Finance Bill 2017: Report Stage (Resumed)

Táimid ag dul ar ais anois go dtí an Bille Airgeadais 2017. Bhíomar ag teacht go dtí leasú Uimh. 5 an uair dheireanach.

I move amendment No. 5:

In page 11, after line 33, to insert the following:

“8. The Minister shall, within 6 months of the passing of this Act, prepare and lay before the Oireachtas a report examining increasing the benefit in kind from 1 year to 5 years, to those who purchase electric cars through work.”.

Good evening, Minister.

Good evening, Deputy. How are you?

Not too bad. It was a nice win for Spurs last night. I hope the Minister read that book I gave him. How much of it has he read?

I hope that he is not going to read it tonight.

We are here until midnight. Can we get on with amendment No. 5 without spoiling the party?

The Ceann Comhairle is spoiling the party. He is way too serious for this job.

Although the Minister introduced a one-year benefit-in-kind provision in respect of electric cars, which is estimated to cost the Exchequer approximately €500,000, we should be doing more. This is not just a point for the Department of Finance, but any Department. This morning, I was arguing with the Minister for Transport, Tourism and Sport in the Chamber. Ireland will have to change its approach. We claim to care, but our actions do not back that up.

Last week, we saw the publication at UN climate talks in Bonn of the 2018 climate change performance index, which contained the not-so-surprising claim that Ireland was now the worst performer on climate change action in Europe. A few weeks beforehand, a study was published in which revised calculations of methane produced per head of cattle showed that global livestock emissions in 2011 were 11% higher than estimates that were based on data from the UN Intergovernmental Panel on Climate Change, IPCC, meaning that the figures being used by the Department of Agriculture, Food and the Marine need to be revised and Ireland's standing on climate change action may be even worse than that damning report suggests.

We are doing little to tackle the threat of climate change, our agricultural and transport sectors being the major culprits. We are increasing the beef and dairy herd even though we know that they are the most climate destructive and carbon and water intensive forms of food production on the planet. To stop being the worst performer on climate change in Europe, we need to face a few hard facts. As Mr. Ian Lumley of An Taisce pointed out at the Bonn climate change conference last week, global animal agriculture needs an exit strategy. We have got to change our approach. He stated that, if the target in the Paris Agreement is to be met, that exit strategy should be as rapid as necessary for coal, oil and gas. In that spirit, we need to get oil, coal and gas out of our transport sector as fast as possible.

We need to consider increasing benefit-in-kind for those who purchase electric cars through work, and I have recommended a period of five years. The Minister might say that is off the Richter scale, but it would not be a mad expense. I do not have figures, but it is something worth considering. As the Minister knows, I am seeking a review. I am not saying this has to happen now, otherwise my amendment would have been ruled out of order because I would have transgressed the money message rule.

Assessing whether this is value-for-money cannot be a bad idea. It is not a mad notion for me to come up with. If we are serious about electric cars, we also have to get serious about how we produce electricity. Unfortunately, we are not the cleanest producers of electricity around. In fact, if one was to compare us with western European countries I doubt any would be in as poor a place as we are. The burning of coal in Moneypoint should stop. The State should borrow in order to provide massive investment in solar, wind and water renewable power. Much like the housing crisis, the private sector will not fill that gap. The State has a significant responsibility to come up to the plate and it can do so.

We know we do not have an endless supply of money, but the State has to play a stronger role in tackling climate change. Everyone has seen their electricity prices rise of late, as the PSO levy has increased. We have been told this is to help to pay for new renewable projects, but in reality we are subsidising the highly inefficient and destructive burning of peat at power stations while we convert them to biomass, another climate disaster in the making. Future generations will thank us if we play a positive role now and deal with these issues.

The Minister has probably heard what people in the industry have said about going from one to five years. Alan Nolan, the director general of The Society of the Irish Motor Industry, welcomed the move to promote electric cars in the first place, but said it is so limited in scope that it will have very little impact given that most companies buy vehicles over three-year periods. He went on to say that if it really wants to make an impact, any such scheme needs to relate to the buying cycle. I can assure the Minister that when I was buying commercial vehicles we worked on a five year cycle because it made more financial sense to do so.

I ask the Minister to consider the measure urgently. I do not think it is a mad idea. God knows there have been plenty of mad ideas in this place. It is to be hoped that the Minister will see fit to at least agree to a review after about six months or whatever.

We discussed this to some extent on Committee Stage. My view is that we should give a longer-term commitment. One year is too short from the point of view of a company or employer investing in vehicles. They need more certainty. The Minister indicated on Committee Stage that the intention was to keep it for a longer period of time. He should formalise that in the Bill.

Yesterday, the Minister for Communications, Climate Action and Environment, Deputy Denis Naughten, said the exemption would be in place for three years. That is not what the Finance Bill, as currently constructed, actually states. The Minister might clarify the Government's policy, as well as from the point of view of employees. If they think they will have a benefit-in-kind exemption for 12 months that may affect their decisions in terms of whether it is worth their while accepting it.

In the booklet issued on budget day, the Minister indicated that the cost was €0.5 million, which is extremely modest. We are well behind the curve in terms of tackling climate change. We are facing substantial fines in three years' time, and we need to show greater commitment to this issue. The Minister should extend the period from one year. A period of three years would be reasonable, and I look forward to what the Minister has to say on that.

The Finance Bill refers to a one year period. The main reason for that is because I aim to carry out an overall review next year of how we provide benefit-in-kind treatment to all motor vehicles. I want to ensure that this policy decision next year fits into the broader review we have under way. As I confirmed on Second and Committee Stages, it is my intention to retain this relief for a minimum of three years. I accept that buying cycles stretch well beyond a single year, in particular for companies which are providing vehicles for their employees. It is my intention that this change will be in place for a minimum of three years, subject to this change proving to be successful, which I believe it will be. I might make further decisions beyond that once I have completed the review of benefit-in-kind treatment for motor vehicles.

I agree with nearly all of the arguments advocated by Deputy Wallace. It is for that reason that I am reducing the rate to 0%. As I said, I envisage the provision being in place for a far longer time period than is referenced in the Bill.

