Finance Bill 2020: Committee Stage (Resumed)

Debate resumed on amendment No. 126:
In page 40, after line 35, to insert the following:
22. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on the revenue gained from increasing corporation tax to 25 percent for corporations with over €800,000 in profits and in closing loopholes that exist that allow corporations to hugely reduce their rate of tax.”.
- (Deputy Richard Boyd Barrett)

I was looking at the timeline for today, and I was wondering at what point we were going to speak on section 21, and its amendments, but it seems that the Chair is stating that we will do that from the start.

That is correct.

Then we will move back to section 10?

No, then we will move to section 24; we are moving ahead. We are doing section 21, section 24, then section 10.


I recognise the work that was undertaken by the staff of the committee yesterday in organising an excellent day. I thank them and everybody who is supporting us in the operation of the ICT.

I will now deal with the amendment. The trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5%. Some of the main features of the current corporation tax regime are its simplicity and the fact that it applies to a broad base. Changing this rate would involve increased complexity and could change the attractiveness of our corporation tax offering. The Deputies may be aware that the Department of Finance carried out a comprehensive economic impact assessment of our corporation tax policy in 2014. A distinctive feature of the economy is the high share of activity accounted for by foreign direct investment, FDI. As part of this assessment, the Economic and Social Research Institute, ESRI, analysed firm-level data on over 3,000 newly established multinational subsidiaries in 26 European countries. It found that if the Irish corporation tax rate had been 22.5% over the period examined, the number of new foreign affiliates entering the country would have been significantly lower.

The implications for Ireland are clear. An increase to the 12.5% corporation tax rate could be expected to damage inward FDI flows and reduce investment and economic activity in the State, with consequential negative impacts on the overall corporation tax yield and employment in the State. For the year to date, corporation tax receipts have continued to perform well, notwithstanding the current economic circumstances. The sustained corporation tax receipts are critical to maintaining Exchequer revenues and supporting the Government’s measures to support both individuals and businesses that have been negatively affected by the pandemic.

We are fully engaged in international tax reform and, in conjunction with other EU and OECD member states, have introduced in recent years extensive reforms aimed at tackling aggressive tax planning. This includes reform of company residence rules and transfer pricing rules, the introduction of new controlled foreign corporation, CFC, rules, anti-hybrid rules and an exit tax, and improved transparency and reporting requirements.

Taking all these considerations into account, I cannot accept the amendment.

The amendment was tabled by Deputy Barry but, unfortunately, he is tied up with Leaders' Questions in the House. While the amendment is in our names too, I should have said that People Before Profit holds a slightly different position, namely, that of raising the tax rate to 25%. I nonetheless think that the spirit and thrust of the amendment, in focusing on this issue, is correct because, as I suggested last night, the effective rate is much lower than 12.5%, which relates to gross trading profits. The total profits for the latest available figures are €182 billion, whereas the taxable profits are only €96 billion. I do not accept, therefore, the Minister's claim that it is straightforward. The fact that, in most cases, large corporations can write down their taxable profits using myriad reliefs, deductions and allowances available to them - loopholes, in layman's terms - means they are not really paying 12.5% on their profits. They are paying 5.7%, less than half of that. There is no need for that and I reject the claim that if they were made to pay the actual 12.5%, they would all go flying out of the country.

I refer the Minister to a recent interview on "Morning Ireland" with US Representative Brendan Boyle, a Democratic Congressman from Philadelphia, where he was asked about this issue. He was categorical and there was no equivocation. He said bluntly that Ireland's tax rate was not the key issue with the location of US multinational investment in this country but rather that it was our involvement in the EU market and the fact that Ireland is an English-speaking country. Critically, he emphasised the fact that we have a highly educated workforce. There is a suggestion that if these multinational corporations were made to pay 12.5% - which, if they did so on gross trading profits, would deliver double the sum we are getting now, or an additional €10 billion in revenue - they would leave. Brendan Boyle, however, in putting forward arguments from the point of view of an American politician, stated that they would not leave. There is simply too much profit being made here by those companies and, even if they had actually to pay 12.5%, they would still make very considerable profits and pay a very low proportion of those profits in corporation tax.

We should not, therefore, take this kid-glove attitude to the corporations. We need money for housing, water infrastructure, health infrastructure and so many different areas. Indeed, those companies depend significantly on that infrastructure, not least the education infrastructure. As Brendan Boyle pointed out, with that educated workforce from which they generate so much money, why on earth would we not at least make them pay 12.5% in order that the money could be redirected into further enhancing our education system and other key public services and infrastructure?

Amendment put and declared lost.

I move amendment No. 127:

In page 40, after line 35, to insert the following:

“Report on compliance of producer companies in receipt of section 481 tax relief

22. The Minister shall, within three months of the passing of this Act, produce a report on the extent to which producer companies in receipt of section 481 tax relief are complying with requirements to provide quality employment and training, with employment legislation, taking direct responsibility for their employees and trainees, and acknowledging the service of employees who have worked for them over many years and in productions similarly financed through section 481 relief.”.

The amendment seeks to have a report produced on the section 481 relief within three months of the passage of the Bill. Section 481 concerns the film tax relief, which amounts to approximately €80 million a year, although the figure varies from year to year. This is significant public financing of the live action and film industry. I stress that I support public funding of film and the arts generally, and I would like arts funding, including for film, to increase from its fairly low levels, by European standards. Currently, 0.1% of GDP goes to the arts, whereas in the rest of Europe, it is 0.6%. That is six times less than the average in a country that has a significant international reputation based on it arts output.

My call for a review of this relief is not because I want in any way to obstruct - indeed, I want only to see increased funding for the arts, including film. As I have outlined on numerous occasions in the House, and the Minister will be aware of this, there remain significant problems with section 481.

As spelled out in the Taxes Consolidation Act, the purpose of that section is to generate quality employment and training. I will add a point that I did not make yesterday. Under EU law, state aid to the film industry - I want this aid to be provided - is predicated on it generating companies of scale and creating a permanent pool of skill, talent and creativity. That is not happening, though. The film producer companies that receive the money do not want to acknowledge the rights of those who work in the sector or take responsibility for them as employees. Therefore, there is no permanent pool and there are no companies of scale. The largest film producer companies in this country might have ten or 15 permanent employees. Some have no permanent employees at all. As such, the number of people who are recognised in any way as employees in the industry is tiny. Most of them are employed on a project-to-project basis. Even if they have worked in the industry for 20, 30 or 40 years, which is the case for many of them, when the next film comes up, it is as if that is the first time they have sought employment in the industry. They have no pension rights, there is no proper system of accreditation for trainees and there is no acknowledgement of the service that people have given to the industry over many years. This puts the workers in a very weak position.

Despite the fact that the Government has acknowledged some of these points and sought to introduce reforms to improve the workers' situation, there has been no change on the ground. To a large extent, the situation remains the same because the film producers, in what I can only describe as a bloody-minded refusal to acknowledge the intent of the Government's reforms and an attempt to ignore employment law and the conditions placed on state aid by the EU, refuse to acknowledge their obligations to their employees. They even refuse to acknowledge that they are the employers and that their workers are employees.

We must press home the fight in order to end this situation and give people rights and acknowledgement as workers in the industry, with pensions, proper training pathways and so on. This has still not been achieved. I will not elaborate on the arguments further, but there is more to be done in this regard. That is why I have tabled this amendment. While I have acknowledged the Government's willingness to listen and make some improvements, the situation has still not got to where it needs to be even in terms of meeting our obligations under EU state aid rules.

We debated this matter at length yesterday, so I will not repeat the same arguments. However, I will emphasise two points to the Deputy. First, I expect that the process that is under way in the Workplace Relations Commission, WRC, which I understand is hoped to lead to a framework agreement on such matters by the end of the year, will be a significant step forward in dealing with the matters to which the Deputy referred. I accept the point that he made yesterday that it is not a collective agreement, but I do not believe I ever stated that it was purported to be one.

I understand the Deputy's point about this being an employment relationship between an actor, a set designer and a film or television series that is due to be made and that there is not the same continuity of relationships as there is in other parts of our economy for different kinds of work. All of that being said, the process of trying to get to a framework agreement later this year must have an effect on the matters the Deputy raised. They are best dealt with as employment relations and in the arms of the State that deal with such matters as opposed to in the Finance Bill.

Second, and as the Deputy has been good enough to acknowledge, this is an area that my officials and I have followed up on over the past two years after he raised it with me. I have with me a copy of the form that he referred to yesterday. It lays out the requirements that we expect to be adhered to in order to access section 481 tax relief. This form has not been implemented for long. If it does not begin to have the kind of effect that we want it to have, we will take further action. In what I believe was a Report Stage debate two years ago, I made the point to the Deputy that, if a tax relief was granted on the expectation of quality employment being made available, such employment should be made available. That is what led to the development of this form, which reads: “Undertaking in respect of quality employment”. We did what we said we would do in conjunction with the Deputy. If this does not begin to have the desired effect or if issues are raised with me regarding its operation, there is much that we will be able to do between Finance Bills to examine these matters.

I will now put the question on inserting the new section.

I am sorry, Chair, but may I respond briefly?


I genuinely appreciate the Minister's engagement and his statement that he would examine this matter further if needs be. We have had an extensive debate on it. However, I will make a few final points to him.

A key aspect of quality employment and training, particularly as set out in the fixed-term workers legislation at European and national levels, is recognition of service. The Minister cannot make commitments on it now, but I ask that he and his officials examine this issue carefully. The film producers, who receive significant amounts of money year in and year out and employ largely the same people year in and year out, refuse to acknowledge the service that those workers have given them. They have done that by hiding behind designated activity company, DAC, status. In other words, they are implying that it is not them but a series of different companies when the fact of the matter is that it is the same producer companies. This essentially allows them to evade their legal responsibilities to employees. In doing so, they are in serious breach of EU directives and our national legislation. This behaviour must be clamped down on seriously.

If the Minister's officials read the submissions being made by the producer companies in receipt of section 481 relief in various cases that have been before the Labour Court and the WRC in recent times, they would see those companies explicitly stating that they are not the employers and that the DACs are.

That is in breach of the declaration they are signing and the clear intent behind the section 481 relief and the conditions surrounding it. This matter needs to be looked at carefully and those companies need to be told that what is happening has stop. It is an abuse, a failure to comply with the law and those companies must be told that they will have the section 481 relief removed from them if they continue to make those arguments.

The state aid rules also need to be examined as they apply to support to the industry. They are explicit in stating that one must build companies of scale and create a permanent pool of employment and talent in this sector. That is simply not happening at all. There is no such permanent pool for the same reason, that is, the producers do not want to accept that they have any responsibility to the people who work in the industry. I will leave it at that but I ask the Minister to look at those particular points.

Amendment put and declared lost.
Question proposed: "That section 21 stand part of the Bill."

This section provides for an extension of the knowledge development box for a further two years. I suppose the aim of the knowledge development box was to improve research and development by providing a tax break for research and intellectual property. What does the Minister believe the level of take-up of this tax relief scheme has been, particularly by smaller companies, and what is the rationale for extending the expiration date for two years?

I also want to speak to the section. In that context, I seek clarity from the Chair. I have an amendment which relates directly to this section and I am not sure why it is not being taken now. I am a bit confused as to the process. There is another amendment we tabled which relates directly to the knowledge box and research and development. Could somebody clarify the position?

The only amendments I have listed have been dealt with. Those were amendments Nos. 126 and 127, the amendment in the Deputy's name of which we have just disposed.

I was not talking about either of those two amendments. There is another amendment that deals directly with section 21 and the knowledge development box. I do not understand why it is not being taken now.

Is that amendment No. 171?

That is exactly it. Could somebody clarify why it is not being taken when we are dealing with the relevant section?

It is grouped with the research and development amendments.

It is not to deliberately throw the Deputy off his game. It is just that it is grouped differently.

I just have to be careful. One never knows.

I will look after the Deputy.

May I speak briefly to the section?

Deputy Farrell had raised a question and perhaps the Minister wants to answer it.

I would prefer to take the questions from Deputies Farrell and Boyd Barrett together, if the Chair does not mind.

This is a point that I have made to the Minister before and it is a serious one. We all want to expand knowledge, see innovation and research to improve our society, develop technology and advance enterprise and industry that is beneficial to society. That is a no-brainer and a noble objective. However, I put it to the Minister that the mechanisms by which we do that, including the knowledge development box and research and development grants with which we will deal later, are largely benefiting a very small cohort of companies. The major objective of those companies is to make money, largely in the IT sector. I am not saying they have not contributed to the advance of technology, and useful technology, but there is a hell of a lot more out there in terms of scientific and technological advance than the small number of social media and IT companies that are dealing with smart technology and are the major beneficiaries of reliefs and grants. We should be carrying out a cost-benefit analysis as to whether the significant amounts of money which, in the main, go to a small group of multinationals would not be better directed into our public universities.

This may be a better time than ever to make the argument in this regard, given Covid-19, because we all now see the value in, for example, research into things such as vaccines and medicines, and across the whole health area. The research capacity of our universities for testing and tracing and of our health system for researching medicines is way below what it should be, faced with the sort of crisis we are in. I seriously suggest that we need to weigh up whether we would be better off giving direct funding to our public universities, health service and so on in the areas of research development and innovation, rather than giving reliefs such as this which benefit a small number of wealthy multinational corporations.

I thank the Deputies. When we look at the knowledge development box, we should not think that it is the only thing the Government is doing to try to support research and development, and a high-innovation economy. We are, through may different investments, doing the kind of work to which Deputy Boyd Barrett has referred in our universities and places of higher education. That is funded directly by the Department of Further and Higher Education, Research, Innovation and Science. Much of the work to which the Deputy referred is happening. It is funded via expenditure, as opposed to tax expenditure, and it is overseen by the Minister for Further and Higher Education, Research, Innovation and Science, Deputy Harris, and his Department.

The knowledge development box is comparatively small in the context of the kind of money that is correctly spent by the taxpayers in supporting research. That is illustrated by answering the questions that Deputy Mairéad Farrell put to me regarding the scale of the knowledge development box. I will do that before concluding by answering her question regarding why it is being extended in the way I am proposing. For 2016, the total cost of expenditure for the knowledge development box was €9.4 million, with a total of 12 claimants on it. For 2017, the budget was €10.3 million, with a total of 13 claimants. We expect to have the final figures for 2018 in the first half of 2021. The total cost is estimated to be €9 million with fewer than ten claimants. In terms of the scale of the tax expenditure and the number of companies that are accessing it, this is one of the smaller tax reliefs in place in our tax code.

Deputy Mairéad Farrell asked about the rationale for the scheme and its extension. The rationale for the scheme is to encourage companies to locate qualifying research and development activities here in Ireland and, by doing that, to encourage employment and more substantive operations within the State. It is being extended for two years in the context of uncertainty about a no-deal Brexit and some of the operational challenges that have been created due to Covid-19. It normally takes approximately two years to build up data for a relief such as this in order to allow us to evaluate its operation. We will have a new sunset clause on the knowledge development box of 31 December 2022.

That will allow the knowledge development box for a company to have been in operation for a period of time and then they will have claimed it for the two years after that, which should give us more information to evaluate its operation.

Is it possible for companies to, say, redomicile intellectual property, IP, to avail of this?

It would be possible but certain criteria would have to be met to then allow that IP to be part of the knowledge development box. In particular, it would need to be demonstrated that there was research and development expenditure that was relevant to the intellectual property that was incurred by the company and income arising to that company as a result of that research and development expenditure.

Will the Minister confirm that if the company re-domiciled the intellectual property would mean that research and development have to happen here or can it happen somewhere else?

No. The research and development has to happen here.

I thank the Minister.

Question put and agreed to.

I propose that sections 22 and 23 be postponed until amendments Nos. 130 to 132, inclusive, have been disposed of and that amendments Nos. 130 to 132, inclusive, be postponed until section 19 has been disposed of. Is that agreed? Agreed.


Amendment No. 129 is in the name of Deputy Nash. The Deputy has indicated that he does not intend to move the amendment.

Amendment No. 129 not moved.

Amendments Nos. 130 to 132, inclusive, have been postponed until section 19 has been disposed of.

Question proposed: "That section 24 stand part of the Bill."

On the section, can the Minister clarify if this section extends the timeline by which companies are required to pay their exit tax obligations and, if so, what would be the implication for Revenue collecting that tax and what is the rationale for extending it?

It does not extend the time period over which the tax is due to be paid. It remains at five years during which six instalments are to be paid.

Question put and agreed to.

We move now to section 10 and resume the debate on amendment No. 5 in the name of Deputy Doherty, which proposes the insertion of a new section. Amendments Nos. 5 and 6 are related and are being discussed together.

We are withdrawing these amendments with a view to retabling them on Report Stage.

Amendment, by leave, withdrawn.

I move amendment No. 6:

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

“Report on income levy on high incomes

11. 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 of five per cent on high incomes in excess of €140,000.”.

Amendment, by leave, withdrawn.

I move amendment No. 7:

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

“Report on income tax relief

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

We are withdrawing this amendment.

We are withdrawing this amendment.
Amendment, by leave, withdrawn.

Amendment No. 8 is in the names of Deputies Boyd Barrett, Bríd Smith, Gino Kenny and Paul Murphy.

I move amendment No. 8:

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

“Report on abolition and replacement of Universal Social Charge

11. The Minister shall, within three months of the passing of this Act, produce a report on abolishing the Universal Social Charge for all those earning less than €70,000 per year and replacing it with an emergency Covid-19 Solidarity Tax on the incomes of those earning in excess of €100,000 per year and on the profits of companies whose net profits exceed €1,000,000 per year.”.

Every year that I have been in the Dáil we have made the case in our pre-budget submission for wealth taxes as against taxes that impose a further tax pressure on low and middle income workers that we should look at wealth taxes. That is something the Government has resisted but Covid-19 creates a new context for the case for wealth taxes because we are borrowing huge amounts to finance income supports and other increased expenditure in areas such as health and so on to sustain us through Covid-19, and particularly the incomes of those who have been hit by the pandemic. It is worth saying that many of the people who have been hit had precarious incomes and circumstances in the first place or would have been low paid people in areas like bar work, hospitality, the arts, about which we have talked a good deal, music, live entertainment and taxi drivers. These would not be people who had very high incomes to start with and they have been hurt very significantly by the measures. While there has been some income supports for them they are people who are really suffering as a result of Covid-19. There are other sectors of our society who are not suffering but actually doing extraordinarily well. The report of the Central Bank for the second quarter of this year that came out in the past few days underlines that in spades where the net household wealth has now reached the highest level ever in the history of the State at €817 billion. That is a jump of approximately €60 billion on the year before. It is an extraordinary accumulation of wealth. As the Central Statistics Office, CSO, demonstrated in its studies on the distribution of wealth, that wealth is overwhelmingly concentrated in a small number of very wealthy households. For example, the richest 1% of the population have more wealth than the bottom 50%. That is an extraordinary fact. The richest 1% have more wealth than the combined household wealth of the 50% at the bottom. The wealthiest 10% have half of that wealth, 50% of that €817 billion. That is extraordinary, and it is growing every year because once we reach a certain threshold of wealth the money begins to make money.

