I had concluded my initial contribution and would like to hear the Minister of State's reply.
Finance (No. 2) Bill 2013: Report Stage (Resumed)
Debate resumed on amendment No. 7.
In page 13, between lines 11 and 12, to insert the following:
“(c) Where a qualifying contractor has not fulfilled the provisions set out in this subsection, the Revenue Commissioners, upon receipt of a claim from a claimant shall inform the contractor of the claim and final stated payment and inform the contractor that they are obliged to fulfil the requirements as stated in this section. Contractors will have 10 working days to dispute the payment claim, at which point the Revenue will process the claim, once legitimate receipts are provided.”.
(Deputy Pearse Doherty)
Before the break Deputy Doherty set out his views in connection with amendment No. 7 and I will respond with the agreement of the House. I do not propose to accept the amendment and there are a number of issues arising from this provision. The relationship between the home owner and contractor is important from the outset. Before engaging a contractor, a home owner must ensure the contractor is tax compliant, and the home owner should ask to see the building contractor's up to date notification of determination of relevant contracts tax rate, or RCT rate. This must be zero or 20% in order for the contractor to qualify to carry out the work under the incentive. Alternatively, an in-date tax clearance certificate is also acceptable until the Revenue Commissioners' new on-line system is put in place. If the contractor is not tax compliant, he or she is not eligible to operate under the incentive and any work carried out by the contractor would not qualify.
When a home owner makes a payment to a contractor, he or she is required to provide a receipt or statement showing the amount of payment, and the VAT must also be identified separately. It is important in building a relationship with the contractor that there is a common understanding that in order for the home owner to get relief, a contractor is required to notify the Revenue Commissioners of the works and payments made by the home owner. When the Revenue Commissioners' electronic system comes online early next year, it will be possible for home owners to track whether the contractor meets his or her obligations in notifying the Revenue Commissioners of works and payments. This means that cases where a home owner would only become aware at the claim stage that a contractor has failed to meet his or her obligation - the point raised by the Deputy before the break - should not arise, as home owners can track exactly where they are in the process under the on-line system.
Any failure by a contractor to meet his or her obligations is an offence subject to a fine of €3,000. Failure to meet the obligations under this incentive would render the contractor in a position where he or she would not be tax compliant, ruling a contractor outside the terms of the incentive. The party in question would not therefore be in a qualifying contractor position. For these reasons I will not be in a position to accept amendment No. 7.
With respect, the Minister of State did not address the amendment. We have gone through this on Committee Stage and we have lost a bit of time so I will not extend the issue. The Minister of State did not deal with the amendment, which concerned the possibility of a contractor not fulfilling the provision in subsection (5), or the requirement on the contractor after payment is made to notify the Revenue Commissioners that payment is made, identifying VAT and so on. The Minister of State spoke at length about the relationship between a contractor and the claimant.
Of course that must be the case. I refer to a situation where a contractor has already provided documentation such as a tax clearance certificate and who has already been deemed eligible. Subsection (5) begins at a point where the relationship ends between the contractor and the claimant when the contractor has been paid by the claimant for the work and he is now obligated to inform the Revenue that a payment has been received and to give information on VAT and the work that has been done, including the unique reference number. My concern is in cases where someone fails to fulfil the requirement in that regard even though a tax clearance certificate has been provided and approved by Revenue for the work but where the contractor has failed to provide the information even though they have been paid. On Committee Stage it was clarified that the claimant would still get paid but my concern is the process to be followed in such a situation as all of that is tied in together. A claimant is supposed to make the claim after the contractor informs the Revenue they have been paid and they specify the amount of VAT that has been paid as part of the work and provide the unique number.
The amendment deals with a situation which might be unique but where it would be difficult for the individual concerned if a contractor has not fulfilled subsection (5) and has caused an undue delay on the claimant who should have a tax credit applied to them. That is my major concern. Tax credits become available at a certain time and if a situation drags on one could miss an entire calendar year. It is not clear in the event of a contractor going bust or not fulfilling subsection (5) for whatever reason how the claimant’s case will be processed. The amendment I propose would ensure the claim would be processed within ten days in such cases. All the penalties that exist for non-compliance within the legislation could be imposed on the contractor but my concern is for the claimant. The contractor would have had to provide receipts to the claimant for the payment made and it should be possible for the claimant’s case to be processed within ten working days.
I am aware of the point the Deputy makes, although I was not present for it on Committee Stage.
My apologies, it was the Minister, Deputy Noonan.
That is okay. From what I understand we are talking about the contractor who initiates the procedure. He registers on the revenue online system and when it gets to the requirements under subsection (5) the final bit of the jigsaw is not put in place and therefore the home owner cannot benefit from the work. We must have some control. I accept that Deputy Doherty’s point is an unusual one. While it is possible that it would happen, one could ask why a contractor would not do what is required on the basis that he wants other work. During the break I was thinking about the issue. We previously discussed the disability grant of which many of us are aware from our work in local authorities, whereby in order to qualify one had to get a number of compliant contractors who would have the certification in place and equally would be prepared to pitch for the business. The same standard will apply in this case. What would be the point in a contractor having set up the process and in effect having done the work, or being in the process of doing it, not to fulfil the final step? Deputy Doherty made the point that he could go out of business or skip the country. In that scenario I suppose the householder would lose out but there are significant penalties for such behaviour. We must have a properly controlled system with a beginning, middle and end where the work done is vouched. Because the online system will be in place both the householder and the contractor can see the progress that is made. Deputy Doherty raises a minority issue and while I concede that it could potentially happen I cannot understand why a contractor who wants other business under the scheme would do that if he wants to be able to say to friends, relations, family and neighbours that he is compliant and point to the work he did for Mrs. Murphy or Mr. Murphy and for people to be able to ask them how he has done.
An enormous number of inquiries have been made to the Department and to Revenue since the Minister for Finance, Deputy Noonan, first made the announcement in the budget. People are already engaged in the process. There is considerable interest in getting started on the scheme. I do not wish to use this as a default position but if the issue arises over the next two years we can examine it again. However, we do not anticipate it being a problem.
I never claimed that it would happen in the majority of cases.
I know.
However, it could happen. A contractor who wants additional work under the scheme would comply with it. I am not sure about the latest figures for payment of the local property tax but there is always a certain percentage of people who even though they intend to do something do not do so on time. We got clarification that a claim will not be ineligible even when a contractor does not fulfil the criteria of ten working days. The Minister of State referred to a process but no process is laid down in legislation on how a claim can be processed in an appropriate time without a contractor providing the necessary information as set out in subsection (5). There are various reasons why a contractor might not provide the information. He could, for example, go bust or be sick for a period. Given human nature there could be many reasons. The purpose of the amendment is to ensure that the person who is entitled to the tax credit would not be denied it because they would already have a number of steps fulfilled. They would have employed a contractor who was tax compliant. Revenue would have approved the works, deemed the property suitable and given a unique identification number and the individual would have provided receipts. On that basis, in the event that a contractor did not follow through the claimant would still be able to have the claim processed in a transparent way within ten working days.
Could I help?
The Minister of State can speak briefly. He is not supposed to have another opportunity.
I have a note that I did not read earlier which might be useful. Mea culpa. It might help to put the issue in context. It might be the case that a very unusual situation could arise to which the Deputy referred, in which a contractor complies with the terms of the scheme but due to force majeure the final electronic confirmation cannot be made. I am sure that in such highly unusual situations the Revenue Commissioners could deal with the matter under their care and management powers. Even in such circumstances as the Deputy outlined, it is the position of the Department that the householder will not lose out in terms of the credit being granted to them in circumstances whereby for some unforeseen reason on the part of the contractor the final stage of the process was not in place. That is a verbal commitment rather than a legal commitment, which Deputy Doherty sought in his amendment specifying ten working days. However, that is our view and I hope that will be of some assistance.
Amendment put and declared lost.
Amendments Nos. 8 to 11, inclusive, form a composite proposal and they may be discussed together.
I move amendment No. 8:
In page 16, line 35, to delete “continuously”.
Again, we discussed the matter fairly extensively on Committee Stage. It is hopefully a point of agreement between all of us that we need to do something about long-term unemployment and that we must take measures that avoid people falling into long-term unemployment or help them to get out of long-term unemployment and back into work. The tax relief proposed for unemployed people who start a new business is a reasonable proposal.
However, I have a difficulty with the requirement that somebody be unemployed for 12 months before he or she can avail of the relief. There is a big problem not just with this relief but also with a number of schemes targeted at the long-term unemployed. There is a requirement that one must be unemployed for a certain period in order to avail of benefits. The alternative would be to allow people to join schemes immediately on losing their jobs so as to prevent them from becoming unemployed for protracted periods. As we all know and as I suspect the Minister of State would acknowledge, the longer one is employed, the more difficult it is to get back to work. It creates anomalies and causes frustration for people. They identify a certain scheme such as the back-to-education scheme which might help them to further their careers or return to work only to be told they cannot join until they have been out of work for one year. Is that not pretty stupid? Since the State has to pay for somebody who is unemployed, why should it not give relief immediately to somebody who wants to do something? Thus, there would be a chance that one would not have to become dependent on social welfare. The Minister of State might say in response that the State must take specific measures to help those who are out of work for longer periods. I agree and believe special assistance and various measures are needed in this regard, but I do not believe the Government's approach is the way to achieve this.
In response to Deputy Pearse Doherty the Minister of State made a point on singling out particular groups, in this case the disabled. He has said the tax code does not work in the way described and that it should be more general. He has also said it cannot be discriminatory in the way described, yet that is precisely the nature of the relief under discussion. It involves the tax code discriminating by stipulating somebody unemployed for more than 12 months can avail of a relief to enable him or her to return to work while, somebody unemployed for six months cannot do so. The latter must remain another six months in unemployment before being able to benefit. That does not make sense. The Minister of State must think of other ways to address the specific problem faced by those who become long-term unemployed through no fault of their own. In so far as the Government is providing a tax incentive designed to prevent people from falling into unemployment or to get them back to work, it should make the relief available to anybody who is unemployed. As soon as a person loses his or her job, he or she should be able to avail of a range of schemes to help him or her to return to work rather than having to wait 12 months to get support.
Deputy Richard Boyd Barrett raised an important issue. In the Bill, as published, the period specified was 15 months. I tabled an amendment suggesting a period of 12 months and this was accepted by the Minister. This is moving in the right direction. The logic seems to be to align the relevant period with the qualifying period for those on jobseeker’s benefit who are accessing other forms of social welfare support. This is true in the case of the back-to-work enterprise allowance scheme, in respect of which the period is 12 months. The period for the back-to-education scheme is now nine months in certain cases for a third level course. We have all met people in our constituency offices who are unemployed but chomping at the bit to return to third level education or start up a new business. They are told they are not on the dole for long enough to qualify. This is a general issue across a number of schemes and it needs to be addressed.
The incentive under discussion is very modest. I said on budget day that the last thing somebody unemployed for 12 months worried about was paying income tax on the profits of a business he or she had not yet set up. One is exempt from income tax on the first €40,000 of profit in years one and two - this is great and I hope those eligible will have enough profit to avail of the relief - but the reality for most people starting a business involves their hanging in the first year or two. I am not sure how beneficial the relief will be in practice, but the qualifying period of 12 months is one we need to examine. It must also be examined in respect of other schemes. We must incentivise people as soon as they receive jobseeker's benefit. Where they are relying on basic State support, the incentive should kick in as quickly as possible to get them into education, self-employment or mainstream employment.
The objective of the amendment is worthy of support. I can understand that there needs to be some timeframe to prevent people from becoming unemployed in order to avail of this relief. The period may not need to be as long as that about which Deputy Michael McGrath has spoken. It is not €40,000 one is getting; one is exempt only in terms of tax and a portion of the income would be exempt in any case. I hope the measure will allow a number of people who have been self-employed, particularly in the construction sector, to put their tool belts back on and go back working with an upturn in the sector. The problem is that some of those who have been self-employed in the sector may be getting a little work here and there, or may have a week on and a week off; unfortunately, that is the way the construction sector has been in recent years. The period of 12 months' continuous unemployment would mean that they would not be able to avail of the opportunity to set up their own businesses again. A real issue arises that could be examined.
While it might be right and proper in a normal environment to have every measure aligned with the back-to-work enterprise allowance and other measures in the social protection area, we must understand we are in unique circumstances in the State because so many people are unemployed, including a large number in one sector. In excess of 80,000 people are unemployed in the construction sector. I realise the amendment does not concern the construction sector alone, but we need additional measures to try to address the issue. Trying to co-ordinate measures with existing measures without having a massive impact on getting people back into self-employment is not ambitious enough. Anybody I know who is unemployed wants to find a decent job. People thinking about starting their own business think about all of the risks associated with it. Any encouragement we can give them to become the entrepreneurs of the future is welcome.
Each unemployed person represents a cost to the State in the region of €20,000 per annum if secondary benefits are taken into account. When one notes the modest tax revenue, amounting to a couple of thousand euro, that would be forgone as a consequence of the relief and compares it with the €10,000 cost the State would incur in primary and secondary benefits for an individual unemployed for a period of only six months, one realises the reconsideration of the 12 month period, as advocated in the amendment, is justifiable, at least until we actually determine whether this measure can entice enough people to take the risk or leap of faith required to start their own business and become self-employed.
I am aware of a good discussion that occurred on Committee Stage on this issue. With regard to a suggestion made by Deputy Michael McGrath, the Minister has already reduced the period associated with the scheme from 15 months to 12. This tapering was pretty much in line with the range of supports available on the social protection side.
We could not have a situation whereby the minimum period for eligibility would be less than the 12 month term which applies for schemes such as the back-to-education allowance. That would create a situation where individuals could claim a tax relief but also could lose their social welfare benefits. In tapering the scheme to the 12-month period, we are effectively bringing this measure into tally with existing supports on the social protection side.
We all accept there must be some minimum period for eligibility. Otherwise we could have a situation in which people in sustainable work situations who have business lined up or a plan to set up their own business become unemployed for a period of one day and thus become eligible, over the next two years, for the full relief. That is in nobody's interest. The Minister has been very fair in acknowledging that this is a modest scheme that is aimed at people who have been unemployed for at least 12 months. It offers targeted support for such individuals in terms of establishing their own business.
Deputy Doherty referred to job losses in the construction sector. I have consistently highlighted the fact that 60% of the people who lost their jobs in the crash were attached to the construction industry, either directly or indirectly through the materials and plant business which supported it. Already in the past 12 months we have seen an increase of some 11% in the numbers employed in construction. The scheme we are discussing could well provide the type of support that is necessary to get people back on their feet and potentially begin to take on employees. That is all to the good. The home renovation incentive, which we have also discussed, is effectively our contribution in the budget to helping the construction industry get back on its feet. The scheme we are discussing in these provisions has a larger application than just the construction industry. In fact, it is a scheme that applies right across the economy.
There must, as I said, be a minimum eligibility period, but we have reduced it from 15 months to 12. There is a variety of international views as to what constitutes long-term unemployment. The OECD has one view and the European Commission has another. In tapering the scheme for a 12-month period, we are allying it to the protections available under existing social protection schemes. The objective is to encourage people who are unemployed for at least a year to seek to get going again by allowing them to write off any profits they might make. It is a big ask and I do not pretend it will be some type of panacea. I have made no predictions of largesse in that regard. We have tapered the scheme to the next two years and to people who are out of work for 12 months or more, and we hope to see a good take-up.
