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Seanad Éireann debate -
Tuesday, 14 Dec 2021

Vol. 281 No. 7

Finance Bill 2021: Committee and Remaining Stages

The Minister for Finance, Deputy Donohue, is welcome the House.

Sections 1 to 5, inclusive, agreed to.

I move recommendation No. 1:

“Report on Help to Buy scheme

6. The Minister shall, within three months of the passing of this Act, lay a report before both Houses of the Oireachtas on—

(a) the impact of the Help to Buy scheme on prices and affordability in the housing market, and

(b) potential alternative policy options which would increase housing affordability by reducing prices, rather than increasing available credit.”.

The Minister will be aware of the shocking figures in the increases in the cost of housing over the last number of years. House prices have doubled since 2012. There was an increase of 12% this year. There are significant projected increases in house prices if we continue according to the model we have.

We will come to the many commercial investments shortly. We have been told the solutions to the housing crisis lie with commercial investments. In fact, it has been found that, as I think might have been predicted, the priorities of the speculative market are not necessarily aligned with the priorities of the provision of housing. This is because the goal of a market is to exert every pressure it can in order to maximise the return for its shareholders, in investment funds and so forth. We have constantly seen a flip whereby affordability has moved away from what we might expect from the houses that are purchased. Instead, affordability is now about how we bridge the gap between house prices and affordability. I have spoken about this to the Minister for Housing, Government and Local Heritage, Deputy Darragh O'Brien, and the idea that we must bridge this ever-widening gap in the cost of housing. This allows and supports the inflation of housing prices, through all of our various investment incentives, mechanisms, measurements and our de-risking of the sector. Then, we try to bridge that gap by making people pay those higher prices. While we provide some bridging for them to pay those higher prices, we do not address the core problem, which is the inflation of housing prices.

This recommendation proposes a report on the help-to-buy scheme. The Minister will be aware that his own officials, the Economic and Social Research Institute, ESRI, and many other bodies all signalled the concern that the help-to-buy scheme would effectively contribute to the kinds of increases in prices, such as those we are seeing. While I know that the help-to-buy scheme is not doing this on its own, the scheme simply allows for the bar to keep rising. It puts yet another measure in place to try to bridge that gap as house prices go up. Again, the help-to-buy scheme was signalled as having a potential further additional inflationary impact.

I would like if the Minister would be minded to produce a report on the impact of the help-to-buy scheme on the prices and affordability within the housing market. He might perhaps set out alternative policy options because, having tried multiple versions of the same thing over a decade, it is probably time to consider how we can prioritise housing provision in a way that is not dependent on rooting through a market that seeks to constantly raise and increase its returns. This could include housing affordability by reducing prices and introducing measures to deflate the cost and prices of houses. The Minister might outline those, rather than simply increasing credit and indeed increasing debt for our citizens.

I thank the Minister for coming to the House. I am asking that the Minister might review the help-to-buy scheme early in the new year. This is because there are so many measures, as outlined in the Housing for All scheme. Approximately 30,000 people have availed of it to date. The Minister might review it early in the new year to see its impact. He might come back with a report.

Before I respond to the nature of the recommendation tabled by Senator Higgins, I have a couple of opening points about the State's involvement in the provision of homes. First, it is wrong to suggest that the Government is subcontracting out the need to meet housing needs to the private sector. This year, the State is spending €4.1 billion in either directly building homes itself, or enabling the delivery of more homes. If one takes even a short walk around Dublin city centre at the moment, one will see the homes that are being completed in, for example, Dominick Street, and Sean Foster Place. These are all city centre, local authority-built homes. It is vital, both in this discussion and in the ones that will happen later on in the Finance Bill, to recognise that the State is playing a leading role, not only in regulating the provision of homes but also by directly building homes, or indirectly by funding them.

As to the discussion on the help-to-buy scheme, I ask Senators to keep in mind the figure of 12.7% when evaluating the impact of this on the housing market. This figure of 12.7% is the total number of housing transactions that happened in 2020 that were partially funded by the help-to-buy scheme.

I do not accept that a scheme that only influences less than 13% of all of the transactions for the purchase of homes within the country is of itself a significant cause of house price inflation.

Senator Higgins referred to us increasing credit. We have macroprudential rules that have constrained the availability of credit. What the Government has not done in response to the challenges that have been made more acute during the pandemic is look to increase credit or change the rules on borrowing. Leaving aside the fact that they are decisions made by the Central Bank, which is independent of us, what we have avoided is increases in credit that are driven by changes in rules or Government action. If higher levels of borrowing are happening, which is the case, in particular by those who are seeking to buy a home for the first time, it is still done in the context of the application of the macroprudential rules.

Section 5 provides for the help-to-buy scheme to continue to apply to applicants who sign a contract for the purchase of a new house or who make the first drawdown of the mortgage in the case of a self-build during 2022. With regard to the Senator's recommendation, it should be noted that housing policy is primarily a matter for the Minister for Housing, Local Government and Heritage, so I will limit my comments to tax measures.

As I have stated previously, the need to activate the delivery of additional new houses is an important priority for the Government. That is why the Government is committed, through Housing for All, to achieving progress, as a matter of the utmost priority, in the interests of the people of Ireland.

In relation to the Senator's points on prices and affordability, policymakers were aware at the time that the scheme was being developed that it was not without risk and that there was a danger that, against a background of constrained supply, the initiative could serve to increase prices for new homes and thus potentially undermine, to some extent at least, the affordability aspiration of the scheme. However subsequent formal reviews of the scheme did not bear out these fears. There have been two reviews, one in 2017 and one in 2018. The main findings were as follows: with regard to prices, while there may have been a very small increase in prices attributable to the introduction of the scheme, the primary driver of house prices remains the continued misalignment between demand and supply. With regard to affordability, the analysis also found that the availability of the scheme had reduced the time needed to save for a deposit and improved the overall affordability of housing for help-to-buy claimants.

With regard to supply, the evidence suggests that, following the introduction of the scheme, there was an increase in supply which can be attributed, at least partially, to the scheme. Furthermore, the analysis found a benefit-cost ratio of 1.28, indicating a moderate positive effect for the incentive.

The recent tax strategy group paper on help to buy concluded that should a decision be taken to extend the scheme, there would be a strong case for commissioning a further formal review of the efficiency and effectiveness of the scheme. The cost, the changing policy context in which the relief operates, and the advent of other non-tax Housing for All measures that have similar objectives, as well as the requirements of the tax expenditure guideline considerations, all support such a move. Accordingly, I announced in my budget speech that a further formal review of the scheme will take place in 2022. The review will be fundamental in nature, and it will inform decisions for budget 2023 and finance Bill 2022. Questions related to who will carry out the review, its terms of reference and a timeline for completion will be determined shortly.

The extension of the scheme for a further 12 months reflects the role it has played in facilitating greater numbers of first-time buyers to make their first step onto the property ladder, while also encouraging the delivery of new housing units by the construction sector. In addition, as I have noted previously, the extension of the help-to-buy scheme will allow time for other measures in the Housing for All strategy that will operate in the same policy space to be introduced in the period ahead. In the circumstances, therefore, I do not propose to agree to this recommendation.

The Minister mentioned 12.6% of purchases, but if we pick another 12% figure, house prices went up by 12.4% and that is an extremely high level of inflation. He will be aware that inflation in housing is a massive outlier compared with other levels of inflation. Inflation in wages does not match this factor.

While I respect that housing policy is the responsibility of the Minister for Housing, Local Government and Heritage, the fact is that the financial and fiscal policies that have applied to housing have been very strongly directed through budgetary policies. For example, local authorities were for many years precluded from building or buying because they were encouraged to lease. Even in the new Housing for All strategy, in excess of 2,000 houses are due to be provided again by leasing. These are financial decisions. Leasing has been exposed as extraordinarily poor value for the State. In the case of cost rental, again, a margin of return for investors was built in to the cost-rental model to ensure a profit. Every time we add profit into the mix, or in the case of inviting private investors in some of those areas of housing provision where we provide that the financing costs would be incorporated for them, we are effectively adding extra costs to the State, when the State could be directly accessing more of that finance, and could be getting loans at a better rate than the private sector and providing more capacity. I accept some building is now happening at local authority level, but local authorities are still being pressed into partnerships which come with an additional margin and additional cost. The policies are dictated by the market. Affordability is only a percentage lower than the market rather than affordability being based, for example, on a metric of income and what people can earn.

These are fundamentally financially irresponsible policies that the State has had. The State has had a choice where it is trying to ride two horses, one which is a property investment market and the other is accommodating the need of the public. For a long time we have been told these two horses are working in tandem and as soon as we satisfy the private investors they will provide supply. We should not be in that kind of hostage-to-fortune position.

With respect, I appreciate there will be a review of the help-to-buy scheme, but the second part of my recommendation, which is what are the policy options in terms of the deflation of house prices, what are our policies to increase housing affordability by reducing prices? How are we going to dampen this down? This is the inflation that started galloping when the capital gains tax measures were brought in and has continued apace since. It is not simply about that scheme. I do not suggest that, of itself, this is the source of inflation, there are a number of contributing factors, including the de-risking that the State has done by becoming a guaranteed customer in respect of many investment funds, but it is a factor.

The figures released by the Department of Finance showed 40% of those who benefitted from the help-to-buy scheme already had the necessary deposit. Did this just contribute, even partially, to the inflation of prices, where the deposit got them less far on the ultimate price of a house? In 40% of cases, the help-to-buy scheme was not the key determinant in them being able to reach a deposit for the purchase of a house.

I want to make a brief statement on housing. We are in a housing crisis and we have to look at every avenue and opportunity to deliver housing. Part of the reality is we must deal with the private sector. In Wicklow, in the areas of high demand for housing, there is not one piece of local authority land.

The local authority has no choice but to work with developers in order to deliver social and affordable homes. Nobody knows which is the better option. In fact, we might be getting better value for money from the private sector than we would from building houses at local authority level. We have reports on that from years ago stating that it is more beneficial to buy homes from the private sector. In the context of the housing crisis, we cannot rule out any option that is on the table to deliver homes for people and deliver affordable and social homes.

Senator Higgins made a few comments. The reality is that in the early 2010s we were precluded from purchasing houses and leasing was the most cost-effective way to provide them at the time. For us to develop or build housing, we need investors and we need people to develop it. It is the same in Longford as it is in Wicklow. It is a mixture of local authority housing plus private investment to make sure that we deliver the housing we have proposed. The Minister of State, Deputy Peter Burke, provided some figures earlier today. Between 2016 and 2021, we, as a party that was in government, were criticised for not reaching the housing target we proposed but we actually went over that target and built 39,000 houses. It is a mixture of private and local authority housing. We need developers and investors to deliver housing.

It is very clear that one size does not fit all. All the local authorities are different. In Limerick, the council let its carpenters and other staff go and franchised the work out. Every local authority is different and, as a result, I do not think we can tie it all down under the one umbrella.

I fundamentally disagree with the Senator's description of housing policy being dictated by the market. Macro-prudential rules are not being dictated by the market. The State spending €4.1 billion on building homes directly or helping to get them built is not being dictated by the market. Senator Casey spoke about work happening in his community. The work Dublin City Council is doing in directly building new homes in the heart of our city centre is not being dictated by the market. The role of approved housing bodies is not an example of the Government or citizens' housing needs being dictated by the market.

The Senator's description of housing policy and how it is being developed in our country is fundamentally wrong. It does not recognise the many interventions being made by the State. The Land Development Agency, planning regulations and the work of our local authorities are not led by the market. They are trying to channel the market into helping deliver more homes in the right places. The Senator spoke about those who are involved in building homes for profit. What I am about to say feels nearly radical but somebody earning a profit is not a bad thing. Those who work in our private sector, those who create companies, those who go to work in companies, entrepreneurs, small builders and big builders work really hard at what they do. They have an expectation that if they work hard, whether they be somebody who is running a building company, a developer or a hotelier, they will earn a reward for their efforts. In some of the debates that gain a lot of traction within our politics and media, it feels at times as if we are losing sight of the fact that those who work hard, in whatever part of the economy they are working in, have a legitimate expectation to earn a return on their efforts. That coexists with the Government playing a huge role in building homes in our country. To describe what we are doing as dictated by the market does not recognise all the things that are being done by this Government, or were done by previous Governments, to try to ensure we have a housing policy that meets more of the needs of our citizens more often. However, I acknowledge all the difficulties and challenges we face at the moment and how much more we need to do.

On the recommendation, I will go back to the point I made earlier. Some 13% of all house transactions in Ireland in 2020 were covered by the help-to-buy scheme. If it is playing any role in contributing to house price inflation, at 13% it is a small one. The far bigger issue here is constraint of supply. We need the private sector to play a role in increasing supply but we also need an active State doing its part too. That is what is happening. We want to do it quicker and better but this is not a housing policy that is dictated by the market.

It is important to be very clear. I am not objecting to the concept of profits existing. Nobody objects to that part of business. The question is whether the State should be factoring in profit levels, dividend levels, reasonable levels of return and profit, and unnecessarily adding profit levels into our expenditure. I have no problem with private developers that wish to build houses and sell them for profit. So be it. I hope they will be appropriately taxed, but I have no problem with them doing that. My question is about the model of how the State develops. It is unfortunate that we still do not have a strategy for the deflation of house prices. That is the fundamental point here. We have runaway inflation in house prices and further runaway inflation is projected for the future, to the point where home ownership will move out of the reach of most people. We will come to the build to rent apartments later. The Minister and I have a difference of opinion on this matter but it is important that we represent each other correctly. My position is not against the private market existing or, indeed, playing a role in providing housing; my concern is that the State should manage its finances better to ensure it does not unnecessarily build additional costs, such as dividends and profits for shareholders, into the money we spend. Of course we need to work with people but let us do so from a position of strength that recognises that the State is fundamentally the stronger actor in these situations. It needs to act as the stronger actor in these agreements and unfortunately we have not seen it do so. Perhaps the review of the help-to-buy scheme in 2022 will offer potential for further measures to address inflation in pricing. If the Minister believes that the help-to-buy scheme is only a small factor in inflation, then let us identify the other factors and address them.

We are doing that. That is why we are trying to build more homes. As already stated, the fundamental reason we have house price inflation at these levels is that we are not building enough homes. We need to build more homes and we need to do it more quickly. That is the answer to many of the challenges as regards affordability at the moment. We need to build more homes and, within that, have local authorities and State-led schemes that play a role in getting the prices of those homes down. That is what we are doing. We accept that for many people we are not making progress quickly enough on an issue that matters so much to them but we do not have a housing policy that is led by the market. We have a housing policy that acknowledges within it that the market has a role to play. Those are two very different things.

I remind Members that there are 34 recommendations that are in order.

The debate on the first one has taken 30 minutes of the four hours we have available. At that rate, we will get to recommendation No. 8. I am not trying to curtail debate but I remind Senators that this business must be concluded by 9.30 p.m.

I support my colleague, Senator Higgins. We can agree to disagree with the Minister on the ideologies involved, but I am not clear as to why the Minister will not accept this reasonable recommendation. It asks the Minister to lay a report to investigate these matters. Given that we have a housing crisis which has happened entirely on Fine Gael's watch over the past 11 years in government, why would he not want to go ahead with this report? What is he afraid of in terms of what might be discovered?

We have already given a commitment to go ahead with a review of the help-to-buy scheme. I indicated that in my statement earlier today and on budget day. The reason I am not accepting the recommendation is that I do not believe the Finance Bill is the right place to make commitments about when and by when reports are to be done. This is legislation. I have given a commitment that I will compile a report and described what I believe the priorities should be in the context of that report. That is why I do not believe an amendment to the legislation is merited.

Recommendation put and declared lost.
Section 6 agreed to.

