Finance Bill 2020: Committee Stage

Sections 1 and 2 agreed to.
SECTION 3

Recommendations Nos. 1 and 2 have been ruled out of order as they would impose a charge on the people.

Recommendations Nos. 1 and 2 not moved.
Question proposed: "That section 3 stand part of the Bill."

We are opposing the section and specifically the provisions relating to the retrospective application of income tax to the pandemic unemployment payment, PUP, for the 20 and a half weeks between 13 March and 5 August. Let us be clear what is in question here. The Social Welfare (Covid-19) Act 2020 provides that the PUP is subject to tax from 5 August but it is only now, in the middle of December, that we will be retrospectively applying income tax to that vital payment between those dates that kept many thousands of households throughout the country afloat during the worst of the pandemic.

This belated decision to retrospectively apply income tax to the payment is mean and unnecessary. It is a penny-pinching initiative. Its main impact will be to strike fear into those households that have been so badly hit this year and to cause anxiety. People in these households are dealing with reduced incomes, the stress of working from home and the great uncertainty that comes from not knowing whether they will have a job next year. I ask the Minister of State to consider taking section 3 out of the Bill. We have yet to hear any answers as to how much this measure will raise. My colleague, Deputy Nash, asked this question in the Dáil and we have not got an answer yet.

My second point is that it makes no sense for it to be good enough to retrospectively apply income tax to an ordinary worker's social welfare payment, which is supposed to be exempt from such tax because it is a supplementary welfare payment as per the 2005 Act, while it is not okay to retrospectively change the rules regarding corporation tax or many other taxes in our system, as has been articulated by the Minister for Finance. FLAC, the Free Legal Advice Centres, has been in contact with the Department on a number of occasions to express grave concern about the legality of the principle of retrospectively applying income tax and the impact this will have on working families. Let us be clear; this retrospectively applied tax could push someone who did not have to pay income tax this year because he or she fell below the threshold into paying tax or could push a worker from the standard income tax bracket into the higher tax bracket. All of us in this Chamber today have to ask whether it is good enough to further penalise those families and workers who have been so badly affected this year. I ask the Minister of State to withdraw this section. It does not stand up and it is not fair. We will oppose the section.

As the Minister of State will be aware, I have proposed amendments to address this issue. The section should either be withdrawn or the Minister should exercise his power not to commence it at the same time as the rest of the Bill. We had an extremely lengthy debate in these Houses when changes were being made in respect of the pandemic unemployment payment, PUP. We discussed whether it would be a social welfare payment and what obligations and implications might arise with regard to qualifying for redundancy, availability for work and whether claimants could travel for two weeks if it was to be such a payment. We had all of these discussions because a fundamental change to this payment was made over the summer. It was a legal change requiring legislation. We all discussed it and stood over it. None of us can claim a lack of awareness given that we debated the issue for approximately two hours. This change resulted in the PUP moving from a supplementary welfare or extraordinary need payment, which was how it was constructed, to an unemployment payment. It moved to a different part of the social welfare code, which resulted in different obligations being associated with it, including obligations in respect of taxation. It simply was not the case that this payment was taxable prior to the change on 5 August.

I do not know if the Government is gambling that ordinary families will not have the wherewithal or the financial, emotional or psychological capacity to challenge this change. Is that the logic for pushing ahead with it? With regard to any such changes to corporation tax for businesses, we are constantly told that tax cannot be applied retrospectively and that these measures cannot look backwards. We are also often told about things like double taxation. The arguments made in that regard are sometimes framed in a spurious way. We have been told on many occasions the reasons we cannot increase taxes even on those who have, as we come to the end of the year, profited substantially during the Covid period in a way that had not been anticipated. Despite this, we are going back in time to tax those who are in receipt of the pandemic unemployment payment.

We must look at this legislation in the context of a suite of other legislation we have debated. It should be borne in mind that we debated legislation in this House which allows for somebody who is only 28 days in arrears of rent to be given only 28 days to pay. We have not only increased the potential financial load on families who are going to be pushed to the pin, but we have also increased the jeopardy attached to falling short financially. That is the situation into which we are sending people next year, after the eviction ban and curtailment have been lifted. When people come off the pandemic unemployment payment, they will be left with a very large bill and greater financial risk.

The right thing to do is not to force people to fight this, because I am sure some people will fight it and that they will win. We are also increasing the workload of the Money Advice and Budgeting Service, MABS, FLAC and all of those instruments of the State that are meant to help people stay afloat and help families maintain their finances. It would be advisable not to add on this extra three or four months in a way which is not legally robust. We should be satisfied to simply tax the portion of the pandemic unemployment payment paid after 5 August. This is legislatively, legally and morally the more responsible thing to do. I hope the Minister of State will consider either withdrawing the section or, if he is not minded to do so given the time pressures of Christmas, committing to not commencing it.

I welcome the Minister of State. I agree with my two colleagues who have spoken on this issue. Our view of it is simple; it is well dodgy and does not stand up. Senator Higgins makes a very good point. Perhaps the Government is gambling on the fact that ordinary working people do not have the means to challenge this but, constitutionally, it really does not stack up. To be clear, section 13 of the Finance Act 2018 amended section 126 of the Taxes Consolidation Act 1997 to clarify a number of payments made by the Minister for Social Protection which would be exempt from income tax, among which were urgent needs payments. I know the Minister of State rejected the word "retrospective" the other day, but that is clearly what this is. It does not stand up legally. It is a very odd thing to do. It stands in stark contrast to the treatment of other wealthier sections of society.

I thank the Senators for raising this issue. The Minister, the Government and I have been consistent from the beginning. This payment was taxable from the day it was introduced. It always has been. There is a mass misconception about the taxation of the payment, which has always been possible. I hope to put the record straight. People who are not watching this meeting might not get the reality of the situation regarding the taxation of the PUP, but at least the correct position will be on the record of the House, even if it is not known among the general public.

Section 3 provides for the taxation treatment of the pandemic unemployment payment. This is subtly different from providing for the taxation of the payment. It provides for its taxation treatment. It was taxable to start with. This section is about how that tax, which has existed since the beginning, is to be treated. This section does not introduce taxation but clarifies how the taxation to which the payment has been subject since its introduction is to be treated. This section does not introduce a tax. It clarifies the tax treatment of the payment, which was taxable from day one. Some people have understandably taken this clarification of the treatment of this taxation, which I will explain in a few minutes, to mean that section 3 retrospectively introduces taxation.

In fact, we are clarifying the treatment of the taxation of the PUP, which was taxable from day one. I wanted to put that on the record. People might not understand what the section is about. It is not about taxation but about the treatment of a payment that is already taxable. It is a clarification of the treatment.

The PUP was placed on a formal statutory footing by the Social Welfare (Covid-19) (Amendment) Act 2020, which was passed into law on 5 August. I have been consistent as regards the PUP’s liability to tax from the outset of the payment. It is fair and equitable that recipients of the PUP are subject to tax on this income - it is an income - just as those who have continued in employment are subject to tax on theirs. The PUP is an income support and shares the characteristics of the jobseeker's benefit and the self-employed jobseeker's benefit, both of which are taxable. From the very beginning, certain social welfare payments have always been exempt from income tax, while others have always been subject to tax. Everyone knows that jobseeker's allowance is not taxable and that jobseeker's benefit, because it is connected to having been in work and is claimed when someone is out of work and might be back in work in the same year, has always been taxable, as are other benefit payments. The State pension, similarly, is subject to taxation if the recipient has other income that brings him or her into the tax net. Several social welfare payments are taxable and that has always been the case.

The PUP is not an allowance payment and we have to consider what it is about. It is intended for people who were in employment, are not in employment for a period and will be back in employment at a future date. It is very similar to a jobseeker's payment. It is intended for somebody who had been in employment, was out for a period and goes back in. It is similar to the jobseeker's benefit payment and nobody argues about the taxation of that. It would be inequitable if the PUP was not taxable while the jobseeker's benefit was. Indeed, as a general rule, all social welfare payments are subject to taxation, unless specifically exempted.

The section will provide that the PUP will be treated as an emolument to which Chapter 4 of Part 42 of the Taxes Consolidation Act applies and,accordingly, charged to tax under Schedule E. This means that while taxable, the payment will attract the personal income tax credit and the PAYE credit. The taxation position will follow the general taxation rule for social welfare payments and, therefore, the payments will be exempt from PRSI and the universal social charge. I will presently explain that in plain English because it is the crux of the issue. Furthermore, to alleviate any immediate financial burden that may arise, Revenue announced last September that it will collect the liability, interest free, by reducing the individual’s tax credits over four years to minimise any hardship. This reduction of tax credits will start in January 2022.

As I said on Second Stage, there is some debate about when the tax will fall due and whether people will get a shock at Christmas. By definition, anybody involved in that debate knew that the payment would be taxable. Why else would they have asked whether people will get a shock in their tax bill at Christmas? They understood it was taxable. The only issue related to when people would have to pay the tax. The Members involved in that debate cannot now, a couple of months later, say they never knew it was taxable, having discussed the date of when people will find out how much is due on their tax bill. There is an inconsistency in the argument that Members are making on this Stage versus the arguments they may have made in the summer, which concerned when people would find out how much they owed in tax. Revenue has decided that it will not collect the tax even next year because we do not know what will be the status of the PUP next year. We might still be dealing with Covid. Revenue has indicated, therefore, that it will start collecting the tax only from 2022, which means it will adjust a person's tax credits over a four-year period starting in 2020. Over that period, it will bring about a reduction in a person's take-home pay of approximately €1.50 per week. If persons know they have this liability and if they want to keep their tax affairs up to date, they can notify Revenue that they are happy to pay it all as soon as practicable in order that they will not have to spread it over four years. Nevertheless, the default position of Revenue is that it will collect the tax over four years unless a person comes forward to say that he or she wants to pay it upfront and be done with it. People will have that option. That debate has been ongoing for a while because everyone knew what we were talking about. It was not just a matter of whether the payment was taxable but rather when the tax would be paid. They cannot now, having had that debate, in which many people were involved, pretend it would never be taxable.

Some have argued that the PUP is an urgent needs payment and, therefore, is exempt from tax by virtue of section 13 of the Finance Act 2018, which exempted from tax a range of social welfare payments. While it is the case that the Social Welfare (Covid-19) (Amendment) Act referred to the PUP as a payment made under section 202 of the Social Welfare Consolidation Act 2005, which deals with what are commonly referred to as urgent needs payments, this was used merely as a vehicle to get payments out quickly to employees and self-employed persons who had lost their jobs due to Covid-19. When Covid first emerged, the Government wanted to respond promptly. If we had put the payment down as the equivalent of an unemployment allowance payment, it would have taken weeks to process and people would have been left stranded. The Government took the view that we should help people on the spot, to put the cash in their hands within days of them requiring the payment, and the quickest mechanism was to get it through like an urgent needs payment, without the need for a detailed check and a community welfare officer having to check the person's circumstances. The idea was to get it out quickly.

Section 202 of the 2005 Act facilitates urgent needs payments, which are processed quickly, and that was done. It did not mean it was a supplementary welfare allowance payment, which it is not. Many people would not accept the suggestion that anybody who was in work and is now out of work because of Covid would go on a supplementary welfare allowance payment. People will argue that they were in work and lost work because of Covid, and similarly to the case of the jobseeker's benefit, if somebody is out of work due to no fault of his or her own, he or she should be able to claim the payment based on having been in work. The payment is related to the person's work and he or she has an entitlement to it because he or she was paying PRSI contributions.

Everyone knows that if somebody is getting the jobseeker's benefit in such circumstances, he or she pays tax on it in due course. It is applied to the person's taxable income at the end of the year, depending on the income that has been earned from employment. We wanted it to be related to a person's work and PRSI contribution record, analogous to the jobseeker's benefit, but we also wanted to get it out promptly, which we did. The only way of meeting both objectives was to treat it like an urgent needs payment, but not to classify it as a supplementary welfare allowance. I do not suggest that everyone who got the PUP was on a supplementary welfare allowance because many people might not like to be forced into asking for a supplementary welfare allowance. That is normally a difficult process in any event. We used that section purely to get the payment out quickly. The suggestion that we got the money out quickly as an excuse to say it should not be taxable like the jobseeker's benefit is not accurate. The Government did the right thing We got it out quickly and we used a mechanism to do that. It is not to be confused with a supplementary welfare allowance.

Nevertheless, the PUP, by its nature, is not an urgent needs payment. To return to my earlier point, this section concerns the treatment of taxation. It has been implicit from day one that the PUP would be taxable. This is where it gets complicated. There are various headings relating to taxation in the tax code. Cases I and II of Schedule D tax deals with trading and professional income, while cases III and IV deal with investment, foreign income and miscellaneous income. The PUP, therefore, comes in under case IV of Schedule D. Case V concerns rental income, while Schedule E covers employment income, the heading we are all used to.

A person in employment is taxed under Revenue rules and rules set out under Schedule E of the Finance Act. Under Schedule E, people are entitled to tax credits and a PAYE allowance. That PAYE allowance is specifically for people whose income from employment comes in under Schedule E. As the PUP is not an income from employment, it does not come in under Schedule E in the tax code. It is a miscellaneous income, which comes in under Case IV of Schedule D. If I were to do what people have asked me to do and withdraw this section, it would make the situation dire. I do not believe any of the Senators who asked for the section to be withdrawn understood the consequences of what they were asking me to do.

Under Schedule E, income from employment, a person is entitled to a PAYE allowance and a tax credit allowance. There is no equivalent allowance in respect of PAYE allowance for income under Case IV, which is investment income, foreign income or miscellaneous income as in a social welfare payment. The purpose of section 3 is to allow for the PAYE and tax credit allowances to be offset against the PUP so that people will not be paying tax on it, save for the €1.40 per week people will pay over a four-year period if they were in receipt of the PUP for the full period. If we withdrew this section, a person in receipt of the PUP would not be able to offset against that payment the normal PAYE allowance or tax credits he or she would have if in employment and in receipt of an income from that employment. There are two different strands of employment for taxation purposes, one of which is an employment in respect of which those allowances are available. Section 3 provides for these allowances that are normally only available to people who receive income directly from an employer also to be offset against the pandemic unemployment payment. If we did not allow that, the PUP would be 100% taxable.

The legislation is complicated. This section provides for the normal allowances that a person would have to be offset against the pandemic unemployment payment because it is a different category of income under the existing Tax Acts. If we did not do this and we withdrew this section, the PUP would be 100% taxable from day one and recipients of it would have no benefit from a PAYE allowance or tax credits. I have gone a long way around the house to explain it. I hope I have explained it. I am not reading from a script. I am trying to explain this in a way such that people listening get the message of what I am saying. I am convinced 99% of the people who have been talking about this do not understand the intricacies of it. We are paid as Oireachtas Members to go through things line by line and we are doing so here today. We are doing a good job in allowing section 3 to remain in the Act so that the PUP will not be taxed to the extent it would be taxed if we did not allow the tax credits and PAYE allowances to be offset against it.

This is not about taxes. Rather, it is about allowing the normal reliefs that a person in employment would have against tax to be offset against the PUP. As I said earlier in my initial reply, this is about taxation treatment and not whether the payment is taxable. It is taxable but this is about the treatment of it. This provision seeks to ensure people in receipt of PUP do not fall into an unforeseen tax net. I hope when people understand what section 3 is about, they will see 100% merit in it.

I cannot accept the amendment because there would be uproar tomorrow morning if people learned they could not offset their PAYE allowance and tax credits against their pandemic unemployment payment. We are doing a good job here today. I accept it is tricky to understand.

I thank the Minister of State for his detailed and considered response. I would like to make three points. It is well within the power of the Government to allow on a pro rata basis the application of the PAYE allowance and personal tax credit during this tax year. It is within the power of the Government to allow those tax credits to apply against whatever earned income is generated in 2020. My understanding of the Minister of State's response is that it is a dressing up the section as an act of charity or mercy to those who have been on the PUP and are earning again in 2020 and that if the section is withdrawn the PUP will be 100% taxable. It is within the wherewithal of Government to apply an amendment here that allows the application of the tax credits.

As I understand it, for 20.5 weeks this payment was considered a supplementary welfare payment. Under the tax code, that payment is not taxable. On 5 August the status of that payment was changed to make it taxable and now, in December, the Government is trying to change the status of the payment retrospectively from 13 March to 5 August. I do not think that is necessary. The Minister of State has given no figures in terms of how much is likely to be generated. If he thinks it will sufficient to blow a hole in the public finances, then let us have that conversation. Thus far, there is no evidence as to what it will generate other than fear and anxiety among workers.

It is good that there is a four-year period for repayment. Let us call a spade a spade. This means five years of workers living with this hanging over them. Workers will have to repay tax because they were misfortunate enough to have lost their jobs because of the pandemic. I think we can do better.

The Minister of State made the point that to put the tax treatment of the PUP in place in March would have taken weeks. To me, that is a nonsense. As a new Senator I sat in this House in the months of July and August when we passed legislation dealing with billions of euro in one day. We have taken all Stages of a Bill in one day. It was within the power of the Government to make this payment taxable in March but it chose not to do so. It did so in August and we cannot go back and rewrite that, but the Government can apply the tax credits for earned income for this year and ensure that the 20.5 weeks of the PUP between 13 March and 5 August are not taxable. I reiterate the call for the Minister of State to withdraw or amend section 3.

Potentially, the Minister of State has made the case for amending the section rather than not commencing it. He has not made the case for taxing income between March and August other than the narrative that the Government said it would do it. In my five or six years as a Senator I have heard a great deal said by Ministers, some of which has not happened, but some of which has.

We are not simply talking about the Revenue code although the Minister of State talked at great length about it. Nobody has argued against the move from Schedule D to Schedule E or the taxability of income since August. That is not the case. It would be a misrepresentation of the arguments being made to suggest that that is what is being sought. People are looking for solutions for the Minister of State. We are on Committee Stage. Perhaps the Minister of State is correct that an amendment would be a better way to address it that would capture the nuance so that we ensure we do move all the payments since August into Schedule E rather than Schedule D, Case IV.

The key point remains that it was in the social welfare legislation that the decision was made in terms of where this was placed. There has been much commentary and rhetoric around what the Minister of State said or what was said in the Chamber. I regularly argue for tax. I am looking at this legislatively as somebody who is often arguing for tax. I am in favour, in general, of taxation but I am not in favour of it being retrospectively applied. We have multiple cases where, for example, Ministers have spoken about unforeseen loopholes in regard to corporation tax and they were not panning out as planned even when that was well signalled. I am thinking, for example, about capital gains tax, how the capital gains tax waiver was above, and I am thinking of some of the schemes in regard to real estate investment trusts, REITs and so on.

However, I have never yet seen a Minister refer back and say "This was not doing what we thought it would do and our intention was clear when we spoke". In fact, in any case where there has been anything remotely resembling a tax gap, a potential relief, an allowance or a loophole in the case of some corporations that could be exploited, it has been left until it has been fixed legislatively.

This is not an argument against the urgency of the payment. It was the right thing to do and I supported it. Members of the last Seanad came to the House from our various election campaigns for the Seanad to pass that legislation. I did and still applaud the State for introducing an urgent payment. It was worth it for what it did in keeping our economy and society together. It was a social cohesion measure which has been praised. That was worth it, as will be forgoing two or three months extra payments, which will be very small although we have not heard the amount it will gain. It will be very significant on a family and household but not significant for the State. That is also worth it. I am not saying the Government should not have done it this or that way but that it did the right thing by introducing a payment quickly.

As Senator Sherlock said, we would have allowed for it to be properly put in another location, if the Minister of State wished, but that was not the choice. That is not what we are criticising. We are saying that legislatively, in terms of the placing of this payment in the social welfare code, the basis the Minister of State has been citing and the description he has given are based on the legislation that was introduced on 5 August. We should deal with the period from 5 August to now and should regard the other as it was, an exceptional needs payment which came from that relevant part of the social welfare code, the part which Senator Gavan has cited that contains such payments. We should be very glad of it and what it did for households and we should continue in the same spirit of understanding that the resilience of households is the resilience of our State.

The Minister of State gave a lengthy explanation but he did not answer the questions that were posed respectfully by the three of us. At the risk of repeating myself, this payment was quite correctly introduced as an urgent needs payment. Under the Finance Act 2018, an urgent needs payment is exempt from income tax. Saying that the Government said it would be taxable does not matter. What matters is how the Government introduced the payment. It was introduced as an urgent needs payment and such payments are exempt from tax. I do not know if the Minister of State is a fan of Doctor Who, who likes to travel back in time in the Tardis. The Minister of State does not have that power, and I am surprised that he might think he does. He is basing his argument on the legislation of 5 August, but we know how this was introduced. We support how it was introduced. It received universal support. It appears to be extremely mean-spirited to try to recoup some of these moneys now. It will bring hardship to families.

Frankly, I am surprised that this is a message Fianna Fáil is prepared to convey because there will be repercussions from families in terms of how they feel about Fianna Fáil. They do not feel great about it at present according to the opinion polls. This is another massive misstep. It is not even going to bring in much money in gross terms, so it does not make sense from a revenue perspective. In addition, the Minister of State is not addressing the key point, which is that this payment is exempt from tax under the Finance Act 2018. If somebody challenges it, the Minister of State will have to eat all the words he said this morning. It is far better to accept the suggestions of my colleagues, particularly that of Senator Sherlock, and fix it without going down this route.

I wish to make a couple of points. The date of 5 August was mentioned because it was put on a statutory footing, but Senator Sherlock says it should be in the power of the Government to sort this out. Thank God we live in a democracy and the Government cannot do what it likes. It must go to the Dáil and the Seanad to change legislation when it affects people's income. I am worried about what the Senator suggested, that if she felt it was appropriate, the Government could change the taxation of people's earned or unearned income. That is what she said - can the Government not do it? A Government has no authority-----

On a point of information.

They are the words she used. She suggested the Government has the power to do this. Thankfully, the Government has no power to do it. Only the Oireachtas has the power and that is why we are here today. We do not have the power. The Government cannot unilaterally change the tax law.

On a point of information.

Senator, you can speak again later. It is Committee Stage and you can contribute at any time. Let the Minister of State-----

On a point of information, it is not related to-----

There is no such thing as a point of information in our Standing Orders.