To clarify, individuals who have been unemployed for a period of 12 months or more will be eligible to claim this relief. Qualifying applicants will include those in receipt of jobseeker's allowance, jobseeker's benefit or one-parent family payment and individuals in receipt of partial capacity payments. Where persons who would otherwise qualify attend a training course akin to a FÁS course, the period of training will also count towards their period of unemployment and thus towards their eligibility for the text credit to apply should they establish their own business and make a profit over that period of time.
In conclusion, I am not in a position to accept the four amendments put forward by Deputy Boyd Barrett precisely because, as I have outlined, we must have a minimum period for eligibility. We have opted for 12 months as the most logical choice, given the corresponding condition applying to existing social protection schemes.
We have had an interesting debate and it has given me much to think about as we moved through the different Stages of the Bill. However, the more often I hear the Minister of State's case on this particular issue, the less I agree with it. His main argument against my proposals is the very implausible suggestion that a person might give up his or her job in order, the next day, to avail of a scheme which, as the Minister of State rightly pointed out, is fairly marginal in its likely impact.
The word I used was "modest".
Okay; we will call it very modest. In fairness, the Minister, Deputy Noonan, was very frank in his acknowledgment at the committee that several of the initiatives he has brought forward are experiments which may or may not work. That is an honest approach. Given the scale of the crisis we face, we have no choice but to thrash out different ideas and schemes and give them our best shot. It is in this spirit that I put it to the Minister of State that what he just said does not stack up. I cannot envisage a scenario in which somebody would give up a job in order to avail of this scheme. It is simply not plausible.
The issue is one of deciding to whom this modest scheme should be available. Just as it is wrong in the case of other schemes administered by the Department of Social Protection, including the back-to-education allowance, it is wrong in this instance to stipulate that applicants must be unemployed for 12 months before they can avail of it. That does not make sense. I cannot count the number of times people have come into my clinic lamenting this bizarre requirement and saying how much they want to get back to work. The last thing they want is to slide into a situation in which unemployment becomes a self-fulfilling prophecy and they become depressed and less motivated to return to work. When people lose their job, their first instinct is to get back into the workforce immediately. I agree with the Minister of State in so far as he is arguing that this scheme should be aligned with other social protection measures, but my argument is that the latter must also be changed. We should not have a time lag for eligibility of 12 months in any instance. Instead, we must try to get people back to work as soon as possible.
The reality is that there is no money about the place. As the Minister has consistently pointed out, where there is no money, one must be experimental and creative in seeking to construct a tax system that encourages the type of entrepreneurship we need. One of the great benefits of the current system is that even though many people lost a great deal of money and a lot of people had to lay off employees, they still know what it is like to earn money and to make a profit. We did not have that in the 1980s. In the current situation, even though so many people have lost so much, they know how to make money. We must foster that type of entrepreneurship - that quiet, determined, enterprising culture - through the tax code.
It is wrong to say that the Government has not done anything in this area. Last year, for instance, we brought forward the JobsPlus scheme, which is a deliberate intervention to help people who are long-term unemployed. The home renovation incentive, as I have stated, is a specific targeted approach on the construction side. Under the scheme we are discussing here, we are encouraging people to get going again where they have a business idea and the potential to make that idea work in terms of the profits they might make or the people they might employ. Slowly but surely, we are putting schemes in place that will make a difference.
The good news is that as the numbers out of work decline, as is already happening, the number of long-term unemployed will also decrease. The most recent statistic points to a reduction in that cohort from 8.5% to 7.5%. It is a reduction of only one percentage point but it represents important progress. The definition of long-term unemployed deployed by the Department of Social Protection is that persons so categorised have been out of work for one year or more. We are allying that definition with the tax position we are proposing here. We will have to see how it goes. I absolutely concede that it is an experimental measure.
I hope as a result of this experiment that people will take up the opportunity offered by this relief. Many of them who have lost much do know how to make money.
The Minister took the opportunity to trumpet the Government's successes and initiatives.
No, I am just being factual.
We will agree to disagree on the there-is-no-money argument and agree to use a different language when it comes to profit and entrepreneurship. I accept people want to get back to work and it is largely through no fault of their own that they do not have jobs. If the Minister of State wants to blame Fianna Fáil for that, then that is fine by me too.
When someone loses their job, are we telling them they have to wait 12 months for us to give them a hand getting back to work? I believe we should not. I am proposing that there should be no time gap through this amendment. While I accept this would need to be aligned with the Department of Social Protection, we can start it here with the Finance (No. 2) Bill. I accept there are issues with those who end up long-term unemployed but this should be addressed separately. We need to give those with energy and enthusiasm, those who are used to earning a living, the opportunity to get back into work instead of telling them they have to wait six or eight months to be eligible for this relief.
A clenching point in accepting my amendment is that it would not cost the Government anything. In fact, it costs the Government to keep people on social welfare. If someone wants to get back to work, then the tax break under this scheme will not cost the Government anything in the end.
The amendment is the correct approach and the Minister of State should concede as he has no arguments for not accepting it.
Amendment declared lost.
Question put: "That the words proposed to be deleted stand."
The Dáil divided: Tá, 75; Níl, 46.
Tá
- Barry, Tom.
- Breen, Pat.
- Burton, Joan.
- Buttimer, Jerry.
- Byrne, Catherine.
- Byrne, Eric.
- Cannon, Ciarán.
- Carey, Joe.
- Coffey, Paudie.
- Collins, Áine.
- Conaghan, Michael.
- Conlan, Seán.
- Connaughton, Paul J..
- Conway, Ciara.
- Coonan, Noel.
- Corcoran Kennedy, Marcella.
- Coveney, Simon.
- Creed, Michael.
- Daly, Jim.
- Deenihan, Jimmy.
- Doherty, Regina.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J..
- English, Damien.
- Farrell, Alan.
- Feighan, Frank.
- Ferris, Anne.
- Fitzgerald, Frances.
- Fitzpatrick, Peter.
- Flanagan, Charles.
- Gilmore, Eamon.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Hayes, Brian.
- Heydon, Martin.
- Hogan, Phil.
- Humphreys, Heather.
- Humphreys, Kevin.
- Keating, Derek.
- Kehoe, Paul.
- Kelly, Alan.
- Kenny, Seán.
- Kyne, Seán.
- Lawlor, Anthony.
- Lynch, Ciarán.
- Lyons, John.
- McEntee, Helen.
- McGinley, Dinny.
- McHugh, Joe.
- McLoughlin, Tony.
- Mitchell, Olivia.
- Mitchell O'Connor, Mary.
- Murphy, Dara.
- Murphy, Eoghan.
- Nash, Gerald.
- Neville, Dan.
- Nolan, Derek.
- O'Donnell, Kieran.
- O'Donovan, Patrick.
- O'Dowd, Fergus.
- O'Mahony, John.
- O'Reilly, Joe.
- Penrose, Willie.
- Phelan, Ann.
- Phelan, John Paul.
- Rabbitte, Pat.
- Reilly, James.
- Ring, Michael.
- Ryan, Brendan.
- Stagg, Emmet.
- Stanton, David.
- Tuffy, Joanna.
Níl
- Boyd Barrett, Richard.
- Broughan, Thomas P..
- Calleary, Dara.
- Collins, Joan.
- Collins, Niall.
- Colreavy, Michael.
- Cowen, Barry.
- Crowe, Seán.
- Daly, Clare.
- Doherty, Pearse.
- Dooley, Timmy.
- Ellis, Dessie.
- Ferris, Martin.
- Flanagan, Luke 'Ming'.
- Fleming, Sean.
- Fleming, Tom.
- Grealish, Noel.
- Halligan, John.
- Healy, Seamus.
- Healy-Rae, Michael.
- Keaveney, Colm.
- Kelleher, Billy.
- Kirk, Seamus.
- Kitt, Michael P..
- Mac Lochlainn, Pádraig.
- Martin, Micheál.
- Mathews, Peter.
- McDonald, Mary Lou.
- McGrath, Finian.
- McGrath, Mattie.
- McGrath, Michael.
- McLellan, Sandra.
- Naughten, Denis.
- Nulty, Patrick.
- Ó Caoláin, Caoimhghín.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- Ó Snodaigh, Aengus.
- O'Dea, Willie.
- O'Sullivan, Maureen.
- Pringle, Thomas.
- Ross, Shane.
- Shortall, Róisín.
- Stanley, Brian.
- Tóibín, Peadar.
- Wallace, Mick.
Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Richard Boyd Barrett and Thomas Pringle.
Question declared carried.
Amendments Nos. 9 to 11, inclusive, not moved.
As amendments Nos. 13 and 14 are alternatives to amendment No. 12, they may all be discussed together.
I move amendment No. 12:
In page 18, to delete lines 23 to 38, to delete pages 19 and 20, and in page 21, to delete lines 1 to 17.
I know there has been a change to this section, but I want to make some general points on the one family tax credit and the way in which it facilitated the collaborative approach of parents who had separated but had shared responsibility for their children. When this measure appeared in the budget, it was seen as a retrograde step. We saw the number of emails from separated fathers and organisations such as One Family. It was very distressing and disturbing for those fathers who took responsibility for their children while not living in the same house. There is an issue about how parents are designated. We have to get away from the designation of primary carer and look more completely at shared responsibility.
The one family tax credit was abused by some people who availed of it without contributing, but it is disappointing that all separated fathers were tarred with the one brush. This measure caused them a lot of distress when it appeared in the budget. I am not too sure that the Government's amended section goes far enough because it provides that the second parent will receive the tax credit if the couple is not co-operating, but there must be a period of 100 days involved. This does not sound like shared responsibility.
Some of the suggestions by those people working with separated fathers could have been taken into account.
I strongly support Deputy Maureen O'Sullivan's comments. I recognise that the Government has perhaps come a small way towards meeting the grave concerns brought to our attention. Like myself, the Ceann Comhairle has probably received many representations on this issue and the retrograde and disproportionate changes the Minister has introduced in this section. It is felt that this is directed against fathers in particular. Recent Trinity College Dublin research shows that in 97% of separated families the courts deem the child's mother to be the primary carer. In that context, and in the context of having very good relationships between both parents as the child is growing, this is a retrograde move by the Government.
Many of my correspondents have noted that secondary carers do not get the majority of the ancillary benefits associated with caring for children, such as child benefit and medical cards. The number of people affected by this is significant, as the Minister knows. Notwithstanding the slight amendment that was brought in on Committee Stage, at which I unfortunately was unable to be present, for the amount of money the Minister hopes to save, the overall impact is detrimental. Therefore, I urge the Minister of State to consider withdrawing his proposal through our amendment.
We had a lengthy discussion about this amendment on Committee Stage, and this entire section which this amendment deletes. I brought forward other amendments which were more nuanced. I understand the Minister of State's arguments regarding the Commission on Taxation. When we rely on the Commission on Taxation it is important we recognise the very good job it did of trawling through all the different taxation measures. However, it was limited in its scope. There was insufficient engagement with civic society. When the Commission on Taxation recommended that the one-parent tax credit should be given to only one carer there was no consultation with the families or the organisations that represent them. Economists examined the figures and based the recommendation on those assessments.
The SIPTU representative in the Commission on Taxation refused to endorse the commission's viewpoint because it struck the wrong balance. This is a good example of where one can strike the wrong balance. On a fairness level, for two parents to receive a tax credit for one child does not seem to make sense. Cohabiting married couples do not receive the tax credit, so that definitely makes no sense. However, we need to dig deeper and examine how it was introduced, how it has evolved and the impact of removing it. We must judge that impact today. For more than 15,000 carers, primarily fathers, the impact would be a loss of over €220 per month. They will pay €220 per month more tax on the implementation of this measure, approximately €2,500 per year. We must examine the impact that will have on the individual and the child he or she supports.
This is about deleting the section because there are certain things one can and cannot do. I had an amendment down that we examine this as a commencement order. Earlier I discussed the home renovation incentive scheme, which has passed Report Stage. It replaces the environmental incentive introduced in 2009 under the Finance Act 2010. It was subject to a commencement order, which was never given because issues surrounded it. That has happened time and again. We have the issue of the charities scandal. Four years on we still do not have the charities regulator because it is subject to a commencement order. This area should be subject to a commencement order. While it is not a huge group of people, some people will be affected by this.
On Committee Stage the Minister said the principle he wants to see here is one payment to one individual, but he is open to examining the structure of that. It is very clear from Report Stage that, from what I can see in the amendments, the Opposition benches have not provided solutions to the challenge the Minister put to us. There is a reason for that. We left Committee Stage of the Finance Bill on Wednesday night and had to have our Report Stage amendments in by 11 a.m. the following day. It was impossible to rise to the challenge the Minister set us.
There is a need for engagement with the sector and to explore the openness suggested by the Minister on Committee Stage. The State will not save a huge amount of money on this in the context of the Finance Bill but it could put significant pressure on individuals. Deputy Broughan mentioned the Government amendment, which will address and satisfy a number of individuals. I can only guess that the number of people who will be able to avail of this amendment will be limited. While the amendment will go to address some of the damage this section will cause these secondary carers, it is unfair. The Minister has accepted the principle in legislation that secondary carers can be supported through tax credits in the Finance Bill if they care for their children in excess of 100 days and if the primary carers have no tax liability.
In the tax code the two carers are not assessed based on joint incomes. They are two individual units. Now we are saying the secondary carer is entitled to a tax credit if he or she satisfies two conditions, one that he or she cares for the children for more than 100 days and the other that the primary carer does not avail of the tax credit. The term "secondary carer" is a horrible term because any father is a carer. Other carers who provide care for their children in excess of 100 days, and it could be 150 days, will not receive the tax credit because an individual who is unrelated to them from a tax point of view, is working and has a tax liability. It is discriminatory on that basis.
While I do not object to that amendment because it will benefit a number of people, for the amount of money the State will save there may be a better way of doing it. There have been concerns from the Opposition benches on how this tax credit was used in the past. No voice within this Chamber will argue that we should keep the tax benefit as it is. Equally, a sizeable number of voices in government as well as opposition are concerned that ending the tax credit in its entirety for the second carers, even with the exemption in cases where the primary carer has no income and the secondary carer cares in excess of 100 days, does not go far enough.
A commencement order would be the right way to do it. Let us have some contact with the groups. Let us explore the challenge the Minister has put to us. Can we examine ways of shaping and strengthening this? Later, I will deal with amendments to the Betting (Amendment) Bill. This Bill was to bring in €20 million, and three years later we are still awaiting it. That was not going to affect any individual to the extent that this will affect people.
These individuals will be down by €215 per month. We need to take a step back and look at this again. If there is an unwillingness to amend this in the Seanad, in terms of a commencement order, there is no other option for us but to object to the entire section.
We have had some discussion on this. The initial proposal was an absolutely wrong and disproportionate hit at single parents, mainly single fathers, who do not live full-time with their children, but who play a considerable role in looking after them and who take responsibility for them. As I pointed out to the Minister, the proposal was indicative of a conservative perspective on the family that fails to recognise families have changed. The modern family is not the sort of nuclear family of the de Valera period, which involved two parents living together with their children. We have different types of families now and this must be recognised.
Deputy O'Sullivan was right to challenge in committee the language used, which used the terms "primary" and "secondary". I should have done the same. I have been thinking about these terms and have realised these terms refer to my situation. I am a so-called "secondary" carer as I am a father who does not live full-time with his children, but who plays a full part in my children's lives. I do so to the greatest possible extent, financially, personally and every other way and I get on very well with their mother, my ex-partner. The language used in the legislation is problematic in that it creates a hierarchy in a situation where two parents happen to be separated and one of the parents has the children living with him or her full-time while the other does not.
