getting paid anything. Then one of them got paid and when the money was divided up among the five employees, it worked out at about €5 an hour. They were forced to engage in a very long and bitter dispute to highlight the injustice being perpetrated against them. This was fraudulent behaviour by a major contractor, which is still getting contracts to build schools and other things for the State, in wrongly classifying these workers as self-employed when they were not, in order to avoid paying tax and proper wages. This stuff is rampant.

Anytime I raise this all I get back from the Minister is a request to report to the Department any individual instances of this of which I am aware. I actually did so on a few occasions. About a year ago I mentioned a particular construction site where, I had been informed, this was going on. When it was raided nine months later, I am informed they found precisely what we said they would find, which was people being wrongly classified as self-employed. That is just one workplace.

The evidence from the lack of tax revenue coming back and the fantastic and unbelievable numbers of people who are supposedly self-employed in the construction sector would suggest this is rampant. Yet the Government is unwilling to close down this abuse and ensure that workers who should be employed as PAYE workers are employed as PAYE workers, thus requiring their employers to pay all the proper pay and entitlements that an employer should pay for an employee.

Is the unwillingness by this and previous Governments to go after this because it means being able to get State contracts done on the cheap? Of course, if contractors can abuse workers and abuse the tax system in this way, they can put in bids that undercut contractors who actually pay their employees properly and employ them on proper terms and conditions. I think the State is deliberately turning a blind eye to this because it is a way of getting contracts done cheaply. Therefore the authorities do not really want to go after it; they might do the odd raid if prodded by a Member of this House. If ICTU or construction workers cry foul about it as they do on a regular basis, we might get some tokenistic action from Revenue, but then we just go back to ignoring it again and we let it happen.

The number of people working in construction is shooting up again. An article in The Sunday Business Post a few weeks ago noted that almost in direct proportion to the very significant increase in the numbers in construction, the number of people being classified as self-employed has shot up as well. As the construction sector expands, this abuse expands again, just as it had done during the Celtic tiger period when the construction sector was at its height and abuse was rampant.

That is my contention and more importantly it is the contention of building workers who have been campaigning, protesting and forced to take industrial action about this for many years. While Government Members often say, "You guys and people out there don't want to pay any tax", incredibly, we have a cohort of construction workers who go on strike and protest for the right to pay tax, but the State is not interested in vindicating their right to pay proper taxes. The workers want it because they know it means they are employed on proper pay and conditions and have the entitlements that employees should have.

The amendment seeks to insert into the Finance Bill a requirement to look at this area seriously and address the problem. It is in the interests of the State, the Exchequer and the wider public, not to mention in the interests of tens of thousands of construction workers who want the Minister to address this. It is a very reasonable amendment and if the Government cares about getting tax revenue in, cares about tax compliance and cares about the conditions of workers in the construction sector, it should agree to the amendment and go after the issue in a serious way to close down this wholesale abuse.

It is important to note that compliance has significantly increased since the start of 2016. Anyone familiar with working the eRCT system for principal contractors will know that for any contract that is undertaken he has to specify the value, the location and whether the contractor has insurance. All these details are available for the Revenue Commissioners to do aspect queries and audits. Essentially, anyone who is abusing this is in clear breach of the law and it is the job of the Revenue Commissioners to enforce the law. We know that there has been a huge increase in the budget for compliance and audits.

There is genuine self-employment and we should not tarnish everything with the one brush. As construction increases, it is only natural that the number of subcontractors will increase because there are genuine subcontractors. The principles in terms of the cornerstone for self-employment are very clearly set out. They are very clear in terms of the principles to which a person must adhere to be termed self-employed. The employer bears a huge responsibility if he is paying subcontractors or contractors who are not genuinely self-employed and he is accountable for that to the Revenue Commissioners.

Obviously RCT is a preliminary tax involving all tax heads; it is a security tax. Contractors who are zero-rated must now have significant history of tax returns with the Revenue Commissioners. I bet there is nobody in here who actually operated an RCT system and who actually sees the significant level of compliance of contractors at the moment.

