Finance Bill 2011 [Certified Money Bill]: Committee Stage (Resumed)

NEW SECTIONS
Debate resumed on recommendation No. 1:
In page 7, before section 1, to insert the following new section:
"PART 1
COST BENEFIT ANALYSIS OF TAX EXPENDITURES
1. —The Minister shall within one month from the passing of this Act prepare and lay before Dáil Éireann a report on a cost-benefit analysis of tax expenditures provided for by this Act, setting out the costs of tax foregone, and the benefits in terms of job creation or otherwise.".
—Senator Alex White.

Like Senator Leyden, I am opposed to this. I do not know whether the Labour Party Senators got clearance from their Dáil spokesperson but if we did this within one month, we would need to hold the general election in March.

Because it cannot go before the Dáil.

The Dáil is sitting this evening.

The recommendation states: "The Minister shall within one month from the passing of this Act prepare and lay before Dáil Éireann". The Dáil will no longer be in existence in one month.

The Minister can go ahead and do it; he is still a Minister.

The Senator should know we are supposed to dissolve the Dáil on Tuesday.

He can leave it at reception.

The Dáil will not be in existence.

He can leave it at the reception and we can pick it up when we come in.

We are in Seanad Éireann and we are dealing with the Finance Bill.

I am dealing with the wording of the recommendation.

That is a pathetic objection.

It is not as pathetic as the wording of the recommendation.

Amend it then.

If you are going to come into this House——

Through the Chair.

——you should at least say "two months".

Through the Chair.

As Senator Leyden said, we should make declarations about this and I, as an auctioneer, was involved in selling section 23 properties.

I felt at the time that some of these tax exemption sections were quite good, such as the section dealing with nursing homes, but the holiday home exemptions went on for too long. Senator Ross is right about that. They should have been closed off in many areas.

In my home town there were a number of planned developments and we were lucky they did not go ahead. If, however, the section was taken out, people who rented out a business such as a shop using section 23 relief to shelter the income from the shop would now be in a situation where the rent from the shop would no longer be sheltered and they would have to use what was left from the after tax income from the shop to pay off the section 23 mortgage because none of the section 23 properties would provide any income, not even enough to pay off management fees. We would then be left with a situation, especially for section 23 holiday homes, where the estates would not be managed properly because there was no income and they would deteriorate.

I agree with the thrust of the recommendation but it is a shame the Labour Party did not allow for more time, perhaps three months. The idea is good and the Minister is looking at the situation. I raised concerns previously about the selling off of these estates. There was a case in Kenmare where the auctioneers were involved in a fire sale. The Irish Examiner property supplement published a headline reading “Fire sale in Kenmare”. The auctioneers were telling their friends they should buy these because they are bargains. Auctioneers are supposed to achieve the maximum price, not sell bargains. The loans were held by Anglo Irish Bank — the taxpayer — which told the receiver to maximise the value of the properties, who then told the auctioneer to sell the property and the auctioneer told his friends they were bargains. They were selling them below the market rate. We told those auctioneers they were selling below the market rate, that we had sold six similar properties in the last six months and we estimated that the price being asked would cost the taxpayer €1 million.

How does Senator Daly know the market value?

If that loss were extended to cover other fire sales in similar properties, including section 23 properties, the cost to the taxpayer would be in the hundreds of millions, if not billions, of euro. If section 23 relief is withdrawn unilaterally, there will be a double crash.

I raised a related point during the week that NAMA was not following the legislative provisions in the selling of properties under its control. It is not even following the code of conduct for State bodies. When it comes to the sale of section 23 properties and other properties by liquidators, we need transparency. Legislation provides for that but NAMA, in the case of numerous properties being sold on its behalf by the banks, is not following the provisions laid down. People have come to me disgusted that the guys who had borrowed the money originally are buying back their own debt for 50% or 75% less, knowing well that the properties were undervalued. I will speak against my profession in this regard. The valuers undervalued the property initially, because most of their valuations were desktop valuations. They undervalued it and the banks took a haircut of 40%. In the case I came across the original loan was €12 million and the haircut was €6 million, while the actual value of the property was €9 million. The developer went back and arranged for a buddy to buy the property at the haircut price of €6 million and sold it on for €9 million, costing the taxpayer.