The number of days proposed in the legislation - 100 days - requiring the carer to have the child living with him full-time could be problematic. I mentioned the issue of parents who are out of the country, but I suppose those parents who are out of the country might not get the tax relief. More realistically, what about where a parent is required to live and work in a different part of the country? That parent could be on the phone to his children every day and could be having them stay with him every weekend that is possible, but because of school and work commitments and so on, there could be long periods of time when that parent does not see his children. This does not mean he is not playing a huge role in their lives or not paying maintenance etc. The legislation fails to recognise the human reality of many modern families.
I accept the Government has acknowledged some of the anomalies in the proposals and has tried to address them, but the legislation still does not go far enough. For example, the requirement for the secondary claimant to have the children resident with him for 100 days is problematic. There will be cases where fathers or parents who play a big role in their children's lives - not a secondary role, but who do not live with the children - will be hit unfairly by what is being proposed. My amendment tries to nuance this slightly by reducing the requirement to 50 days, although I do not think this is satisfactory. I also suggest that the proposal should not hit parents where the parent manifestly plays a substantial role in the care and financial maintenance of the child.
My proposal is not perfect because, as Deputy Doherty said, we were told of the deadline for amendments, the day before the deadline. I accept that although the deadline was 11 a.m., we were allowed to submit them somewhat later, but we had a very short time to work out a complicated problem. There is recognition by those who represent single parents that there are problems with the current situation. We need to work on that, but what the Government is doing is unfair. It is neither right nor satisfactory. We were put in a position where we had no choice but to lash in whatever amendments we could at the last minute to meet the deadlines. This is not a satisfactory way to deal with the serious issue confronting families.
We must remember that at the heart of these families are children and that it is these children who will be hit as a result of this. Much of the cost will fall back on the State, in so far as maintenance payments may be reduced. This will impact on social welfare payments, rent allowance payments and various other areas. The proposal has not been thought out fully and must be re-examined.
The income of no other group of people has been affected to such a proportion by this budget as will be the income of this group of single parents by section 7. Many single parents, primarily single fathers, will be hit for €2,500 a year, between the loss of the credit and the reduction of the lower rate band. This will apply to people even on modest incomes. People on the average wage of approximately €37,000 a year could lose €2,500. Nobody else has been affected to that extent by the budget.
I concur with Deputy Boyd Barrett that ultimately it is the children who will pay the price for this change. This will mean fewer maintenance payments will be made by fathers, because they will be out of pocket to the tune of approximately €50 a week due to this change. I acknowledge that the current provision regarding this tax credit is anomalous. Deputy O'Sullivan acknowledged earlier that even fathers who play no active role whatsoever in the upbringing of their children can benefit from the credit. None of us would stand over that.
On the substantive issue, amendment No. 14 in my name differs from the proposal brought forward by the Minister, Deputy Noonan, on Committee Stage. He provides that if one parent does not use the credit, that parent can relinquish that credit and provide it to the other parent in a manner prescribed by the Revenue. However, this does not provide for the splitting of the credit, which is the proposal I wish to make. I suggest that if one parent can use €1,000 of the €1,650 credit, the balance could be transferred to the other parent. The Minister's proposal in subsection (4) on page 20 provides that only one person can benefit from the credit. Will the Minister of State consider making a change so that if the primary claimant only uses a portion of the credit, the unused portion can be used by the secondary claimant? Doing this will still result in only one credit being used, but it will be shared in certain circumstances. This proposal will only benefit a portion of the people who will be affected by this section, but it would help some.
The Government has gone a bit of the way in this section following Committee Stage, but acceptance of my amendment would help more people and I ask the Minister of State to consider it.
I strongly support this amendment because I believe what is being proposed in the legislation is completely unfair and very much targets one section of society, lone parents, and single fathers in particular. These people will lose over €200 per month. If the Minister for Social Protection came up with a proposal in the budget that resulted in a cut of €200 per month in child benefit, there would be uproar. However, the effect on families of what the Minister of State proposes to do here is exactly the same. It takes money out of parents' pockets and will, undoubtedly, have a huge impact on the children concerned.
Nobody suggests that the regime as it operates currently should remain in place. We all accept there are shortcomings in it and that it is open to abuse.
What is required is a much more nuanced response to the issue and not just the sledgehammer being used which will result in children being victimised.
The programme for Government makes a very clear commitment to maintaining the current rates of income tax together with bands and credits. The Minister of State and many of his colleagues have made much of this commitment in the programme for Government, but it is quite clear that as a result of this provision the Government will break this commitment in the case of a certain section of society. Labour Party Ministers in particular have claimed credit for measures which will result in people on low incomes being protected, and keep repeating this, but in actual fact this proposal will mean a further 4,000 people will be brought into the tax net. The Government claims it will not make any tax increases but this is the reality of what it is doing. An extra 4,000 people, predominantly single fathers on very low wages, will be brought into the tax net as a result of this measure. I challenge the Minister of State to explain how on earth this is fair.
I point out to Fine Gael Members in particular that an extra 5,500 parents will now pay tax at the higher rate. How is it unacceptable to Fine Gael Members to impose a higher rate of income tax on top earners in Ireland but somehow it is acceptable to impose it on single parents on average wages? I ask the Minister of State to address this point specifically in his response. How on earth is this acceptable when Fine Gael has resisted any attempt to make high income earners pay a fair share of income tax? It is sheer hypocrisy on the part of both Government parties to speak about tax cuts next year while imposing them on single parents this year.
The most basic request coming from people campaigning in this area is that there would be at least a commencement order which would allow further consideration of this measure. This is a very reasonable approach given the rush which has been put on this and the time constraints applied to getting the legislation through the Houses. A number of groups have lobbied in this area and the approach they have taken is very reasonable. Nobody suggests matters should remain as they are, but they are looking for the Government to accept the reality of people's lives nowadays and recognise some principles we need to apply to the tax and welfare treatment of families in current day Ireland. These groups seek four principles to be accepted. Does the Minister of State accept the principle and practice of shared parenting as a fact and aspect of modern society and family life in Ireland? Is the Minister of State prepared to accept the principle that the tax credit can be transferred to the non-principal carer if appropriately crystallised through a shared parenting agreement? The third principle is that the tax credit should be awarded to reflect the additional costs and needs of children who are cared for through a shared parenting agreement, and the fourth principle is that the tax credit should recognise the costs and needs of the children concerned and therefore the tax credits should follow the children. These are very reasonable principles which reflect the reality of people's lives and the need for fairness in the tax and welfare treatment of separated parents. I challenge the Minister of State to tell me he does not accept any one of these principles. If he accepts these principles he cannot possibly proceed with these provisions.
The minor concessions made following the arguments made on Committee Stage are wholly inadequate to respond to the issues concerned. For one partner to relinquish part of the tax credit is completely imbalanced in terms of the approach to this. We must bear in mind in the vast majority of cases it is the mother who receives child benefit to reflect the costs. What is proposed is that there will be no measure to reflect the costs for single fathers who by and large do their utmost to do the right thing by their children and provide as best they can for their families.
I call on the Minister of State to stand by the commitments given in the programme for Government in terms of not increasing taxes on any sector in society, not increasing income taxes and not bringing any further people into the higher rate of tax, which is what this provision will do, and to recognise the reality of people's lives where parents do not live together and where both parents do their best to provide for their children. In light of this I ask the Minister of State to put a stay on this measure and take time to reflect on the damage it will do to families. Most of all I ask the Minister of State to respect the many parents and single fathers throughout the country who do their utmost to provide for their children and not to proceed with this measure which will result in a loss of more than €200 per month in these circumstances.
The single person child carer tax credit will replace the one-parent family credit from 1 January 2014. It will operate differently from the one-parent family credit by being available in the first instance to the primary carer, namely, the individual who cares for the child for the greater part of the year. The one-parent family credit was available on the basis of the child residing with the claimant for part of the year, which led in certain cases to multiple claims in respect of the same child by different individuals. This policy change was recommended by the Commission on Taxation in its 2009 report.
I point out to Deputies no specific tax credit for children in the tax code is available to married or cohabitating couples to assist them with maintaining their children, therefore the existing one-parent family tax credit, and its availability to multiple claimants in respect of a single child, was unfair to such couples. This was accepted by many Deputies in the course of Committee and Report Stages. This change will ensure a maximum of one credit will be available but, as a result of a Committee Stage amendment brought forward by the Minister, it can now be relinquished by a primary carer to a secondary carer in certain circumstances.
The main features of the new credit include that the primary carer is the individual with whom the child resides for the greater part of the year. The primary carer can be the child’s parent or the individual in whose custody the child is and who maintains the child at his or her own expense for the greater part of the year. This claimant is entitled to the credit in respect of that child. If the primary carer relinquishes the credit, a secondary carer may claim it. The child must reside with this individual for more than 100 days in aggregate in the year, which is indicative of a level of involvement in the care of the child which is supportive of the primary carer. For the purpose of this limit a day can include the greater part of a day. Only one credit in respect of any child is available and an individual who is a primary carer for more than one child can get only one credit in respect of those children. Where the person who is the primary carer retains the credit, no other individual can get a credit for any of the children in respect of whom the person acts as primary carer.
The final point is that, regardless of whether a person is a primary or secondary claimant, he or she must not be married or in a civil partnership, unless he or she has separated, or cohabiting.
On Committee Stage Deputy Pearse Doherty inquired about students, particularly those from rural areas, who were obliged to live away from home between Monday and Friday of each week while attending college. He asked whether they could satisfy the requirement of residing with a primary carer for the purposes of being a qualified child. The Revenue Commissioners have indicated that there was previously a similar qualifying condition in respect of the one-parent family tax credit. There was never any issue of contention with regard to those students being treated as being resident with their parents, despite the fact that they were obliged to be absent from home in order to attend college. The same practical approach will be taken with this new credit.
The entitlement of the primary carer to the credit has precedence in all circumstances. If, however, the primary carer cannot utilise the credit, either the other parent or another person providing care for the child can make a claim for it. As a result, the credit applies in all circumstances. This will only be possible where the primary carer has relinquished his or her claim to the credit. The secondary carer, in claiming the credit, will also be required to confirm that the qualifying child resides with him or her for a period or periods of not less than 100 days during the year of assessment. How this period is determined will be a matter for the primary carer and the claimant to decide. In his amendment Deputy Richard Boyd Barrett is seeking a reduction in this period to 50 days. The shorter timeframe proposed by the Deputy could, in certain circumstances, lead to more than one secondary carer making a valid claim for a tax credit where a primary carer had relinquished it. In addition, the amendment would alternatively allow for the credit to be claimed where a secondary carer played a substantial role in the care and financial maintenance of a qualifying child. This alternative criterion would also allow for more than one secondary carer making a valid claim for the tax credit. It would be impossible for the Revenue Commissioners to adjudicate on to whom the credit should be awarded in such circumstances. On Committee Stage the Minister, Deputy Michael Noonan, pointed out that the definition of a day included the greater part of a day. This means that where a secondary carer takes a child on a Saturday morning and the child returns to the primary carer on Sunday afternoon or evening, this period will be actually treated as a period of two full days for the purposes of the legislation.
In designing this new credit aimed at the primary carer, with the opportunity for relinquishment to a secondary carer, the Minister was very anxious to address the situation which had prevailed with the one-parent family tax credit where any individual who had a child residing with him or her for just one day in the year could qualify for that credit. This could not be allowed to continue. On Committee Stage the Minister was asked if the credit could be made available to a secondary carer where there was no relinquishment, for example, in circumstances where there an acrimonious break-up. The officials have considered how this might operate, in consultation with officials from the Revenue Commissioners, and have concluded that in such circumstances it would not be possible to reallocate the credit without the permission of the primary carer. Such an allocation would effectively breach confidentiality in respect of the primary carer’s income and tax affairs.
Deputy Michael McGrath's amendment proposes that in order for a person to make a claim for the single person child carer credit as a secondary claimant and rather than requiring him or her to demonstrate that he or she was involved in the actual care of the child, he or she would have to have adhered to the terms of a court ordered maintenance agreement. While the amendment has some merit, it would not take account of situations where separated partners did not need to go to court and manage to agree maintenance arrangements in respect of the child or other care scenarios. It would not take account either, for example, of grandparents also involved in the care and maintenance of a child.
The intent behind the new credit is to provide a support for those single persons, whether they are primary or secondary carers, who have the additional responsibility of caring for a child while in employment. The credit is not granted simply on the basis that a claimant is obliged to provide financial maintenance for a child but rather where that adult is involved in the care of the child. Existing tax legislation does not provide tax relief for that element of a maintenance agreement which specifically relates to support for children. All parents have an equal responsibility to provide financial support for children. Married or cohabiting parents are not granted a tax credit in respect of their children when they must bear similar costs.
The Deputy further proposes that the unused amount of the tax credit could be apportioned to the secondary carer in circumstances where the primary carer did not fully utilise the credit. There are clear administrative difficulties in this proposal which would, at a minimum, require a review at the end of the tax year. However, the Minister would have significant concern about allowing for circumstances where the credit being claimed by one person was determined with reference to the tax and income position of another independent person. To allow for such a division of the credit would possibly expose Revenue to being obliged to indicate in some fashion the confidential details of another person’s financial circumstances.
Complete nonsense.
For all of the reasons given, I cannot accept any of the amendments tabled by the Deputies.
I will now deal with some of the other issues raised by colleagues. Deputy Pearse Doherty referred to the Commission on Taxation. My understanding is that when the commission examined this issue, it invited significant comment from interested parties or groups. It also consulted widely among a large number of interested parties in the private and public sectors in order to progress its deliberations. It is fair to state the proposal brought forward in the recent budget is more nuanced than the more blatant one made by the commission in 2009. We have been cognisant of some of the points made by Deputies in that regard.
The Deputy made a very fair point on including a commencement order. As I suspect he knows, we calculated the budgetary arithmetic on the basis that €22 million - not an insignificant amount of money, particularly in the light of the circumstances in which the country finds itself - could be saved by means of this measure. The effect of including a commencement order would be that we would not be able to obtain that €22 million in this tax year and that the full weight of the proposal would not be enforced until the end of next year. As a result, the €22 million would be lost. I am sure the Deputy will inform me where we might find this amount and we would certainly examine whatever suggestion he wished to make.
On married and cohabiting couples, when I was dropping my children to school recently, I met the father of some of their friends who informed me that he was working in London to where he travelled each Monday morning. As a result, he must pay for bed and breakfast accommodation there for five days each week and he is also obliged to make mortgage repayments on his home in the area of west Dublin in which we live. It is not untypical for married parents to find themselves in situations of this nature. They are obliged to hold down two jobs in separate locations in this country or else in different countries. It is not credible to suggest such married couples should be disadvantaged by a continuation of the current scheme. We must be cognisant of this fact.
Deputy Róisín Shortall inquired as to whether we were breaching a commitment contained in the programme for Government in respect of this matter. I do not believe we are doing so and wish to explain why. The programme for Government states that, as part of its fiscal strategy, this Administration will "Maintain the current rates of income tax together with bands and credits. We will not increase the top marginal rates of taxes on income".
The credit is being maintained. It is not being lost but restructured to reflect the purpose for which it was originally intended.
What about the bands?
I did not interrupt the Deputy. The credit is intended for use by the primary carer. That has not changed. While the Deputy may take a different view, the proposal does not breach the clear commitment given in the programme for Government. The credit remains, but it is being restructured and specifically designated for the child, as should have been the case since its introduction. That was the purpose of the entire scheme.
Despite the pretence in which some people are engaging, it was recognised for some years that this issue had to be addressed at some point. As I stated, the approach we have taken is better than that proposed by the Commission on Taxation. We have taken a more nuanced approach which ensures the credit will be available to the primary carer or, in certain circumstances, a grandparent. I understand this was not the original proposal made by the Commission on Taxation. I do not accept the Deputy's contention that we have breached the commitment set out in the programme for Government. On the contrary, the credit remains in place and is better targeted as a consequence of this proposal.
