As Deputy McGrath is not here, will Deputy Cowen speak on the amendment?
Finance (No. 2) Bill 2013: Report Stage (Resumed)
May I step out to take an urgent call?
I propose that the sitting be suspended for five minutes until 10.57 a.m.
Is that agreed? Agreed.
This amendment is intended to deal with the issue of cigarette smuggling and the illegal sale of cigarettes. In a recent reply to a parliamentary question the Minister, Deputy Noonan, confirmed that in 2012 there were 57 convictions for cigarette smuggling resulting in 26 custodial sentences, some suspended, and fines amounting to €93,550. The total amount in fines for 57 convictions was €93,550, which is completely inadequate.
With regard to the illegal sale of cigarettes, the fines were equally derisory. The fines had been increased quite significantly through the various Finance Acts, as recently as 2010, but they need to be increased further. The deterrent against the smuggling of cigarettes into this country and the illegal sale of cigarettes, which is quite open in many parts of this country, particularly in Dublin - I have always found it quite unbelievable that on certain streets in Dublin anyone can walk around and buy illegal cigarettes - is just not good enough. The penalties enshrined in the legislation are simply not strong enough and they need to be strengthened. That is the reason we have proposed this amendment - to seek to strengthen the penalties, increase the deterrent and, hopefully, deal with the issue of smuggling and the illegal sale of cigarettes.
I endorse this amendment. I have spoken about smuggling, black market activity and tax increases on cigarettes during the debates on the last few budgets. Our party does not oppose an increase in taxation on cigarettes, but we would have gone further than the Government has gone. We argued for a 20 cent increase, but we would not have gone as far as Fianna Fáil and argued for a €1 increase.
The key point is that any increase in the price of cigarettes and tobacco products needs to be made hand-in-hand with a number of measures to deal with black market activity. Deputy Michael McGrath's amendment is one such measure dealing with the end product where someone has been caught. It could be used as a deterrent. The missing element is the resources to tackle black market activity. That is where the Government falls down in its proposals, with which we will deal in the next section, to increase the price of tobacco. It has not used that resource to deal with the fact that a large number of cigarettes consumed in the State are purchased on the black market. It is an illegal practice, but for many, it has been normalised. People who never think of breaking the law do not see it as breaking the law, defrauding the State or Revenue when they buy packs of cigarettes for €3 or €3.50.
I commend the amendment in looking at one end of the issue. It is part of a bigger jigsaw with which we must deal and the Government's focus heretofore has been on grabbing more money from people who smoke tobacco. There are health benefits; we know that increasing the price of tobacco has consequences in terms of consumer behaviour. If so many tobacco products are available at a lower price, there must be action to deal with the issue. Enforcement deterrents are more welcome, but there is also the question of how to deal with the issue on a practical day-to-day basis in ports and Garda Síochána and Revenue operations. That question must also be dealt with.
The fines applicable to an offence of evasion or attempted evasion of excise duty on excisable products were increased significantly in the Finance Acts 2008 and 2010. For a summary conviction, the set fine was increased to €5,000. For a conviction on indictment, the maximum fine was increased tenfold to €126,970, or where the value of the goods concerned, including duty and tax payable thereon, is greater than €250,000, the fine can be three times the value of the goods. The Deputy's amendment seeks to separate the penalties and fines for offences regarding excise duty on tobacco from offences relating to other excisable products such as mineral oil and alcohol products. Second, the Deputy seeks to set new minimum fines and penalties. For a summary conviction, he suggests a minimum fine of €5,000 and for a conviction on indictment, he suggests a minimum fine of €130,000 or five times the value of the excisable product concerned, whichever is greater, or a minimum term of imprisonment of five years. Where the value of the excisable products is greater than €250,000, he suggests a minimum fine of five times the value of the excisable products or a minimum term of imprisonment of seven years.