We will be debating this until 12.30 with the way Senators are making speeches.

The Senator should supply the details of that transaction to NAMA.

The Senator has not done so to date.

I have not. I am not an investigator, but NAMA is not following the code of conduct. It says it does do not have to. Transparency is the key factor in this matter, but NAMA is not following the code of conduct.

The Senator is under privilege in this House, but he should provide whatever information he has.

Senators

Hear, hear.

The Senator is a public representative. He should name and shame.

The Senator should give the Minister the information.

As I am not a member of the Garda, I cannot do that. When I have information of wrongdoing, I will put it before somebody.

The Senator has not suggested wrongdoing, just bad commercial practice.

We are on recommendation No. 1. The Senator has made his point well.

NAMA has turned around and said it does not have to follow the code of conduct for the sale of State assets. I maintain these are State assets because we provided the money. NAMA owes us the money. I do not care whether NAMA follows the code or not, but there is no transparency and there are bad practices going on. I do not want to be doing a post mortem here in a year's time when it has cost the taxpayer hundreds of millions of euro.

We would all agree with that, so please give me the information.

I am delighted to welcome the Minister and it was a pleasure to hear his exemplary speech yesterday. Despite the ranting and raving from the other side of the House, there is no doubt the economy is beginning to grow and thrive again. I am completely optimistic on that front. My job as a politician is to inspire hope in people.

As a business person, I would like to raise the issue of the abolition of the tax exemption for income received by an individual or company from a qualifying patent. The tax exemption for distributions made by companies from exempt patent income has also been abolished. This measure was announced on budget day and was also included in the list of tax expenditure set out in the national recovery plan for abolition or restriction. The abolition of the exemption applies to income from a qualifying patent which is paid on or after 24 November 2010, which was the date of publication of the plan. I have spoken to the Minister of my disappointment that we were not able to prevent the abolition of this exemption. I hope the new government, of which I hope Fianna Fáil will be a part, will carry out a cost-benefit analysis on section 26 and the abolition of patents.

The sudden abolition of this exemption has serious negative implications for the future investment plans of SMEs at a time when we should be encouraging them to invest in innovation as part of our economic revival. As I have said many times, innovation is the name of the game with regard to creating employment, increasing exports and getting growth. The continuation of the patent exemption scheme was recommended, with some modifications following the only specialist study carried out, namely, the Goodbody economic consultancy study of February 2007. The Government innovation task force of March 2010 also specifically recommended its continuation. The Commission on Taxation recommended abolition, but adduced no evidence to support its conclusions. Rather than abolish the royalty and patent scheme entirely, I suggest the new government should arrange a cost-benefit analysis and restrict the scheme so that it remains as an incentive to the SME sector to invest in research and development. Research and development involves risk and companies, because of the lack of cash flow from the banks, need as much investment in that area as they can get.

An excellent contribution.

Every speaker so far has been in favour of this recommendation. It is a reasonable recommendation in that it sets out the cost of forgoing tax, the benefits in terms of job creation and the tax expenditure provided for in the Bill. One of the first schemes in this country was the one mentioned by Senator Leyden, which was introduced by Deputy Enda Kenny, the seaside resort scheme. I remember that scheme well and know exactly what happened. It was one of the first schemes introduced and there were no proper plans in place for dealing with it. Some schemes should have a longer lead-in time and proper plans should be put in place. Nobody seemed to know exactly what was to be achieved with the holiday resort scheme. We should have learned something from that. With regard to the scheme for hotels, we should have set a target as to how many extra hotel beds were needed. The same should have happened with regard to the car park schemes. We should have considered how many extra car parks we needed and where they were needed. The same should have happened with nursing homes. If it is the case that we need these schemes, this recommendation is central to any plans that should be put in place. Therefore, I fully support the recommendation put forward by Senator Alex White.