I hope I have answered all of the questions asked. If not, I will address any outstanding issue once the Deputies opposite have made their second contributions.
Without casting aspersions on our distinguished colleagues in the bull pen, the Minister of State's contribution is reminiscent of an episode of "Irish Pictorial Weekly", with numbers being plucked from the air. He referred to the definition of a day. It seems we will have to define what is and is not a day.
Given the energy the Government is expending on tracking down the €25 million it will allegedly save by eliminating multiple claims in 2014, why does it not expend the same energy on pursuing the Googles of this world which pay only a couple of per cent in corporation tax when they should pay a minimum of 12.5%?
The Minister of State explained that the Government had been examining this tax relief for a long time, whether through the Commission on Taxation or in other forums, because it was unfair on families in general. Irrespective of what one's view is of the proposal, it may well be discriminatory against many fathers. In the second or third quarter of this year 34% of births were to single parent families. Since the fateful events of September 2008, successive Governments have taken a series of anti-family measures and interventions which have not been child friendly. For example, child benefit and one-parent family payments were cut, while maternity benefit was made taxable. These measures gave the most vulnerable the task of carrying the burden of austerity. As a recent Oxfam study shows, austerity has been borne most heavily by those least able to bear it. I commend the amendment to the House.
I presume the tax credit can be claimed retrospectively for four years, as is the case with other tax credits. Perhaps this part of the debate will not be broadcast on "Oireachtas Report". As the Minister of State noted, the legislation is so open-ended that one only needs to care for a child for a portion of a day to be eligible to claim this tax credit. Will this mean that we will have a flood of retrospective applications for the tax credit from single parents who, as Deputy Broughan noted, account for 34% of families? A tax credit of €2,500 for each of the past four years would mean that people would get ten grand from the Revenue Commissioners before Christmas. What damage would that do to the €22 million in savings the Government expects to secure?
I could provide different options for generating savings of €22 million. To paraphrase the response of the Minister for Finance when he was questioned about the €3 million loss to the State arising from a mistake made in the local property tax legislation, pluses and minuses are built into every budget. The Government can make a commencement order and if corporation tax revenues are €22 million below target, it will still have scope to make up the shortfall. Governments will always try to define the parameters of the budget in advance. The money generated from Bank of Ireland's sale of a preference share today will be recouped by the National Pensions Reserve Fund, from which the original investment in the bank originated. As a result, the State will lose out as it will no longer receive part of the dividend to the Exchequer that is paid by Bank of Ireland every February. As this example makes clear, issues always arise in terms of the pluses and minuses in a budget.
If the Government genuinely did not want to target single parents, specifically single fathers, for savings of €2,500 per annum, it would find a way around this measure. Based on comments made by the Minister for Finance in committee last week, I entertained the hope he was open to change on this proposal. While the Minister of State may argue that this measure is better than the proposal made by the Commission on Taxation, it is still not a good one. He should explain to single fathers who pay maintenance, provide love, care, protection and support for their children and play a valuable role in their upbringing why losing €220 per month is better than the proposal made by the commission because that argument does not cut it.
The proposal is wrong. As Deputy Róisín Shortall pointed out, if it was presented in its true guise, namely, as a measure to remove €220 per month from single fathers, it would cause outrage. The numbers involved are small and many of those who are entitled to the credit do not claim it. While there may also be others who should not have claimed it because they had not provided for their children or did not engage with them, we should not throw out the baby with the bath water. There are more sensible approaches to reforming the current system. The proposed measure is cruel to parents and, more importantly, their children.
Separated parents incur additional costs in providing for their children as there will be two homes and essentially two families. Having one tax credit for the child is not how the system should operate.
As I listen to this debate, I am becoming more frustrated and angry about the way in which this issue is being addressed. I keep thinking I am the single parent about whom the Minister of State is talking because I do not live full-time with my children. He makes comparisons with cohabiting couples who have been hammered by cuts in child benefit, income reductions and other changes. It would be a damn good idea to consider tax breaks that took account of the general costs hard-pressed parents pay in bringing up children. However, the Minister of State should not use comparisons with cohabiting couples to justify a cruel attack on one particular group.
As Deputy Pearse Doherty noted, €200 per month is a big chunk of money for the vast majority of those who have benefited from this tax credit. There is a major issue in this regard. Irrespective of how many days of the year my children spend with me, I must have somewhere for them to stay.
Whether it is the Minister of State's 100 days or fewer, where are they going to sleep when they come to stay? Are they to sleep in a box? One must have a bigger house. Both sets of parents must have a place for the children to stay, and that generates an extra cost.
The Minister's provision completely fails to take typical situations into account. For example, there are cases of working parents in which the single father would take the children every second weekend. Such fathers cannot take the children during the week because they are at school, and they take them every second weekend. The parents alternate but they make big financial contributions, and then the fathers would go to see their children during the week for half a day, for instance, to go to a football match or to go out shopping, and take them for extra days at the holiday period. Such parents might not fit into the Minister of State's criteria, but they incur significant extra costs because a key feature of ferrying children back and forth in that situation is extra transport costs that one would not have to pay for otherwise. The Minister of State is not taking these matters into account; he is hitting at a group of persons in a big way and, by extension, no doubt he is hitting at the children. It means parents will see their children less. That will be the effect.
On the amendment that the Minister, Deputy Noonan, brought forward, the Minister of State, Deputy Brian Hayes, elaborated on how it will work in practice where one parent can relinquish the credit to the other parent and he confirmed that the consent will be required of the primary claimant. It is important to acknowledge that many relationships end fairly badly and, unfortunately, such consent may not be forthcoming in many cases.
On the second issue of the possible division of the credit which would have been a good step which would have obviated some of the worst aspects of this decision, the Minister of State gives two main reasons it cannot be done. First, he stated it would involve in some way transgressing the confidentiality of one person's taxation affairs, essentially, by letting the other person know that he or she did not use all of the credit. The Minister of State could include the consent provision there. That would certainly deal with that.
Second, the Minister of State stated it would be difficult to deal with administratively. I do not believe it would be. It might mean, for example, that somebody would have a time lag of one year in arrears with which he or she could deal by way of seeking a P21 balancing statement and he or she could get the credit the following year for the unused portion that the other parent did not claim for the previous year. That is eminently doable.
The Minister of State confirmed in the course of the discussion a tight and strict interpretation. The impression given that he has moved considerably from the original draft of the Bill does not stand up to scrutiny. He is saying that one person can transfer the credit in full to another person if he or she so consents, fills up a form and sends it off to the Revenue. I would suspect that not many will fall into that neat little category.
The Minister of State has been somewhat economical with the truth in his comments on the programme for Government. As he stated, the programme for Government states:
As part of our fiscal strategy the new Government will: ...
• Maintain the current rates of income tax together with bands and credits.
Theoretically, the Minister of State is retaining the credit even if he is taking it from one group. I will concede that point to some extent, but I will not accept that he is maintaining the bands.
The figures that have been provided to us through parliamentary questions state clearly that some 4,000 parents who are currently not paying tax will be brought into the tax net as a result of this measure and a further 5,500 parents will pay tax at the higher rate. The Minister of State is not maintaining the bands for those parents. Would the Minister of State address that point about the broken commitment to maintain the bands? The point is that, in total, almost 5,500 parents stand to pay extra income tax as a result of these changes. That figure also has been provided by Revenue. It flies in the face of the commitments that have been given on taxation.
The Government, in particular, the Minister of State's party, but also the Labour Party, has steadfastly refused to increase the taxation burden for those earning over €100,000. In the light of that and the Government's stated commitment not to increase taxes, how on earth can he justify bringing 4,000 of those who are on minimum wages into the tax net and increasing the bands of 5,500 others on low wages to bring them into the higher rate of tax? It seems that when it comes to the Government, in particular, Fine Gael, there is one law for the golden circle of high earners and another law for those who happen to be single fathers on low income. That is an indefensible position for the Minister of State to adopt.
He has been given a number of suggestions of how he might deal with it.
We are over time.
If the Minister of State accepts the principle of shared parenting, there should be a shared arrangement. I endorse the points made by Deputy Boyd Barrett. We are all too familiar with separated fathers who are living in tiny bedsits or one-bedroom flats who do not have the opportunity to have their children living with them because of the serious housing crisis. The Minister of State is also completely ignoring that. In most cases, such parents have very limited means indeed. How can he justify it?
Through this Bill, the Government is attempting to restructure this credit to focus it exactly on the primary carer and, exclusively, on the child to ensure that the support in the tax code goes directly to the child. I think there is an unanimous view on all sides that this anomaly has gone on for far too long. The point has been made consistently by colleagues that married or cohabiting couples face a discrimination in the tax code in that such provision is not granted to them. There is an acceptance that we must resolve this.
An issue at which we all need to look between now and next year's budget is whether we can find a new way to deal with this issue. I heard colleagues who were engaged in this issue on Committee Stage state that they had not the time to put forward a more workable solution to this issue. The Government is all ears on how we can resolve this issue but it must be done on a fair and equitable basis. We cannot discriminate in favouring of one group as against another. We are determined to ensure that-----
The Minister of State is just after doing so.
That is exactly what the Minister of State is doing in taking €2,500 from a particular group.
The Minister of State without interruption.
If another way can be found - perhaps we have time between now and next year's finance Bill to establish whether that can be teased out by the committee - the Government would consider it.
On the question of the loss of income to parents as a result of this measure, I understand 5,500 is, broadly speaking, the number of individuals that has been determined by Revenue. If one takes a person earning the minimum wage of €17,500 per annum-----
On a point of order-----
We are out of time, actually.
-----that is not in line with replies that have been given to parliamentary questions on this matter.
The Minister's two minutes are up.
I apologise for that, a Ceann Comhairle.
Question put: "That the words proposed to be deleted stand."
The Dáil divided: Tá, 78; Níl, 48.
Tá
- Barry, Tom.
- Breen, Pat.
- Burton, Joan.
- Buttimer, Jerry.
- Byrne, Catherine.
- Byrne, Eric.
- Cannon, Ciarán.
- Carey, Joe.
- Coffey, Paudie.
- Collins, Áine.
- Conaghan, Michael.
- Conlan, Seán.
- Connaughton, Paul J.
- Conway, Ciara.
- Coonan, Noel.
- Corcoran Kennedy, Marcella.
- Coveney, Simon.
- Creed, Michael.
- Daly, Jim.
- Deenihan, Jimmy.
- Doherty, Regina.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J.
- English, Damien.
- Farrell, Alan.
- Feighan, Frank.
- Ferris, Anne.
- Fitzgerald, Frances.
- Fitzpatrick, Peter.
- Flanagan, Charles.
- Flanagan, Terence.
- Gilmore, Eamon.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Hayes, Brian.
- Heydon, Martin.
- Hogan, Phil.
- Howlin, Brendan.
- Humphreys, Heather.
- Humphreys, Kevin.
- Keating, Derek.
- Kehoe, Paul.
- Kelly, Alan.
- Kenny, Seán.
- Kyne, Seán.
- Lawlor, Anthony.
- Lynch, Ciarán.
- Lyons, John.
- McEntee, Helen.
- McGinley, Dinny.
- McHugh, Joe.
- McLoughlin, Tony.
- McNamara, Michael.
- Mitchell O'Connor, Mary.
- Murphy, Dara.
- Murphy, Eoghan.
- Nash, Gerald.
- Neville, Dan.
- Nolan, Derek.
- O'Donnell, Kieran.
- O'Donovan, Patrick.
- O'Mahony, John.
- O'Reilly, Joe.
- Penrose, Willie.
- Perry, John.
- Phelan, Ann.
- Phelan, John Paul.
- Rabbitte, Pat.
- Reilly, James.
- Ring, Michael.
- Ryan, Brendan.
- Shatter, Alan.
- Stagg, Emmet.
- Stanton, David.
- Tuffy, Joanna.
Níl
- Adams, Gerry.
- Boyd Barrett, Richard.
- Broughan, Thomas P.
- Calleary, Dara.
- Collins, Joan.
- Collins, Niall.
- Colreavy, Michael.
- Cowen, Barry.
- Crowe, Seán.
- Daly, Clare.
- Doherty, Pearse.
- Dooley, Timmy.
- Ferris, Martin.
- Fleming, Sean.
- Fleming, Tom.
- Grealish, Noel.
- Halligan, John.
- Healy, Seamus.
- Healy-Rae, Michael.
- Kelleher, Billy.
- Kirk, Seamus.
- Kitt, Michael P.
- Mac Lochlainn, Pádraig.
- McConalogue, Charlie.
- McDonald, Mary Lou.
- McGrath, Finian.
- McGrath, Mattie.
- McGrath, Michael.
- McLellan, Sandra.
- Martin, Micheál.
- Mathews, Peter.
- Murphy, Catherine.
- Naughten, Denis.
- Ó Caoláin, Caoimhghín.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- Ó Snodaigh, Aengus.
- O'Brien, Jonathan.
- O'Dea, Willie.
- O'Sullivan, Maureen.
- Pringle, Thomas.
- Ross, Shane.
- Shortall, Róisín.
- Smith, Brendan.
- Stanley, Brian.
- Tóibín, Peadar.
- Troy, Robert.
- Wallace, Mick.
Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Pearse Doherty and Thomas P. Broughan.
Question declared carried.
Amendment declared lost.
Amendments Nos. 13 and 14 were discussed with amendment No. 12 and, as a result of the decision on amendment No. 12, neither amendment can be moved.
May I make a point of order on this?
There is no point of order on an amendment.
I am asking about that.
Is this to raise a point of order or to have a discussion?
No discussion. I am not revisiting the debate, just making a point of order.
It is a rule. The amendment has already been discussed and the Deputy cannot move it.
The amendments tabled by Deputy Michael McGrath and me are insertions, so I do not understand why they were not dealt with separately from amendments that propose deletions. I can understand how amendments proposing to delete a provision of the Government's legislation are directly counter to one another and that the amendments fall if the words stay, but I do not understand how an amendment that proposes to insert something new, and not to delete something the Government has said, is not voted on as a separate matter.
What we voted on was whether the words proposed to be deleted stand. The words stand and therefore no changes are made to the Bill.
With respect-----
We are moving on. The Deputy has had his say.
Very briefly, with respect-----
Please, Deputy, sit down and respect the Chair. If Deputy Boyd Barrett wants to come to me afterwards, I will explain it to him in simple language. Please sit down and respect the Chair.
Surely I am allowed to make-----
I have already told the Deputy that the question was "That the words proposed to be deleted stand", and it was carried.
My amendment does not propose that they do not stand.
Once the question was carried, the Deputy's amendment became irrelevant. I ask Deputy Boyd Barrett to resume his seat.
My amendment does not ask that the words do not stand.
The officials will explain it in detail to Deputy Boyd Barrett.
Amendments Nos. 13 and 14 not moved.
Amendments Nos. 16 to 19, inclusive, are alternatives to amendment No. 15, and amendments Nos. 15 to 19, inclusive, may be discussed together.
I move amendment No. 15:
In page 21, to delete lines 18 to 39, and in page 22, to delete lines 1 to 25.