When this was discussed on Committee Stage, I mentioned to the Minister that when I was Minister for Social Protection the Department initiated a review to be conducted in conjunction with the Department of Finance and the Revenue Commissioners.

The Minister indicated at that stage that he hoped the scope study and review in regard to self-employment might be available within the next few weeks. Could he provide details on the timeline for this? This issue is going to be solved only by looking at the definition of "self-employment" and recognising that there are many people who are genuinely self-employed but that there is also an increasing number of people who are not genuinely self-employed. I do not believe Deputy Boyd Barrett acknowledges the number of people in various trades in the building industry who are genuinely self-employed. It would be foolish to suggest that they are not self-employed. We should move from the fantasy that nobody in the building industry is self-employed. Many members of my family work in the building trade and it is really hard to tell a young man in his late teens or early 20s that he ought to be properly and fully insured. At that age people prefer to see more money in their hand and they do not think there will ever be a day when they might be unemployed or, God forbid, that they could have an accident in which they would end up being laid off work. The real problem arises if they are self-employed in a bogus way when they ought to be employees. The building trade in a boom and bust situation, or even outside a boom and bust situation, can be capricious and uncertain and weather can intervene in projects. People then have no fallback. The social consequence for society is that we have a group of people who fail to build up pension entitlements and other social insurance entitlements and they are left with nothing. Equally, other people end up paying. If they are doing well in self-employment they can end up paying an awful lot of money for private income continuance plans when, in fact, if they were included in a proper pay-related social insurance structure, they would be entitled to a retirement pension.

The third aspect is the impact on the general taxpayer where we have a large grey area around taxation compliance. The Revenue Commissioners have done a big job of improving the RCT system but there are too many people in it. While this measure relates to employment in the construction industry, there are issues around, for example, those who do deliveries, such as the Deliveroo people, and other trades. The issues may also be moving in to the taxi area. Thankfully, Ireland has stronger laws than the UK with regard to employment structures, hours of work, etc., but as that scope study and review was initiated some time ago, I would appreciate if the Minister would advise Members as to when the report might become available. I understand the Revenue Commissioners have worked on it, and if there is more work that needs to be done by the Department of Social Protection, I am sure the Minister could pass on that message to his colleague, the Minister for Social Protection, Deputy Leo Varadkar.

I acknowledge Deputy Peter Burke's contribution. Another situation also arises because of the way the building industry operates. While many contractors go out of their way to comply with regulations and are very careful about that, there are also situations where large numbers of people are effectively bogus self-employed by particular contractors and those kinds of jobs lay the ground for risk-taking in health and safety matters. There are many negative, knock-on consequences, including the potential for fraud on the taxpayer and a loss of taxation. We spoke in the House earlier about how much it costs to build a house, but if a large proportion of the money currently being invested in buying houses, by young couples or by older people buying homes for retirement, ends up in the grey economy, it is not going to do the rest of us any good. While this is a very difficult area to regulate, I believe it is worth doing. I welcome any detailed review. As there is a review under way, it would be helpful if the Minister could indicate when it might be available.

It is important to emphasise that the relevant contracts tax, RTC, system does not determine the employment status of any individual engaged in the construction industry. The design and development of the relevant contracts tax system was an anti-tax evasion measure to counteract tax evasion in the construction, forestry and meat processing sectors. Principal contractors are required to deduct tax from the payments made to sub-contractors and pay it over to Revenue. As it is recognised that it would be undesirable to deduct tax from compliant sub-contractors, provision is made for these compliant sub-contractors to receive payments without deduction of tax. The electronic relevant contracts tax, eRCT, system was introduced with effect from 1 January 2012 and it has reduced substantially the opportunities for fraud, mainly from bogus documentation, which attached to the previous paper-based relevant contracts tax system. As I have said, the eRCT system does not determine the employment status of any individual engaged in the construction industry. Where the parties have entered into a contract for employment, where there is a principal and sub-contractor relationship, the eRCT system operates to determine the tax obligations on all parties. Having regard to the start your business relief provisions, introduced by Finance (No. 2) Act 2013, there is a tax incentive for individuals to operate as self-employed where these individuals have been unemployed for more than 12 months. These individuals may earn up to €40,000 tax free in the first two years of trading. This is likely to be a factor in explaining the growth of self-employment within the construction sector.