I welcome the Minister. There is an element of motherhood and apple pie with regard to this recommendation. As somebody who has worked as a cost accountant in the past, I agree with the need for cost-benefit analyses and I commend the Labour Party on bringing forward the recommendation. The notion of a cost-benefit analysis for almost every aspect of government is crucial and there should be more of them. I see this as an administrative function and I hope the Minister will give a commitment today that a cost-benefit analysis will be done. However, it seems unnecessary to include the requirement in the legislation. We do not need to include every administrative function that should happen into legislation. This is particularly relevant with regard to the one month clause. This Bill is likely to be passed today, which means that we would have to have the report by 29 February, which does not exist this year. There would also be a three-week election campaign in that time. I presume the recommendation means the report should be done by Tuesday, 1 March. It would be lovely to see a cost-benefit analysis done by that time, but the one-month timeframe is impractical. I hope the Labour Party accepts the spirit of consensus with regard to a proper cost-benefit analysis——

Of course, within three months.

Everybody would like to see a cost-benefit analysis done, but I would be happy if the Minister committed to informing his officials that it should go ahead while the rest of us are out fighting on the hustings. Then, the new government, whoever is involved, whether the Labour Party, Fine Gael, Fianna Fáil or, heaven forbid as some might say, the Green Party, should begin by doing things the proper way. Openness and transparency will be crucial. I commend the Minister on the recommendation, but I hope the Minister will give us a commitment that he will work with his officials to bring about what is required, without necessarily including a specific provision in the Bill.

I have already spoken on the issue of section 23 provisions on Second Stage. I am not speaking for the big developers, big businessmen, auctioneers or valuers. They are well able to speak for themselves. I am speaking for ordinary people who have spoken to me about this. These are people who invested in a house under section 23 in order to provide for their pensions or education. These people are now worried they will be caught with debts when the tax relief scheme is changed. The Minister said he will look at this issue and do an analysis with regard to how it will work. There is no doubt the initial introduction of the scheme was not properly planned and that it has been abused. However, I urge the Minister to ensure that those who entered contracts in good faith will be given five, six or seven years' grace in order to readjust themselves to any changes that will be introduced. While I welcome the Minister's proposal to conduct a cost-benefit analysis, I am still concerned. I am not saying we should plan for big developers. I am speaking on behalf of the ordinary man and woman and want the media to know this.

I have a problem because I wish to raise one topic under section 19. I gather——

We are discussing recommendation No. 1.

I know we are. Does that I mean I will be unable to raise the topic I want to raise?

We need to dispose of recommendation No. 1 and the quicker we do this, the sooner we can move to section 19.

This is a reasonable recommendation. The Minister can come back to us on whether it should be provided for in legislation and whether the time for the cost-benefit analysis should be adjusted. It is reasonable that we would require such an analysis. A basic business plan would require such an analysis and it should be no different when it comes to running the country. I acknowledge that where incentives were provided, employment was created in the west, but saturation levels were reached, which has had a negative social and infrastructural impact on the areas in which the houses were built and the local authorities with responsibility for them.

Senator Ormonde referred to ordinary people and the taxpayer. I have no doubt that many of these schemes were abused by wealthy people who loaded a great deal of money into them to lower their tax burden and, in some cases, they paid very little tax. Many ordinary PAYE workers did not have the income to benefit from such schemes.

I acknowledge the holiday homes schemes regenerated some seaside towns and villages, but they were also abused and saturation was experienced. The concept was good, but the implementation and administration of the schemes were poor and they have also had a negative social impact. There are ghost estates in small villages in the west. What will happen to the houses? They are a burden on local authorities which have to service them. This has also had a negative effect. I agree that we should consider a measure to allow people who might be to the pin of their collar to readjust their finances in order that they do not go bust.