It is not in our Standing Orders.

As the Cathaoirleach has pointed out-----

Senator, I ask you to let the Minister of State finish.

The Government can do this on Report Stage.

Senator, the Minister of State did not interrupt you.

The Minister of State made indications about a Member of the House.

You are entitled to speak again on Committee Stage, but the Minister of State is on his feet. I ask you to let him finish.

I will repeat what was said. Senator Sherlock said the Government should have the power to do this and should have done it anyway. Thank God we do not have the power. I do not subscribe to the philosophy that a Minister can sit in Merrion Street and change people's taxation regimes without reference to this House. It is essential that no Government should have the power to do this without coming before both Houses of the national Parliament.

That was never suggested.

It is the Oireachtas that makes these changes. As to suggesting that the Government has the power to do what likes on Report Stage, it does not. If the Government does not have the numbers to carry what it wants on Report Stage, it does not carry. The Dáil and the Seanad carry it. A Minister or a Government does not run this House-----

That is entirely disingenuous.

-----aside from the numbers voting to support a Minister's point of view. No Minister can unilaterally change anything when it comes to these taxation matters, and I say "Thank God" for that and that we have a parliament. I would not like to have the route that was suggested. It might not have been intentionally suggested, but that is what was said today.

The other point I wish to make is important. There is a Schedule to the social welfare legislation of social welfare payments that are exempt from income tax. The same Schedule is included in the Finance Act 2018. If something is on that Schedule, it is exempt from tax. Every other social welfare payment is taxable. The only ones that are not taxable are those on the list of payments exempt from tax. The PUP did not exist when that Schedule was put in the Finance Act two years ago, so by definition, PUP is not on the list of payments that are exempt from tax. It could not be. Now the Senators are going back in time and asking us to have the PUP listed in 2018 as a payment of income that is exempt. That is the logic of what Senator Gavan said. To make the case, he quoted the 2018 Act that has a list of the exempted payments and he is saying it is a supplementary welfare allowance or an urgent needs payment. It is not a supplementary welfare allowance payment, which is in that Schedule. This is not a supplementary welfare allowance and, by definition, it is not in the Schedules to the Social Welfare Acts or the Finance Acts. The PUP was never listed as a payment that is exempt from income tax so, by definition, it is taxable.

I am worried about what I have heard today. Where a person lost his or her job this year, unconnected to Covid and as happened this year and happens every year, and the person goes on jobseeker's benefit, I am shocked that there is a move here today to say that those people who lost their jobs through no fault of theirs and are on jobseeker's benefit should be taxable - Members are not arguing otherwise, and it is taxable - but the person next door who lost his or her job because of Covid should get his or her payment tax free. I am shocked to hear Members picking out people who are getting a payment for loss of income this year and saying some should be taxed, such as the people on jobseeker's benefit, while those on the other payment because of Covid should not be taxed on the same amount, and sometimes it can even be a higher weekly payment. I am surprised to hear that case being made here. It is the logic of what has been said.

I have made it very clear.

The Government cannot do it. It came in and was taxable at the beginning. We passed the legislation on 5 August and that was the formality of it. The purpose of this section is to give retrospective benefit to allow people who have got the PUP to claim the PAYE credit allowance and the tax credit allowance. Section 3 is a retrospective measure which benefits people who receive the PUP. It is not charity. It is their entitlement, having been at work, lost their jobs due to Covid and gone on the PUP. As the payment is not from their employer, it does not come under the normal PAYE tax credit rules. We recognise that and for the avoidance of all doubt we are amending it to say the PAYE credits and tax credits a person would get if they were in employment can be used while they are on the PUP. We are making a retrospective move to benefit people who went on the PUP. Without this section, we would be penalising those people to no end.

The effect of being asked to withdraw or change this is that, although the Senator is setting out to say it should not be taxable, her recommendation, if passed, would make it 100% taxable without the benefit of being able to have the PAYE allowance or the tax credit offset against it. I know that was not her intention as nobody in Dáil Éireann or Seanad Éireann would suggest that. We are removing all doubt, just in case somebody made that case without this section in the legislation. It could have been 100% taxable so we are doing this to remove doubt on this matter. I hope I am making myself clear. That is the position. If this recommendation were accepted, everybody would get a massive bill for tax on PUP unless we allow these allowances to be offset against it.

There is a substantial Bill before us and if the Minister of State gives an editorial and attributes statements and views to everybody across the House at great length in response to everyone, it will be a lengthy debate. It is an issue if people are attributing statements that are misrepresentations to people in the House. That is a concern. The Minister of State has just said at great length------

It is a debate. People are entitled to make points.

It is a debate on the policy and on the law.

Everyone is entitled to come back. That is all I am saying.

I am entitled to come back but I would like not to have a politics in which we simply say, "You're saying this, this is what you're saying, this is what you're saying, this is what you're like." That is the politics we are hearing and it is not constructive.

The Minister of State made some valid points in relation to Schedules D and E which Senators acknowledged and engaged with. Then the Minister of State came back again to contribute completely inaccurate perspectives in respect of the taxation of other unemployment payments and to suggest that anyone who says the Government could take action is suggesting Executive power by the Government with no recourse to the Parliament. I ask the Minister of State if, by his own logic, every single time any Member of this House or any Minister refers to "the Government" in future, they should refer to "the Government with the permission of the Oireachtas, having followed due process". That is what they will have to say.

As the Cathaoirleach acknowledged, Report Stage is coming and the Minister of State's hands are not tied. The Government can bring forward recommendations which would likely be ruled out of order if they were proposed by the Opposition, as my recommendations to address these issues were ruled. The Government can bring forward recommendations which would ensure what we all want, namely, that PAYE benefits and so forth under Schedule E would continue to be allowed in respect of taxation on payments since 5 August, but not including March to August. The period from March to August is at the nub of the issue raised and, with respect, the Government has the power, in bringing this Bill through the Oireachtas, to introduce a Report Stage recommendation to address the issue. The only question is why the Minister of State is not choosing to table such a recommendation to exclude the months from March to August in respect of the measures of the Bill. The power sits with the Government to propose it. We can only make recommendations as Opposition Members of the House during debates on the Finance Bill. The power lies with the Government to bring forward those proposals and I imagine they would get the permission of this House.

I speak on a point of clarification which the Minister of State may be able to confirm. Everybody wants taxation applied fairly across the board and everybody should be treated equally. My understanding is we all receive tax credits and how we use them is up to ourselves. If I was on the PUP from March until August which I was not able to use the tax credits for, they are accumulated into the period after that. Is the Minister of State saying I can use them retrospectively in relation to the income I earned in that period or use them in relation to any additional income I received from August onwards? It is an annual credit and it is up to me to decide how I use it. I can use it for income since August or retrospectively in relation to the PUP from March until August. If I was to apply my tax credits to the PUP from March until August, what will my tax liabilities be? Will the Minister of State answer that? My understanding is that I get a personal tax credit, the same as everybody in here. I can decide to use that credit for my income in the Oireachtas or my income in relation to my business in the hotel. That is my choice. If I was an individual on the PUP for those months and I accumulated those tax credits over that period, I can use that moving forward or I now have to option to use it retrospectively in relation to the payment I received. Perhaps I am wrong but that is the understanding I am getting from the debate. I think everybody agrees that the taxation system should be applied fairly and equally to everybody.

I thank Senators Higgins and Gavan for the earlier support. I thought it was implicit in my comments that I was asking the Government to put forward a recommendation in the context of this Bill coming through our House. Senator Higgins has eloquently articulated how it is well within the power of the Government to bring forward recommendations on Report Stage. I am disappointed that the Minister of State would seek to attribute comments to me that are a complete misrepresentation of what I said.

I came into this House to debate respectfully with the Minister of State on a very important issue. It is a source of regret to me as a new Senator that, when a Minister of State has his back to the wall and is looking for arguments, he would seek to attribute to me something that I simply did not say. It is most disappointing that the Minister of State made that comment. I have made my comments on the section and I urge that we move on because we have a large number of recommendations to get through and it is not productive that we are back and forth in this fashion.

I take the Senator's clarification on what she meant. She meant the Government here in the Oireachtas tabling the recommendation. I interpreted her as suggesting the Government could unilaterally make a change by statutory instrument, through a Minister in his office. I accept she meant the Government could put it through the House because it has the numbers to do so. I take the point. I interpreted it one way and the Senator is clarifying that is not what she meant. I accept that.

It is important to recognise that the PAYE credit is €1,650 per annum. That is the maximum. Nobody has the entitlement to get €1,650.

It depends on whether one has the taxable income to attract the credit. It is like social protection payments. When we discuss the headline figure for jobseeker's allowance, that is the maximum rate, but not everyone can get the maximum. Similarly, €1,650 is the maximum PAYE credit above which one cannot claim. There is no guarantee that one has an entitlement to claim all of it either. It depends on one's income.

I want people to understand another point. I want to help the Senators, although they might not like me putting it this way. I urge them not to oppose section 3. Taxation is complicated and we have Finance Bills of this nature every year. We can see how various issues are handled year by year. A social welfare payment does not fall under the normal earned income Schedule because it is not earned through employment. Rather, it falls under a different Schedule. Without section 3, the PUP would not have a social welfare payment's benefit of attracting the PAYE and other tax credits. Section 3 provides that benefit.

I urge Senators to take my comments as being genuine. If they vote against section 3, they are voting to prevent tax credits being used to offset the PUP. If they were to win the vote, the PUP would be 100% taxable with no PAYE or other tax credits applicable. We are proposing the section at this point because the Financial Bill is so technical. It will ensure that the maximum credits can be set against the PUP. To vote otherwise would be to prevent that and tax the PUP. I know that is not Senators' intention, but it is what would happen if section 3 was not included. We have ventilated this matter a great deal. The section is designed to help people who unfortunately had to go on the PUP.

Question put:
The Committee divided: Tá, 28; Níl, 8.

  • Ahearn, Garret.
  • Ardagh, Catherine.
  • Buttimer, Jerry.
  • Byrne, Malcolm.
  • Carrigy, Micheál.
  • Casey, Pat.
  • Cassells, Shane.
  • Chambers, Lisa.
  • Conway, Martin.
  • Crowe, Ollie.
  • Cummins, John.
  • Currie, Emer.
  • Davitt, Aidan.
  • Doherty, Regina.
  • Dolan, Aisling.
  • Dooley, Timmy.
  • Fitzpatrick, Mary.
  • Gallagher, Robbie.
  • Garvey, Róisín.
  • Kyne, Seán.
  • Lombard, Tim.
  • McGahon, John.
  • McGreehan, Erin.
  • Murphy, Eugene.
  • O'Reilly, Joe.
  • Seery Kearney, Mary.
  • Ward, Barry.
  • Wilson, Diarmuid.

Níl

  • Bacik, Ivana.
  • Boylan, Lynn.
  • Gavan, Paul.
  • Hoey, Annie.
  • Ruane, Lynn.
  • Sherlock, Marie.
  • Wall, Mark.
  • Warfield, Fintan.
Tellers: Tá, Senators Robbie Gallagher and Seán Kyne; Níl, Senators Marie Sherlock and Paul Gavan.
Question declared carried.
SECTION 4

Recommendation No. 3, in the name of Senator Mullen, is deemed out of order as a charge on the people.

If I may address this point, I had arranged with the Cathaoirleach that I would do so. There is an error in the ruling. This is an issue the Minister of State may also very well be interested in. The purpose of the amendment is to address an abuse, as I see it, in the current availing of the artists' tax exemption. The effect of my recommendation, of course, because it is not an amendment being a money Bill, would be that a provision in the tax code that allows those responsible for works of artistic or cultural merit to avail of a tax break of up to a limit of €50,000 tax-free earnings in the year in which the exemption is granted would not apply to public representatives, Oireachtas Members, retired public servants in receipt of a pension of €20,000 or more, or those who have earned at least €100,000 in any of the preceding three tax years. The artists' tax exemption was originally introduced in 1969 by Charles Haughey.

The Senator has made his point.

Here is the point. This was a provision of the tax code designed to prevent artists from starving in the garret. The reason I believe this is wrongly decided is that Standing Order 41, under which the recommendation has been ruled out of order, states: "An amendment to a Bill, which could have the effect of imposing or increasing a charge upon the people or upon the revenue, may not be moved save by way of Government amendment." Obviously we will have to allow that we are not talking about amendments here.

Here is the point. What it states is "which could have the effect of imposing or increasing a charge upon the people". It does not state imposing or increasing a charge upon people and it does not state imposing or increasing a charge upon any person.

Surely Oireachtas Members are part of the people.

That is not the point. The issue is not what the recommendation is about. The issue is whether this is a recommendation that can be properly excluded under the terms of the Standing Order 41. If the Leas-Chathaoirleach bears with me, I will explain. A charge "upon the revenue" clearly means a lessening of revenue coming in. This recommendation of mine does not propose a tax break.

I take the Senator's point.

Please, Leas-Chathaoirleach, if you do not mind bearing with me. A charge upon the people means a public expense. An increase of a charge upon the people means an increase in that public expense. The narrowing of an exemption under the tax code is not the imposition or the increase of a public expense. It is not a charge upon the people.

The Senator has made the point extremely well as always, so what I recommend him to do is speak to the section and make all the points he wants on the section and then discuss with the Seanad Office the technicalities of the ruling.

I am happy to go with that but I will say in conclusion-----

The Senator may go ahead and speak to the section.

We are dealing with a situation here where there are already considerable restrictions on what the Seanad may do on money Bills and that is understandable because we are not as directly elected as the Dáil. In this context it surely means within this limitation we should, therefore, otherwise have the broadest latitude. Where there is an ambiguity in the meaning of the Standing Order, it surely has to be resolved against those who would impose the burden. That would certainly be the precedent in contract law where we have the contra proferentem rule. As far as I know, it is also a provision of statutory interpretation. Where there is any ambiguity it is to be resolved in favour of the person who would bear the burden of what is being proposed. I take what the Leas-Chathaoirleach has said on this and I thank him for allowing me to return to this issue. I am a fortiori asking the Minister of State whether I am precluded from bringing forward this recommendation. I ask him to pay special attention to it so the Government may bring it forward on Report Stage if it deems fit, leaving to me whatever other avenues I may have to seek clarification or, indeed, reversal of this ruling.

I thank Senator Mullen for understanding both sides of the equation.

Recommendation No. 3 not moved.
Question proposed: "That section 4 stand part of the Bill."

I call Senator Higgins, who wants to speak to the section.

I am speaking to the section and how it may or may not be changed.

Okay, because we have already discussed the proposal.

This is, in fact, very relevant. I might not agree with the exact letter of Senator Mullen's proposed recommendation of two of every three years. To recognise the fact that sometimes artists will get a very large payment once in perhaps five or ten years, this might have been a better nuance, although there is value in the overall proposal to be examined. Senator Mullen is correct in his interpretation of the Standing Order and it needs to be examined. It came up last year on the Finance Bill-----

-----when I had a similar debate in respect of the continuation of a special tax relief for golf courses-----

We will look at it. It will be looked at by the office. I thank the Senator.

When many other areas of hospitality had their VAT increased, golf courses were given an exemption. It is a misinterpretation and an undue measure. "The people" is "the State" and "the public purse" and "the revenue" is "the revenue". To move this and, in fact, to have amendments that benefit Revenue and benefit the people, effectively, with whatever interpretation of it, is a skewed interpretation. I recognise we cannot debate it further-----

I think we have discussed it well now Senator Higgins. It will be looked at by the office.

-----but it is one we will need to take up either at higher political level or perhaps at the Committee on Procedures and Privilege.

We will discuss it in the Seanad Office.

Senator Mullen has indicated he wants to speak to the section briefly.

I thank the Leas-Chathaoirleach. I do realise he has to do what he has to do within the limitations imposed by the fact the Cathaoirleach wrote me the letter, as it were. I thank Senator Higgins for her intervention on this point. In general terms, we are already very constrained in that we are only allowed to propose recommendations.

With great respect, Senator, it is well noted now. It will be discussed by the Seanad Office.

The section should not pass in my view without a recommendation of this type being included. As Senators will be aware, the so-called artists' tax exemption was originally introduced by Charles Haughey, the former Taoiseach, when he was Minister for Finance in 1969. When he spoke later in his life, in an interview in 2003, he spoke about the thinking behind this exemption. He said it was designed to address the "sad history of our creative people going abroad for economic reasons or from what they felt was an unsympathetic or even hostile climate". He stated, "I wished the modern Irish State to make a positive gesture to our creative people. I wished to say to them, in effect, 'you are valued members of our community. Your contribution is of unique importance.'"

The Leas-Chathaoirleach will be interested to know that in the same interview he said a number of artists had said to him that from time to time without it they would not have been able to continue to devote themselves to their art. We are all familiar with the culture, and even in some Italian operas we have the image of the artist starving for the sake of his or her work in the garret. This is clearly what the artists' tax exemption was all about. It was not meant to be about career politicians or highly paid sports people writing their memoirs and getting a significant tax exemption for it.

Its aim was to encourage artistic creativity within the State and to give assistance and encouragement to those with creative talents. It helps them to make a living out of what can be a very-----

The Senator is suggesting there would not be creativity in-----

I take the Senator's point.

I have no intention to detain the House. I sat through a very interesting and important exchange on the previous section. We have had a problem before with legislation going through the House in very short order where Ministers do not have time to engage with proposals that might be the subject of a Government amendment on Report Stage. I ask the Leas-Chathaoirleach's indulgence briefly. I promise not to repeat anything.

Artists' income is often low and infrequent. We must work to prevent people with creative talents from taking those talents abroad. Those are aims all Senators would fully support. We have a proud tradition in literature, art and music. Therefore, this expenditure on public funds, which is what the artist tax exemption is, is entirely justified. However, we have known for at least 15 years that exemption has been availed of by individuals who are in no way low-paid or impecunious. In addition, many who qualify are not even artists in the true sense of the word. The exemption is being availed by a small number of persons who derive large incomes from other sectors, in many cases directly from the taxpayer. They either have or have had successful careers in other sectors and yet they qualify for this exemption. If my recommendation had been allowed to be discussed, it would have sought to change that by ensuring that high-earning individuals do not qualify for tax exemptions designed to assist low-earning artists.

I thank the Senator.

No, please a Leas-Chathaoirligh, I ask you to bear with me. It would result in a small number of the 3,000 or more people who quality for the exemption being excluded in future years. This would not save the State a significant amount of money. However, from the perspective of the integrity of our taxation system, particularly at a time of economic hardship for so many, it would send an important message. We have already had an unfortunate controversy in recent weeks arising from the treatment of student nurses, contrasting starkly with the pay rises handed to Ministers, judges and other highly paid public servants.

This recommendation would have helped - and if it is brought forward on Report Stage by the Government it will help - to undo in a small way the damage done by these controversies by ensuring that high-earning individuals on high wages, funded by taxpayers cannot avail of special treatment.

The current scheme operates under section 195 of the Taxes Consolidation Act 1997, which allows income from the sale of artistic works which have cultural and artistic merit to be exempted from income tax in certain circumstances, up to a limit, as the Minister of State knows, of €50,000 tax free in the year in which the exemption is granted by Revenue. Applications are made annually in respect of specific works, for example, a book, a play, a collection of art works and so on, rather than on a blanket basis for all works produced by an individual artist.

A Leas-Chathaoirligh, you will be interested to know that what does or does not qualify as having cultural or artistic merit is assessed by the Revenue Commissioners but with advice from the Arts Council based on a set of guidelines put in place by the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media. You will also be interested to know that on at least one occasion, the Arts Council has expressed concern about how Revenue is interpreting the meaning and scope of the artist tax exemption. That is why this important recommendation was brought before the House.

The number of exemptions granted by Revenue has grown every year in recent years, rising from 2,840 in 2015 to 3,270 in 2018. According to figures provided to the Dáil recently by the Minister for Finance, the total amount of tax forgone under the scheme is an average of about €11 million per annum over the past five years, which is a significant amount of money.

I thank the Senator.

Section 195 of the Taxes Consolidation Act 1997 has been amended regularly - on at least ten occasions in the past 15 years. There is considerable precedent for the scheme being tweaked, based on new developments or on the financial circumstances of the State.

The Senator has made the point very well.

Thank you, a Leas-Chathaoirligh.

I move on briefly to the successful applicants under the scheme. As I said, my issue with the operation of section 195 is that a number of people with high incomes are availing of the scheme. Revenue has published a list of those granted the exemption from 1998 onwards. You will be amazed by this a Leas-Chathaoirligh. One serving public officeholder with a salary in excess of €200,000 availed of the scheme. A former public officeholder with a pension of €138,000 availed of the scheme. Four separate exemptions were granted to serving Members of the Oireachtas, whose salaries were between €66,000 and €87,000 at the time they qualified.

I thank the Senator. I think we have taken-----

It gets worse, a Leas-Chathaoirligh.

One prominent broadcaster with a salary of €495,000 has been granted the exemption three times.

I have given the Senator considerable latitude.

On each point, as I think I said to you,-----

The Senator has made them twice.

-----there is no repetition and I think you will agree. A number of prominent sporting figures whose earnings are not in the public domain, but whose incomes are known to be high, have also qualified.

Each of these exemptions applied in respect of books they had written. Why should any of these people qualify for a tax exemption designed to assist low-paid artists? By allowing high earners to avail of the scheme, they paid no tax on the first €50,000 in royalties they earned from their books. Without the exemption-----

A Leas-Chathaoirligh, I have not got to the amount of money it is costing in each case. Without the exemption they would have paid tax at the top rate of 40%. In the case of the current and former public officeholders and the prominent broadcaster, as well as funding their salaries and pensions, the taxpayer is also potentially gifting them an extra €20,000 per annum in respect of a book they have written.

The Senator has made his point.

Why should these individuals not pay standard income tax on income derived from work?

We have discussed it twice now.

What possible case is there?

I thank the Senator.

Public figures, media personalities and sporting figures who have additional earnings from speaking engagements or company directorships pay income tax on those earnings at the normal rate. Why should earnings from publishing books be any different?

I thank the Senator.

The amendment, which is called a recommendation, would have brought about-----

We have already ruled it out of order.

