Michael Moynihan
Question:4. Deputy Michael Moynihan asked the Taoiseach when Cabinet committee A (economy) last met. [37437/18]
View answerTuesday, 2 October 2018
Questions (4, 5, 6, 7, 8)
Richard Boyd Barrett
Question:5. Deputy Richard Boyd Barrett asked the Taoiseach when Cabinet committee A (economy) will next meet. [37539/18]
View answer
Mary Lou McDonald
Question:6. Deputy Mary Lou McDonald asked the Taoiseach when Cabinet committee A (economy) last met; and when it is scheduled to meet again. [38474/18]
View answer
Micheál Martin
Question:7. Deputy Micheál Martin asked the Taoiseach when Cabinet committee A (economy) last met. [38525/18]
View answer
Brendan Howlin
Question:8. Deputy Brendan Howlin asked the Taoiseach when Cabinet committee A (economy) last met. [38628/18]
View answerOral answers (22 contributions)
I propose to take Questions Nos. 4 to 8, inclusive, together.
Cabinet committee A covers issues relating to the economy, jobs, the labour market, competitiveness, productivity, trade, the action plan for rural development, the digital economy and pensions. Recent developments in these areas include the publication of the pensions road map by the Minister for Employment and Social Protection and the Government's decision to prepare a "future jobs" programme focused on creating high productivity jobs, increasing levels of participation in the labour market and tackling the opportunities and risks we face in areas such as digital transformation and the low carbon economy. The most recent meeting of Cabinet committee A took place on 9 July and the next meeting is scheduled to take place later this month. Of course, the full Cabinet also considers these issues on an regular basis.
As the Taoiseach scratches around for additional money for things like housing which we need desperately, health and education services and water infrastructure, has he taken note of the significance of the Comptroller and Auditor General's recent report which confirms something those of us on the left have been saying for years? Now it comes from a source that the Taoiseach cannot dismiss quite so easily. The report outlines how 90 of the richest individuals in the country are declaring taxable incomes which are less than the average industrial wage. In 2016 these high net worth individuals claimed €96 million in various tax credits and reliefs. By the way, they are people whose individual wealth is estimated to exceed €50 million. It is absolutely shocking when one thinks of some of the social problems people in this country face that some of the richest people are availing of tax reliefs and credits to bring their taxable income down to negligible levels. The Comptroller and Auditor General's report also points to something else we have said repeatedly about the extent of corporate tax loopholes. As someone who has spoken a lot about this issue, the Comptroller and Auditor General's figures stagger even me. In 2016, €296 billion was available in allowances and forward losses to be offset against profits. It is estimated that in future years it could rob Revenue of approximately €29 billion.
We have to move on.
It is a scandal. Is the Taoiseach going to look at it and examine the loopholes to ensure the rich and corporations will pay their fair share of tax?
We will not be able to get the answer if the Deputy does not allow the Taoiseach to come in. I call Deputy Mary Lou McDonald who will be followed by Deputies Micheál Martin and Brendan Howlin.
I share the concerns raised by Deputy Richard Boyd Barrett and add the issue of the corporate tax honeymoon period extended to the banks. I also add issues related to the taxation of intangible assets held by multinationals, a loophole which was partially closed by the Minister for Finance, Deputy Paschal Donohoe, but which requires a full and final resolution. I noticed in the Taoiseach's Twitter account that he had had sight of some of Sinn Féin's budgetary proposals. I suggest he read the document in full and absorb it properly before tweeting again. We have made a range of proposals on investment in public services, tackling the cost of living and building prosperity and set out in detail the choices we would make within the fiscal parameters. I realise the Taoiseach's choices are likely to be different, but I appeal to him to study our proposals. As he has often said, no one in this Chamber has a monopoly on empathy. Certainly, the Government benches do not have a monopoly on wisdom when it comes to prudent and sound economic management.
I am sure the Taoiseach is aware that there are many signs of worrying pressures in the economy and the huge social dimension to the impact of the housing crisis. That crisis which is now over five years old is having a significant impact on inward investment and disposable incomes which are being reduced by exorbitant rents. It is causing missed opportunities and a lack of mobility. There are growing signs that Brexit is beginning to have an impact on consumer confidence, as well as potentially causing disruption in the United Kingdom market. An important aspect is a sense of deflation which has followed the complacency arising from the overselling of last December's deal. Where once businesses were told that they had an ironclad assurance of the status quo continuing and that the United Kingdom as a whole was leaning towards a soft or low impact Brexit, today the public feels a general degree of anxiety and a higher level of fear. The Copenhagen study which remains the Government's only attempt to quantify the impact of Brexit states we face a loss of over 7% of national income in the event of a chaotic, no-deal Brexit and 4% in the event that there is some form of comprehensive free trade agreement. For example, a Canada plus agreement would lead to a decline of 4%. Will the Taoiseach confirm that these projections remain the basis for Ireland's Brexit planning and does he believe the measures taken so far and their impact are of sufficient scale to respond to a loss of between 4% and 7% of national income? One must take into account the divergence in the economy between the domestic, indigenous economy which relies heavily on exports to the United Kingdom and the multinational base which will probably prove to be more resilient. The indigenous sector, in particular, agrifood companies and companies in the west, the north west and the midlands which export mainly to Britain, could be in significant difficulty, even in the event that there is a free trade agreement along the lines of Canada plus.