I am familiar with the urban renewal scheme which was implemented by local authorities in 1998. The concept was good as it was hoped to incentivise people to invest in regenerating small towns and villages, but, unfortunately, the take-up was low. Why were people not willing to invest? They could have invested in sustainable developments in town centres. but the take-up was low. In the designated areas in County Waterford consultants and local authority staff spent a great deal of time compiling strategies and plans, but the take-up was low and the regeneration did not happen. While I agree with the concept, there should be a cost-benefit analysis. The Minister will outline this views on how it should be framed or managed. We need to be realistic, not tie the hands of the Minister. A basic business plan would require this level of analysis and the country requires the same.

The arguments have been well rehearsed. I strongly support the recommendation tabled by Senator Alex White and his party. I congratulate him because it is worthwhile.

Spending will have to be rigorously assessed in the future and the two criteria that will have to be used are whether the funding will contribute to job creation, on the one hand, and, on the other, alleviate the needs of the vulnerable and contribute to the good of society. In other words, a cost-benefit analysis of expenditure needs to be conducted and waste eliminated. In that sense, the principle underpinning the recommendation is a good one. Senator Alex White accepts the timeframe would be tight at one month and it needs to be adjusted.

Government Members have eloquently said that within the schemes there was the good, the bad and the ugly and delineated cases of each. Implicit in what they have said is the need for an evaluation and, in that position, a vote in support of the recommendation. To use that awful contemporary cliché, the recommendation is a no-brainer in the sense that one could not posit a view in contemporary society that one would spend money without having projections before it was spent and, having spent it, without assessing its impact.

The urban renewal scheme was interesting in that it did a great deal of good, but it also had a negative effect by creating small ghettos in the alleyways of towns and with unpleasant apartments constructed in areas where they were not appropriate. The ghost estates are the most awful outcome of the recent schemes, but significant good was done also. Job creation must also be a criterion for similar schemes in the future.

I came across an interesting case in Bailieborough, County Cavan. It was proposed to create a small ecotourism village with a residential area in which interesting courses would be provided and so on. It had job creation potential and tourism and other implications. It was a well presented scheme, but it was undermined by the windfall tax on land. We had to meet departmental officials who were helpful. However, there are good exceptions to general rules and they need to be evaluated. Constant evaluation and monitoring are needed. The principle of the recommendation is a good one and as such, we should all support it unanimously.

Everything we do must have job creation at its core. One of the greatest failures of recent years, as Senator Burke rightly said, was the building of hotels throughout the four provinces. How many are idle? What are they being used for? How much has the Exchequer forgone in tax reliefs? Every proposition made by Government Members has supported the recommendation. As Senator O'Toole rightly said, it makes common sense. The Minister in preparing the budget and the Bill was given briefings, supporting documentation and advice. As Senator O'Toole said, that should also be provided for Members.

The recommendation seeks a cost-benefit analysis. What is wrong with that? How many hotels dotting the landscape are empty and idle? Where is all the money and the jobs gone? One hotel in Cork city is being used as a centre for asylum seekers.

The Senator is being repetitive.

I support the principle of the recommendation, but if we want to ensure the budgetary process provides for a full debate and analysis and proper decision-making, we need more than this recommendation. The Minister will be aware that we need to examine the budgetary process in greater depth through the committee system. The finance committee works well, but if it was given new terms of reference or a budgetary committee was established, significant questions relating to expenditure, tax forgone and cost-benefit analyses could be addressed. That would be a useful addendum to the recommendation which, like my colleagues, I support. On Second Stage I outlined the danger of us entering the Orwellian realm of "four legs good, two legs bad", of suddenly deciding in retrospect that every tax relief is wrong, which is not the case. Much good work has been done and infrastructure has been put in place in this country due to tax reliefs. I, and many of my colleagues, made representations to the Minister in the past year on the provision of tax relief for the new primary medical centres. I make no apology for that.

Senators

Hear, hear.

The Minister will be aware from his colleague in the Department of Health and Children that the Government, fully supported by the Health Service Executive, has proposed the development of a large number of primary care centres which would transform the health care of every citizen on this island. We, on this side of the House, concede that without some degree of tax relief or incentive, that will not happen. We cannot have our cake and eat it. We must recognise that there must continue to be some degree of flexibility on valid tax reliefs. Primary care centres stand out as deserving of such support.