Where the parties have entered into a contract of employment, such as where there is an employer-employee relationship, then PAYE operates on all payments made. The Revenue Commissioners have undertaken to examine any cases brought to their attention of bogus self-employment. In 2015, a sector-specific compliance programme was initiated for the construction industry which included a focus on the misclassification of employees by employers. Interventions by Revenue into the construction industry in 2015, which have included audits, resulted in additional yield for the Exchequer of €51 million.

The code of practice for determining employment or self-employment status of individuals was created to assist both parties to an engagement, including an engagement in the construction sector, in determining if a contract of engagement is, by its nature, either a contract of service - an employer and employee arrangement - or a contract for service - not an employer and employee relationship. The code of practice for determining employment or self-employment status of individuals is not a Revenue code but was compiled with the assistance of a variety of Government and representative organisations. For the reasons I have just outlined, I do not propose to accept the amendment.

In 2103 the gross yield of relevant contracts tax, RTC, to the Exchequer was €132 million, in 2014, it was €172 million and in 2015, it was €174 million. The working group has been examining the issue of the use of intermediary-type employment structures and self-employment arrangements, their impact on tax and PRSI and, as Deputy Burton referred to, a report on the submissions is being prepared by the working group which will be finalised in the very near future. It will identify possible options for addressing the loss to the Exchequer and will also look at the broader issues of disguised employment. Officials are at an advanced stage of drafting.

I thank the Minister.

I call Deputy Boyd Barrett and remind him that this second contribution is confined to two minutes.

I will still press this. Primarily because of the actions of workers themselves protesting, backed up by some of the trade union movement, there have been some moves in this direction. What the Minister seems to have said, if I heard him correctly, is that when audits are done and when there is a bit of an increased focus on this we end up getting more money in, and the Minister mentioned the figure of €51 million as a result of a bit of serious focus being put on this. This suggests if we really closed down this abuse there would be a hell of a lot more revenue coming in.

It is quite extraordinary that between 2008 and 2014, €2.3 billion was collected under RCT but €2.4 billion was paid back in refunds and offsets. Over a six- or seven-year period we had a minus figure for this tax head in which 70,000 or 80,000 people are employed. There is something seriously amiss.

To respond to Deputy Burton, I did not for one moment suggest there is not legitimate self-employment in the sector. What I did suggest is that it is not credible in the construction sector where 135,000 people are employed that 70,000 or 75,000 of them are self-employed. This is not credible. This suggests wholesale abuse of the classification of self-employment. We have lots of evidence this abuse is happening. We need to take this much more seriously and we need to move to close it down. Any contractor found guilty of this should be banned from ever getting State contracts.

We debated this on Committee Stage and I made a contribution. Every year for the past number of years I have tabled an amendment to the Finance Bill similar to that tabled by Deputy Boyd Barrett. I mentioned on Committee Stage the ongoing work announced earlier in the year. This has been dragging out. I agree with Deputy Burton there are legitimate self-employed people and nobody is suggesting there are not. There are many of them, including friends of mine and family members. This is not the issue here. The issue is if the Minister knows what is happening on the street and if he speaks to individuals who are chippies or bricklayers or doing a bit of plastering, they will tell him they know they must present themselves as self-employed. This is just the way it is. It has become the accepted norm. This is because it has been going on not for the past number of weeks or months but the past decade. This was here during the boom times.