Against the background of many people being hurt in the Covid-19 pandemic and us clearly needing very significant additional investment in key public services more so than ever after Covid-19, for example, in our health service, to reduce class sizes in education and to invest in key infrastructure projects, surely there is a serious case for wealth taxes or, in this specific context, for a Covid solidarity wealth tax. These are measures that have been introduced in a number of countries since Covid-19 or are being actively discussed around the world if countries have not yet introduced them. I refer to the idea of imposing Covid solidarity wealth taxes on those with the very highest incomes and those who have very significant accumulated wealth. That would save us from having to borrow as much as we are having to borrow and it would be an important measure, underpinning with real action, the principle of "we are all in it together", which has very much provided the framework for the public attitude towards the sacrifices and hardship they have to make to deal with Covid-19.

That is why we press the case for removing more aggressive taxes on working people and replacing them with wealth taxes, in particular in the current climate a Covid solidarity wealth tax.

There are a considerable number of issues with the proposal the Deputies have suggested, including Exchequer cost, significant erosion of the tax base and impact on the competitiveness of our tax code.

I note that the Deputies have not specified the level of income tax rates that would apply under this proposal. However, it is estimated that the removal of the application of the universal social charge, USC, on all incomes below €70,000 as suggested would cost in the region of €1.6 billion in a single year. Assuming no other policy changes to the structure of the charges, it is likely that if the new tax took the form of a new USC rate for those earning over €100,000, it would need to be as high as 14.6 % in order to raise the same level of revenue for the Exchequer and ensure that this is a cost-neutral proposal. This estimation does not take account of any behavioural changes that could result from the significant increase in marginal rates of taxation.

To introduce any higher rate of USC would increase the marginal rate of tax. High marginal tax rates have an impact on work and also cause harm to our international competitiveness. The considerable progress that has been made in recent years to restore our economy cannot be taken for granted, particularly given the challenges in the international arena that confront us at present.

Introducing a USC exempting all those earning up to €1,346 per week would considerably erode the tax base. The current exemption threshold for USC is €13,000 per annum and it is now estimated that 29% of all income earners will not be liable for USC in 2021. To further increase this entry threshold to €70,000 would exempt almost 88% of income earners from USC. This would greatly narrow our income tax base and expose the economy to significant risk in the event of a future economic downturn.

In summary, the USC and our progressive income tax code have shown their mettle in 2020 in terms of their ability to generate a large amount of income tax at a time when we need it to pay for public services that are particularly essential at the moment. I am not supportive of reducing the number of people who pay the USC, as Deputy Boyd Barrett suggests, while at the same time significantly increasing marginal tax rates in the way the Deputy wants. That would have an effect on kinds of jobs we have in the State. For those reasons, I am not in a position to accept this amendment.

Amendment put and declared lost.
Section 10 agreed to.

We have moved to section 15.

Amendments Nos. 105 to 121, inclusive, will be discussed together.

I move amendment No. 105:

In page 33, line 21, to delete “paragraph (b)(i)” and substitute “paragraph (c)(i)”.

Section 15 updates Part 35A of the Taxes Consolidation Act 1997 which provides for transfer pricing. In particular, section 15 updates the definition of "relevant person" in section 835A and replaces section 835E, which provides for an exclusion from transfer pricing rules for certain domestic non-trading arrangements. These amendments are necessary to ensure that certain aspects of the transfer pricing legislation operate as intended. The new section 835E also provides that parties to certain domestic loan arrangements may be regarded as "qualifying relevant persons" and fall within the exclusion, provided certain conditions are satisfied.

Following publication of the Finance Bill, it became apparent that certain bona fide domestic non-trading arrangements, which were similar in nature to qualifying loan arrangements, were not specifically provided for within the exclusion. Therefore, I am now making provision to include additional domestic non-trading arrangements within the scope of section 835E. These amendments extend the exclusion from transfer pricing rules for domestic non-trading arrangements in the following circumstances, provided certain conditions are satisfied. The first is where an individual, tax resident in the State, provides a loan to a trading company or rental company to which they are associated. The second is where a company within the charge to corporation tax or an individual within the charge to income tax, in each case as a supplier, is owed a debt by either a trading company or rental company which arose from a supply of goods, services or assets. Of note is that it is only the debt and not the arrangement or part of an arrangement that gives rise to the debt that will be excluded by this amendment. The third is where a replacement loan is used to repay a loan that previously qualified as a qualifying loan arrangement, in which case the replacement loan will be treated as having been used for the same purpose as the original loan. Of note is that the replacement loan must satisfy the other necessary conditions. The final circumstance is where intragroup debt is created between two associated companies as a result of the acquisition of ordinary shares or a subscription for ordinary shares in a trading company or rental company where all of the other necessary conditions for a qualifying loan arrangement are satisfied.

The other amendments I propose to make are minor in nature and include some updates to cross-references and other minor technical updates. I commend these amendments to the committee. I am considering a Report Stage amendment with respect to this section.

These changes seek to provide greater clarity around our transfer pricing rules and the circumstances in which domestic non-trading transactions between Irish entities are excluded from the application of the rules. It is good to make the rules clearer. However, I would be concerned if it would allow for the possibility of transfer pricing arrangements via special purpose vehicles, SPVs, and financial vehicle corporations, which appear to take place at arm's length because they use the orphan ownership-type structure we discussed yesterday. In reality, these are essential intragroup transactions designed for the purpose of tax minimisation. If a company uses an orphan structure with legal trustees holding the issued share capital, will Revenue and the Central Bank look to find the ultimate beneficial owner when trying to ascertain whether transfer pricing arrangements are being used?

I will come back to the Deputy with an answer to that question. It is quite technical and, while I have a fair idea of the answer, I will not risk misleading the Deputy by not giving an accurate answer. I will get a written answer from my officials and provide it to the Deputy later today.

Amendment agreed to.

I move amendment No. 106:

In page 33, line 27, to delete “subsection (5)(b)(ii)” and substitute “subsection (5)(c)(ii)”.

Amendment agreed to.

I move amendment No. 107:

In page 33, line 30, after “shall” to insert “only”.

Amendment agreed to.

I move amendment No. 108:

In page 33, line 42, to delete “subsection (5)” and substitute “subsections (5) and (6)”.

Amendment agreed to.

I move amendment No. 109:

In page 34, to delete lines 9 to 12 and substitute the following:

“(i) whereby a loan is made by a supplier to an acquirer, otherwise than in the course of a trade carried on by the supplier, and—

(I) where the acquirer is a company referred to in clause (I) or (II) of subparagraph (ii), the acquirer is within the charge to corporation tax and the supplier is—

(A) an individual who is resident in the State for the purposes of income tax, or

(B) a company within the charge to corporation tax, or

(II) where the acquirer is a company referred to in clause (III) of subparagraph (ii), both the supplier and the acquirer are companies within the charge to corporation tax,".

Amendment agreed to.

I move amendment No. 110:

In page 35, line 32, after “reasons” to insert the following:

“and not as part of a scheme or arrangement the main purpose of which, or one of the main purpose of which, is the avoidance of tax".

Amendment agreed to.

I move amendment No. 111:

In page 35, between lines 32 and 33, to insert the following:

“(b) In the case of an acquirer referred to in clause (III) of paragraph (a)(ii), where, and to the extent that, the proceeds of a loan (in this paragraph referred to as the ‘replacement loan’) are used by the acquirer to repay a loan (referred to in this paragraph as the ‘original loan’)—

(i) which was provided under an arrangement that, under paragraph (a), was regarded as a qualifying loan arrangement for a chargeable period, and

(ii) the full proceeds of the original loan were used for a purpose specified in clause (III) or (IV) of paragraph (a)(iii),

the proceeds of the replacement loan shall be deemed to be used for a purpose specified in clause (III) or (IV) of paragraph (a)(iii), as the case may be.”.

Amendment agreed to.

I move amendment No. 112:

In page 35, line 33, to delete “(b)” and substitute “(c)”.

Amendment agreed to.

I move amendment No. 113:

In page 35, line 37, after “(a)(iii)” to insert “or clause (III) of subsection (6)(b)(iii)”.

Amendment agreed to.

I move amendment No. 114:

In page 35, line 42, to delete “subsection (7)” and substitute “subsection (8)”.

Amendment agreed to.

I move amendment No. 115:

In page 36, between lines 2 and 3, to insert the following:

“(6) (a) In this subsection, a reference to a ‘debt’ is a reference to an amount of money owed by an acquirer to a supplier, which—

(i) arose directly from a supply of goods, services or assets under an arrangement to which section 835C(1) applies (referred to in this subsection as the ‘underlying arrangement’), and

(ii) is an amount of consideration for that supply and acquisition which, for bona fide commercial reasons, is unpaid.

(b) Where, for a chargeable period, the following is the case—

(i) a debt is owed by an acquirer to a supplier, which arose otherwise than in the course of a trade carried on by the supplier, and—

(I) where the acquirer is a company referred to in clause (I) or (II) of subparagraph (ii), the acquirer is within the charge to corporation tax and the supplier is—

(A) an individual who is resident in the State for the purposes of income tax, or

(B) a company within the charge to corporation tax,


(II) where the acquirer is a company referred to in clause (III) of subparagraph (ii), both the supplier and the acquirer are companies within the charge to corporation tax,

(ii) the company who is the acquirer is—

(I) a company referred to in subsection (5)(a)(ii)(I),

(II) a company referred to in subsection (5)(a)(ii)(II), or

(III) a company referred to in subsection (5)(a)(ii)(III),

(iii) where—

(I) in the case of an acquirer referred to in clause (I) of subparagraph (ii), the acquirer is, for the chargeable period, chargeable to tax under Case I of Schedule D in respect of profits or gains or losses and the full amount of any interest chargeable on the debt would be directly taken into account in computing the amount of those profits or gains or losses, or

(II) in the case of an acquirer referred to in clause (II) of subparagraph (ii), the acquirer is, for the chargeable period, chargeable to tax under Case V of Schedule D in respect of profits or gains or losses and the full amount of any interest chargeable on the debt would be directly taken into account in computing the amount of those profits or gains or losses, or

(III) in the case of an acquirer referred to in clause (III) of subparagraph (ii), the debt arose directly from the acquirer acquiring ordinary shares in, or subscribing for ordinary shares in, a relevant company (as referred to in clause (IV) of subsection (5)(a)(iii)) and arising from such acquisition, or subscription, as appropriate, of shares in the relevant company, the acquirer receives in the chargeable period, or in any period of three years that includes the chargeable period, an amount of dividends or other distributions, greater than a nominal amount, from the relevant company that are chargeable to tax under Schedule D or which would be chargeable to corporation tax but for section 129,


(iv) the arrangement which gave rise to the debt was entered into for bona fide commercial reasons and not as part of a scheme or arrangement the main purpose of which, or one of the main purposes of which, was the avoidance of tax,

then the debt owed from the acquirer to the supplier shall be deemed to be a qualifying loan arrangement within the meaning of subsection (5) and subsection (5)(c) shall apply with any necessary modifications.

(c) An underlying arrangement, which gave rise to a debt which is regarded as a qualifying loan arrangement under paragraph (b), shall not be regarded as a qualifying loan arrangement by virtue of paragraph (b).”.

Amendment agreed to.

I move amendment No. 116:

In page 36, line 3, to delete “(6)” and substitute “(7)”.

Amendment agreed to.

I move amendment No. 117:

In page 36, line 6, to delete “(7)” and substitute “(8)”.

Amendment agreed to.

I move amendment No. 118:

In page 36, line 16, to delete “(8) Subsection (7)” and substitute “(9) Subsection (8)”.

Amendment agreed to.

I move amendment No. 119:

In page 36, line 27, to delete “(9)” and substitute “(10)”.

Amendment agreed to.

I move amendment No. 120:

In page 36, line 27, to delete “subsection (8)” and substitute “subsection (9)”.

Amendment agreed to.

I move amendment No. 121:

In page 36, line 29, to delete “(10)” and substitute “(11)”.

Amendment agreed to.
Section 15, as amended, agreed to.

Sections 16 to 18, inclusive, were disposed of earlier.

Question proposed: "That section 19 stand part of Bill."

I have a query. Some international experts are worried about the strength of Ireland's CFC, rules. I welcome that companies that appear on the EU's new blacklist will no longer be able to avail of exemptions, but I am worried about those companies that are not on the list. No EU jurisdictions are on the list. Although these measures spring from the EU's anti-tax avoidance directive, I am concerned that the rules, despite today's welcome amendments, are unlikely to succeed in their aim of curbing aggressive multinational tax avoidance. Will the Government publish any publicly available data on the impact that blacklisting has on financial flows between Ireland and jurisdictions on the blacklist? Will a report be published to give us an update on the blacklist?

The changes that we are making through the Bill by removing exemptions in the application of particular rules relating to CFCs will have a significant effect on dealing with very aggressive tax planning or potential tax planning with jurisdictions that are on the greylist created by the EU. These rules will not apply to countries that are not on that list. The rules are demanding in nature and will only apply to countries that are put on this list by a decision of the EU. Those countries are seem to be unco-operative in terms of fair and effective taxation.

I imagine that most of the information on the operation of the list will be prepared by the EU, but I will see if there is any domestic source of information that I can share with the committee. If there are national pieces of data that would aid the committee in evaluating these rules, I will see if they are available and share them with it.

The concern is that there would be a shift in transactions from countries on the blacklist to others that are not. I would be interested in seeing an analysis of that. The Minister is telling us that such information would probably be available on an EU basis.

Yes. As to whether a displacement effect could occur, we do not know the answer. We will have to evaluate how the rules are applied. Am I correct in saying that the Deputy's inference is that, for example, financial or tax entities might be shifted to other countries?

Her point is that this would allow the perpetration of taxing activity that is not seen as acceptable anymore. My judgment is that that is probably unlikely because the list of countries that are not inside the scope of our tax co-operation or of our tools for dealing with tax non-co-operation is very small. The combination of this list and, for example, measures taken through the OECD will have a significant effect on better tax co-operation.

We will now move to the postponed amendment No. 130.

If Deputy Naughten bears with me for a moment, I want to double-check that a term I used in answering an earlier question from Deputy Farrell was accurate. I used the term "greylist". I should actually have used the term "blacklist". The substance of what I told the Deputy was correct, but I used the wrong term in describing the list. The list covers a group of countries that are seen to be non-co-operating in terms of managing tax co-operation.

I thank the Minister.

Question put and agreed to.

I move amendment No. 130:

In page 42, between lines 9 and 10, to insert the following:

“Report on extending 10-year ownership and usage period for Capital Gains Tax retirement relief

25. The Minister for Finance shall, within 90 days of the passing of this Act, publish a report on extending the 10-year ownership and usage period for Capital Gains Tax retirement relief to a spouse for lifetime transfers to address an anomaly in the 2014 agri-taxation review.”.

The agri-taxation review report of 2014 identified an anomaly in the taxation system whereby the transfer of the ten-year ownership and usage qualification between spouses in the context of retirement relief from capital gains tax was only allowable where the farm transfer occurred on the death of one of the spouses. Where a farm is transferred into joint ownership, the farmers must own and farm the asset for the next ten years before they can qualify for the capital gains tax retirement relief. This is preventing farms from being transferred into joint ownership and is a disincentive to female participation in agriculture.

Where a farmer has owned and used the asset for ten years and it is transferred into joint names, the transferee's spouse should inherit the same ownership and usage status as his or her spouse who had been farming the land up to that point. This amendment just seeks to clarify that in terms of the retirement relief for capital gains tax. It will not be used often, but this situation is acting as barrier to the transfer of land to joint owners.

A number of years ago, I had the privilege of visiting Iringa in Tanzania to see an Irish Aid project that was being run by Concern. Irish taxpayers' money was involved in assisting women to get their land into joint ownership. The Irish taxpayer was successful in that initiative, which gave equal power and control to the husband and wife in terms of the land's ownership. We are encouraging joint ownership of farmland in sub-Saharan Africa, yet this anomaly in Ireland is putting in place an unfair barrier to women having joint ownership.

I am seeking a small alteration to the definition to ensure that it will not act as a barrier to the transfer of farmland from one spouse to joint ownership.

To qualify under sections 598 and 599 of the Taxes Consolidation Act 1997, a relevant individual must have owned and used the qualifying asset - farmland, in this case - for a minimum of ten years prior to disposal. The provision allows for the aggregation of periods of ownership of the qualifying asset by each spouse or civil partner for the purposes of the ten-year ownership test. It does not, however, extend and aggregate the use of the assets in the same manner. The exception to this is in the case where one of the spouses or civil partners has died.

I am aware that the issue to which the Deputy's amendment relates was raised in the context of the 2014 review to which he referred. Nevertheless, I will make a number of points in this regard. First, the aim of the relief is to encourage timely disposal of a business or farm to the next generation. Second, the relief applies to an individual and, therefore, where both spouses meet the criteria, both can benefit from the relief separately, thereby doubling the relief available to the couple. Where only one spouse qualifies, that person will still be able to avail of the relief. Third, and most important, this is not an anomaly. The inclusion of the usage requirement ensures that the individual qualifying for the relief is genuinely active in the farm or business. This is a fundamental requirement.

A provision allowing that in cases of joint ownership, both owners will be eligible for retirement relief if either is eligible could allow for tax avoidance and greatly expand the scope of the relief. This is because if the disposal is outside the family or the disposer is over the age of 66, there are limits to the proceeds or consideration on which relief can be claimed. If couples could both claim relief in cases where either of them qualifies, they could effectively double the relief available to them by putting their assets in joint names just before the transfer of the assets, even in cases where one spouse had never used the asset, that is, had not worked on the farm. It is for those reasons that I cannot accept the Deputies' amendment.

I listened to what the Minister said. None of us is trying to create loopholes in the tax law or encourage tax avoidance. That is not the objective behind the amendment. I am seeking a report into the issue to see whether it is possible to ensure that a mechanism is in place that will not discourage the joint ownership of farmland. There are many barriers to this happening. From a policy perspective, we all agree it is important that each spouse has equal ownership of the farmland and we do not want a barrier to be put in place in that regard.

I accept the point the Minister made about not wanting to create a tax avoidance element by altering the legislation as it stands, but I am seeking a review to see whether a mechanism can be found to get over this barrier to transferring land into both names, without creating a tax avoidance loophole. Will the Minister and his officials reconsider this and see whether there is a mechanism to meet the objectives he set? I do not disagree with those. He might also try to facilitate, insofar as is possible, as much land as possible being transferred into joint ownership.