As I have said already, I am putting this to the Minister of State because I am asking for this to be considered on Report Stage.

The Senator has already asked the Minister of State to consider that.

Public officeholders, within the meaning of the Social Welfare and Pensions Act 2010, would be precluded from availing of the exemption. This would exclude the President, Members of either of the Houses of the Oireachtas, members of the Judiciary, military judges, the Attorney General, the Comptroller and Auditor General and Members of the European Parliament.

The Senator has made the recommendation and I think the Minister of State gets it.

I thank you, a Leas-Chathaoirligh. Members of local authorities would not be precluded-----

Please, Senator-----

-----as they were removed from this definition by the Social Welfare Act 2016. They could still qualify for the exemption, subject to fulfilling the other necessary criteria.

I seek your indulgence, a Leas-Chathaoirligh. It is simply not sustainable for serving Members of the Oireachtas to be availing of a tax break-----

Okay, I thank-----

-----which was designed to assist low-paid artists. As I said earlier, since 1998 six exemptions have been granted to serving Members.

I thank the Senator.

To allow this to continue would be the very definition of the golden circle political establishment protecting its own purse.

Given that we have discussed this twice, I ask the Senator to finish with it.

I will conclude very shortly.

Former public officeholders who are in receipt of a public service pension would also be excluded, as I said, in cases where they receive more than €20,000 from their pension.

That point is well made.

I think that is a reasonable threshold because it allows that individuals who served in the Oireachtas only for a short time-----

We have had sufficient-----

-----and who might-----

The recommendation was already ruled out of order.

I accept that, a Leas-Chathaoirligh. I have accepted your ruling, but I am speaking to the section, as you permitted me to do.

That is stretching it.

I promised, and I intend to keep the promise, that I do not intend to repeat a single thing. I want to make important points for the Minister of State to consider ahead of Report Stage. The threshold of €20,000 for retired public officeholder is reasonable. It will ensure that individuals who have served only for a short time and who might have a relatively small or no pension at all would not be excluded from qualifying.

As I mentioned earlier, one exemption of €20,000 was granted to a former officeholder. Any person who earned €100,000 in taxable income in any of the last three tax years would not qualify for the exemption. I am very much persuaded by what Senator Higgins just said that perhaps this should be tweaked to provide for two of the previous tax years. The Minister of State might bear that in mind if he is in any way engaged by the substance of this proposed recommendation.

That would apply regardless of the person's profession or employment status or indeed whether he or she was public figures or not.

I ask the Senator to conclude on that.

I will conclude very shortly.

There is a wider issue here that goes beyond the scope of this but needs to be mentioned because it relates directly to the recommendation. It is the question of whether non-fictional books are involved. Most of the small number of people who would be excluded from this scheme had this recommendation been in place in previous years were granted the exemption in respect of books that were political memoirs. It seems that the granting of the exemption in respect of non-fiction books such as these has been a bone of contention between the Revenue Commissioners and the Arts Council, which are the bodies that manage the section 195 scheme, for more than a decade. In 2013, the Arts Council complained to Revenue that its role in this was being undermined by the tendency of Revenue to grant exemptions to "ghost written sports biographies" and "political memoirs". I think the Leas-Chathaoirleach will agree that there is not a word of repetition in what I am saying so I ask him to let me conclude this important point. The ministerial guidelines say that for non-fiction books to be considered, they should have a cultural theme such as a biography or autobiography of a writer or painter. In other words, the book must relate to art and creativity in a direct way if it is a non-fiction book such as a biography or autobiography. That shows how far we have come from the original meaning, aim and intended scope of the artist's exemption. Even then, according to the ministerial guidelines, a non-fiction book should only qualify if it is a pioneering work casting new light on its subject matter or changing the generally accepted understanding of the subject matter. That would be in the context of a biography of an artist or writer. I have to say, and I imagine most colleagues would agree with me, that it is difficult to see how political memoirs or collections of amusing political anecdotes would qualify as pioneering works that cast new light on the subject matter of politics. Political memoirs are of value to our political system since they inform the general population about matters of political and historical merit but they could hardly be described as having artistic merit so the fact that they qualify for this exemption is highly questionable. The same can be said for memoirs of sporting figures.

There appear to be broader issues about how the scheme is administered by Revenue and the Arts Council. Between 2004 and 2013, 46 appeals were made against unsuccessful applications for the exemption, of which 56% were successful. That seems to be a very high - a suspiciously high - success rate for an appeals process and it prompts its own questions. The Arts Council also provides expert opinions to Revenue in the event of an appeal. In 2013, the Arts Council complained that "all manner of appeals are upheld" and that it felt that some determinations by Revenue implied that the council considered sporting books in particular to be of artistic or cultural merit. I do not intend to be a snob about this. I get the cultural merit of sport but we are still a long way from the intention behind the artist's exemption.

We have addressed this very well in two ways.

I am coming to the conclusion. Clearly, the ministerial guidelines that apply to the grant of this exemption need to be reassessed so that these strange inconsistencies are ironed out and an exemption that was designed to promote and encourage artistic expression should do just that and no more.

In conclusion, and I mean this literally, there are issues I have just mentioned that go beyond the scope of the recommendation. The recommendation I was proposing today would iron out a main glaring inconsistency in the operation of section 195, specifically, that it is being availed of by high-earning figures in the political, media and sporting world, many of whom are being paid - and paid handsomely in some cases - by the taxpayer. The current state of the national finances and the significant challenges faced by ordinary working people demand that we make changes such as this to our tax code to ensure that high earners pay their share. This is not going to change the world or save the Exchequer a huge amount of money but what it would do is send a message to the taxpayer that there is prudent management of the resources coming into the State and that includes ensuring that tax exemptions are not abused, and I do not mean that in any morally judgmental way, by high earners for whom the exemption was never intended.

By way of clarification, I listened closely to everything Senator Mullen said. From what I understand, he had a recommendation that was ruled out of order. The recommendation was effectively to insert a new section between sections 3 and 4. Section 4 is about home sharing host allowances in respect of the HSE providing a tax allowance for people looking after people in their houses so it is not connected to anything we have discussed to date. The contribution we heard is certainly nothing to do with section 4. It was in respect of a recommendation that was ruled out of order, which involved a new section, but I will take on board everything the Senator said. That is all I can say.

(Interruptions).

I am putting the question.

I think I have the right to come in.

The recommendation has been ruled out of order. It is not relevant to this.

I am speaking to the section.

It is not relevant to section 4.

As I understand it, I have a right as a Member of this Seanad to respond to something the Minister said about section 4.

I do not think I should have to fight for that right. I think I have proved to the Leas-Chathaoirleach that I am not engaged in filibustering. I am making a serious point.

I know that but-----

I have great faith that the Minister of State will go away and think about this.

He has indicated that he will.

I have brought up something of substance. My recommendation has been ruled out of order on a technicality and as a result, I was advised by the Cathaoirleach and the Leas-Chathaoirleach that I was within my rights to speak to the section.

What I am saying is that section 4 should include a recommendation of the kind I am making, which proposes the insertion of a new section 5 that would amend section 195 of the principal Act. If the Minister of State is going to talk in respect of the content of the recommendation I am proposing being different in its scope to other matters covered within the section and to claim in this House that there is no such thing as a Bill of an omnibus nature or a Bill that treat of different issues, I can tell him that only a few weeks ago, we had considerable debate in the Seanad about how completely discrete issues were tacked into the same piece of legislation at the last moment. I seem to recall that it was in the context of the mother and baby homes commission legislation.

I ask the Minister of State to credit this House with some intelligence by sharing his thoughts with it. He is a fine legislator who knows his stuff so he knows as well as I do that it is no argument against the possible inclusion of this recommendation were the Government to have brought it forward that it somehow differs in scope, content or application from other things that might be covered under section 4 of the Bill. I ask the Minister of State for his specific response to my procedural point because he seems to be suggesting that not only does he not have to engage with what I have said because my proposed recommendation was ruled out of order, even if it had not been ruled out of order, there is no need to engage with it-----

The Senator has made his point.

I will just finish the point if I may - not in an overly leisurely way but I think I am entitled to that. The Minister of State seems to be saying that even if my recommendation had not been ruled out of order, there is no need to engage with it because the scope of it is somehow different to other matters treated within section 4 of the legislation. That is certainly a very novel approach to legislation.

The better approach would be to acknowledge that the recommendation has been deemed out of order but that it is not out of order for the Government to take good lawmaking seriously and to consider what I am trying to do on its merits, not on the basis of whether, as a mere Senator, I am entitled under Standing Order 41 to make a proposal of this kind. The Government should make a call on whether there is merit in the proposal and, on that basis, bring forward a proposal on Report Stage. I would be very grateful for the Minister of State's response to that.

It should be borne in mind that we have given Senator Mullen considerable latitude, given that the recommendation was out of order-----

You have not done me any favours, a Leas-Chathaoirligh-----

I have given the Senator latitude.

I will respond to the issue the Senator has raised. My only point was that we are on section 4. I just want people to know what we are talking about in this section of the Finance Bill. I will not read out the section in full. It amends section 192BA of the principal Act, relating to an exemption in respect of certain payments made or authorised by the Child and Family Agency. Section 4, which this debate has been connected to, is about payments by Tusla and their tax treatment.

I will put it this way. I will give Senator Mullen 100% for creativity for being able to link the debate on the artists' exemption to the tax treatment of a payment by Tusla to a host sharing a house. That is what section 4 is about. I accept that it might be possible, if one is exceptionally creative, to link the debate we have had to the Tusla payment. My understanding of the recommendation was that it was ruled out of order. Essentially, it sought to insert a new section. The recommendation we are discussing has been ruled out of order, and not by me. Senator Mullen has raised an issue discussion on which has been ruled out of order but the Leas-Chathaoirleach has facilitated that discussion. I was ready to deal with section 4, which is about a payment by Tusla. I understand that the exemption of certain earnings of writers, composers and artists allows the Revenue Commissioners to make a determination in respect of artistic works in the following categories only: a book or other writing, a play, a musical composition, a painting or other like picture, or a sculpture.

The Senator has made a good point, and perhaps it can be addressed by the House again separately. Guidelines are drawn up by the Arts Council and the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media to determine whether a work which falls within the scope of the activity listed in the section is an original or creative work and whether it has or is generally recognised as having a cultural or artistic merit and consequently can qualify for the exemption. The Senator makes the point that the Revenue does not adhere to these guidelines and regularly grants the exemption where, the Senator claims, the Arts Council has voiced criticism at the Revenue's approach in that regard. Again, the policy basis for the artists' exemption is to provide further encouragement to creative artists in our midst and to help create a sympathetic environment in which the arts can flourish. I do not see how it is relevant to the objective of the measure to exclude a person solely on the basis of his or her former employment. A work could be artistic, but the purpose of the Senator's recommendation is to exclude people from the exemption based on their former employment.

I was a little surprised the Senator went so hard and was so specific in referring to a particular highly paid individual who availed of the exemption. He did not refer to a name but he clearly publicly identified the person in this House in respect of their tax affairs. I was surprised by the specific nature of where the Senator went in that regard. That person is identifiable, not specifically here today, but identifiable to many people listening to the debate. I was surprised the Senator went that far. As I am sure he will agree, however, artists' inspiration and talent can be found in all unexpected places, even among public servants and public representatives, so we should not be excluded solely on the basis of our previous occupation.

As the Senator has said, the cap was previously €40,000 and has been raised to €50,000. In light of that, I do not believe it is necessary to limit further the relief to those who had a particular income outside the scheme in any of the three previous years. Creativity and talent can be found everywhere, including among public servants and politicians, and it is not right to exclude from the scheme, solely on the basis of the category of his or her previous employment, somebody who would otherwise meet the criteria of the scheme.

I take on board what the Senator has said. The topic he has raised merits a serious debate in its own right. I suggest that some mechanism be found for a serious debate on the issue he has raised. It is not, however, relevant to the HSE home sharing tax allowance, the payment by Tusla detailed in section 4. I have tried to respond as best I can to the substance of the debate raised by the Senator.

I will allow Senator Mullen two sentences.

No. I will take a little more than two sentences but nothing excessive, I promise you, a Leas-Chathaoirligh. First, I am going to do something that is relatively unusual in this House. I will apologise and say I was wrong on one point. I acknowledge that the Minister of State is correct because I now understand what he was saying about the purpose of the section. What I was clearly proposing here was the insertion of a new section 5, thereby renumbering all succeeding sections. Therefore, the Minister of State's question about that issue appears to have been, since we are at this point speaking on section 4, why should I speak on the insertion of a new section 5? In answer to that, while I apologise and say he is absolutely right on that point, I would follow on from his point in saying that what I should then do is speak to section 5 and suggest that we should not accept section 5 because the section 5 we should accept should be my proposed section 5. I am not sure a whole lot rides on the Minister of State's intervention if he thinks about the implications of what he has said. I grant that he is literally correct but, as I said, the implications of what he has said suggest that it is something of an absurdity, although he was literally correct.

I wish to note something else in passing. The Minister of State is a bright man, and I have no doubt that he has his own views on the artists' exemption, but he did not come here today entirely unprepared or unbriefed on the subject. That makes its own point about the farcical nature of the exclusions under the-----

The Senator has already made this point.

It is a point that needs to stand in the House.

The Senator has made it well and often.

Thank you, a Leas-Chathaoirligh. You say such kind things to me-----

No. It is time we put the question on the section.

-----even as you take the legs from under me. May I just address the substance then?

No. The Senator has already addressed the substance.

No, not the substance of my amendment but the substance of the Minister of State's objections. He said two things. First, he took issue with me for referring to a particularly high-earning individual-----

No. I do not want that issue returned to.

Please. This is really important.

We cannot identify anyone.

We cannot and we will not, and I shall not and I did not. That is my point.

The Senator has made that point-----

No. I was accused of nothing bad by the Minister of State.

I am ruling out any talk of an individual.

If the Minister of State came close to accusing me of something bad, it was of being somewhat irresponsible in referring to an incident which, were it to be delved into, might disclose the identity of a particular person. My response to that is important, a Leas-Chathaoirligh, and I ask you to let me make it. I will make it very clearly. If you were to ask me off the top of my head who that person is, I am not sure I could say with clarity who it is. The name of any such person simply did not enter my head in preparing the recommendation, other than the factuality of it.

We cannot have a discussion that might even lead to that identity being revealed.

Here is the point, though. Our job here is to shape policy and to make legislation in pursuit of that policy. If there is a relevant case that illustrates why change of legislation is extremely important, it simply cannot be the case, under any reasonable interpretation of the role of a legislator, that I may not instance a particular situation which highlights the urgency of change. That simply cannot be the case just because some person might ask in whose case that situation arose. It is not our business to talk about whose case the situation arose in. The media may engage in that type of activity, but it cannot-----

No, this is really important, a Leas-Chathaoirligh.

No, it is not. This is a repeat-----

I absolutely insist on it, a Leas-Chathaoirligh. It cannot be the case that a Member of the Oireachtas-----

We cannot identify an individual.

I shall not do so, but I insist-----

I think you are getting bad advice, a Leas-Chathaoirligh. It cannot be the case that a Member of the Oireachtas is constrained from illustrating the purpose-----

The Senator has made that point. I insist on putting the question on the section now.

I ask you to think very carefully, a Leas-Chathaoirligh, and I ask the Minister of State to think very carefully-----

Yes. The Senator has said that.

-----about seeking to obstruct any Member of the Dáil or Seanad from referring to-----

I am putting the question.

I have not finished, but I will finish shortly. It simply cannot be the case that a Member of the Dáil or Seanad would be obstructed from referring to a factual situation which is not sub judice and goes to the relevance of the recommendation that is being made. It cannot be the case-----

What the Minister of State said was that we cannot identify an individual or-----

I fully agree with him-----

-----or reveal the circumstances-----

I fully agree with him, but where I disagree with the Minister of State is the suggestion that I may not identify a particular situation that is illustrative of the need for change-----

I do not think that is implied. Thank you, Senator.

Sorry, there is no other possible inference that I can draw from what the Minister of State said.

Well I am putting question-----

Before we put any question on the section, I ask the Minister of State to acknowledge the point that I am making, which is that while I am under a moral duty, as part of my obligations and responsibilities as a legislator, not to engage in the naming of people who might be embarrassed or disadvantaged-----

Thank you, Senator. I am putting the question-----

I am still on my feet and I am asking to be allowed to make a point-----

Well, I am asking the Senator to-----

I promise that I am making an important point here. I am making a point that goes to-----

No. The Senator has made his point very clearly.

No, a Leas-Chathaoirligh. This goes to my prerogatives, not just as a Member of Seanad Éireann, but the right of every Deputy and Senator to advert to a particular factual situation where it is illustrative of the case-----

Yes, and the Senator has said that, so I am putting the question-----

No. There is one final point I want to make before you put any such question and before anyone else chooses to speak on this. I ask the Minister of State to respond to the point that I am making. I agree with the Minister of State that I should not name names, but the Minister of State might want to clarify that I should be within my rights to refer to a situation. The mere fact that there is a uniqueness to an incidence-----

If that incidence strongly illustrates the case I am making, I should not be under any constraint.

The Senator has made his point. I am asking him----

The last point is this. The second substantial objection the Minister of State made, as opposed to the procedural objection, to the recommendation-----

The Senator should bear in mind that the recommendation has been ruled out of order, and it is not relevant to the section.

The Leas-Chathaoirleach should also bear in mind that the Minister of State chose to comment on the recommendation and that that invites a response from me. We are not on Second Stage or Report Stage and I am not trying to hold up the House. However, a stupid convention has come into this House where, if we decide to rush legislation, we will make it difficult for legislators to make their point.

That is not what is involved-----

It is a disgrace.

It is a disgrace.

If the Senator is going to digress, I will put the question.

I am not someone who jumps up and down or engages in theatrics or tries to get myself thrown out of the Chamber as other people in these Houses have done over the years. I have endured nothing but obstruction from the Chair, even when I have tried to-----

That is not the case. There was a ruling at the beginning.

-----make points without repeating myself.

No. I must interrupt the Senator there. There was a ruling from the Chair, and latitude was given to the Senator to speak the section to incorporate many of his arguments, which he did very succinctly. That was done. The Minister of State responded and we cannot go on with this interminably.

The Senator made his point about the identification of an individual.

I was coming to a second substantial point.

I ask the Senator to make his point very briefly.

It can hardly be the case on Committee Stage of this legislation that the Minister of State can attack the rationale behind or the implications of my proposed recommendation and that I would not given an opportunity to address it. I would have addressed this point in much shorter order, if I did not have to constantly apologise for still being on my feet.

The second substantial objection the Minister of State made to my recommendation concerned public servants. Of course, public servants can produce works of cultural merit. There was a former Minister of State who wrote quite a racy novel a number of years of years ago-----

We are not going to mention individuals.

-----and people might have had views as to its artistic or cultural merit. However, the fact is that the artist exemption was designed to protect those who were at risk of poverty. In reverse order, the two legs of the proposed recommendation were as follows: a person who, in any of the three years preceding the assessment, was in receipt of income in excess €100,000. Such a person is not at risk of poverty. That is the merit of that part of it, and it applies to anybody, regardless of whether he or she is a public servant or not. As the Minister of State knows, the first leg of the recommendation concerned serving officeholders - I named the kinds of officeholders involved - or a person in receipt of a pension in excess of €20,000. The reason for limiting it to a public servant in that situation, as opposed to, for example, someone in the private sector who might have a pension of €30,000, is that members of the public sector enjoy particular advantages. I do not need tell the Minister of State the difference between a defined benefit and a defined contribution pension scheme.

That point was made earlier by the Senator in his substantive remarks.

No, it was not. It was not.

It was about the-----

No. The difference between the defined benefit and the defined contribution scheme-----

It was made even when it should not have been made.

I did not give an extensive rationale for the reason the first part of the proposed recommendation deals with public officeholders. There is a very obvious difference between being Member of the Dáil or the Seanad, a judge or the Attorney General, or someone like that, and being in the private sector. It is generally speaking that we are cushioned in a way that people in the private sector and county councillors are not.

I am putting the question now-----

-----and that is the reason. I do not know if the Minister of State is suggesting, for example, that there is some kind of constitutional obstacle to placing this kind of particular burden on public officeholders. There certainly was not a constitutional obstacle to the pension related deduction that was introduced after the financial crash. Therefore, there is a clear rationale and I ask the Minister of State to reflect on it, and not just him personally. With the greatest of respect to the Minister of State, as he has seen, I have been willing to acknowledge the bona fides of his argument where it eventually became clear to me, and I apologise for my own slowness in that respect. However, I ask him to take this recommendation on its merits and not just to fob it off by saying that it is useful for a discussion at another time. Now is the time.

Thank you, Senator. I think that is fair now.

Given that we are borrowing and spending shed loads of money, now is the time to change the improper application of a tax exemption which has been availed of by high earners or people on secure pensions.

Thank you, Senator.

Now is the time to engage intellectually and politically with that proposal. I would ask the Minister of State to consider the recommendation and that the Government might resubmit it on Report Stage.

Question put and agreed to.
SECTION 5
Question proposed: "That section 5 stand part of the Bill."

I do not agree to it.

If it is the same discussion again-----

I do not intend to support it because section 5 should be my section 5. I intend to oppose it.

Question put.

Will the Senators claiming a division please rise?

Senators Alice-Mary Higgins, Sharon Keogan and Rónán Mullen rose.

As fewer than five Members have risen I declare the question carried. In accordance with Standing Order 61 the names of the Senators dissenting will be recorded in the Journal of the Proceedings of the Seanad.

Question declared carried.
Section 6 agreed to.
SECTION 7
Question proposed: "That section 7 stand part of the Bill."

We are opposing this section. Section 7 amends section 477C(5A) of the Taxes Consolidation Act 1997 to extend the enhanced help to buy relief. The help-to-buy scheme provides income tax relief to assist first-time buyers with obtaining the deposit required to purchase or build their first home. The enhanced help-to-buy relief is set to expire on 31 December 2020 and this section provides for an extension of the enhanced relief by 12 months to 31 December 2021. The Government's policy change allows first-time buyers purchasing a newly built home or building one themselves to claim back up to €30,000 in income tax paid, as well deposit interest retention tax, DIRT, on bank deposit interest, over the last four years. As previously, people cannot claim back either universal social charge or PRSI paid over that period. This is a substantial increase on the current rules that allow home purchasers to claim back a maximum of €20,000. It doubles the purchase price the scheme can cover. Under the scheme, people can claim up to 10% of the price on houses priced up to €300,000, or €30,000 on more expensive properties up to a maximum value of €500,000.