I move recommendation No. 2:

In page 14, between lines 8 and 9, to insert the following:

“Report on lowering of High Wealth Individual threshold

7. 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 €20 million and above.”.

I am seeking information here rather than change. I am aware that a recommendation was accepted by Revenue in 2019 that the threshold for high wealth individuals would be lowered from €50 million to €20 million on the advice of the Comptroller and Auditor General. It is not so much to suggest that this be done as to ask for a report on if and how it has been done. How has it played out since that recommendation? The recommendation from the Comptroller and Auditor General was accepted in principle by Revenue but has it been implemented?

This is more of a question than a recommendation.

I am seeking a report on the introduction of the new threshold, but the new threshold has been accepted in principle. I want to know about how it has been introduced.

As part of its national structure, Revenue has adopted a large cases-high wealth individuals division. That division is responsible for all taxation matters relating to high wealth individuals, who are currently defined as people with net wealth of €20 million or more. Revenue has also established a medium enterprises division and tax affairs of the next tier of high wealth individuals with wealth below the €20 million threshold are managed in this division. Responsibility for these cases in both divisions includes ongoing risk evaluation and, where necessary, targeted programmes.

I do not have any information available for now regarding the performance of those divisions within the Revenue Commissioners, but I will see if I can get some information for the Senator regarding their operations and the difference it has made in tax collection from that group of taxpayers. If it is made available with me during this debate, I will share it with the Senator in a moment.

I thank the Minister for indicating that he might provide me with information on that. It would be useful to see how it has panned out.

Recommendation, by leave, withdrawn.
Sections 7 to 15, inclusive, agreed to.

I move recommendation No. 3:

In page 20, between lines 28 and 29, to insert the following:

“Report on Trans-Border Workers’ Relief in the context of Cross-Border Workers

16. The Minister shall, within six months of the passing of this Act, prepare and lay before

Dáil Éireann a comprehensive report on the Trans-Border Workers’ Relief in the context of people who reside in the State and work in the North and the tax status and options of people who reside in the North and work in this State.”.

The issue of transborder workers was raised in the debate on last year's Finance Bill debates, specifically in the context of people who reside in the State but work in the North and who avail of a domestic tax relief, known as transborder workers' relief, as provided for in section 825A of the Taxes Consolidation Act 1997. Transborder workers' relief is for people who are resident in the State but travel daily or weekly to work in another country and pay tax in that other country. This tax relief is not normally available for Irish residents who work from home in the State. In light of the unprecedented circumstances arising due to the Covid-19 pandemic and the resulting public health restrictions to limit movement, for the tax years 2020 and 2021, Revenue confirmed that a concessional treatment for this relief would apply, whereby if employees are required to work from home in the State due to Covid-19, such days working at home in the State will not preclude an individual from being entitled to claim this relief, provided all other conditions of the relief are met.

The relief effectively removes the earnings from a qualifying foreign employment from the liability to Irish tax where foreign tax has been paid on those earnings and such tax is not refundable. The effect of the measure means that individuals who qualify for the relief will not pay any Irish tax on their employment income. Irish tax will only arise where the individual has income other than income from the qualifying foreign employment.

There are a number of criteria that must be satisfied for an employee to be eligible. In particular, the employment duties must be exercised wholly outside of the State in a country with which Ireland has a double taxation agreement. None of the duties of employment can be performed in the State, save those considered incidental to the performance of the duties outside the State.

... it appears impracticable from a legal perspective, in terms of taxing rights, as well as challenging from a policy perspective when having regard to the interests of the wider body of taxpayers encompassing all Irish resident employees and employers, to place the concessional treatment on a statutory footing.

The tax strategy paper reached this conclusion based on issues of taxing rights, equity and competitiveness.

The Senator is requesting a comprehensive report on transborder workers' relief. This was discussed during the debate on last year’s Finance Bill, when I undertook that the relief would be examined as part of the work of the TSG process for 2021. I fulfilled this commitment and this relief was examined by that process earlier this year.

This issue was also raised with me on Committee and Report Stages of the Dáil, in particular Revenue’s temporary concession for the years 2020 and 2021, introduced in light of the exceptional and unprecedented circumstances arising from the pandemic. The concession provides that employees will still be entitled to claim transborder workers' relief where they are required to work from home in the State due to Covid-19 restrictions, provided all other conditions of the relief are met.

This concession is due to lapse at the end of this year. The question has been raised previously if the concession would be extended further due to recent public health advice recommending that everyone should work from home unless it is necessary to attend the workplace in person.

The Senator may wish to note that the operation of the relief is a matter for the Revenue Commissioners.

I am advised that Revenue has been reviewing this matter. Having regard to current circumstances, I can confirm that Revenue will continue to adopt a pragmatic and flexible approach by allowing for a further extension of the temporary concession. This extension will apply for the period of time in 2022 during which the public health advice recommends that everyone should work from home unless it is necessary to attend the workplace in person. I am advised that Revenue issued further guidance on this temporary extension, which is available on Revenue’s website.

More broadly, in relation to the Senator’s request for a further report on transborder workers’ relief, as I said, a comprehensive examination of the issue was undertaken by the TSG that encompassed very detailed consideration of all relevant matters, including the equity of treatment between Irish residents who pay tax in the State, the competitive position of Irish employers and the established principles of international tax.

Ordinarily to avail of the relief, the duties of employment must be performed wholly outside the State and in a country with which Ireland has a double taxation agreement. When examining whether the temporary concession should be placed on a statutory footing, the TSG review identified a number of significant concerns from a policy perspective having regard to the interest of the wider body of taxpayers encompassing Irish resident employees and employers.

The review noted that if the temporary concession regarding transborder workers’ relief was placed on a statutory footing, it would allow residents in the State to avail of the relief while working in the State and pay no tax to the Exchequer in respect of the foreign employment income. Where employment duties are carried out in the State, Ireland has a taxing right over that income and to not tax that income would be asking the State to give up a taxing right it rightfully has under the Irish tax code. It is unclear why Ireland would not exercise those taxing rights and it is unclear also how another jurisdiction would then have taxing rights over income earned in the State in respect of duties carried out in the State.

The review identified issues relating to equity for all Irish taxpayers. Currently, there may be different tax liabilities and different effective tax rates between those Irish residents who can avail of the relief as compared to those who cannot. However, there is a key distinguishing factor in that the employment duties are exercised outside the State for a non-resident employer. The move to increased levels of remote working, including blended working arrangements, within the State weaken that critical distinction.

If transborder workers’ relief was relaxed to allow for work carried out in the State to qualify for the relief, there would no longer be a distinguishing factor between Irish residents as both sets of Irish residents would be exercising their employment duties in the State. In such circumstances, some - those with Irish resident employers - would be liable to tax at the Irish tax rates with income tax and USC, and a potentially higher effective tax rate, while others, those with non-resident employers, would be liable to tax at the tax rates in the other jurisdiction and a potentially lower effective tax rate. This is an example of some of the issues of equity that arise with regard to the report the Senator is requesting. Revenue has given an indication that it will extend the relief on a pragmatic basis given the current public health guidance. I am prepared to continue to look at the matter as I accept it causes issues for those affected by the current public health guidance and the need for them to work in their homes while their employer is located in another tax jurisdiction. However, for the reasons I have outlined, there are really important issues of principle that mean that I am not in a position to make the kind of change the Senator is advocating for.

I thank the Minister. I appreciate the lengthy reply. We are not going to agree on this but I note he is willing to keep an eye on the ongoing issue.

Recommendation put and declared lost.

Recommendations Nos. 4 and 5 are related and may be discussed together by agreement. Is that agreed? Agreed.

I move recommendation No. 4:

In page 20, between lines 28 and 29, to insert the following:

“Report on tapering out of income tax credits

16. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on tapering out income tax credits for incomes between €100,000 and €140,000 at a rate of 2.5 per cent for each €1,000 earned.”.

Even before the pandemic an ageing population, potential over-reliance on corporation tax receipts and an inevitable decline in motor tax revenues combined to make the need for future tax rises likely. Emerging from the pandemic it is clear as never before that we need a more agile and responsive State, a stronger social safety net, a health service that works and a public childcare option for parents that is genuinely affordable. This can only be done through an increase in tax revenue in the form of additional taxation or less in the way of tax expenditure. The Commission on Taxation and Welfare will examine these options as the ESRI has done but the programme for Government all but rules out additional revenue measures other than behavioural tax measures the purpose of which, on the face of it, is not for revenue generation.

These recommendations call for the examination of measures to increase revenue through changes to the income tax system first, by tapering of tax credits on individual incomes in excess of €100,000 and, second, the introduction of a solidarity levy on individual incomes above €140,000.

In 2022 the effective tax rate on a full rate PRSI individual income of €100,000 will be 38.1% compared with 38.5% in 2021 and 41.1% in 2014. In 2022, the effective tax rate on a full rate PRSI individual income of €120,000 will be 40.4% compared with 40.7% in 2021 and 42.9% in 2014. In 2022, the effective tax rate on a full rate PRSI individual income of €150,000 will be 42.7% compared with 43% in 2021. We can see the direction of travel.

Tapering tax credits at a rate of 2.5% on individual incomes above €100,000 and introducing a 3% solidarity tax on portions of individual incomes above €140,000 would not change the effective tax rate on a full rate PRSI individual income of €100,000 but it would increase the effective tax rate on full rate PRSI individual income of €120,000 to 41.8%. It would increase the effective tax rate of a full rate PRSI individual income of €150,000 to 45.1%. Withdrawing PAYE and earned income tax credits at the previously proposed rate of 5% from those with taxable income above €100,000 would create an effective rate of 64.2% between €100,000 and €120,000 per year.

The British tax system incorporates a personal tax allowance which is subject to a tapered withdrawal for individuals whose income is in excess of £100,000 per annum. In this context it is worth noting that the tax allowance allows relief at a taxpayer's marginal rate whereas the PAYE and earned income credits are standard rate tax credits. The allowance is reduced by £1 for every £2 earned above this limit, tapering out in the 2017-2018 tax year once income reaches £123,000. The £100,000 threshold was chosen as all individuals with income above that level were already obliged to file a tax return each year. This facilitated the operation of the taper. By contrast there is no similar liability to file a tax return based on income level in Ireland at present. That would likely need to be reviewed were the policy of tapering the credits to be pursued. There is real merit in calling for these reports and I hope the Minister will support the recommendations.

The Senator’s recommendations refer to reports on first, the tapering out of income tax credits at certain incomes and, second, the introduction of a high income levy. First, regarding tapering of income tax credits, there is already a substantial amount of research published on this subject. The income tax reform plan published by my Department in July 2016 examined this issue due to the fact that the Programme for a Partnership Government contained a commitment to consider the removal of the PAYE credit for high earners as part of a medium-term income tax reform plan. It pointed out that there are a number of technical issues and policy issues which would need to be addressed in order to achieve a tapered withdrawal of income tax credits, particularly for PAYE employees. The issue was also discussed in the 2018 tax strategy group papers on income tax. It is estimated that the tapering out of the personal income tax credit, PAYE credit and earned income tax credits in the manner outlined by the Senator could raise in the region of €855 million per annum.

A significant issue arising with this amendment is that it would have a negative impact on the marginal rate of tax. The tapering out of a tax credit would result in a higher marginal tax rate within the taper zone than would apply at higher income levels. By way of example, were the personal tax credit of €1,650 to be tapered out at a rate of 5% per €1,000, the marginal rate within the taper zone would be just over 60%. Once the taper period has expired, at income over €120,000, the marginal rate would revert to 52%.

Another issue that has been pointed out in previous research is that tax credits and rate bands operate on a cumulative basis as Revenue issues a revenue payroll notification to the individual’s employer, which then uses the information contained in the notification to calculate the tax to be deducted each time a payment is made. If it is known from the beginning of the year that an employee's income will exceed the chosen threshold, then the application of the taper of the credits could be applied from the outset, thereby spreading the tax burden equally over the year. However, where it appears during the course of the year that the employee’s income may exceed the chosen threshold, Revenue will need to update the Revenue payroll notification to withdraw the relevant credits and this will result in the collection of arrears from the next payment of salary by the employer, resulting in an uneven distribution of its liabilities over the year and an uneven distribution of the yield for the Exchequer.

Tapering the tax credits could also affect the relative position of different categories of taxpayer. For example, consideration would need to be given to how the taper would work in the case of jointly assessed individuals, such as whether the value of a single personal tax credit or that of a married personal tax credit would be subject to the taper, and what income threshold would apply to a single-income couple. In addition, the effect of a deduction such as a loss available in respect of one spouse would need to be considered where the couple are jointly assessed for tax.

Regarding the amendment for a report on introducing a high-income levy on incomes in excess of €140,000, there are a number of issues with the proposal the Senator has suggested, as it would increase the complexity of the income tax system and could negatively impact on marginal rates of tax as well as the competitiveness of our tax code. While the Senator has not specified a specific percentage for the levy, for illustrative purposes, if a 5% levy was introduced on the basis of the current structure of the income tax charge, it is estimated it could yield €505 million per annum. However, this would see the current two-rate income tax system expand to become a three-rate system. If introduced on the basis of the current structure of USC, it is estimated that such a 5% charge could yield an additional €520 million per annum but would see the current five rate USC system increase to six rates. This would be in addition to the PRSI system, which has further distinct features and would introduce complexity and an unnecessary additional administrative burden for taxpayers, employers and Revenue. The introduction of a higher rate such as this would increase the marginal rate of tax on earnings over €140,000 to 57% for employees and 60% for the self-employed if it was introduced as an income tax rate.

I believe those kinds of marginal tax rates would be a deterrent to the continued retention of workers in our economy, including individuals who earn a lot of money, whose presence here is important to the retention of jobs in Ireland. A practical example of this is hospital consultants. The difficulties we have in attracting consultants who were trained in Ireland but are working abroad to come back to work in our hospital system are well known. Rates such as those I have outlined would be a deterrent to encouraging those highly trained consultants to come back to work in our public services. There is a public service argument for why I would not accept this amendment, and a broader issue with the competitiveness of our economy and the need for personal tax rates to be competitive.

I thank the Minister for the extended reply. I appreciate that. We have clear ideological differences here and should acknowledge that. I am fascinated that, when it comes to the wealthy in society, we need to give them incentive after incentive, or else they may not stay here. When it comes to ordinary working people, for much of the past six months, we have heard that pandemic unemployment payments are too much and employers are no longer able to find workers. There is one rule in place for people on low incomes and one for people on high incomes. The Minister's refusal to countenance even a report on what could be achieved by tapering income tax credits and a levy on high incomes puts him to the right of the British Tory party. Even Johnson, perhaps the worst and most extreme prime minister in recent times, has acknowledged that tapering income tax credits is important. Where does that leave Fianna Fáil and Fine Gael on the political spectrum?

I note that if we wish to encourage the retention of hospital consultants or indeed anyone in the public service, it is in the Minister's remit to pay them more. We do not have to include a protection from tax for all those on higher incomes. If the concern is consultants, the mechanisms exist in the State's contracts with them. Among many of the concerns with regard to retention, tax has not featured highly. The terms and conditions, including those related to the silencing of consultants who engage in public debate, have been prominent factors in the discussions. The tax rate is something of a red herring.

The capital flight we have heard about over the years is not a sufficient argument. Taking the idea that a 5% levy will lead to large numbers of high earners leaving and taking their jobs with them, if those are the priorities of managers to such a degree that a marginal difference in their income tax will determine whether they will carry out business in a state, even with favourable corporate tax measures in that state, that is questionable. Those are maybe side points.

The core point is that these are reasonable recommendations. Regarding recommendation No. 4, if there is a fall-off after €140,000, there is nothing to stop the Minister from bringing a counterproposal or indicating interest in a further report whereby he would look to continuing the tapering beyond €140,000 to avoid that disconnect. The crucial matter here is the idea of a high-income levy and the reluctance to look at that, with the idea that it is too complex. People earning €140,000 or more can handle the additional complexity. It is a very small additional complexity for persons on a substantial income, which would place them in the top 10% of earners in the State.