I have outlined why I believe there are consequences to what the Deputy is seeking that we should avoid. I acknowledge that in putting forward the amendment, he is not in any way seeking to indirectly facilitate tax avoidance. I fully understand that and the policy issue he wishes to address but I do not believe that the Bill is the place in which a commitment to reports should be put into law.

I am, however, willing to prepare a note for the committee that we will share with it perhaps by the end of this year, although we have to focus on getting the Bill passed. We will share that with the Deputy and that might be a way in which he can better understand the issues to which I refer. If options are available - although to manage expectations, I am not sure they will be - we will lay them out in the note. If that is of help to the Deputy, given that he has raised the matter, I will be happy to do that. In return, I ask him to consider not pressing the amendment.

I will withdraw the amendment on the basis of the Minister's response. I thank him for that.

Amendment, by leave, withdrawn.

I move amendment No. 131:

In page 42, between lines 9 and 10, to insert the following:

“Report on determining land area for solar panel installation

25. The Minister for Finance shall, within 90 days of the passage of this Act, publish a report on addressing the current ambiguity on the calculations used to determine the area of land on which solar panels are installed, for Capital Gains Tax retirement and Capital Acquisitions Tax agricultural reliefs.”.

An amendment to section 34 of the Finance Act 2017 extended the definition of assets that can benefit from capital gains tax, retirement relief and capital acquisitions tax agricultural reliefs to include land that is leased on which solar panels have been installed. Under that Act, land being disposed of still attracts these reliefs where the solar panels installed do not exceed 50% of the total area of land concerned.

The difficulty is there is an ambiguity surrounding the definition as laid out in the legislation and this is deterring many farmers from considering entering into land leases for solar projects. As the Minister will know well from our discussions through the years, the objective is that by 2030, 70% of the energy on our grid will be renewable. Having solar as part of that mix is vital and we need to ensure that landowners are prepared to consider leasing land for the installation of solar panels. Clarity needs to be brought to the existing legislation with a small amendment. The calculations that are used to determine the area of land on which the solar panels are installed should include only the footprint of the structures that mount the solar panels and the ancillary equipment such as service roads but exclude any area capable of being grazed by livestock.

There is a lack of clarity as to the definition of the 50% of land that is covered by solar panels. All these solar panels are mounted at a height that allows sheep to graze under them. That grazing area should be allowed as agricultural land in the calculation of the footprint of the solar panels. The lack of clarity in the legislation is causing a great deal of concern for farmers because the liability, if that definition is not clarified, is significant and is an inhibiting factor to farmers signing up to these leases.

Prior to the Finance Act 2017, agricultural land that was leased for solar panels was not classified as qualifying agricultural property for the purposes of capital gains tax retirement relief or agricultural relief from capital acquisitions tax.

Following a review of the tax treatment of the installation of solar panels on farmland in 2017, a change to this approach was announced in budget 2018.

Under this revised approach, it is possible for land leased for the installation of solar panels to be classified as qualifying agricultural property under certain conditions. A key condition is that the total area of land under lease and on which solar panels are installed does not exceed 50% of the total area of agricultural land.

Revenue requires that the total area within the perimeter of the land that has been leased by the developer and on which solar panels have been installed is counted for the purposes of calculating the proportion of land given over to this alternate use. In other words, the entire area that has been leased is counted. This includes the marginal areas of land that lie between and around the rows of solar panels that have been installed.

The view of Revenue is that it would not generally be possible to farm any land on which equipment for the production of renewable energy is installed. Due to the large scale and high density nature of solar operations, large areas of agricultural land are removed from normal productive agricultural activity. To maintain the policy objective of agricultural relief, a 50% limit on the amount of land that can be diverted to this alternative use is in place.

From the point of view of the Revenue Commissioners, we believe clarity is in place to allow a determination of what land has been used for and the effect, therefore, it has on claiming tax relief. If the Deputy has particular matters in which this clarity is not apparent for individual cases and shares them with me I will, in turn, share them with the Revenue Commissioners and ask that they respond to him. From a policy point of view, the Revenue and I are satisfied that there is clarity regarding land use. I reiterate that if the Deputy is aware of individual matters that the Revenue should consider – I am sure they have already considered them - if he shares with me I will, in turn, share them with the Revenue Commissioners.

I thank the Minister for his clarity on that. The nub of the issue is that I do not think any of the Revenue Commissioners is a sheep farmer. The problem is with the definition. The definition, as outlined by the Revenue Commissioners, is that the area around and between solar panels is considered the area for calculation that is suitable for farming.

The reality is that under these solar panels the grass continues to grow. These solar panels are mounted quite high and sheep can and do easily graze under them. While the land in question complies with good farming practice under the rules and regulations of the Department of Agriculture, Food and the Marine, because it has been grazed by sheep and maintained, the difficulty arises in the Revenue definition.

It has stated that the area under the solar panel, which is being actively grazed by sheep, cannot be considered agricultural land. This is the nub of the issue. The difficulty is the definition set out by the Revenue Commissioners, which refers to the area around rather than under the solar panels where grass continues to grow and sheep can and do graze. I would be quite happy to bring the Minister to a solar farm and show him exactly how it operates. I will give him one or two lambs to bring home.

I am reasonably sure that a number of sheep farmers work in the Revenue Commissioners, in particular given the intricacies of tax law in respect of agriculture. It would appear that farmers of all varieties work within the Revenue Commissioners. At some point, when the public health guidance allows, I will certainly take the Deputy up on his offer to have a look at land that allows the grazing of lambs and its use for solar energy production at the same time.

As I said, from a policy point of view, it appears that there is clarity that allows the Revenue Commissioners to operate this relief. I do not need to tell the Deputy that the reliefs in place in respect of the inheritance of agricultural property are significant. They allow a very significant reduction in the taxable value of property. That is done for good policy reasons. We have to ensure, therefore, that the land that is participating in this tax relief is being used for genuine agricultural purposes.

It is for that reason I believe the policy as structured at the moment is clear and effective. I reiterate that if there are individual cases that the Deputy wants me to bring to the attention of the Revenue Commissioners, I am very happy to do so. I will take him up on his offer of looking at lambs at some point in the future.

How stands the amendment?

I will come back to the Minister on that. I take him at his word. The difficulty is that I am talking about genuine farming and the grazing of this land. I am not talking about people who are trying to avoid paying tax. It is a significant barrier to the roll-out of renewable energy across the country, in particular the deployment of solar panels.

We have the mother and father of all charges in trying to achieve 70% renewable electricity on our grid by 2030. That is based on our current electricity demand, never mind the petrol that is being put on this particular fire with the number of data centres being connected to the grid. Unless we can actively encourage farmers to start installing solar panels on their land, we are not going to get anywhere near our 2030 targets.

This particular definition excludes the area of land under a solar panel that is being grazed not just by lambs but also by ewes because they are a significant height off the ground and allow daylight to get in and grass to grow. This land is being actively grazed under solar panels and, because of that, should be considered agricultural land. It cannot have cattle on it, but it can have sheep grazing on it and there is no reason it should fail to comply with the definition. The difficulty is that the Revenue Commissioners' interpretation of agricultural land in this instance is very different from the practical reality. I ask the Minister to reconsider this between now and Report Stage.

How stands the amendment?

I will withdraw it, with leave to reintroduce it on Report Stage and give the Minister time to think about it.

The case made by the Deputy is valid. It has been put forward by the farming community in various areas and it is worth considering. I am also sure that his offer of two lambs is by no means an attempt to influence tax policy.

With the amount we are getting for them, he can have more than two.

The amendment has been withdrawn.

Amendment, by leave, withdrawn.
Amendment No. 132 not moved.

I move amendment No. 128:

In page 41, to delete lines 6 to 12 and substitute the following:

“ “(6A) (a) Notwithstanding subsection (6), where a debt owed by a bank which is not in the currency of the State, and which is represented by a sum standing to the credit of a person in an account in the bank, is transferred by the person in whole or in part to another account of that person in the bank concerned, or in any other bank,in the same currency, the transfer (referred to in paragraph (b) as a‘transfer to which paragraph (a) applies’) shall be treated as if it were made for a consideration of such amount as would secure that neither a gain nor a loss would accrue to that person on that transfer.

(b) On any disposal of the debt or part of the debt by the person who is the holder of the account referred to in paragraph (a), other than any further transfer to which paragraph (a) applies, the acquisition cost of the debt or part of the debt taken into account in computing the amount of any gain accruing to that person on the disposal shall be determined as if the transfer, or any further transfer, to which paragraph (a) applies had not occurred.”.

(2) This section applies to disposals made on or after the date of the passing of this Act.”.

This section makes a technical amendment to section 541 of the Taxes Consolidation Act to address the situation whereby the same foreign currency transfer between bank accounts held by the same person has the potential to crystallise a chargeable gain or an allowable loss without an accompanying economic capital gain or loss. The intention behind section 22 of the Bill is to provide that transfers between accounts of the same person in the same foreign currency do not give rise to a gain or loss where there is no corresponding economic gain or loss.

Section 22 took effect by way of a budget night resolution and applies to disposals made on or after 14 October in order to prevent tax avoidance opportunities before the Finance Bill becomes law. A further amendment is now required to section 22 in order to clarify that in relation to a subsequent disposal of the foreign currency, the base cost of that foreign currency for capital gains tax will be its original base cost, that is, the cost of the foreign currency before any transfers between bank accounts of the same person took place. By putting in place this amendment, the budget night resolution underpinning section 22 will cease to have effect. The original intention behind the amendment, that transfers between accounts of the same person in the same foreign currency do not give rise to a gain or a loss where there is no corresponding economic gain or loss, would take effect from the date of the passing of the Finance Act.

Does Deputy Mairéad Farrell wish to comment?

Amendment agreed to.
Section 22, as amended, agreed to.
Question proposed: "That section 23 stand part of the Bill."

May I ask a question on section 23?

Will the Minister explain in greater detail what exactly this section is trying to achieve and what the cost will be to the State?

The purpose of this section is to support business development and growth by allowing for dilution in shares throughout the period of ownership so that business expansion is not penalised as a result of raising equity in a fast-growing business. This is a minor but helpful change to this section of our tax code and we are not anticipating there being any significant cost or revenue change behind it.

Is that okay?

Question put and agreed to.
Sections 24 and 25 agreed to.

I move amendment No. 133:

In page 44, to delete lines 12 to 37, to delete page 45, and in page 46, to delete lines 1 to 30.

I will speak to amendments Nos. 133 and 134 together.

That is fine.

Amendment No. 133 seeks to delete the carbon tax on agricultural diesel. Amendment No. 134 is, relatedly, to have a report on that proposal. The Minister and I have had this discussion on a number of occasions in the past. The reality is that within the agricultural sector, there is no alternative to diesel at present. We do not have electric tractors or hybrid vehicles and the agricultural sector is hugely dependent on green diesel. I am arguing, as have many others, that we should not be applying a carbon tax where there is no alternative available to diesel.

The principle behind a carbon tax is to encourage people to move to alternative fuels. The objective behind it is not to bring in additional revenue for the Exchequer but to get people to move to alternative forms of energy. In the case of agriculture, there is no alternative to agricultural diesel at the moment. There may well be at some stage in the future but it is not available at present and because of that, we should not be applying a carbon tax to agricultural diesel. Agricultural diesel is marked diesel because it is used for a specific purpose within the agricultural sector.

The Minister will come back and make the argument that there is a rebate scheme in place. That is available for some farmers who have a tax liability but contractors and many farmers who do not have a tax liability are having to pay this particular carbon tax when there is no alternative fuel available to them.

If we accept the principle that carbon tax is not about bringing in more money to the Exchequer and is about trying to drive change across society and the economy to more fuel efficient and cleaner vehicles, we have to accept the principle that we cannot charge it on agricultural fuel because an alternative does not exist at present.

Are we now speaking on amendment No. 134?

Deputy Naughten indicated he was speaking on both amendments Nos. 133 and 134. The Minister can reply in whichever order he wishes.

Okay. Amendment No. 134, as the Deputy has said, focuses on the agricultural sector and amendment No. 133 is much broader than that. He has spoken on amendment No. 134 so I will confine my comments to that for now. The main exposure that the agricultural sector faces to carbon tax is through the use of marked gas oil, MGO, also known as agricultural diesel or green diesel. It is already subject to an exceptionally low rate of mineral oil tax, much lower than that applied to auto diesel. The rate of mineral oil tax on MGO is currently 11.8 cent per litre and it will increase to 13.8 cent per litre in May 2021, following the application of the increase in carbon tax. This compares very favourably with the current rate of mineral oil tax applied to auto diesel, which is 51.5 cent per litre.

In budget 2012, my predecessor made provision for a double income tax relief for farmers to compensate for the increase in carbon tax at the time. Section 664A of the Taxes Consolidation Act 1997 provides that a farmer may take an income tax or corporation tax deduction for farm diesel, including any carbon tax charged in respect of the diesel, and then a further deduction for farm diesel which is equal to the difference between the carbon tax charged and the carbon tax that would have been charged had it been calculated at the rate of €41.30 per 1,000 litres of farm diesel, which is the 2012 baseline.

This relief continues to apply. While I am mindful of the point made by Deputy Naughten that any change in carbon taxation does have an effect on those who are paying it, and I accept that, on the other hand a set of very comprehensive reliefs and supports is in place for the agricultural sector that I believe gives very strong recognition of the challenges it faces as we adjust to a lower carbon future. For these reasons, I cannot accept the Deputy's amendment.

The difficulty I have is that not only are we discussing the increase in carbon tax from next spring but we are looking at increasing the carbon tax for agricultural fuel from now until 2030. I will deal with this incremental increase in carbon taxes in far more detail when discussing one of my later amendments. Specifically at this point, we are looking at an additional carbon tax on the agricultural sector of €27.3 million next year. This is a sector that does not have an alternative available to it.

The objective behind all of these carbon taxes is that, over time as people buy new cars and upgrade their heating systems, they would move to more carbon efficient alternatives or zero carbon alternatives. This is the objective behind the introduction of carbon taxes. This should be done in incremental blocks rather than annually because if it is done on an annual basis, people tend to absorb it rather than being motivated to change. In the case of the agricultural sector and the farming community, there is not an alternative for them to move to. Diesel is the only fuel that can currently be used in the agricultural sector. Farmers cannot go and get an electric tractor. The machinery is not available.

The Minister made a point regarding the rebates in the agricultural sector. They are all well and good if someone has a significant tax liability but the reality is, as shown consistently by Teagasc farm surveys, that many farmers are not making enough income on their farms to generate a tax liability in the first instance. As a result, they are not in a position to claim the relief back for diesel. The practicality is that farmers do not have an alternative so why are we taxing them in the manner we are? This is turning out to be purely a tax rather than an environmental tool to get people to change.

The way this measure differs from other taxes is that we have made a commitment that we will use the revenue raised from this carbon tax to fund the activities needed to lower carbon use in our economy. Unlike every other tax I will debate with the Deputy on the Finance Bill, we will not use the revenue from carbon taxation to fund general expenditure. We are using it purely with the objective of putting in place the incentives, plans and changes needed to lower the use of carbon in Ireland.

I listened carefully to the point the Deputy made on the effect of this increase in carbon tax on the agricultural sector. I recognise the consequences the sector faces and I acknowledge this. The reliefs I outlined earlier offer a very high degree of support for our farmers in dealing with carbon pricing changes. This is legitimate and needed given the difficulty they have in changing their vehicles or getting new vehicles with low levels of diesel use. This is why these reliefs are in place. I repeat that the changes made in 2012 by the then Minister, Michael Noonan, offer a very high level of support to farmers in coping with the changes that will arise as a result of carbon pricing going up.

The Deputy understands the value of these changes as a former Minister in this area. He made the case for the change being incremental. This is what we are doing. We are making incremental changes year by year and we are committing to making these changes for the next number of years until we get to a level of carbon taxation that experts believe can make a difference to the amount of carbon used in Ireland. I will conclude by emphasising that the changes made in the budget of 2012 offer a very high level of protection to farmers in dealing with the income consequences of carbon taxes going up.

I accept that for farmers who have a tax liability the changes made in 2012 will benefit them. I do not dispute this but the fact is that a very large proportion of farmers in this country do not have a tax liability because they are making very little, if nothing, from their farms at present. The reliefs are all well and good but farmers cannot access them unless they actually have a liability to pay tax in the first place. This is part of the problem.

I will go into greater detail later but I am arguing against an incremental increase in carbon tax on an annual basis. The Minister needs to do it on a step-change basis and I said this to him when I was in my previous role as Minister with responsibility for the environment. With incremental slow change, people will absorb the tax rather than act upon it. It will not bring about the type of motivational change needed. If the Minister did it in big blocks of changes every three or four years, it would act as a much bigger motivator. I will come back to this point later. I do not want to dwell on it now.

The Minister said the objective behind the carbon tax is that it will be ring-fenced to be used to lower the use of carbon throughout the economy. I welcome this principle. The difficulty is that €27 million will be collected from the agricultural sector in 2021 in carbon taxes and none of this money will be put back into lowering carbon usage in the agricultural sector. This is the difficulty I have. The tools, mechanisms and vehicles are not there as of yet. The point I am making is that we should not be taxing a sector when alternatives are not available.

We are taxing farmers and investing the revenue in diesel hybrid buses in the city of Dublin when we should be going for zero emission buses, an argument I had in the past with the Minister and the previous Minister with responsibility for transport. I fundamentally disagree with the idea of diesel hybrid buses. Regardless, we are subsidising diesel in Dublin Bus but using taxes on the agricultural sector, where there is not an alternative available, to fund this investment. That is fundamentally wrong and it is why I am opposed to the approach being taken.

The Deputy will come back to this point when discussing another amendment. How stand amendments Nos. 133 and 134?

I will not come back to the agricultural aspect of it.

I ask the Minister to think about it again in advance of Report Stage and I will resubmit them on Report Stage.

Amendment, by leave, withdrawn.
Amendment No. 134 not moved.
Question proposed: "That section 26 stand part of the Bill."

I understand Deputy Farrell wishes to comment.

I wanted to speak to sections 26 to 28, inclusive, as a group.

Does the Deputy want to leave it until we deal with section 28?

If we leave it until we deal with section 28, will we be able to vote on sections 26 and 27 or how does that work?

The Deputy wishes to comment on sections 26, 27 and-----

We can allow the Deputy make that comment at that time if she wishes to do so. Does the Deputy want to comment on section 26 now?