Covid-19 has severely stunted house building, reducing the number of new builds available to those using the help-to-buy scheme. There is no guarantee that the extra €10,000 will make homes more affordable and there are reasons to believe it will push up prices. Indeed, speaking at an ESRI conference on budget 2021 on 16 October, Dr. Barra Roantree said:

It is likely to fuel property price growth. So, it will push up prices

When the hospitality sector sought a dramatic VAT cut in the stimulus plan, it was quite transparent that it did not intend to pass that on to customers but wanted to allow businesses to recover margins. With current supply constraints, the expanded help-to-buy scheme will likely deliver precisely that outcome for developers. There is also a distributional and equity issue regarding the policy change. The most recent data show that 40% of those who availed of the help-to-buy scheme already had the required deposit to secure a mortgage.

I support the extension of the help-to-buy scheme. The figures show that 16,412 people applied for the help-to-buy scheme from January to November and even more people have applied in the last few months. If the Senator were successful in removing the section, can he imagine how many first-time buyers would be let down by him and Sinn Féin? The UK has brought in a similar scheme, which is a tax-free loan of up to 40% for first-time buyers. In Ireland we are only giving them up to 10%. It is not ideal that we have to intervene in the market and provide such schemes but there needs to be some incentive for builders in the short term to increase supply. This scheme has worked. It has helped young couples who have been paying rent as they do not have to put money aside for a deposit. The help-to-buy scheme is one way of overcoming that requirement. It is very welcome and we acted before the UK when it came to the scheme. We were in there first. Generally, we follow its legislation but in this case it has brought in similar legislation to ours. One of the better elements in the UK legislation is that if builders want to benefit from the help-to-buy scheme or engage with it, they have to comply with extra standards of house building and extra requirements. That might be something for the Department to look at, in conjunction with the Department of Housing, Local Government and Heritage. It is a very helpful scheme. There could be improvements but I do not agree with Senator Gavan's opposition to the section.

I do not intend to say too much, though I probably will end up doing so. Having been on the housing committee during the previous Dáil, I have a fair and deep understanding of this issue. The same cases were made when the initial scheme was brought in and they were proved incorrect. In the absence of affordability, the State needs to intervene to give young couples who aspire to own their own homes that opportunity. It might not be the ideal solution but it is a solution that gives families hope of owning their own homes. This scheme did not increase house prices when it was introduced originally and there was a shortage at that time. We have now increased it by another €10,000 and I guarantee that the same sceptics will make the same comments they made when the help-to-buy scheme was first brought in.

I have no problem with supporting anything that helps a family own their own home. Our party is strongly behind home ownership, unlike Senator Gavan's party, which does not stand behind home ownership. It believes everyone should rent for the rest of their lives. We are a party that believes families should own their homes. There is no alternative. This scheme has been successful and should be supported and all Sinn Féin wants to do is remove it completely. There is only this scheme, and a shared equity scheme which the Minister for housing will be launching shortly, to allow families the opportunity to own their own homes while we try to tackle the bigger challenge of dealing with affordability in the long term.

Senator Gavan makes quite a lot of good, commonsense points in this House but the way he is looking at this scheme is flawed. Second-hand house prices are rising more dramatically than new house prices. This scheme tries to put extra stock into circulation. There have been huge complications in Dublin where some funds have bought large numbers of units. Perhaps the Minister of State can clarify this but as far as I am aware these funds cannot claim the first-time buyer's grant on these properties as well. These two things are certainly helping first-time buyers and are bringing more stock into the market, because that is a problem. Builders are not jumping up and down and we are not being overrun by new builds, as Senator Gavan knows. Unfortunately, we still have to try to coax builders into building at present. That is just the market we are in and if there is anything we can do in that regard, we should do it. This scheme has been successful. It is not a miracle cure by any stretch of the imagination. In England, new homes have no VAT on them and that would certainly be a prudent way to go forward. People could say the same thing about that and claim that builders would only use it for profit. I support this section.

Does Senator Gavan want to come back in?

Not really. I think we will agree to disagree on this matter at this point.

Apologies, I did not realise Senator Higgins wanted to come in.

I do not take particular exception to this scheme but I do object to the idea that we need to coax builders when a bigger and more substantial change would be brought about if we addressed the issues that were mentioned, including the fact that speculators can buy large numbers of units and benefit from tax relief measures through other schemes. That is the end of it.

They are not benefiting from this scheme.

No, but as was raised by a Member, that is the context of this support. I am in favour of supporting first-time buyers but one of the reasons they need support is that they are up against speculative purchasers that are also helped by other schemes which outweigh this one. They are in a situation where builders have been allowed to hoard land for strategic housing developments, get planning permission and not deliver on that housing. That is creating a shrunken market in which investors are disproportionately powerful. I do not have a fundamental objection to this scheme but it is a band-aid and we are allowing the wounds in the system to continue untreated. That is my concern.

I have to disagree with Senator Higgins.

The fundamental point we were talking about and which this section speaks to is the first-time buyers grant which, if memory serves me correctly, is up to €30,000. In rural Ireland if that was not there, houses would not be built at present. That is a fact. I have gone through pricing models and can stand over that and can have that argument with anybody and I would be right on it. If that grant was not available, houses would not be built in rural Ireland. It might be slightly different in Dublin but that is the unfortunate reality.

We discussed this topic on Second Stage. To briefly summarise, the help-to-buy scheme announced in budget 2017 is an income tax incentive measure designed to assist first-time buyers with a deposit required to purchase or self-build a new home or apartment to live in as their home. The relief is only available in respect of new builds with a view to increasing supply. This measure is to encourage supply, more housebuilding and more opportunities for people to buy a house. Building more houses will help in keeping prices down. If supply is tight, prices can be higher. This measure is to encourage supply and to encourage people to purchase their own homes. The issue of funds investing in companies or otherwise to carry out development for rental purposes is not part of the amendment we are discussing here today.

As stated, this is a measure to encourage supply and to assist people in buying their first home and getting their foot on the ladder in a home to live in. I can think of nothing more important in society today than helping people to own their own homes. I cannot accept the proposal that this should not be accepted and I support this section.

Question put and declared carried.
Sections 8 and 9 agreed to.
NEW SECTIONS

I move recommendation No. 4:

4. In page 11, after line 34, to insert the following:

“11. The Minister shall, within three months of the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the introduction of a new threshold for High Wealth Individuals defined as persons in possession of net assets of the value of €10 million and above.”.

This recommendation asks that the Minister would, within three months of the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the introduction of a new threshold for high wealth individuals, defined as persons in possession of net assets to the value of €10 million and above.

I am not attempting, as may perhaps have been hinted, to reach backwards in taxing in the past but we need to be clear that there have been those who have become much more wealthy this year. It is outside the scope of this Bill to retrospectively tax them but it is a marker that we need to review, which is why I am encouraging the Minister to prepare a report in order that we might look in our next budget at a new tax threshold for high wealth individuals. Let us be in proportion. Globally, the very wealthiest have increased wealth of €10.2 trillion during the Covid-19 crisis. For billionaires globally, there has been a 27.5% increase in their wealth during the pandemic. Even at a time when many have struggled and when all involved in every kind of business, together with employees, and all of those different groups upon which we have debated at length, it is important to note that billionaires and indeed millionaires in many cases have become much more wealthy. This is not an abstract issue talking about the 27.5% increase globally because in Ireland, the very wealthiest have increased their wealth by 7.3%. Nobody is getting increases of that level of income when one talks about SMEs or PAYE employees but for the very wealthy in Ireland, the 300 individuals who have wealth of €93.7 billion between them, there has been a 7.3% increase in their wealth. It is very reasonable to ask those who have become extremely wealthy, at a time when every other part of society and of our economy has been strained and pressed to the pin of their collar, to pay little bit more. This would give the Minister of State the option of looking at what might be the case to introduce a threshold for high wealth individuals.

We are not talking about those people on €100,000 a year, as was discussed on a previous amendment, but are talking about those with net assets of €10 million or more. They can contribute more. It is worth bearing in mind that in this crisis that has strained and pressed all of us, not only have the very wealthiest become much more wealthy, as I have said to the tune of billions and trillions of euro, but these people are also endangering us more in respect of the next crisis. That is because the next crisis is climate change and a report from Oxfam this week pointed out that while those on lower incomes have decreased their emissions by 20% to 13%, the top 5% of the wealthy have increased their emissions by 3%, even at a time of significant climate crisis. The top 1% of persons, that is again the super-wealthy that we are talking about - for example, the 300 individuals in Ireland but their equivalent globally - have increased their carbon emissions by 5%.

We have, then, the very wealthiest creating greater danger and jeopardy for us in the future by way of another crisis, which will be a significant crisis and will take a toll on our collective economy, and we are not asking that they increase what they contribute. It is very reasonable that we would and I urge the Minister of State to do a report to look at this issue. This recommendation does not require that to be done for this budget. I urge everybody to bear in mind what we know, and this is not from left-wing economists but from mainstream economics, from the research of the International Monetary Fund, IMF, the World Bank, and others. There is no trickle-down from billionaires. We know, and I have quoted this in previous Finance Bills, that research by the IMF over 30 years in more than 100 countries found that when one increase the income of the bottom 10%, the national GDP and the economy grows. When one increases the income of those in the top 10%, it can actually be bad for the economy. This is a chance to address and redress this issue. We do not want to emerge from this crisis with an even more skewed and imbalanced economic system, as it does not serve any of us.

Briefly, I wish to voice my support on this matter. I am always fascinated by the fact that the one thing that neither of the conservative parties opposite ever concede to do is to try to measure the wealth in this country. Every opportunity is taken to avoid doing that. As Senator Higgins has so eloquently pointed out, there has been a huge gain in wealth for the wealthiest, the top 1% in this country. All this recommendation is requesting is some information on this. Why should anyone be afraid of a report detailing where that wealth is actually at? Surely, in the interests of understanding where our country is that, all of us should be supporting the call for this report.

While this is a noble and good idea, unfortunately I do not know how practical it would be, as I am sure the Minister of State will lead us to understand. Wealth is highly mobile nowadays, which is why gold has doubled its value in the past three years and this has fed into a significant increase in the value in minerals, gold and stocks of that sort this year in the face of the Covid-19 pandemic. For all of these people, their wealth is highly mobile and is all over the world; not just in Ireland. It is okay to say we have 300 people in Ireland with a net worth of a particular value and that it has increased by 7%. I would be fearful if we started heavy taxation and targeting a section of society made up of 300 people as they would simply move out of our country.

Those figures have been proven. Different shifts in the past have resulted in such people moving out of our country. As the Minister of State will know, many of them employed a lot of people. There are many of the captains of industry located in Ireland. I would not be in favour of this move.

This issue was raised previously by Senator Higgins, including last year. There is a special section within the Revenue Commissioners, known as the large cases - high wealth individuals division, deals with high wealth individuals. It is important the public knows that these individuals are not treated in the same way as any other taxpayers. There is a special section in Revenue which compiles information on individuals. This is done through its knowledge of and co-operation under double-taxation agreements with Revenue authorities in other countries. Revenue has a detailed list of everybody in the high wealth category. These are high wealth individuals with assets in excess of €20 million. The previous threshold was €50 million. The Revenue previously dealt with this issue on the basis of assets worth in excess of €50 million. I will make a couple of points in that regard.

There are people in Ireland who have high wealth assets, but little or no income. They may have an investment here or a large family legacy located here but wealth does not always equate to income. It is important to make that point. Normally, there should be a connection between both, but not always specifically. The Revenue's medium enterprise division also has a unit dealing with high wealth individuals and this remit covers individuals whose assets are between €10 million and €20 million. The review which led to the reduction in the high wealth individual threshold from €50 million to €20 million was conducted in 2019 and the report was published in June 2019. Senators should bear in mind that following on from Revenue's review and report produced last year, we have very new information in respect of this area and this led to the threshold being reduced from €50 million to €20 million. I understand that the rationale behind using the threshold of €20 million included facilitating the close alignment of Revenue's resources in the context of risk. Revenue has a serious risk unit which looks at circumstances where revenue to the State could be at risk. The threshold was €50 million and it has been reduced to €20 million. Revenue is of the view that, in terms of risk, this is an appropriate level. The reduction from €50 million to €20 million is a big one.

A further rationale was the engagement between Revenue and the Comptroller and Auditor General on chapter 18 of the 2018 report on the management of high wealth individuals’ tax liabilities and - I have a particular interest in the next line of my script - discussions during the attendance of the Chairman of the Revenue Commissioners at the Committee of Public Accounts in November 2018. In the previous Oireachtas, I was Chairman of the Committee of Public Accounts. The 2018 report of the Comptroller and Auditor General included material on high wealth individuals, which is an issue I took particular interest in, as Senators are doing today. The Committee of Public Accounts took the view that the €50 million threshold was too high. I think everyone would agree with that. I drafted and published a report on behalf of the committee recommending that it be reduced. In terms of accountability and transparency in the Oireachtas, the committee's input into that arising from its detailed examination of the chapter in the Comptroller and Auditor General's report, its discussions on it with Revenue and the report it produced, did contribute to the threshold being lowered. That is an important point to make. I acknowledge the work of the Members of the Oireachtas who contributed to that report. As an issue, this has been live. As I said, Revenue reviewed it and subsequently published a report on it last year.

The adjustment of Revenue’s organisational structure is an ongoing process, influenced by a wide range of factors, both external and internal. Revenue proactively and continually evolves its structure to ensure that it optimises the alignment of its resources with risk to the taxpayer by not collecting all the money that is due and to ensure taxpayer compliance. Revenue is independent in its administration of the tax and duty systems and the threshold within which cases are managed by the different divisions in Revenue is an operational matter for Revenue. As part of its ongoing management of its case base, I understand Revenue continues to prepare reports and evolve that base. The management of issues in regard to the collection of taxes is a matter for the Revenue, which, at operational level, has reduced the threshold from €50 million to €20 million. It continues to examine the risk and should a future risk be identified Revenue will prepare a report on it. As I said, it published one such report last year. In these circumstances, a further review is not appropriate at this time. It would not be a productive use of Revenue resources coming so soon after the previous review. On that basis, I do not propose to accept the amendment.

There are ongoing major improvements in this area. The threshold has been reduced from €50 million to €20 and Revenue will keep the matter under review. As I said, it produced a report. Revenue staff are the best people at the coalface to assess the risk and they are doing that and they will continue to issue further reports. I have no doubt the issue will come up again, not just here in a future debate but also, perhaps, at hearings of Oireachtas committees, be that the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach or the Committee of Public Accounts.

There are good mechanisms in place and there has been substantial progress on this issue in the past two years. I think we should accept that and leave it to Revenue to come forward with further reviews. I look forward to that. I cannot accept the amendment.

I acknowledge that the Minister of State has taken an interest in this issue in the past, that he continues to take an interest in it and that the threshold has been reduced to €20 million. I am of the view, however, that a threshold of €10 million would be better. There are two issues here. One is the question of the gathering of the information and the other, which is outside my prerogative as a member of the Opposition, relates to what we do with that information. I believe that we need to consider the introduction of an additional tax or some form of levy on high wealth individuals, be the level of such wealth categorised, as I suggest, at €10 million-plus or €20 million-plus, which I do acknowledge is an improvement on the €50 million-plus that applied previously. I think this would be appropriate. It is a way of reflecting and allowing people to make a contribution. I do not accept that, for example, a 1% tax on such wealth will mean that people will automatically take their children out of schools, sell their homes and move lock, stock and barrel out of the country. We know that we have an issue with tax exiles but that is a separate issue. We are talking about high wealth individuals and appropriate contribution.

The Minister of State indicated that he took an interest in this issue in the past in terms of the Committee of Public Accounts and the report it produced, which resulted in the threshold being reduced from €50 million to €20 million - not €10 million as I would like. It is important that we do something with the report from last year. Much as I would welcome a new report, I would prefer to see something done with the previous report. As I said earlier, these are not issues that I can seek to amend because that would require financial amendments. Given the Minister of State has taken an interest in this matter it would be good if he indicated that he is looking to see what aspects of Government policies in the context of the next budget cycle might be informed by the information in that report.

I take on board the spirit of what the Senator said. If Revenue has more information available on the next occasion we come to deal with a Finance Bill, that information should be made available for consideration in the context of the drafting of that Bill. Given that a report was produced as recently as last year, we have the most up to date information available. The Senator's point is well taken for the future.

Recommendation put and declared lost.

I move recommendation No. 5:

In page 11, after line 34, to insert the following:

“Report on operation of income tax relief for cross-border workers

11. The Minister shall, within six months of the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the operation of income tax relief for cross-border workers under section 825A of the Taxes Consolidation Act 1997, including the consideration of options to regularise the temporary relief granted by the Revenue Commissioners under that section in response to Covid-19 and further measures to facilitate cross-border workers in the future.”.

I know the Minister of State is familiar with this particular amendment from my colleague, Deputy Pearse Doherty, in the Lower House and that he has had good conversations on it. He will be aware that there is a relief in our tax code known as the transborder workers' relief, which people can claim if they are working wholly outside of the State that is the jurisdiction and commuting to work. In most cases, this involves people working on a cross-Border basis. In other cases, people resident here could be commuting to Manchester or London and be working five days per week in Britain or elsewhere. Again, the problem in this area has been exposed by the pandemic, but, in fairness, Revenue and Department were quick to act on it.

If people carry out any work that is more than incidental in this jurisdiction, they will lose this trans-border relief. For example, if people work from home for one day or half a day, they lose this relief. That would be the case as long as it was deemed something more than incidental.

As a result of the pandemic, the Revenue waived the requirement because we are obviously trying to encourage people not to travel. However, that is not the issue. The issue concerns changing work patterns. For example, if an employee living in Donegal and working in a company in Derry is availing of this relief, it will mean the tax the person pays is calculated in Derry and there is no tax liability in this State. If the person works one day from home, however, that will all be gone. He or she will have a tax liability here and the difference between what will be applicable in Derry and this State would have to be paid to the Revenue here.

Let us consider the reverse case, where an employee is resident in Derry and working in a company in Letterkenny. That employee could work from home for up to something like 60 days and still be able to gain the relief. I am not suggesting this should be right across the board. There is, however, a need to carve out space within our Finance Bill regarding these cross-border workers on the island of Ireland.

I mentioned looking at this issue through the prism of Brexit and in respect of the Good Friday Agreement. I do not believe we should allow those who live on one side of the Border and who work on the other side to work remotely most of the year. However, we should try to bring the situation into line with what happens in the North. We should allow for several days where people can work from home. It could be for different reasons. It could be a case where two partners are working. One could be a nurse, a teacher or someone working on the front line. Perhaps a child is sick on a given day and the worker who was supposed to travel to Derry cannot do so and works from home instead. If that person works from home on any substantive issue, anything more than something incidental, he or she stands to lose the trans-border relief. There should be flexibility built into the scheme to ensure it is possible for people to work in their place of residence for several days and still be able to avail of the relief.

An energetic group has been established to represent cross-border workers. It is an important issue that affects many people. I am not stipulating what the number of days should be. The Minister can decide that. It could start with 12 or 14 days or whatever number of days he chooses. There must be some flexibility, however, because it is far too rigid now. The criteria state that the employment duties must be wholly exercised outside the State with none performed in the State, save for duties considered incidental to the foreign employment. That is a situation of a bygone day.

Although we have double taxation arrangements, where there is offsetting of tax from one jurisdiction to the other, trans-border relief is a different matter. We must build into our tax code for workers resident here but working outside the jurisdiction the flexibility to prevent the complete loss of the trans-border relief if the workers work from home on a certain number of days in the calendar. This recommendation simply calls for a report to examine all these important issues and I hope the Minister of State will support same.

I thank Senator Gavan for raising the issue. I applaud the Cross-Border Workers Coalition for driving this issue and bringing it to the attention of people. It is not only a tax issue; it is a quality of life issue and an all-island economy issue. The fact that it was addressed for Covid-19 is fantastic. Given the acceleration of remote working and the expected changes in how we work, I hope we can find a more permanent solution to this.

I raised the matter in a Fine Gael parliamentary party meeting and I was supported by Deputy Joe McHugh. The Minister agreed to look at this. He has since said that he will examine it as part of the work of the tax strategy group. That is going to be important. I realise this is being brought forward in the Finance Bill but it is not as simple as dealing with it or finding a solution for it through the Irish taxation system. It involves the EU and the double taxation network regions as well as Ireland's taxation system. The Minister has agreed to look at it. I encourage my colleagues to raise it with their MEPs as well because it is relevant to them.

As I have said, it is an all-island economy issue. We have done extraordinary work to protect the all-island economy. Thankfully, this week we have seen agreement in principle on the implementation of the Northern Ireland protocol. Last week, we saw the Brexit Bill, which will help to continue cross-border life as we know it. This week is critical for the all-island economy. I urge the Minister of State to consider that in advance of the work of the tax strategy group. The Revenue Commissioners have shown flexibility because of Covid-19. Will the Minister of State consider maintaining that flexibility until the work of the tax strategy group during the summer is complete?

I wish to emphasise the importance of finding a solution. We do not want double tax liability for people who are working in one jurisdiction and living in another. We want to ensure they can avail of the same flexibility as other workers. It presents a problem in terms of attracting talent.

This is an important issue. The Cross-Border Workers Coalition has done fantastic work on it. I know the Minister has said that he will meet them. That would be a positive move.

I am aware of the matters raised by the Senators and can advise that my officials have been in touch with their counterparts in Northern Ireland on the matter. I note that the relief applies not only to persons with a UK-based employment but also for employment in the EU and countries with which we have a double taxation agreement in compliance with Ireland's treaty obligations. While it is most acute on the island of Ireland, these arrangements are in place not only between the UK and the EU but in countries with which we have a double taxation agreement. It is a worldwide issue from an Irish taxation point of view and it affects a large number of countries with which we have a double taxation agreement.