The Labour Party recommendation is useful in the sense that it forces us to do more long-term thinking on our budgetary process. When the new Administration is in place, I hope it will encourage debate on the concept as it would make for much better decision making. I formally support the recommendation.

I oppose the recommendation on technical grounds and on grounds of principle, but I welcome the discussion which the recommendation has engendered in the Seanad. I support the spirit of the recommendation.

Technical problems were identified by Senator Norris early in the debate when he said a month is clearly far too short a period for such an exercise. One would need two to three months as a minimum period. An interesting point was raised to the effect that the Dáil will not be in existence at the time of the submission of the amendment. They are technical matters and could be cured with an appropriate amendment.

It is important to understand that what the recommendation proposes is a cost-benefit analysis of the 13 tax expenditures or tax reliefs in the Bill. That is the substantive proposal before the House in this recommendation. A total of 13 sections in the Bill involve tax expenditures. As Senators are aware, another finance Bill will have to be passed this year to give effect to the civil partnership legislation and to other measures which have had to be postponed because of the truncated timescale for the Bill.

Given the pressing issues facing the economy and the country, including the possible change of Government and of ministerial personnel, the Department will require much time for tasks other than producing a cost-benefit analysis of measures as a matter of statutory obligation. I agree with Senators, however, that the completion of cost benefit analyses or economic impact assessments is required on the majority of tax expenditures before they are introduced.

Only 13 sections involve tax expenditures and the two of greatest importance, which are innovations, are the employment and investment incentive and the energy efficiency measure relief. They are the two major new incentives in cost terms in the Bill. I can meet the spirit of the recommendation by pointing out that an assessment of the employment and investment incentive relief will be completed and published shortly. A similar assessment of the energy efficiency measure relief will be prepared before the section is commenced. The measure is subject to a commencement order. A proper cost-benefit analysis of tax expenditures before their introduction is being done in the context of the two major tax reliefs being introduced in the legislation. To that extent the practice to which many Senators referred of insisting on proper cost-benefit analysis before the introduction of those measures is being followed.

I discussed section 23 relief, property reliefs and capital allowances on Second Stage yesterday. The need for a statutory requirement was included because it was part of the EU-IMF arrangement. Therefore we had to show good faith in statutory terms that there was an absolute commitment and that the issues involved were so great that they required that kind of analysis underwritten by statute in order that we could, if one likes, postpone our obligations under the agreement. That is the thinking on the measures in the Bill. I hope that is a satisfactory explanation of the terms of the recommendation and the Bill itself.

Senators naturally and properly availed of the subject to peg a wider discussion on tax expenditures and tax reliefs. I wish to make a number of reflections in that regard. First, I agree with the general direction of the debate on all sides. Most Senators expressed concerns that we had not thought through tax reliefs enough in the context of their place in the economic system, that there was not, as Senator Norris said, a sufficient analysis in forecasting terms of what was at stake. Incidentally, I can inform him that my Department had its forecast right on tax receipts for 2010.

I congratulate the Department.

It is the first time it got its forecast right.

The Minister should be allowed to speak without interruption.

I could list a number of other cases for the House as well.

The Department got it wrong.

The Minister should be allowed to speak without interruption.

That was the case for a long time.

Senator Buttimer should please allow the Minister to speak without interruption. We are on a very tight time schedule.

I assure Senator Buttimer we will have good fun on the hustings but when one is piloting a ship in a storm, the important thing is that one keeps the ship afloat.

And stay at the wheel.

Exactly; stay at the wheel.

If one's compass is off, one is going nowhere.

No one could suggest I did not.

Not without a compass though.

I thank Senator Norris.

The Minister did but some of his colleagues jumped overboard.

The Minister should be allowed to speak without interruption.

I entirely agree that the compass at times was out of control.

It is the ha'porth of tar.

The officer class had jumped ship.

There were men overboard.

Please. The Minister should be allowed to speak without interruption.

The Minister——

Please, Senator Buttimer.

I prefer to think that I was the chief engineer on the ship and that I was not afraid to get my hands dirty.