I welcome the Minister’s comments. I would like a period of three or five years to be enshrined in the Bill. I accept that the Minister seems to be moving in the right direction. At the same time, experience has taught us to be wary. I had a discussion today with the Minister for Transport, Tourism and Sport, Deputy Shane Ross, about the fact that every single one of the many buses we purchased over the past six years is powered by diesel. There is a significant movement away from diesel right across Europe. Several European cities will have no public transport diesel by 2025.

We have all bought things which we cannot throw away. However, I was shocked to find that we bought new buses which are 100% diesel powered. I tabled a motion which was ruled out of order, perhaps because the matter was not discussed in committee. I wanted to equalise the tax on diesel and petrol in order to encourage people to move further away from diesel. I understand there are issues around that, such as the commercial use of diesel, and there is a body of work to be done to make sure businesses are not crucified. However, there has to be a genuine move away from diesel in the direction of renewable energy. It is to be hoped that will happen. When I hear that all of the new buses purchased in the past four years are diesel powered it makes me wary.

The only point I add is that when a company looks up the policy on this benefit-in-kind treatment, it will not read committee or Dáil transcripts. Rather, it will look at the Revenue website which sets out the legal position, which is that the exemption is for a one year period. We have a political commitment that it will be there for at least three years.

The reason the Minister gave for not extending it further in the Bill is that there is an overall review of benefit-in-kind in respect of vehicles. I put it to the Minister that he is very unlikely to seek to change this anyway. He has given a commitment that the provision will be in place for three years. He is not going to dilute or remove this incentive in any way. The Minister has an opportunity to provide the certainty that people need.

It will set out the legal and statutory position as enshrined in the Finance Act, and it will say one year. It could influence decisions in a negative way, notwithstanding the political commitment given by the Minister.

Across our tax code we have many forms of relief that are time-bound. As such, this example is no different. I take on board the point made by the Deputy and I will see if there are other ways in which this policy statement from me can be made clearer to those who would be involved with the purchase of these vehicles. I have explained why I am making it available for one year. It is a change I believe is welcomed and understood by the House. There may well be further changes relating to benefit-in-kind next year and, through engagement with the Revenue Commissioners or representative bodies, I will seek to find ways in which we can make this clear. I am given to understand some of the organisations involved in representing interests and groups in this industry are already aware of what I have said and understand our intention in this area. I am happy to use this as an opportunity to confirm it further and I will see if there are further ways in which I can make it clearer.

With regard to Deputy Wallace's point on how we tax diesel, this is one of many matters I consider in the run-up to the budget. One of the difficulties that became very apparent is the impact on commercial vehicles. I decided this merited further reflection before I could make any decision. In looking at the potential uncertainty and difficulty that we may need to manage in the coming period with respect to haulage and access into and out of our country, I decided this budget was not the time to change the tax treatment of diesel. It is a matter I will continue to review, as I do with all tax measures. I hope Deputies recognise that this movement in the benefit-in-kind treatment of electric vehicles, and what we are doing with employer-provided electrical charging points, reflects my intention.

I agree 100% that there are complications with the diesel issue and allowances must be made for certain commercial vehicles. At the same time, we must start encouraging companies to move in that direction. As I stated, I do not expect companies to throw away what they have but they must start moving in the direction of using less diesel. The impetus will probably have to come from here so the sooner we do it, the sooner we will get to a position where we are in a better place. We must bring the companies with us. I would make allowances for companies as I would not want to penalise them in the transition period. It is a piece of work that can be developed.

The point made by Deputy Michael McGrath is very good. People looking at whether to invest in this will look at the Revenue Commissioners' information and see it as one year rather than three. The Ceann Comhairle will ask me if I will press this. I would if Fianna Fáil would vote with me. Deputy McGrath informs me his wife will kill him if he votes with me so there is not much point in me pressing it. I will have to give the Minister the benefit of the doubt and trust him. I hope companies will have the courage to take this on board as well and trust him. It is not enough for me to do it.

I will add my support to this amendment. I know it will not be pressed. Fair play to Mick for taking into account the considerations of Deputy McGrath's wife.

For the record, I did not even mention my wife. I mentioned confidence and supply.

We will not get into any more "he said, she said", as we have had enough of that all day. There is an issue, and I have heard the Minister's comments about certainty. It has happened many times that provisions have been put into a finance Bill to give certainty over three years. If a company was getting into this in a big way, it would be a serious consideration that it could change. The only reason this is not in the Finance Bill is that, although the Minister has given a commitment, he is not 100% sure it will be in the finance Bill next year. How can a company director or shareholder make a decision based on a verbal commitment of the Government? The only reason it would not be in the Finance Bill, it can be deduced, is that there will be a review and the Minister is not 100% sure it will be there next year. It is a pity but we are where we are and the motion is not being pressed. I wanted to add my support to it and perhaps, between now and the conclusion of the legislation, the Minister will reconsider it.

I support the amendment, which makes sense. It is a feature of both Committee and Report Stage amendments that reports are called for to get information. If the Department was better organised, frankly, it would not be contentious and it would form the basis of people being able to make intelligent decisions. I confess to being one of those mostly women who some years ago switched to a diesel car because I believed all the propaganda I read. One might say somebody involved with politics should be very alert to propaganda but I really believed it. It is a particular concern for the Minister in his constituency, for me in my constituency and probably for Deputy Michael McGrath in his constituency in Cork that all the international evidence indicates the level of pollution and particulates from diesel cars is far higher than has been appreciated. The health consequences, particularly for young and vulnerable people living near busy traffic routes, are very severe and ultimately could be very costly to the Exchequer.

The data and information about diesel were not available until the various scandals, particularly involving Volkswagen and so on, which emerged in the United States when tests were faked. It is a second reason to support this, particularly for any of us who represent urban constituencies with dense concentrations of traffic. Many of the drivers in the traffic, like me, bought diesel cars thinking they were better for the environment. That was four or five years ago. I am not somebody who would trade in a car very frequently but a strong case can be made for a financial incentive in this respect. A former Minister, Mr. Ruairí Quinn, did this in the past for what might be called clapped out vehicles over ten years old. There was a subsidy to have them replaced and get the bangers off the road. It worked very well at the time. There is a role, with regard to consumer and business behaviour, in providing such subsidies.