I note there is no equivalent provision in UK domestic legislation to match what we have. In the case of a person who lives in Ireland but works in another jurisdiction, the general tax position is that as an Irish resident the person is subject to Irish tax on worldwide income from any source, including the employment exercised outside the State. At the same time, the employment may also be subject to tax in the country in which the person works. In accordance with general principles of international tax, where instances of double taxation arise on the same income, relief against Irish tax may be claimed by way of a credit for any foreign tax already paid subject to the terms of the applicable double taxation agreement. Unilateral relief may also be available in certain circumstances under domestic Irish legislation.

What if a person has taxable income on both sides or lives on one side and works on the other side? The essence of all these double taxation agreements is that the person only pays tax once. If the person pays tax in one jurisdiction under these arrangements the person gets relief in the other country, whether the home country or wherever the person is tax resident, against the tax already paid. There is never a question that the person will be doubly taxed. The double tax agreements are in place to prevent that from happening. A person is taxed once but not twice. That is why the revenue authorities in the various jurisdictions ensure taxpayer X who has paid X amount of tax gets relief in the country in which he is resident for the tax he paid in the country. That is the essence of the double taxation agreement.

In the case of a person who lives in the State but who works in Northern Ireland, the terms of the Ireland-UK double taxation agreement provide for relief by allowing the Irish resident to claim relief for the UK tax paid against the Irish tax that may be due on the same income. That is exactly the point I was making but it applies to more countries than the UK. That is the basic position of all taxation agreements.

The trans-border relief referred to by the Senators is in addition to the relief provided by the double taxation agreement and may apply, subject to certain conditions, where a person lives in Ireland but works wholly outside of the State. As set out in section 825A of the Taxes Consolidation Act 1997, to qualify for trans-border relief the individual must be tax resident in Ireland; must work in a country with which Ireland has a double taxation agreement in an employment held for a continuous period of 13 weeks in the year; must exercise the employment duties wholly outside of the State with none performed in the State, save for matters considered incidental to the foreign employment; must have paid tax in the other country and must not be due a refund of the tax; and must be present in Ireland for at least one day for every week the person works abroad.

One could say it is almost customised for people in Northern Ireland and the UK. If one is working exclusively in the UK, one must be present in Ireland at least one day in every week. Where the trans-border relief applies in the case of an Irish resident who works in the UK, it operates in such a way that only UK tax is charged on the employment income and there is no charge to Irish tax on the same income. Any additional Irish tax that may be due is forgone under the Irish domestic legislation.

This tax relief is not normally available for Irish residents who work from home in Ireland. However, in light of the Covid-19 pandemic, Revenue has confirmed that if employees are required to work from home in the State due to Covid-19, such days spent working at home will not preclude the individual from being entitled to claim this relief, provided all other conditions of the relief are met. I have listed out the five conditions, one of which relates to being present in the State for one day per week. Due to Covid restrictions in travel, Revenue has made those flexible arrangements.

In the event that the existing arrangements were to be revised, specifically for Northern Ireland Border workers, a number of issues could arise, including: questions of equitable treatment of Irish residents in respect of employments carried out in Ireland; the competitive position of Irish employers vis-à-vis those in other countries; concerns regarding the potential for double non-taxation of such workers, which means there might be a case where they would end up not paying tax in either place, which would be a risk to our Exchequer; and questions around compliance with established principles of international tax.

Any such consideration would also need to be examined in the overall context of Ireland’s EU membership, noting that it would likely not be possible for Ireland to give preferential treatment to UK-based or Northern Ireland-based employments without also giving similar treatment to EU member states or other countries with which we have a double taxation agreement. When one is in the EU network, one cannot have separate arrangements for one country outside of the EU and not have it for other countries outside the EU. It would have to be a similar arrangement for all countries that have a double taxation agreement.

As is the case with all taxation matters, this position will be kept under review, especially in the context of Brexit. However, I assure Senators that in circumstances where this relief does not apply, relief for foreign tax may be applicable in the normal course under the double taxation agreement.

This was introduced in the context of Covid. That is why, even if I, as Minister of State, wished to accept this proposal, the six-month deadline would be an issue because we might have Covid here for longer than six months after passage of the Act. Revenue has made the required alterations on an administrative basis in its management. It is satisfied there is no great risk to the Exchequer as a result. Revenue has introduced this on an administrative arrangement basis, using its own powers of discretion to look after tax revenue but always to treat taxpayers fairly. It has done this and I expect that to continue as long as Covid continues to be an issue, which could be well beyond the six months we are talking about. There is no immediate prospect of this being withdrawn as long as Covid is, unfortunately, with us. It is only in the context of Covid that this is arising. After that, in terms of Brexit and so on, it is another day's work. In terms of seeking a report now, this matter may not have come to a conclusion in six months and people are satisfied with some of the arrangements currently in place, that the Revenue is taking a practical approach and that it is a good organisation. On that basis, I do not accept the recommendation relating to the six months issue.

I thank the Minister of State for the extensive answer. It is good to hear cross-party support on this issue. We should look at it on Report Stage. If the six months is the issue, we can look at when we can get a report done. However, there seems to be consensus that we need a report on this issue. I would like to get a commitment from the Minister of State on the production of that report. We can figure out the timeline later but the Minister of State should give us a commitment because this is important, as he has acknowledged.

This issue came up in the Dáil after Report Stage last week and the Minister, Deputy Donohoe, gave a clear commitment that the issue of cross-Border workers would be looked at by the strategy group well in advance of next year's budget. The Minister put that on the record on Report Stage in the Dáil. It will be examined in 2021 as the situation evolves and fully considered in advance of the budget. That is a good commitment from the Minister.

Recommendation put and declared lost.

I move recommendation No. 6:

In page 11, after line 34, to insert the following:

“Report on income tax relief

11. The Minister shall, within six months of the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on an income tax relief equivalent in value to 8.3 per cent of annual rent to all private rental tenants not already in receipt of any State subsidy, examining the social and economic impact of this measure in the context of high levels of rent.”.

This recommendation relates to the important issue of tax relief for renters. The €43 million allocated to the help to buy scheme stands in stark contrast with the consistent refusal of this Government and previous governments to assist renters. We all know the crisis in the rental market and the extortionate rents that are in place on our doorsteps and throughout the country. In my city of Limerick, there are two-bedroom apartments that one could not give away years ago. They had to install flat-screen TVs to entice tenants to take them. Such apartments are now going for €1,200 a month. Working people are pushed to the pin of their collar.

Sinn Féin has consistently proposed a tax relief for renters. It would be the equivalent of one month's rent. It is a reasonable proposal which would make a tangible difference to hundreds of thousands of people in this State. The Government has rejected that consistently. It is disappointing that whenever these things come up, for better or worse, Fianna Fáil and Fine Gael tend to side with the landlords rather than the tenants.

The proposal we make today is to do a report. It is a simple request to do a report on the issue to tell us how it would look in terms of taxation. It would be a step in the right direction. It is a reasonable and sensible proposal and I would hope someone on the Fianna Fáil or Fine Gael benches would have something to say in defence of renters, as opposed to landlords.

I acknowledge the new section proposed to be inserted in the Bill. Years ago, there was such a provision but it was abolished, I think, in 2010 or 2011, following a recommendation from the Commission on Taxation that rent relief should be discontinued. The view of this independent commission was that, in the same manner in which mortgage interest relief increased the cost of housing, rent relief increases the cost of private rented accommodation.

I would link this to the previous points made on the help to buy scheme, where people said that by giving an incentive to the person, one is helping to put up the price and put money in the builder's pocket. The Senator felt the scheme was bad because of that. I would say the scheme the Senator is proposing would have the exact effect he warned against under a previous recommendation. If we gave tax relief, it would allow landlords put up the price of rent, knowing the renter was getting such relief. To use the Senator's logic, the outcome of this would be to make landlords wealthier. By increasing the incentive for a purchaser or a renter, who is the ultimate beneficiary when they know the taxpayer is giving a subsidy or support? The logic the Senator has used tells me that the only beneficiary of this would be landlords who would get extra money because they would put up the rent in the knowledge that the tenant is getting tax relief. On that basis, I am not in a position to accept the recommendation that we have a report on this matter within six months.

The contradiction is on the Minister of State's side. He is saying that if we effectively give money to developers via the help to buy scheme, it will not cause inflation, but it will with renters.

We will not get agreement on this, but we are asking for a report to examine what the consequences could be. What is the harm in that? What is the Minister of State afraid the report might elicit?

I will be brief. I accept that there is some contradiction in the logic on the Senator's side and ours. Previously, the logic of his point was to put money in builders' pockets, but now he wants to put money in landlords' pockets. That is a contradiction. The difference on our side was that I was in favour of helping people to buy houses. That is our priority. We are not in favour of creating a culture of renting and making landlords wealthier. There is a difference in each of our approaches, but we are favouring people who want to buy their own houses. I am not in a position to accept the recommendation.

Recommendation put and declared lost.
Section 10 agreed to.
SECTION 11
Question proposed: "That section 11 stand part of the Bill."

Without the Covid restrictions support scheme, CRSS, many businesses would have gone to the wall. We have engaged on this matter previously. I welcome the CRSS, but I have an ongoing concern. Businesses are relying on the CRSS, tax warehousing and many other measures that will collectively add to their problems down the road. The CRSS is allowing us to stay viable and keep our doors open while we park the losses we are making to be dealt with later. It is welcome from that point of view but, as I told the Minister of State the last time we spoke, there is no harmonisation or gradation of the payment. Either a business qualifies for the payment or it does not. The Minister of State said that we could be dealing with this situation for a further six or nine months. The CRSS needs to be reviewed and tweaked. It should not be the case that a business getting it is an either-or situation or that qualifying is based solely on access to premises. Under level 3, a restaurant can be open and, therefore, will not qualify even though it is only operating at half capacity. Will the Minister of State bring my suggestion to the Minister, Deputy Donohoe? Could we review the CRSS to make it more flexible? It is important to the business sector, but we can be more creative and flexible in how we make it available to businesses that need it to survive. We all know we are talking about next June. Businesses that are accumulating losses week after week need the CRSS to be reviewed and tweaked. The level of debt that is going into warehousing is worrying. All businesses will have to face them next September.

I wish to bring a matter to the Minister of State's attention. Senator Casey just outlined part of it. The CRSS was a crucial piece of budget 2021 and provided businesses with certainty and necessary supports, which was especially important during the lockdown. More than 13,000 businesses have already received support under the CRSS. As the Minister of State is aware, the hospitality sector is facing difficulties. For hotels in Galway and beyond, the prohibition on leaving one's county has created considerable issues in terms of occupancy rates. Many gastropubs and restaurants up and down the west coast and beyond are not in a position to open because there are no tourists. Opening would not be feasible or viable. These businesses are now more or less seasonal, be they in Connemara or the Burren, on the Aran Islands or wherever. Opening is not viable, yet they are not eligible for the scheme. This issue needs to be examined and a three-month review may need to be conducted. It is causing difficulties and, as Senator Casey alluded to, has financial implications through putting issues on the long finger. We need to be fair to businesses.

Thankfully, we seem to be through the worst of the pandemic. Senators believe so. Today's announcement regarding the distribution of a vaccine was welcome.

I seek a comment from the Minister of State. I have gone through the Bill. I understand that the reduced VAT rate has proven effective. As the Minister of State is well aware, it was welcomed by the hospitality sector. Those who operate in the hospitality and tourism sectors feel strongly that having the reduced VAT rate of 9% for all of 2021 would be a great boost to them. It would also bring certainty, which is what businesses require now. They have come through an incredibly challenging 2020. I appreciate that reducing the VAT rate would be a major cost to the State, but is consideration being given to extending the temporary reduction, which is due to expire on 31 December? Will we be sending a message that the 9% rate will be extended for all of 2021?

I welcome the Minister of State. I support the comments of Senators Casey and Crowe regarding the CRSS. There is an issue if businesses are supposed to open at a certain level but there is no business to sustain them or not enough to prevent them making losses, for example, in the tourism sector. Will this matter be examined? Valid points have been made. A continued support, be it at a 50% or 75% sliding scale, needs to be considered.

I thank the Senators for discussing this important scheme. It is not subject to any recommendation, but it is a significant element of the legislation. On Second Stage on Tuesday, Senators Casey and Buttimer referred to the issue of warehousing tax. I did not have the figures with me then, so I will confirm now that the total amount of tax debts warehoused is €1.9 billion. As such, this has been a major scheme. These debts are mainly VAT and employer's PAYE. There is also €8 million in income tax debt. Approximately 70,000 businesses have availed of this tax debt warehousing. We all know that this debt has to be paid. It has not gone away, but businesses have shoved it down the line. As an aside, perhaps this is why the appetite for other schemes, for example, funds advanced by the Strategic Banking Corporation of Ireland, is not strong. People know they have large debts to pay. The €1.9 billion is a substantial figure and I undertook on Tuesday to provide the information to the House.

I have provided that figure here.

The issue of the thresholds has been well aired. The level of restrictions in the country due to Covid is relevant because if goes below level 2, some restrictions are not available at all. The key issue is that this matter be kept under close review. I am not in a position to make any comment on extending VAT rate reductions. That matter is not deal with in this legislation. Regarding the important point about this scheme, section 11(e) states:

Without prejudice to the generality of paragraph (d), the Minister for Finance shall cause an assessment, at such intervals as he or she considers appropriate but no less frequently than every 3 months beginning on 13 October 2020, of the following, and any other relevant matters ...

This means the Minister has given a commitment in the legislation that because Covid, businesses and restrictions are so fluid and getting people back to earning a livelihood is such a priority, he will review the position every three months. This is effective from essentially budget day around 13 October so it is November, December and January. A report on this will be prepared in January and every three months as long as this situation continues to obtain. It will be very closely monitored and there will be an opportunity for Government and the Oireachtas to debate this on an ongoing basis. It is good that we will have a review so early in the new year and regularly afterwards as long as we are dealing with Covid. On that basis, I thank the Senators for their contributions on this section.

I welcome the Minister of State's comments about the CRSS. I think he realises how vital it is - no more than supporters across the House like Senator Carrigy - that the review is done in January. Hopefully, we should be able to have an input into that. My next point is very relevant to the hospitality industry. The temporary reduced VAT rate of 9% applies until the end of December. I take it that this will be extended for a minimum of six months. It is important that we send out the right message from this House.

When I asked the Minister of State a question earlier in the week or last week, I was not expecting that figure to come back. It is quite staggering and goes back to my fundamental concern about what businesses will do in September when they are faced with this bill. It is all tied in together because what is happening in businesses such as my own is that we are using the CRSS to pay suppliers and for energy and everything else. The only thing we can park into the future is State debt - our taxes such as VAT and PAYE and PRSI - but we still owe that. I do not know whether the Minister of State can start looking at how we are going to deal with that in September because if businesses are faced with 3% interest, which is proposed at the moment, and have to fund that after September, it will be another challenge for them. This is why the CRSS needs to be looked at in a more sympathetic manner, rather than having this hard rule of access to the premises only. Other criteria need to be taken into account to see how we can help businesses to get over that hump.

I will address a comment made in the past few moments even though it does not strictly apply to this section. Believe it or not, I have good news to impart to Senators who asked for the VAT reduction to be extended into next year. It will be effective until December 2021.

Would it be possible to extend it until 2023?

We will take it year by year. With effect from 1 November 2020, hospitality- and tourism-related services and goods currently subject to a VAT rate of 13.5% will, on a temporary basis, be subject a reduced rate of 9%. This will apply to catering and restaurant supplies, tourist accommodation, cinemas, theatres, museums, historic houses, open farms, amusement parks, certain printed matter and hairdressing. This change will apply from 1 November 2020 to 31 December 2021, which is a 14-month period. That is good news. It is until the end of next year.

Question put and agreed to.
Sections 12 to 21, inclusive, agreed to.
NEW SECTION

I move recommendation No. 7:

In page 54, between lines 23 and 24, to insert the following:

“Report on restoring cap on intangible assets

23. The Minister shall, within six months of the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on restoring the 80 per cent cap on intangible assets onshored between 2015 and 2017 that can be written off against profits at the rate of 100 per cent.".

This recommendation basically calls on the Minister to prepare and lay before both Houses, within six months of the passing of the legislation, a report on restoring the 80% cap on intangible assets onshored between 2015 and 2017 that can be written off against profits at the rate of 100%. The recommendation seeks a report on implementing an 80% cap on capital allowances. This arises from recommendation No. 18 of Seamus Coffey's review of Ireland's corporation tax code, which states:

In order to ensure some smoothing of corporation tax revenues over time, it is recommended that the limitation on the quantum of relevant income against which capital allowances for intangible assets and any related interest expense may be deducted in a tax year be reduced to 80%.

This policy was endorsed by Stephen Kinsella, associate professor of economics at the University of Limerick, in January 2020. It is worth quoting what Professor Kinsella had to say. He stated:

Sinn Féin have correctly identified that intangible assets are a key resource for the Irish economy in the 21st century. I argued for a rethinking of Ireland’s relationship with intangible assets some weeks ago, but more importantly, so did the Fiscal Council's Seamus Coffey. Sinn Féin want to tax these intangible assets properly. Introducing an 80% cap on profits in intangible assets, particularly those on-shored between 2015 and 2018 by multinationals.

He went to state:

This is an excellent idea that will result in some capital flight from the country, no doubt, but which will fund the Exchequer handsomely and help offset the inevitable loss of tax revenue from the introduction of new OECD rules on digital taxes.

The amount of capital allowances claimed by companies increased by €27.4 billion in 2015 to reach a level of €51.8 billion. These are truly eye-watering amounts. The use of capital allowances has increased significantly from €8.5 billion in 2011 to €45.2 billion in 2015. This likely reflects a greater amount of capital allowances available but also increased profitability of companies carrying capital allowances and thus able to use existing allowances. Unused capital allowances in one year are carried forward as trading losses for use in subsequent periods when there is taxable income to offset against them. Capital allowances for intangible assets are claimed under section 291A of the Taxes Consolidation Act 1997. This section provides for the offsetting of capital expenditure on the development or acquisition of a range of intangible assets against the income arising from the use of that intangible.

Ireland's national accounts have been impacted by a number of intangible onshoring events in recent years with the profit generated by these intangible assets now included in gross measures of Ireland's national income. Most notably, there was an increase in the stock of intangible assets in Ireland of approximately €250 billion in quarter 1 of 2015, while the quarterly national accounts for quarter 4 of 2016 show investment in the acquisition of intangibles of approximately €25 billion. There may have been other events that were not as readily identifiable in the accounts while the possibility of future large onshoring events cannot be discounted. In nominal terms, Ireland's gross capital stock rose from €756 billion to €1.088 trillion, an increase of €332 billion. Changes in the capital stock are usually driven by investments, either outright purchase or internal development, and obsolescence, withdrawal from use, giving entries and exits to the capital stock. However, in 2015, investment in capital was €54.1 billion. As a result, nearly 85% of the €332 billion increase in the capital stock cannot be explained by investment. Table 9.8 of Seamus Coffey's review of the corporation tax code gives the composition of Ireland's gross capital stock for 2014 and 2015. In the 2015 data, two categories were suppressed for confidentiality reasons, namely, those relating to transport equipment and research and development.

The categories reflect aircraft leasing and the onshoring of intellectual property assets. The categories for which data are provided recorded an increase of €42 billion in 2015, so the remaining €289 billion is accounted for by the missing categories of transport equipment and intangibles. It is probable that the bulk of this was due to intangibles.

From an industrial policy perspective, the decision of companies to locate some of their intangible assets in Ireland can be considered another spoke in the wheel. Although these assets are inherently mobile, the decision to locate them here strengthens existing investment in Ireland. The link to future investment is less clear but ongoing changes at international level in how corporate income tax is assessed have the link between profit and substance as a key motivation. Many companies that are likely considering the location of their intangibles in this changed environment already have significant operations in Ireland. This substance will likely be a factor some companies will consider when making these decisions, and it is likely that further substance will follow to the location chosen.

We are asking for a report on this. It is a very reasonable and important request that has the backing of key respected economists who already do good work for the Government.

The cost of assets that are used to generate taxable trading profits are recognised as legitimate business expenses. While these costs are not fully tax deductible in the year in which they are incurred, tax relief is available through capital allowances, which spreads the cost of the asset over a number of years. This gives a fairer reflection of the performance of the business for accounting and tax purposes, which is why capital allowances are a well-established feature of most OECD tax codes.

By the early to mid-2000s, it was clear that the development and exploitation of intangible assets had become a significant driver of economic growth in OECD economies, some of which had introduced specific tax schemes to address the particular features of these assets. Therefore, the Finance Act 2009 introduced capital allowances for certain intangible assets that a company manages, develops and exploits. These intellectual property, IP, allowances encourage substantive activity and high-quality employment in the management and exploitation of intangible assets such as patents, trademarks, know-how, customer lists and research rights.

The success of Ireland’s approach to encouraging real substantive investment is clear from Revenue’s analysis, which shows that claims of intellectual property allowances accounted for 24% of net corporation tax payments in 2019. In addition to corporation tax, claims of IP allowances are making a significant contribution to the Exchequer from all payroll tax receipts.

When IP allowances were introduced, the maximum deduction for IP allowances and related interest was restricted to 80% of income from the relevant trade. No such cap applies to other capital allowances, so the cap was removed in the Finance Act 2014 to bring the tax treatment of intangible assets into line with the tax treatment of other assets and of similar assets in other jurisdictions.

The 80% cap was reintroduced in budget 2018 in response to a recommendation in the Coffey report, with the aim of smoothing corporation tax receipts and helping to support their sustainability. As the Senator is well aware, changes to tax law are generally made on a prospective basis such that they apply only from the date on which they have been given effect. I know the Senator was referring to prior years in his contribution. The cap does not affect the overall quantum of relief. It merely extends the period over which intellectual property allowances are used, with any restricted amounts carried forward for use in later periods, subject to the 80% cap in those periods. It is relevant to note that IDA Ireland’s assessment is that Ireland offers a strong and growing research, development and innovation environment and found that a third of multinationals in Ireland have had operations here for more than 20 years. These companies have long-established and deep-rooted links with the Irish economy, which are supported by Ireland’s stable and transparent taxation approach.