We will have to ask Deputy McGuinness.

On the wider aspects of this important question, one of the experiences I had in government on tax expenditures was that individual Departments defend the tax expenditures associated with their particular Department. The Department of Enterprise, Trade and Innovation will defend the tax expenditures associated with the incentivisation of research and development, patent royalties or shared bonuses for employees. The Department of Agriculture, Fisheries and Food will defend the various tax reliefs associated with the farming community. Although those tax expenditures involve substantial postponement of public revenue, no real evaluation of them is done at departmental level.

For example, when one prepares the annual Estimates for expenditure, a detailed evaluation of the expenditure plans from each Department arrives in my Department and there is debate about what the expenditure allocation should be in individual Departments. When I was first appointed, I found the debate about the tax expenditures was far more nebulous but because taxation is imposed at a later stage of the budgetary cycle, the degree of dialogue between individual Departments and the Department of Finance on those issues was somewhat limited. In the budget I announced in December 2009, I insisted that there would be a process whereby Departments would be compelled to justify the tax expenditures as if they were ordinary voted expenditure. I was quite struck by the paucity of response. It enabled me to eliminate quite a number of tax reliefs in the budget because of the inadequacy of any departmental response in defence of tax expenditures which had been axiomatically defended every year in the weeks leading up to the presentation of the budget.

Senator Bradford made the point that this is an area where our budgetary system needs to be improved. First and foremost, we need to understand that when one provides a tax relief, it is a form of expenditure. That is why it is called tax expenditure. The actual budgetary process within the Administration has to reflect that far more so that, in effect, tax expenditures have to be included with the routine Estimates process, justified and stood over.

There have been far more cost-benefit analyses and economic impact assessments in recent years than used to take place, but they also must form part of the process.

Although we see this type of impact assessment going on all the time for actual expenditure, we have not seen it as much for tax expenditures until recent years. However, we had the Indecon report on property tax expenditures and the bulk of these were eliminated. The argument about section 23 reliefs and capital allowances is not about the merits of the particular expenditures. It is about their phasing out, the timescale for their phasing out and the economic impact and elimination of these reliefs.

Senators may reflect on and discuss different tax expenditures and there has been a strong focus on the property area. There is no doubt that some of the tax expenditures were misplaced. I do not say it out of partisanship but the previous rainbow Government introduced the seaside village incentive while Deputy Kenny was Minister with responsibility for tourism. Everyone can see throughout seaside Ireland great numbers of empty properties many years later. Clearly, that was not a correct decision. Equally, I remarked yesterday that I was surprised to learn——

Who has been in place for the past 14 years?

It is important that we understand——

I want to make it clear that the Minister's Government has allowed an expansion of——

Deputy Martin made an apology. Let us see whether Deputy Kenny is willing to make an apology for that scheme.

Must he apologise for the Government decisions of the past 14 years?

He was directly involved.

The Minister should listen to what he is saying. He is suggesting Deputy Kenny should apologise for the Government's behaviour of the past 14 years.

The Minister, without interruption.

The Minister is moving to the Opposition benches a little too quickly.

Senator Twomey, please. The Minister, without interruption.

Deputy Kenny has become so shy of the media that it is unlikely we will see him making this apology.

The Minister's party will be a little shy themselves after next month because there will be so few of them left.

Minister, we are on the recommendation. Senator Twomey, can we have the Minister without interruption?

Tourism is important and the hotel reliefs have caused difficulties, but they have also ensured we now have a sizable modern hotel stock and it is difficult to see how direct State investment could have procured that stock.

Let us consider where we can achieve growth in the coming years. One crucial area for growth and jobs will be tourism. It will be vital if we are to lift domestic demand from the doldrums. We know the large volume of bank debt is weighing heavily not only on the State and the banking system but on thousands of small businesses throughout Ireland. This weight of debt means the expansion of domestic demand and the stimulation of more consumer activity is difficult. One obvious substitute for this would be an increase in the volume of tourism and visitors to the country who would spend money and increase the volume of domestic demand.