It is financially responsible to consider our GNI* and how we ensure its maintenance. The Irish Fiscal Advisory Council has been clear that we cannot continue to over-rely on the substantial windfall revenue that we have had from corporate taxes. It stated that we need to make sure we maintain a predictable and steady income tax. We should look at options such as a high-income levy. It is hard to look at this and not look at the fact that tax cuts are being talked about. We have heard the extreme measures in transformative public expenditure that are required. Tax cuts are expenditure. The idea that expenditure would go towards tax reliefs rather than public investment is a real concern. It affects public investment in the things that we share, including our collective public services and State measures.

If we have a return of the fiscal rules, as the Minister has advocated for, and the ratios which the junior Minister spoke about when he was before the Seanad on the Finance Bill, then, if we consider the ratio of revenue to debt, by taking down revenue in any sense through tax reliefs or by failing to ensure a steady and continuous revenue by bolstering GNI*, not only is that money taken out of circulation for public investment but the ratio between income, expenditure and deficit also changes. It, therefore, becomes harder for us to spend on the other side, so we are losing twice on public investment in that context if we have tax cuts. We are taking away from one side of the scales and lowering the other side. It is surprising that tax cuts are being talked about now, even though the Irish Fiscal Advisory Council has been clear about the need for us to be clear. It would be more fiscally prudent if we at least did a report so we would know what our options might be around the introduction of an income levy on higher incomes if we need to bolster our GNI*.

There is a fundamental difference here. The two Senators will always see work as something to be taxed at a higher level. They will always see companies, entrepreneurs and innovation as things to get more tax from. They, frankly, ignore the fact that other countries want the innovative companies that are located in Ireland. That is an inescapable fact of having a small, open economy in which ideas and people are mobile. I find it extraordinary that in the arguments and facts the Senators have put forward to me, they give no credence to the fact that we already have one of the most progressive tax codes in the OECD. They have not acknowledged that at all. I will put the facts in that regard onto the record of the House. A single person who earns €120,000 in Ireland pays an average effective tax rate of 40.4%. If the same person earns €20,000, that tax rate is 6.4%. As one earns more in Ireland, one's average tax rate goes up as one's marginal tax rate goes up. Those are facts that are fundamental to considering how progressive and effective our tax code is. Those facts are relevant to the debate we are having here.

The Senators suggest that a higher tax rate for income above €140,000 would not have consequences that bear consideration. I believe those consequences would be difficult and potentially damaging for our economy. It is not an easy argument to make because somebody who is earning more than €140,000 is exceptionally well paid, but those individuals have ideas, skills and training. They may have people reporting to them who I want to keep in our country. That is a difference between the Senators and me.

Senator Gavan suggested we have a different rule for people who are on low to middle incomes and those who are on higher incomes. If one is on a lower level of income, one's average effective tax rate is lower than those who are on higher levels of income. We have proposed tax changes that will primarily benefit those who are on low and middle incomes and the Senator's party voted against it. Sinn Féin thinks it is okay for somebody who is on the average wage in our country to continue to pay the higher rate of income tax. It is comfortable with that and wants that to be maintained. I disagree. I believe that if people earn a few extra euro each year due to getting a promotion, staying longer in a job, doing some overtime, getting a new role within their company or changing companies, it is appropriate that we look to ensure they do not always pay a high marginal rate of tax as their income goes up due to their efforts.

I make a similar point to Senator Higgins. She does not believe there is any role for a change in our tax policy as prices and incomes are going up. In the model the Senator has espoused, as incomes go up, as they are, and as prices go up, as they are, tax revenue will go up and those who are on low levels of income will progressively end up paying higher and higher rates of tax. That is something I believe we should be proactive in trying to change. The measures we brought forward in the budget are all about ensuring that somebody who is earning between €30,000 and €40,000 is not always paying the highest rate of income tax. I believe we should change that.

In the arguments they put forward to me, why can the Senators not acknowledge that we already have a very progressive personal tax code here in Ireland? There are high marginal rates of income tax for those who see their incomes grow and average rates of income tax that mean those on high incomes already pay higher levels of taxation than those who are on lower levels of income. For those reasons, I believe the tax changes we are making at the moment are appropriate. I am not going to accept this recommendation, which provides for a report, because I do not believe the Finance Bill is an appropriate location for committing to reports.

If we get into a back and forth, it will probably not be particularly productive, to be fair. There are clear ideological differences between the Minister and me. I believe that someone who earns €140,000 can afford to pay a little more tax. We need that tax and we will need it in the years to come. One of the reasons we have exactly half the ICU beds we are supposed to have in this country, and we were told we would need in the 2009 Prospectus report, is because, year after year, this Government, unfortunately, did not ring-fence funding to expand the numbers of beds until such time as the crisis hit last year. That is a fundamental failure of planning and delivering ICU beds. That is a fact. We know we have one of the lowest rates of ICU beds in Europe. That is a fact. My point is that rather than being opportunistic, we are looking for ways to raise revenue in a sensible fashion over the coming years to ensure we can pay for decent public services. That is the responsible thing to do.

Of course, when we talk about a rate of tax of 46%, we are talking about that as the rate on that portion of the income above the marginal rate. That factor can sometimes be blurred. It is also worth noting that Ireland has one of the highest levels of income inequality in the European Union. There is a redistributive function through our taxation system but it is redressing extremely high income disparity and income inequality. If we are committed to the idea of progressive taxation, a third level is something that perhaps needs to be looked at down the line, and that would be consistent with a progressive system. It would be recognising that, for example, somebody earning €140,000 is not the same as somebody earning €30,000 or €40,000. It would be reasonable that somebody earning €140,000 might pay a higher rate than a person who has slipped into the marginal rate at €40,000 or so, as has been described.

A person earning €140,000 is already paying a higher average rate of tax. That is already the case. Politicians such as me who believe we have tax structures at the moment that are fair and effective, and that play a role in ensuring those who have more pay more, do a disservice to those beliefs if we do not challenge the views we are hearing from our colleagues here. Let me repeat that if one earns more in Ireland, one pays a higher average rate of tax and as one earns more, one pays a higher marginal rate of tax. I ask Senator Gavan not even to try to position Sinn Féin as the party of fiscal responsibility. The party wants to abolish local property tax. It does not want to go ahead with increases in carbon tax. With due respect to Senator Higgins, she is making the case for fiscal prudence while she is also advocating higher levels of borrowing to form particular forms of expenditure. I cannot accept that argument.

I will not hear Sinn Féin make the case that it is fiscally conservative or prudent when it proposes to abolish taxes that the vast majority of analysts and economists, or at least those among them who are sensible, would argue for. Local property tax plays a valuable role in the tax code and Sinn Féin wants to abolish it. Sinn Féin says it is in favour of broadening the tax base but it argues against increases in carbon tax year after year. I do not accept, therefore, that it can make the case for being prudent about what we are doing or for prudence.

I accept that we need more ICU beds. The Government has a plan in place to achieve that. It is also the case that even though the number of hospital beds in Ireland came under real strain, we managed to ensure we had enough hospital beds for those who needed them during the pandemic. We know we need to build more. For Senator Gavan and Sinn Féin to position the pandemic as an example of public service failure, as his fellow spokespersons do all of the time, is a narrative I completely reject. Our public services came under strain and we need to invest more and support them in future. Our health services, hospital beds, nurses and doctors faced a huge challenge and many of them faced unimaginable strain in the work they were doing, nonetheless the State overall, facing huge tests in this pandemic, has managed to reduce the number of people who died in the country, put in place a really good vaccination campaign and protect the economy. They are arguments that we need to hear a little bit more of when Sinn Féin make the case that what happened in this pandemic is an example of the failure of our State. It is wrong.

On the overall substance of the recommendations, we have a progressive tax code. The more one earns, the more one pays. Average tax rates go up the higher one earns. The jobs we are talking about and the people we want here in Ireland are wanted by other jurisdictions. I want those jobs here. For this reason, I do not accept the recommendation or the policies being proposed.

Recommendation put and declared lost.

I move recommendation No. 5:

In page 20, between lines 28 and 29, to insert the following:

“Report on income levy on high incomes

16. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on the introduction of a high-income levy on high incomes in excess of €140,000.”.

Recommendation put and declared lost.

I move recommendation No. 6:

In page 20, between lines 28 and 29, to insert the following:

“Report on income tax relief

16. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann 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 and other policy levers such as a ban on rent increases.”.

The latest rental report from shows that rents are continuing to rise across the State, with renters in Munster, Connacht and Ulster facing hikes of between 15% and 18% annually. The average monthly asking rent for the third quarter of 2021 was €1,516. The Government introduced legislation that pegged rents to inflation and allowed landlords to increase rents by 5.1%. Following that, it introduced legislation that would allow landlords to increase already unaffordable rents by another 2%, which is madness. These rent rises are the first data set reflective of the changes made to the rent pressure zone legislation that linked rents to inflation.

The report shows that 17 counties had double-digit rent inflation. Rents continue to soar outside of the Dublin area, increasing by over 20% in counties Mayo, Leitrim and Roscommon. This is a huge expense for households to shoulder.

The rental crisis continues unabated showing that tweaks to the failing rent pressure zone legislation have failed. Sinn Féin wants to see the introduction of a time-bound, refundable tax credit for renters in the private sector at a rate of 8.3% of annual rent and equivalent to one month's rent, in conjunction with a three-year ban on rent increases. This will provide much-needed relief for renters, effectively reducing the burden they face.

In 2009, the Commission on Taxation recommended discontinuing income tax relief for rent paid but on the grounds that the relief would increase demand and, therefore, rents to the benefit of landlords. However, this problem would not arise as we are proposing a refundable tax credit for rent paid would be accompanied by a ban on rent increases for the period in which the relief was payable.

The fundamental point is that this budget did absolutely nothing for renters. People are pushed to the pin of their collars with extortionate rents. In my village of Castleconnell, rents of €1,400 a month are being charged for very poor quality houses. The belief that it is okay to slow down the rate of increase is missing the point. We need rent reductions and a rent freeze. That is the only way to address the rental crisis in the country.

As the Senator will be aware, this change was proposed in an amendment during Report Stage of the Bill in Dáil Éireann. However, allow me to set out once again why I believe the introduction of such a relief is not appropriate.

On Report Stage in the Dáil, Deputy Pearse Doherty noted correctly that relief in respect of rent paid by private tenants was previously available. However, as I explained, it was abolished in budget 2011 and it is no longer available to those who commenced renting for the first time from 8 December 2010 onwards. This was on foot of a recommendation in the 2009 report by 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 increases the cost of housing, rent relief could increase the cost of private rented accommodation. Accordingly, the result of re-introducing this relief would be a transfer of Exchequer funding directly to landlords, which would not have the intended effect of reducing the pressure on tenants.

In fairness to the Senator's colleague, Deputy Doherty, he acknowledged this point and argued on Report Stage that the measure be accompanied by a rent freeze for the period that the proposed support is in place. In reply, I would argue that the evidence suggests that long-term rent controls can give rise to their own problems, including a reduced number of landlords being available to provide rental accommodation in the first place. There is the risk that we would see a reduction in the overall availability of properties to rent, making worse the fundamental lack of supply already in evidence.

As I said previously, it should also be noted that a tax credit of this nature will be of little benefit to lower income workers, the unemployed and students who may not receive the benefit of the relief as they may not be paying sufficient levels of income tax.

If anything shows how out of touch this Government is, it is the Minister's statement. We have a rental crisis, which happened under the Minister's watch. The problem has been getting worse year after year. We have hard-working families who simply cannot afford the rents they are being charged. Yet, a simple proposal to actually give those hard-working families a break in this budget has been rejected again by this Government.

I do not think the Minister understands the level of distress families are suffering due to these extortionate rents. I do not think he understands how much they are hurting. It is hugely disappointing but it does not surprise me because, let us be clear, we have had 11 years of Fine Gael government and during that time, Fine Gael has consistently failed in housing, renting in particular. That is why we have a housing crisis.

I fully appreciate that we have huge challenges in the rental sector. I understand the anxiety and stress faced by many tenants who find their rents going up and are worried about whether they will have rental accommodation in the future. The Senator makes the case that we have huge difficulties in the rental sector, as we do. At the same time, we are at the point at which "landlord" has now become nearly a term of abuse in the way Sinn Féin uses it. That is the reality of the debate we are in. Every time Sinn Féin members use the word "landlord", they drip with invective about them.

We need more rental accommodation in Ireland and we need more landlords willing to supply that rental accommodation. To call someone a landlord is a term of abuse on the part of Sinn Féin. The Senator talks about the challenges that tenants are facing but in the debate in the Dáil, Sinn Féin voted against an extension of a tax relief that seeks to support landlords with the expense of turning unused rental accommodation into rental accommodation they can rent out. What will Sinn Féin say to the families who will be looking for rental accommodation in the future and who will be looking to have a better chance of finding a property they will be able to rent in the future when Sinn Féin voted against a measure that seeks to support landlords in making more rental accommodation available? We have to acknowledge what Sinn Féin's arguments are doing to the many challenges we have in the supply of rental accommodation in Ireland.

Senator Gavan talks about the Fine Gael record in the housing market and I accept that there is much we need to do better, that we need to get more homes built more quickly and that they need to be more affordable. Our record is that we were in government at a time when there was not enough money available in our country to build the homes that needed to be built where they needed to be built. Year after year we have taken the measures and put in place the policies and money that have seen the amount of homes that are built by local authorities increase over time and the number of homes that are being built in our country increase over time. We acknowledge that for many it is not enough and that it is not happening quickly enough. The Senator cannot on the one hand argue that more needs to be done to provide more rental accommodation while on the other hand he continues to use the word "landlord" as a term of abuse. He cannot do both. The Government accepts that there is a huge challenge in how we can make more homes available for rent but we believe that the measures the Senator is proposing are a recipe for fewer homes and higher rents. It is for those reasons I am not accepting the Senator's recommendation.

Does the Senator wish to make a comment before I put the recommendation?

We are not finished yet. First, for the record I never used the word "landlord" at all in my contribution so the Minister might care to listen a little more closely. Second, the Minister's contribution is extraordinary because one would almost think from listening to it that the housing crisis is some kind of natural phenomenon like an earthquake or storm but it is nothing of the kind. The housing crisis happened as a direct result of Government policy, or to be more explicit, it happened as a direct result of failures in Government policy. We should be clear and have some accountability from the Minister. His Government has been in place for the last 11 years. I note the sigh from Senator Casey and I also note the fact that there is not the width of a cigarette paper of difference between Fianna Fáil and Fine Gael on housing policy now. What does that tell us about how low Fianna Fáil has found itself going? We are in a housing crisis because of the failure of the Governments the Minister has been in over a decade. That is why we have a consistent housing crisis, not just in the lack of public housing but in the atrocious state of the rental market. That is the reality and nothing the Minister can say here avoids that fact. That is the Minister's record in government.

I want to repeat what I said five minutes ago and I would love to hear a comment from a Sinn Féin representative on it. The fact is that between 2016 and 2021 Fine Gael delivered more houses in the programme for Government than was in the Sinn Féin proposal prior to the 2016 election. What answer does Sinn Féin give to that? We exceeded the proposals Sinn Féin put in place and we failed? If Sinn Féin had been in government we would have an awful lot more problems. Sinn Féin's housing spokesman, Deputy Ó Broin, might get his calculator or go back to school and learn his maths because he seems to be able to build houses in this country at €150,000 per unit, which is impossible in the current market. Senator Gavan is giving out about this Fine Gael, Fianna Fáil and Green Party Government that has put in place Housing for All, a plan that will deliver housing at all levels, including affordable and private. It will involve local authorities, private developers and investors, which are needed to make sure we can deliver this. I ask the Senator to go back and get his calculator out and get his figures right.