The Coffey report said that it is right that we tax these companies, and we clearly do so. It also said it is essential that our tax regime is robust, is not subject to challenge and allows companies to plan ahead, invest and generate real activity and employment in the country with reasonable certainty. It is important to maintain this certainty as part of our overall tax regime, and to change it from year to year would cause uncertainty. People would not know the implications of making long-term investments if significant changes were made every year.

Seamus Coffey's report goes on to say:

In order to ensure some smoothing of corporation tax revenues over time, it is recommended that the limitation on the quantum of relevant income against which capital allowances for intangible assets and any related interest expense may be deducted in a tax year be reduced to 80%.

The tax came in at 80%, went up to 100%, and Mr. Coffey reckoned it should be brought back to 80%, and we have done that.

None of these issues will increase the amount of corporation tax that will be paid. All it is doing is extending the period over which to pay corporation tax. The Senator mentioned in his contribution that this may lead to a flight of capital from the country. I would not support a measure where the person proposing it recognises that, if it were implemented, it could lead to a capital flight from the country.

Essentially, what the Seamus Coffey report has done, which is good, is to say that by putting a cap on how much of the allowances can be claimed each year, it will take longer for them to get the full tax relief for their intellectual property intangible asset. When we know a company is going to make a certain amount of profit in the years ahead, and bear in mind these multinationals we are talking about pay the majority of corporation tax already, we are now saying to them that we want a more sustainable flow of corporation tax rather than a big surge one year, a drop-off the next year followed by another big surge. We cannot plan our health services if the tax coming into the country goes up and down like that. That is why we have restricted it to 80% as it will allow for a more stable environment. Companies can only write it off over a longer period so there cannot be any major reduction in tax in a year if they have a bigger write-off allowed in any particular year. Having the 80% limit spreads out longer the amount of tax that will be paid. There will be no more and no less tax paid but it can be paid over a longer period. That ensures we have, in the years ahead, a certain level of corporation tax coming to us in the medium term rather than taking a big bulk of it now and being short of tax in two or three years' time because we grabbed it all now. I think that it is far better, and I am not talking from the multinational perspective but from the perspective of the Irish public, that we have a little stability in the flow of corporation tax into the Exchequer, and that we do not try to grab it all now and leave ourselves short next year and in the following years.

The regime that is in place is excellent. We have had a very recent review and I do not see a need to review the matter again because by doing so it may cause uncertainty about this issue. We have certainty and a guaranteed sustainable tax flow from this system for a number of years ahead. I would not like to interfere with that plus I do not think that we need a report because we are satisfied with the regime as is.

Recommendation put and declared lost.
Sections 22 to 25, inclusive, agreed to.
NEW SECTIONS

I move recommendation No. 8:

In page 56, between lines 2 and 3, to insert the following:

“26. The Minister shall, within three months of the passing of this Act, prepare and lay before both House of the Oireachtas a report on—

(a) the introduction of Capital Gains Tax at a rate of 33 per cent where a REIT or a group of REIT disposes of a property of its property rental business,

(b) the introduction of a surcharge on REITs buying up residential properties, and

(c) the effect or otherwise of REITs on the supply of residential housing on the open market for private household purchase.”.

My recommendation follows our discussion on housing and the very real difficulties faced by first-time buyers in the housing market and, indeed, some of the systemic problems that go a lot deeper than simply the financial situation for first-time buyers but are around what we value and prioritise in the system. I do not suggest that real estate investment trusts, REITs, are the sole or main cause of our housing issues. There are other issues, as we have highlighted, such as the hoarding of land and planning permission. It is a fact that the opportunity to attach a use-it-or-lose-it clause in a more robust and stronger way to strategic housing developments was not taken at the time when it was suggested, and we again have the hoarding not only of land but of planning permission and situations where the Government somehow feels it has to coax builders and developers to build rather than leading out on building, as it should. Those are all of the wider issues.

I want to address here the issue of REITs. It was said again, I believe by a Government Senator, that there are stories of how these investment companies are buying up hundreds of housing units at a time. They are being bought before they have been built. They leave first-time buyers completely out of the market.

They become a speculative investment to be leaked onto the market bit by bit and in a way that maximises profit by creating a scarcity and ensuring there is desperation, and there is desperation for some persons with regard to accessing houses at this point.

The Government gives generous tax terms to REITs and there is a question as to whether prioritising funding to these bodies and giving them tax breaks are a positive intervention in the market. I argue that it requires review. The review I am seeking from the Minister is to examine the introduction of a new capital gains tax at a rate of 33% where a REIT or a group of REITs is disposing of its property or property rental businesses. This is an important measure now because we know how many REITs and speculative funds operate. They look for the next big opportunity. There are going to be opportunities in the UK, for example, and we do not want to have a situation in which a number of large-scale owners of rental property or homes can put the Government in the position of being a hostage in the future. We do not want a situation whereby a REIT disposes of property rental businesses on a mass scale. If it does that, we want the State to recoup a decent amount of revenue which it can put towards the other measures it takes in respect of housing. It is appropriate to have a capital gains tax that recoups the very large profits that have been made, given that so much of that profit depended on the preferential tax treatment originally afforded.

In addition to examining the question of a capital gains tax at the rate of 33%, the report should examine the introduction of a surcharge for REITs that are buying residential property. Instead of the State having to add itself alongside first-time buyers, perhaps we could consider introducing a surcharge on the rival purchasers in this regard to ensure individuals and homeowners would be able to compete effectively. I also ask that the report examine the effect or otherwise of REITs generally on the supply of residential housing on the open market for private house purchase. Again, these measures have been in place for some time. There are strong individual and anecdotal examples of cases in which they have had a negative impact either in terms of rental security or in terms of access to home ownership.

I am asking the Minister of State to examine that and to consider the measures I have set out, or such other measures as he might find, that will ensure we do not have a set of negative and potentially avoidable consequences to the treatment of REITs in Ireland.

The real estate investment trust framework was introduced in 2013 to facilitate long-term, risk-diversified investment in rental property, by removing a double layer of tax which otherwise would have applied. Income and gains from Irish property are not taxed within the REIT but are instead taxed in the hands of the investor when the funds are distributed.

In 2019, Department of Finance officials produced a report on REITs, Irish real estate funds, IREFs, and section 110 companies as they invest in the Irish property market. This paper provided a basis for policy discussions and for a number of amendments to the taxation regime for REITs as part of the Finance Act 2019. The amendments aimed to ensure that an appropriate level of tax is levied on REITs. As the Senator’s recommendation refers to capital gains, it is relevant to note that two of the amendments focused specifically on property disposals. The first related to the application of dividend withholding tax on capital disposals. If the net proceeds from capital disposals are not reinvested in the REIT business or distributed in the 12 months prior to the disposal or within a two-year period following the disposal, they become part of the profits of the REIT business, at least 85% of which must be distributed annually. That means the recipients, or the investors, will pay tax on that at their top tax rate.

The second change limited the regime in the case of REITs in operation for less than 15 years. Prior to the Finance Act 2019, upon a company ceasing to be a REIT all its property was deemed to be disposed of and reacquired. This ring-fenced gains within the REIT regime and mirrored the treatment for a company electing into the regime where all pre-REIT gains were crystallised as taxable. An amendment was introduced to limit this cessation measure to REITs in operation for a minimum of 15 years. A company had to be in existence for 15 years to avail of that capital gains tax regime. Obviously, companies that were here for a short period were now excluded. This was done in line with the policy objective of the REIT regime, which is to encourage stable, long-term, collective investment in the Irish property market.

As regards the impact of REITs on the residential property market, although institutional investors have increased their presence in recent years, they continue to represent a very small share of the residential housing market. Central Statistics Office, CSO, data show that in 2019, property funds, real estate firms and REITs combined purchased a net 0.8% of all transacted units. This equates to 479 net purchases out of a total of 58,376 property transactions. More broadly, financial, insurance and real estate companies were net sellers into the market in 2019. This means they sold more housing stock than they purchased.

An increasing volume of investment by institutional investors is reported to be by way of forward purchase deals, meaning agreements for the purchase of stock not yet built, with much of this investment targeted towards urban apartments. This funding source is particularly important in apartment developments where it is not possible for the developer to fund the project in stages through the sale of different phases, as can more easily be the case with housing estates. This investment is a likely reason behind the recent increase in apartment construction as of the end of 2019. It is, therefore, increasing the badly-needed supply of housing in these locations. In light of the fact that the report was prepared only last year and given the measures introduced in the Finance Act 2019, it is not appropriate to undertake a further review at this time.

Of all the investment by these investment companies in the Irish market, 28% of it is residential and 72% is commercial. The vast majority of their investment is in the commercial office space and that type of development rather than in the residential sector. They have less than 3% of the Dublin housing stock and less than 2% of the housing stock nationwide. They have a role in financing apartment blocks where no builder would have the funding to do it alone. The builder cannot do the development in stages because of the complex construction, whereas if there are 100 houses in a housing estate, the builder can build them 20, 30 or 40 at a time. One cannot do that with an apartment block when it has be built complete.

The bottom line about the REITs is that the investors in the REIT pay the full tax. There is a requirement for 85% of the profits to be distributed by way of dividend, and the dividends are taxed at the full tax rate of the investor. It is important to recognise that. As mentioned previously, where investors are outside the State, this is caught in line with the normal double taxation agreements that exist across the planet. That is the mechanism whereby any income that is not taxed in Ireland is caught under a double taxation agreement, depending on where the investor is resident. On the basis that we recently concluded a report and amendments were made in the Finance Act 2019, I am not in a position to agree to a further report on the REIT regime.

If anything, the Minister of State has made the case for a far more ambitious investigation into REITs than mine. We all have a concern about the potential homeowners and those in rental situations. The Minister of State is correct that approximately 70% of the money has gone into commercial office blocks, many of which are empty. We can take a walk in the square mile around these buildings and see thousands of square metres of empty commercial office space. In many cases we also see, and this was highlighted during the Covid pandemic, the hollowing out of the city centre and the fact that it has been deadened by the presence of speculative, often empty, open-plan commercial office space that is already doing its work by being built and serving as a speculative investment. It is taking up spaces where we might have a vibrant city centre. REITs have a role in that.

I would be very happy if the Minister of State did wish to conduct an investigation that looked not just at the interference and engagement of REITs in respect of housing but also looked at the favourable and unusual tax treatment in place for REITs. Many people have incomes and if they sell a property or another asset they are subject to capital gains tax at a certain rate. As Members know and the Minister of State is well aware, many of the investors are not based in Ireland and, as such, will not pay tax in Ireland in that regard. Those who are based in Ireland do not pay tax at anything like the rate they would pay in capital gains tax. Some people argue that it is double taxation if one is taxed again anywhere down the line. Most people and small businesses do not experience that.

There is a question around the capital gains tax waiver. We know the capital gains tax waiver from 2012 onwards is considered to have contributed significantly to the overheating of the market. The very favourable treatment of REITs in respect of capital gains tax has been and is a real concern. It is creating a dynamic of speculative investment.

The Minister of State referred to the fact that more property is sold. That is the case because much of it is flipped. A person buying a house to live in will buy it, live in it and then sell it if they decide to move on. A very large scale investor can afford to buy numerous offices and housing units and leave them empty and then, exactly as I described, pick the point of greatest pressure in the market to make them available or sell them on. Of course, there are investors buying units and then, drip by drip, selling them at a point such as the period in the market previously when there was a significant amount of selling as prices had sufficiently inflated, as the Minister of State described. I acknowledge we are in a different market now.

We cannot and should not be placing a speculative model at the centre of building. Sometimes we hear about having to coax builders to build houses. How will we coax builders to build houses when it is far more lucrative and easier for them to just build yet another empty office block? The Minister of State himself made the case in that regard in terms of the problems relating to REITs.

The problems go far beyond the housing issues at which I have looked. The Minister of State referred to reports that were done in the past. I urge him to really think about and examine potential changes we may see in respect of the operations of REITs in the forthcoming 12 months or 24 months post Brexit. I refer to the many international commercial investors that may currently be working through REITs.

The principle in respect of double taxation was based on a previous model relating to pension funds. The idea was that people were paying into a pension fund and that the fund would then invest the money and the investors would be taxed when they got their pension. That was the investment principle and it had some basis. It was based around the idea of collective investment by pension holders who paid in their pension. That is from where it originally came. The extension and widening of this kind of space that is being given to speculative investors is really problematic.

Although there may have been reports in the past, I urge the Minister of State, now that he has responsibility for this area, to consider a re-examination of the issue. I of course am very open to his examining the issues relating to commercial office letting, as well as those he has mentioned.

I agree with many of the sentiments expressed by Senator Higgins regarding the operation of REITs. The problem with the Finance Bill is that it leads one on to other issues of principle. At one time, REITs played a role in the market and were considered to be part of the housing solution but it has evolved into something bigger and is actually causing more problems than it is providing solutions. It is disappointing that we need REITs to come in to build apartments. We should be able to find ways in the economy of building apartment blocks. We should not need REITs to do it. That is the fundamental problem. If one is developing houses, one can sell five houses and then move on to building the next five or ten or 15, whereas with apartment blocks one must build them to scale and in their entirety.

Senator Higgins referred to the hollowing out of the city centre. I would not necessarily blame REITs for that. Rather, I would look towards the planning system and county development plans and see what we, as a society, are looking for in city centres. We looked to REITs to solve the issues in the rental market. Although Senator Gavan and I may differ on this issue, he will acknowledge that the vast majority of landlords, approximately 85% of them, own fewer than two properties and do not get the same breaks as do REITs, yet they provide a valuable source of accommodation for families and individuals. Before giving out about landlords, we must remember that between 85% and 90% of landlords own two properties or fewer. The RTB is clear that the relationship between small landlords and their tenants is much more beneficial and personal and has a much greater understanding of the issues tenants are going through than is the case with regard to some of the REITs and their tenants. The issue of REITs was looked at. I have questions regarding the role REITs play in the property market and the whole housing solution. The problem with speaking on the Finance Bill is that we get into other issues. I agree with many of Senator Higgins' remarks regarding REITs and their impact on the housing market.

I welcome that thoughtful contribution by Senator Casey. There is much on which I agree with him. It emphasises the frustration of those of us on this side of the House. The requests that are being made are very reasonable. We are asking the Government to prepare a report. It is very disappointing that, recommendation after recommendation, the Minister of State is refusing to engage in terms of taking on these reports. To be frank, it strikes far too conservative a tone. What is the Minister of State afraid of in the context of the recommendation tabled by Senator Higgins? What is he afraid we will find out from that report? There is a problem in this area, as has been acknowledged by his party colleague. All Members know there are problems in this area. What is the fear of preparing a report such as this? I cannot see what there is to fear. What do we have to fear from information? Surely we need more information on this issue. The Government should do more in this area. It has an opportunity to do so.

Information published in the 2019 annual reports relating to this area and the organisations involved indicates that the total value of REITs in the Irish market is €3.7 billion, 28% of which is residential and 72% commercial. That information only became available this year. We examined the matter this year based on financial information produced less than 12 months ago. I do not think the Revenue or the Department of Finance should spend all their time every year examining every report. It is sometimes necessary to prepare a report, make changes if necessary and then see how it works after a couple of years, but this matter was examined within the past year based on financial information published less than 12 months ago. The fact that the matter was examined based on the annual reports that have been published recently means there is up-to-date information available.

Reference was made to REITs being largely concerned with the rental market and that they focus mainly on the office premises market. Investment decisions were made on the basis of being able to rent certain city centre properties etc., but Covid is changing the complexion of the city centre and where people wish to live. People may wish to live closer to the area from which they originally came. That will work its way into a much wider planning issue in the Dublin region in particular.

On the basis that REITs are obliged to distribute 85% of their property profits annually for taxation in the hands of their shareholders, there is no taxation issue to be dealt with here. Matters contained in the Finance Bill may stray into the broader issue of planning or apartment blocks versus houses, but those are really matters for the housing side. I know the Seanad will be dealing with the issue of housing. From a taxation point of view, 85% of the profits are distributed and they are taxed fully in the hands of the recipients. That may be at the top rate of tax. In some cases, the profits may be taxed at a much higher rate than the corporation tax rate. There are double taxation agreements in the context of investors not resident outside the State. There is a dividend withholding tax. When REITs declare a dividend each year, which must be a minimum of 85% of their profits, 25% must be deducted by way of dividend withholding tax. That is taken into consideration in the double taxation agreement. Some other countries may only have a dividend rate of 15%, which is kind of the norm. In Ireland, we can be sure that a dividend withholding tax of 25% applies to all those dividends.

A significant level of taxation is being obtained in this area but only where the REITs make a profit. Let us be clear. Anybody who invests a lot of money and has an empty building that they cannot rent is not making profit. We are only talking those who make a profit. Every property that has been referred to here, the empty properties and the apartment blocks that are under construction, have not yet yielded a rent roll and have not yet produced a penny or profit. The investment has all been one way, that is, into construction of housing and office blocks. There will be no profit out of those until they begin to get rent roll to make a profit. The profit comes long after the original investment and even when there is a profit, there is a withholding tax and the recipient pays that tax at the highest rate.

As I said, the most recent information is based on last year's annual reports which were only published earlier this year. The information we have is only six months old so I do not see the reason we would need to do a report every six months. We have good current information and those annual reports will be coming out again early next year for the end of this financial year and everybody will be able to see some of those reports at that stage. It will assist the wider discussion. I would not like to see the Department of Finance or Revenue having to stop its work and do a detailed report every six months when a company or sector of society issues an annual report. We have current information.

The Minister of State has acknowledged that the complexion of the situation has changed in the past six months. This has not been a normal six-month period. The complexion of how our towns and cities might work has entirely changed. I do not think it is by choice that everybody is moving home. It is also because property has become very valuable, in a speculative way, over the past few years. Office blocks have been favoured in many cases, even in areas where housing is desperately needed. It is commercially and financially advantageous to those investors to invest in such properties.

These have been six months of change and the Minister of State needs to re-examine this matter. In particular, he needs to examine the measures in terms of commercial office blocks and whether we want to have advantageous tax relief for the building of office space when we have vast amounts of it that are empty. That is a substantial question of public finances, which is something in which I know the Minister of State, from his previous role, is very interested. I suggest it is an issue. If the Minister of State feels these are going to be examined again as a part of the annual review, it would be important for him to look at a cost-benefit analysis of the rationale for greatly incentivising an advantageous tax relationship for those building commercial office space, given the different choices we make as a State. Why are we doing it and why is it more important than other things? That is, ultimately, the core question relating to finances.

The Minister of State has already outlined the dividend withholding tax of 25%. The 33% capital gains tax would indeed be higher. The thing is that the buying and selling of properties is something the real estate investment trust, REIT, scheme is doing. The dividend question for investors comes at a later point. As I said, if a small business owner decides to buy or sell a property, or whatever, they will be paying capital gains tax and so forth. It is normal that the actions taken around the generation of profit by a scheme would attract tax. There is no small business owner in Ireland who does not pay VAT on whatever they buy in order to make profits. When selling or buying properties to generate profit for a REIT scheme, it would be normal for it to pay the costs along the way, such as capital gains tax. I do not regard that as double taxation. Ultimately, it should be the amount that the scheme has to pay in dividends after having paid capital gains tax on whatever purchases and so forth it has done or sales it has made. The scheme should pay tax as it goes and then give whatever money that remains as dividends and let that be reflected. One does not have to worry about people not paying because they will be paying tax on their incomes but only on the dividends after the appropriate costs, including the costs of contributing to the State through capital gains tax, have been paid. I would regard that as a more appropriate system. It is closer to the experience that most of us have.

I know we are not going to be able to move forward on this but I urge the Minister of State to reconsider this issue. He acknowledged, in his speech, that the past six months have not been like any other six months. The next six months will not be like any six months we have known either.

Of course, everybody knows that the past six months have been difficult, as the next six months will be. We have been here a few times as a result of Covid-19. There was the July stimulus package and now the Finance Bill, with billions of euro going to support the Irish economy and keep businesses open, or in a suspended state until they get to reopen. That has come at a cost of billions of euro to the Exchequer. That has happened because all of those businesses are losing money. The Senator need not worry about the taxation of people who have empty office blocks because they are losing money. The Senator does not need to worry about the rate of tax to charge a non-existent property with empty office blocks. I find it unusual that the debate has centred on empty office blocks that generate zero income, only a lot of investment by the investor, with no rental income or profit. The Senator has suggested they should be paying 33%. We said that if a REIT sells an asset that is not reinvested within two years, it has to be distributed by way of dividend at the top tax rate that the investor will have to pay. The Senator wants a 33% tax on the company and then the investor in the company, when he or she gets a dividend, should pay 40% tax out of income that has already borne a tax at 33%. That would be a minimum of 75% tax and I cannot go there. That is all.

That is not accurate.

The Senator is saying that the REIT should pay 33% tax. The investor gets his or her income. The Senator wants a mechanism in place whereby the investor, when filing his or her income tax returns, should be able to get recognition for the 33% that has already been paid. I do not see that here.

They are different-----

The Senator can come in after the Minister of State.

All I see in front of me is 33% capital gains tax on the company and then, when the person gets his or her dividend, he or she pays 40% tax on money that has already suffered 33% tax in the first place. If what the Senator is proposing is a 75% tax on a person who invests in a house, property or apartment, I am not going there.

Let us not try to do made-up maths because it does not help or serve anybody. We are suggesting a 33% tax on the capital gains that are made when a company makes a purchase. REITs do not have one person who is the investor, they have multiple investors. Those investors, at the end of whatever year or quarter of the functioning of the company, get the dividends of the profits. The Minister of State is arguing that every payment of capital gains tax, as many normal people pay on purchases they have made, is somehow added to their income tax and that means they have paid 75% tax. That is just not accurate. The Minister of State should do better than that. As he is aware, people do not pay 40% tax on their income. They only pay 40% on such portions of their incomes above certain thresholds and so forth. The Minister of State has no idea. I imagine that most of the people who will be affected already have large amounts of income. The additional part of their income that comes from their share of the profits of a particular investment may well come down the line. It is a complete misnomer to try to add capital gains tax to income tax and suggest that people are paying 75% rated tax.