With regard to the Deputy’s suggested minimum fine of €5,000 for a summary conviction, the current fine of €5,000 is already equal to the maximum applicable to the District Court. With regard to the Deputy’s suggested minimum fine of €130,000 for a conviction on indictment, the courts can apply a fine of up to €126,970. I am reluctant to introduce radical changes to the current penalties and fines regime without a thorough analysis of the issues involved. The amendment, as structured, would severely curtail the powers of discretion of the courts in all cases and I am concerned that it might have unintended consequences. For example, if trial judges believe defendants do not have the ability to pay the full fine, they would be forced to impose long custodial sentences and it is likely that these would be suspended in most cases. The result would be that no fines would be imposed or prison sentences served.
I am not convinced that penalties and fines for offences concerning excise duty on tobacco products should be set at different levels than offences concerning excise duty on mineral oil and alcohol products. On that basis, I cannot accept the amendment.
The reply of the Minister of State sets out what the courts can do, but the reality is that they are not doing it. I have outlined some of the figures. Last year there were 57 convictions for smuggling and fines of €93,550. That amounts to a typical fine of less than €2,000 on average. For illegal sales, there were 75 convictions and total fines of €153,050, which amounts to less than €2,000 on average. The legislation is not bad and the courts have the power to impose fines greater than are being imposed, but larger fines are not being imposed, which is why the amendment seeks to increase what are inadequate fines. I encourage the Government to look at this amendment favourably because the deterrents are not strong enough. That is why smuggling and illegal sales are rampant. People are not fearful of the law and this amendment would go some distance towards addressing the issue.
On the face of it, there is an issue, but I do not believe the amendment, as structured, would resolve the issue. There could be unintended consequences. If trial judges believed defendants did not have the ability to pay the full fine, they would be forced to impose sentences or, more likely, suspended sentences in all cases and no fines would be paid.
- Boyd Barrett, Richard.
- Broughan, Thomas P.
- Browne, John.
- Calleary, Dara.
- Collins, Joan.
- Collins, Niall.
- Colreavy, Michael.
- Cowen, Barry.
- Daly, Clare.
- Doherty, Pearse.
- Ellis, Dessie.
- Ferris, Martin.
- Flanagan, Luke 'Ming'.
- Fleming, Tom.
- Grealish, Noel.
- Healy, Seamus.
- Healy-Rae, Michael.
- Kelleher, Billy.
- Mac Lochlainn, Pádraig.
- McGrath, Mattie.
- McGrath, Michael.
- McLellan, Sandra.
- Martin, Micheál.
- Murphy, Catherine.
- 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.
- Bannon, James.
- Barry, Tom.
- Burton, Joan.
- Butler, Ray.
- Buttimer, Jerry.
- Byrne, Catherine.
- Byrne, Eric.
- Carey, Joe.
- Conaghan, Michael.
- Connaughton, Paul J.
- Conway, Ciara.
- Corcoran Kennedy, Marcella.
- Creed, Michael.
- Daly, Jim.
- Deering, Pat.
- Doherty, Regina.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J.
- English, Damien.
- Farrell, Alan.
- Ferris, Anne.
- Fitzgerald, Frances.
- Fitzpatrick, Peter.
- Flanagan, Charles.
- Gilmore, Eamon.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Heydon, Martin.
- Hogan, Phil.
- Humphreys, Kevin.
- Keating, Derek.
- Kehoe, Paul.
- Kenny, Seán.
- Kyne, Seán.
- Lawlor, Anthony.
- McEntee, Helen.
- McGinley, Dinny.
- McLoughlin, Tony.
- McNamara, Michael.
- Maloney, Eamonn.
- Mitchell, Olivia.
- Murphy, Dara.
- Murphy, Eoghan.
- Nash, Gerald.
- Neville, Dan.
- Nolan, Derek.
- O'Donnell, Kieran.
- O'Donovan, Patrick.
- O'Dowd, Fergus.
- Perry, John.
- Phelan, Ann.
- Phelan, John Paul.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Ring, Michael.
- Sherlock, Sean.
- Stagg, Emmet.
- Stanton, David.
- Tuffy, Joanna.
I move amendment No. 32:
In page 75, to delete lines 12 to 38.