Sometimes it is hard to come here and listen to what is being said. I find the statements being made in the housing debate disingenuous. While Senator Gavan might not have mentioned landlords, when he mentions private rental tenants he is indirectly referring to landlords because one cannot have them without landlords. The Senator can come here and take the stance he has taken because he is not responsible. He just wants a political line on a video clip. We need landlords and what has happened with them in the last two years? We lost 1,600 landlords last year and we have lost over 2,000 this year. This Government has brought in six Acts to control rents in the two years it has been in government. The interference of this Government in the housing market is the largest single investment in the history of the State. Some 50% of all houses delivered by this Government are controlled by the Government, be that through local authority housing, affordable housing or cost rental. Some 50% of the keys given out to individuals in this country are as a direct result of this Government's policy on housing. It is the single biggest intervention in the housing market ever. We have managed to build over 22,000 houses this year, despite being shut down for three months and we had commencements of over 31,000 units already in November of this year. We are addressing it and we are beginning to deliver. Everybody says it is all about supply. It is about supply and we are getting there through difficult times but let us not run down Housing for All and Rebuilding Ireland before that. They are delivering but we need landlords. All Sinn Féin's policy is doing is scaring landlords out of the market and making the situation worse than it already was. Some 86% of our landlords only own two properties or less. Over 90% of them own one property or less. These are the people Sinn Féin is targeting and running down every day. It wants landlords but it is running them out of the market with its lingo.

In this city we have the highest rents anywhere in Europe.

I am not disputing that.

That is the reality and that is the Minister's record. We should have some accountability on that and the figures are getting worse in the rental sector, not better.

We are getting very pithy in our speeches. Is the Senator pressing the recommendation?

Recommendation put:
The Committee divided: Tá, 8; Níl, 22.

  • Boyhan, Victor.
  • Boylan, Lynn.
  • Gavan, Paul.
  • Higgins, Alice-Mary.
  • Keogan, Sharon.
  • McDowell, Michael.
  • Ó Donnghaile, Niall.
  • Wall, Mark.


  • Ahearn, Garret.
  • Ardagh, Catherine.
  • Blaney, Niall.
  • Buttimer, Jerry.
  • Byrne, Malcolm.
  • Byrne, Maria.
  • Carrigy, Micheál.
  • Casey, Pat.
  • Cassells, Shane.
  • Chambers, Lisa.
  • Conway, Martin.
  • Cummins, John.
  • Currie, Emer.
  • Dolan, Aisling.
  • Fitzpatrick, Mary.
  • Garvey, Róisín.
  • Horkan, Gerry.
  • Kyne, Seán.
  • Martin, Vincent P.
  • McGahon, John.
  • McGreehan, Erin.
  • Ward, Barry.
Tellers: Tá, Senators Niall Ó Donnghaile and Paul Gavan; Níl, Senators Lisa Chambers and Seán Kyne.
Senator Lorraine Clifford-Lee has advised the Cathaoirleach that she has entered into a voting pairing arrangement with Senator Eileen Flynn for the duration of Senator Flynn’s maternity leave and accordingly has not voted in this division.
Recommendation declared lost.
Sections 16 to 18, inclusive, agreed to.

Recommendations Nos. 7 and 13 are related and may be discussed together by agreement.

I move recommendation No. 7:

In page 23, between lines 21 and 22, to insert the following:

“Report on the application of Capital Gains Tax to REITs

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

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

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

(c) the effect of REITs on the supply and prices of residential housing on the rental market, and

(d) the effect of REITs on the supply and prices of residential housing on the open market for private household purchase.”.

The Minister will be aware that there was debate in the Dáil where similar amendments were tabled. It is important to table them again, however. Currently, REITs do not pay capital gains tax when they are disposing of a property. The tax is only paid at the point where dividends are distributed to shareholders. The argument is often made around double taxation. I do not believe that applies here, however, because considerable things happen and in many businesses and many areas of activities, tax is paid along the way over different activities that happen. It is notable that in terms of IREFs, taxable events are not considered to be the disposal of an asset or the collection of rent. This seems to me to be a very significant omission.

I urge the Minister to take on board my recommendation, which would seek first of all to look at the options for the introduction of capital gains tax at a rate of 33% where REITs, IREFs, or groups of REITs or IREFs, dispose of a property and its property rental business, and the introduction of a potential stamp duty surcharge on REITs that are buying up residential properties. Again, that is something on which more could be done.

I refer to the effect of REITs on the supply and price of residential housing in the rental market. This is a factor. REITs are effectively competing with first-time buyers. That is part of it. We talked about things that are driving up inflation and prices. It is certainly not solely the help-to-buy scheme. Another factor is the fact that first-time buyers are competing against REITs. Killian Woods has given very detailed analysis and examples of this in his reporting, as have others, where local authorities must compete with REITs in terms of the purchase of housing.

REITs that have the potential of getting leasing contracts with local authorities or others are effectively outbidding local authorities for what is often a limited supply of private housing for purchase in rural and other areas, as described earlier by Senator Casey. Local authorities then find themselves forced into leasing properties on which they were outbid. We need to know the effect of REITs on the supply and the price of residential housing, whether they are part of the inflationary effect if help-to-buy is only a small factor and their impact on residential properties available on the open market for private purchase. These are two factors that I hope the Minister might be able to address. Senator Gavan has tabled a similar recommendation on this issue.

I have some sympathy with Senator Higgins's suggestion that there should be a report on some of these possible changes in taxation policy. I am an admirer of the skills of the Minister for Finance, Deputy Donohoe, but what is wrong with the current Government is that we are not facing up to a fundamental issue, namely, the level of capital gains tax. When I served as Opposition spokesperson on finance for the Progressive Democrats in 2002, I proposed an amendment to the Finance Bill to reduce the rate of capital gains tax from 40% to 20%. Former Deputy Charlie McCreevy, who later became Minister for Finance, was an Opposition spokesperson as well and he and I teamed up on this matter. I had the good grace to lose my seat in the following election so my tuppence worth was simply offered on that day.

I strongly believe that the rate of capital gains tax is too high. I am looking at what is coming down the tracks in this debate by way of recommendations. For example, there is a suggestion in recommendation No. 14 that the rate of capital gains tax be brought back up to 40%. I am strongly of the view that we need to have a 20% rate of capital gains tax. I fully understand that people will say that we are already taking 35% or 40% of basic income and this, that and the other by way of taxation, and question how this would square up in terms of equity to a capital gains tax rate of 20%. On becoming Minister for Finance, Charlie McCreevy had the bottle to pursue his own views, expressed in opposition, and reduce the rate of capital gains tax from 40% to 20%. The result was a 500% increase in the yield from capital gains tax. This poses a fundamental issue for elected politicians: do you put theory before practice or practice before theory? My strong view is that a low rate of capital gains is a sensible arrangement in order to keep assets moving within an economy and that the rate of 33%, which was introduced in the aftermath of the financial crisis, was a knee-jerk reaction, which, I can well understand, was politically sensible at the time. We should, however, take a look at it now from the perspective of what transactions we are inhibiting. There are many people who, when they look at various transactions that are open to them, will note that a consequence of proceeding with one particular course of action is that 33% of the nominal gain that will accrue on that transaction will go straight to the Exchequer and their reaction is to hold off and to hang on to the asset in the hope that at some future date there will be a different regime.

I consider the former Minister, Charlie McCreevy, a friend and a good and decent man. He took the bull by the horns and cut the rate of capital gains tax from 40% to 20%. There was huge opposition to that at the time. It was regarded as ideologically indefensible, but the result was a 500% increase in the yield to the Exchequer. Leaving aside the housing bubble and the rest of it, when that money came in, it was available to the Exchequer to expend on redistribution and other things. A stance should be taken in this House against the current rate of capital gains tax of 33%. It should be reduced to 20%. In the final analysis, one can, of course, look to compare that with the higher rate of income tax, PRSI, etc., but I am convinced that the Minister should look at the outturn of such a low rate of taxation. I am convinced that if the rate of capital gains tax was reduced from 33% to 20% the result would be a very substantial taxation boost. The former Minister, Charlie McCreevy, proved that that was correct.

I can well appreciate that in the aftermath of the property market crash, the credit squeeze and all the rest of it, the Government of the day thought that on equity grounds, because we were burden-sharing across the economy, it should be increased from 20% to 33%, but the Department of Finance is not infallible. Very few of the people in the Department engage in any activity that would attract capital gains tax. There is a different world outside Merrion Street. That world is one in which the disincentive effect of taking one third of all capital gains by way of taxation is significant. The proof of the pudding is what happened when the former Minister, Charlie McCreevy, reduced the rate. I hope nobody is listening to me because on the basis of stamp duty measures that I once proposed they will probably think that this is a serious possibility. It is not in the mind of the current Government but a future Government should face up to the fact that 20% is the appropriate rate for capital gains tax to keep assets moving, transactions happening and to stop people engaging in massive tax avoidance schemes. There are transactions that are necessary. People who own land and who are faced with the proposition of whether to put it on the market often decide not to do so because before anything else happens, one third of the gains will accrue to the State. I am of the view that 20% is the appropriate rate for capital gains tax, as it is for the lowest rate of income tax, and that it should remain at that level.

I want to speak to recommendation No. 13 in particular which, as Senator Higgins stated, is similar to her recommendation. I have tabled a number of recommendations calling for reports into the tax treatment of REITs and IREFs and the broader economic impact of institutional investment in the housing market.

I want to begin with the tax treatment of REITs and IREFs and the application of capital gains tax. Investment funds in the housing market pay no capital gains tax on disposal of their assets. We have just heard an interesting contribution from Senator McDowell, who argued for a lowering of the rate to 20%. I disagree with him. I am sure he will be relieved to hear that as well. We are talking about investment funds paying zero capital gains tax on the disposal of their assets. When property or land is sold at a profit it is normal practice that it is subject to capital gains tax at 33%, which is payable within a few months of disposal. This applies to individuals and companies, including large developers such as Glenveagh and Cairn Homes, but REITs and IREFs are exempt.

This exemption is a massive and unjustified benefit for funds to keep accumulating money within a fund, tax free, with none of these gains subject to dividend withholding tax unless the money leaves the fund. It is striking that we have these outrageous tax reliefs for REITs and IREFs that Fianna Fáil and Fine Gael want to defend, while those parties have just voted against giving a tax break to ordinary renters. That is some contrast.

I will provide two examples. Last year, Kennedy Wilson sold one of its key Irish properties, Baggot Plaza in Dublin, for €141 million to a German property investor at a profit of $85 million, with these gains exempt from capital gains tax, CGT. Kennedy Wilson made clear that these proceeds, exempt from CGT, would be "recycled into new opportunities", which is a tax advantage not available to struggling homebuyers, small landlords or any other company. Yes, I used the word "landlord" but, hopefully, the Minister will approve. Similarly, last year, IRES REIT sold an 151-apartment portfolio to Orange Capital for €48 million. Again, this was a sale that was exempt from capital gains tax. If we are to rebalance our housing system, one that is out of control and failing in the delivery of affordable homes for purchase and rent, we must examine and remove the generous tax advantages that have been gifted to funds by this Government, including capital gains tax.

We are heading into a debate on capital gains. Capital gains tax needs to be looked at from a supply of housing point of view. It can form part of the solution. There are thousands of properties out there on short-term lettings because they are better value for money for their owners. We would much prefer to have those properties as part of the housing stock. There is a case to be made that if we reduce capital gains tax to 20%, we could get a lot of disposal of assets, which would in turn make up the revenue loss from a taxing measure point of view.

It is just an observation, but I am looking at this issue from a housing supply perspective and from the perspective of individuals who have a second property and are possibly basing their ownership on short-term letting at present. If capital gains tax was 20%, we might have a better opportunity to deliver that house into the supply chain rather than having owners sitting on it.

I completely agree with the last contribution. This is not an ideological thing. It is about increasing the capacity of assets to flow into the market. A capital gains tax of one third is indefensible in that context.

Senator Gavan mentioned the Government's view of the proposal to give some income tax relief on rental payments to taxpayers who are not entitled to other reliefs. I voted in favour of that because I genuinely believe that people are being very heavily gouged by the housing shortage in respect of the rental payments they are making, especially in Dublin, where some of the payments being exacted by landlords and market forces are extraordinarily high.

The fundamental issue is whether we want assets coming into or going out of the market. As long as we have 33% capital gains tax, many assets will be withheld from market activity. On the point Senator Gavan made about a rate of 33%, 20% or 40%, it has to be borne in mind that it is not just a matter of how fair we think this is on some abstract level. If assets become more mobile and come into the market more quickly, that has a market effect. The market cannot be misunderstood. It is a thing where some assets are stodgy and will not become involved in sales and transactions, if 33% capital gains tax is applied to them. Charlie McCreevy took an awful lot of stick for his welfare reforms and so on, but he proved, in fairness to him, that if the rate is reduced, the yield is quintupled. That is what he did with a reduction from 40% to 20%. I do not think the yield would be quintupled at present but I believe the capital gains tax yield would be doubled or trebled, if the rate was reduced from 33% to 20%.

I strongly support a review of capital gains taxation. I know it is politically difficult. The Minister is probably thinking what his partners in government, the left and all The Irish Times columnists, with the exception of Senator McDowell, would think of it, but I honestly believe that the current rate of capital gains taxation is one of the influences on the market that is in fact working against the mobilisation of assets in order to deal with the housing shortage. I will not be persuaded otherwise. I will not call a vote on this matter but I am saying this is a case where effectiveness trumps ideology.

A whole variety of issues have been raised in this debate, from the taxation of REITs and IREFs to the issue of taxes on capital raised by Senator McDowell. I will say a word about each of the points I have heard.

I will begin with Senator McDowell's point regarding the level of transactions we have in our economy being influenced, in the first place, by the level of tax on those transactions, a point with which I agree. That is my opening point on where we stand with our housing market at present. I keep saying this every time we get into any debate about housing, but I absolutely appreciate the stress that is caused to many by what is happening with their rents, the worry so many have about their future and whether they will ever be able to buy their own home, and the insecurity that is being caused for many in our society who, despite their best efforts, worry that they will not be able to afford their rent in future or have a roof over their heads on which they are paying their own mortgage. With any issue that is so complex and causing such deep worry at present, unfortunately, the answers we are putting forward are ones that will make a difference over time. People, however, want a very quick response, they want homes to be built immediately and they want easy answers that are capable of delivering quick solutions. I understand why they want that, given the level of concern at present.

This brings me to the issue of REITs and IREFs and the role they play. I contend that their role has to be looked at in the context of the role the State is already playing. The largest builder of homes in our country at present is the State. This year, €4.1 billion has been invested in directly building or supporting the delivery of more homes. I will keep saying this again and again in this debate because I keep hearing the assertion that we have a housing policy that is led by the market. We have a housing policy in which the market plays a role. Those are two fundamentally different things. The areas of planning regulation, the Land Development Agency and local authorities, in particular, have not had more active building programmes for many years than those they currently have.

The examples of this are literally concrete. If the Leas-Chathaoirleach goes to Dominick Street, he will see the quality of the accommodation that is being built by Dublin City Council and people who have been waiting for a home for too long, which I accept, now moving into accommodation and apartments that are of extraordinary quality, as they should be.