This is the section dealing with relief for insurance against the expense of illness. As the Minister of State may remember, on Second Stage I strongly opposed this provision for a reduction in the relief available to those with medical insurance premiums above €1,000 for adults and €500 for children. Deputy Peter Mathews also made a passionate speech attacking this measure as an increase in income tax which would effectively reduce the incomes of families. Many Members, and anyone with medical insurance, felt the reference to gold-plated premiums was an insulting and irritating comment by the Minister for Finance. The cut applies to some 90% of health insurance policies. There is a double whammy of stamp duty increases provided under the Health Insurance (Amendment) Bill. The measure aims to raise €94 million in 2014, or €127 million in a full year. It has been noted that changes to relief for medical insurance and to the DIRT rate in 2014 will generate the same amount of revenue as the bank and pension levies combined. I listened to the discussion on Committee Stage and it is welcome that section 8 has been amended in respect of students under 23 years of age with adult health insurance premiums. It was particularly unfair that children over 18 years of age, who are treated by health insurers as adults, were not recognised as such in the Finance (No. 2) Bill. There is also an amendment on dental expenses which is relevant under section 470 of the Taxes Consolidation Act 1997.
With the sustained increase in the cost of health insurance premiums, I disagree with the imposition of this cap. I have always basically been a National Health Service man and in my former party for a decade or more we had very deep and profound discussions, as the Acting Chairman may have had with his former colleagues, about what we should do with the Irish health system. I always took the view that we should emulate the British system, with service free at the point of use and the State essentially organising the profession and system in an efficient and coherent manner. It may be seen by some that this is part of the road we must travel on the way to a health system that has the entire population insured.
We all have had personal or family experience of the way people have had to downgrade health insurance plans because it has been impossible, with ever increasing premiums, to maintain the plan that people want. There was a 12 month extension from the European Commission with regard to the State insurer, VHI, and authorisation from the Central Bank on the capital shortfall of €220 million. VHI and other insurers are under pressure so price increases from the likes of Aviva and others will be in the order of 5% and over. This will also result in defections that Deputies rightly predicted on Second Stage would come from the imposition of this section.
This relates to fundamentally unfair treatment of private health insurance policies in this Bill and it is contrary to the Government's stated aim in the programme for Government of moving to some kind of egalitarian and universal model of health care. The way in which the Government has done this is reprehensible and will have a very severe negative impact on many families in 2014. This morning I heard reports of a speech at the weekend - unfortunately I was not present to hear it - when the Tánaiste spoke about the bills that are coming in on top of families and making life so hard, leaving people on edge. Many of these extra bills and cutbacks are a product of the Government; these include the full-year property tax and the 50% increase in Dublin city waste management charges. There has been a plethora of utility bill increases and this will be a double whammy on the health insurance side. It is something the Minister of State should reconsider.
I rise to speak to amendment No. 16. The Minister on Committee Stage argued that the significant increase we have seen in health insurance has not led to a significant fall in people covered by health insurance. We know that approximately 7.5% of the people insured have now left the system, which is not a small number of people in any respect. Many thousands of people within the health insurance system have downgraded plans, removed children from plans or cut back on other household expenditure to try to hold on to health insurance. The Minister made the argument on Committee Stage when he recited statistics from a survey, and I am sure the officials can provide those to the Minister of State. They made it clear that people were sacrificing in trying to hold on to health insurance, and the cost was a significant contributing factor to people leaving the system. Families are making many sacrifices in trying to hold on, if at all possible, to health insurance.
Over the past three years the health insurance levy has doubled and significant additional pressures are being put on families with regard to health insurance policies. I accept the principle behind the Minister's argument on budget day, although his maths are still wrong in that respect. On budget night I stated that the Minister would have to revisit this because the legislation was to be rushed through and we are doing that with this amendment. I still think the maths are wrong and this will put an unnecessary financial burden on people.
I accept the Minister has indicated that if he does not do something in the next couple of years, we could see €1 billion being put into the health insurance system in tax credits. None of us wants to see that happening. The Minister has set a benchmark on gold-plated health insurance policies that is far too low and because of that, even the most basic policies will see an increase. The Minister made the point on Committee Stage that those on the lower end of the scheme - a typical family - might be looking at an increase of approximately €40, which may well be the case. The difficulty is that the figures from the Department on the overall savings underestimate the total. For example, VHI believes that approximately €120 million will be taken from their customers alone with this proposal, and overall we are probably looking at a saving by the Revenue Commissioners of approximately €170 million. Dividing that among the number of people currently covered by health insurance, the average charge per person covered by health insurance is approximately €80. If a typical young family is paying an extra €40 for a policy, in effect this becomes an age tax, as older people at the higher end of the health insurance system will pay significantly more in their health insurance policies than was the case until now. With this measure, the Government is targeting older people.
I accept there are some policies such as VHI's plans D and E that are gold-plated, and we should not provide tax relief for them. There are many older people who want coverage for hip or knee replacements, and they should have the right to that level of cover. These people are paying premiums well in excess of the average which the Minister spoke about on Committee Stage and they will be paying far more than €40 extra for their policy. That is on top of an increase in the levy and spiralling bed costs. Aviva has already announced that its average price increase will be between 5% and 11% as of 1 January and GloHealth has indicated its increase will be between 5% and 10%. This will force more people from the insurance system, particularly those who are healthier. These are younger and more profitable people within the health insurance system, and they cross-subsidise the older people in the system.
My amendment deletes the provision introduced on budget night.
The proposal the Minister put forward acts as a disincentive to taking out health insurance for families. Bizarrely, the proposal put forward on budget night builds in an incentive to families to come back into the health insurance market or to bring their children back into it. It also encourages younger people to start paying health insurance, which is what we need to do if we are to have a sustainable health insurance system. It does that, bizarrely, because as the legislation currently stands, the policyholder will get €500 of relief for each child on the policy and €1,000 for every adult, irrespective of the cost of the policy. That would encourage more families to take up health insurance and would reduce the burden across the board. It would act as a support for the community-rated system and for older people in the system because it would reduce the overall cost of health insurance for everybody. By encouraging young families with children to take out health insurance, we would be making it cheaper for Granny, which means she can stay in the system and access the coverage for hip replacement or knee replacement. In contrast, the proposal that is currently before us acts as a disincentive for families and makes health insurance far more expensive for Granny, forcing her out of the health insurance system and back onto the public system along with everyone else. The measure is a retrograde step.
I find the situation frustrating. I made a number of proposals on health insurance to the Minister for Health, including the introduction of lifetime community rating, which could encourage younger people to take up health insurance for the first time. Another option would be to introduce a proper calculation for health status that is not based on how many days a person spends in a hospital bed but is more focused on keeping people out of hospital and in the community. Older policyholders could be encouraged to shop around. The Health Insurance Authority has said there are cheaper policies available from other health insurers, but because older people are afraid to switch from their current provider they are not availing of the cheapest policies, which could provide them with enhanced hospital cover. It should be possible for health insurers to directly negotiate with public hospitals, particularly where there is spare capacity within the system, as at present. The Minister does not disagree with any of my suggestions. In fact, he agrees with me. The difficulty is that he has failed to put any of the measures in place over the past 12 months and is kicking the can down the road. We have an opportunity to remove the proposed Government change, which would provide a small incentive for families to take out health insurance for the first time or put their children back on the policy and thereby reduce the overall cost of health insurance for older people within the system. Everyone would benefit. It would act as a community benefit, incentivising people to get involved in the health insurance system. The measure would also support the establishment of universal health insurance, which is the Government's objective. I urge the Minister of State to accept the amendment.
I do not believe in health insurance at all. As I listened to the discussion with Deputy Naughten and heard about all the problems and anomalies that can develop, it made me realise what a load of nonsense it all is. It is the irrational working out of a two-tier system in which one gets better health cover if one has money than if one does not. That is a rotten idea. Universal health insurance sounds good, but the key word is “insurance”. What the public hear is “universal health”, and they like the sound of that, but they do not get the bit at the end - that is, “insurance” - which involves private insurance companies that want to make money. That is the real agenda. The extreme manifestation of the system is in the United States, where more money is spent on health than anywhere else yet tens of millions of people do not get proper health cover because vast amounts of money are eaten up by the private health insurance companies in administration and billing. It is a complete waste and has nothing to do with delivering health care.
In principle, I am against all of that. However, we must deal with the sad reality that the alternative to privatising the provision of health care via the insurance market is a national health system which is paid for through progressive taxation based on one’s ability to pay. It is simple, because the money comes out of income tax and one does not have administration, the billing, the waste, and all the millions spent on advertising or corporate branding, none of which has anything to do with health. One just gets the health service. Is it not blatantly obvious that such a system would be far better? However, we do not do that. What we are doing is slashing the public health system and forcing people who would much rather go to a decent public hospital and not have to wait on a trolley or spend a year on a waiting list for a procedure to take out health insurance that they cannot really afford because they are terrified of having to deal with the bargain-basement version of health care that one gets in the public system.
Ironically, in a way, the Government then goes after those people. It punishes them for taking out an insurance policy against having to deal with the chaos the Government has left in the public health system. The Government then hits such people, which is rotten. It is another significant hit for people whom even Fine Gael purport to represent. My amendment is an attempt to minimise the damage the Government is doing and the cost that will be imposed on people. I agree with Deputy Naughten that this measure will tip many people over the edge and they will not be able to afford health insurance any more. In many cases, such people will not go to hospital when they are sick. They will hold back. Many people are doing that already because it just costs too much. Because they do not have a medical card they do not go to the doctor, or else they wait until they are really in pain or more sick than they would otherwise have been if they had not had to take into account the financial imposition involved in going to hospital. The measure is completely retrograde. My amendment is merely an attempt to minimise the damage. This is another example of how the Government must completely reassess its thinking on how we provide a health service.
These debating points have been well rehearsed.
We had a lengthy debate on Committee Stage. We are beginning to see the full picture of the health insurance market. Deputy Denis Naughten referred to the increase in premium costs announced by Aviva. The average increase is 5.2%, but the cost of some policies will increase by 11%. We should remember these increases are altogether separate from those resulting from the restriction of tax relief. The increases announced by Aviva and the expected increases to be announced by Laya Healthcare and VHI are consequent to general inflation in medical costs, the issue concerning the charging for public beds in public hospitals, etc. These issues are all having a very serious impact. The Minister for Finance seemed to base his argument on the apparent fact that, despite an increase in the order of over 80% in the cost of premiums in recent years, the number of people relinquishing health insurance policies had only fallen by approximately 7%, which was quite remarkable. The Minister has made the point that the market is very inelastic, but that is because people are fearful. They do not want to let go of their health insurance because of what they hear about the public health system. In some cases, the public health system's bad reputation is unwarranted, but in others the very real stories people have, particularly about waiting for elective procedures in orthopaedics, etc., are justified.
The objective of my amendment is very modest and based on my recognition that the Minister will not change his mind about introducing this restriction of the tax relief. It would require, at least, that the value of the tax relief the Minister proposes to leave in place would not be undermined over time by the time value of money and inflation. In amendment No. 19 we are suggesting the amounts referred to in the tax relief provisions should be increased annually in line with medical inflation, as measured by the CPI and published by the CSO.
It is worth repeating the point I made on Committee Stage, namely, that by restricting tax relief and implementing other health policy initiatives, the Minister's overall goal of having universal health insurance is becoming increasingly distant. More people will end up forfeiting their health insurance because they simply cannot afford to pay for it. The very idea of universal health insurance is that as many people as possible who can afford to pay for health insurance should continue to do so, while the State would pay for the health insurance of everybody else. That model will not work if the number of people paying for health insurance is diminishing all the time. The very policy decisions the Government is taking are accelerating that trend. Young people, including those who are working and have young families, or those we most need in the system to pay for the health insurance needs of others, are the very ones who cannot afford to maintain their cover. That is a fundamental flaw.
I would love to believe the announcement of a free GP card for every person under six years will be honoured shortly, but I very much doubt it. There is no chance of our seeing free GP care for all in the lifetime of the Government. Universal health insurance is becoming increasingly distant as a policy objective. The decision in the Finance Bill is contributing to this.
I support the thrust of the amendments. This measure demonstrates that, where the Government's health policy is concerned, the left hand does not know what the right hand is doing. On the one hand, the official health policy is that we are to move towards a system of universal health insurance. That will be exceptionally difficult to achieve without any change being made. However, when the Minister for Finance introduces the restriction on tax relief for so many people, it will make it virtually impossible. This highlights the lack of coherence in the direction of the Government's health policy.
The Minister stated on budget day that this measure would affect only gold-plated policies. I completely concur with Deputy Broughan's comment that this was so insulting to people who were struggling to maintain their health insurance policies. There are a couple of points we are entitled to know. I ask the Minister of State, Deputy Brian Hayes, to provide a full explanation for the thinking behind the Minister's comment. Either his phrase was included in the Budget Statement to deceive people – I do not believe he deliberately tried to mislead people – or the Department got its figures wrong and was using net instead of gross figures. We are entitled to an explanation and it is important that we hear it.
The fact of the matter is that a majority of policyholders will be affected by the reduction in tax relief. It will affect people with very modest policies such as families with two young children. Those on a basic plan B, for example, will lose €90 straight off as a result of the measure. What will really hurt will be an increase by the insurance company and we are seeing this happen. One company announced a 5% increase, but increases could be anywhere between 5% and 10%. The cumulative effect of the loss of tax relief and a premium increase is such that a family with average cover will lose €200 to €300. That is a clear tipping point for many families.
We know that approximately 6,000 families are leaving the health insurance market every month and this is before the making of the budgetary changes. With the making of the budgetary changes, there is no doubt that the rate of departure will accelerate, with the result being greater pressure on the public health service, increased costs and longer waiting lists. This makes absolutely no sense at all.
We were promised a system of universal health insurance by 2016. Part of the promise was that a lot of exploratory work would be done. The Department and the Minister for Health, we were told, needed to scope out what was entailed in moving towards a system of universal health insurance. We were promised a White Paper within the first year of government. There is still no sign of that paper two and a half years later. The proposal was very much predicated on switching the emphasis in the health service from the acute hospital sector to primary care. It was also predicated on reducing the cost base of the health service, but we have seen little or no progress in that regard. When we consider what has happened in the past two and a half years, including the loss of tax relief, the charging of the full rate for the use of public beds by private patients and the failure of the Minister for Health to introduce substantial moneys owed by the insurance sector, we realise it all adds up to a system of health insurance that is getting very close to the point of collapse.
Some days ago we heard the commitment that has been repeated in the past two years by the Minister for Health, namely, to bring in the money owed by insurance companies. Acute hospitals across the country are owed substantial amounts by insurance companies. In many ways, there is complicity in the delay because of the lack of a sign-off by consultants on many bills. A lot of the outstanding moneys should be in the system. There is a realisation that an attempt to bring the moneys into the system would put the health insurance industry in even more serious difficulty. All in all, this does not add up. There is no plan. As I stated, we are getting very close to the point of collapse in the health insurance sector. As a result of various measures announced in the budget, including the one under discussion, we will reach a point very soon in the coming months at which the centre will not hold in the health service. If there is any attempt to take out the kind of savings proposed by the Department of Health, the system will come crashing down.
The cutting of this relief just does not make any sense whatsoever. We are supposed to be making health insurance more affordable. Cutting this relief makes it less affordable for the majority. Even at this late stage, will the Minister apply sense and logic and give some long-term thinking to where our health services and insurance system are going?
We deserve an explanation. Did the Minister deceive the House or did the Department of Finance get its figures wrong again?
Amendment No. 15, tabled by Deputy Broughan, opposes the section. Amendment No. 16, as tabled by Deputy Naughten, opposes the section with the exception of the amendments to this section which we introduced on Committee Stage. Amendments Nos. 17 and 18, tabled by Deputy Boyd Barrett, seek to increase the ceilings for qualification for tax relief in respect of private medical insurance premiums, specifically an increase in the adult ceiling from €1,000 to €1,500 and in the child ceiling from €500 to €750. Amendment No. 19, tabled by Deputy Michael McGrath, seeks to ensure ceilings are increased annually in line with medical inflation as measured by the consumer price index published by the Central Statistics Office.