We should try to be clear on this. There is capital gains tax on companies and all kinds of transactions that happen in this State, including the sale of companies. Let us not try to mix oranges and apples to make a scary fruit salad. Let us try to be a bit clearer on it. The Minister of State and I may disagree on the question of whether companies should be paying all of what I regard as the normal costs associated with the conduct of business, be it VAT, other charges or capital gains tax, where a company is changing and exchanging properties before it comes to calculating its profit at the end of the year.

I believe they should and the Minister of State may believe they should not and that instead it should be reflected in if they make a larger profit, because if they did not have to pay those normal costs and capital gains tax, we would will catch the profit later. This is a difference of opinion but please let us not be inaccurate in what we put out to the public.

I will conclude on this by saying capital gains tax is different from income tax. If the Senator or I happen to have a property that we sell and it is not a principal family residence, we pay capital gains tax of 33%. We might have other income that we pay 20% or 40% tax on, depending on our income. They are two unconnected taxes paid by one individual but one is not added on top of the other. What the Senator has done in her recommendation is the REIT as a company would pay 33% capital gains tax but then the people who get a dividend could not offset that tax the company paid against their tax bill because they are not the same as the company, they are just people receiving a dividend out of the investment. It is a distribution to the investors, who will be taxed at the income tax rate. I do not think too many people who have sufficient funds to invest in this particular type of investment are not earning more than the average industrial wage and paying tax at the top rate. I cannot envisage somebody investing who is not on the top tax rate. If people are not on the top tax rate, they are not on a high income. The Senator can take it as common sense that people who have funds to invest in REITs must have some income behind them, otherwise they would not be investing. They cannot offset the capital gains tax the company paid versus their income tax at more than 40%.

I am looking at the Senator's recommendation again, and in addition to the 33% in paragraph (a) she proposes the introduction of a surcharge on REITs. She wants a 33% tax to be paid by the company and now she wants a surcharge but does not specify the rate, and this is on top of the 40% the people will pay when they get their dividend. I have nothing further to add.

The Minister of State is being grossly unfair. Senator Higgins is asking for a report on what the impact of these proposals would be. It is very different. Again, I have to point out that so far today, the Minister of State has rejected every constructive proposal for a report. We should expect better than this type of engagement. Senator Higgins is asking for a report that could well elicit very important information on what we could do in this area and he is flatly rejecting a report. Again, I ask what he is afraid of in terms of the information that a report on these points would elicit. It is not good enough.

Recommendation put and declared lost.

Recommendations Nos. 9 and 10 are related and may be discussed together.

I move recommendation No. 9:

In page 56, between lines 2 and 3, to insert the following:

"26. The Minister shall, within six months of the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on policy options which could be taken to restrict banks from carrying forward losses against taxability of their current profits of those banks, and where banking profits arise from loans guaranteed by the Minister under the Credit Guarantee (Amendment) Act 2020 and the Credit Guarantee Act 2012, no more than 50 per cent of such profits should be eligible for exemption from taxation under the Deferred Tax Assets Scheme.".

These recommendations ask the Minister to lay, within the next six months, a report on restricting banks from carrying forward such profits as they might make. For a very positive moment I thought I was going to get an opportunity to speak about the Debenhams workers but I am very disappointed to see my recommendations in respect of them have been, wrongly, ruled out of order. It did not name them but it was with regard to workers as creditors. The recommendations I had noted as Nos. 9 and 10 in my notes related to that issue but in fact they are numbered differently to the official list.

I am not going to discuss this at length, as we have discussed many times the fact that we still have a situation in Ireland whereby many banks are not paying tax on their profits. They did not pay tax on their profits even in their most profitable times. We know that certain banks, including banks that have put questionable kites flying in the public realm about whether they will even continue to function in the State and on whom many individual households and small and medium enterprises are dependent, have been extraordinarily profitable. Recently, we heard that Ulster Bank paid dividends of approximately €3.5 billion to its parent company over recent years. These banks do not pay tax because they are able to write them off against previous losses.

Previously, we had a more balanced situation under the former Minister, Brian Lenihan, whereby only 50% of profits could be written off against previous losses. This was reasonable because it reflected the fact the 50% would be small if the profits were small but not if a bank was in the position of making large profits. The impact is almost disproportionate. If a company or bank is not healthy financially, the cost is quite small in terms of paying tax on whatever small amount at 50% but if the bank is extraordinarily profitable, it is reasonable that 50% of the profit could be considered for tax.

We know the huge efforts and sacrifices the public made, and I am sure some would argue these were made on their behalf and without their particular choice, in respect of bailing out the banks and bringing the banks through a difficult time. We now have a situation in which we have a lot of banks that are very profitable. We are continuing to try to protect those banks against risk with measures such as in the summer when we brought through the new Credit Guarantee (Amendment) Act, again ensuring that we were underwriting the banks so they do not have to take risks in the same way because we are taking a huge part of that risk. It is very reasonable, given how much of the risk in the past was absorbed by the public and how much risk continues to be absorbed by the public, that when the risk pays off and there are profits, the public would get something back from it. Both recommendations ask the Minister of State to consider the question of putting a stronger time limit or, what I would prefer, a percentage limit on the percentage of profit that can be written off and made immune to taxation by banks in Ireland.

I understand the general point being made but this matter could be discussed in more detail at another time. The issue of bank profits not being subject to corporation tax because the loss is brought forward is the essence of what we are discussing.

Although the precise impact of Covid-19 for the full 2020 year may not be known until early next year, AIB, Bank of Ireland and Permanent TSB reported an aggregate loss before tax of €1.6 billion in the first half of 2020. Based on the guidance given as part of the third quarter statement in November 2020, it is expected that additional loan losses were incurred by the banks in the second half of 2020. We are looking at a situation among major banks whereby the losses are well in excess of €1.6 billion and in these recommendations we have the idea of talking about profits with these massive losses this year. Perhaps when the banks return to profit, we can have a debate on the issue. The one thing that is sure is that while it is interesting, it will not have a practical effect this year or next year because of the losses that have happened this year, which may well carry into next year.

In respect of the tax they will pay next year, which will be based on the profits made this year, that will be seriously in the negative because they are in a loss-making situation. Due to the fact that losses have been made and the loans have been given in the Irish market this year, we must ask whether they should be allowed to carry that loss forward into next year or whenever they regain profitability. Most people would say that if they are taking a hit now, and they return to making profits next year or the following year, the losses they make this year, which carry over into next year, should be able to be off-set against the profits they make when things start to recover. Every business will do that and if someone argues the banks should not be able to do that, that is their particular point of view. On the question of reports on the profits of the banks and public companies for this year in particular, they issue their figures every quarter. Nothing could not be more transparent. We see their figures every three months. All anyone need do is to look at the figures and see they are making losses. Bank of Ireland, AIB and Permanent TSB incurred current year corporation tax charges in Ireland totalling €70 million. They paid that this year in respect of last year. It is important that they have actually paid €70 million in these charges. They have also paid €93 million through the bank levy. Even though they are in a loss-making situation this year, they will still have to pay the bank levy. They will not have any corporation tax to pay, for the obvious reason that they are making massive losses. I hope it will be sooner rather than later, but if and when the banks return to a level of normality, are in a position to start giving new loans to businesses to help the country recover and there are profits to be made, we will talk about taxing the profits they make then. However, that will certainly not be this year or next year, so I am not in a position to accept the Senator's recommendation on reports. The information on their profits is there for everyone to see and there is no requirement for us to do anything further other than to note where we are. It should be noted the banks are paying the bank levy this year as well.

If they are not making profits, this recommendation will not affect them. It only applies to profits, so if they are making losses they have absolutely nothing to fear if this recommendation was brought in on Report Stage and if the measure was implemented right now. It would not have any effect because they are not making profits. The very nature of this measure - it was the balancing act sought originally by former Minister, the late Brian Lenihan, who brought it in - is that when they are profitable, they start contributing again. They do not even have to contribute fully as there is even a cushion provided at that point where 50% of their profits would be untaxable. The fact they are making a loss this year, frankly, does not have any relevance. This is an example of why we should be changing the policies this year, because it will not have any impact. However, it will protect us for future years. The Minister of State mentioned the €1.6 billion loss. They made a €2.5 billion profit last year and they paid nothing, except the bank levy, which is a different thing. That was a €2.5 billion profit which could, and should, have been at least partially taxed. We are talking about a corporation tax rate on 50% of the profits. If one was looking at it then, one would really only be looking at 10%. If the profit was 21%, only 10% of their profits would have been meaningfully taxed. It would have been very minor. It would have been a good contribution to the State and it would have helped us.

I am concerned that it seems we are going to double down. Are banks going to pay top rates of tax in Ireland for the next 50 or 100 years? They are still using the previous financial crisis to write off their losses. Are they again going to write off those losses for another period of time, even though again the State took the risk on Covid and stepped up and guaranteed those small loans under the credit guarantee scheme? We have a very large actor in the State which is making very large profits. The profits this year were €2.5 billion. I have talked about one bank, which we know, from the finance committee, is paying very large dividends to parent companies. It is also paying fees to parent companies, so part of that profit is not even captured in that €2.5 billion. The fact is these banks are part of the State. Every other business that took a hit, as many did during the financial crisis, did not get the same protection. I am not proposing to remove that measure for general businesses. Most small businesses that have a few bad years and then try to find their way back to profit do not get bailed out, protected and directly underwritten with a guarantee by the State. I imagine many businesses would have loved have got that. They did not get that but the banks did. Given that the losses the banks experienced were cushioned in a way that losses in other businesses or corporations were not, it is reasonable to ask them to give up a tiny bit of that extra cushioning should they find themselves profitable in the future.

The Senator's last three words were "in the future". She has clearly stated in her that if we were to implement this measure, it would have no practical effect this year because we all know the banks are in a loss-making situation and that is not likely to change on 31 December 2020. The Senator is aware of the volume of supports available that are affecting people's daily lives. I would like the Department to concentrate on the CRSS, the EWSS, the Covid payments and getting funding from Europe for them rather than amending this Bill and bringing it back to the Dáil when we want the President to sign it Bill into law so that it can come into effect as quickly as possible. We would do all that just to introduce a measure that may have an impact when the banks become profitable again. It will certainly have no in the next 12 months. I want to concentrate on the other measures and the priority areas I have just mentioned. That is where my focus as Minister of State will be between now and the end of this year.

If we had had a small portion of the €2.5 billion in profits the banks made last year, I have no doubt it really would have been helpful to the Exchequer in dealing with all of those measures the Minister of State has just described. The Minister of State is clearly not going to do this in this Finance Bill but let us not wait until the third crisis, which is not far away. I would suggest climate change is a top contender as well as Brexit. We should not wait until the next crisis before we say we should have taxed the banks. I urge the Minister of State to keep an eye on this issue over the next year. I hope we can have a forward looking conversation on this issue when we debate the Finance Bill next year.

Recommendation put and declared lost.

I move recommendation No. 10:

In page 56, between lines 2 and 3, to insert the following:

“26. The Minister shall, within six months of the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on policy options which could be taken to restrict banks from carrying forward losses against taxability of their current profits of those banks, and where banking profits arise from loans guaranteed by the Minister under the Credit Guarantee (Amendment) Act 2020 and the Credit Guarantee Act 2012, none of their profits being eligible for exemption from taxation under the Deferred Tax Assets Scheme.”.

Recommendation put and declared lost.
Sections 26 and 27 agreed to.
SECTION 28
Question proposed: "That section 28 stand part of the Bill."

Sinn Féin is opposed to sections 27 to 30, inclusive, of this Bill. This is an area that really concerns me because the carbon tax is fundamentally regressive. When I raised the issue with the Minister of State earlier in the week, he came back with an answer that stated that "on carbon tax on low income households, the budget provides three measures". He mentioned the €3.50 increase in the fuel allowance, the qualifying child dependant allowance and the living alone allowance. The problem is that we know from OECD figures that one in four workers in this State is a low wage worker. I will provide the concrete example of a couple who are both on minimum wage. They will face a 39% increase in carbon taxes next year, when they have to heat their home and drive their cars.

What support will that couple get in this budget? They will get no support and that is the case for hundreds of thousands of workers across the State. This tax is fundamentally unfair. It is regressive and the Department has confirmed it is regressive. For the most part, low-paid workers will get absolutely no support and in particular people in rural areas who depend on cars will get no support unless they are the poorest of the poor. We have the third largest segment of low-paid workers in any EU state. Hundreds of thousands of workers are facing significant increases in carbon taxes with no support whatsoever. It is not good enough. That is why Sinn Féin stands opposed to this.

The carbon tax is a regressive tax. It does not tackle the producers, the sellers of the fossil fuels. The Government is basically asking householders to pay the fees. Let us not forget that householders and taxpayers already pay €480 million through the PSO levy on their electricity bills meaning that we are already making a contribution. It is not just Sinn Féin; people who class themselves as part of the just transition part of the Green Party agree with us. They see it as fundamentally unfair.

There is no evidence that carbon tax actually reduces emissions. From a practical point of view, we know why that is the case. It is because working families cannot afford to buy an electric car or get an entirely new type of heating installed in their houses. The Government is not giving support to those people. There is no point in quoting the fuel allowance when anyone on the minimum wage does not qualify for it. There is no point in quoting the living alone allowance for the few people who might benefit from that. The €5 for children is nowhere near enough.

These budget proposals will hurt working families while not achieving the changes we need. That shows a lack of imagination. Fianna Fáil and Fine Gael continually fail to hear the concerns of working people, who are hard-pressed as it is at the moment. The Government expects them to pay rather than those who have the money. This morning and this afternoon we have consistently heard a refusal to engage on reports that night examine how we could gain more tax from those who have more money. Most bizarrely of all, Fianna Fáil Senators have talked about how wonderful British Tory policies on housing are. My God, we can see the direction of travel of that party.

The Senator should not be talking about the direction of travel of my party considering the hot water in which his colleagues have found themselves in recent days; let us keep to the Bill.

It is worth acknowledging that the carbon tax puts extra pressure to a certain extent on some people. That is why the Government made a commitment that money would be ring-fenced, and measures would be put in place to mitigate that. The same party that does not want a carbon tax still wants to decarbonise the economy, wants to combat climate change, wants a just transition and wants to retrofit homes. It wants to do all these things that cost money. How does it propose to pay for it?

The purpose of the carbon tax is not to penalise people. It is not to collect money for the Government. It is to take that money that is ring-fenced and spend it on becoming a greener and more environmentally friendly country which we need to do. We all accept we have obligations. It is not just for us. It is for the next generation, the children of today and their children. They need a clean environment and a safe country in which to live and work. We need to protect biodiversity and change how we do things.

Today peat will be burned in Shannonbridge power plant for the last time and the Lanesborough plant is closing next week, which indicates that significant change is happening. I acknowledge the positive role the ESB will play in becoming a green energy company. The Government is committed to a just transition and protecting the workers by providing new opportunities. While it is the end of an era, it is the beginning of a new green era, where we will work alongside our environment to maintain biodiversity while still prospering and creating employment. Carbon tax is only one element of that.

It is populist to suggest this is there to penalise working people, but it is far from it. It is there to create a greener and cleaner environment for our children and their children so that they can breathe clean air and have a healthy and safe country for future generations to live in. The tax that is collected will be ring-fenced. It is not being collected to hurt people. That is not the intention, as has been explained repeatedly. While we acknowledge the potential challenges, the Government has shown it is committed to dealing with those challenges. For energy efficiency our housing stock is the second worst in Europe. We have considerable work to do to retrofit homes to make them more energy efficient and cheaper to run for all the families Senator Gavan mentioned. We need money to do that retrofitting and that is where this money will go.

Senator Chambers has covered many of the points I wanted to mention. My party has supported increases in carbon tax since the previous Government and increasing it was in our manifesto, as it was for most parties in this Chamber.

As Senator Chambers pointed out, carbon tax is not about collecting money for the purpose of penalising anybody. It is about changing attitudes. Any money collected is used to reduce reliance on fossil fuels. For example, there is nothing as inefficient as burning coal, turf or briquettes in a fire where that heat is dissipating through windows, doors, roofs, etc. The Government has invested a considerable amount of money into energy-efficient schemes and continued to do so in the recent budget. By doing so we will see our housing stock converted and made more energy efficient. That is what this is about.

During my Second Stage speech, I touched on one area of concern as the trajectory increases. We are trying to change people's behaviour in driving cars. We are providing money for cycleways, BusConnects, bus lanes and greenways around Galway city, for example, to encourage cycling, which is the right thing to do. However, some of the most rural areas will not realistically get a bus service that will pass by their door every ten, 15 or 20 minutes. I hope it happens and I am proven wrong. Ring-fencing money for public transport, greenways, commuting routes, improved pedestrianisation and bus lanes is positive for our large towns and particularly our cities. However, I have a concern for some of our most rural areas.

We need to ensure that some of the additional finances collected through the carbon tax are invested to provide new bus routes in rural areas and improve the frequency of bus services. We need to look at the configuration of our Local Link services and link them up with Bus Éireann or private operators to ensure there is a connection between some of the most rural houses and the mainstream bus networks. Many parts of Ireland will not get trams, fast trains or anything like that. They will still rely on roads. They have two options, either to drive cars, and we encourage electric cars, or they can have a quality bus service. That is my concern over the coming years as the trajectory of carbon tax increases. We need to provide quality bus services and where there are bus services at present, we need to increase frequency to give people an alternative to the car.

I highlight the contrast. The Bill seeks to lock in year-on-year increases in the carbon tax until 2030, increases the Minister of State has admitted are regressive. Where are the corresponding increases in social welfare? At the very least, the Government should have ensured that was matched to make it fair.

The Government should also have addressed the weekly income limit that applies to access the fuel allowance of just €513.70 for a couple. As I have pointed out, that shows that most people will not be able to access the fuel allowance. It could and should have been addressed, but it was not. As structured at present, it is fundamentally unfair. As Senator Kyne has acknowledged, people in rural areas in particular will suffer. They do not have the alternative transport choices that some of us in urban areas have. It is grossly unfair. It could have been done in a much fairer way. It is a failure by the Government.

Senator Gavan is yet again pointing out the failings. I cannot resist pulling him up on a few small things. I do not know who is doing the maths for his party but he claimed that there will be a 39% increase in carbon tax. The increase will be around 1.5 cent to 2 cent a litre. He is scaremongering and he needs to stop. I will take on any debate if it is based on actual facts and figures, not claims about a 39% increase in carbon tax. Let us be realistic and look at proper solutions.

Sinn Féin is all about climate change now. It never was before but it is great that it is now. We are trying our best to find solutions. This is a very small tax and every single penny of it is going back into just transition, including the retrofitting of social housing stock. Has Senator Gavan got a problem with that? Last week €50 million was announced for rural accessible transport, for the first time in the history of the State. That is €50 million for rural children to be able to walk and cycle safely. Has Sinn Féin got a problem with that? The Government is working on putting more money into rural transport because, as was pointed out by the previous speaker, we need to look at rural transport. We cannot do everything overnight. It is easy to sit back there and throw muck. Let us have some solutions from Sinn Féin because we are all about solutions. I will happily work with Sinn Féin Members if they have solutions but we need to change. The Senator talks about climate change but he should ask his colleague, Senator Boylan, about it because she knows all about it. Maybe he is not fully aware of this but we have to do things differently. This carbon tax has to happen. It is very small and he is scaremongering people by saying it is a 39% increase when it is 1.5 cent to 2 cent a litre. Let us be very clear on that and let us not talk about 39%.

We are making political points here. It is never personal. The Senator asked for constructive solutions so I will give her some. The Government could have and should have upped the level of accessibility for the fuel allowance. As I have pointed out for the third time now, a minimum wage couple do not qualify for that allowance. The lowest paid workers in the State do not qualify for it. The Government could have tackled that. Fundamentally, what it could have done and absolutely should have done was insist on matching increases in social welfare to the increases in carbon tax. That is what it could have done and should have done but it did not do it.

Senator Gavan raises a fair point about making a long-term commitment to ensuring the social welfare protections that are in place are always adequate. We all acknowledge that any change in the price of goods can have a significant impact, depending on the household. Earlier, Senator Gavan said that there was no evidential basis for a carbon tax and that it did not make any difference in reducing emissions. The ESRI has looked into this and not only did it find that the increase the carbon tax brings to a household's fuel costs is minimal, it also found that the increase was higher for higher-income families and that it was important to give a long-term commitment on a carbon tax because that leads to behavioural change. That is why there is a ten-year plan for increasing the carbon tax. There was a very modest increase in this budget but it will increase over the years in order to give people notice and time to make these changes. We are not expecting people to buy their electric cars this year or next year but maybe in five or six years' time we might be able to work towards that because there will be a second-hand market for them then. It is about incentivising behavioural change and the way to do that is by giving people advance notice that these changes are coming. They will be accelerated but we must start off slow. The impact in this budget is quite minimal, as evidenced by the report published by the ESRI.

I fully take on board the Senator's point about social welfare protections and the fuel allowance. There is an onus on all of us, in both the Government and the Opposition, to keep an eye on that. It is not prudent for a Government to make projections on social welfare entitlements ten years down the line because we need that flexibility. However, there is a logic and a reason behind giving a ten-year projection for carbon tax because that gives people notice and time to get ready. I agree with the Senator about needing to make sure social welfare entitlements, particularly things like the fuel allowance, are adequate and fit for purpose. We may find in the year or years to come that they are not doing the job they need to do and that people are falling into fuel poverty. The ESRI also said in its report that this tax would not have a significant impact on fuel poverty but that is only one opinion and we have to keep an eye on that. There is an onus on all of us in this House to do so. I certainly agree with Senator Gavan on that point.

The question of carbon tax is one on which many people have many views. The programme for Government is very clear on this matter and we gave a clear commitment on it in advance. During the election earlier this year, people were aware of our party's views on the carbon tax and that it would be increased. To compensate for that, there is an increase in the fuel allowance of €3.50 per week. This will compensate a broad range of lower-income households for the additional energy costs they may incur due to the increase in carbon tax. We have increased the qualifying child payment by €2 per week for children under 12 and €5 per week for children over 12. This will help low-income families. There is also an increase to the living alone allowance of €5 per week. This should help those people as well, especially those who are most vulnerable because of living on their own.