The ESRI has doubled its projection for the year to 8.9% of GDP. Has the Government considered exactly what the impact will be on the deficit projected for the year? Presumably, it will close it. Has the Government considered the impact on the fiscal space? Overspending in the HSE to the end of June was projected to be at a figure of €300 million. It is now projected that it will be somewhere between €750 million and €1.1 billion by the end of the year.
This is a current-year budgetary item. How is this money to be found?
I had a chance to look at the Comptroller and Auditor General's findings on tax and will take a closer look at them over the weekend. I believe everyone should pay his or her fair share of tax in Ireland. As a Government, we have prioritised taking the lowest-paid out of the income tax net altogether. Approximately 30% of people in Ireland, the lowest-paid, no longer have to pay income tax, which is a very good thing. Our focus now is very much on reducing income tax for those on middle incomes, who in many ways often pay the highest tax burden because the very rich can find ways not to pay, whether through legitimate tax incentives or aggressive tax planning and in some cases tax avoidance. It is very often the middle that bears the largest burden of income taxation. This is why it has been our priority to raise the standard rate cut-off point in order that fewer people have to pay that highest rate of income tax and to ensure that people pay less in income tax and universal social charge, USC. While in any one budget this might only be €300 or €400 for a single person and €600 or €800 for a couple, this really starts to add up over three budgets, to €1,800 for a couple. The three-year effect - we have been doing this for three years now - and five-year effect of these taxation changes really make a difference to the take-home pay of those on middle incomes.
It is important, though, to make a distinction between wealth and income. Wealth and income are not the same thing. In our constituencies we all meet people, often elderly people, who own a house that is worth over €1 million or perhaps have life savings but whose income can actually be very small. It may only be €15,000 or €20,000. They might be on a modest pension so they have a low income and do not pay much income tax but they may have quite a lot in assets.
Not €50 million.
There are also people who own businesses, and a business may well be worth €50 million, but against that there may be significant debts. Many people claim to be rich but might not be that rich at all when the levels of debts and borrowings they have are taken into account. Of course, one may own a business that is valued quite highly but not have any income from that business. Businesses are loss-making. One often sees this with farmers as well, that on paper the farm may be worth many millions but that the income the farmer derives from that farm can be very small. It is therefore important to understand the difference-----
I referred to net worth - "high net worth individuals".
-----between wealth and income.
As for corporate profits tax, much has been done in recent years to close some of those loopholes, whether it be the double Irish, some of the loopholes and incentives in respect of intellectual property, statelessness or accounting changes. This is why we are recognised by the OECD and others as being compliant and transparent when it comes to our corporation profits tax, notwithstanding what others may say about us. This is why we have seen a very big increase in the take from corporation profits tax this year. We will see another very big one this month when the Exchequer returns come out and we will see this escalate. We are now taking in a lot of money from corporations in corporation profits tax. This is a risk because we cannot assume that this money will be there next year or the year after. Because loopholes have been changed or closed and because of accounting changes, we will probably have a windfall of corporation profits tax this year which may not be there next year or the year after. While some will be busily finding ways to spend this money, as a responsible Government we need to consider the possibility that this narrative about us not collecting a lot in corporation profits tax is not correct. We are collecting a lot, and there is a risk that as corporation profits tax returns continue to escalate, as we continue to take in more and more of it, it could become our new stamp duty. We could be vulnerable in this area. We must be careful not to think that a bumper year of corporation profits tax is something on the back of which we can make five or ten-year long-term spending commitments. We will not make that mistake, having learned from the mistakes of the past. On Friday we will have the White Paper, which will give the up-to-date calculations on the deficit. While the changes, the projections that Deputy Howlin mentioned, will reduce the deficit, this will be counteracted by overspending in other areas, most particularly in health but also in justice and some other areas. We therefore expect to come in bang on the nose in or around a deficit of 0.2% this year, as projected, with the good things being outweighed by overruns in other areas.
I had a chance over lunch to look at the Sinn Féin budget. I promise to study it in more detail.
Over lunch.
A couple of things struck me which I am concerned about. What is proposed is reckless and irresponsible. Sinn Féin proposes increased borrowing. Now is not the time for us to increase our borrowing. When the economy is going well and growing fast and one has full employment-----
And when there are kids in bed and breakfast accommodation and hostels.
-----that is when one should be balancing the books and trying to run a surplus. One does not increase borrowing. Whatever social problems we have now, they will be much worse in a few years' time if we make reckless financial decisions.
It is a matter of investing in people.
Now is not the time to increase borrowing; now is the time to balance the books. There is also a proposal to cancel the rainy day fund. With Brexit coming up in only a few months' time, cancelling the rainy day fund is a very reckless-----
It is raining.
-----proposal from Sinn Féin. There is also a proposal for 20 tax hikes, raising €3 billion. When one's economic policy is based on 20 tax hikes raising €3 billion, it is not long before one must start hitting average people with those tax hikes. One might get away with this in one go, but if one raises that amount of money out of taxation over five years, it is not long before one starts hitting people on middle incomes. I think Sinn Féin would go into that space very quickly.
Oh dear.