This measure relates to the increase in tax on tobacco products, including cigarettes. Some of us are in a minority in opposing it but, as we indicated in previous discussions, while we accept fully that cigarettes are bad and that we need to do something about them – I say that as a smoker – I do not believe that is what this measure is about. I do not think it is a health measure; it is a budget measure to grab money and it is one that largely hits the least well-off, as do so many tax increases on commodities people buy, whether they are good or bad for one’s health, such as cigarettes and alcohol. Such taxes increase the cost of living for ordinary people in a way that is regressive because it disproportionately affects people on lower incomes.
In so far as we need to deal with smoking, it should be dealt with through education and other health promotion measures which should be funded properly, but of course we are not funding such approaches properly. This is just a grab for money and I do not accept the logic behind it. I wish to record my opposition to the increase.
Section 52, which is opposed by Deputy Boyd Barrett, confirms the budget increases in the rates of tobacco products tax which, when VAT is included, amount to 10 cent on a pack of 20 cigarettes in the most popular price category with pro rata increases on other tobacco products.
As a result of the budget increase, the price of a pack of 20 cigarettes in the most popular price category has increased to €9.50. These measures are estimated to yield €2.5 million in 2013 and €15.4 million in a full year.
I move amendment No. 33:
In page 75, to delete lines 39 to 41, and in page 76, to delete lines 1 to 35.
One can see the fear the Minister for Finance, Deputy Noonan, instils even in his ministerial colleagues at the thought of his returning to these shores to find an amendment has slipped through.
Amendment No. 33 deals with the increase in excise duty on alcohol. We had a lengthy debate on the issue on budget night when the budget resolutions were passed and also on Committee Stage. It is clear the Government will not reverse its position at this late stage but I tabled the amendment to put down a marker that this is an unfair measure. Alcohol duty should not have been increased to its current level. Clear commitments were given by at least one Government party in terms of increasing alcohol and excise duty on wine, for example. Not only has that been breached once, but this is the second occasion. If a person were to pay €8 today for a bottle of wine, more than €4.80 would go directly to the State in revenue. That is 60% of the current cost of a bottle of wine. We levy the highest rate of excise duty and tax on alcohol anywhere in the European Union. The reason I am concerned is that not only does it dip into the pockets of ordinary consumers, but if one buys a more expensive bottle of wine - I use wine as an example – then the portion one pays to the State is a lot less.
There are concerns about the measures from a cross-Border point of view. An issue arises in terms of cross-Border shopping of which we must be mindful. As a member of an all-Ireland party I do not have a problem with where anyone shops, but I wish to see a level playing field. That is why I would like to see harmonisation of the taxation code in other areas across the island.
I am opposed to the measure. We have shown that it is not required in our alternative budget. It is wrong on a number of levels.
Oddly enough, the point made by Deputy Doherty that the State makes a lot of money from the measure is the only good thing about it. My problem with the measure is that it is regressive. I make the same argument about it that I made about tobacco in that it is another disproportionate hit for the less well-off - those on lower incomes who are being hammered from every quarter. This is symptomatic of the problem with the Government’s approach to taxation generally - not just this Government but successive Governments. Rather than opt for truly progressive redistributive taxation, they keep hitting the same group of people and effectively reducing their disposable income by loading taxes on goods they buy. That is why I am against the measure. In so far as there is a public health issue with alcohol abuse, this does not make a damn bit of difference, so I urge the Minister of State to please not waste our time with that spin. This is about money. That is fair enough, as the Government needs money, but there are more progressive alternative ways to raise money, as we have outlined on many occasions. I will not labour the point now but I pose the question of why we do not start taxing corporations, those on very high earnings and speculators, instead of giving them tax breaks. Let us go to that well instead of constantly going back to the same well of ordinary working people.
I wish to speak along the same lines as the previous speakers. The real challenge facing the Government was to do something about minimum pricing. That was one of the foundation stones of Deputy Shortall’s public policy on health when she was Minister of State. She will arrive shortly for the debate. The very low price of beer and other alcohol products is a public health matter and the abuse of alcohol can often lead to serious anti-social behaviour and criminality.