Yes. These sections provide for multi-annual increases in carbon tax. I am concerned that they will have a consequential effect on lower income households. In June 2019, the ESRI published the report, Carbon taxation in Ireland: distributional effects of revenue recycling policies. In its research, the ESRI found that carbon taxation is found to be regressive, with poorer households spending a greater proportion of their income on the tax than more affluent households. In its modelling, the ESRI found that with an increase in carbon tax by an additional €30 per tonne, every household bears some cost but the cost is greatest for the poorest households. Comparing the first and fourth quartiles, it indicated that poorer households suffer disproportionately more from carbon taxes. In addition, single households with children are the most affected by this policy. The trajectory set out in last year's and this year's Finance Bill is an €80 per tonne increase in carbon tax. The ESRI made it clear that the regressive nature of carbon tax can be offset by recycling revenue and offers the distributional effect of different recycling policies.

In its manifesto for the 2020 election, the Green Party proposed gradually increasing carbon tax in each of the next ten years until it reaches €100 per tonne and introducing a mechanism to return all the revenues raised from further increases to citizens by social welfare payments and tax credits. That policy platform seems to have been abandoned in this Finance Bill and I wish to raise a number of issues the Minister can address in this regard. In the note provided by the Department of Finance, the combined proceeds of the 2020 and 2021 increases in carbon tax amount to €238 million. A total of €48 million was allocated to targeted social protection intervention. That is 20% of carbon tax revenues. That is a total departure from the Green Party's manifesto proposals to return the revenue raised to households through social welfare payments, as it has reduced from 100% to 20%. While these sections provide for multi-annual increases in carbon tax, there is no such commitment for multi-annual increases in social welfare payments to offset the regressive nature of carbon tax on lower income households. Will the Minister make a commitment that if these sections are agreed, the Government will hard-wire multi-annual increases in social welfare payments in the upcoming social welfare Bill?

I oppose the section because I do not believe that drip-feed taxes work in motivating people to change their approach. While I accept the principle of carbon taxes, I am opposed to this particular carbon structure approach being taken by the Government because I do not believe that a drip-feed model will motivate people to avoid paying tax and change their approach. This is an approach I debated with the Minister around the Cabinet table. It is an approach that I presented to the Oireachtas Joint Committee on Climate Action. I know that both the Minister and the committee did not agree with my approach because politicians love gentle taxes that do not cause a political shock or pushback. They want to introduce tax that brings in additional revenue that can be used in the approach the Minister is talking about. I fundamentally disagree with that. Carbon taxes should be there to encourage people to avoid paying the tax in the first place. If we took an approach where we had significant incremental jumps in carbon tax in 2023, 2027 and 2030, it would give people an opportunity to change in the interim, whether it is to change their car or, if they are upgrading their heating system, to alter that so that it minimises the amount of tax they pay.

Second, I believe that our carbon tax structure should vary with the cost of a barrel of oil because if carbon taxes increase and the price of oil decreases significantly, as we have seen over the past decade, they will not have the motivational impact we all want to see happen. On the contrary, if we increase the carbon taxes as we are planning to do and the price of oil goes through the roof, so to speak, we will grind our economy to a halt. We need to have an approach that is flexible. As the price of oil goes up and down, the carbon tax should go up and down to reflect that and bring about a real change in people's attitude to using fossil fuels in the first place.

Picking up on another point Deputy Mairéad Farrell raised, this particular carbon tax structure is regressive because those living in rural communities will pay far more in carbon tax than those living in urban areas. I have already given the Minister the example in respect of agricultural diesel where farmers do not have an alternative available to them but in addition, people living in our cities who have jobs locally have local transport alternatives available to them that are not available to people in rural areas. By the time we get to 2030 and we have a carbon tax of €100 per tonne, half of the households in Dublin will be paying less than €9.11 per week in transport costs when the Dublin Bus subsidy is taken into account. On the other hand, rural commuters will be paying €39.50 a week, up to four times more than those who have a bus passing the door every few minutes. Those types of taxation structures will not motivate people out of their cars and onto buses in urban areas for €9.11 a week yet, at the other end of the scale, people who are commuting long distances to work in Dublin and so forth who do not have the alternatives available to them will be paying significantly in terms of these carbon taxes.

This particular section, section 26, which deals with home heating oil-----

If I could interrupt the Deputy, we have run out of time in this particular session so I have to suspend the meeting. The next session will take up from where the Deputy left off, with a follow-up from the Minister in terms of his response. The meeting is suspended until 4.40 p.m.

Sitting suspended at 3.58 p.m. and resumed at 4.40 p.m.
Deputy Bernard Durkan took the Chair.

Prior to the suspension, Deputy Denis Naughten was in possession. He and Deputy Mairéad Farrell had made contributions on the section.

The point I was making to the Minister before the suspension is that the carbon tax, as presently structured, is regressive from a geographical perspective. It discriminates against people residing in rural areas who do not have alternatives available to them. I made the point that a family living in this city with direct access to Dublin Bus pays a weekly carbon tax - half the households in Dublin are paying a weekly carbon tax of €9.11 when the Dublin Bus subsidy is taken into account - whereas rural commuters will be paying €39.50 per week when the full carbon taxes are introduced. That is four times the amount for a rural commuter compared to his or her typical urban counterpart.

I want to make a specific point in respect of home heating oil. The latter is also the subject of section 26. Based on current rates, typical rural households will pay €1 more per week in carbon tax in 2030 than their counterparts in Dublin for the cost of heating their homes. In practical terms, however, the difference will be far greater because over the next decade the Government is going to subsidise carbon removal from the gas network through the introduction of biomethane, whereas families living in rural areas will have to borrow substantially to move away from oil. Again, whether it is transport or heating, the people who do not have alternatives available to them are going to pay significantly more in carbon tax. That is the wrong approach to take. While I agree with the principle of carbon taxes, I disagree with the approach that is being taken.

In dealing with the different points that have been made, it is worth emphasising again that all the revenue being raised via carbon tax is being recycled to invest in the things that can help communities reduce the need they have for carbon. For example, out of the €238 million that is now being raised in additional carbon taxes as a result of the changes made in this year's budget and in last year's, €100 million is being invested in residential and community energy efficiency projects, €48 million is being used to deal with the equity issues which do exist to ensure lower-income citizens are shielded from the effects of increases in carbon taxes, €20 million is being invested in environmental programmes in the area of agriculture and €70 million is being invested in various schemes that can make a difference to communities all over our country. Thus, we are using the revenue from higher carbon taxes in exactly the way recommended by those who advocate increases in carbon pricing as a way of credibly responding to the climate crisis that is in front of us and that could intensify further.

Deputy Mairéad Farrell put a specific question to me about why we are not making a commitment to the indexation of social welfare increases in the forthcoming Social Welfare Bill. That is a matter for the Minister for Social Protection, Deputy Humphreys, but under the last two changes we have made in carbon taxing, we have made alterations to social welfare rates in order to ensure that those who are most affected by increased carbon taxes are protected. This could be a matter that the Minister for Social Protection may want to consider but I imagine she would also want to have flexibility in case, for example, new payments are needed which do not currently exist and which are not referenced in social welfare legislation. It is a very clear programme for Government commitment that as we make these changes in carbon taxes we will ensure those most affected by it get further protection in the form of changes to social protection payments. We demonstrated that in the two most recent budgets.

As I understand it, Deputy Denis Naughten is making the case that instead of making gradual moves, we should make a smaller set of bigger moves.

Looking at the distributional and incomes issues the Deputy raised, would they not simply be bigger and more severe in scale if we were to make a smaller number of bigger moves? I cannot help but feel that if we did get to 2023 and were proposing a very large move, I am not sure he would be supportive of it at that point. If we cannot get the Deputy's agreement to a series of smaller moves, I am unsure that we would get his agreement in respect of a smaller set of big moves. If we were to go down that path, we would have a higher level of distributional issues as a result of such a big move. A gradual set of moves such as those we are proposing that involve protecting those who are most vulnerable through our social welfare code and giving predictability as to where we are going to end up is the fairest way of managing the kind of change we need to see happen in order to ensure that we can reduce the use of carbon in our country.

We have a serious climate crisis here now and we need to deal with it swiftly and effectively.

What we do not need is a regressive tax measure which hits low income earners most. If one takes my constituency of Galway West, for example, there are people living in rural west Connemara who have no, or very limited and expensive, access to public transport, so for those people there will be an increase in their travel costs, and also in their heating and cooking costs. The Economic and Social Research Institute has stated that those in lower income households are going to be hit harder by this tax. We are being asked, in this Finance Bill, to agree to a multiannual increase of this regressive taxation, but at the same time, we cannot get confirmation that there will be a multilannual increase in social welfare payments to offset the regressive nature of this tax.

The Distributional Analysis of Budget 2021 Tax and Welfare Measures looks at the regressive nature of the carbon tax and the reduction of VAT to 9% is included in this. I have a query on this. Are we making the assumption that this lowering to 9% of the VAT is going to be passed onto the customer, when realistically, it is my understanding that it was viewed as help for small businesses by absorbing the reduction on the balance sheet rather than passing it on? Perhaps the Minister could clarify that, and also put on the record that social welfare increases will not be locked in as we are being asked to lock in this regressive tax.

I have another question. It relates to the view that I think we need to be taking, in a progressive sense, to deal with the climate crisis. We know that this State is already Europe's data centre capital, with 54 data centres here, and another 31 for which planning permission has been approved. By 2028, data centres and other large users will consume 29% of Ireland's electricity, according to EirGrid, and worldwide, data centres consume about 2% of electricity - a figure that is set to reach 8% by 2030. Few countries, if any, will match Ireland's level of consumption. This surge in the processing industry will increase Ireland's already excessive carbon emissions, and offset any meagre process that might result from the carbon tax, which as I have said already, punishes those in lower income households, and as we have seen, also punishes those in single-parent households. It seems obvious to me that any talk of a carbon tax as a means to transition to a lower carbon economy needs to begin with these data centres.

I want to echo the comments of Deputy Farrell in respect of data centres. I am not going to go into the argument today, as the Minister knows my views on the issue very well, but the one point I wish to add to Deputy Farrell's argument is that every other example of where there are large numbers of data centres, they are part of a very large electricity network. That is not the case in Ireland, where we have an isolated stand-alone grid, and we are disproportionately impacted upon by the large number of data centres here. However, I will leave it for another day to go into that particular debate.

I wish to return to a number of points made by the Minister. He has made the point that this money is being ring-fenced for the most vulnerable and targeted towards them. I have here in front of me correspondence from Galway County Council. The midlands energy retrofit pilot programme, into which the carbon tax from last year was invested, is intended to target local authority houses across the midlands, most of which are in energy poverty, to try to support them in insulating their homes to bring them up to the highest possible insulation standard. I think we all agree that people in local authority homes across the country do need to see this investment. However, in the case of Galway County Council, its application for funding for local authority houses was only partly approved, because the Department advised it that it would only fund local authority houses that were in an an estate containing a mix of both council and private houses. Where it was exclusively a local authority housing estate with local authority tenants in it, they were automatically excluded from this retrofit programme. Rural local authority houses were also excluded. I have already made the argument to the Minister that people living in rural areas are disproportionately impacted upon by carbon taxes in the structure that exists. Local authority tenants living in rural houses were deliberately excluded from having the retrofit carried out to their particular homes. Therefore on one hand we are saying that we are targeting the most vulnerable, then we are excluding the most vulnerable. That is wrong, and not just in relation to this issue. This is an approach that has been taken by Departments of housing and local government, and local authorities across the country for years, where previous retrofit programmes deliberately excluded anyone that was in arrears. In many cases, they were the people who were struggling to pay their energy bills yet they were put to the back of the queue in terms of having any upgrade carried out on their homes. Again now, we are seeing that those living in rural areas, who are the most rurally isolated deprived families in the country, are being deliberately excluded by the Department of Housing, Local Government and Heritage, in terms of having the retrofit carried out on their homes, and when we are talking about housing estates that contain exclusively local authority tenants.

I asked the Minister a question about how much of the €27 million in carbon tax that is to be collected from farmers is going to be put back into schemes to reduce the carbon footprint in respect of agriculture. There is not any, because those initiatives are not there at the moment, yet we are taxing that particular cohort of the population. I think the Minister is being a bit disingenuous about what I have said on the issue of incremental jumps in carbon tax. The Minister knows well what I am talking about because I have put it in writing to him, I have articulated it to him and I have put it to the committee prior to this occasion. What I am talking about is introducing a completely different structure to carbon tax, and bringing it in on an incremental basis. I accept that we need to have environmental taxes, but the core principle behind environmental taxes is that they should not bring in revenue, rather, they should be revenue neutral and should motivate people to actually change. That is what environmental taxes are supposed to be about, instead of a confrontational approach. For example, if we use targeted investment, we have an opportunity to actually reduce the carbon tax which motorists pay on diesel by up to 50%, as well as dealing with the problem that we have in respect of waste oils. It is possible to blend renewable oils such as hydrotreated vegetable oils at a rate of 50% into our existing diesel that is used in transport and the agricultural sector, and there does not have to be any alteration to the existing vehicles. That would slash the amount of carbon tax by 50% that people are actually paying in those sectors, which are two of the most difficult sectors to deal with. We need to introduce a taxation model in this country that actually suits the Irish situation; we should not just copy and paste the models coming from Europe. The carbon tax model that we are implementing here will work very well in continental Europe, where there are high densities of population very close to public transport in urban areas. In Ireland, 37% of the population lives on 96% of the landmass of the country, which is the most dispersed rural population in Europe, so we need to introduce carbon and environmental taxes here that reflect the type of society and economy that we have, bringing about real change, rather than increasing revenue to the Exchequer.

I refer back to a point Deputy Mairéad Farrell raised about the Green Party policy on carbon tax. The carbon tax and dividend model was shown by the ESRI to be the most progressive method of introducing a carbon tax in order to induce the behavioural change required to reduce emissions. That is Green Party policy but that is not what was agreed in the programme for Government. What was agreed was the hypothecation of the carbon tax in a number of areas to retrofit homes throughout the country, starting with those most at risk of fuel poverty and the most poorly performing housing stock. It was also aimed at social protection measures to protect those on lower incomes who are most vulnerable to the cost of the carbon tax. The third leg is agricultural supports, to which Deputy Denis Naughten referred, to assist and support farmers to sequester carbon and protect our environment, as well as schemes like the rural environmental protection scheme. Those factors are built into the carbon tax model. The ESRI was tasked with looking at and researching our recent budget and it showed that this was the most progressive and supportive model for families on lower incomes. In that regard, our carbon tax is progressive.

I, too, share the concerns about data centres and how power-hungry they are. They are being drawn here because of our cool climate, which is attractive to them, as well as our reasonably secure power supply. Earlier today, the Joint Committee on Housing, Local Government and Heritage discussed the Marine Planning and Development Management Bill, which will result in a massive increase in offshore renewable energy and build resilience into Ireland's energy supply. We must move away from fossil fuels, which create carbon emissions, which are the problem. I just wanted to make those points in response to the points raised by Deputies Mairéad Farrell and Denis Naughten.

Deputy Mairéad Farrell wants to come back in. I want to cover everything this time if we can because the amendments have been withdrawn and we are now discussing the section.

The point I am making is that we are being asked to agree multi-annual increases in carbon tax but on the other side of the fence we are not seeing an agreement or a commitment to a multi-annual increase in social welfare.

I will come back very briefly on the comments Deputy Matthews made. He is correct about the commentary by the ESRI. If the ESRI looked at a continental European model relating to the introduction of carbon taxes, then its commentary may very well be correct. We need to design carbon taxes that reflect the actual situation here in Ireland. That is not happening and is not being looked at.

Deputy Matthews is right to express concern about data centres, but, as the Minister for Finance and I know, offshore renewables are not going to resolve this issue. It will be a decade at least before there is any significant development in offshore renewables coming onto the grid. The difficulty is that many data centres will be coming on stream in a very short period. Meeting our 70% target will require a trebling in the number of onshore wind farms and a trebling in the size of existing wind turbines. That is if we are going to meet that 70% target based on the current modelling.

I will deal with each of the points made by the Deputies. On Deputy Mairéad Farrell's point, there is a very clear commitment in the programme for Government to increase social welfare allowances. It is a matter for the Minister for Social Protection to decide if automatic indexation should be granted in respect of certain payments. It is likely that new payments and new forms of payment will be needed in the future to ensure we continue to stand by what we have done in the last number of budgets by putting in social welfare changes to protect the most vulnerable. In budget 2021, the increase of €2 per week in the qualified child payment is specifically in place to support low-income families with children. There is also an increase in the living alone allowance of €5 per week and an increase in the fuel allowance of €3.50 per week. This is a repetition of what we did in the previous budget, which included an increase in carbon taxation.

As Deputy Matthews noted, analysis undertaken by the Department of Finance using the ESRI's simulating welfare and income tax changes, SWITCH, model, indicated that households in the first five income deciles will see increases in their disposable income as a result of the measures that have been implemented. Those who would be most affected by changes in carbon taxation will be protected the most because of the changes we are making in our social welfare code. I do not know what assumption was made about the pass on in retail pricing in the SWITCH model but last year, when we did not make any changes to the VAT rate for the hospitality and service sector, the model used by the ESRI at that point also indicated that those on the lowest incomes would be protected by the social welfare changes that were made.

The Deputies make an important point about data centres. I debated this matter with Deputy Denis Naughten when he was Minister, as he acknowledged a moment ago. We need to have a discussion on how we can ensure the continued protection and resilience of our energy systems if more data centres are located in our country. The data centres being referred to are often accompanied by jobs in other locations in the companies building these data centres. It would be fair to say that the data centres themselves do not employ many people once they are up and running. The job activity tends to be in the construction of data centres, rather than their maintenance and operation. However, they then form the kinds of investment and activity located here in Ireland that give us a better chance of retaining the jobs delivered by these companies in other locations. While we need to evaluate how to ensure the growth of data centres does not undermine the resilience of our energy systems, they still play a valuable role in the overall mix of things we need located in our country to retain some of the larger international investment.

I will follow up on the point made by Deputy Denis Naughten about Galway County Council. I was not aware of the correspondence to which he has referred and I cannot see why retrofitting and spending by the local authority should be dependent on the housing estate in which the local authority homes are located. I will follow up on that. I am not sure what the argument behind that is.

A local authority home is a local authority home regardless of where it is located. I was involved in the original decisions behind this scheme and it did prioritise local authority housing but I do not recall any discussion regarding where the local authority housing is located. Deputy Naughten might give me a copy of that correspondence when we next meet and I will follow up on it.