Our carbon record is desperate and that is a primary reason for doing some of this. We really are bottom of the class with regard to carbon emissions. Internationally, that is put down to our cattle and it is associated with our name. Significantly, we can act in this respect for health reasons. The Minister and I live near a children's hospital and we know asthma rates, for example, are very high in Ireland. The evidence now is that particulates in diesel are likely to be culprits in that. I strongly support the amendment, although I recognise it may not be pressed.

Is the Deputy pressing the amendment?

I do not know. There is some support for it so perhaps I should press it.

Will the Deputy make up his mind?

Amendment put:
The Dáil divided: Tá, 38; Níl, 49; Staon, 40.

  • Boyd Barrett, Richard.
  • Brady, John.
  • Broughan, Thomas P.
  • Buckley, Pat.
  • Burton, Joan.
  • Collins, Joan.
  • Collins, Michael.
  • Connolly, Catherine.
  • Crowe, Seán.
  • Cullinane, David.
  • Daly, Clare.
  • Doherty, Pearse.
  • Ellis, Dessie.
  • Ferris, Martin.
  • Fitzmaurice, Michael.
  • Healy, Seamus.
  • Howlin, Brendan.
  • Kelly, Alan.
  • Kenny, Gino.
  • McDonald, Mary Lou.
  • Mitchell, Denise.
  • Munster, Imelda.
  • Murphy, Catherine.
  • Nolan, Carol.
  • Ó Caoláin, Caoimhghín.
  • Ó Laoghaire, Donnchadh.
  • Ó Snodaigh, Aengus.
  • O'Brien, Jonathan.
  • O'Reilly, Louise.
  • O'Sullivan, Jan.
  • O'Sullivan, Maureen.
  • Ryan, Brendan.
  • Ryan, Eamon.
  • Shortall, Róisín.
  • Smith, Bríd.
  • Stanley, Brian.
  • Tóibín, Peadar.
  • Wallace, Mick.

Níl

  • Bailey, Maria.
  • Barrett, Seán.
  • Breen, Pat.
  • Brophy, Colm.
  • Burke, Peter.
  • Byrne, Catherine.
  • Canney, Seán.
  • Cannon, Ciarán.
  • Carey, Joe.
  • Corcoran Kennedy, Marcella.
  • Coveney, Simon.
  • D'Arcy, Michael.
  • Daly, Jim.
  • Deering, Pat.
  • Doherty, Regina.
  • Donohoe, Paschal.
  • Durkan, Bernard J.
  • English, Damien.
  • Farrell, Alan.
  • Fitzgerald, Frances.
  • Fitzpatrick, Peter.
  • Flanagan, Charles.
  • Griffin, Brendan.
  • Harris, Simon.
  • Harty, Michael.
  • Heydon, Martin.
  • Humphreys, Heather.
  • Kehoe, Paul.
  • Kenny, Enda.
  • Kyne, Seán.
  • McEntee, Helen.
  • McGrath, Finian.
  • McHugh, Joe.
  • McLoughlin, Tony.
  • Madigan, Josepha.
  • Mitchell O'Connor, Mary.
  • Murphy, Dara.
  • Murphy, Eoghan.
  • Naughten, Denis.
  • Naughton, Hildegarde.
  • Neville, Tom.
  • Noonan, Michael.
  • O'Connell, Kate.
  • O'Donovan, Patrick.
  • O'Dowd, Fergus.
  • Ring, Michael.
  • Rock, Noel.
  • Stanton, David.
  • Zappone, Katherine.

Staon

  • Brassil, John.
  • Breathnach, Declan.
  • Browne, James.
  • Butler, Mary.
  • Byrne, Thomas.
  • Cahill, Jackie.
  • Calleary, Dara.
  • Casey, Pat.
  • Cassells, Shane.
  • Chambers, Jack.
  • Chambers, Lisa.
  • Collins, Niall.
  • Cowen, Barry.
  • Curran, John.
  • Donnelly, Stephen S.
  • Dooley, Timmy.
  • Gallagher, Pat The Cope.
  • Haughey, Seán.
  • Healy-Rae, Michael.
  • Kelleher, Billy.
  • Lahart, John.
  • Lawless, James.
  • MacSharry, Marc.
  • McConalogue, Charlie.
  • McGrath, Mattie.
  • McGrath, Michael.
  • Martin, Micheál.
  • Moynihan, Aindrias.
  • Moynihan, Michael.
  • Murphy O'Mahony, Margaret.
  • Ó Cuív, Éamon.
  • O'Brien, Darragh.
  • O'Callaghan, Jim.
  • O'Keeffe, Kevin.
  • O'Loughlin, Fiona.
  • O'Rourke, Frank.
  • Scanlon, Eamon.
  • Smith, Brendan.
  • Smyth, Niamh.
  • Troy, Robert.
Tellers: Tá, Deputies Mick Wallace and Pearse Doherty; Níl, Deputies Joe McHugh and Tony McLoughlin.
Amendment declared lost.

Amendments Nos. 6 and 7 are related and may be taken together.

I move amendment No. 6:

In page 12, line 24, to delete “after” and substitute “before”.

Amendments No. 6 and 7 amend section 8 which provides that where an employee of a health or dental insurer, or of a tied health insurance agent, receives a health or dental insurance policy in the course of his or her employment, any discount received on the policy shall be a taxable emolument for the employee. The amendments clarify that the emolument is calculated by reference to the market value of the insurance policy prior to deducting any tax relief that would be available. Further, they provide that individuals subject to benefit-in-kind taxation as a result of this section can avail of tax relief in the same manner and amount as any other employee whose employer provides them with health or dental insurance. This is an important measure to ensure equity of treatment of all employees whose employers provide health insurance benefits.

Amendment agreed to.