That is the real challenge facing the Government that should have been addressed but which has still not been addressed three years on. On the other hand, the usual set of circumstances applies every year to the more sociable drinkers.
The amendments proposed by Deputies Doherty and Boyd Barrett would have the result of deleting the budget increases in the rates of alcohol products tax. These increases, when VAT is included, amount to 10 cent on a pint of beer or cider, 10 cent on a measure of spirits and 50 cent on a bottle of wine, with pro rata increases for other products. The expected yield from these increases is approximately €35 million in 2013 and €142 million in a full year.
These excise changes have to be seen in the context of the suite of measures announced in budget 2014 for the tourism sector, namely the retention of the 9% VAT for tourism-related services and the abolition of the air travel tax. These measures can only be seen as positive for the sector and should increase tourism numbers and consumer spending in pubs and restaurants. A large proportion of licensed premises are offering food to their customers, and the 9% VAT rate will directly benefit those businesses. Those businesses that do not serve food will indirectly benefit from an overall growth in tourism. Excise rates on beer, cider and spirits, as a percentage of the average retail price, are lower now than they were in 2003. Given the options available to the Government and the delicate balance that needs to be struck, the budget 2014 excise increases are justified.
As Deputies are aware, the Government has decided to introduce minimum unit pricing to address below-cost selling of alcohol products. However, in view of the ongoing court challenges to minimum unit pricing in Scotland, it is prudent to await the outcome of the legal cases before pursuing further action in that direction. Any policy relating to minimum unit pricing will be dealt with on an all-Ireland basis to ensure there will be no increase in cross-Border trade as a result of the application of minimum unit pricing in the South. Discussions are ongoing in that regard with our Northern counterparts. On that basis, I cannot accept the amendment.
I move amendment No. 34:
In page 76, between lines 35 and 36, to insert the following:
"54. The Minister shall, within one month of the passing of this Act, prepare and lay before Dáil Éireann a report on options available for the introduction of a rate of 3 per cent betting duty for online and in shop bets.".
This is an amendment that was tabled on Committee Stage. There are a couple of reasons for it. First, I believe betting duty can be increased in shops and online to a rate of 3%. This is not a very high level. We have discussed taxation and the excise duty of 60% on a bottle of wine. Many Irish people engage in gambling. For some, it involves an annual flutter on the Grand National and for others, unfortunately, it is more addictive and represents a very destructive vice. An issue arises in terms of the help and support society gives to people who are addicted to gambling.
The 1% duty that obtains in betting shops could be increased. I have said many times that when I was a young child, the duty was 10%. At present, it is absorbed by the industry. Online betting is starting to come under the fold of the legislation. It is about time. I have tabled this amendment as a marker to state the Betting (Amendment) Bill, which has not yet proceeded to Second Stage, is supposed to bring in €20 million. This was flagged a couple of years ago. Therefore, we have missed out on revenue of €20 million over a couple of years. I raise this as an example of how the Finance (No. 2) Bill has not examined such areas. We have not made progress on the betting legislation as we come to the end of the year, yet fathers who care for their children will see a reduction of €2,500 through income tax as a result of the Finance Bill. If the betting legislation had been enacted last year, it would have offset the need to penalise single fathers in the way the Government has decided to penalise them. It is penalising them in the order of over €220 per month. It is important to set down this marker.
I acknowledge the words of the Minister on Committee Stage to the effect that we should get the Bill up and running. I am very eager that we do so. When we do so, it will be possible to examine increases in future years. I am not as patient as the Minister regarding the betting industry. Unfortunately, he has not shown the same type of patience concerning the budgetary impact on lower-income groups, the elderly and the sick. Very little patience was shown towards them. Where the betting industry is concerned, however, the attitude is that there is no rush and that the Bill can be talked about for two years before publication. The view is that it does not really have to proceed to Second Stage because there is no major urgency. I am concerned about that, and that is why tabled this amendment.