We have all the consequences in terms of entitlements, and the serious consequences if someone was seriously injured on a building site, or lost his or her life, given the difference between being self-employed and being an employee. Where I agree with Deputy Burton is some people, particularly younger people, do not see the value of being insured. They do not see themselves falling ill, getting injured or being made unemployed. Some of them go from day to day or week to week. Others just know this is the only way they will get employment and this is now the accepted norm. What is lacking is urgency from the Government and a very strong statement to say this clampdown is happening. There are two sides to this. There is workers' rights and lost revenue or revenue foregone to the State. For this reason, it needs to be dealt with in far more urgency than the Government has shown heretofore.

I am not sure for how many years I have tabled this type of amendment, but it has been going on for a number of years. I hope that next year we will not have to table an amendment looking for a report into bogus self-employment and the work will have been done by Revenue to ensure it has clamped down. What Deputy Boyd Barrett is asking for is something that is worthy of acceptance. It is similar to what I have argued for in previous years. It would begin to send a very clear signal. What is required is a very strong statement from the Minister and the Government to individuals, businesses, companies and developers who support and promote this that it is over, their days are numbered regarding the scheme and we are giving them notice they need to move away from this type of facilitation and encouragement of this type of bogus self-employment, and ample time to do so and, if they do not, we are willing to come in as a Parliament with very stiff penalties. What we should not see in next year's finance Bill is that we are giving them 12 months or two years to get their house in order. The statements need to be made now that there is a clampdown on this and we will not tolerate it in terms of workers' rights or lost tax to the Exchequer, and that notice is being issued on the floor of the Dáil today.

I remind Deputies we will adjourn the debate at 12 noon.

I understand. The figures Deputy Boyd Barrett has put on the record are startling. To his credit, this is an issue he has raised consistently. There is undoubtedly an issue here and Revenue and the Department need to have a very hard to look at it. Not only are there consequences for the Exchequer by way of taxation receipts, but there are very serious consequences for the workers themselves in terms of the absence of job security and the lack of any benefits they may need in the event of ill-health. They suffer the same deficits as other self-employed people encounter in this regard in the social protection system.

The reality must be that where all of the characteristics of employment are in place, it should be regarded as employment and not self-employment. While this has been evolving for a number of years in the construction sector, we are beginning to see it in a number of other sectors also. It is a real issue of concern that bogus self-employment is creeping its way across various sectors of the economy. It is very evident in construction, and all of the issues around this have been highlighted, but it is increasingly going to become an issue in many other sectors of the economy. There must be a very clear dividing line between what constitutes employment and what constitutes self-employment. Where all the characteristics of employment are in place, the law and all of the agencies in the State need to be very strong in insisting they are reinforced by contracts of employment and all of the rights and obligations for the employer and employee that come with these.

There is some misinformation on RCT, which is not a tax on income. It is a preliminary collecting tax for all other tax heads, such as VAT and income tax. By its very nature we cannot judge how much it takes in a year. There will be offsets from year to year because it must go to another position in the tax system. It is not a tax on income. It can misrepresent the facts when minus figures are quoted because from tax year to tax year there can be overlaps.

I agree with Deputy McGrath that the statistics put on the record by Deputy Boyd Barrett are startling, but what is even more startling is they are all incorrect. He has been supplied with the information previously which shows they are incorrect. In an exchange with me in the House it was pointed out to him the discrepancy between 34,000 and approximately 75,000 arises from the fact 34,000 subcontractors are active in the RCT system but they employ 75,386. It is the difference between the numbers employed and the numbers of subcontractors. The Deputy was given this information. Revenue wrote to him on 17 July 2015 and practically all of the information he is still putting on the record was corrected in a very lengthy letter by the Revenue Commissioners personally to him.

The Deputy's assertion is not correct, unless he is challenging the figures given to him by Revenue and which Revenue has said are not correct. There is a general issue and I will ensure Revenue is made aware of our exchange of views today but the Revenue Commissioners feel they are on top of the issue and are not closing their eyes to it. They are pursuing it actively and are making serious progress. I will ensure they are made aware of the views expressed in the debate today.

Debate Adjourned.