I move amendment No. 7:

In page 13, to delete lines 20 to 22 and substitute the following:

“(4) Where an amount is treated as emoluments in a year of assessment under this section—

(a) for the purposes of section 470, the amount (referred to in this subsection and subsection (5) as the ‘notional payment amount’) shall be treated as if it was an amount paid—

(i) under the relevant contract concerned to an authorised insurer by the relevant employee concerned, and

(ii) in the year of assessment,

and

(b) subject to subsection (5), notwithstanding that the payment of the notional payment amount is deemed under paragraph (a) to occur after 6 April 2001—

(i) section 470(3) shall not apply to the notional payment amount, and

(ii) section 470(2) shall apply to the notional payment amount as if the relevant employee concerned had made a payment under a relevant contract of that amount to an authorised insurer.

(5) Where an amount (in this subsection referred to as the ‘actual payment amount’) is paid under the relevant contract concerned by the relevant employee concerned or an individual connected to that employee—

(a) section 470(2) shall apply subject to the following modifications:

(i) a reference to a payment shall be construed as a reference to an amount being the sum of the notional payment amount and the actual payment amount;

(ii) the amount by which the income tax to be charged on the individual for the year of assessment, other than in accordance with section 16(2), is reduced shall itself be reduced by the percentage of the relevant contract price which the actual payment amount represents,

and

(b) section 470(3) shall apply subject to the following modifications:

(i) a reference to a payment shall be construed as a reference to an amount being the sum of the notional payment amount and the actual payment amount;

(ii) the amount the individual shall be entitled to deduct and retain shall be reduced by the percentage of the relevant contract price which the notional payment amount represents.”.”.

Amendment agreed to.

I move amendment No. 8:

In page 13, between lines 28 and 29, to insert the following:

“The linking of DIRT rate and Exit Tax rate on Life Assurance policies

10. The Minister shall, within three months of the passing of this Act, prepare and lay before the Oireachtas a report on the breaking of the link between the rate of DIRT and the rate of exit tax from Life Assurance policies, including the impact of this on life assurance savers.”.

The issue I raise is the breaking of the link between the DIRT tax rate and the exit tax rate on certain life assurance policies and I am seeking a report on the issue. In last year's budget the decision was made to reduce DIRT tax by 2% each year up to 2020. Historically and up to the past 20 years, the DIRT tax rate was linked to the exit tax rate on life assurance investment products. I understand there are several hundred thousand savers in the country with such products and I am seeking to establish the policy position of Government on this. If this trend continues, DIRT tax will be reduced to 33%, which I welcome, but the exit tax will be kept at 41% and we will have a significant differential - 8% - when up to last year the rates were identical. The issue is whether the Minister is discriminating between different types of savings products. What is the rationale behind this? Is it simply about the cost of extending the reduction in DIRT tax to the exit tax on the investment products in question?

I know why this amendment only calls for a report. It is because that is the way we have to table amendments. The intention is to have a link between DIRT tax and exit tax but, given the fact that people will be getting ready to make their beds in different doorways tonight, or to go into emergency accommodation, there are far more important areas where we can spend the scant resources of the State than on a reduction in exit tax. My party and I will not be supporting the amendment.

Deposit interest retention tax, DIRT, is deducted by Irish financial institutions from deposit interest paid or credited to the accounts of Irish residents.

The basic rate is 39%. This was provided for in the Finance Act 2016. This will fall to 37% from 1 January 2018 and by a further 2% each year until 2020 when it will be 33%. It is a final liability tax, that is, it satisfies the individual's full liability to income tax in respect of deposit interest. The individual may still be liable to PRSI on the interest. Deposit interest subject to DIRT is not subject to the universal social charge. It is estimated that as the overall cost of each 2% reduction in the rate of DIRT is approximately €6.4 million in a full year, the total annual full-year cost over the three remaining years is estimated at €19.2 million by the time the full reduction is in effect in 2020.

I am aware that prior to the enactment of the Finance Act 2016, the rates payable on a series of other taxes, including taxes on life assurance policies, have tended to move in line with DIRT. However, on that occasion, my predecessor decided not to reduce those other rates. The decision was made due to the annual cost of reducing the rates of these other taxes by 2% being tentatively estimated by the Revenue Commissioners to be, allowing for rounding, €14 million annually with tax on life assurance products alone accounting for €11 million. Therefore to immediately bring the rates into line with those applicable to DIRT would cost €28 million in 2018, rising to €56 million by 2020. It therefore remains too costly to the Exchequer to reduce the rates of these taxes in the same manner as the ongoing series of reductions in the rate of DIRT.

This summer, the tax strategy group examined the matter of taxation of investment products. The tax strategy group examined options for changing and amending that taxation. It set out some options in this regard but constrained financial resources meant that it was not possible for me to act on them in this year's budget or Finance Bill. During work on that paper, and following advice from Revenue, it became evident that there were more complex issues to be addressed, in the context of the tax regime that applies to personal investment products other than those covered by DIRT, than simply the degree of the rates of tax applied and it was soon determined that a more holistic approach might be required. I therefore propose to establish a working group of officials from my Department and Revenue to examine and address the variety and complexity of the operation and taxation of personal investment products including the interaction of these regimes. An examination of the matters set out in the Deputy's proposed amendment will form part of the group's work. It will take longer than the three months suggested in the amendment for the group to carry out its work on such complex issues in a thorough and complete manner. I will instruct the group to provide me with a co-ordinated form of proposals prior to budget 2019, allowing sufficient time for those proposals to be acted on if necessary.

The resource argument was particularly important in my decision. If one looks at the cost for this year of this decision on DIRT, and the cost of continuing the decision of the then Minister, Deputy Noonan, it was €6.4 million in a full year. The costs in respect of similar decisions on other investment products would have been €28 million for next year, rising to €56 million by 2020. Given the cost involved in the decision, I decided I would not include it in the budget. I will go ahead with the working group, which will tease out different policy issues on the matter to be presented to me in advance of next year.

I thank the Minister for his response. I welcome that he plans to set up a working group to examine this and related issues. I recognise the budgetary reality but it is particularly important in the context of the very low returns available in the present environment. The reality is that people earn little or nothing on their savings. The effect of having this differential between the DIRT on traditional savings and deposit accounts and the exit tax rate on longer-term products is that it incentivises people to put money into traditional banks, savings and deposit accounts where they are currently earning little or nothing, where other products tend to be longer-term in nature. Hopefully the working group will take these points on board and I look forward to engaging with it along with colleagues. I will not press the amendment.