On his point regarding the design of the scheme and ensuring that it reflects the particular qualities of our country, I believe it does in terms of the manner in which we are allocating the revenue that comes from the higher level of carbon tax. The Deputy made a point regarding the type of environmental programmes that are needed to support farmers in moving to lower carbon use. He may be aware that there was an additional allocation in Budget 2021 of €20 million which is designed to pilot new schemes to help offer lower carbon solutions to farmers. I will be open and make the point that the contribution made to that scheme by the higher level of carbon pricing is €3 million to €4 million of that €20 million, but that work is still going ahead. It is going ahead in recognition of the point Deputy Naughten makes regarding a potential risk that those who are affected the most by some of the changes that we are referring to are those who have the lowest levels of access to public transport and would not be living within our cities. I will relate this to something I know is very important to Deputy Naughten, namely, the national broadband plan. It is the reason we are going ahead with this plan. Deputy Naughten and I can recall the difficulty involved in the discussions in regard to this matter. Ultimately, it is going ahead in order that those who commute into cities might have a chance to commute into villages that are near them instead to work in, for example, hot-desk centres or businesses that have located to towns and villages away from the busier cities or so that we are moving to the kind of hybrid work model that the Deputy and I discussed earlier in the debate on the Finance Bill. One has to view this issue in the round. For me, one of the strongest reasons for going ahead with the national broadband plan was the need to find a different way of addressing the issue raised by the Deputy.

I concur with the point made by Deputy Matthews. As he said, we ultimately did not reach agreement in regard to a full fee and dividend model although we had a lot of discussion on that point in the programme for Government negotiations but we did compromise on a model that has ensured that all of the revenues raised by higher levels of carbon taxation are being spent on priorities that, for example, had been raised by the Green Party and others. We do recognise that there is difficulty involved in this change and we are using this money to support families, businesses and farms in dealing with the consequences of that change.

I note Deputy Mairéad Farrell and Naughten have indicated. We have discussed this issue at length but I will allow a final round of questions on it. I ask the Deputies to be as quick as possible.

On a point of clarification, in the distributional analysis of tax and welfare changes in Budget 2021 the reduction in VAT was counted as progressive and partially offsetting the increase in carbon tax. Can the Minister clarify if he expects this measure to be passed on to consumers or as a business support to be absorbed by the business balance sheet? If it is the latter, will he accept that it should not be factored into the distributional analysis carried out by his Department? Separately, the VAT reduction is temporary, as are certain social welfare measures, so will he commit in this committee to multiannual welfare increases in every year to 2030 in line with these sections of the Bill?

I would like to comment briefly on the Minister's responses. In terms of data centres, we all accept that the direct economic activity from data centres is minimal. Using the construction dividend in terms of it is undermining our housing programme across the country. The Minister is correct that once these data centres are completed the amount of direct jobs generated is small. In terms of indirect jobs, I fully accept the argument that is being made in that regard. We have far more data centres being developed in this country than just those linked to high value jobs across our economy.

As I have said previously to the Minister at Cabinet, I believe it is immoral that families across this country who are struggling to pay electricity bills should be subsidising the cost of electricity supplied to data centres across the country. I firmly believe that is immoral and I argued vehemently in that regard at Cabinet, as reflected in the Government policy statement issued on the matter. This particular element of the commitment in that policy statement has yet to be implemented. We need data centres paying for their own costs in terms of the electricity infrastructure that is being put in place and in terms of the generation of green electricity. This cost should never be put on the backs of struggling families across this country. I accept the type of model that is being introduced here in terms of carbon tax is an allocation of revenue approach. This is where we fundamentally differ. I believe that if an environmental tax is structured well it should not create the revenue in the first instance. It should motivate people to change and avoid the tax being generated in the first instance. That is the difference between our two approaches in regard to this issue.

I will make two final points. In terms of agriculture, the Minister will know that the €3 million that is being invested this year in the pilot environmental scheme is the same €3 million invested last year in the pilot environmental scheme that never went ahead and is now being rolled over into next year. I made the point earlier that none of the €27 million that will be paid out of farmers' pockets next year in carbon taxes will go back into the agricultural sector. That is the fundamental weakness in terms of the model and approach that the Minister is taking at the moment.

The Minister is 100% correct that the national broadband plan is very much about reducing the emissions profile of people in rural communities. I know that the Green Party had opposed it in opposition. The leader of the Green Party was very critical that his own constituency would end up with poorer broadband than rural areas and he did not agree with it for that reason. Is that the reason there is no additional money being put into the national broadband plan over and above the money that the Minister and I agreed to be invested next year to help fast-track the delivery of the national broadband plan, which we both agree would help to reduce the emissions profile of people living in rural communities?

I will allow the Minister to make a brief response before I put the question. The debate has been exhausted in regard to the subject matter under discussion.

I think I have covered the points made but I can restate them again. Before doing so, from an IT point of view I am seeing two pictures of Deputy Naughten when he speaks but only one of everybody else. Perhaps that is a good thing.

That is because my point is twice as important.

The price of that, unfortunately, is that Deputy Mairéad Farrell's picture is blurred. While I can still hear her, I cannot see her that well.

Deputy Farrell can rest assured I can still hear her points. Deputy Naughten is in technicolour glory, whereas Deputy Farrell is a little more analogue at the moment.

It must be the broadband up here.

The reception is beginning to break down now at my end.

I will keep on going, and if there is a difficulty in what I am communicating I know I will not be short of committee members to tell me.

I thank the Minister.

Regarding the point Deputy Mairéad Farrell put to me about VAT, it is going to vary from business to business. Some businesses will pass it on while others will not. I know the VAT reduction is a move that Sinn Féin was supportive of. In my response to the Deputy about this point earlier, I specifically said I was not sure how the ESRI counted for the VAT move in this year's model. I thank her for reminding me, and for telling me what it did, but I also said that in last year's modelling of this, which did not take account of any reduction in pricing, because the VAT levels were unchanged, it still did find that the measures we took in last year's budget to offset the increase in carbon taxation did protect the most vulnerable. Our commitment to continue to do this is laid out in a programme for Government commitment. I will pass on to the Minister for Social Protection, Deputy Heather Humphreys, the point on whether certain payments should be indexed as well, but it may be the case that new payments need to be created to deal with the challenge of continuing to protect families that have the lowest level of income from changes that are happening with carbon taxation.

In response to Deputy Naughten, we have covered off the issue concerning data centres. The reason more money was not put into the national broadband plan is because the Minister for the Environment, Climate and Communications, Deputy Eamon Ryan, told me that the main difficulty we have in accelerating the roll-out of the national broadband plan next year is the logistical difficulties of trying to accelerate the pace of work, rather than funding. If it is the case that funding can be put in place to accelerate the roll-out of the national broadband plan there will be other opportunities to fund it later in the year. The national broadband plan is the other piece in this jigsaw.

Regarding the point Deputy Naughten made about the €3 million, I did make reference to €20 million. Overall, the fund is €20 million. I did say that €3 million of it was coming from carbon price and carbon taxing again. It is a fair point. This may be the continuation of the €3 million from last year's budget but the €17 million extra is not.

Question put: "That section 26 stand part of the Bill."
The Committee divided: Tá, 6; Níl, 4.

  • Donohoe, Paschal.
  • Durkan, Bernard J.
  • Matthews, Steven.
  • McGuinness, John.
  • O'Callaghan, Jim.
  • Richmond, Neale.


  • Barry, Mick.
  • Doherty, Pearse.
  • Farrell, Mairéad.
  • Naughten, Denis.
Question declared carried.
Question put: "That section 27 stand part of the Bill."
The Committee divided: Tá, 6; Níl, 4.

  • Donohoe, Paschal.
  • Durkan, Bernard J.
  • Matthews, Steven.
  • McGuinness, John.
  • O'Callaghan, Jim.
  • Richmond, Neale.


  • Barry, Mick.
  • Doherty, Pearse.
  • Farrell, Mairéad.
  • Naughten, Denis.
Question declared carried.
Question put: "That section 28 stand part of the Bill."
The Committee divided: Tá, 6; Níl, 4.

  • Donohoe, Paschal.
  • Durkan, Bernard J.
  • Matthews, Steven.
  • McGuinness, John.
  • O'Callaghan, Jim.
  • Richmond, Neale.


  • Barry, Mick.
  • Doherty, Pearse.
  • Farrell, Mairéad.
  • Naughten, Denis.
Question declared carried.
Question proposed: "That section 29 stand part of the Bill."

It is somewhat ironic that we are talking about excise duty exemptions for NATO and EU military forces just after we talked about carbon tax increases which will affect households with lower incomes most. These big military forces have a massive impact on the environment. The US military is one of the largest polluters in history. It consumes more liquid fuels and emits more climate-changing gases than most medium-sized countries. The F-15 fighter jet uses 25 gallons of fuel per minute, or 1,580 gallons per hour. My mind boggled when I saw this come up in the Finance Bill. Will the Minister provide an explanation as to why he is proposing this because I cannot see any rhyme or reason to it?

We are discussing parts of the Bill which provide for tax exemptions for NATO forces and European security and defence forces and other arrangements. One section allows for excise duty to be waived while another allows for VAT to be waived. This applies to canteen facilities, which would include food and drink. This may apply in a variety of circumstance, including when troops are here on exercises, manoeuvres and so on.

We have to put this matter in a certain context. Part of that context is the presidential election in the US. A new Administration is due to come to power in January. Another backdrop to this is the issue of Brexit. At this juncture, powerful forces within Europe, particularly the German and French states, are pushing for the increased militarisation of Europe. Yesterday, the French President, Emmanuel Macron, talked about the European Union building up what he described as security autonomy. Effectively, this means the militarisation of Europe. Today, the German defence minister has put forward a view which is slightly different but which points in the same direction. She suggested that Germany and Europe, while not replacing US forces in Europe, need to take more responsibility within the framework of the so-called shared relationship. The push for militarisation in Europe is not unrelated to the EU directive which puts an onus on each EU member state to waive excise duty and VAT for NATO forces and EU security and defence arrangements in respect of canteen facilities in various countries which, as I have said, include food and drink.

I suspect that the Minister will argue that this is an EU directive of no major consequence, that the sums of money that would accrue to the State if those VAT and excise duty arrangements were to remain in place would not be significant, and so on. There are two points I would make in that regard. First, it is of symbolic importance that we say no to militarisation and to the militarisation of the EU. Second, it is not impossible to push back against an EU directive. This can, and should, be done in this case.

My second point is that while big sums of money are not currently involved, the fact that we are being asked to implement an EU directive of this kind may point to the possibility that in the future, if not next year or the year after then maybe some years hence, more NATO activity or EU military activity will be taking place in the State. I refer to battle groups and the like. It is fair to ask whether there is a connection.

The final point I would make on this issue is that this Finance Bill has been put forward by the Government parties - Fianna Fáil, Fine Gael and the Green Party. It does not surprise me in the least that Fianna Fáil and Fine Gael are putting their names to this measure but attention should be drawn to the fact that this policy is being backed by the Green Party and its representatives. The Green Party made a name for itself and built a reputation in this country in part due to its opposition, in words at least although sometimes in deeds, to the militarisation of Europe and to the politics of militarisation. The fact that the Green Party is signing up to this policy, however small it might be, is a real sign of that party's direction of travel and of how it has left behind some of its best traditions. As I have said, this has symbolic importance at the very least and we should say no to it. That is why I will be voting against these proposals.

This section amends section 104 of the Finance Act 2001 to align Irish excise legislation with the provisions of the EU general excise directive. This directive requires member states to apply a relief to excisable products that are supplied to the armed forces of any state which is a member of the North Atlantic Treaty other than the armed forces of the EU state within which the excise duty is chargeable. It also requires that a similar relief be applied, with effect from 1 July 2022, to forces of member states undertaking a common defence effort under the European Union’s common security and defence policy, other than the armed forces of the EU state within which the excise duty is chargeable. This amendment is therefore necessary to transpose relevant provisions of the general excise directive into Irish legislation.

In response to the point made by Deputy Mairéad Farrell, it is important to note that the provisions of the general excise directive that are being transposed are already applicable in Ireland as the directive is directly applicable to Irish law in this regard. This does not arise as an issue in Ireland because the provisions only apply to the delivery of excisable products within a member state intended to be used by the armed forces of another member state or their accompanying civilian staff.

As there is no change to the constitutional provisions relating to armed forces, which effectively prohibits foreign forces being based or maintained within the State, I do not expect these excise provisions to change anything. To be very clear, in order for this to be a charge on the State it would require foreign forces to be present here in such a way that they can claim this excise relief. As the Green Party, Fianna Fáil and Fine Gael are very clear in standing over the constitutional provisions on neutrality this is not a matter that will occur. The longstanding foreign policy priority of protecting the neutrality of our country is utterly unchanged by this. This section is the transposition of something that is a general excise directive and it in no way affects our commitment to our provisions on our neutrality.

On Deputy Farrell's point, because of our standing over our neutrality I cannot see any circumstances in which this would protect or create a charge within our jurisdiction. Deputy Barry's concerns around European security sovereignty and developing a defence capability for the European Union are indeed worthy of debate but they are not affected by the passage of this section.

For clarity, the Minister is saying that as we are supposed to be a neutral State this section will not be applicable to anyone and it will not be enforced at all. I do not understand why this section needs to be provided for. I need more clarification. The Minister is saying that because Ireland is a neutral State there will not be any impact by this at all. Will the Minister clarify what the impact will be?

I have two points. The Minister has said that Irish neutrality is safe in his hands. He did not say those words but that is the gist of it. The problem here is that I do not believe that. There are other parties and other Deputies in the House, and plenty of people in society, who do not believe that. We could point to many examples, but none that illustrates the point more clearly than what has been happening at Shannon Airport for many a long year. The question raised by Deputy Farrell is a very strong point. Why would the Minister introduce a policy that is never going to be used and will never have any consequences, unless it is going to be used at some stage and it does have some consequences. One could flip it on its head and say that because it is never going to be used and because it is never going to have any consequences we are not going to bring it in.

A charge on the implementation of the section can only arise if armed forces from another member state are in our country and, particularly from 1 July 2022 onwards, undertaking a common defence activity, which would be under a Common Security and Defence Policy, CSDP, framework. Because our neutrality is very clear, those circumstances will not arise in our country. As to Deputy Barry's question on why I am going ahead with the implementation of this directive, if I do not go ahead with the directive now that I am aware of this issue I would have to seek a derogation from it. I tend to seek derogations in matters that would materially affect our economic or political interests as a State. This section is not one of those things.

If we want to state clearly and categorically that we are a neutral State then we absolutely should be pushing back on this. I believe there is no question on this matter. The mind boggles that this was not already pushed back before it was brought to this point. If we want to make it very clear, and we need to be a lot clearer, that we are a neutral State then we should be pushing back on this. I ask the Minister for Finance to do that on behalf of the State.

This measure does not affect our neutrality. If we are looking to send signals about our neutrality we will find far better opportunities, and there might be a far greater need in the future, than with regard to the implementation of an excise directive. This does not influence our neutrality. I am bringing it in because to use a derogation on an issue I do not believe will arise inside our jurisdiction is not a good use of a derogation on behalf of our country. A liability only arises if an activity takes place in our jurisdiction. This will not present a charge to us in the future. The commitment we have to our neutrality is clear and unaffected by this.

On the back of what Deputy Farrell has said, the importance of her statement should not be lost on a committee of the Houses of the Oireachtas. Is it not the case that this is the first time we are entering into Irish law provisions that would apply if there was a foreign army in the State? It is not insignificant. The intentions of the Government in the future on neutrality is one thing, and we would all question how that has been eroded, but this section actually provides for circumstances where a foreign army in the State would be tax exempt in relation to VAT. It is a wild statement, and if it was suggested a couple of years ago that this was something that could be countenanced one would say: "You are daft and off your head, of course no Irish Government would be putting such a piece of text into Irish financial law." No harm to Deputy Matthews, but it would definitely not be one to be supported by the Green Party. I hear what the Minister has said on what the triggers would be for this section to apply, but nonetheless this text suggests that in certain circumstances this would apply. It is quite significant that we are even putting into Irish law preparations that would allow for provisions to apply if foreign armies were in our State.

There have been foreign armies on our island for the past 800 years but that is a different matter and it would take us all night to discuss that. What is being asked is significant and it should not be lost on anybody. There was a way to deal with this through a derogation but instead the Government has asked us to amend the law to allow for this type of circumstance, which nobody should do, especially those who value neutrality and who have a concern with the slippage in neutrality.

I mention the Minister's old buddy who is in with the heads of the vulture funds and banks, former Deputy, Brian Hayes. Does the Minister remember the document he brought out on behalf of Fine Gael called Beyond Neutrality? That was an official policy document at the time, which stated that we needed to go beyond neutrality. This is significant and on that basis this should be opposed.

I want to respond to what Deputy Doherty said. It is an equally significant statement if a member of Government reassures the committee that this does not impact on our neutrality. At the start of her questioning to me, Deputy Farrell asked how a charge could be created and I explained that because of our neutrality, a charge would not be created due to the implementation of this directive.

Deputy Doherty referred to other strands of opinion within Fine Gael and that is a strand of opinion that I do not agree with. I believe our neutrality is an essential element of our foreign policy identity within the EU. Sinn Féin has had, until recently, a poor view overall of the general development of the Union. I have to protect and negotiate on behalf of our country within the EU and it is my recommendation to this committee that use of a derogation on this matter is not a good way to manage such derogations. It is implementing an excise directive, which will have no effect on our neutrality whatsoever.

For the first time, we are legislating for how taxation would apply to NATO troops in our State. The Minister should not lose the significance of that. He is asking Oireachtas Members in a neutral country to legislate for that, which is serious. He pointed out the different strands of opinion within his party - and I accept he does not share those opinions - but that was the official policy of the party at that time in the policy document authored by former Deputy, Brian Hayes, and there are others who have different views. We understand that this would not be triggered today but it could be triggered in the future and for the first time ever, the Minister is asking us to legislate to allow for how this would have an effect for taxation purposes on NATO troops on our soil. How could we support that when there are other options? The Minister contended that a derogation should not be sought but we get derogations on many issues. He also contended that the easier option is to legislate for the first time for foreign NATO troops on Irish soil and what that would mean. That is not acceptable.

The context and the timing are missing from the debate. We are having this debate at precisely when in the past 24 hours there have been key statements from the French President and the German defence minister basically calling for the EU to step up its spending and its emphasis on so-called defence. In reality, this is a push for the militarisation of Europe. That is the background and the context from the past 24 hours that debates of this kind are being held in.

The Minister speaks as though he has a limited number of derogations that he can push the button on in the same way one has a limited number of chips in a poker game or something like that. There is no limit. There is no problem or particular consequence if Ireland says it will not agree to this and will not sign up to this. Whatever about the immediate practical consequences, there is an important symbolic consequence to Ireland speaking out strongly and clearly saying that we are fundamentally opposed to this militarisation that is being promoted in the past 24 hours. This is a small but significant way in which that point can and should be made.

I will allow Deputy Farrell in but this will be the final intervention. Hopefully, we can bring this to a conclusion soon because we will run into time problems in the not too distant future. I ask members to give their winding-up contributions now.