The House deserves a proper explanation as to why there has been such a significant delay in the introduction of the betting legislation. I understand the betting legislation was first published in July 2012 but it was recently withdrawn. Earlier this year, in July, the Betting (Amendment) Bill 2013 was published. Clearly, issues arise regarding the imposition of a levy. I have no doubt that this is posing difficulties for the Government but we deserve a proper explanation as to the status of the Bill and why there has been such a significant delay. We all know betting patterns have changed and that an increasing number of people are using online facilities to bet. There is a potential source of revenue for the State that is not being captured at present.
The taxation of remote betting operators is designed to level the playing field with traditional bookmakers and the Betting (Amendment) Bill 2013, published in July, provides the regulatory framework for this. The Bill was subject to a three-month standstill period under the EU technical standards directive. This commenced in July and a number of communications seeking clarification around aspects of the Bill have been received from the Commission and responded to by the Department of Finance in that time. Progress on the Bill is now subject to agreement on scheduling by the Whips and I still hope to be allocated time to pass the legislation through the Oireachtas before the end of this session.
There have been a number of calls for an increase in the rate of duty that applies to betting. However, our preferred approach has been to extend the base on which the 1% rate applies, ensuring that the tax is applied fairly and widely on a level playing field for all. When we can be sure that we have in place a framework that captures all betting, the prospect of a rate rise can perhaps be explored. All taxes are reviewed on an ongoing basis by officials from my Department and the Revenue Commissioners, and this will be no different. However, as I’ve said, the priority is to extend the tax to the remote sector. Accordingly, I cannot accept the amendment.
Amendment No. 37 is an alternative to amendment No. 36. Therefore, they may be discussed together.
I move amendment No. 36:
In page 87, to delete lines 14 to 30.
Probably one of the main responses to the budget in our e-mails and other forms of correspondence has concerned this particular provision, which now appears in section 71. I refer to the increase in the pension levy and its extension to 2015. People feel incredibly sore. Members and Oireachtas colleagues bear a special responsibility for people who work in the private sector in the sense that we have access to valuable public sector pensions. People in the private sector – many of us have experience of working in the private sector – feel vulnerable about their pensions. They believe this measure is another whammy. They were obviously very upset when the levy was introduced in 2011 to fund the jobs initiative. That was bad enough and we believed it would end this coming year. Not alone has it not come to an end, it is being extended. People feel this is a breach of faith by the Government.
I am sure Government members have sensed that from correspondence they have received. Our National Pensions Reserve Fund, initiated by a former Minister for Finance, Deputy McCreevy and supported by the whole House at the time, has been raided and completely diminished following the outrageous and appalling decision to introduce the blanket bank guarantee. That leaves the entire pension structure of the country in a very vulnerable position.
It has been reported that the pension levy could be used to support pension funds which are in difficulty. The levy is aligned with the Bill to be debated later today, the Social Welfare and Pensions (No. 2) Bill. The avalanche of change in the private pension sector recently, with many schemes converting from defined benefit to defined contribution, puts pensioners and those about to retire in a very vulnerable position. They feel their vulnerability is increased by this levy and they also feel very hard done by. For the vast majority of members of both defined benefit and defined contribution schemes, it will mean a reduction in their benefits. The extension of the levy to 2015 creates further uncertainty and the fact that pension funds are being put to unintended uses is very regrettable and regressive.
We now have a situation in which private sector pension funds are subject to a wide range of levies, penalties and restrictions, which increases the imbalance between these and public sector pensions. The ideal situation is to achieve certainty, solidity and safety for all workers, in both the private and public sectors, for the future. That has to be the key aim of policy, but this measure is regressive.
Many will look at the Jobs Initiative and ask what it achieved. We have seen the equivalent of a full Aviva stadium of young people leaving for the United Kingdom, Australia, Canada and the USA in recent years, another legacy of this Government. On that basis, I oppose section 71 of the Bill.