I welcome the establishment of the review group. Presumably it will take some time to do its work.

Charges on savings products including life assurance are very high in Ireland. Early on in my time as Minister for Social Protection, I commissioned a study on costs of investment products in respect of people saving for pensions. Compared with other European countries, our costs can be very high. That is something the review group could look at.

I agree with Deputy Michael McGrath that savers, many of whom are saving for pension lump sums, find it extremely difficult to get any decent return. My view and that of the Labour Party is that there should be a product available either through An Post or through the National Treasury Management Agency, which could be a savings bond, for instance. The ideal candidate for the use of a savings bond fund would be housing. I envisage it would permit people to save up to a certain amount, would allow many people to save, especially those on lower incomes, and could be used to invest in housing. It could pay modestly above the current rates of return. For many people who are trying to save for their retirement, interest rates in the Irish market make it almost impossible for them to get any return worth talking about. It is important that the Minister for Finance should facilitate people, especially smaller savers, to do so to facilitate their comfort in retirement and that they can accumulate savings that keep their value. As I am sure the Minister is aware, many savings have a negative return in real terms, perhaps not hugely so but negative nonetheless.

The focus, in finance terms, has been on restoring the pillar banks. As such, interest rates are low and interest charges are high and we do not have the kinds of products that are available in other countries, especially for smaller savers who would not be in a position to pay the fees on other products and who, because of their age, are understandably risk-averse. They need deposit-type structures or something very close to that. The review group is a good idea in the context of the economy recovering. It would be good if it was in a position to address those issues.

I will give an example of the complexity to which I referred earlier. An investment undertaking tax, which is in place for some of these products, operates at a 41% rate with an eight-year disposal window.

We then have a 60% rate in relation to personal portfolio life insurance products that also operate over an eight year window. In terms of some life assurance products, we also have a 41% exit tax rate over an eight year disposal window. I understand that at the moment we have 12 different regimes in place, many of which operate under different rates and rules. For those reasons, I believe that the best way to move the matter forward is through the working group. I emphasise that the cost of such changes would be an important point for me.

On Deputy Burton's two points, it is unlikely that the cost of supplying these products will fall into the terms of reference of the working group as we are looking more so at the taxation regime that applies. However, this is perhaps an area the Minister of State, Deputy D'Arcy, who has responsibility for financial services and other areas, could examine next year. I would propose to establish the group promptly and put in place a deadline for early 2018 to allow for submissions and proposals to be made to us, flesh out the matters to which I have referred, particularly the number of different regimes and their different rates and, if resources permit, use that report to guide choices in next year's budget.

Amendment, by leave, withdrawn.

Amendment No. 9 is also in the name of an Teachta McGrath and arises out of committee proceedings.

I move amendment No. 9:

In page 13, between lines 28 and 29, to insert the following:

“Tax bands for people over 65 years of age

10. The Minister shall, within three months of the passing of this Act, prepare and lay before the Oireachtas a report on the potential impacts and costs of increasing the income tax bands for those aged over 65 years of age from the current €36,000 for a couple and €18,000 for singles.”.

This amendment relates to the tax exemption limits that currently apply for people aged 65 years and over. For a single person, a widowed person or a surviving civil partner, it is €18,000. For a married couple or a couple in a civil partnership, it is €36,000. Those figures have not changed for some years. People have made the point to me and, I am sure, to other Deputies that the value of those exemption limits is eroded over time if they are not changed. I recognise that the priority in this budget was the reduction in the universal social charge and the raising of the entry point to the higher rate of tax. However, this is one issue where the non-indexation of the tax system has a direct consequence. While, on the face of it, people might think those exemption limits are generous, the State contributory and non-contributory pensions are taxable. Therefore, if a person has other income such as a private occupational pension, even of a modest amount, that can be taxable income and the person may have a tax liability. For those whose incomes are marginally in excess of the current exemption limits, there is the option of paying tax at a rate of 40%. This is known as marginal relief. However, it is somewhat complicated because the point at which the marginal relief ceases to be of benefit varies depending on the circumstances and the tax credits that apply. As a practitioner of constituency politics, people come to me with tax issues and so on and, obviously, I advise them to get professional taxation advice. However, many of them would not be aware of this particular provision.

The purpose of the amendment is to establish Government policy on these exemption limits and whether it is its intention over time to amend them, which is why we are proposing a report.

The Deputy's amendment refers to the income tax exemption limits available to taxpayers aged over 65 years. Such individuals whose income is below the relevant exemption limit are not liable to income tax. The current annual exemption limits for people aged 65 and over are €18,000 for an individual and €36,000 for a married couple or a couple in a civil partnership. The purpose of the exemption is to identify an income threshold below which a taxpayer aged 65 or over is not required to pay income tax or to submit claims to Revenue for income tax reliefs. This exemption limit does not equate to the amount of income which would be sheltered by the tax credits available to the individual or couple as both the exemption limit and the tax credit available can vary depending on the personal circumstances of the individual. However, I note that the exemption limits are slightly above the point at which such individuals would enter into a liability to income tax based on the current PAYE and age tax credits. As there have been no changes to personal PAYE or age tax credits in recent years, I do not see a need to review the exemption limits for those aged over 65. I am, therefore, not minded to expend resources on the production of the report requested by the Deputy and, consequently, cannot accept the amendment.

It is true to say that it is a slightly preferential system for those aged 65 and over but the extent of the preferential treatment is declining over time because the thresholds have not been increased. That is an important point to put on the record. Pensioners do pay tax. They pay the universal social charge and will have benefitted from the reduction in it. Others who would pay income tax under the normal system would potentially have benefitted from the increase in the entry point to the higher rate as well. I will not press the issue but it is something of which to be conscious. It is an element of the income tax code that relates to a cohort of people aged 65 and over. There has been no change whatsoever in recent years. Many of them are very aware of the issue and have raised it and it should be examined in future budgets.