As a rich country, which we are, and with the national income growth we have had in recent years, we should be in a position to build local authority accommodation of that kind of quality. It is being built. We will have tenants moving into such accommodation soon, for example, the development at Sean Foster Place, just down the road from the King's Inns. Senator McDowell should look at the accommodation that is being built at the moment, which will be opened in March. It is state-of-the-art accommodation being built by Dublin City Council. Examples of that have been replicated all over the country by local authorities. After many years of difficulty, due to the aftermath of the previous crisis, they have had the levels of funding in recent years which is bearing fruit and reaping dividends in new homes being built. That is relevant to the discussion that we are about to have on REITs and IREFs because if we want to make the kind of progress year-on-year on housing that we must make, we need more supply. We need more homes to be built. It is an increasingly unfashionable argument to make, both here in the Seanad and elsewhere, that the private sector has a role to play in the delivery of those homes, but it does. The Government cannot build every home that every citizen wants at every price level they want. The private sector has a role to play in that. If we want more homes to be built, which I do, and I believe this House does, there is a role for the private sector in doing that.

That simple argument leads on to a complex point, which is what is the role of REITs and IREFs. An increasing number of people do not want them to play a role in the country. I ask them to consider whether we want savings from other parts of the world to play a role in the provision of homes in this country. Do we want pensions that are being built up in other parts of Europe and elsewhere in the world to play a role in the delivery of homes in our country? Do we want those who have saved money elsewhere to play a role in building more homes, especially more apartments? I believe the answer to that question is "Yes". The reason is that we are a small economy. Two banks have left the country. We have two banks of scale and a third bank that is trying to build up scale. We have a young and growing population. We need billions of euro of additional investment from the private sector every year in addition to the billions of euro that the State is providing to build more homes. They are complex and increasingly unfashionable arguments to make but we cannot wish away that reality. If we want more homes being built in the country, there is a role for private capital in doing that, and by private capital I mean savings that we make or savings that people make in other parts of the world that they want to be used in a productive way. If we, as a country, decide we do not want that capital, which is the argument that is being put forward by Sinn Féin, we should be under no illusion that if we decide to change the taxation structure of REITs and IREFs – I understand why that is an attractive argument – that is investment that simply will not come to Ireland. It is savings that will be used elsewhere. I believe that those savings have a role to play in the provision in particular of certain kinds of apartments in this country, especially in Dublin city, which in turn will have an important effect of increasing the overall supply and allowing existing housing stock to be used in a different way. That argument may be one that will take time to have an effect, but ultimately, I believe it is part of the answer to what is a very difficult and very complex set of dilemmas that we face in housing at the moment.

The argument that is then made, for example, by Senator Gavan this evening, is that REITs do not pay capital gains tax. He is partially correct in what he said, which is very typical of the arguments that Sinn Féin is making currently on many areas of public policy. It is the case that capital gains tax is not paid by a REIT when a gain is made, but of course where the tax is paid is when the income is distributed from a REIT or IREF, which is exactly the same way we tax pensions. We do not tax the gain that is made in a pension, we tax the gain when the income is distributed from a pension. For the record, when income is distributed from a REIT, a dividend withholding tax is paid on it of 25%. If an Irish investor receives that income, if the person is an individual, he or she must pay tax at the personal tax rate and a company must pay corporate tax on it. An international investor in an Irish REIT will pay tax on the income received from the REIT according to the tax paid in the investor's own jurisdiction. Tax is paid when the income is distributed. There is also a withholding tax in place for IREFs at 20%. That is where the tax is paid. Then again, depending on one's jurisdiction, one will then pay perhaps even additional tax on top of that. I know these are complex arguments in the face of arguments that say that REITs and IREFs should pay more tax or do not pay any tax at all, as some would assert, but that is where the tax is paid. There is a simple point at the heart of all of this complexity, and all of this technical language regarding withholding taxes, taxable events and what a REIT or IREF is, it is whether we want private capital to play a role alongside an active State in more homes being built in Ireland. I make the case in the Seanad this evening that the answer to that question is "Yes", because we are a small, open economy with a limited level of capital ourselves, with a young and growing population and we need more homes to meet our needs and, within that, the private sector has a role to play.

That is not to say that our housing policy is led by the private sector or that our housing policy equals the private sector. For those who make the claim that that is what the Government is doing, they should walk up Dominic Street and look at Sean Foster Place and what is happening at the moment. They should walk around Sean McDermott Street at the heart of my constituency and look at St. Mary's Mansions. I hear again this evening from the Opposition the condemnation of the role played, for example, by approved housing bodies, and leasing in the work of local authorities. They should look at the extraordinary renovations that have been made to St. Mary's Mansions in the heart of Sean McDermott Street. It is local authority accommodation that was run by Dublin City Council and it is now looked after by an approved housing body. Let them make the argument to the tenants who are now living in the apartments in a quality of accommodation that they deserve, that is far better than what they had a few years ago. The reality is that has now happened for them.

I make these arguments because there are consequences to the debate we are having. If we increasingly indicate as a country that we are unwilling to allow a role for private capital investment in either the provision of homes or jobs in this country, that will have consequences, but that is an argument that I am going to engage in and I am going to make the case here for a role for that kind of capital investment supported by the State, which has never invested more in housing and is determined to make a difference.

In response to the argument put forward by Senator McDowell, I must choose my words carefully in this regard, because if there is any area of taxation in which my words will be scrutinised, it is in regard to taxes on capital and capital transactions. I remind the House that we have a Finance Bill before the House that is not making any significant changes to the level of taxation on capital transactions.

I wish to make one point to Senator McDowell on the argument he has brought forward. At the outset this evening, I said I believe there is a relationship between the tax you have in a transaction and the number of transactions that occur. However, we are in an economy that at the moment, for extraordinary reasons, is now experiencing many capacity constraints and shortages. Those relate to people to do work or to the kind of capacity an economy needs to ensure that if a transaction happens, it can be executed at normal and affordable prices. There is an economic cycle to the Senator's argument that bears consideration. One can ask whether we are at the right point in our economy at which changes in the level of taxation and transactions would have the kind of effect it did a number of years ago when the last big change was made. We are now in an environment in which rising prices and inflation are an increasingly important issue for us as we form economic policy for next year and beyond. There is an economic cycle dimension to the Senator's argument that I am sure the Senator understands and that is relevant to the argument he is putting forward.

For those reasons, I am not accepting the recommendations that are being put forward. The substantive recommendations that have been put forward here relate to the role of REITs and IREFs. The core contention I am making to the House this evening is we have an active State. It has never spent more. That which we must spend more on is how we deliver affordable homes. There is a role for the private sector in delivering homes and REITs and IREFs tell the rest of the world that we want their savings to play a role in increasing housing supply in Ireland. It is a difficult argument to make at the moment but not making it and potentially even losing it is a recipe for fewer homes to be built here in the future or asking the State to do even more. That itself is something we are willing to do, by the level of capital investment we have at the moment but no state can do everything when it comes to meeting the level of housing needs we have.

I want to shine a light on the actual taxation situation. In 2019, tax paid by IREFs relative to pre-tax profits was 9.1%. That was less than the 25% paid by any other landlord or the 12.5% paid by any other company. Furthermore, as I said, they are entirely exempt from capital gains tax. We disagree with the Minister on this policy issue. We believe the tax advantage enjoyed by these funds is pricing struggling homebuyers out of the market and driving up rents. We also know these funds are, in the vast majority of cases, buying up properties subject to forward purchase agreements and not forward funding agreements, despite the commentary. These recommendations are calling for reports, as we have done every year. A report published in February 2019 by the Department of Finance entitled Institutional Investment in the Housing Market noted:

There is a risk that, should BTR investment continue at current growth rates, market forces would over the long-term create socio-economic polarisation in some urban areas. Under such a scenario average income earners would be priced-out of purchasing or renting from the private market ...

Is that not exactly what has been happening? It goes on to state, "there is a risk that at sufficient scale an institutional investor or group of investors could, over time, develop monopolistic or oligopolistic pricing power". That is a report by the Minister's own Department. It is very clear that is exactly what is happening. The Minister may be of the view the housing policies pursued in government over the past decade has been a roaring success. I am not. The power of investment funds within the housing market must be reined in. This threat has been recognised elsewhere. The Liberal Party has committed to measures to clamp down on the financialisation of the housing market in Canada. We have a different view of the success of Government housing policy and its impact on affordability. All this recommendation is calling for is a report.

This debate is a valuable one. What the Minister has just said is in general something with which I can sympathise considerably. I fully accept that to cut capital gains tax from 40% to 20% in 2002 is possibly different from the scenario the Minister now faces where there is a massive amount of money sloshing around looking for places to land and where inflationary pressures are high. I am totally conscious of the cyclical and countercyclical implications of changes to capital gains tax. However, I make the point, which I am glad the Minister accepts, that to have a levy of the rate of 20%, 33% or 40%, as some of the recommendations suggest, does have market implications. Looking back to what happened when Charlie McCreevy took the bold plunge and said he was going to cut capital gains tax by half, he got a 500% yield. That cannot be forgotten. Maybe I am wrong on this but I assume that in the Department of Finance's files there are plenty of advices and memos stating the then Minister should not do this, that we would not get any extra money from it, that we would lose a lot of money and all the rest of it. In fairness to the very decent civil servants in that Department, that is the way they conservatively think in relation to rate reductions.

My second point is there really is a danger now that somehow, entirely simplistic snake oil solutions are being sold to the Irish people as to how the home building and housing crisis can be solved. In that context, I do not believe the present Government understands some of the things it is actually doing. In 2009 the then Minister, John Gormley, was persuaded by Threshold, a housing charity, to abolish bedsits. Across Dublin, in areas the Minister represents and in the one where I myself live, between 10,000 and 15,000 dwellings were extinguished by market forces because private landlords could not adapt old houses to the new requirements. It was well intentioned. I am not saying this in any way crabbedly about the then Minister. He was being urged by a charity to improve standards of accommodation. However, those involved did not look around the corner and see they were bringing about the extinction of an entire category that was the lowest and second-lowest rung of the housing market right across Dublin. I hope I am not revealing a terrible secret, but I live on Charleston Road in Ranelagh. Across the road from me is a series of large redbrick houses. When I originally went to live on Charleston Road, all those houses were divided into bedsits, as far as I could see. I used to canvas for both Fine Gael and the Progressive Democrats and knew what it was to go up to the hall door and see a thing that looked like an accordion, given the number of bells on it you could or could not press. When you went into the hall, because the door was left open, there were bicycles and you had to wander around the inside of the building to see was there anybody on the register still there three or five years later. By the way, when I was actively politically 15 or 20 years ago at least half of the houses on Palmerston Road in Ranelagh, now one of the wealthiest and most salubrious roads, were divided into bedsits. We changed things. To use the phrase the trendies use now, we gentrified Dublin. We handed over the market forces to those who had the capital to buy those houses and to turn them into trophy homes.

We told the private landlords who took their rents from providing for the lowest rung on the rental ladder to get out of the business because they were no longer required. The moral of that story is one can do the wrong thing for all the right reasons. One can drive people out of a market and change a market in this way.

I mention that because the Minister referred to Dominick Street. I was going across from my place in Ranelagh to the Broadstone Luas station in King's Inns recently and saw the development on Dominick Street. I also saw across the inner city something which was apparent to me when I was Minister for justice, that is, that the area the Minister represents has atrophied rather than prospered in the last 30 years in many respects. Gentrification is happening by degrees and only a fool would ignore it but north inner-city Dublin is a different world from south inner-city Dublin.

The Minister mentioned the role of local authorities in Dominick Street and, God bless them, they are doing some good work there but there is a blight across north inner-city Dublin. The Minister only has to open his eyes, look around and realise that it and areas of south-west inner-city Dublin are underdeveloped and in trouble, socially and economically.

When I was a colleague of the former Taoiseach, Bertie Ahern, in government, it struck me that he did not seem to have a sense of discontent about the state of north inner-city Dublin. He seemed to like it the way it was. Perhaps he was wise to do so. He got an enormous vote out of it. My view was that from the canal to the Liffey on the north side should be as prosperous and vibrant a property market as from the canal to the Liffey on the south side.

That brings me to the following point, which I would like the Minister to take on board. He sits at a cabinet where the Department of housing and whatever it is - we will call it the Custom House for short - is represented. The Minister, Deputy Darragh O'Brien, is doing his best to bring new thinking and dynamism to its activities but let it never be forgotten that over the last 20, 25 or 30 years, those in the Department did everything they could to get local authorities out of housing provision. Any compulsory purchase order, they sat on it. They did their best to ensure local authorities did not engage in the level of housing provision that happened at the time.

I will finish on this point. I know I am straying a tiny bit away----

Not just straying, but long strayed.

The Minister, Deputy Darragh O'Brien, is doing a great job in trying to revolutionise that Department but it, through its prefects across local government, has completely misunderstood the capacity under the housing Acts and local government and planning and development Acts to make a difference by acquiring land and helping in the process of redevelopment. Personnel in the Department just do not do that. They do not look at ten or 15 acres in Clanbrassil Street or off Dorset Street and say, "This could be radically different if we were to CPO it". They do not think in that way. This is the big thing about the Custom House which existed when I was Attorney General, when I was Minister for justice and before that. They think the Constitution somehow prevents them from using redevelopment powers to make a decent city, build more property and take over derelict land. It is sad how pathetic the implementation of the Derelict Sites Act has been.

If we want to address the housing crisis in urban Ireland, particularly in Limerick, Cork, Galway and Dublin, I urge the Minister to urge his colleagues in government to read the Constitution. It allows urban redevelopment and it allows the State to take a lead in this matter, not by doing all the building itself, as the ideologists would ask, but by doing what was done 100 and 200 years ago and saying, "This area must be redeveloped and this is the plan to which it must be done and these are the powers which we have to secure that". If we are dealing with the housing crisis, the time has come for the Government to tell the Custom House to tell local authority management that it has the power to do things. They can buy all those vacant sites and take them into public ownership. They did not do it until this Housing Development Agency came into being because they were reluctant to do it. God bless the Housing Development Agency. Perhaps it will achieve all these things. I do not know.

I agree, finally----

To finish in a positive mode, I agree with the Minister that to say private capital has no function in solving the housing crisis is crazy. It is ideological madness in the present circumstances.

These two recommendations concern reports on the application of capital gains tax to REITs and IREFs and the Senator definitely strayed from that. It was an interesting contribution and I was happy to listen to it but this is not a housing debate. It is a Finance Bill. We are on recommendation No. 7 of 41.

Following on from the points Senator McDowell made, it is exactly as he said. I lived in an apartment on the North Circular Road. I was one of the people affected when they made changes to that legislation. They said that apartments could no longer have shared bathrooms and shared facilities. That is what that legislation brought in. When we look at what we have faced over the last year and a half, it was an impossibility. Back then, it was difficult. Many people had to move and find alternative accommodation. It raised the price but delivered a better quality of housing. That is crucial to remember as we come through this pandemic.

I highlight that there is a role for private investment. It is not solely the State that can deliver this. It is impossible for the State to solely deliver this for every person looking for a home. We already see €4 billion being dedicated. We have social and affordable housing being delivered. Through Galway County Council in my home town of Ballinasloe, social and affordable housing will be built in the next year.

I am worried that we are only on recommendation No. 7. We have ended up going through a complete housing debate.

I made that point at 6 p.m. I left an hour ago on recommendation No. 6 and came back on recommendation No. 7.

There are other relevant sections we will not get to.

There is a guillotine at 9.30 p.m. That is the order of the House. Members are entitled to contribute. Other people have been in the Chair. We will not get to every recommendation but the Minister is entitled to respond.

Sinn Féin quoted a paper from the Department of Finance. I was discourteous when Senators were speaking because I did not have the report to hand and wanted to get it so I could read out to Sinn Féin the conclusions of the report. I will not have papers from my Department being selectively quoted from to make arguments that the Department and I disagree with. The Senator quotes some points from the paper on institutional investors in the housing market but neglects to quote the conclusions from the paper. I will only pick one of them, which stated:

However, the paper acknowledges that such investors do play an increasingly important role in the private ... sector. While there may be a perception that institutional investors are purchasing large amounts of housing stock, the data in the paper show that their activity has been limited in the context of the overall housing market and largely confined to Dublin apartments.