I want to come in on the excellent point Deputy Barry made. We are seeing a massive increase in military spending in the EU. Between 2004 and 2006, €65 million was spent and now we are looking at billions of euro. We have also agreed to the permanent structured co-operation, PESCO, which sees an increase in our military spending so I agree with Deputy Barry. It would definitely be a strong pushback from this committee and State to show we are a neutral state and that we want to remain so if we sought this derogation.

I agree with Deputy Barry that context is all here. The context of this is a long-standing commitment to neutrality on behalf of the Irish State and the idea that the implementation of this section in any way diminishes or affects the commitment that we have to our neutrality is completely wrong. Furthermore, if at some point in the future, a Government was in a situation in which it was making a decision on the presence of NATO forces in Ireland, the ability of that Government to claim relief on excise duty would not be a relevant factor in that decision. The context is all and this does not affect our commitment to our neutrality.

Question put:
The Committee divided: Tá, 6; Níl, 4.

  • Donohoe, Paschal.
  • Durkan, Bernard J.
  • Matthews, Steven.
  • McGuinness, John.
  • O'Callaghan, Jim.
  • Richmond, Neale.


  • Barry, Mick.
  • Farrell, Mairéad.
  • Kerrane, Claire.
  • Tóibín, Peadar.
Question declared carried.
Sections 30 and 31 agreed to.

Amendment No. 135 is out of order.

Amendment No. 135 not moved.
Question proposed: "That section 32 stand part of the Bill."

I will comment on section 34 as well as section 32 to avoid repeating myself later. I have an issue with the worldwide harmonised light vehicle testing procedure because it is nothing more than another three-card trick. We have seen what happened previously with Volkswagen and some car manufacturers whereby they used sleight of hand in terms of the emissions from their vehicles. While we now have a harmonised system for measuring emissions, a laboratory test is still being used to set the emissions for these vehicles rather than an actual emissions profile.

The reason we need to move away from laboratory tests and directly link emissions profiles to motor tax for vehicles is that it will bring about the type of transformational change needed in transport emissions, without having to go down the road of raising carbon taxes, which we spoke about earlier. This has already been proven. If one recalls when the Green Party were last in government, it altered the motor taxation system to incentivise the purchase of diesel vehicles. The scheme was a phenomenal success, far more successful than anyone had expected at the time. In fact, its success has led to a problem with air quality in our cities caused by particulate matter because we discovered that diesel vehicles are far more polluting and damaging to air quality and life expectancy, particularly in cities, than petrol vehicles. When I was a member of Cabinet I made a submission on this to the Minister, and I previously made a submission to the committee on climate change. If we were to replicate the measures that were taken over a decade ago when the Green Party was last in government and altered motor tax on the basis of the actual emissions profile of vehicles, that would be a far more effective tool to drive the type of change we need. It would also act as a very effective congestion charge.

People living in Dublin who choose, despite having a bus route outside their door or access to the Luas, to sit in their diesel vehicles and drive 5 km to and from work on congested roads, have an emissions profile for their vehicles that is far higher than the profiles under the worldwide harmonised light vehicle testing procedure standards. A vehicle that travels long distances from a rural area would have a profile much closer to those in the laboratory tests because it is being driven at a much more efficient rate than vehicles in urban areas. My proposal would also incentivise people who travel and commute long distances to drive at 100 km/h rather than 120 km/h. As we all know, vehicles travelling at 100 km/h are far more efficient and produce far less emissions than vehicles travelling at 120 km/h. In the past, it was suggested that the speed limit on motorways be reduced to 100 km/h. If we used the actual emissions profile of each vehicle, we would not need to alter the speed limit because people would reduce speed by osmosis. This change would also encourage people to avoid travelling in rush hour and park their cars a bit further away from school or work and walk the last kilometre, thereby reducing the emissions profile of their vehicles.

How then do we measure the emissions profile of vehicles? This could be done through an altered national car test using new technology. If, at the end of the national car test, drivers received a certificate detailing the emissions profile and they taxed their vehicle based on that profile, it would be a far more effective tool. It would also incentivise people to choose HVO, which I spoke about earlier, as it has a reduced emissions profile compared with ordinary diesel. It would encourage people to convert diesel vehicles to natural gas or switch to petrol, hybrid and electric vehicles, which would be more efficient. Over time, this would be a far more effective tool in driving the type of change we need to see in Irish society. I know this would be unique to Ireland but it is the way we should go. For this reason, I oppose the approach being taken in sections 32 and 34.

When we analyse the impact the measures in section 32 will have, we see that they are focused on electric cars that cost between €35,750 and €46,500. Does the Minister agree that the distributional benefits of this measure are geared towards higher earners?

I will deal with the different points that were raised. In response to Deputy Mairéad Farrell, some cars that have the lowest possible CO2 emission, which would be in the first band of vehicle registration tax, VRT, are clearly more expensive than the average car, but plenty of cars on the lower bands of VRT, bands 2, 3 and 4, have a very low level of VRT and are not the most expensive cars in the market. When we are designing a structure like this, we need to give the lowest VRT rate to the vehicles that have the lowest emissions. However, other bands have very low levels of VRT for cars which are not the most expensive energy-efficient cars on the market.

Deputy Naughten is correct in stating this is a laboratory test. However, it differs from the other kind of testing that has happened in that it is laboratory testing that more accurately simulates road conditions. I disagree profoundly with the Deputy that this is in any way a three-card trick. This is a method of testing CO2 emissions that is significantly more accurate than the discredited system that preceded it. He asked if we should have a system that relates the VRT rate to the expected CO2 emissions from the vehicle. We have that in the model that is being proposed because the vehicles with the highest emissions have the highest rate of VRT, as the Deputy will know. He is suggesting that we have a VRT model that reflects the actual usage of the car. I am not sure how we could do that with VRT because VRT is charged at point of purchase of the vehicle.

Regarding us having a different system of testing, this will become an EU-wide system of testing as other countries implement the Worldwide Harmonised Light Vehicle Test Procedure, WLTP, system. It would not be feasible or even possible for us to have a non-WLTP testing methodology, particularly as a country that imports cars. We need to have and now have an EU-wide form of testing car emissions. It is, of course, up to us to then decide on how we want to tax based on WLTP, and there are choices regarding the VRT table that is before the Deputy.

This is a significantly more credible way of testing CO2 emissions than what went before it. I have tried to make lower VRT rates applicable across a broader range of vehicles. I am trying to get the balance right between introducing changes that are needed and trying to reflect that this, of course, will cause change in the purchases of vehicles, which in turn will have an effect on car sellers in the State. I think we have the balance right in the measures proposed here.

I call Deputy Naughten. If it were possible-----

I know; I am watching the clock.

----- to conclude before 6.40 p.m., it would be helpful, and we could start afresh in the new section.

I accept that VRT must be charged at point of entry and it is not possible to use an actual emissions profile for that. The point I am making is that the Worldwide Harmonised Light Vehicle Test Procedure is still a laboratory test. It is very dependent on the preconditions applied to the model. That model, which has been enshrined in section 32 of the legislation, is then being used in section 34 as the basis for motor tax. I accept that a tax at the point of purchase will need to be on whatever the manufacturer's profile of the vehicle is; we have no choice in that. However, if following subsequent NCTs, that vehicle is taxed based on the actual emissions profile as certified by the National Car Test centre, it would act as a major incentive for people to avoid congested streets, to use public transport, to use their vehicle in a far more efficient way, to park their car and walk the last kilometre and, to avoid the congestion which is the dirtiest part of any vehicle's journey. The same applies in the vicinity of schools. It would transform air quality in our towns and cities overnight and would provide motorists with an actual output showing the emissions profile from that vehicle.

Over time as the database builds up, that can be reflected in alterations to the VRT. It might reflect, for example, that the world harmonised model does not work in this country for car A whose actual emissions profile is significantly higher than that. With another vehicle it might be significantly lower, based on the actual data readings in Ireland. The principle is that the motor tax on vehicles should be based on the actual emissions profile of the vehicle rather than being solely dependent on a laboratory test that will not alter over time. Therefore, a ten-year-old vehicle will have a higher emissions profile than a vehicle that has just left the factory. However, if their WLTP ratings are the same, the exact same motor tax will be paid on both vehicles. As we know, motor tax here is a far greater motivator of change than any other form of vehicle taxation.

Is there any possibility that we can conclude before 6.40 p.m.?

I will keep my comments very brief. It is possible that we could move to the form of taxation the Deputy is proposing, but it is a medium-term project. At the moment our NCT centres do not have the technology to do the kind of real-time CO2 emissions testing he is referring to. We could move to that point over time but it is a medium-term project. What we have here is a significant improvement on where we were in the past and will make a big difference to the purchase of cars that have a less harmful effect on our climate and environment.

I will briefly make reference to the further changes I am making to the NOx surcharge, included in this section. It is a response to the point Deputy Naughten made about NOx particulates at the start of the section.

Question put and agreed to.

In the next session, I believe we will proceed to section 45 because the officials are changing.

Sitting suspended at 6.40 p.m. and resumed at 7.22 p.m.
Deputy Neale Richmond took the Chair.

This meeting is scheduled to go to midnight but I suggest that we suspend at a more reasonable time. I am also conscious that several members have tabled parliamentary questions to the Minister for Public Expenditure and Reform and that starts in the Dáil Chamber at 9.45 p.m. I suggest that since we are making quite a bit of progress, we could suspend around 9.20 p.m. or 9.25 p.m.

As this session is to run to 9.20 p.m.,we might pick this issue up at 9.10 p.m. and see how much progress we are making or does the Deputy wish to discuss this suggestion now?

I think it would be better to discuss now as otherwise pairing arrangements would have to be put in place for the committee. When I refer to suspending, I mean until tomorrow morning. I think we can make good progress over the next two hours.

I am in the hands of the members but the Minister is indicating.

I support Deputy Doherty's proposal. We are making good progress on the Finance Bill overall and we can do a fair bit more in the next two hours. We are scheduled to sit all day tomorrow. I do not think that we will need to do that and I think we can conclude the rest of the Bill in more normal working hours tomorrow morning. I support an earlier suspension tonight and our officials will be ready to continue tomorrow morning.

No other members are indicating. As the clerk has not indicated an issue, I propose that this session will suspend at 9.20 p.m. and resume tomorrow morning at 9 a.m., as timetabled. Is that agreed? Agreed.

Deputy Pearse Doherty: I move amendment No. 136:
In page 52, between lines 25 and 26, to insert the following:
“Report on distributional impact of Vehicle Registration Tax Changes through section 33 of Finance Act 2020
34. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on the distributional impact of changes made to Vehicle Registration Tax with respect to certain electric vehicles through section 33 of the Finance Act 2020.”.
I will withdraw the amendment and reserve the right to submit it again on Report Stage.
Amendment, by leave, withdrawn.
Section 33 agreed to.

I move amendment no. 137:

In page 53, line 6, to delete “paragraph (a)(i)” and substitute “paragraph (a)(i) or (iii)”.

Amendment agreed to.

I move amendment No. 138:

In page 55, between lines 11 and 12, to insert the following:

“Amendment of section 92 of Finance Act 1989

35. (1) Section 92 of the Finance Act 1989 is amended—

(a) in subsection (2)(a), by deleting “including such further medical criteria in relation to disabilities as may be considered necessary,”, and

(b) in subsection (5)—

(i) in the definition of “primary medical certification”, by substituting “accordingly;” for “accordingly.”, and

(ii) by inserting the following definition after the definition of “primary medical certification”:

“ ‘severely and permanently disabled person’ means a person who satisfies one or more of the following criteria:

(a) the person is wholly or almost wholly without the use of both legs;

(b) the person is wholly without the use of one of their legs and almost wholly without the use of the other leg such that they are severely restricted as to movement of their lower limbs;

(c) the person has no hands or no arms;

(d) the person has one leg or no legs;

(e) the person is wholly or almost wholly without the use of both hands or arms and wholly or almost wholly without the use of one leg;

(f) the person has the medical condition of dwarfism and has serious difficulties in the movement of their lower limbs.”.

(2) This section shall come into operation on 1 January 2021.”.

I will speak to this amendment as it deals with areas that have been raised by Deputies in parliamentary questions so I will explain the intent.

The amendment provides for the insertion of a new section in the Bill in relation to the disabled drivers and passengers scheme. Deputies will be aware that the medical assessments conducted by the HSE in respect of access to the scheme have been on hold since the Supreme Court decision earlier this year. The Supreme Court found that the regulations setting out the medical criteria underpinning qualification for the scheme were inconsistent with the mandate provided in section 92 of the Finance Act 1989. This amendment brings the medical criteria into the primary legislation.

The measure is designed to address the immediate issue raised by the Supreme Court and allows for assessments to recommence without further delay in circumstances where the legal basis for such assessments is clarified. I consider this to be an interim solution only. While I am very aware of the importance of this scheme to those who benefit from it, I am also aware of the disquiet expressed by Members of this House and others in respect of the difficulties around access to the scheme.

With this in mind I have asked my officials to undertake a comprehensive review of the scheme, to include a broader review of mobility supports for persons with disabilities, and on foot of that review to bring forward proposals for consideration.

I remind the committee that earlier in proceedings, I indicated that assessments in respect of the certificate were recommencing on the back of a communication I issued to the HSE. I wish to confirm again that the commencement of assessments will only begin on the implementation of the Bill.

I know Deputy Naughten has raised this issue previously but it definitely has been coming up on all our contacts. Many people are deeply concerned about this. I hope it will be rectified quickly because it is an issue that is really affecting people's lives.

I welcome the Minister's move in this regard. I also welcome his clarification because his comments to me yesterday were that the scheme was opened up again, which is not the case. I brought this to the Minister's attention just before we came into the meeting. The position is now that there will be no processing of the primary medical certificates until the beginning of next year when this legislation is enacted. The difficulty I raised yesterday with the Minister was that there are 1,500 people who should have a primary medical certificate now who, because of the suspension of the scheme and because of Covid-19 will not have it at the end of this year and the indication I am getting from the HSE is that it will not start to deal with this particular backlog until the new year.

This will be in the context of Covid-19, the vaccination programme and developments relating to that. As a result of the suspension of this scheme, the 1,500 people who should have got their primary medical certificates this year will not get them until some time next year. Those who apply next year will be obliged to wait a considerable period before they get access. In line with the Minister's comment to me yesterday that if there is a problem with this he will look at it, will he give a commitment that he will consider providing some type of additional resource to ensure that this backlog is addressed in a very timely manner?

No other Deputies are indicating. Does the Minister wish to come back in?

I have a brief point to make before the Minister comes in. The Minister stated that this is an interim solution. While I welcome the fact that a scheme will at least now be available, we know the challenges that exist. The restrictions are quite severe. A person needs to have lost both hands or both arms. I am sure every Deputy, including the Minister, is aware of constituents who feel they should be entitled to these certificates and the scheme because of the circumstances in which they find themselves, yet they cannot get certificates. Is it intended that the conditions relating to this scheme will be changed? What timeframe does the Minister have in mind? What are his initial thoughts on this?

I agree with Deputy Mairéad Farrell that this scheme affects the lives of many people. This is why the suspension of the scheme in the aftermath of the Supreme Court ruling is a serious issue. While a number of people are waiting to obtain access to the scheme, I will work with the HSE and raise this matter with the Minister for Children, Equality, Disability, Integration and Youth to see what we can do to process the outstanding applications as soon as possible.

In response to Deputy Denis Naughten, I have already confirmed the processing of applications relating to the scheme will recommence on 1 January next. As I said to Deputy Mairéad Farrell, I will talk to the Minister for Children, Equality, Disability, Integration and Youth regarding what can be done to process applications quickly in light of what has happened this year. This is a very sensitive matter. I anticipate that we will have to assess the current eligibility criteria for the scheme because most of the contact I get is about that. While it will be difficult to pin down the exact time that will be involved in doing this work, I would like to have a report and a conclusion to this process for next year's Finance Bill because this matter has been ongoing for a period and I would like to be in a position to be able to amend next year's Bill in order to deal with the conclusions that will come from this process.

I wish to talk about the timeframe. I hear what the Minister is saying in terms of next year. I do not think there is a Member of the Dáil or Seanad who has not had the issue of eligibility raised with him or her on numerous occasions so it is good that this is being reviewed. I ask the Minister to try to review this as quickly as he can. The Committee on Budgetary Oversight could also have a role in future policy direction on this matter. There is a role for the Oireachtas in its entirety in terms of looking at this issue.

Does the Minister wish to come back in?

I agree with the previous speakers. One of things we must do is determine criteria that are fair and open and that will become applicable across the board. Fortunately or unfortunately, several years ago it was much easier to qualify, it was a much fairer system and it was clearly seen to be fairer. In recent times, I have seen totally contradictory decisions made in different cases. It is no good saying that if a person is missing an arm or a leg, he or she has difficulties. Whether he or she requires the loss of both in order to qualify remains to be seen. I do not accept that. There have been other cases where it appears there was no real compelling reason a person could not qualify at all and did qualify, so those issues must be dealt with in order to bring the scheme into repute as opposed to where it is now, in disrepute.

I will take on board the points that have been made. We will try to get the review done as soon as possible. I am sure there will be an opportunity to hear the views of this committee with regard to it. Again, I appreciate how sensitive the matter of this scheme is but there are some serious issues relating to it that need to be considered and teased out. We will try to get the work done as soon as possible.

Amendment agreed to.

I move amendment No. 139:

In page 55, between lines 11 and 12, to insert the following:

“35. The Minister shall, within three months of the passing of this Act, prepare and lay before the Oireachtas a report on the suitability and operability of a diesel rebate scheme and whether it is sufficient in compensation for the increase in carbon tax.”.

The Minister will be familiar with the matter to which this amendment relates from his conversations with the Irish Road Haulage Association, IRHA. If the Government is going to incentivise a scheme whereby the road haulage sector moves to using trucks with ultra-low emissions engines, this is what we must do. It has been presented before, not as amendment to a finance legislation, but to the Minister through lobbying by the IRHA. It is necessary that the scheme provides for all of the homes where the money will spent but nothing is being spent in the road haulage sector. The gains that could result from an air pollution and air quality perspective would be far greater if this scheme was incentivised. The Minister knows that we are moving towards Euro 6 but in this country, we have a much slower uptake. A total of 35% of vehicles are on what is called the clean Euro 6 engine while 65% are operating off Euro 2, 3 and 4 engines. There is an argument to be made in lots of other ways but there would be a higher and faster return if this scheme was incentivised.

Is the amendment being pressed?

Amendment No. 139 refers to publishing a report on the suitability and operability of a diesel rebate scheme and whether it is sufficient in compensation for the increase in carbon tax.

The diesel rebate scheme was introduced in 2013 in recognition of the prevailing high price of diesel at that time.