I hear what the Deputy is saying and do not want to repeat what he just said. I would make the point that those who have the capacity to earn more than €36,000 have the benefit of the reduction in the USC and the extension of the point at which people pay the higher rate of income tax. We are aware of the matter and we are also aware that, as time passes, it is eaten into as it remains static. However, at this moment in time we are not moving in that direction.

Amendment, by leave, withdrawn.

We now move on to amendment No. 10, which is in the name of an Teachta Lawless. It arises out of committee proceedings.

I move amendment No. 10:

In page 13, between lines 28 and 29, to insert the following:

“Report on the Possible Extension of the TaxSaver Commuter Ticket Scheme to include annual parking tickets

10. The Minister shall, within 3 months of the passing of this Act, prepare and lay before Dail Eireann a report on the possibility of extending the TaxSaver Commuter Ticket Scheme to include parking costs associated with public transport.”.

I thank Deputy McGrath for tabling this amendment on Committee Stage, which I will speak to on Report Stage. I tabled the same amendment last year and the former Minister, Deputy Noonan, and I had some discussion on it in the House at the time. The Minister has now changed and I wish the new Minister well in his position. The outcome of the debate, however, was that the Department and the former Minister were to review the situation. I am not sure if that review has taken place. I hope it has and that it will inform this discussion.

The amendment would require the Minister, within three months of the passing of the Act, to prepare and lay before Dáil Éireann a report on the possibility of extending the tax saver commuter ticket scheme to include parking costs associated with public transport. In essence, the amendment would mean that, when one purchases a ticket for a train, bus, Luas or another of the multiple different public transport options to commute primarily into Dublin but also to the main regional urban centres, one would be able to purchase the add-on of a parking ticket along with the fare. The House will be aware of the extremely successful tax saver scheme whereby one can buy an annual train, bus or Luas ticket and have the cost deducted against tax. It is efficient, cost-effective and convenient. It also promotes consistency of behaviour because people travelling on a tax saver ticket do not make the choice of driving or getting the train or bus to work each day. They form a pattern of behaviour in how they go about their business.

The benefits of promoting public transport are many and are probably well-understood. However, they might be worth recapping. We have gridlock on many of our roads. Flooding was exacerbated today in my county of Kildare and probably in many other places. However, we have it on normal days as well. We have congestion on our motorways. A recent report in The Irish Times on the M50 noted how it is gridlocked and has reached capacity at a stage when we hope growth is still occurring in the economy and it is likely that the load on the motorway will be increased again. The M4 and M7 and other major motorways are the same. Unfortunately, we see the effects of this in the backlog of traffic going into our city centres and the knock-on effects on quality of life and climate change. I asked the Taoiseach last week about climate change targets and it is likely that the State will miss its targets, which could result in fines of €1 billion to €1.5 billion, which is pertinent to the debate on this and future Finance Bills. It is, therefore, in everyone's interest that we highlight climate change and promote public transport.

This is a good example of using the taxation system to reward and incentivise certain responsible public policy behaviours at the individual level.

In the real world, while we would like to see everyone's journey start and finish on public transport, we must accept that it is often impractical to make the entire journey in this way. I refer to the commuter belt, in particular. I represent Kildare North but my point applies to the wider area of sprawl around Dublin. Very many people in slightly outlying areas may have to drop children to a crèche or perform other duties before they embark on their journey to work. They must, of necessity, drive part of the way, park and then change to another mode of transport going to the city centre.

Park-and-ride facilities are becoming more critical in the circumstances. As of yet, however, we do not have any integrated ticketing or system whereby one can have a combined parking and rail ticket. In recent years, Irish Rail moved to introduce an annual ticket at certain stations but, because it is not incorporated into the taxsaver scheme, it makes it that much more difficult to incentivise. The objective of the scheme I propose is to include parking costs, paid for on an annual basis, as an add-on to the public transport fare. The whole sum would be tax deductible to incentivise behaviour to make it easier and more convenient for the rail user or bus user. There also would be a knock-on benefit in terms of consistency and reliability in respect of the journey. One would not be fumbling for change every morning at the train station or trying to load the meter while watching a train pull away from the platform in front of one. The frustration of the daily commuting experience could be alleviated slightly by having a measure such as the one I propose in place.

In essence, the suggestion is that the taxsaver scheme, which has been very successful in influencing public transport behaviour, be extended to include the cost of parking. It was not always a cost but has been in recent years. The proposal would enable the commuter to make a single purchase once per year, with everything included. This would be good public policy. It would not be terribly difficult to implement. We may discuss the implementation details in a moment but I hope the Minister will look on my proposal favourably. As I stated, the previous Minister was positive about my amendment when I introduced it last year. I await the current Minister's response. My proposal would be a sensible and pragmatic measure that would reward good behaviour.

Since Deputy Lawless raised this matter here last year, the Department of Finance has examined it. I wish to outline the various reasons offered to me as to why I should not accept the Deputy's amendment and to have a dialogue with him about it. The first point, which the Deputy has acknowledged in his contribution, is that the tax relief already available to anybody who purchases a commuter ticket is already very significant. The taxsaver scheme was put in place to incentivise the purchase of tickets and it represents a very good investment on behalf of the State.

One reason the existing scheme has been so robust over recent years is that it is very transparent. By that, I mean that the providers of the tickets against which the tax relief can be claimed are all named in the primary legislation. At the start of the year, one knows the cost of the tickets against which the relief may be drawn. There also are conditions in place concerning providers or, in other words, they are required to be regulated. We must ensure that any service provider providing a ticket against which relief can be obtained is regulated. A crucial challenge we would face in implementing the Deputy's proposal is that parking facilities are provided by a multitude of providers. Parking exists in different formats. For example, there are multi-storey facilities in some areas and single-storey facilities in others. In others, parking may be in premises that are not used for anything else. The charging is not set by or influenced by the State and can vary in many ways.