I wish to speak on my amendment, No. 37, which differs from Deputy Broughan's amendment. We have heard the argument from Government that the retention of the 9% VAT rate for the tourism and hospitality sectors requires the continuation of the pension levy. Sinn Féin welcomes the retention of the 9% VAT rate, having called for its retention. The industry itself lobbied very effectively for its retention and hopefully we will see the fruits of that lobbying over the next 12 months in the form of increased activity and job creation. However, it is beyond belief what the Government has done in using that very effective lobby not only to retain the levy but to actually increase it for the coming year. There is no need to increase the levy to 0.75% for 2014 in order to retain the 9% VAT rate. My amendment calls for the levy to be retained at a level of 0.5%, but if one actually does the maths, it could be reduced further if the income from the levy is just to be used to retain the 9% VAT rate. It could be set at less than 4% for that purpose. There is absolutely no justification for continuing with this levy beyond next year because the Government has given no indication that it intends to retain the 9% VAT rate beyond that time.
There has been talk to the effect that the Government is going to use this money in the event of pension fund double insolvency. While it is important that we have some type of insurance fund to deal with such issues, it is not appropriate that pension contributors should have to pay for it. The Government spin at the time of the introduction of the levy was that there was enough fat in the system to allow the industry itself to soak up the pension levy, but it is very clear that this is not what has happened. It is the pension contributors who have had to bear the brunt of this. In terms of a fund for dealing with cases of double insolvency, as we found out from the Government during the debate on Committee Stage, the 0.15% of the levy will not be going into a ring-fenced account. The money is going into the general Exchequer fund and in cases of double insolvency where the State picks up the bill, the money will come from Exchequer funds. The Government is playing with words here and is trying to make it easier for the public to swallow the fact that the levy is continuing and that it has breached its own commitment in that regard. The Government commitment was that the levy would be in place only until the end of this year. Now, not only will it continue beyond 2013 but it will actually increase next year and continue on at a lower level thereafter.
If the Government is genuinely considering a levy on the pension sector to deal with cases of double insolvency, then it should be setting up a ring-fenced fund, which is not unique and has been done in many other areas such as insurance and banking, whereby money contributed from the sector is put into a fund to deal with problem issues. If the Government made such a proposal I would be willing to discuss it, but the proposal before us today is to increase the pension levy in 2014 to a rate of 0.75%, which is not required to cover the extension of the 9% VAT rate for another year, and then to continue with the levy at a lower rate beyond that. I cannot support that. I have put forward a fair amendment which would allow for the levy to remain in place in 2014 at a rate of 0.5%, which would more than adequately cover the 9% VAT rate extension, and then to set the levy at 0% thereafter. We specified 0% in our amendment because otherwise it would have been ruled out of order. The effect of setting it at 0% is that the levy would not exist beyond 2014.
There has been a complete betrayal on this issue. When the levy was first introduced in 2011, a firm commitment was given that it would end in 2014. That commitment has been repeated a number of times since then. The levy has now been increased in 2014 and retained, albeit at a lower level, in 2015. My concern is that the Government is now attaching the levy to the issue of dealing with pension funds that are in difficulty. We all know how serious an issue that is. There are numerous schemes that are now under water, and Deputy Doherty also referred to the issue of double insolvency. Can the Minister of State give a commitment to pensioners and those who are paying into pension schemes at present that the levy will end in 2015? The Government has already broken its word on this issue. People want to know now if the Government is serious about ending the levy in 2015 and I ask the Minister of State to give a commitment to the House to that effect.
I support Deputy Broughan's amendment. The Government may try to attach the pension levy to other measures they think the public might want or support, but in reality it is just an austerity grab and an attack on pensioners. Now the promise that this austerity grab, which fuelled such anger among pensioners, would end at a certain point has been broken. That is fairly typical of what goes on. When unjust measures such as this levy are introduced, the Government becomes addicted to the money raised and the likelihood that the measures will ever be gotten rid of sinks further into the distance. This is all the more obnoxious because it is just another outworking of the bailout of bondholders and banks.
I had a debate on this issue with the Minister of State, Deputy O'Dowd, on the radio. One must examine the different approaches within this Bill. It gives new tax breaks for trading in securities and shares, for example, and further tax breaks to property speculators in the form of elaborate real estate investment trusts.