I may have confused matters. There are two matters. The Minister is addressing the diesel rebate scheme. I thought we were dealing with amendment No. 156 but it is amendment No. 139. I presented it incorrectly but the Minister is fully aware of what I am talking about. I will explain it to other members if necessary.

I am aware of the matter. I thought the Deputy's comments were relevant to the amendment proposed, which is amendment No. 139. I am aware of the points made on the matter by Deputy Murphy.

I made changes last year to the operation of the diesel rebate scheme, where we doubled the marginal rate of compensation that is available if and when the retail price of diesel goes above €1.07. I know the point being made by Deputy Murphy is that we should have incentives in place to encourage the transition into low-carbon trucks and engines. I understand that in response to her point, the Department of Transport is currently working on the design of a grant to facilitate that. The point she makes is fair, as there are grants and incentives available for change with private vehicles, for example. For commercial vehicles, the kind of incentives that are available are not as comprehensive as they should be.

As I stated, the Department of Transport is currently working on a grant to help bridge the cost differential between conventional and alternatively fuelled vehicles. I understand it is aiming to make this grant available next year. Perhaps the main area of engagement should be on what the grant will be and how it will operate. This is so we can move to a place where the change in vehicles for the heavy duty sector would have effective incentives in place. We want to see a change in engine there just as we want to see it happen with other vehicles.

As the Minister knows, the floor was at €1 and it is now at €1.07 plus VAT. The current increase in carbon tax is not being taken account of for hauliers. I appreciate the Minister's comments about the grant. It is good to hear that and I am sure the hauliers will be very pleased. We must incentivise this as we have done with many parts of the agricultural sector. It is not a highly profitable sector and margins are around 3%. I could not see the majority of hauliers moving fast to upgrade their trucks.

This amendment was presented by the Minister for Public Expenditure, Deputy Michael McGrath, last year when he was a spokesperson for the Opposition. It is the exact amendment. I hope that when we move to Report Stage, the Minister will allow for a report post-Brexit in particular. We do not know how the landscape will be then. It is a sector we cannot do without. We saw through this Covid-19 pandemic that it has not let us down. Shelves were stocked. The sector will come under major pressure post-Brexit. It is already under pressure but after Brexit these will be the workers on the front line. I would appreciate the Minister putting some serious thought and effort into this.

I hope to be in a position by the time we get to Report Stage to give Deputy Murphy an update on the work under way on the grant. As I said, I take her point that we must ensure there are incentives in place to facilitate change.

I understand where she is coming from with respect to her observations on the operation of the diesel rebate scheme. The current price of diesel means the rebate scheme does not offer the degree of support that it otherwise would. If and when the price of diesel increases, the rebate scheme will play a role. I may not be in a position to agree to the report on Report Stage but I hope at that point, in two weeks, I will be in a position to give an update on the work that the Department of Transport is doing on a grant.

I thank the Minister. Everybody understands that the haulier will not get this increase in the carbon tax back and it will have to be passed to the consumer in the form of a double whammy. When haulier costs go up, everything on the shelf goes up. The Minister should bear that in mind. I hope this is not the final result.

Amendment put and declared lost.

Amendments Nos. 140 and 172 are to be discussed together. Is Deputy Pringle moving amendment No. 140?

No. I have the next amendment.

Amendment No. 140 not moved.
Question proposed: "That section 34 be agreed to."

This will see an increase in motor tax for a small proportion of newly registered cars in 2021 and also for cars that have been registered since 2008. I understand the changes will amount to between €10 and €40. Concerns have been raised, particularly with respect to cumulative changes in the Finance Bill for a family with a car. The Society of the Irish Motor Industry, SIMI, has indicated this will push up the price of a family car by approximately €1,000. Will the Minister comment on that?

Our taxation regime, particularly vehicle registration tax, is guided towards emissions and this makes complete sense. We must all recognise that in all of this, not everybody can trade up to a newer car because some people do not have the means to do. I also note the changes for pre-2008 cars mean there will not be any increases in tax there.

There is always a matter that arises and I have raised it on numerous occasions. It relates to families with four or more children, and to travel as a family they need a car with seven seats. They may be described as gas guzzlers but they may be required in order to do the school or football run or getting to a shopping centre with the páistí.

Will the Minister comment on the cumulative effect of these changes, particularly the statement from SIMI that this will push up prices for a family car by €1,000. It contends that this measure will disincentivise people from changing their cars to more energy-efficient models. What about the impact of the motor tax provision on older cars, which may be used by those in lower income households because those people do not have ability to change? They will see an increase in taxation.

Section 34 relates to motor tax.

Deputy Doherty touched on some points concerning vehicle registration tax. I will deal with the motor tax issue first. Members can tell me if I miss any elements.

Minor changes are being made to the current CO2-based motor tax table. There are rate increases for the most polluting cars only. No changes are being made to the table of rates accorded by engine size. We estimate that 92% of cars already registered in the State up to the end of 2020 will not see an increase in their annual motor tax bill. Most of the remaining 8% will see a motor tax increase of around €10 per annum. Some cars could see an increase of around €50 in motor tax. We estimate that this will account for about 0.5% of cars on the road. These cars produce a very high level of emissions. As the Deputy said, rates for cars registered before July 2008 will remain unchanged.

Regarding the points made by the Society of the Irish Motor Industry, SIMI, on the impact of VRT, I note that particular examples were presented to illustrate the most extreme increase in VRT for car purchases. For obvious reasons I will not refer to examples of specific cars in this debate. Most cars that are purchased will see minor changes in VRT. However, it is true that there will be significant increases in VRT on the purchase of larger vehicles with larger engines. On average, however, they will not reflect the examples we heard before the budget was announced.

I am concerned about this section. I do not support it because I have not seen evidence of the impact it will have, particularly on low-income households. I have raised some motorists' need for larger cars in the debate on numerous Finance Bills. I would like to raise the issue of how motor tax is charged, which I have continually raised with the Minister. As the Minister acknowledges, 8% of motorists will see an increase. That means tens of thousands of people, albeit a minority, will see increases of between €10 and €40.

Motorists who pay motor tax but are not in a position to pay annually face a penalty. I do not expect the Minister to deal with this issue now and I do not have an amendment to the Finance Bill on it. However, I appeal to the Minister to get with the times. We must tax fairly, whether we are trying to raise revenue or change behaviour. It is unfair to apply an additional charge to those who are not in a position to pay their motor tax annually and instead pay on a biannual or quarterly basis. This charge dates from an era when this tax created a quite heavy administrative burden involving paperwork, postage, stamps and whatnot. With the evolution of technology and the Internet, most motor tax renewals are done online. Someone who pays motor tax online but cannot afford to pay it annually pays it quarterly instead. As a result he or she pays 13% more. The quarterly charge is not 25% of the yearly tax, but rather 28.25%. This means a person in this position pays 113% of the tax charged on his or her vehicle. Someone who is in a position to pay the tax every six months is charged an additional 11%. He or she pays 55.5% of the nominal charge every six months and 111% per year.

I acknowledge that collecting tax, posting out a disc and so on may create an administrative burden. However, the cost is not that high. The total additional money raised by the State as a result of people paying motor tax on a quarterly or biannual basis is €52.7 million. We need to reduce this. I appeal to the Minister to have this reviewed in a serious way by the tax strategy group. Perhaps it does not need that. This has not been changed for decades. Fairness must be applied. Taxing cars according to their emissions raises revenue but it is really intended to change behaviour, and rightly so. I question whether it is the right approach and wonder if we are doing enough to incentivise alternatives, but that is for another day. We should not penalise those who cannot pay every full year. People with cars that emit more should pay more tax, but they should not have to pay 13% more because they cannot pay in one go. I would appreciate if the Minister took this seriously and reviewed it for the reasons I have suggested. An additional 13% burden is not acceptable.

I will ask for a report on this matter so I can consider the matters Deputy Doherty refers to. However, I would expect a report to point to the fact that higher costs are involved in processing these payments on a quarterly or biannual basis. There will therefore be a reduction in the net yield to the Exchequer from such payments. However, I will look at the matter.

Question put and declared carried.
Sections 35 and 36 agreed to.

I move amendment No. 141:

In page 55, to delete lines 27 to 32 and substitute the following:

“(b) by inserting the following after 13(3) in Schedule 3 of the Principal Act:

“(4) Beautician services”,


(c) by inserting the following paragraph after paragraph (ca):

“(cb) during the period from 1 November 2020 to 31 December 2021, 9 per cent in relation to goods or services of a kind specified in paragraphs 3(1), 3(3), 7(b) to (e), 8, 11 and 13(3), 13(4) of Schedule 3 on which tax would, but for this paragraph, be chargeable in accordance with paragraph (c);”.”.

This is very straightforward. Changes have been made to VAT to support hair salons during the current Covid-19 restrictions. These have benefitted hairdressers but not beauticians. This is causing a real problem. As many beauticians share the same premises as hairdressers and the two professions go hand in hand, the measure should include beauticians. I know that may have a knock-on effect in other areas, but it would make sense.

In recognition of the challenges facing the hospitality and tourism sector, the section provides that the 9% rate of VAT applies from 1 November 2020 to 31 December 2021 to the supply of certain goods and services which primarily relate to the hospitality and tourism sector and which are currently subject to a VAT rate of 13.5%. The 9% rate of VAT will apply to the supply of restaurants and catering services, guest and holiday accommodation and various entertainment services such as admissions to cinemas, theatres, museums, fairgrounds and amusement parks. It will also apply to hairdressing services and certain printed matter such as brochures, maps and programmes. It is estimated that this change will cost the Exchequer €336 million in 2021 and €401 million in total.

The VAT rates applying to Ireland are subject to the requirements of EU VAT law, with which Irish VAT law must comply. Under EU law, there are a limited number of areas where a reduced rated can be applied, and these areas are set out in the third annexe to the VAT directive. Beauty salon services are currently liable for VAT at the rate of 13.5%, as services consisting of care of the human body under paragraph 21(1) of Schedule 3 of the Value-Added Tax Consolidation Act 2010. This rate is provided for under Article 118 of the VAT directive. It is not possible to reduce the rate of VAT applying to those services to 9% because for those services, the applicable VAT rate cannot be reduced below 12%.

My Department will continue to monitor the economic impact of the pandemic and in the event that we identify another sector where a reduction is possible, and where such a reduction could be a critical factor in sustaining businesses and jobs, we will consider that case. What we have done with VAT has to be considered in the round of all the other measures that have been put in place to support the economy and the beauty sector, including measures such as the CRSS and the employment wage subsidy scheme, for which the beauty sector qualifies, despite the fact that it does not qualify for this change in VAT.

It seems bizarre that the reason beauty salon services, unlike hairdressing services, do not qualify for the reduced rate of VAT is that they are regarded as services providing care of the human body. Beauty salons should be included in the VAT reduction because hairdressers and beauticians are basically sister professions and often work out of the same premises. Beauticians find it difficult to understand why hairdressers will benefit from the reduction but they will not. It is unfair. I know the Government is trying to do the best it can to manage through the Covid crisis but this issue shows how nonsensical the approach is. There could be two practitioners using the same premises and one would qualify for the reduction while the other would not, simply because of a definition contained in an EU directive. It is unfair and the Minister should look at some way of alleviating that.

I understand the argument the Deputy is making. I have been contacted by representatives of the beauty sector. Unfortunately, there are very clear legal reasons as to why I cannot do that. I am raising the matter with the European Commission for clarification because I can understand why the beauty sector is asking why it is excluded from a measure in which hairdressing services are included. While I have a clear reason based in law for doing this, I know that some in the beauty sector are looking at how they can pursue this matter. I will seek further clarification from the European Commission on this issue.

Amendment put and declared lost.

Amendment No. 142 has been ruled out of order.

Amendment No. 142 not moved.
Question proposed: "That section 37 stand part of the Bill."

On section 37 and the reduction of VAT to 9% for the hospitality sector, I must say, as I did before, this is to be welcomed. We called for this reduction previously and would have liked for it to have been part of the July stimulus package. It was not but at least it is here now. As we know, it is to run from late this year to December 2021. On the review of this 9% VAT rate and whether it will be extended in the Finance Bill 2021, what is process involved and what consultation does the Minister plan to undertake? How will he measure whether the reduced rate of VAT will need to come to an end, as scheduled in this Bill, or be extended for a period of time thereafter?

I will look at three factors, namely, the level of employment within the affected sectors, the level of transactions within the affected sectors, and what we think the public health guidance will be for those sectors in 2022. This will be a matter that I know will be touched on in any event in the tax strategy group process but as I approach the decision point for the 2021 budget, the factors I will consider will be employment, the number of transactions within the sector and what the public health guidance will be for the following year.

Question put and agreed to.
Question proposed: "That section 38 stand part of the Bill."

I ask the Minister to comment briefly on this section.

This section amends section 86 of the Value-Added Tax Consolidation Act 2010, which deals with special provisions for tax invoiced by flat-rate farmers. It confirms the budget increase in the farmers' flat-rate addition from 5.4% to 5.6%. The new rate of 5.6% will continue to achieve full compensation for farmers under the flat-rate scheme.

Question put and agreed to.
Section 39 agreed to.
Question proposed: "That section 40 stand part of the Bill."

We discussed this section at length when we dealt with section 29. I reiterate my opposition to the section and I want to have that put on record.

I also oppose this section.

Unfortunately, I missed the earlier debate on amendment No. 29 but it is worrying that easing taxes on NATO participants would be part of a debate on the Finance Bill. That should be opposed and I will certainly be opposing this section in that context.

As indicated, others were present for quite a lengthy debate on this. Does the Minister want to say a few words or has he said it all already?

I just want to restate that this section will not affect the neutrality of our country or our defence and foreign policy.

Question put and declared carried.
Section 41 agreed to.

Amendments Nos. 143 to 145, inclusive are related and will be discussed together by agreement.

I move amendment No. 143:

In page 59, lines 36 and 37, to delete “31 October 2020” and substitute “30 April 2021”.

Section 42 amends the VAT Consolidation Act to provide for the temporary application of the zero rate of VAT to certain goods used in the delivery of Covid-19 related healthcare services. It provides that the zero rate applies to goods supplied to or acquired by the HSE, hospitals, nursing homes, care homes and GP practices for use in the delivery of Covid-19 related healthcare services to their patients. These goods which are subject to the zero rate of VAT are personal protection equipment, thermometers, hand sanitisers, medial ventilators and specialist respiratory equipment such as respirators for intensive and sub-intensive care, other oxygen therapy apparatus, including oxygen tanks, and oxygen itself.

This measure has been applied administratively by the Revenue Commissioners since 9 April following my request to them to apply this relief. My request followed the European Commission's indication that notwithstanding the VAT directive, member states could apply a reduced rate to such items. The end date of the measure, which is currently 31 October, is linked to the end date provided in the Commission's decision. However, as the Commission has decided to extend the end date to 30 April, I have prepared these Committee Stage amendments to make that change. Any further changes will be provided by way of an order. I commend these amendments to the committee.

I did not table an amendment here but I want to ask the Minister a question on this proposal. He is extending the time period. The zero VAT rate applies to front-line staff in hospitals and other care settings and the flexibility has been approved by the European Commission. Initially, Family Carers Ireland secured tens of thousands of euro worth of PPE for distribution to family carers throughout the country who could not access PPE at that time. Will the Minister consider applying the zero VAT rate to PPE for use domestically by family carers?

The ability to apply the zero rate of VAT is related to the European Commission and as a result, the scope of the measure is narrow. With the exception of the medical bodies and professionals that are listed in the legislation, it cannot be extended to other medical professionals. Therefore, the standard rate of VAT must be applied in those cases where PPE is being supplied to or acquired by other medical professionals. I am informed that the answer to Deputy Harkin's question is "No". That said, the first time I became aware of this issue was when the Deputy raised it with me this evening. It was not subject to an amendment so I have not had the opportunity to look into the matter in more detail. The Deputy mentioned that she did not have the opportunity to table an amendment. While I still expect that the answer will be "No", in truth, I will follow up on the matter between now and Report Stage in order to better understand why and whether there is any flexibility possible. I do not want to give false hope but it is a matter that I have not considered up to this point. I will look at it before Report Stage.

I thank the Minister. I looked at the scope of this provision in the various directives and thought there was some flexibility there. I will wait and see what comes out of the Minister's checking.

I am clearly informed that we do not have the ability to extend this to dentists, for example, and one could also make a convincing case as to why they should enjoy the zero rate of VAT on PPE. While I expect I will not be able to do what the Deputy asks, this is the first time this specific issue has been raised with me. I urge the Deputy to raise the matter again on Report Stage when I will be in a position to give her a more specific response.

Amendment agreed to.

I move amendment No. 144:

In page 60, lines 7 and 8, to delete “31 October 2020” and substitute “30 April 2021”.

Amendment agreed to.

I move amendment No. 145:

In page 60, line 27, after “2020” to insert “and Commission Decision (EU) 2020/1573 of 28 October 2020”.

Amendment agreed to.
Section 42, as amended, agreed to.
Section 43 agreed to.
Question proposed: "That section 44 stand part of the Bill."

On section 44, I welcome the application of the reduced rate of VAT to certain sanitary products but I am wondering why the section refers to "certain" rather than "all" such products. I ask the Minister to clarify that.

I must apologise to the committee because I have not been able to participate in the debate for most of the day. There is a small change under this section which brings candles into the VAT net. Given what is happening to many people around the country and the fact that churches are closed which means that there is a lack of funding going into that sector, this seems a little petty. Is there anything that can be done in that regard?

In response to Deputy Farrell's question, the more established sanitary care products are already zero-rated. They already have a zero rate of VAT and I am just using the discretion that is available to me now to make changes in the other products that are listed in this Bill, which is clearly the right change to make.

In response to Deputy Tóibín's point, I was briefed on the anomaly that exists at the moment. Actually, I will not use the word anomaly but will simply say that candles that are white, cylindrical and unperfumed were not subject to VAT whereas candles that are perfumed, a different shape, or coloured were subject to this tax.

I was advised that we need to make a change to ensure these candles are treated in the same way as other candles, and that is what we are seeking to do. I have seen some of the commentary on this and some of the charges being made. The last thing I am trying to do is cause any hardship. I have been informed that allegations have been made about this affecting people's ability to pray. That is the furthest thing from my mind in making this change. If there is evidence of hardship as a result of this change or evidence of difficulty being created, I will be happy to hear about it. Perhaps the Deputy and I can discuss it now. However, these candles have been zero rated and they are mainly used in church settings. Candles that are sold alongside them that are not white, cylindrical and are perfumed have the normal rate of VAT applied to them. If there is evidence of this change causing hardship or difficulty, perhaps this is the time at which it could be presented.