On amendments Nos. 15 and 16, the cost of income tax relief in respect of medical insurance has increased significantly in recent years. These costs were estimated at €404 million in 2011, €448 million in 2012 and €500 million in 2013. Despite the increasing cost of the relief, the numbers insured are estimated to have decreased by approximately 170,000 over the same period while, at the same time, the level of medical cover has decreased on some policies. Against this background, the increase in costs is unsustainable. In addition, if the relief were to remain unchanged and the trend were to continue, we could be facing a tax liability of approximately €1 billion by 2020. Anyone who is being logical must ask whether that is sustainable.
The tax system is supporting those who can afford private medical insurance to the tune of €500 million per annum. Effectively, that means those taxpayers who could never afford private health insurance, or who have had to give up their policies due to personal circumstances, are providing financial support via the tax system to those individuals who can afford such insurance.
The cap on the amount of the premium for which tax relief will be provided will restrict the exposure of the Exchequer in respect of more expensive insurance policies while not affecting individuals with insurance policies that provide more standard levels of cover.
If amendments Nos. 17 and 18, tabled by Deputy Boyd Barrett, were to be accepted, the Revenue Commissioners estimate they would reduce the expected full-year yield of €127 million to €61 million. In other words, the expected yield would be more than halved. The maximum gain from these amendments to an adult individual would be €100 per annum, or roughly €8 per month.
The Commission on Taxation acknowledged in 2009 that medical insurance is expensive and that tax relief plays a role in attracting and retaining individuals in the medical insurance system. However, it also stated that there is a sizeable deadweight element to this relief, as many individuals would pay these premiums in the absence of the income tax relief. On that basis, the commission recommended that the relief should be continued, but on a more limited basis. The Government is satisfied that the introduction of the new ceilings will achieve such an outcome.
The Government cannot accept amendment No. 19 as it seeks to impose indexation on the qualifying ceilings for tax relief in respect of medical insurance premiums. Such a proposal would not act to curtail the price increases imposed by insurers and would merely restart the process of increasing the cost to the Exchequer of this relief. The Government believes the new ceilings are reasonable and justifiable, given that the Revenue Commissioners has estimated that 47% of policyholders will be unaffected, and of the 53% of policyholders that will be affected, many will only be affected marginally. These figures are very different from the more bloated comments the industry makes, which people seem to accept without any question. It is envisaged that the new ceilings will ensure continuing support via the tax system for those who purchase medical insurance policies, while reducing Exchequer exposure to more expensive policies. In addition, individuals can of course opt for less expensive policies and therefore avoid the impact of this measure entirely.
The medical insurance companies are continuing to post significant profits. However, despite these profits, insurers continue to increase the prices they charge to consumers. Both Aviva and Laya have indicated that they will increase premiums by approximately 5% from the start of next year. Against this background, customers must take their financial affairs into their own hands. The peak renewal period will occur this month. Accordingly, I urge consumers to shop around before renewing their policies. The principal insurers continue to generate significant profits and, therefore, could be more active in reducing any increases in premiums for their customers. For the reasons outlined above, I cannot accept these amendments.
Deputies Broughan and Shortall mentioned the Minister’s comment about gold-plated policies, which is a selective quotation made for people's own political reasons. I will repeat what the Minister for Finance actually said in his Budget Statement:
This will restrict the exposure of the Exchequer on premiums paid for gold-plated medical insurance policies, while not affecting the majority of individuals who avail of more standard levels of medical cover[.]
This is the important bit that everyone ignores for the purpose of their own agenda. The rationale for this, which Deputy Shortall asked me to explain, was based on the assessment given by the Revenue Commissioners of the level of relief drawn down by individuals. That information, which dates back to 2002, shows that 47% of policyholders will be unaffected. Of the 53% of policyholders that will be affected, many will be affected only marginally. The Minister’s comment on gold-plated policies, which has been deliberately twisted and turned for all sorts of agendas, must be read in its entirety.
He said "while not affecting the majority of individuals who avail of more standard levels of medical cover". That is the statement he made on budget day, and if people choose to play politics with that for their own ends, then that is a matter for them.
Deputy McGrath spoke about inelasticity and mentioned the issue of families and individuals not retaining their medical insurance. People have a tendency to stay with one insurer. It is true that since the crash we have seen a pretty significant group of people not continuing with medical insurance policies. As I said in my initial reply, over a four-year period the level of increase in the medical insurance CPI was in excess of 86%. I do not think we can compare general CPI across the economy with medical insurance, but there have been very significant rises in medical insurance over that period of time, and we must ask whether things can be done differently with regard to the unit costs involved. These are very profitable companies which continue to record quite substantial profits in their operations in this country. I do not think that people who cannot afford medical insurance and who do not obtain the benefits of it through the tax code should be continuously subsidising other people who can afford it and who still have it in spite of these very difficult times.
The risk equalisation system is designed to keep prices the same for all categories of consumer, regardless of age. It is difficult to see how greater tax relief could be provided to younger individuals without breaching the principles of risk equalisation.
This is a very significant relief, and it is important that it remains as it is. We believe the decision we have taken is broadly in line with the recommendation that came from the 2009 report of the Commission on Taxation. If we did not take this action, we could have faced a much greater exposure because the level of tax forgone over the course of the last three years has exponentially increased from €400 million to nearly half a billion euro. The great majority of people will be unaffected by the action that we have proposed, and even those that are affected will only be affected marginally. That is backed up by the evidence of the Revenue Commissioners.
We are into the second round, so each speaker has a maximum of two minutes.
Thank you, a Chathaoirligh. I have listened carefully to the Minister of State, but I think the proportion of people affected, at 57%, is not an insignificant percentage. I know some of the estimates we got after the budget were around €200 per family, and that is a significant additional cost. I am ad idem with Deputy Boyd Barrett. Deputy Shortall, Deputy Boyd Barrett and I all have a similar belief in a certain type of health system. Over the years we had a lengthy debate in the Labour Party about the best approach to reforming the Irish health system. Under a previous spokesperson in 2002, we eventually went with the insurance-based system, but a number of us felt that a national health service such as that which has been in the UK for decades, including Northern Ireland, was a fairer system. If the wealthiest people wanted to have a more private system, then so be it, but the vast bulk of people should receive the necessary service very quickly at the point of use. Unfortunately, the Minister of Finance and the Minister for Health cannot come into the House and present us with some sort of national health system which would obviate the concerns that many of my constituents genuinely have about this and about the impact the current system will have on their lives.
The Minister of State is right about the profits made by insurance companies and about the need to examine that area to see if there can be greater efficiencies.
Thank you, Deputy.
I mentioned already that the VHI and the Government are under serious constraints due to new rules at a European level. I do not think the Minister has really addressed-----
Deputy, your time is up.
I want to make a final point.
As the proposer, the Deputy knows he will be entitled to speak again.
The final point I want to make is that the Minister has not ordered his officials to do a cost-benefit analysis with regard to the huge numbers leaving the private insurance system to go into public care. Can the Minister of State give me figures from a cost-benefit analysis that show which situation is more expensive for the State?
I must intervene in fairness to everybody. The Deputy can speak a final time as proposer of the amendment.
I appreciate that. I did that job in the Chair for many years before you appeared in this House.
So let us be fair to everybody and-----
We are discussing the Finance Bill in the House with a Government which has a huge majority-----
The rule states that the Deputy has two minutes.
-----and which has done outrageous things.
For the purpose of fairness, each person may respond for two minutes.
Maybe you would like to display a sense of fairness to the Opposition, which has very limited time today and tomorrow to discuss this most important Bill.
Thank you. I call Deputy Shortall.
The majority of people who have health insurance will be faced with increased costs as a result of this measure, and then there will be an inevitable increase in the cost of premiums, meaning that many families will be faced with a bill of between €200 and €300 in additional costs for their health insurance. That makes it less affordable and means that more and more people will abandon their health insurance. That is not the aim of the exercise in terms of moving towards a system of universal health insurance.
I agree with previous speakers who spoke about the need to move towards a different system, whether that be a national health service or a social-insurance-based health system, which I believe would suit this country best. We are travelling down a road that will result in the effective privatisation of much of our health service, with the insurance companies, whose profits and costs are not under control, determining the shape of our health service. As the Minister of State has said, the insurance companies will be the predominant purchasers of health care, whether at acute hospital level or primary care level, and I cannot understand how that will operate within an Irish context.
The model that is being used is the Dutch model. It has not been successful. There has been huge health cost inflation, with very expensive health insurance costs for all of the population as well as underdeveloped primary care. It does not make any sense to be travelling down a road towards a system that has already been shown to have failed in Holland. This will exacerbate the situation in the health system at the moment, and I appeal to the Minister and the Minister of State to do the sensible thing and try their best to ensure that health insurance remains affordable for as many people as possible. This is flying in the face of that.
Not since the former Taoiseach Bertie Ahern spoke about smoke and daggers have we seen a sleight of hand such as that used by the Minister on budget night in respect of this health insurance issue. I cannot understand how anyone can figure out that 43% is a majority, and it really worries me to think that we have a Minister for Finance who believes that 43% is a majority. When I did maths in school, 43% was not a majority. It is a minority of people who are able to avail of the more standard policies who will not be affected by health insurance changes. The vast majority of people who are in receipt of health insurance will actually be affected by this. That is where the Minister of State's calculation is flawed, because health insurance is again increasing this year.
The Minister has made the point that people can move to cheaper policies. What is the Department's calculation of how many people will move to cheaper policies under the threshold? The VHI, which knows something about the Irish health insurance market, has estimated that the total tax take from this will be approximately €170 million, €50 million in excess of what is proposed here. Deputy Boyd Barrett's amendment would bring in the sort of figure the Minister envisages and ensure that far more people will be out of the tax system regarding this proposal. The Minister says that only 190,000 out of 2.13 million people will have a significant increase in their health insurance premiums as a result of this. Nobody believes that. In my book, 43% is not a majority.
I apologise for not calling Deputy Boyd Barrett earlier.
I do not mind; I just wonder how it works. I get pulled up on protocol fast enough.
It is ironic that the Minister used the argument one would expect us to use about subsidies for private health insurance to justify what he is doing. I agree with him, if the other side of that equation were a significant upgrading and increase in resourcing for the public system, so that we are not subsidising a two-tier system, which is wrong. The vast majority of people who take out private health insurance do not want to be in a two-tier system but feel forced to, and now the Minister is punishing them because he will not do what is necessary - that is, fund a proper national health service through progressive taxation.
It is interesting to hear the Minister go through it. The Minister cuts public health budgets. He also cuts subsidies to private health insurance, which will hit the middle group. When we say there is no elasticity in private health insurance, that means the very rich will always be able to afford it. The people in the middle, who are just above the threshold but not rich, take it out because they feel they have to. In many cases they cannot really afford it and this is just enough to push them into a situation in which they feel they cannot afford it. People may feel they have particular ailments and therefore they need health insurance. Simultaneously, the Minister is reducing medical card entitlements, so many of those people who might be entitled to medical cards will not get them.
The Deputy's time is up.
The net effect is that the private health insurance companies will make more money from the rich people who can afford private health insurance while everybody else will be pushed back on the public system as they cannot afford it.
The Deputy's two minutes are up. He spoke to me about protocol, so let us keep to it.
Yes; I was approximately ten seconds over time.
That is ten seconds too many.
My good friend Deputy Broughan is entitled to an answer to his question about cost-benefit analysis, and I have no difficulty giving it. We normally do a cost-benefit analysis when we give taxes out rather than take taxes in. Normally, the analysis is published on the day the Minister gives the statement. It is often an appendix to his speech. Deputy Broughan's point is that there could be a cost to the public health care system as a consequence of this, but it would not be normal for a cost-benefit analysis to be done in a circumstance in which we are taking some tax back. That must be seen in the context of the total amount of tax foregone. Nobody would stand over a situation in which we allowed this to rapidly increase year on year when there are such competing demands for the resources we have on the tax side.
Deputy Naughten is relying on the VHI. One picks the people one wants to rely on. We are relying on the estimate of €127 million for the total amount that will be taken back on this, and that comes from Revenue figures. We would dispute the view of the VHI and other elements of the industry. We never argued that 43% was a majority. Deputy Naughten needs to get the words right. The Minister, Deputy Noonan, said that 43% of people would be unaffected by this and, of the 57% of people who could potentially be affected, the great majority of those would be affected only marginally, so in the round the effects will be borne more substantially by people with larger premiums. We had a very good discussion on Committee Stage and Report Stage. We have to do this as a means of tapering tax credits.
The Minister has not addressed the central concerns. Those in his party sometimes portray themselves as representatives of the squeezed middle. On this matter the Minister is not representing the people he hopes to represent. Maybe the squeezed middle is better represented by this side of the House. Why did the Minister not go in a different direction and examine capping the overall levels of relief rather than looking at it in terms of premium amounts? Maybe he had that discussion on Committee Stage. That could have targeted what the Minister referred to as those gold-plated policies. The Minister could have taken a fundamentally different approach to it, maybe reducing the amount of tax expenditure to an extent. It is a tax expenditure, but I would have thought a cost-benefit analysis would be done when clawing back a tax expenditure. Why could the Minister not have examined it in a more fundamental way to come up with a provision that might have had a less harsh impact on the 57% of people who, the Minister has admitted, will be profoundly affected by this?
Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.
Amendments Nos. 16 to 21, inclusive, not moved.
I move amendment No. 22:
In page 37, between lines 18 and 19, to insert the following:
“20. The Minister shall within 3 months of the passing of this Act prepare and lay before Dáil Eireann an analysis of the tax increases in this Act, and the total of tax increases and spending cuts of Budget 2013, setting out the continuing impact on people based on their gender, income, age, marital and disability status.”.
This is an equality budgeting amendment. The party has drafted legislation and tabled this before the Houses before and, unfortunately, it has been rejected by the Government. I tabled an identical amendment on Committee Stage but felt obliged to move it again because it goes to the heart of what the Finance (No. 2) Bill is about. If one is willing to introduce the policies discussed earlier, such as those regarding private health insurance, asking separated fathers to pay €2,500 extra in tax or cutting supports for struggling families, then one should at least be able to have that budget equality-proofed by examining the impact it will have on different sections of society. The impacts I have mentioned relate to gender, income, age and marital and disability status. I discussed this at length on Committee Stage and I will leave it there, because I expect the Government will support this amendment given the number of motions passed at the Labour Party conference last weekend calling for equality-proofing of Government policies to ensure the distribution of austerity measures did not fall too unevenly on any section of society.
Motion No. 30 specifically called for equality proofing in the disability sector. I hope the Tánaiste, Deputy Gilmore, has had the ear of the Minister of State and has told him that, given the endorsement the Labour Party conference gave to the spirit of this amendment, there is now a change of heart in Government policy. However, in case there is not, let us be clear that the Government has presided over unequal budgets over the past number of years. While it proudly states that the austerity measures must be implemented and we must serve the masters of the troika and the market, there is a fairer way to balance the books. As the only party in Opposition which has provided a fully costed alternative to meet the Government's adjustment targets for 2014, we have shown how that can be achieved.