The paper goes on to advise that institutional investment in apartments is likely to be the driving force behind a significant recent increase in the number of apartment units granted planning permission in Dublin. If the Senator is going to refer to a paper from my Department, please be aware that I may be aware of the conclusions in it and will make them in debate on these topics.

The Senator again asserts that IRES REIT either pays no tax or a low level of tax. In 2019, the total amount of tax that IRES REIT paid in Ireland was €71.98 million. There were issues in respect of taxation of it. In the years before that, it was lower than it should have been, but due to changes made in the Finance Act by me and my predecessor, the former Minister, Michael Noonan, the level of tax that IRES REIT pays in Ireland has gone up considerably. The debate about the role of these structures and funds in Ireland comes back to supply. I know these structures are complex and I know the language about taxable events and withholding tax does not lend itself easily to the kind of debates that we sometimes have in here and in the Dáil. If we want more homes to be built in Ireland, accompanied by the State directly building more homes itself, savings in our country and elsewhere have a role to play.

We need billions of euro per year of additional investment and more homes being built in our country. We need billions of euro to meet the needs of tenants who are worried about their rents in the future and of families of young workers who worry that they might not be able to own a home either now or in the years to come, regardless of how hard they work. To meet their needs, we need the Government to invest more, which is happening, as well as the private sector playing a role to accompany our efforts. That is what we are doing. We know how much we have to do and the effect it is having on our society, politics and living standards, but we are determined to make a difference and we will. What will not make a difference are simplistic arguments that infer that a State in the future will be able to do everything and there is no role at all for the private sector in meeting those needs.

Senator McDowell put forward arguments about the north inner city, which I will briefly address. I agree with Senator McDowell that Dublin City Council and other local authorities should have done more in recent years to try to meet the housing needs that we are discussing this evening. I am, however, sympathetic to the executive and the dilemma it faces. I will give the example of Sean McDermott Street, O'Devaney Gardens and Oscar Traynor Road. These homes should have been built years ago. One can look at what happened at O'Devaney Gardens. I remember being a Senator in this House in 2008. Residents from O'Devaney Gardens were sitting over in the Visitors Gallery, by the most bizarre and poor of luck, on the day that the project collapsed. Nearly 15 years after that event, the good news is that homes are being built. That bad news is that it is years later than it should have been. We had private accommodation, cost rental, and local authority housing playing a role in it. There are homes there that we believed it would be appropriate for people to be able to buy if they could afford to. Nothing happened with the project for years. It was ground down. The same thing happened on Oscar Traynor Road. There is hypocrisy in parties of the left coming in to castigate this Government, which knows what its responsibilities are, for not being able to meet housing needs while fighting the delivery of those homes tooth and nail in local authorities. For example, on Oscar Traynor Road, hundreds of homes that should now be built are not happening. It is relevant to where we are with this debate on housing this evening. This argument has to be made more regularly and with more force than it has been to date.

Regarding the institutional role that the city council can play, one reason that I am so supportive of the Land Development Agency is that we need to assemble land banks within our cities more quickly than we are at the moment, and we need to come up with a new body to do it. The Land Development Agency will do it. By doing that, I hope it will encourage local authorities to play a similar role. The north inner city needs to make much progress. The next time Senator McDowell is on his way to Broadstone, I suggest that he go a step beyond it, to Grangegorman, to see what is happening there. A magnificent project has been delivered by the local authority, the National Transport Authority, NTA, and Grangegorman Development Agency. That is the vision for integrated development and proper planning that I want to see replicated all over the country. There is an extraordinary higher level institution and place of learning that benefits all. It took a long time to do but that is what can be done and we need to do the same with housing.

Recommendation put and declared lost.
Sections 19 to 22, inclusive, agreed to.

I move recommendation No. 8:

In page 25, between lines 35 and 36, to insert the following:

“Report on Diesel and Kerosene Subsidies

23. The Minister shall within 6 months of the passing of this Act publishing a report outlining the amount of fossil fuel subsidies provided by the State, including subsidies through tax relief or revenue forgone, in respect of

(a) Diesel for Agricultural vehicles

(b) Diesel for HGVs and other Haulage Vehicles

(c) Jet Kerosene.”.

This recommendation asks the Minister to produce a report on diesel and kerosene subsidies. We passed climate action legislation and we know the issue of fossil fuel subsidies has been highlighted internationally as a core concern. We seek to meet our climate targets. The Minister has spoken about the urgency of climate change and the centrality of the challenge which we face. I have supported the increase in carbon pricing. I do not believe that the basis for it should be any lifestyle measure and I do not think that would be appropriate. It is the Pigouvian principle, where costs have been externalised and the social, environmental and other costs have been carried by society. Those costs should be internalised and reflected within the cost of the fuel. We know the extraordinary costs of fossil fuels. When it is approached in that way, it is not a matter of rewarding or punishing. Our goal should and must be to protect those who are most vulnerable and most impacted. I am not addressing that issue here but wanted to provide it as context. This is consistent with that position. Even for those who do not support a carbon tax, I believe that these measures are appropriate.

Carbon pricing has gone up at a household level. We know that fuel costs are a key issue at a household level. More will be needed to address fuel and heat poverty going into this winter. The fossil fuel subsidies that we are making, however, are largely in commercial areas. That is where the greatest amount of our revenue forgone, tax subsidisation and absorption of externalised costs from the fossil fuel industry can be found. I have figures from the Central Statistics Office, CSO, from 2019. I would of course appreciate if I could access later figures but those are the latest figures I have. The CSO figures show that indirect subsidies from revenue forgone due to tax abatements on fossil fuels accounted for nearly 90% of a €2.4 billion total. The single largest area of revenue forgone, through tax subsidisation, is jet kerosene used for domestic, international and commercial aviation.

The revenue forgone from this measure in 2019 was €634 million. Revenue was also forgone through lower excise duty on diesel fuel. This was estimated at €400 million. There have been several calls over many years for this measure to be removed, not simply because of the costs in terms of emissions through diesel fuel which we are absorbing, but also because of the additional social costs carried by our health budgets and the nitrous oxide and particulates emanating from diesel fumes, both of which have been shown to be linked to premature death and strokes.

We are subsidising diesel and jet kerosene by extraordinarily large amounts even as we are telling everybody to do better at turning off lights, which is using fuel carefully, and taking all these household measures. We need to be clear and consistent. If we are telling people that we are in a point of transition and they need to change how they live and use fuel and to address those issues, we also need to be consistent and ensure we are not subsidising industry to a very large degree and subsidising jet kerosene. This is not necessarily always jet kerosene. We have a large private aeroplane leasing industry and there is a subsidisation issue there.

I have seen the recent protests and it seems to be a bit unclear who is leading them. A group has magically appeared, yet it is not the Irish Road Haulage Association. I know the pay and conditions of many who work in road haulage are a concern. That is the issue that needs to be addressed. I know there was extensive lobbying by the Irish Road Haulage Association. At one point, there was an invitation to patrons across the Oireachtas to attend an event. There was lower excise duty on diesel fuel in budget 2020. I hope the protest is a signal that the Minister is planning to address this subsidisation and remove it. Perhaps he might clarify that. I hope this is a last-ditch attempt to stop the Minister doing the right thing in this area.

I acknowledge the contribution of the Irish Road Haulage Association to agriculture, industry and businesses. While I acknowledge that the subsidy involves a fossil fuel, given the higher fuel costs at present, the aim is to make road hauliers more competitive. The subsidy is significant for businesses that are reliant on deliveries from road hauliers. This measure needs to be kept for the moment and phased out eventually, which is the Minister's aim. If we are to keep our deliveries on the road and allow businesses to receive these deliveries, we need to keep this measure.

When it comes to support for agriculture and the challenges of just transition and moving to alternative fuels, the just transition is in place and is supported from an EU perspective until at least 2027. It has been acknowledged that certain sectors in our economy need support to be balanced - in other words, that we need to support them over the next number of years. This is what a just transition means and it is supported at EU level. We need to be cognisant that certain regions need this support even more.

The phrase "just transition" is used quite a lot. I believe in just transition. I await the just transition territorial plan, which we are due to submit to the EU, with great interest. The Joint Committee on Environment and Climate Action has requested to see this plan but has not yet seen it. We all want to see just transition but we must be clear that it relates to supports for those who are impacted when the necessary changes are made. It is not about delaying changes. It is about ensuring we address and support those impacted by them. It is important because there are really specific policy documents that relate to just transition that need to be addressed. In their absence, we are using it in this way. It is being used in lots of ways. It would be very useful if we had a debate on the actual just transition strategies at European and Irish level.

This is about subsidisation of something, which is unsustainable and creates and drives carbon emissions. If there is a desire to support an industry, the way we support it cannot be through subsidising the most damaging aspect of what it does, which is the use of diesel. If it was around subsidising companies which wish to change their vehicles, so be it but we certainly cannot subsidise the core cause of catastrophic climate change. We cannot negotiate in respect of the reduction of emissions. That has to be the bottom line.

We would welcome alternative fuels for tractors. Everybody would like to see that.

Senator Higgins raised the performance of the large cases division in the Revenue Commissioners. I am committed to coming back to her in the context of the debate. The high-wealth individuals division is dealing with approximately 2,700 high net worth taxpayers. This also includes spouses and related entities. On average, the division carries out between 250 and 300 interventions per annum with settlements in the region of between €40 million and €50 million achieved.

A similar case management approach is taken in Revenue's medium enterprise division, which deals with the tax affairs of individuals with worth of between €10 million and €20 million. A report on the methodology used to identify such high-worth individuals above this threshold is available on the Revenue website. Senator Higgins asked about the impact of the high-wealth individuals division's interventions. As I said, it is between €40 million and €50 million.

I thank Senator Higgins for her acknowledgement of the role of carbon taxation in this debate and her support for that measure. The rebate scheme for diesel is at a higher level than it has been in recent years but I believe this scheme is worth retaining in recognition of many of the costs and challenges that sector is facing. I am aware of the calls for me to phase out this scheme immediately. I do not believe that would be the right thing to do. What I want to indicate this evening, as I have done before, is to say that over time, we need to look at how we can scale back the scheme. If we look at many of the challenges the sector is facing at the moment, for example, with regard to Brexit and the fact that the price of its fuel is going up in any event, as has been evident for some time, I believe this particular relief scheme is worth retaining for now given the importance of the sector to the economy.

It is worth pointing out that the reason some of the protests are taking place at the moment is not a sense that this scheme is too generous.

It is a fact that many of those who are protesting at the moment do not want me to go ahead with the increase in carbon pricing, or want the diesel rebate scheme to be extended.

On the Senator’s point about fuel for the aviation sector, that debate is coming. However, the Senator will be aware that currently taxation on fuel for international transport is a difficult area for the State to take unilateral action. It needs to be done in conjunction with other colleagues within the European Union. Currently, Ireland is engaging with the European Commission in regard to its proposal on revising the energy taxation directive to take greater account of environmental concerns and the taxation of energy products. I believe there is a debate approaching on the taxation of the aviation sector. It is not a change that Ireland could bring about on its own. I have to say that I would be cautious about change in that area at moment. We are an island economy, and we depend greatly on access in and out of our country. I do not want to do anything that would jeopardise that access or undermine what is an important part of our economy.

We are doing something that few governments are in a position to do at the moment, and that is to make credible commitments to change the taxation on carbon in each budget. Budget 2022 was the third budget in which we have done this. That is an important way we could change the use of carbon in the future. For those reasons, and while I thank the Senator for the support she has offered for the changes we are making on carbon taxation, I am not in a position to accept the report that she is proposing.

To be clear, it is not so much that I support these changes; it is just that I regard the cost of carbon as being high. I regard also that it is closer to an accurate reflection of those costs. It will be extremely hard to sustain. I am aware that climate change will have an extraordinarily negative and inequitable impact. On climate action, we should be taking every measure we can to ensure it does not have an inequitable impact. It is not so much that I support this, although, in a way, I have supported the fact the price better needs to reflect the costs. I would be clear that I think this is dangerous. Everybody has costs and challenges. Every household has costs and challenges. Some households coming out of this pandemic face exceptional costs and challenges. I am concerned precisely because I believe we need to have more accurate carbon pricing. The price of fuels just cannot go down and they cannot be subsidised further, as they have been for a long period of time. We have to have more genuinely reflective pricing on the cost of fossil fuels.

I am concerned that an unnecessary divide and political tension will be created if people consider that sectors, such as aviation, haulage and others, are targeted. Of course, there are difficulties with Brexit, but there are also opportunities coming through the haulage sector. We have more roll-on roll-off going directly from Ireland to the Continent and other places than before. I am concerned that people might think it is only hitting them and that it is not consistent and that there are not measures. I am also concerned that the words "over time" are a little vague. There should be a signal. Will there be a plan in the next budget, or will it be the budget after that, to end the diesel rebate scheme? Until there is a timeline on that, we will not see the kind of shift we need away from heavy diesel vehicles to those that run on alternative fuels.

We are talking about large amounts of money - €400 million on diesel fuel and €634 million on jet kerosene in 2019, as the Minister acknowledged. The amount in respect of diesel fuel has gone up since then. While I do not necessarily want it taken away from that sector, I would like to see that same amount of money re-routed towards pressing for entire fleet changes, for example. Otherwise, it will be there every single year. I would prefer that we would have front-loaded investments that encourage a transition and a major shift and a change in the haulage sector as well as a hard timeline, so that the sector knows that if it does not seize the opportunity to make the changes now, it will not be continuously underwritten. We should bear in mind that this tax subsidy is paid for by tax. Those who are paying carbon taxes in their households, and who are also paying income taxes, are indirectly subsidising diesel for this industry.

I understand that the Minister is saying it needs to come and that it will come. However, we need to be much clearer and more urgent in our action on this. I hope that next year we do not see the same diesel rebate scheme rolling on again, along with a general aspiration that the sector will change. Next year, if money is to go into this sector, let it go towards an exit.

While I understand Senator Higgins’s passion, as well as what she said, we have to deal with reality as well. The fact is that so many businesses will be impacted by this. There will be a knock-on effect. Businesses are going through a hard time because of Brexit, Covid-19 and so on. We are all talking about schemes to support businesses because they are going through a turbulent time. If we add an extra cost onto the hauliers, they will put that cost onto the businesses. It will impact on the cost of goods and on jobs. We have to deal with the reality.

If there was an alternative that was more beneficial to those in business, they would use it. However, there is no alternative to diesel at the moment. In talking the way we are, we are just wasting our time. The real solution for heavy use of diesel is probably hydrogen. Yet, we are a long way away from hydrogen being developed for use in heavy haulage or agriculture. It is fine to talk about these things. However, the reality for these people who depend on diesel for their daily income is that there is no alternative at the moment. Are they going to drive a tractor or an articulated lorry on batteries? Good luck to them.

I acknowledge Senator Higgins's points. It is a great intention and it is something I will welcome. However, I would ask the Minister for more investment in research and technology so that we get to a space where we are investing in research and development centres that will allow us to have the technology in place to offer alternatives. Currently, in different sectors, in terms of income and transport, we do not have that and we need to support those sectors.