Religious practice is a human right under the UN Universal Declaration of Human Rights. Obviously, it is a practice that has been mainly deleted for approximately 1 million people each week in this country. Those candles are used. People light candles and pray for a dead loved one or an issue of great importance to them. Faith can offer strength to people to deal with some of the darkness we all experience at present. Even the Minister said that these candles are typically used in that environment. In addition, from the church's perspective, it has experienced, like everyone else, a radical fall in income over the last number of months because its buildings are closed. I ask the Minister to reconsider. It is a small detail in the scheme of things, but for many individuals it is a very big thing.

May I intervene on this point? It is a burning issue for many, and there has been some commentary on it over the last while. I have a question for the Minister on the background to this change. Is the Tax Appeals Commission's ruling relating to the €394,000 that was deemed to be paid by a company for the sale of church candles between 2013 and 2016 the instigation of this measure? I am interested to hear what prompted the change. The Minister said he did not want to call it an anomaly, but that Tax Appeals Commission ruling made it clear that cylindrical, white candles are VAT exempt or zero rated and that the standard rate of VAT applies only to those that are tapered, perfumed or coloured. It is important to outline the intentions behind this and where it came from. Many people go into a church and when one lifts white, cylindrical candles they are generally church candles. People go in to light a candle for somebody who has passed away and so forth. I am sure many of us have done it. There is a sensitivity about this issue so perhaps the Minister could outline the background to it and why it emerged now. Was it the Tax Appeals Commission ruling? That ruling said the legislation was clear and unambiguous, so obviously something prompted a change since then.

I accept that prayer and religious practice are, as Deputy Tóibín said, human rights. I am glad he did not suggest that I am trying to interfere with that human right because a number of allegations have been made regarding the intention behind this change. It was not prompted by the Tax Appeals Commission ruling referred to by Deputy Doherty. Every year when I deal with the Finance Bill there are dozens of issues on which I am asked to agree to change and to deal with issues that have developed in the tax code. It is in that spirit that I am making this change but I am aware of the debate that has ensued. I am also aware of the financial difficulties that churches are experiencing at present. If any evidence can be presented to me that this is causing a significant difficulty for churches, on top of the other problems they currently face, I am happy to engage with the committee and stakeholders before Report Stage on the matter.

I thank the Minister for clarifying that it does not relate to the Tax Appeals Commission ruling. What is the revenue that is expected to be generated from the introduction of VAT on these products? I presume this applies when we purchase small candles for our homes as well and that it is not just church candles. Is that the case? It is all cylindrical candles we buy, so it is wider than that issue.

It would only apply to candles that meet these criteria. Other candles that do not meet these criteria are charged VAT as is normal. Regarding the revenue gain from this, it is negligible if there is one at all. It will be very small. If there is genuine evidence of hardship or difficulty created due to this change, I will engage with stakeholders on the matter before Report Stage. Some of the language that has been used about this change and my intentions behind it is utterly unjustified. If there are issues regarding the effect it will have on churches and on those who are helping parishioners who are very vulnerable, as they are now in 2020, I am happy to engage with them and the evidence on the matter. It will be on the basis of engagement and evidence that I will consider this issue, not on the basis of some of the charges that have been made about my intention or the effect of this change.

Question put and agreed to.

We are required to allow a change in the officials present to advise the Minister. Will we suspend the meeting for a few minutes?

Would five minutes be agreeable to the committee?

Sitting suspended at 8.29 p.m. and resumed at 8.33 p.m.
Section 45 agreed to.

Amendments Nos. 146 and 148 are related and may be discussed together by agreement.

I move amendment No. 146:

In page 62, between lines 24 and 25, to insert the following:

“Report on applying full rate of stamp duty on non-residential property to all corporate structures including REIT and IREF in certain circumstances

47. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on introducing anti-avoidance measures by applying the full rate of stamp duty on non-residential property on all corporate structures including REIT and IREF, which derive over 50 per cent of their value from commercial property for investment and/or letting purposes, upon the sale of their shares.”.

This amendment concerns stamp duty on REITs and IREFs. I will begin by discussing amendment No. 146 in particular. As the Minister knows, I have been quite vocal on the tax treatment of REITs and IREFs. Amendment No. 146 calls for a report on the application of the full rate of stamp duty on non-residential property to all corporate structures, including REITs and IREFs, in certain circumstances. I welcome the number of measures that have been introduced in previous years to address what were glaring gaps in the taxation of these structures. Some of this we discussed yesterday during the passage of various sections of the Bill. I welcomed in particular, for example, the move to close the revaluation loophole on REIT cessation. Section 705P requires that the relevant REIT has to be in operation for over 15 years before it enjoys preferential treatment, and that is to be welcomed. I was on the record as far back as 2017 calling for the dividend withholding tax on REIT and IREF structures to be increased to the 25% rate, and I welcomed the adoption of that proposal in last year's Finance Bill. Let us be clear, however, that this needs to go much further. I have called for dividend withholding tax to be increased further to 33%.

There is no doubt but that there is a need for a complete overhaul of the tax treatment of non-resident investors in our property market, both residential and non-residential. My views on this have been made well known to the Minister and have been articulated time and time again on Committee Stage of the Finance Bill and through the many other opportunities I have in the Dáil. We need to overhaul the treatment of both capital gains tax and dividend withholding tax. The section before us deals exclusively with stamp duty, as does this amendment. In last year's Finance Bill a stamp duty loophole for REITs was closed, which I welcomed; however, it did not go far enough. On a number of occasions in the Dáil last year I raised the example of Green REIT and its sale to Henderson Park. The change made ensured that a 1% stamp duty was applied to the €1.34 billion sale of Green REIT to Henderson Park. That brought in about €13.4 million to the Exchequer, and while something is better than nothing, it is simply not good enough that it was able to pay as little as that in stamp duty. Non-residential stamp duty is not 1% but 7.5%, and there is no justification for a REIT or an IREF enjoying lower levels of stamp duty that are denied to other businesses operating within the State. Last year I called for the full rate to be applied to the REIT structures, a change which in the case of the Green REIT sale would have brought in €100 million and a little more in change to the taxpayer, money that could be well spent in these times.

The amendment before us uses the type of procedure we have to use. It calls for a report to examine legislative change that would ensure that the full rate of stamp duty is applied to these structures. I am aware that officials within the Department of Finance discussed such changes to the Stamp Duties Consolidation Act in the summer of this year. A stamp duty anti-avoidance measure was introduced in budget 2018 under section 31C of the Stamp Duties Consolidation Act 1999. However, this measure did not include REITs. Officials sought approval to amend the section to encompass REITs in the Finance Act before us but approval was not granted. The sale of shares attracts stamp duty at a rate of 1%. A stamp duty anti-avoidance measure was introduced in section 31C of the Act. However, following the increase of the stamp duty rate on the acquisition of non-residential land and property from 2% to 6% in budget 2018, the measure ensures that the higher rate, now 7.5%, also applies where non-residential property held by an entity such as a company, a partnership or an IREF is indirectly sold by way of sale of the shares in the company, effectively selling the non-residential property itself. In the absence of section 31C, it is probable that only a 1% stamp duty rate that applies to share purchases would apply to such sales. REITs, as we know, are collective investment vehicles designed to hold rental investment properties in a tax-neutral manner. They are not currently covered by section 31C of the Stamp Duties Consolidation Act 1999, and their inclusion was overlooked at the time. Therefore, the acquisition of shares in some REITs which are comprised solely or principally of investment in various types of non-residential property may only be subject to a 1% stamp duty as opposed to a 7.5% rate for all other types of property of that nature by other structures.

Owing to the infrequent occurrence and unpredictable size of the transactions which would be encompassed by the extension of section 31C, it is not possible, we are told, to provide an estimate of the revenue that might be derived from it. However, we know from the Green REIT sale to Henderson Park that there are clear advantages to the taxpayer in applying the full rate of stamp duty to REITs and IREFs. In addition, there are positive effects these measures would have on our property market more generally in terms of turning it towards affordability rather than into an environment which is geared towards non-residential investors, with the impact on prices that results from that. I ask the Minister to clarify why the changes were not made despite approval being sought by officials. We discussed how he provided approval in regard to candles and so on. In terms of REITs being able to avail of stamp duty at 1% when non-residential stamp duty applies at 7.5%, there is a loophole that needs to be closed and was sought to be closed by officials but did not get ministerial approval.

While these two amendments have been grouped, I will speak to them individually. In regard to amendment No. 146, in general the purchase of company shares is liable to stamp duty at 1%. When stamp duty was increased from 2% to 6% in budget 2018 an anti-avoidance measure was included to ensure that the new 6% rate would also apply where non-residential property held by an entity such as a company is indirectly sold by way of a sale of the shares in the company and, effectively, the company itself. This section applies the higher - now 7.5% - rate for non-residential property to the acquisition of entities that deal in land or that secure development of land for non-residential purposes. The charge applies where the entities derive the greater part of their value from Irish property and hold land where there is little or no other activity carried on by the business, or hold and develop land for residential or non-residential purposes and where the purchase of the shares, interest or units results in a change in control of the entity and thus a change in control of the land or buildings. Not all companies deriving value from property are affected. Sales of the following types of entities should not attract the 7.5% charge, provided they are carrying on an active business: hotels; car park businesses where the land was acquired for that business; office rental businesses; and crèches.

Last year, officials in my Department prepared a report on REITs, IREFs and section 110 companies as they invest in the Irish property market. The report was presented to the tax strategy group in July last year and provided a basis for policy discussions and the amendments introduced in the Finance Act 2019. Deputy Doherty asked me a question in regard to a recommendation that was made to me. I will have to check the communications sent to me during that period by my Department and revert to him with an answer on the matter. In light of changes that I made recently, and the new measures introduced in the Finance Act 2019, I do not believe now is the time to undertake a further report in this area. I did implement significant anti-avoidance measures last year in the area Deputy Doherty refers to. I will continue to keep this area under review to see if further action is merited.

We have seen the issue arise and we have seen the impact of it. I refer to Green REIT and Henderson Park, where a 1% stamp duty applied as opposed to the 7.5% that should have applied. This is a question of fairness and balance. There is not need for a further review. I am unconvinced. I ask the Minister to elaborate on why these structures should apply a stamp duty of 1% as compared with 7.5% because I do not get it. That is not acceptable in my view.

We have a differing view on it. The 1% is the stamp duty rate that applies with regard to the purchase of shares and that is the reason for it.

The purchase of shares is the purchase of property. When Green REIT sells to Henderson Park it does not sell only shares. Henderson Park owns all of the property. It is a property investment company. It is bricks and mortar that is being sold in this instance. There is a loophole in the law.

What is being purchased is shares in this entity and the charge in that respect is 1% stamp duty, which is paid by the person who purchases them. The 7.5% refers to the transactions that I outlined earlier.

Let us be clear on this. This is the sale of over €1 billion of property in the state. If a company in Ireland sold off hotels, apartments, shopping centres, residential units and so on a 7.5% stamp duty would apply but because this structure can sell the shares as a means of selling the property it gets away with paying stamp duty at 1%. It is ridiculous. It is a massive loophole that the Minister's officials sought to close-off in this Finance Bill. It is not acceptable to continue to support these types of structures in the way we have been doing.

We had a discussion yesterday in regard to how no capital gains applies to them. No corporation tax applies to the rents that are received and now when they are disposing of the property they can do it by way of the sale of shares and, therefore, pay only a fraction of the stamp duty that would apply to other structures.

As I outlined in my earlier response to the Deputy, in last year's budget and Finance Bill, I introduced a very comprehensive set of measures to deal with issues that I identified in regard to the taxation of this sector, which the Deputy has acknowledged. When I identified issues that needed to be addressed, changes were made. In our debate yesterday I highlighted the higher rate of tax that is now being paid by some of these entities as a result of changes that were made. In last year's Bill, I brought in some comprehensive measures that are aimed at preventing tax avoidance. This shows my commitment to trying to ensure effective taxation within this sector. I am happy, as I said already to the Deputy, to keep this area under review and to examine it again in the context of the tax strategy group papers. As I said, I made significant changes to this area in last year's Finance Bill.

The Minister made changes in last year's Finance Bill in regard to this structure because it was going to get away with paying no stamp duty on a €1.3 billion sale of residential or non-residential property. As I said, 1% is better than nothing but the stamp duty on non-residential property is not 1%, it is 7.5%. This is not an entity that is engaged in selling shares. It is not a company that is involved in research and development, R&D, or manufacturing and the company is being sold through its shares. This is an entity structured in a way that allows it to purchase and develop property in the State.

REITs and IREFs do nothing else. Therefore, when they sell their shares, they are selling the apartment blocks, shopping centres and other commercial entities. They are able to do so in a way that is not envisaged. It was never envisaged that they could sell commercial property at a 1% rate. This was a loophole that was exploited by Green REIT. The Minister has talked about keeping it under review. However, he knows what the issue is, and he is willing to let it go, which is not acceptable.

I am conscious that this amendment is also grouped with amendment No. 148. I will speak to that amendment now. It asks the Minister to lay before the House a report on the introduction of a residential property tax surcharge where property is purchased by a non-resident. The Minister will know, because his tax strategy papers also discuss this issue, that a 2% stamp duty surcharge on non-residents purchasing residential property will be introduced in the North and in Britain from 1 April 2021. The objective of that policy is to try to control price inflation, which is nothing like what we have seen here in recent years. The intention is also to support residents in attaining home ownership.

Sinn Féin's amendment is about doing as other jurisdictions are starting to do so that a non-resident purchasing residential property through one of these structures would pay additional tax by way of a surcharge. Britain has decided to impose a 2% stamp duty surcharge. Here, never mind a surcharge, the Minister does not even want them to pay 2% and wants them to pay as little as 1%. These are the types of policies we need to look at. There is a serious issue with non-residential investors disturbing the market and pushing up prices as a result. Calling for these two reports is a mechanism to allow us to table amendments.

I strongly argue that the Minister should not allow REITs to get away with paying 1% stamp duty when every other company that sells or disposes of commercial property in the State is required to pay 7.5%. What is so special about these REITs? Why does Fine Gael think they are so special above every other structure? These are multibillion euro structures and not wee companies. They are not corner shops, but multibillion euro companies that are able to pay a fraction of what others would have to pay on disposal of non-commercial property.

I again remind the Deputy that I have introduced very significant anti-tax avoidance measures in this sector. When I have become aware of issues that have required action, I have taken action. The Deputy and I differ in that he thinks more should be done on this. When I continue to monitor the operation of the sector, which I will do, if more needs to be done to deal with tax avoidance issues, I will act. However, I do not hold any special affection for these organisations or entities. They have a role to play as landlords of commercial property and, to a lesser extent, of residential property. When I have become aware of issues that need to be addressed in how they are taxed, I have acted on them. The Deputy thinks I should do more, but I have made changes already.

Under section 31C of the Stamp Duty Consolidation Act 1999, shares are taxed at 7.5% but only for companies that focus on the dealing in and development of property.

The Deputy also spoke about the implementation of a surcharge to take effect from 1 April 2021 in Britain and the North. I will look at the operation of that surcharge in the context of the tax strategy process.

I have acknowledged changes that have been introduced in the Finance Bill. I have also acknowledged that some of those changes have happened because of amendments I have tabled or by exposing areas where loopholes have existed in the past. I acknowledge that the Minister and his officials have introduced amendments to close them. However, he allowed Green REIT to get away with blue murder last year. He allowed it to get away with not paying over €90 million in tax because he allowed it to pay stamp duty at 1%. Where there is acknowledgement - fair play to the Minister and his officials on those issues - there must also be acknowledgement that he is letting them away without making their fair contribution in tax, which I believe is also their duty. He mentioned shares where 7.5% stamp duty applies where there is development of property. However, the problem is that REITs are not developing the property. Therefore, the stamp duty that applies to them is just 1%.

The Minister has said he will keep the 2% surcharge under review to see how it will operate and will look at it next year. These entities do substantial damage by buying property, pushing up house prices and pushing first-time buyers out of the market because they are non-residential purchases. CSO figures show the numbers that have been purchased in the past, particularly in concentrated areas as I have mentioned.

I will continue to pursue this. The Minister points to the role of REITs in being a commercial landlord, which is fine. However, I believe they should not have a tax advantage that other structures do not have. That is where we differ significantly. It is really challenging and frustrating because we have been dealing with this for four, five or maybe even more years. It is painfully frustrating trying to get the Minister to close some of these loopholes. I am sure in his rebuttal he will say that where they have been pointed out to him, he has closed them. He has done so in some, but it was pointed out to him that Green REIT was able to pay stamp duty not at 7.5% but at 1% when it sold its properties and he did nothing. He actually facilitated it, which resulted in €90 million lost to the Exchequer.

I remind members about privilege when naming individuals or entities.

I add my support for Deputy Doherty's amendments. REITs are given a competitive advantage in the market through taxation. They already have a competitive advantage with regard to the international interest rates that they receive. They have a distorting effect on the market. They crowd out other purchasers they compete with. The tax forgone is an opportunity cost. That tax take could be used for many purposes throughout society. Pressures are coming from every direction at the moment. The Government should be looking to maximise its tax take from these hyper-profitable organisations.

I think we have already covered the different issues yesterday and today. I want to make it clear to the committee that I do not design policy or set tax law to benefit any one company or transaction.

I do not do that. I am not going to get into naming companies or transactions. It is not appropriate for that to happen at this committee; it certainly would not be appropriate for me to do so as Minister for Finance. However, I absolutely do not set tax law to benefit a particular company or transaction.

Amendment put:
The Committee divided: Tá, 3; Níl, 6.

  • Doherty, Pearse.
  • Farrell, Mairéad.
  • Tóibín, Peadar.


  • Donohoe, Paschal.
  • Durkan, Bernard J.
  • McGuinness, John.
  • O'Callaghan, Jim.
  • Ó Cathasaigh, Marc.
  • Richmond, Neale.
Amendment declared lost.
Section 46 agreed to.
Sections 47 to 50, inclusive, agreed to.
Amendment No. 147 not moved.

I moved amendment No. 148:

In page 64, between lines 21 and 22, to insert the following:

"Report on introduction of residential stamp duty surcharge for non-residential purchases

52. 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 residential property tax surcharge where property is purchased by non-residents."

Amendment put:
The Committee divided: Tá, 3; Níl, 6.

  • Doherty, Pearse.
  • Farrell, Mairéad.
  • Tóibín, Peadar.


  • Donohoe, Paschal.
  • Durkan, Bernard J.
  • Matthews, Steven.
  • McGuinness, John.
  • O'Callaghan, Jim.
  • Richmond, Neale.
Amendment declared lost.
Amendment No. 149 not moved.
Section 51 agreed to.
Progress reported; Committee to sit again.
The select committee adjourned at 9.23 p.m. until 9 a.m. on Wednesday, 18 November 2020.