We took important initiatives in this budget to secure that objective through the relaxation of the air travel tax and we took important initiatives on the minimum wage. I note Deputy Noonan has returned from Brussels and has announced that Fine Gael will reverse the minimum wage decision. I would like to ask Deputy Noonan one question, although perhaps I should ask it outside the House under the conventions. Did he discuss that issue with President Barroso yesterday? He says he is free to change it. When we discuss the question of tourism, we should note that we have this infrastructure in place and it is something that can be built upon and developed. I challenge any Senator to establish how else it could have been established. Certainly, it could not have been established by direct State investment or by setting up a State hotel company.

As Senators have noted, from time to time issues arise about particular tax reliefs. A case was made by several Senators in the health care area. I do not prejudge the issue and it is not in this budget but were one to introduce a tax relief for primary medical care centres, it would be a property-based tax relief.

There are social and health benefits to it.

Let us be clear about what we are doing. We all maintain property-based tax reliefs are wrong. Then we turn around and suggest a new one. We must be consistent and we must make up our minds. I agree that a cost-benefit analysis is of great benefit in deciding on these matters and it may be desirable as an aspect of national health policy. One would examine what it would cost for the State to establish this infrastructure, how important the infrastructure is and how much it would cost the State to subsidise the medical profession to do it. These are the kinds of factors which a proper cost-benefit analysis must evaluate in considering any such expenditure.

I welcome the debate, the tone of which was sound, and most Senators were correct. For various reasons I am not supporting the recommendation, primarily because there are a limited number of tax expenditures in the budget and on which we are conducting a cost-benefit analysis. There are technical defects in the recommendation but I do not take my stand based on this. This is my attitude to the recommendation. The general points raised in the debate are good and worthy of consideration.

Is the recommendation being pressed?

Yes. May I respond?

Yes, briefly. I remind the Senator to be conscious of the timeframe.

I am conscious of the time and I will not detain the House too long but I wish to respond briefly. This recommendation was never about and does not include within it anywhere an attack on reliefs. That is not in it. We could have a debate about the reliefs and their merits. However, the Members opposite fell into a trap which is not in the recommendation. It was never an attack on the reliefs. This is about cost-benefit analysis, changing the way we view these matters and having an intelligent scepticism about all the reliefs. That includes the relief to which Senator Bradford referred earlier, of which I would be rather sceptical and on which we held a debate previously under other legislation. That is a matter for another day. The question is the sort of system we should have not only in here among ourselves and in the Department but also such that the public can participate in understanding that we are discussing revenue forgone to the Exchequer which could be used for other things. These are taxes the Exchequer would get otherwise.

The Senator is still falling into the trap.

Senator White raised the tax issue.

Senator White, without interruption.

I love this because it simply makes my point.

He is not listening.

Everything that has been said by the other side, especially by Senator Cassidy, fortifies my view about the necessity for such a procedure.

For all his intelligence and expertise, I will not take it from Senator Cassidy that these things are good things. Even he must agree there must be limits. Senator Daly agrees. Perhaps I was a little harsh on Senator Daly on the technical issue of a one month period. I did not appreciate fully what he was saying.

That is fine. Senator White is forgiven.

It ought to have been a three month period and I would be satisfied to concede an amendment if the Minister wished to bring it forward to the effect that it should be done in three months rather than one.

I wish to make some other points briefly. I believe I am entitled to do so since I moved the recommendation. This goes to the heart of our politics and how we debate these things. Naturally, many people have availed of reliefs who are not wealthy property developers, including nurses and the lower earners to which Senator Mooney referred. That is an important point to which we must be sensitive. We must realise that people could end up having their income greatly reduced and the State must take a view on how that must be done. I understand and appreciate that. I admit that people have come to me about it as well. That is not the point. What do we want to do in terms of how we structure our taxation system? How do we use the taxation system in limited ways to promote economic growth? The whole community must participate in this debate. The fact that people would be affected by a change is naturally hurtful and potentially damaging to them.