It has been asked why we do not tax the companies responsible for fossil fuels. Most of the fossil fuels we consume in Ireland are imported and most of our energy comes from fossil fuels. Certain sectors that do not pay carbon tax, such as those involved in electricity generation and certain energy-intensive work such as steel work and cement works, come under the scope of the EU emissions trading scheme. There is a separate scheme for large companies in Ireland, which includes very large institutions. Some of the larger hospitals, such as St. James's and so on, would be included in this emissions trading scheme. Several years ago, surveys were done of the 100 biggest polluters in Ireland, to call them exactly what they were. They are part of a European emissions trading scheme with a view to reducing their emissions. There is a market there and if they have to buy a carbon allowance or permit, it is at least €25 per tonne of CO2. While some companies are not directly caught by this tax, they are paying for these increases through a different method. I wanted to bring that to people's attention. The industry is being caught heavily. We would like to see these companies actually reducing their CO2 output in the first place rather than purchasing these allowance permits. The cost will bite them there and they will have to make reductions. The EPA enforces this scheme and can issue fines. It has issued fines to some large institutions in Ireland that have been in breach of their initial targets.

The ESRI has looked at carbon tax, poverty and the compensation options. It has recognised how we are going about this and said that such taxes would reduce emissions in Ireland with little wider economic effect. That is why we have targeted those increases at low-income families. This started to a small extent in last year's budget but was very much part of this year's budget with the allocation of carbon tax expenditures in 2021 being produced on budget day. It is all well and good to criticise the tax or to say we are not spending enough on social welfare. I agree with that and I was one of the people saying for the last two or three years that we must have a detailed explanation of where the carbon tax will go as part of budget day. We have it here and this document was published on budget day. It includes investment in residential and community energy efficiency projects. That means housing and community facilities and those projects come under the Department of the Environment, Climate and Communications. There is €100 million for housing retrofitting and various residential schemes. There is a targeted social protection intervention of €48 million for the measures on which I have just given the specifics. There is €20 million for pilot environmental programmes in agriculture. We have heard the debate about CO2 emissions in agriculture as recently as today. Everyone acknowledges that there are ways of improving and reducing those carbon emissions and €20 million will be dedicated to that in 2021 as a result of this carbon tax. There is also the continuation of the carbon tax investment programme of €70 million across various Departments. That adds up to €238 million, which is quite a lot of the carbon tax being collected and is way more than the increase. There is already some carbon tax in the system year in, year out from petrol, fuels, coal and so on. We are going a long way and we will be getting there very soon. Everything that gets collected in carbon tax in a year is dedicated to environmental measures.

We went more than halfway in this regard in the budget we are now discussing in the Finance Bill. This is was published on budget day and these measures were outlined on that day. That is the single biggest achievement. People in Ireland are fair. They understand there is pollution if people are burning coal in their houses. We do not have to tell them that; they are aware of it. If people, however, are paying additional carbon tax on their fuel, diesel or whatever, they want to know where that money is going and whether it is going to help that problem. The answer is "Yes". This is what the €238 million that is being collected in carbon tax this year is being spent on. Perhaps the gap in communication is that we are not explaining the good, productive, environmental benefit we are going to get from this extra carbon tax. That is probably the next job we have to do. In future years we will have to do more of this, because it must be clearly identifiable in the public mind where what is collected is actually going. Some people call it a hypothecated tax, which is a technical word. It does not necessarily have to be that because once we can see a clear line of X amount of expenditure in the Estimates corresponding with what comes in, it does not have to be a hypothecated tax. That is one way of doing it and hypothecated is a kind of trendy word that some people use on occasion.

The most important and final point I want to make here relates to a valid point Senator Gavan has raised and Senator Chambers has followed up on. On budget day, the Government stated it will be increasing carbon tax over the next number of years. That is being put into legislation now in order that it does not have to be revisited, re-argued and re-debated every year. The question that has been raised here is about the support for low-income families during that period and why did we not specify the increases in social welfare. On budget day, the Minister, Deputy Michael McGrath, outlined in the Dáil Chamber the specific areas that would benefit from the increased funding in 2021. His Department published a note on these allocations, which I have just read out. He also confirmed that he is actively considering the best ways of giving effect to the programme for Government commitment to provide a legislative basis for ring-fencing the carbon tax funds in future years. Obviously, this has not happened yet, as we only have been in government for a couple of months but he went more than halfway by providing a detailed schedule of where €238 million of carbon tax is to be spent in 2021. He is actively pursuing the matter through a legislative basis, to ensure that it is ring-fenced such that if there is a change in the complexion of the Government, it cannot simply start robbing the carbon tax for some purpose other than the good environmental reasons it is there for. That is coming. It is not in this budget but there is a clear commitment that this is under consideration by the Government and will come through, in due course.

All in all, nobody likes having to pay extra tax but the Irish people are sensible. They will pay it once they see compensation for the low-income households and once they can see a chart of where the money which is being raised in carbon tax is actually being spent for the good of the environment. We are very closely heading in that direction and this is a great step forward.

I want to home in on one particular piece of language the Minister of State has used in response to the measures that have been taken to help people. The Minister of State refers to the fuel allowance increase of €3.50, which will go to a broad range of lower-income households. I will keep this very simple. Is the Minister of State disputing that a couple on the minimum wage will not qualify for that fuel allowance?

I am very clear that on budget day, the Government stated it was targeting those people in receipt of those three particular social protection payments as the three categories that were most identifiable. There are many people who will end up being net payers of carbon tax but who will not get anything back out of it. It generally falls to people in the workforce who are earning income. The Senator is right. We did not collect carbon tax to hand it back out straight away.

This is possibly the difference. One does not solve the climate change issues in one budget. It is a long-term plan, which is why we are setting out for a long period of years, what we are going to raise in carbon tax and why we are saying we are going to have detailed information in every budget and a plan to ring-fence that funding for the period over the years to come during which the carbon tax will be collected. Some people will be net beneficiaries as a result of that. If a person is in a house and receives a substantial grant to re-insulate one’s house, that person will be a net beneficiary in that year. That person, however, may not get that benefit again in the next ten years and the person will then be a net contributor. Like most things in life, one will contribute in particular years and in other years one may be a net beneficiary. All in all, there are measures to ensure that it is as fair as possible and when all is said and done, some people will be net contributors.

I take the Minister of State’s point and there has been a good engagement on this issue. My point is that while most of us are going to have to pay more, it should not fall disproportionately on lower-income workers. As the OECD has evidenced, one in four workers in the State are lower-income workers. Unfortunately, given the way the Government has constituted this measure in this budget, that is exactly what it is doing.

Another point, which has been made by many environmentalists, is that if carbon tax is introduced in a regressive manner, it could have the unintended consequence of undermining confidence in these important measures that must be taken for the environment. That is what we are talking about here now, because as the Minister of State would acknowledge, the lowest-paid workers in the State will not benefit from the countermeasures that the Government has put in place. There is something fundamentally wrong with that and it should not happen in this manner.

Question put and declared carried.
Question, “That section 29 stand part of the Bill”, put and declared carried.
Question, “That section 30 stand part of the Bill”, put and declared carried.
Sections 31 to 35, inclusive, agreed to.
NEW SECTION

I move recommendation No. 11:

“Report on distributional impact of increases in the carbon tax from 2021 to 2030

37. The Minister shall, within six months of the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the distributional impact of changes made to the carbon tax from 2021 to 2030 through sections 26, 27 and 28 of the Finance Act 2020.”.

This really flows on quite nicely because concerns have been expressed across all sides of the Chamber on how potentially unfair this carbon tax could be. What we are requesting here is, simply, a report that within six months of the passing of this Act, the Minister will prepare and lay before the Houses of the Oireachtas a report on the distributional impact of the changes made to the carbon tax from 2021 to 2030. Who could possibly object to a report, given the concerns that everyone has expressed? I hope the Minister of State will engage with this because it is a reasonable request.

I take the point the Senator is making and it is the same formula of an amendment that we have had previously. People, however, can detect and see for themselves with the level of reporting of this carbon tax, that it is going to be fully scrutinised and that there will not be any shortage of debate, discussion and reports on this issue. As I have already said, the Minister, Deputy Michael McGrath, gave an absolute commitment on budget day that he is looking at ways to give a legislative basis for ring-fencing the carbon tax funds for future years. He can only do that on the basis of information. I am quite satisfied, and it is made clear in the programme for Government on these taxes, that we set the rate for the increase of carbon taxes for a period here. We have not done that with the mitigating measures to help people who may be subject to fuel poverty. The Minister has given a commitment and he will have a legislative basis for the ring-fencing of the carbon tax funds in future budgets, which will include retrofitting, transport and a variety of areas. It will also include agriculture, people who are working but must travel to work, people on low incomes and people in receipt of social protection payments. There are umpteen commitments from the Government to revisit and to have a full debate on this several times during the course of this coming year, and well in advance of next year's budget. We will not get to next year's budget unless we have this done. It is an essential element which everybody in government is committed to doing. It is guaranteed to happen on a structured basis but not, perhaps, through the method proposed by the Senator in his amendment.

The difficulty is this. What Members across the Chamber and what the Minister of State's Department have acknowledged is that this is a regressive tax. What we are asking for is a report to exactly show how regressive it is and who it is failing most in terms of unfairness.

If the Minister of State is serious about ring-fencing funds and making sure they go to the people who most need them, that can only be done if we find out who has been the hardest hit. By calling for this report, we are asking him to do that. I cannot see why he would object to it.

I accept the spirit of the recommendation but we want to do more than what is recommended in it. I do not want to tie my hands just to producing a report. It would be only half of what is needed. What we would do with that report and the measures we would put in it and introduce are the key issue. We will be getting to that point. A report is step 1 along a more important process but I accept it is step 1 and that we need that information. Some of that will be decided at Government level by the three parties in the Government taking account of the priorities. Parties in the Government will have particular priorities based on the programme for Government as well as any report that comes to light. I am satisfied there will be ample reports on the exact topic but more than that will be required to come to a conclusion on matters and events in the context of next year’s Finance Bill.

Is the recommendation being pressed?

Recommendation put and declared lost.
Sections 36 to 41, inclusive, agreed to.
SECTION 42
Question proposed: "That section 42 stand part of the Bill."

The Minister of State might shine a light on this section. Am I misreading it, as it looks like we are subsidising NATO now? Is that correct?

There are two similar type sections in the Bill. Section 30 deals with excise duties and this section deals with VAT. Both cover the same issue. This section amends the Value-Added Tax Consolidation Act to align Irish VAT legislation with the provision for the EU VAT directive. The purpose of this is to align with a long-established EU VAT directive. The VAT directive requires member states to apply a zero rate of VAT to certain supplies of goods and services to NATO forces and, with effect from 1 July 2022, to forces of member states undertaking a common defence effort under the European Union Common Security and Defence Policy. The requirement to apply a zero rating to such supplies exists under the VAT directive at EU level. The amendment is therefore necessary to correctly transpose relevant provisions of the VAT directive into Irish legislation, irrespective of their application or otherwise within the State. This is a commitment that Ireland has to a long-standing EU directive arising from our involvement in the European Union’s Common Security and Defence Policy. Our involvement in that requires us to do this and that comes in under this particular measure.

This is quite extraordinary. This seems to have escaped the notice of most people. It is bad enough that US troops are using our civilian airport at Shannon on their way to wreak havoc across the world. We need only look at the war in Yemen, supported by the US and the horrendous death and destruction there, but now it turns out we are going to subsidise the US troops as they go through Shannon. Were we not supposed to be a neutral country? Was that not what we used to claim at one point? This is purely embarrassing but it is more than; it is immoral. Those troops should not be there in the first place. Of course, Fianna Fáil has nothing to say on that, it never has had and now it wants to subsidise them. It is not good enough. It is outrageous. We have just been speaking about how we have not done enough to support low-income families. Under this section the Government is giving VAT subsidies to US soldiers who have come through here. How the hell is that right?

I will explain it. If an Irish company was working on a contract in some country in Europe or on a site under the European Union Common Security and Defence Policy and there were VAT implications, this section deals with that. There is no change to the constitutional provisions relating to armed forces, which effectively prohibit foreign forces being based or maintained in the State. I said excise duties come under section 30 and this section. They are two identical measures. I am linking the two for discussion purposes. We do not expect any changes but it could have an impact on an Irish contractor working on a contract in Europe for one of these agencies. That is essentially it.

It is still wrong. It is morally wrong but we never hear anything of that from the Minister of State's colleagues in the House.

Question put and declared carried.
Sections 43 to 45, inclusive, agreed to.
NEW SECTION

I move recommendation No. 12:

In page 76, after line 32, to insert the following:

“Report on the operation of the Retail Export Scheme

47. The Minister shall, within six months of the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the operation of the Retail Export Scheme.”.

At last this is something we can all agree on. I know from all sides of the House there was genuine concern, and rightly so, regarding the retail export scheme and the changes in that respect. Notwithstanding that we made some progress in reducing the imposition to €75, it is still not enough. We heard that from Fine Gael, Fianna Fáil, Sinn Féin, the Labour Party - every party in the House. I expect the Minister of State will agree with the recommendation that a report be done on the impact of this scheme. I cannot imagine why he would object to it. That is important because many small businesses depend on this scheme operating effectively. As the Minister of State will know, Members across the House are very concerned about this. I look forward to him reassuring me this recommendation will be accepted and that he will stand with Senators across all parties, including my colleague, Senator Casey, who has spoken passionately on this issue, and grant this report.

I remember this issue well from the Brexit Bill. It relates to the retail export scheme. I want to clarify what has already been said in the Oireachtas. This recommendation calls for a report on the operation of the scheme. I remind Members that the Minister for Foreign Affairs gave a commitment in the Oireachtas on Second Stage of the Brexit Bill that his Department and the Revenue Commissioners will carry out a review of the operation of this scheme in 2021. That commitment was restated by me on Committee Stage. The Minister of State with responsibility for European affairs gave an absolute commitment on that on Report Stage. There are three Government commitments to produce this review. On the basis that we are satisfied that the objective of this recommendation is being met and triple-locked by three Ministers during the course of this matter being discussed in the Dáil in recent days, the triple-locking and three commitments of the Ministers meets the intention of this recommendation without having to make a recommendation to the legislation and going back to the Dáil again. The commitment given by three Ministers on this issue in recent days in the Oireachtas is cast iron.

Recommendation put and declared lost.
Sections 46 to 55, inclusive, agreed to.

Recommendations Nos. 13 to 18, inclusive, in the name of Senator Higgins, have been deemed out of order as they are not relevant to the subject matter of the Bill.

Recommendations Nos. 13 to 18, inclusive, not moved.
Recommendation No. 19 not moved.
NEW SECTIONS

I move recommendation No. 20:

In page 80, between lines 33 and 34, to insert the following:

"Report on the taxation of pandemic unemployment payments made under section 202 of Social Welfare Consolidation Act of 2005

57. The Minister shall, within three months of the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the taxation of payments commonly known as the pandemic unemployment payments made under section 202 of the Social Welfare Consolidation Act 2005.".

This makes common sense. We need to understand what will be the impact of the taxation on the pandemic unemployment payment. It is very sensible that the Minister should, within three months of passing the Act, prepare a report and lay it before both Houses on the taxation of the payment, commonly known as the pandemic unemployment payment, made under section 202 of the Social Welfare Consolidation Act 2005. As we know from the debate earlier, we fundamentally disagree with the Minister of State's interpretation of this payment. As it was constituted as an urgent needs payment, it should have been exempt from tax. Now, as we are moving through, at the very least what we need to do is understand what the impact of taxing these benefits will be. Therefore, a very reasonable request is a report. I am looking forward to the Minister of State's agreement on it.

We are back to the pandemic unemployment payment and there is a significant difference of opinion on the basic question as to whether it should be taxed. The issue is deeper than getting a report on how it is working out. It would not be physically possible to do a report within a couple of months of the year's end. In an earlier debate, we were asked for a report on how much tax arose a result of the pandemic unemployment payment. It will be well into next year before Revenue has people's financial tax affairs for this year in the system. Those people on PAYE will get their P60s, or whatever the term is, early in the new year and Revenue will be able to capture some of the information through those returns. A lot of people who are self-employed, and we have mentioned hairdressers and the man with the van who are self-employed, will not have to have their returns into Revenue until well into next year, perhaps September or October. Revenue will not know the outcome of this until it sees all of the income tax returns for this year, and in many cases this will not happen until well into next year. It would not be possible to have this information any sooner than Revenue can get it. There is a practical problem.

Because of the seriousness of this matter, I will give a commitment, whether through the Seanad or the joint committee, that some time after a couple of months I would be happy if there were a special debate on this, in light of information we may have, piecemeal as it will be at that stage, that will emerge earlier in the year. It is premature to have a report after three months, as Revenue will not even have the information that quickly. In light of information becoming available on the topic we can have a debate, if it is of any assistance. I cannot accept having a report because it will be the end of next year before we would have a meaningful report with fully populated information by all taxpayers. In the interim, I will be happy to facilitate a special debate or discussion on the topic in this House or at a meeting of the joint Oireachtas committee as Senators decide. I cannot go beyond that at this stage because the information simply will not be available for a while.

Recommendation put and declared lost.

I move recommendation No. 21:

In page 80, between lines 33 and 34, to insert the following:

"Report on the cost of expenditures to companies in receipt of section 110 tax relief

57. The Minister shall, within six months of the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the annual cost of tax expenditures provided to companies in receipt of section 110 tax relief (as provided for under section 110 of the Taxes Consolidation Act 1997) and the numbers of companies availing of that relief.".

I have tried to facilitate debate, while at the same time allowing the legislation not to get bogged down this afternoon. I will speak briefly on this issue because it is important. It is fair to say Sinn Féin has real concerns about section 110 tax relief and this is with good basis. We just know that a lot of the special vehicles from a financial point of view are very adept at helping to avoid tax where it should not necessarily be avoided. Again, our request is reasonable as we are asking for a report. Something that concerns me, and unfortunately the Minister of State has been consistent on this throughout the day, is that any time I or other Senators have asked him potentially to shine a light on poor practice and tax avoidance, he has refused to agree even to have an investigation or a report. It has been consistent. What it speaks to ultimately is the ideology of his party and Fine Gael because they are firmly on the right of politics. They do not want to look, see or find out where the problems lie. Sinn Féin is saying we need to have a look at this. We need to understand what is going on. The fact the Minister of State will not even agree to a report on any of these matters tells us very clearly that from a Fianna Fáil and Fine Gael perspective they do not want to find out. They do not want that information in the public domain. It is disappointing.

On the issue of the annual cost of these section 110 companies, I am advised by Revenue that while there are figures available on the number of section 110 companies, it is not possible to calculate the amount of tax that would have been paid if a company had not submitted a notification to Revenue that it is a qualifying company for section 110 of the Tax Consolidation Act 1997. This would in any case be an entirely hypothetical estimation and it is unlikely that such transactions would take place here in the absence of the securitisation legislation. Revenue just knows the number of companies but because the companies have qualified under the section 110 process, the amount of tax they would have paid if they did not qualify has not been calculated by Revenue. It would only be making a hypothetical guess and would not have any basis for doing so. Even if I were minded to have a report, it would not be possible to have the information.

If the Senator and his party want to pursue this, they will probably find another mechanism through the House, the Committee of Public Accounts with the Revenue Commissioners or the finance committee. I cannot achieve it through this amendment because Revenue does not have the information. If I were in the Senator's position I would look for a mechanism other than this to shine a bit of light in this area. I am sure there is some information out there. Revenue would not have any hard and fast information it could put its name on and stand over in a report to the Oireachtas at present. Other people might have information on it, other than directly through the Department of Finance as well, which might know more about the industry than we might.

As it has the section 110 designation, we do not have the information on the potential tax it could have paid if it were not a section 110 company. I hope the Senator gets the point. There might be other mechanisms which could be used to elucidate this issue.

I take the Minister of State's point. We will certainly take it up in other areas. However, the Minister of State highlighted a fundamental issue in terms of Revenue and when it comes to wealth, namely, there is not enough information when there needs to be. It is striking to Sinn Féin that, every year, when we propose a wealth tax, the Department of Finance comes back and states it cannot possibly estimate what that might bring in. That in itself admits we do not know enough. An important point about a wealth tax is that it would enable the State for the first time to map accurately what wealth there is in the State and where it is.

While I take the Minister of State's point, it still speaks to the fact that there is much more we need to do if we are going to see real tax justice. We need to map that wealth and shine a light on some of the ongoing actions in areas such as section 110 companies. We will take up that suggestion. However, I cannot help but notice that on each occasion today when we asked the Minister of State to work with us in terms of looking at reports and eliciting information that might be useful, he has turned us down. That strikes me as going back to this free market ideology at the heart of Fianna Fáil, unfortunately, and Fine Gael.

In an effort to be helpful, the Minister and the Department consistently keep the section 110 regime under review and make changes when issues are identified. If Revenue becomes aware of a particular issue, it brings it to the attention of the Department of Finance and changes are made.

For example, the Finance Act 2011 made a change in respect of profit participation notes. The 2016 Act made changes to the section 110 regime to ensure profits derived from Irish land and buildings were subject to tax in Ireland. The 2019 Finance Act strengthened the 2011 anti-avoidance rules to ensure that they are effective and operate as intended.

While no report has been produced, nobody has the exact figures. These are three specific issues which Revenue felt needed to be deal with. There might be a forum to have a broader discussion on the section 110 mechanism other than here. One can hang the hat of looking for information on those three changes and ask what the rationale behind them was. It might open up the debate on that matter. There might be a mechanism other than the Finance Bill during the course of the year to explore this topic further.

Recommendation put and declared lost.
Sections 56 to 76, inclusive, agreed to.
Schedule agreed to.
Title agreed to.
Bill reported without recommendation.

When is it proposed to take Report Stage?

Next Wednesday.

Is that agreed? Agreed.

Report Stage ordered for Wednesday, 16 December 2020.
The Seanad adjourned at 3.27 p.m. until 2 p.m. on Monday, 14 December 2020.