Moreover, there is a concern that were the scheme extended in the way proposed, it could have the unintended consequence of increasing the distance driven by commuters before they switch to public transport. I have listened to the Deputy's contribution, however, and I believe he makes a fair point that gaining access to a public transport facility in many counties requires the use of the car in the first instance. While we are making strides to ensure there are public transport routes and options available to get people to a train station, for example, I acknowledge this is not possible at present for many commuters. That is one reason there has been such investment in upgrading parking facilities in many counties, including the Deputy's, that are right beside public transport routes, particularly train routes.

I am advised that there could well be difficulties in minimising opportunities for misuse. Let me give one concrete example. These are the factors we need to consider when introducing any form of tax relief. We could grant tax relief against the ticket but, of course, we could not have a guarantee regarding who might be using it. Different people may use it. It may be provided for an organisation or a company and different people might use it, despite the fact that tax relief is granted against the ticket itself.

For all these reasons, I regret I am not in a position to accept the Deputy's amendment. It was considered. I have outlined my reasons for not accepting it. I do not know whether the Deputy is aware that one can purchase a parking pass, at a reduced rate, on the taxsaver website when availing of the benefits we are debating. Perhaps this can be attributed to the debate we had here last year and the fact that the Deputy has been raising this matter. Perhaps the issue the Deputy is raising here is being dealt with in another way. We are giving those individuals who make a purchase on the website the opportunity to purchase at a reduced rate access to parking facilities that may well allow them to use the public transport. The tax relief and the reduction in the cost of parking for those who make a purchase on the taxsaver website demonstrate an intention to provide the relief in a different way.

I hope that the Deputy can see that, over the past year, we have considered the matter and have tried to make progress in a different way. For the reasons I have outlined, I am not in a position to accept his amendment.

I thank the Minister for considering my points. I acknowledge the progress since last year. If I am still a Member next year, however, I will table my amendment again because there may still be some work to do in exploring it.

I take the Minister's points on board. I will respond to each of them. The providers are named in the primary legislation. I suggest that a review could recommend that a list of providers be extended. That could be included in the primary legislation, which can always be updated.

I believe there was a reference to the possible accrual, possibly accidentally, of a double benefit. At present, it is possible to travel to Dublin using one's taxsaver rail ticket, disembark at Heuston Station and then use a bicycle purchased through the cycle-to-work scheme at a discount to cycle to the city centre. This would involve rail and cycling as opposed to driving and rail. I do not know, therefore, whether what the Minister suggests in this regard is necessarily a problem.

I certainly agree there is a multitude of parking providers. Regulations are being introduced by the National Transport Authority at present on managing commuter parking. They typically concern clamping but also other issues that arise in parking management. It is possible that the regulations could be extended to include measures such as those I propose. In any case, the parking facilities are typically provided by the State providers, particularly Irish Rail. My proposal could be implemented initially in Irish Rail's car parks only if that would get around the difficulty.

As for the potential for overuse, I must disagree with the Minister's analysis or the Department's analysis. This matter arose last year. The same point has been made even though I responded to it last year. I am going to respond to it again. If we have the debate next year, let us hope we can move this on.

I do not accept the point that the ticket could be abused or re-used by multiple persons or entities because there is a very simple check. In the same way that a train ticket cannot be given to another person to use because it contains ID on it, by the same token a car registration plate could be used. As one typically does not swap cars around, the same car can be parked in a space in the station every morning. That is the system most parking systems use already as an identifier. It is built into the system. I suggest that the issue could be re-examined because there is a very simple way to address the concern. I thank the Minister for his response. I suggest that the issue could be looked at again as there is scope to revisit it. Some of the points that have been made could be countered. Where there is a will there is a way and it would be worth doing that.

I believe we will be here next year and we can look at this matter again then. I have a Leap card and I am aware that it took years to make it happen. Now that I see how Leap cards are used, I understand why it took so long to make it available. Technology is now being made available to allow the Leap card to be used on more forms of public transport. It is now possible, for example, to put one's photo on the card to ensure that if it is lost, one can get it back. I am very much in favour of looking at measures in the tax code to incentivise more use of public transport.

I will give an example of the kind of difficulty we need to manage, which is the reason I cannot accept the amendment but am happy to look at further ideas in the year ahead in regard to it. Deputy Lawless made the point a moment ago that if we were to list the various providers in legislation, we could begin to make the relief available to some providers rather than others. From a tax policy point of view I cannot do that because what would then happen is those parking providers, for example, a private sector company providing parking from a facility that is beside an Irish Rail train station – Deputy Lawless knows where this argument is going – would then claim they are being disadvantaged by the tax relief.

Deputy Lawless referred to the legislation on the regulation of clamping companies. I introduced that legislation when I was Minister for Transport, Tourism and Sport and I remember all of the challenges we had in terms of trying to define property and where clamping takes place. I assure the Deputy that if during the year he comes up with further ideas on how the matter can be addressed I will engage positively with him because I am open to such ideas. Perhaps one thing we could do arising out of this debate is to ascertain if we can find out how many commuters have access to parking at a reduced price because that might help us understand the potential scale of the opportunity to which the Deputy refers.

I thank the Minister for his response. That is a fair point about the multiple providers and tax equality for them and the difficulty in achieving that if we were to select some and not others.

I will address the Minister with his Public Expenditure and Reform hat on rather than his Finance hat. The commuter parking services are so popular that they are in scarce supply. The National Transport Authority, NTA, would be very grateful, as would the commuters of Kildare North and of the wider commuter belt, for any support that could be given towards the provision of additional parking services in those areas. I will finish on that point and thank the Minister for his response.

Amendment, by leave, withdrawn.

Amendment No. 11 is in the name of the Minister. It arises out of committee proceedings. Amendments Nos. 11 to 20, inclusive, are related and may be discussed together.

I move amendment No. 11:

In page 14, line 25, to delete "pharmaceutical,".

Amendments Nos. 11 to 20 relate to the new key employee engagement programme, KEEP, introduced in budget 2018. KEEP is an SME focused share-option programme, intended to help small, growing companies to attract and retain key staff. It operates by providing that any gains realised on the exercise of qualifying KEEP share options will not be subject to income tax, PRSI or USC at the date of exercise. The gain will, however, be subject to capital gains tax on a future disposal of the shares.