I hate the phrase "back to basics" but we must go back to the start and hold an intelligent public debate about these schemes and expenditures. The way in which we facilitate this is simply by having the information available and having an expert assessment and an intelligent scepticism applied to every scheme proposed. I welcome the Minister's remarks on the two schemes he identified in the Bill. It should be in legislation and not simply on the instruction of a Minister that an analysis would be published about a particular relief. It should be in legislation that this is the way we do business. There should always be a cost-benefit analysis available to the public such that it can participate in the debate, however limited it might be given the technicalities. At least the public would have some participation in the debate such that everyone has a stake in what is being done on their behalf in respect of the taxation system.

Senator Walsh should note that this is not about the Labour Party looking to try to extract more taxes. This is about trying to ensure that, generally speaking, people pay their taxes and we limit the opportunities for people not to pay tax. Let us face it: that is what a tax expenditure scheme is. It amounts to not having to pay tax that one would have to pay otherwise. If there is a public dividend, whether it affects houses along the Shannon, in inner cities or seaside houses, it should be balanced against the relief. A decision must be made on it for the common good rather than reducing the debate to the undoubted hardship that affects individuals when faced with the reduction or removal of some of these schemes.

I want to put the record straight.

On a point of order. I do not wish to be unmannerly but I am conscious of time. The proposer has responded so the recommendation should be put now.

That does not apply on Committee Stage.

We are on Committee Stage. To respond to the claim that everyone should pay their fair share——

In fairness, Senator Cassidy, the Minister has responded to this as well.

Yes, I accept the thrust of what the Minister said. I thank him for his response and his understanding of the capital allowance relief.

In response to Senator Alex White, I agree everyone should pay their fair share of taxes. Investors, however, are paying their taxes in advance. Up to 40% of the tax owed on products covered by such reliefs, such as health care or tourism products, is paid in advance. The priority of whoever goes into government after the general election will have to be jobs. In both of these sectors——

Senator Cassidy has made his case well.

I will be brief. It is in the health and tourism sectors that sustainable jobs are really being created.

Senators

This is a Second Stage speech.

The Senator is not really addressing the recommendation. We must move on.

Question put: "That the new Section be there inserted."
The Committee divided: Tá, 24; Níl, 29.

  • Bacik, Ivana.
  • Bradford, Paul.
  • Burke, Paddy.
  • Buttimer, Jerry.
  • Cannon, Ciaran.
  • Coffey, Paudie.
  • Cummins, Maurice.
  • Donohoe, Paschal.
  • Fitzgerald, Frances.
  • Hannigan, Dominic.
  • McCarthy, Michael.
  • McFadden, Nicky.
  • Mullen, Rónán.
  • Norris, David.
  • O’Reilly, Joe.
  • O’Toole, Joe.
  • Phelan, John Paul.
  • Prendergast, Phil.
  • Quinn, Feargal.
  • Regan, Eugene.
  • Ross, Shane.
  • Ryan, Brendan.
  • Twomey, Liam.
  • White, Alex.

Níl

  • Boyle, Dan.
  • Brady, Martin.
  • Butler, Larry.
  • Callely, Ivor.
  • Carroll, James.
  • Carty, John.
  • Cassidy, Donie.
  • Corrigan, Maria.
  • Daly, Mark.
  • Dearey, Mark.
  • Ellis, John.
  • Feeney, Geraldine.
  • Glynn, Camillus.
  • Hanafin, John.
  • Harris, Eoghan.
  • Keaveney, Cecilia.
  • Leyden, Terry.
  • McDonald, Lisa.
  • Mooney, Paschal.
  • Ó Brolcháin, Niall.
  • Ó Domhnaill, Brian.
  • O’Brien, Francis.
  • O’Donovan, Denis.
  • O’Malley, Fiona.
  • O’Sullivan, Ned.
  • Ormonde, Ann.
  • Walsh, Jim.
  • White, Mary M.
  • Wilson, Diarmuid.
Tellers: Tá, Senators Dominic Hannigan and Alex White; Níl, Senators Camillus Glynn and Diarmuid Wilson.
Recommendation declared lost.
Progress reported; Committee to sit again.