Even if the Government rejects our proposals from an ideological point of view, it should still be able to stand up and explain the impact its measures, collectively, will have on those with disabilities, on women or on any sector of society. This is not something that is alien to policy. It is something that happens. I believe it is something that will happen in this House in the not-too-distant future, because equality budgeting is something in which we in Sinn Féin, and I am sure others in this Chamber, genuinely believe. Equality budgeting does not force the Government to do anything. If we had equality budgeting, it would not mean one dot in this Finance Bill would have to change. It would not mean that any of the cuts that were introduced, whether we are talking about the cuts made by the Minister for Social Protection, any of the savage cuts imposed on the health services by the Minister for Health, or any others, would have to be reversed. What it would mean would be transparency for the public in a situation in which people believe the Government has set out to target certain sections in society and to protect certain other sections. If the Government believes those claims are rubbish, it should put its money where its mouth is and allow for equality budgeting, as happens in other jurisdictions.
I warmly support the amendment put forward by Deputy Doherty. It is clearly a huge lacuna in budgetary strategy and policy that we do not have the serious equality proofing he talks about. For about ten years we have inserted a couple of pages in the budget documents which give a rudimentary Department of Finance type of analysis of the impact each tax change will have. I have been calling for some time for changes in this regard. Last year, I submitted an amendment to the then Finance Bill asking for a permanent commission on higher incomes and wealth to provide policy makers such as ourselves with the requisite information so that we know what we are doing when we are talking in the spring about the proposed budget for the coming year. We do not have that information.
This is the first year the CSO is conducting a survey on levels of income and wealth. It is a small survey involving approximately 5,000 households. In the context of the recent significant disclosures relating to voluntary bodies and the provision of top-up payments from non-public sources to health organisations that are primarily funded by the State, the public would like to know what people earn. They know what we earn and we must register our interests. We do not have a register of interests for the media and I believe we are remiss in that. We cannot see and do not know the particular interests of journalists and media and broadcast organisations. We do not know where they are coming from on issues. Broader society needs to know of these interests. For example, I, along with my colleagues Deputies Nulty, Murphy, Halligan and Pringle, have called for the reintroduction this month of the Christmas bonus or for some solidarity payment to the squeezed bottom of society, to the people who are suffering due to additional utility bills and so on. This payment would give them some kind of a boost. My main point and the reason I support the amendment so strongly is that we need to know the basic earnings and income of everybody. We need to know the level of wealth in society. We proposed a wealth tax for the recent budget, as did Sinn Féin. We estimated that a sum of between €300 million and €450 million could have been raised towards reducing the fiscal gap this year. There is a dearth of information in this area and we need to address that.
The acceptance of this amendment to the Finance Bill would be helpful because it would mean we would find out the real information about higher earnings and levels of wealth in society. How can we frame policy if we are framing it in darkness? We hear the views of some great industrialists, media owners and media conglomerates, people who are allegedly worth billions of euro, some of whom are not domiciled here for tax purposes. They might have a strong view on what we should do in this House in regard to fiscal policy, but we do not have any information on them. Therefore, I welcome this amendment.
Last year I proposed an amendment to the Finance Bill providing for a commission on higher incomes. As the Minister of State probably knows, the UK has a commission on high pay - a voluntary agency - which tries to collate and collect this information. I understand it is a commitment of the next Labour Party Government there to establish such an institution in the UK next September so that this critical information on budget and taxation policy will be available. Again, I warmly support Deputy Doherty.
Deputy Doherty's amendment is quite modest. The issue is that there is no agreed methodology for measuring the impact of a budget. For the past number of years we have cited the ESRI and its analysis of the budget and the Minister has responded by stating that the ESRI has not taken X, Y or Z into account. We have no agreed basis for measuring the impact of a budget on different groups of individuals. This should be done, as it would make for better policy decisions and would allow everybody to understand the impact of Government policy in regard to budgetary matters.
I strongly endorse Deputy Broughan's comment regarding the media and so on. He is absolutely right. He might be interested to know that I received a strongly worded letter from the gentlemen I mentioned yesterday about certain comments I made about him in the Dáil. These people certainly know how to pursue their agenda.
I hope the Deputy is going to apologise.
I will not apologise. The Minister of State must be joking.
We end up batting back and forth with claim and counter-claim about the impacts of budgets. I am convinced that as a result of measures taken by the Government, the gap between rich and poor is growing. I do not believe everybody is feeling the pain to the same extent.
There is a fair bit of evidence that corporate profits are increasing, and the value of financial and property assets are also increasing, according to the CSO, but we are told everybody is feeling the pain in the same way. I do not believe it for one minute, but the Minister of State states that it is true that everybody is feeling it equally and we go around in circles. Why do we not have an agreed basis for assessing the impact? We could then let the public assess whether the parties here actually care about issues such as equality and the impact on vulnerable groups or whether it is rhetoric. If we have an agreed basis for assessing these things, that would allow an objective judgment by the public on the impact of various measures.
I commend the civil society and anti-poverty groups who have pushed the agenda of equality budgeting, but we need to specifically add into this mix anti-poverty budgeting. We can have equality and prosperity and we can also have equality and misery. Equality and misery is not much good, so we need to include in the criteria and indices the extent to which measures push people into poverty. We also need agreed definitions of poverty based on real consultation with civil society and various stakeholders so we do not have to have these ridiculous arguments. To my mind it is blatantly obvious that poverty is increasing as a result of the measures being taken, but let us have objective criteria to assess these matters.
On Committee Stage the Minister, Deputy Noonan, made it clear that his position remained unchanged and that he did not believe there was a great deal of difference in principle between his position and that of Deputy Doherty. Analysis can play a very important part, but it should not be applied to everything, particularly in instances where we do not deem it necessary. If the cost in terms of time and resources is totally disproportionate to the yield from the analysis then it is not done.
This Government has carried out more economic impact assessments in respect of tax proposals than any other. There exists a concept in politics and public administration which is generally summed up as "analysis paralysis". We do not want to get into that situation, as the Government must govern. While we can examine everything all of our lives, there is a principle of proportionality, and the level of resources invested in carrying out analysis should be commensurate not only with the scale of expenditure involved but the scale of the resources available and not least the demands already placed on these resources in the preparation of budgets and finance Bills.
The programme for Government contains a commitment to require all public bodies to take due note of equality and human rights in carrying out their functions. Furthermore, the Cabinet handbook requires a statement on the likely effects of the decision sought on equality and on persons who are experiencing or are at risk of poverty or social exclusion, and they must be included in the memorandum for Government. Consequently, the Government does not consider each of these important issues at individual policy or programme level.
I remind the Deputy that the State and its bodies take provisions of equality legislation into account in the development and delivery of policies and services. I also remind the Deputy that a distribution analysis of taxation measures is performed based on various income levels for various categories of income earners. These categories include single individuals, married one-earner couples with no children and married one-earner couples with children. A distribution analysis which models the impact on disposable income by income decile using SWITCH, the ESRI tax benefit model, is also undertaken in evaluating various taxation options. Examples continue to be included every year in the budget documents.
In future, as part of our annual budget, Ireland will submit a draft budgetary plan to the Commission no later than 15 October. This is a requirement of Regulation 473/2013, which specifies that all euro area member states not in a macroeconomic adjustment programme will be required to submit this plan. As part of the materials supplied, Article 6(3)(d) requires, where possible, the inclusion of indications of the expected distribution impact of the main expenditure and revenue measures. This distribution analysis will be conducted using the SWITCH model, as has been the case in previous budgets. Information contained in the draft budgetary plan sent to the Commission will also be included in the budget booklets distributed to Members of the Oireachtas.
With respect, much of what the Minister of State has said is a load of nonsense, to tell the God's honest truth. We have heard it all before from the Minister, Deputy Noonan. The Minister has no analysis paralysis when it comes to analysing. The Minister of State said we are the best and we have done so much analysis and impact assessment, but the first measure on which the Government carried out an impact assessment was legacy property tax reliefs. It carried out an impact assessment because a previous finance Bill contained provisions to get rid of them based on a ministerial order. We could not do this to the property developers, so the impact needed to be examined. They are not like single fathers; they really deserve our attention because the Galway tent might be gone and a new Government might be in place, but the same people fund the parties at the end of the day. They are their friends with whom they congregate, and they know them because they were not unique to one individual party. They may have dominated and corrupted that party, but they are not unique to it. The Government carried out an impact assessment for these individuals and concluded that property tax relief should not be ended for all of these individuals because some of the smaller investors would be hit disproportionately. No such impact assessment whatsoever was done for single fathers who will be affected by the budget. The Government has gladly voted to charge them €2,500 extra in tax. No impact assessment was done for any child who has suffered as a result of the budget, or for any elderly person who has lost support in the form of the telephone allowance. No impact assessment was done for patients who will suffer as a result of the €666 million in cuts that the Minister for Health, Deputy James Reilly, will inflict. No impact assessment whatsoever was done for the young people who have had to take a further cut in their social welfare entitlement as a result of the Government's Pathways to Work strategy, which is nothing more than an incentive for young people to leave our shores. This is the priority the Government gives in terms of analysis paralysis. It will carry out economic impact assessments for those who need them least.
This has happened in other jurisdictions and it can happen here. It is the right thing to do. The Government should be bold enough to stand up and state that this is what it stands for, this is the Finance Bill it will introduce, that it stands by these measures and that this is the impact the Bill will have on various sectors of society. The Government is afraid of and running from the truth because the truth, if it is unveiled, will show very clearly that the Government is pro-austerity but has forced austerity down the throats of the weakest members in society. This is the problem with equality budgeting for the Government.
The thing about the Government is that we have paralysis but not analysis on many issues such as housing. We are mired and nothing is happening, and there is not much analysis either. I know of the Minister of State's distinguished career; we were both spokespersons on energy.
And transport.
I did not realise the Minister of State also had responsibility for finance. I have been here for many hours and I wonder why neither the Minister for Finance, Deputy Noonan, nor the Minister for Public Expenditure and Reform, Deputy Howlin, is here at the ultimate Stage of the Bill in the House. I would have thought it was the responsibility of at least one of them, without belittling the contribution of the Deputy O'Dowd or that of the Minister of State, Deputy Brian Hayes. I strongly support Deputy Doherty.
Perhaps Deputy Doherty has a problem remembering things. He spoke about developers. The biggest developer who was involved in the biggest controversy in the country for a long time was a member of his party.
Yes, he was. He spent some time in a certain house in the North and in his house in Dublin he hid a few bob, amounting to €250,000, in the bathroom and forgot about it.
The relationship between developers and the Deputy's party is very clear.
I know that those opposite do not like it, but the number of people in employment increased by more than 58,000 this year.
The same number of people emigrated. That is more than it takes to fill the Aviva Stadium.
I did not interrupt the Deputy. I ask him to be kind and to listen, difficult though that may be for him. There are more people working now than there were last year, tax returns have increased and a greater air of confidence is evident. Notwithstanding the difficulties families face - and no one is denying that such difficulties exist - when I knock on people's doors, I am met with hope and positivity. I have been told that the Government, which is doing a very good job, should continue with its work.
They are asking those in government to close the gate behind them as they leave.
The Deputy should have some manners, as we say in my house, and listen to people rather than trying to interrupt them. He should refrain from interrupting. People have informed me that they believe the Government is succeeding in dealing with the issues, notwithstanding the fact that there is a long way to go. It is no surprise that Forbes magazine has an article on its website today which states that Ireland is the best country in the world in which to do business. We have restored our credibility internationally. The troika will depart these shores on 15 December next.
They will be back in February. From now on they will be visiting us twice rather than four times each year.
If we were to refer to the troika representatives as "emigrants", then we would be extremely happy that they are leaving. We had the courage of our convictions and we dealt with the issues that arose. We did not shy away from difficult decisions and our policies are successful. That is the reality of the situation.
I thank the Minister of State.
I will conclude shortly. I just want to finish reading my reply.
There are just two minutes for each Member.
I know that. I will be as brief as possible. The Deputies opposite need to examine the independent analysis from Forbes and other international magazines and journals because they will discover that we have restored both our economy and our credibility and that our budgetary policy is having an impact.
Again, the Minister of State is way off subject. He is engaging in a diversion because he does not want anyone to enter into a real analysis of what is happening.
No; sorry-----
With respect, the Minister of State should show some manners. The Government does not want to introduce equality budgeting for the citizens on whom its budgets are going to have an impact. The Minister of State made a charge in respect of a developer in this city, which I reject. I presume he was referring to Mr. McFeely.
I did not name him.
I advise the Minister of State to read Sinn Féin's newspaper, An Phoblacht, which as long ago as 1999 carried statements and stories in respect of that developer. An Phoblacht actually referred to him as a "rogue developer" and a "rogue merchant" and reported tenants stating at the time that he did not treat them like human beings. This was long before any issues arose in respect of Priory Hall. I reject the Minister of State's attempts to deflect attention from the reality, which is that the first assessment the Government carried out related to section 23 developers. Perhaps the Minister of State will indicate whether I am right or wrong in stating that the first economic impact assessment carried out by the Department of Finance following the Government's election related to such developers. The Ministers from the Department of Finance are not present but I can inform the Minister of State that it was the first assessment carried out.
I stand by the charge that the Government will not carry out economic impact assessments in respect of young people, the elderly, those with disabilities and others who need them most. There is nothing to fear about equality. The Minister of State should not try to deflect this debate off course. Even if the economy was booming again and everything was perfect, there would still be a need for equality budgeting. Even if the Government were in a position to introduce giveaway budgets, there should still be equality budgeting. It is a principle and it has nothing to do with how the economy is performing at any given time. As legislators, we should be able to see how our decisions affect individuals and not take anyone else's word for it. Anything we do that has an impact on people should independently assessed. That is the way that it happens in the North, in Scotland and in other jurisdictions which are not too far away. In those places, equality budgeting is the norm.
As I said earlier, the day will come when this State will be dragged out of the Dark Ages and equality budgeting will be the norm here. Let us be clear about this matter. At its annual conference last weekend, the Labour Party passed a resolution - No. 28 - which states that all future policies and Government funding decisions should be equality-proofed to assess their impact on people with disabilities. Why would the Tánaiste, Deputy Gilmore, and other Labour Party Deputies not vote in favour of such a resolution, particularly when it is the right thing to do? They should come to the Chamber now and vote against my amendment, which refers to "setting out the continuing impact on people based on their gender, income, age, marital and disability status". Let Labour Party Deputies inform those who attended or watched their conference last weekend and believed the spin that the party is not really in favour of equality proofing when it comes to disability benefits and that even though this has been a long-held policy, it is not being honoured.
Sinn Féin intends to continue to raise this issue and pressurise the Government to bring forward proper equality proofing. People should have nothing to fear from transparency regarding where the axe falls in the context of budgetary commitments made by any Government at any time.
Is the amendment being pressed?
I want to respond to that.
The Minister of State cannot do so. Deputy Pearse Doherty is the final speaker on the amendment.
Amendment put:
The Dáil divided: Tá, 40; Níl, 70.
Tá
- Boyd Barrett, Richard.
- Broughan, Thomas P.
- Browne, John.
- Calleary, Dara.
- Collins, Joan.
- Collins, Niall.
- Colreavy, Michael.
- Cowen, Barry.
- Crowe, Seán.
- Daly, Clare.
- Doherty, Pearse.
- Ferris, Martin.
- Flanagan, Luke 'Ming'.
- Fleming, Sean.
- Fleming, Tom.
- Grealish, Noel.
- Halligan, John.
- Healy, Seamus.
- Kelleher, Billy.
- Kirk, Seamus.
- Mac Lochlainn, Pádraig.
- McConalogue, Charlie.
- McDonald, Mary Lou.
- McGrath, Finian.
- McGrath, Michael.
- McLellan, Sandra.
- Murphy, Catherine.
- Ó Caoláin, Caoimhghín.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- Ó Snodaigh, Aengus.