Can I please make a small but an important point? There is nothing more real than our planetary boundaries. While any business sector may change, finances might change, and our entire fiscal and monetary structures may change, there is one thing that is not negotiable. When we talk about being real, the thing we need to be real about is our planetary boundaries and the impact of emissions. It is more real and less negotiable than anything else. Effectively, going into the future, our economic planning, our models, our expenditures, our systems and our business models will need to sit inside our planetary boundaries. The planetary boundaries cannot be adjusted to suit the realities or even the accustomed realities of economic practice. I do not say that to be insensitive or to say that those issues are not important. However, we do a disservice to anything and any area if we do not acknowledge the hard reality of planetary boundaries and of emissions levels. For example, in the area of jet kerosene, emissions trading schemes mean that many of the emissions from the aviation sector are not captured in our carbon budgets. However, we have a responsibility if we effectively subsidise that sector to a large degree and are part of a large part of aviation. Of course we need to have a sustainable aviation industry, to a degree. We need to look to that, but we also need to be realistic. We cannot rewrite the facts on emissions. As of yet, carbon capture is certainly not, and I do not think it is in line to be, in a position to pull that back. I appreciate the constructive engagement from colleagues across the House.

It is precisely because of the planetary boundary, as Senator Higgins described it, that the Government decided to go ahead with an increase in carbon taxation. The Government could have done the easy thing. My fellow Ministers in Cabinet and the Deputies who support this Government could have said the price of energy is going up at a time when many families and businesses are facing increasing pressure and now is not the time to go ahead with a carbon tax. That could have been an option for the Government to take. If we had taken that action, we would be in a situation where the price of carbon and the tax on carbon would not go up again for the foreseeable future. The Government decided not to take that course of action. We decided that, because of our recognition of the environmental and ecological chaos that could well already be approaching us, we would go ahead and stand by our commitment to raise the price of carbon, budget by budget.

I understand that Senator Higgins's recommendation is saying that, on top of that, we should have equalised taxation on diesel and petrol. The concerns she has about fairness and how we can maintain the case for putting up the price of carbon would at that point come into play. Is the Senator suggesting that on top of going ahead with an annual increase in carbon tax, we should also have equalised the tax on diesel and petrol?

It is about the tax rebates that are provided-----

That is a €20 million scheme.

-----for diesel for agricultural vehicles, heavy goods vehicles, HGVs, and haulage vehicles.

That is a €20 million scheme. The Senator has been quoting figures of €400 million.

These are Central Statistics Office figures. The CSO did an analysis in 2019 of the amount of indirect subsidies arising from revenue forgone due to tax abatements. These are CSO figures. The revenue forgone in jet kerosene in 2019 was €634 million. The revenue forgone through a lower excise duty on diesel fuel was estimated at €400 million. These are the CSO statistics.

The Senator is comparing apples with pears. We are discussing the diesel rebate scheme, which is worth €20 million. The figures the Senator has produced are the difference in taxation between diesel and petrol. That is the €400 million figure. That figure is the disparity between the taxation of diesel and petrol. It is not the diesel rebate scheme. The diesel rebate scheme is worth approximately €20 million per year. They are different.

I may have misspoken by focusing on the diesel tax rebate scheme. However, I note that my recommendation addresses subsidies through tax relief or revenue forgone. In fact, the equalisation measure may well be captured by my recommendation.

In that case, the Senator is supporting the equalisation of tax on petrol and diesel.

I suppose I am, yes.

Given the concerns the Senator had regarding the impact of this measure on families and hard-pressed businesses, if she is proposing that on top of the change in carbon tax we should also equalise taxation between diesel and petrol, that is quite an argument to make. Many businesses, taxpayers and families are facing challenges at the moment. It is not an argument I would make or something I would do. The Government went ahead with increases in carbon taxation despite all the pressures. To overlay that, as I now understand the Senator is proposing, with an immediate or gradual equalisation of tax on petrol and diesel, given the pressures we have just discussed, is not something I would support. We should not do it for now. In fact, it runs the risk of undermining the case for putting up the price of carbon.

I draw to the Minister's attention to the fact that what I have proposed is a report. If, for example, the Minister wishes to produce a nuanced response to that matter, my proposal is a report on diesel and kerosene subsidies.

I am not sure if you are doubling down or rowing back.

I am pointing out that-----

I am not sure what you are doing.

Speak through the Chair, please. The Minister without interruption, please. I will let Senator Higgins back in after the Minister has concluded.

I am not sure what the Senator is doing. She quoted a figure of €400 million but that is not the value of the diesel rebate scheme. That scheme is worth €20 million. The €400 million figure is the cost of equalising the tax on diesel and petrol. If that is what the Senator is supporting, I am sure she will inform the House. If it is, I candidly say to her that it is difficult enough at the moment to win the argument for carbon taxation without overlaying that on top of it. If there is a time for making that move, it is not when the price of energy is as high as it is at the moment.

For clarity, are the Senator and the Minister talking about the equalisation of tax on agricultural diesel, diesel and petrol?

I am clear that the cost of equalisation is €400 million for the equalisation of tax on diesel and petrol.

Does that incorporate agricultural diesel?

No. I will conclude on the following point. I can see the value of the thrust of what the Senator is referring to. We need to look at how we can phase out fossil fuel subsidies over time and where we can. The Senator made a point about a roadmap for how we would consider whether we can do it and how we would do it. Under the climate action plan, the deadline for the production of that roadmap is the first quarter of 2024.

The reason I raised my hand was because the Minister referred to the immediate introduction of the equalisation of taxation. That implied my recommendation proposed that immediate introduction. I am only looking for a report that would explicitly refer to diesel for agricultural vehicles in terms of tax relief or revenue forgone and the diesel for HGV and other haulage vehicles. It may well be that the rebate scheme is worth €20 million. That should be discontinued. However, I also believe that we need a pathway for the equalisation of tax on diesel and petrol. The Minister characterised it as me putting forward a proposal to do it immediately when that is not reflected in the language of my recommendation. It calls for a report on diesel and kerosene subsidies, and specifically names jet kerosene, diesel for HGVs and diesel for agricultural vehicles. The Minister did not present my proposal accurately.

The Minister asked whether I think we need to move towards an equalisation of tax on diesel and petrol and I think we do. I agree that it might take longer than the tax rebates. The main thing I want is more engagement and a report on these issues. We should not have a situation where, on the one hand, we are moving ahead with increases in carbon pricing in one area and, on the other hand, a general plan that we may move away from these specific diesel subsidies over time. We must bear in mind that from both a climate and health perspective, diesel is a damaging substance because it has a higher rate of nitrous oxide and particulates. We want to discourage and stop the use of diesel. That may be a longer piece but we can certainly start by addressing the rebate scheme.

We are committed to reviewing that rebate scheme. I have to do it each year as part of the normal tax decisions we make in the budget. Perhaps the record of what I said earlier will have to be corrected but I think what I said to the Senator was that it sounded to me like she was proposing the immediate or gradual removal of the lower level of tax on diesel versus petrol. I think I said both. That was what I heard. I head the Senator say that, and she has repeated it.

I said I think that is a part of a longer term strategy.

That is fine. I wanted to draw that out because it is important to note that the larger figures the Senator was using do not refer to the rebate scheme. That was my core point. As I said, I genuinely welcome the fact that the Senator is, on balance, willing to support the changes we are making on carbon taxation. I know she has reservations. She is balanced, and I welcome that. She is a rare voice at the moment in the opposition view on climate change. Many parties in opposition are, on the one hand, saying we have a climate crisis which is caused by the increase in the use of carbon but are, on the other hand, unwilling to admit that carbon should be taxed.

I thank the Senator for having the intellectual consistency and bravery to make that point.

Recommendation put and declared lost.

I move recommendation No. 9:

In page 25, between lines 35 and 36, to insert the following:


23. The Minister shall, within three months of the passing of this Act, lay before both Houses of the Oireachtas a report on the revenue raised by excluding developments from section 21 where the development is a facility consisting of one or more than one structure, the combined gross floor space of which exceeds 10,000 square metres, used primarily for the storage and management of data, and the provision of associated electricity connections infrastructure.”.

Given the time, I will address this at some other point. I believe we will not be having a Report Stage-----

We will have a Report Stage. Committee and Remaining Stages are being taken tonight.

That is regrettable. I hope that by next year progress will have been made so we do not have a situation where we are trying to create tax incentives for data centres. Given their energy impacts, we need to be very carefully reviewing their role in our economy and environment. I will withdraw the recommendation because of the time constraints and with due respect to other Senators who have recommendations.

Recommendation, by leave, withdrawn.
Sections 23 to 27, inclusive, agreed to.

I move recommendation No. 10:

In page 36, between lines 34 and 35, to insert the following:

“Report on the tax treatment and economic impact of institutional investment in the housing market

28. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on the tax treatment and economic impact of institutional investors and corporate landlords in the housing market, including their impact on tenure, affordability, property price and rental price dynamics.”.

I am not sure there is much point in rehashing the arguments we had about an hour ago. It is very clear that we are operating along very different ideological lines. Like all our recommendations, this is a very reasonable recommendation. We are seeking a report on the tax treatment and economic impact of institutional investments on the housing market.

Every recommendation involves a request for a report.

This would be a useful report for the Government to have compiled. Unfortunately, the Minister has made it extremely clear that while he is proud to defend tax reliefs for vulture funds, he is in complete denial of the need for tax reliefs for hard-pressed renters. He has no interest in taking on board any of our recommendations for reports. I do not intend to rehearse the arguments we had earlier about the outrageous tax reliefs for REITs and IREFs. I will simply say that the Minister is out of touch with the desperate needs of the housing market at this point in time.

The Senator does a disservice to the desperate needs of those in the housing market when he brings forward simplistic arguments, which may be initially appealing but which will lead to a reduction in the number of homes being built in our country.

It is a report. We are asking for a report.

It is a report. However, the Senator concluded his argument with a statement regarding my attitude and my views on the housing market. In such circumstances, I am equally entitled to make a point about his. I understand how appealing his arguments are, and I understand why the argument regarding REITs and IREFs is attractive to those who are facing difficulties at the moment. The reason I support the taxation structure that is in place is because, ultimately, I believe it will lead to the building of more homes. It will lead to an increased supply of apartments, particularly within our larger cities. For that reason, I am of the view that the taxation structures we have in place are appropriate. The reason I am not supporting the compilation of a report is that the information the Senator is looking for is available through other means apart from requiring a report to be done through the Finance Bill.

Recommendation put and declared lost.
Sections 28 to 35, inclusive, agreed to.

Recommendations Nos. 11 and 12 are related and may be discussed together.

I move recommendation No. 11:

In page 94, between lines 14 and 15, to insert the following:

“Report on restriction of carrying forward of bank losses

36. 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, 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.”.

I will be brief. I am keen to get to some of our later recommendations, particularly those relating to the gender equality-proofing of our private pension tax relief systems. This is similar to a recommendation I proposed last year. The former Minister, Brian Lenihan, previously placed a constraint on the amount of profit that could be eligible for exemption under the deferred tax assets scheme. I understand that how the scheme intersects with the banks is complicated. There is a role for the deferred tax assets scheme for businesses that have had a difficult period. However, when these institutions are restored to profit, the writing off of former losses should be a 50-50 measure. It would be reasonable for 50% of profits to be exempted and 50% to be eligible for taxation by the State, thus contributing to the State. Many of the banks have benefited significantly not just from the credit guarantee in 2012 but also from smaller credit guarantee schemes such as the one in 2020. I ask that the Minister prepare a report looking at what the policy options are to restrict banks from carrying forward losses against the taxability of their current profits, specifically banking profits arising from loans that have been guaranteed by the Minister under the credit guarantee scheme. In the case of those loans, no more than 50% of profits should be eligible for exemption.

I am looking at the time. My colleague has a better worded recommendation on this matter and I would be happy to withdraw mine in favour of it because mine is relates largely to last year. Sinn Féin has a more reasonable and moderate recommendation in that it is looking at a-----

Is the Senator asking for leave to withdraw her recommendation?

No, I will wait to hear from my colleague on this side of the House. I may withdraw recommendation No. 11, however, because Senator Gavan's recommendation is more reasonably worded.

I thank Senator Higgins. Recommendation No. 12 calls for a report on restricting banks that were bailed out by the taxpayer from carrying forward losses against taxable profits in a manner that has previously resulted in many of them paying no corporation tax whatsoever. The report would also examine the introduction of a 25% cap on profits that could be written off by carried forward losses in any given year and the introduction of a ten-year limit on the use of losses for this purpose. As we enter a new phase of the pandemic, banks are returning to profitability. Indeed, the two largest banks in the sector, namely, AIB and Bank of Ireland, are increasing in scale due to the exit of KBC and Ulster Bank from the market, and as a result of recent acquisitions they have made.

As the Minister knows, Fine Gael changed the law in 2014 to remove the cap and allow bailed out banks to use 100% of the losses they incurred in previous years to offset future profits. Up until this change, these banks could only offset 50% of their prior losses against profits in any given year. We are unique in having neither a time limit nor a cap on losses that can be carried forward to write off against profits, though I would argue that we are the country where such restrictions are most justified. The proposal is that the banks bailed out by the taxpayer should be required pay corporation tax, and this recommendation calls for a report in order to scrutinise this proposal.

Senators may recall that in 2018 my Department produced a detailed technical note for the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach on the subject of both bank losses and corporation tax losses more generally. This technical note was published online and is still available. The technical note considered in some detail the potential implications of restricting the use of losses carried forward, or the introduction of a specific time limit or sunset clause on loss relief, for Irish banks, for the wider banking sector, or for the corporate sector as a whole. Among other considerations, it examined the possible effect of such a restriction on consumers, with the probability that an increased cost base for the banks would be passed on to the consumer in the form of higher fees, higher interest rates on loans or lower deposit rates. The report noted potential negative consequences for the valuation of the State’s banking investments and for capital levels in the banks with possible resulting regulatory impacts. It also considered potential effects on competition within the banking sector in Ireland, a factor of increasing relevance as banks have since left the Irish market.

Taking all these factors into account, it is my view that it would be detrimental to Irish consumers and taxpayers if a restriction were to be placed on the use of losses carried forward by the banks. Notwithstanding the trading losses forward, the Irish banks have been paying corporation tax in recent years, as the tax losses forward are restricted in their use and do not shelter profits made in all their corporate entities. However, I would also note that as the three pillar banks each posted losses in their 2020 financial statements as a result of the Covid-19 pandemic, it is likely that limited corporate tax liabilities would have arisen for 2020 regardless of any offset of the banks’ historical losses.

Senator Higgins, in her recommendation, refers to the Credit Guarantee Act 2012. The 2012 Act was most recently amended in 2020 to provide for the Covid-19 credit guarantee scheme, a measure within the remit of the Department of Enterprise, Trade and Employment. This scheme facilitates up to €2 billion in lending to eligible businesses that have been negatively impacted as a result of Covid-19 in Ireland. The scheme offers a partial Government guarantee of 80% to participating finance providers against losses on qualifying loans to eligible SMEs and primary producers. The key purpose of the Covid-19 credit guarantee scheme is to support SMEs by improving their access to finance during these difficult times, and any further conditionality attached to the scheme could undermine this important objective. Given the level of analysis that has already been published, a further report on the matter is not merited. Therefore, I cannot accept the proposed recommendation.

This would only be for such loans that have been profitable. The concern is that we underwrite the risk and then we do not take the share of the profits. I understand some of the arguments on the underwriting of risk. For example, I did not oppose the Credit Guarantee (Amendment) Act 2020 in that sense but where the risk is being effectively underwritten by the State and there is profit then we cannot have the situation where we do not share any part of that profit. It is unfair and it is a poor agreement and situation. I am concerned that sometimes we pour a lot of public money into banks and into underwriting their risks, while not asking them to contribute where they are making profits. The thing with all these measures, be it the 50% I propose or the 25% proposed by Senator Gavan, is that it only applies where there are profits. If there is a bad year and there are no profits then it does not kick in but it applies where there are profits, which is important because we are still substantially de-risking what the banks are doing. However, we are cutting ourselves off from any benefits from that. It is a poor deal.