The more I look into them, the more alarmed I become because this is the new mechanism to encourage speculation in a property boom. These guys are being looked after, encouraged and incentivised to do things that will destabilise the economy, while we continue the raid on smaller pensions.
Pension provision is a serious issue that needs to be addressed. Just like the argument I made yesterday about health insurance, private pension schemes are unstable, subject to the whims of the market. One should note the connection. We let the speculators off the leash and they become the people who actually control the value of pensions. As the market goes up and down, so too do the values of pensions in a dangerous way.
As has been suggested by several people, we should treble the State pension, making it an attractive and viable option for ordinary people, while, at the same time, doing away with all of the subsidies we give to the private pension business. Meanwhile, the Government is hitting those who have made understandable provision for their old age and has raided them in a nasty way. I oppose the continuation of the levy and the breach of promise it involves.
I strongly support Deputy Broughan’s amendment. The Government’s pension levy underlines the complete disarray in its pensions policy. Two promises were clearly made by the Minister for Finance, Deputy Michael Noonan, last year. First, he promised to tackle the very unfair pension tax relief on high-end pensions. Pension tax relief costs the taxpayer €2.5 billion a year, the vast bulk of which, about 80%, is going to the top 20% of earners. From the start, it is a very unfair system. Last year we were promised that tax relief would not be available on a pension in excess of €60,000, a promise particularly emphasised by the Labour Party which decided to call it some sort of a wealth tax. That would have been a progressive move had it happened. Unfortunately, the Minister for Finance has broken that promise. Now, people can accrue pensions up to €100,000. Those who have exceeded the €60,000 threshold will be allowed to continue to accrue further pension benefits up to €100,000. Accordingly, the expected revenue from that promised measure is vastly reduced. It was supposed to save €250 million. Now, because of the backtracking and the breach of that promise, it will only raise €120 million. There is a shortfall of €130 million in the budget figures as a result of the Minister breaking that promise and going back on the commitment given last year. To make up the shortfall, he has increased the pension levy.
Another commitment the Minister made last year was that the pension levy, which has caused so much difficulty for many people’s pension entitlements, would be abolished in 2014. That is the second commitment the Minister has broken in the budget. Far from abolishing it, he is actually increasing it in 2014 and it will continue to apply in 2015. The revenue expected to be raised through this measure is €135 million. It is clear that because of his failure to attack the high-end pension issue, the Minister is targeting those on low and average pensions to recoup the saving. He is compounding the inequality within the pension system. People on small pensions or taxpayers with no pension provision of their own are subsidising those with high-end pensions up to the level of €100,000. There is no fairness in this at all. It is a significant breach of the two commitments made last year. Not only do those in defined contribution schemes and defined benefit schemes have a 0.6% levy on their meagre private pensions but, now, they will have an additional levy. It is completely unfair and flies in the face of any sense of equity in the system.
The Government is continuing to perpetuate the golden circle arrangement for people on the inside and in the know. The fact that it has not tackled high-end pensions directly benefits Ministers, for example, and high earning public servants, the very ones who decided to backtrack on the promises made last year and added a further imposition on those with minor pension provision instead. This is a significant conflict of interest. The people who stand to benefit from a Government policy are the very ones who have designed it. They then hide behind a line about legal advice. I have already challenged the Minister for Finance and the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, to produce this legal advice to show us why they could not follow through on the commitment given last year. Of course, they refused to provide that advice. Those who have provided it are all part of the apparatus of government at senior level and are the very ones who are conflicted on the issue. They are the same kind of people who will benefit from the backtracking on the commitment to tackle high end pensions. The Government should, at the very least, be seeking independent advice. Otherwise, we cannot come to any other conclusion but that this is a group of very well protected high earners who are continuing to featherbed their own pensions, at the expense of those who have small pensions which will be now further reduced as a result of the measure in question. It is completely unacceptable. No other jurisdiction would allow a group of insiders to look after themselves in the way this group is doing. It is shameful.