- O'Brien, Jonathan.
- Pringle, Thomas.
- Ross, Shane.
- Shortall, Róisín.
- Smith, Brendan.
- Stanley, Brian.
- Tóibín, Peadar.
- Troy, Robert.
- Wallace, Mick.
Níl
- Barry, Tom.
- Breen, Pat.
- Buttimer, Jerry.
- Byrne, Catherine.
- Byrne, Eric.
- Cannon, Ciarán.
- Carey, Joe.
- Coffey, Paudie.
- Conlan, Seán.
- Connaughton, Paul J.
- Conway, Ciara.
- Coonan, Noel.
- Corcoran Kennedy, Marcella.
- Creed, Michael.
- Daly, Jim.
- Deenihan, Jimmy.
- Doherty, Regina.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J.
- English, Damien.
- Feighan, Frank.
- Ferris, Anne.
- Fitzpatrick, Peter.
- Flanagan, Charles.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Heydon, Martin.
- Hogan, Phil.
- Howlin, Brendan.
- Humphreys, Heather.
- Humphreys, Kevin.
- Keating, Derek.
- Kehoe, Paul.
- Kelly, Alan.
- Kenny, Seán.
- Kyne, Seán.
- Lawlor, Anthony.
- Lyons, John.
- McEntee, Helen.
- McHugh, Joe.
- McLoughlin, Tony.
- McNamara, Michael.
- Mitchell, Olivia.
- Mitchell O'Connor, Mary.
- Murphy, Dara.
- Murphy, Eoghan.
- Nash, Gerald.
- Neville, Dan.
- Nolan, Derek.
- O'Donnell, Kieran.
- O'Donovan, Patrick.
- O'Dowd, Fergus.
- O'Mahony, John.
- O'Reilly, Joe.
- Penrose, Willie.
- Perry, John.
- Phelan, Ann.
- Phelan, John Paul.
- Rabbitte, Pat.
- Reilly, James.
- Ring, Michael.
- Ryan, Brendan.
- Stagg, Emmet.
- Stanton, David.
- Timmins, Billy.
- Tuffy, Joanna.
- White, Alex.
Tellers: Tá, Deputies Aengus Ó Snodaigh and Pearse Doherty; Níl, Deputies Emmet Stagg and Paul Kehoe.
Amendment declared lost.
Amendment No. 23 in the name of Deputy Boyd Barrett is out of order.
Amendment No. 23 not moved.
Amendments Nos. 24 and 25 are related and may be discussed together.
I move amendment No. 24:
In page 54, between lines 20 and 21, to insert the following:
"(3) The Principal Act is amended in 372AAB in part (a) by deleting the words "immediately prior to conversion" and replacing with "for a period not less than 5 years prior" and in part (b) by deleting the words "immediately prior to conversion" and replacing with "for a period not less than 5 years prior,".".
Amendment No. 24 relates to the so-called living city initiative. There is a widening of the living city initiative to include a number of other cities despite the fact that the initiative has not been up and running in the two cities identified for it in the Finance Bill 2013. We have seen a trend of the Government introducing policy without any evidence to back it up. One is supposed to allow a pilot scheme take effect, assess it after a while and if it is worthy, expand it or roll it out nationally, but that is not the approach the Minister has taken.
The key to this amendment is in the Bill. The amendment refers to the Principal Act. It amends the Bill, first, by deleting the words "immediately prior to conversion" and replacing them with "for a period not less than 5 years prior". The reason for this can be found in the original living city initiative, and because the Minister is expanding the scope of it. The Finance Act 2013 states:
'conversion' in relation to a building, structure or house, means any work of—
(a) conversion into a house of a building or part of a building where the building or, as the case may be, the part of the building has not, immediately prior to the conversion, been in use as a dwelling...
The key point here is that this initiative is aimed at buildings that have not been lived in. Obviously, the name, "living city initiative" is to get people back living in the city. However, the definition of conversion is that it is not, "immediately prior to the conversion," lived in. Earlier we dealt with an amendment where persons had to be unemployed continuously "for the period of 12 months immediately" before. Therefore, there is a definition of "immediately". It means straight before.
The question here is how long does somebody have to be not living in the house before he or she can apply for this scheme. As I stated on Committee Stage, although we do not know what parts of Dublin will be designated, let us say a part of Dublin around the canal was designated where there is a house built pre-1915 in which somebody is living. This scheme is so lucrative it is unbelievable. If one has the tax liability to avail of it over the period of ten years, it is a 100% grant. How long does somebody have to leave the house unoccupied for him or her to avail of this grant? The definition under the original section is that "the building has not, immediately prior to the conversion, been in use as a dwelling". My reading of the Act - this is why I seek clarity - is that it would apply if one was not there for a month, two months or a year. What is meant by "immediately prior"? If we look at what we dealt with earlier in terms of 12 months of continuous unemployment immediately prior to taking up the position, then that means the day before. It will be interesting to hear the Minister of State's response.
Amendment No. 25 states:
In page 54, between lines 22 and 23, to insert the following:
"(4) The Living City initiative should include the following cities and town— Cork, Dublin, Galway, Kilkenny, Limerick, Waterford and Bray.".
Deputy Pearse Doherty referred to amendment No. 24. I believe this is a positive initiative and I would be supportive of the concept. The principle is to revitalise certain parts of cities and, hopefully, a town, that will be designated for the future.
I do not agree with Deputy Pearse Doherty's amendment because it limits the possibility that this policy will achieve change. It is not to assist the developers but to revitalise towns. We all will be aware that there are large tracts of the cities of Dublin, Cork, Limerick or wherever where many of the buildings are converted pre-1963 into a multiplicity of units, many of which are fire hazards or are of a poor standard. I believe that the initiative can be positive.
What is the status of the scheme outlined in the Finance Act 2013 for Georgian houses in Waterford and Limerick? It is important that this, as a pilot scheme, is monitored.
We can get a little confused. When we talk about the economic collapse, we always talk about the property bubble. There was not a property bubble. It was a money bubble. There were many decisions made. There is the disposal of newspaper groups, bank shares and land. Many items other than residential property were purchased for quite crazy figures. Companies exchanged hands. It is important to realise that it is possible to provide incentives for residential property without causing a difficulty with regard to the price.
We in the Reform Alliance have come up with a concept, which we will be forwarding to the Minister for Finance, called, "a fair value". This is to try to establish a co-relation between the average income and the average house price - the average house price as a multiple of the average income - and to use this as some sort of measuring tool with respect to lending to ensure that there is no irresponsible lending in the future and financial institutions lend in a responsible manner. It is a progressive policy and I sincerely hope the Minister will take it on board. We will be distributing it to the various stakeholders over the next couple of weeks. It is simple. It is in addition to the standard percentage of disposable income or the two and a half times the income of the principal earner in a couple plus one time the other income that financial institutions would apply.
My amendment No. 25 is simple. It may appear narrow. It shows up a greater fault in how we make policy here. I lived in Galway and Kilkenny and both of those towns are listed in the initiative. I have sought to add Bray to it because, by any independent objective analysis, the numbers of properties in Bray that would benefit from this are far greater than the numbers of such properties in Galway or Kilkenny.
In Galway city there are old properties in the area called The Crescent and in Eyre Square and Taylor's Hill that need to be revitalised. In Kilkenny city the old properties are in a limited area around the core of the town off High Street and Patrick Street and an upper part known as the Lacken area that looks down on the lower area of the city. In Bray there is a large area stretching from the Main Street heading east down towards the seafront, through Meath Road, Sidmonton Road and Florence Road, where a large number of properties are in multiple units and many of them are old buildings in a very poor state of repair. If one was to base the criteria for inclusion purely on economic and social analysis and the potential to improve a town, I believe that Bray should be included at least before those two cities I mentioned although I am not so sure in that respect in the case of the larger cities. I raised this issue with the Minister on Committee Stage and indicated my intention to table an amendment on Report Stage. He indicated at the time that he would give consideration to including Bray at some time in the future but not now, but I hope he has seen fit to change his mind. Bray's inclusion in this initiative would be a positive move for the town as it needs an incentive.
On Deputy Doherty's amendment, I would like to clarify any confusion which may exist in relation to the point he has raised in his amendment. I share his concern that the initiative should be targeted at the areas where it will do the most good and that it should not be available on a wide-scale basis. The landscape of this country is still scarred by the rampant tax-driven property developments of the past. Mercifully, these older tax schemes have been largely brought to an end and the Minister for Finance has no ambition to preside over a repeat of them in the future.
Deputy Doherty's amendment concerns the residential element of the initiative. Under the scheme, the building must have been originally constructed as a dwelling prior to 1915. The relief is intended to apply to expenditure on refurbishment or conversion of the building for residential purposes. The relief only applies to the person who owns the building and is residing in it as their sole or main residence. Furthermore, the relief is only given for any of the first ten years after conversion or refurbishment and while the person continues to be in residence.
The Minister for Finance envisages two types of situations in which this relief might apply. First, the building may currently be occupied as a dwelling, though in need of refurbishment. Subject to all the other conditions of the scheme being met, the owner-occupier of that dwelling can avail of the relief in relation to the cost of that refurbishment. The term "refurbishment" takes its meaning from elsewhere in the tax code but the use to which the building is put does not change. It was and remains a dwelling. The relief also applies to refurbishment of an empty dwelling so it is not vital that it is occupied at the time the work is done, although of course it must subsequently be occupied as the sole or primary residence to avail of the relief.
The second situation is where the building has been converted into something else since it was originally built. While it may have been constructed as a dwelling it may now be a shop or put to some other use entirely. Where eligible work is done on such a building it is classed as a "conversion". This is also allowed. The reference to "immediately prior to the conversion" in paragraph (a) allows for the situation in which the building is converted back into a house from having previously been something else. Similarly the same reference in paragraph (b) is to address situations in which the building is converted into a series of apartments from having been a single dwelling or not in use as a dwelling at all.
During the Committee Stage debate Deputy Doherty was concerned that the occupier could move out of the building for a short period so as to avail of the relief and it would appear that his amendment is designed to prevent this. He seeks to ensure that properties cannot be converted overnight from a business to a residential dwelling and that the premises must have been a business premises for at least five years before conversion works are carried out. The likelihood of a premises being changed from residential use to business use and then back again to residential use within a period of five years would appear to be remote. It is difficult to see what loophole could be availed of here to circumvent the intention behind the legislation. The key objective is to encourage people, especially families, to live in these run-down areas, and that is what the relief is designed to do.
The Minister for Finance hopes that this measure will work and if it needs improvement in the future he will consider changing it. Since this initiative is not available in the rental sector I am confident that it will cause no distortions in that sector. I am aware, for example, that some low income individuals and families currently live in substandard rented accommodation in inner cities. If the relief under this initiative were available to landlords, it could ultimately result in rents being increased and becoming unaffordable to this group. Obviously, theirs is an unhappy situation and I do not wish to introduce a tax incentive which would have the perverse effect of making their situation any worse. I hope that Deputy Doherty accepts that explanation.
Deputy Timmins indicated on Committee Stage that he would submit an amendment on Report Stage to include Bray in the scheme. The Minister for Finance explained to him then, and I repeat it, that he was not prepared to do this at the present time. This is a pilot scheme. When it was introduced originally it was intended to apply only to Waterford and Limerick. The Minister for Finance has since been persuaded by the results of the ex-ante cost benefit analysis to include Cork, Dublin, Galway and Kilkenny. Deputy Doherty thinks he has gone too far as it is but we will not be going beyond these six cities until we see how the initiative has worked out. The Minister will be consulting with all the relevant local authorities in the coming months with a view to identifying the streets and the areas within these cities where the relief will operate.
The legislation provides for the Minister for Finance to specify by order the "special regeneration areas" to which the relief will apply. The cities and-or towns themselves are not referenced in the primary law. For the reasons I have given, I am not accepting Deputy Timmins's amendment.
Aside from the issue that the scheme is being expanded before it is even up and running, I do not believe that my amendment is in conflict with the Government's intention in this respect. The Minister of State referenced a number of situations but I did not hear him address the concerns I raised. He spoke about the conversion of a property from a dwelling to a commercial premises. Section 372AAB of the Finance Act 2013 relates to owner-occupiers. This initiative is designed to encourage owner-occupiers to go back and live in these houses. That section states: "'conversion' in relation to a building, structure, or house, means any work of...conversion into a house of a building or part of a building where the building or, as the case may be, the part of the building has not, immediately prior to the conversion, been in use as a dwelling". One can fix or change the house one owns as long as it was not lived in previously. The reason that clause is included is that the measure is not intended for people who are living in their houses and want to avail of a tax break to knock a few walls and do up the house, rather the house has to be unoccupied and located in a part of the city that needs regeneration. My concern is that the wording "immediately prior to conversion" could enable people who occupy the House to move out, avail of the tax break and then move back in because no time limit is given. I gave the example of an unemployed person availing of the start your own business scheme but that scheme does not state that the applicant needs to be immediately unemployed beforehand, rather it means that the applicant needs to be immediately unemployed continuously for 12 months.
I regret that the Minister of State did not take on board the points I raised. The argument I put forward still stands. My understanding of the scheme is that once the person is living in the house at the time the conversion is done - where the person lived prior to or after that is irrelevant - that is the only qualification required. Perhaps the Minister of State could clarify the regulations. In the case of a building that was constructed with, say, a shop on the ground floor, as many of these buildings were, and the second and third floor were residential, does all of the building qualify for relief, or is it only the residential part of the building, or is there division in respect of the relief?
I advise Deputy Doherty that the officials have offered to meet with him to clarify the issues he raised. If he is happy to accept that offer, they would be happy to do so. However, the position still stands and we do not accept the amendments.
Deputy Doherty, how stands amendment No. 24?
I will withdraw it.
Amendment, by leave, withdrawn.
I move amendment No. 25:
In page 54, between lines 22 and 23, to insert the following:
"(4) The Living City initiative should include the following cities and town— Cork, Dublin, Galway, Kilkenny, Limerick, Waterford and Bray.".
Deputy Timmins, how stands the amendment?
I will withdraw it.
Amendment, by leave, withdrawn.
Amendment No. 26 in the name of Deputy Richard Boyd Barrett has been ruled out of order. Amendments Nos. 27 and 28 in the name of Deputy Pearse Doherty have been ruled out of order. Amendments Nos. 29 and 30 in the name of Deputy Michael McGrath have been ruled out of order.
Amendments Nos. 26 to 30, inclusive, not moved.
Amendment No. 31 in the name of Deputy Michael McGrath arises out of committee proceedings.
Is there time to move this amendment?
I move amendment No. 31:
In page 69, between lines 18 and 19, to insert the following:
“48. Section 119 of the Finance Act 2001(as amended by section 99 of the Finance Act 2010) is amended by inserting the following new subsection (5) into section 119 (penalties for certain excise offences):
“(5) where the offence referred to in subsections (1) and (2) relates to tobacco, a person convicted of such an offence shall be liable—
(a) on summary conviction to a minimum fine of €5,000 or at the discretion of the court, to imprisonment for a term not exceeding 12 months or to both,
(b) on conviction on indictment—
(i) to a minimum fine equal to 5 times the value of the excisable products concerned, including any duty or tax chargeable thereon, or €130,000 whichever is the greater, or, at the discretion of the court, to imprisonment for a term of not less than 5 years or to both, or
(ii) where the value of the excisable products concerned including any duty or tax chargeable thereon, is greater than €250,000, a minimum fine equal to 5 times the value of those products, or, at the discretion of the court, imprisonment for a term of not less than 7 years or to both.”.
Debate adjourned.