For example, the recovery and resilience fund is coming from the European Union for Ireland to be used in our recovery and resilience and in our climate resilience. We received €49 million for retrofitting which could have been used to expedite retrofitting. I know there are other good retrofitting schemes but it could have increased those schemes and helped our schools, for example, including those that have been most impacted by the heightened price of fuel. Instead we put €49 million into the banks to de-risk them giving loans for retrofitting. We might say that the banks will give larger loans, which is great and we have mobilised that finance. Every business in Ireland takes risks and gains profits but we underwrite the risks for banks and they do not share the profits. It is unfair to other businesses that take risks and pay tax on their profits that we have banks that are getting their risks underwritten by the State and that are not delivering in profits. The banks should be lending for retrofitting and we should not have to underwrite them to do that; we should be encouraging them to do it. The State had €49 million of public money that it could have directly used for retrofitting and instead it went to the banks which do not pay tax on their profits. That is frustrating.

I appreciate that we are in a vulnerable situation and it is regrettable that as KBC and Ulster Bank leave the market they are not paying the levy next year. That is a poor decision. This is a wider issue that we cannot address here but the Minister will be aware that we are developing banking reports within the membership of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach. It is a poor decision that has resulted in this situation where we are overly dependent on a narrowing banking system and where we do not have enough actors in that sector. We need to have proper and responsible policies in this area. I am concerned that we are continuing to write off profits and to double down on the de-risking of financialised solutions in the area of climate, much as we de-risked certain financialised activities in other areas such as housing in the past. I know the Minister is not in a position to accept these recommendations but this is a topic we will need to come back to.

It is so depressing to hear this debate. A 100% write-off of losses for banks is no problem; that is the Fine Gael way. Tax reliefs for vulture funds are no problem either but there is not 1 cent for renters in this budget. That is class politics.

Is the Senator pressing the recommendation?

Recommendation, by leave, withdrawn.
Question proposed: "That section 36 stand part of the Bill."

Is the section agreed? Does the Minister wish to come in?

I have to respond to some of the arguments that have been made by Senator Higgins. She asked about how the State can benefit from the upside. We are majority shareholders in AIB, we nearly entirely own Permanent TSB, and we are minority shareholders in Bank of Ireland, albeit that is decreasing quickly. That is how we participate in the upside. The Senator wants to know how we can benefit from any enhanced profitability those banks can make in the future. We are majority shareholders in two of the three banks so that is the way we do it. As those banks become more profitable the value of the banks increases and our shareholding increases so if those banks are in a position to pay dividends in the future if they become more profitable then the State is a large recipient of those dividends.

The Senator referred to de-risking and she outlined her concerns on that. De-risking is leading to lending activity happening that in the absence of the State putting in place this guarantee would otherwise not be happening, particularly when it comes to retrofitting and in the role we played in providing credit guarantee schemes during darker moments in the Covid crisis. I thank the Senator for her support of that scheme in 2020. As a critical part of the de-risking we do we crowd in private capital and provide funding for different schemes.

Multiples of that funding are then lent out because banks are in a position to use the assurances we give to support more credit or investment than they would be able to do in the absence of those assurances.

I will not let Senator Gavan's assertion about class politics slide. His party voted against an amendment that was about providing more rental accommodation and more units that are currently-----

It was more tax relief for landlords. We did vote against it. No apologies.

The Minister, without interruption.

I am used to this. It is just a typical Sinn Féin response. When its representatives are confronted with the truth of their own actions, they have no option by to deny it. Let me repeat it again -----

Sorry, I did not deny it. We voted against it.

I am glad that the Senator did not deny it.

Get your facts right, Minister.

Let me repeat again, this budget contained a measure that through the use of taxpayers' money, would allow more rental accommodation to be brought online for the benefit of tenants, that is, tenants who the Senator claims to champion.

The tax relief was for landlords.

Sinn Féin is here as a party saying it wants more rental accommodation to be made available but as the Senator's own half-hearted heckling demonstrates, he uses "landlord" as a term of abuse. There are not many landlords who will be listening to Sinn Féin and its tone about the rental sector who will be eager to provide more rental accommodation for the tenants that Sinn Féin claims to represent.

As the Minister already pointed out, two banks have exited the Irish economy. We have two banks here. How will it be possible to deliver all our goals and objectives on housing without a functioning banking sector?

Some €50 million of the EU recovery fund has been delivered for schools in Ireland. Over €3 million alone in Roscommon and Galway to support DEIS schools that are delivering equality of opportunity. That is what has been done with that fund. Retrofitting is happening in each local authority. Housing for All is delivering staff to each local authority to deliver retrofitting in our local areas. That is happening right now.

Will colleagues bear in mind that any further discussion with thwart the number of recommendations that we can get through in the limited time? It is in their interest to give -----

To be honest, I doubt that we will reach the recommendation which was most important to me, which related to gender equality issues in private pension tax relief. I can see a lot of important recommendations on the very far side of this and I doubt that we will reach them.

I want to reply on two things. First, yes, of course the recovery and resilience fund is really important. I am not opposing that. I note that Ireland is one of only seven countries that did not have parliamentary engagement on the allocation of that fund. Most did and that was an omission.

Second, the State is a shareholder. Surely that is the leverage. If we are concerned that there will not be lending or engagement by these banks, which there should be, in retrofitting and the new green economy then that is where our role as shareholder should come in to encourage that because it is good investment and good fiscal or financial practice.

I worry if banks' profits become our core goal. Is there a divide? What if we are concerned about our dividends versus the taxation that might come from the banks? I am a little concerned. That seems like a really important point of leverage. It is not a point that is at odds with fiduciary duty. If we are such large shareholders I do not understand why such amazing acts of persuasion are needed.

That word, "leverage", says it all. That is the concept that says a lot about the Senator's view of private banking. Particularly as a majority shareholder and as a Government, you have to understand the commercial independence of banks. There is a role for privately owned banks. I want our banking sector to be owned more by the private sector in the future. The Senator is familiar with company law and the independence of boards. Is she implying that a shareholder, particularly a Government, would use the shareholding that it has in the banks as a source of leverage against an independently elected board of directors? If it is, she is entitled to her view. However, I would argue that is a pathway to bringing back together the risk between sovereign and banking systems that we said we never wanted to repeat again. It is not a path that I believe we should go down.

Question put and agreed to.

I move recommendation No. 12:

In page 94, between lines 33 and 34, to insert the following:

“Report on restricting banks from carrying forward losses

37. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on restricting the banks from carrying forward losses against taxable profits in a manner which could result in many institutions paying no corporation tax for the foreseeable future by introducing a 25 per cent cap on profit that can be written off by carried forward losses in any given year and an absolute ten year limit on the use of loss for this purpose.”.

Recommendation put and declared lost.
Sections 37 to 39, inclusive, agreed to.

I move recommendation No. 13:

In page 96, between lines 3 and 4, to insert the following:

“Report on the application of capital gains tax to all sales of property by REITs and IREFs

40. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on the application of the full rate of capital gains tax of 33 per cent to all disposals of property of the rental business of a REIT, IREF, or group of REIT or IREF.".

Recommendation put and declared lost.

I move recommendation No. 14:

In page 96, between lines 3 and 4, to insert the following:

“Report on the introduction of a higher rate of capital gains tax on high-income individuals

40. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on the introduction of a 40 percent rate of capital gains tax on the disposal of assets made by high-income individuals, including income generated by gains.”.

I am conscious that we are running out of time so I will simply press the recommendation. We have had a good airing of views and I fear we will not reach agreement with the Minister on this.

Recommendation put and declared lost.

I move recommendation No. 15:

In page 96, between lines 3 and 4, to insert the following:

“Report on the treatment of capital gains tax with respect to worker-owned cooperatives

40. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on the treatment of capital gains tax in instances where a company or shares of a company are purchased by a worker-owned cooperative, and options to amend the capital gains tax regime to promote worker-owned cooperatives and employee ownership.”.

This amendment calls on the Minister to prepare a report on the treatment of capital gains tax in instances where a company or shares in a company are purchased by a worker co-operative and to consider options to amend the capital gains tax regime, including exempting such purchase from capital gains tax in order to promote employee ownership. Sinn Féin is committed to developing an economy in which workers have a greater share of ownership through worker co-operatives. These are businesses in which the workers of the enterprise own at least 51% of the shares.

In a worker co-operative, ownership and labour work together. By giving workers control, you give control to their communities and their local economies to stimulate community and regional wealth building. They put worker outcomes, worker well-being and community sustainability at the forefront of their objectives. Worker co-operatives retain wealth both at a local and a regional scale. They allow community wealth building that is sustainable. They perform well at meeting local employment needs and tend to look for local suppliers, thereby rooting business locally and strengthening community economies. Worker co-operative businesses are more likely to pay the living wage and have lower pay differentials between the top and lowest earner. They show exemplary degrees of corporate social responsibility and a strong commitment to sustainability. For companies who have converted to the worker co-operative model, a majority of them find that employee well-being has increased.

In 2005, the Scottish Government established a State agency known as Co-operative Development Scotland, a subsidy of Scottish Enterprise, tasked with the responsibility of developing Scotland's co-operative sector. Between 2005 and 2012, the sector experienced modest growth. This was followed by a substantial 300% increase in the number of worker co-operatives in Scotland, from 30 to 100. Among the measures introduced was an exemption from CGT, up to a certain threshold, on the sale of a controlling interest in a company to an employee ownership trust or worker co-operative. A report would allow us to explore this area further, introducing incentives to support this ownership structure. I encourage the Minister to give this serious consideration.

One of the big issues we have is business succession. It makes perfect economic sense to incentivise the workers in a business to convert that business to a co-operative when, for example, a business owner wishes to retire. This is a sensible proposal. It has been proven to work in Scotland. I urge the Minister, at the very least, to adopt the report.

I am aware of the Senator's Private Members' Bill, the Worker Co-operatives and Right to Buy Bill 2021, and his interest in this matter. I note that it included a proposed new section 597AB for insertion in the Taxes Consolidation Act 1997 to allow for relief from capital gains tax on the sale of a business to a workers' co-operative. I understand the Bill proceeded to Second Stage in the Seanad on 28 June.

The Senator is aware that the Department of Enterprise, Trade and Employment is close to finalising a general scheme of a co-operative societies Bill, which sets out proposals for the most far-reaching reform of the legislation relating to co-operatives in almost 130 years and will enshrine the co-operative model in legislation for the first time. This work began in 2019. In the context of enactment of the aforementioned co-operative societies Bill, the Department of Enterprise, Trade and Employment intends to examine the range of supports that could accompany the modernised legislation, thus ensuring co-operatives are an attractive corporative option for doing business.

I do not consider it appropriate to initiate a separate report on such a specific aspect of the treatment of co-operatives ahead of the reform of the legislative framework already under way. Consequently, I do not propose to accept the recommendation. I remind the Senator that there are existing capital gains tax reliefs in the legislation which may apply on the disposal of a business or business assets, including retirement relief and revised entrepreneur relief and, depending on the circumstances, these may already be available in respect of a disposal to a workers' co-operative.

I thank the Minister for the response. I propose to press the recommendation. I am anxious to see what comes out of the Department in regard to the Bill mentioned by the Minister, which we have been awaiting a long time. Let us hope we do not have to wait too much longer.

Recommendation put and declared lost.
Sections 40 to 51, inclusive, agreed to.

Recommendations Nos. 16 and 17 have been ruled out of order as they are not relevant to the subject matter.

Recommendations Nos. 16 and 17 not moved.
Sections 52 to 56, inclusive, agreed to.

I move recommendation No. 18:

In page 123, between lines 32 and 33, to insert the following:

“Report on the VAT treatment of domestic energy bills

57. The Minister shall, within one month of the passing of this Act, prepare and lay before Dáil Éireann a report on the VAT treatment of domestic energy bills and options regarding the effective removal of VAT on domestic energy bills either through reduction or rebate, in the context of rising energy prices and their impact on low and middle-income households.

Winter is here and low and middle income households face an energy crisis in the coming months. There have been over 35 price hikes announced by energy suppliers since the start of the year. In the 12 months to October, energy prices increased by 25%. The price of electricity and gas increased by 16% and 23%, respectively. The cost of home heating oil, the main fuel source for home heating in 37% of homes, increased by a staggering 71%. These prices are expected to rise further. These households need a helping hand and they need it now.

Across Europe, governments have responded with a range of measures to help households. This Government has done nothing beyond a modest increase in the fuel allowance, which is out of reach for the majority of workers and families. In Spain, VAT on electricity bills was slashed by 11% until the end of the year. In the Czech Republic, VAT on gas and electricity has been reduced to zero until the end of the year. In Italy, Prime Minister Mario Draghi launched a package of €3.4 billion to protect households from the energy crisis in October, November and December. That included slashing VAT on gas by 17%, reducing gas charges at a cost of €480 million, cancelling electricity charges at a cost of €800 million and providing a discount on the price of electricity and gas for low-income households at a cost of €450 million. In contrast, this Government has done very little. Sinn Féin has repeatedly called on the Government to stretch every sinew to provide real and immediate relief to low and middle income householders who will struggle to light and heat their homes this winter.

It is amazing that of the 41 recommendations from the Opposition in relation to this Bill, 36 are about reports and not one of them has sought any amendment to the actual Bill.

It is not allowed.

It is allowed. The only recommendation that sought to amend the Bill has been ruled out of order as it would have a direct impact on businesses, in particular seasonal businesses. It is disappointing that we have spent the past four hours talking about reports. Some 36 reports have been sought. Much of the information sought in regard to these reports is already out there if people are willing to look for it. All of the housing reports that have been sought are available to Senators on the Department's website. Senators can recommend changes to the Finance Bill, as long as such recommendation has no financial impact on the Government.

Unfortunately, we are very constrained in relation to this Bill. There are reports. Reports are a way of highlighting and trying to set the agenda on issues. Senator Casey will be well aware that I have no problem proposing amendments to legislation, but I am conscious that on this Bill they will be ruled out of order.

I will highlight a recommendation that I will probably not get to speak to but which relates to this issue. As I have said, I understand that the cost of fuel is increasing, but we need to look to ameliorate the impact of the increase in that cost. It is important that that be addressed. An area where it has a particular impact is in regard to persons with a disability. We will not get to discuss the recommendation in regard to the recently published Indecon report on the cost of disability, which has a number of significant implications in regard to financial policies on issues such as VAT, targeted grants, income supports, fuel and many other areas.

As we know, fuel poverty has a disproportionate effect on those with a disability who spend more time, on average, at home. I am just signalling that I will be following up with a report on that in respect of the cost of disability.

I want to follow up on what Senator Casey said. I realise that we will not get to section 70 now. Our recommendation on that section has been ruled out of order. Many businesses do not qualify to enter the scheme in December. I ask the Minister to consider ways in which they could enter the scheme from January up until April. I ask the Minister to include them in his scheme.

As it is now 9.30 p.m., I am obliged to put the following question in accordance with the Order of the Seanad of this day: "That recommendation 18 is hereby negatived in Committee; section 57 is hereby agreed to in Committee; Government recommendations undisposed of are hereby made to the Bill; in respect of each of the sections undisposed of, the section or, as appropriate, the section with recommendations, is hereby agreed to in Committee; the Schedule is hereby agreed to in Committee; the Title is hereby agreed to in Committee; the Bill, with recommendations, is accordingly reported to the House; Fourth Stage is hereby completed; the Bill is hereby received for final consideration; and the Bill is hereby returned to the Dáil."

Question put.

Will the Senators claiming a division please rise.

Senators Boylan, Gavan, Ó Donnghaile and Warfield rose.

As fewer than five Senators 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.

When is it proposed to sit again?

Tomorrow at 10.30 a.m.

The Seanad adjourned at 9.44 p.m. until 10.30 a.m. on Wednesday, 15 December 2021.