The relief therefore has a twofold benefit. First, it reduces the tax payable from income tax to capital gains tax rates. Second, and possibly more important from the perspective of small unquoted companies, it provides that the tax will become payable on disposal of the shares, when the sales proceeds would be available to pay the tax due.

These amendments make two technical changes to the KEEP legislation in order to ensure that it operates as intended. Report Stage amendments Nos. 11 and 12 amend the definition of "qualifying company" to ensure the inclusion of enterprises in sectors that are part of Ireland's strategic enterprise and employment priorities. It expands the definition of qualifying company to include companies that provide pharmaceutical and engineering services.

My officials have continued to engage with small business representatives following the publication of the Finance Bill and it was identified that the legislation could have the unintended consequence of incentivising a company not to grow beyond small and medium enterprise, SME, size while qualifying KEEP share options were on issue. Amendments Nos. 13 to 20, inclusive, correct this issue by amending the definition of "qualifying company" to specify that the conditions relating to the SME size requirement and the cap of €3 million on the maximum value of issued but unexercised qualifying KEEP options are to apply only at the time of the granting of KEEP share options. I commend the amendments to the House.

I thank the Minister of State for speaking to those amendments. This is a very important initiative and in a competitive modern economy, it is essential that we have such a scheme, in particular for SMEs because the absence of a scheme such as this could act as a brake on the potential growth of SMEs and in terms of attracting and retaining talent as well. I seek clarity from the Minister of State. Does he propose the deletion of the reference to "pharmaceutical" and "engineering" in amendments Nos. 11 and 12?

Can he clarify why those terms are being deleted and not the others? What is the purpose of that in terms of the definition?

While it sounds like a negative it is a positive.

It deletes an exclusion.

Okay. That is fine.

Amendment agreed to.

I move amendment No. 12:

In page 14, line 27, to delete “engineering,”.

Amendment agreed to.

I move amendment No. 13:

In page 15, line 4, to delete “and”.

Amendment agreed to.

I move amendment No. 14:

In page 15, to delete lines 6 to 9.

Amendment agreed to.

I move amendment No. 15:

In page 15, line 10, to delete “(ii) is” and substitute “(i) is”.

Amendment agreed to.

I move amendment No. 16:

In page 15, between lines 21 and 22, to insert “and”.

Amendment agreed to.

I move amendment No. 17:

In page 15, line 22, to delete “(iii) is” and substitute “(ii) is”.

Amendment agreed to.

I move amendment No. 18:

In page 15, line 24, to delete “and”.

Amendment agreed to.

I move amendment No. 19:

In page 15, to delete lines 25 and 26.

Amendment agreed to.

I move amendment No. 20:

In page 15, between lines 26 and 27, to insert the following:

"and

(d) at the date of grant of the qualifying share option-

(i) is a micro, small or medium sized enterprise within the meaning of the Annex to Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium sized enterprises, and

(ii) the total market value of the issued but unexercised qualifying share options of the company does not exceed €3,000,000;".

Amendment agreed to.

I move amendment No. 21:

In page 19, between lines 21 and 22, to insert the following:

“Amendment of Parts 9 and 36 of, and Schedule 25B to, Principal Act (capital allowances for equipment and buildings used for the purposes of providing childcare services or a fitness centre to employees)

12. (1) Chapter 2 of Part 9 of the Principal Act is amended by inserting the following after section 285A:

“Acceleration of wear and tear allowances for childcare and fitness centre equipment

285B. (1) In this section—

‘qualifying expenditure’ means capital expenditure incurred on qualifying machinery or plant by a person carrying on a qualifying trade;

‘qualifying machinery or plant’ means machinery or plant in use in a qualifying premises;

‘qualifying premises’ has the same meaning as it has in section 843B;

‘qualifying trade’ has the same meaning as it has in section 843B.

(2) Where a person has incurred qualifying expenditure, and for any chargeable period a wear and tear allowance is to be made under section 284, subsection (2) of that section shall apply as if the reference in paragraph (ad) of that subsection to 12.5 per cent were a reference to 100 per cent.”.

(2) (a) Part 36 of the Principal Act is amended by inserting the following after section 843A:

“Capital allowances for buildings used for the purposes of providing childcare services or a fitness centre to employees

843B. (1) In this section—

‘childcare services’ means any form of childminding services or supervised activities to care for children, whether or not provided on a regular basis, in respect of which it can be shown that the applicable requirements of the Child Care Act 1991 (Early Years Services) Regulations 2016 (S.I. No. 221 of 2016) have been complied with;

‘construction’ has the same meaning as it has in section 270;

‘fitness centre’ means a gymnasium used exclusively in providing a range of facilities designed to improve and maintain the physical fitness and health of participants;

‘qualifying expenditure’ means expenditure incurred by an employer, carrying on a qualifying trade or a profession, on the construction of a qualifying premises;

‘qualifying premises’ means a building or structure which is in use for the purposes of providing either childcare services or the facilities of a fitness centre to employees of the employer referred to in the immediately preceding definition, and where that employer is a company, whether the employees of that company or of a company connected with that company;

‘qualifying trade’ means a trade, other than a trade which consists of the provision of childcare services or a trade which consists wholly or partly of the provision of the facilities of a fitness centre.

(2) The provisions of the Tax Acts relating to the making of allowances or charges in respect of capital expenditure incurred on the construction of an industrial building or structure shall, notwithstanding anything to the contrary in those provisions, apply in relation to qualifying expenditure on a qualifying premises—

(a) as if the qualifying premises were, at all times at which it is a qualifying premises, a building or structure in respect of which an allowance is to be made for the purposes of income tax or corporation tax, as the case may be, under Chapter 1 of Part 9 by reason of its use for the purpose specified in section 268(1)(a), and

(b) where any activity carried on in the qualifying premises is not a trade, as if (for the purposes only of the making of allowances and charges by virtue of paragraph (a)), it were a trade.

(3) In relation to qualifying expenditure incurred on a qualifying premises, section 272 shall apply as if—

(a) in subsection (3)(a)(ii) of that section the reference to 4 per cent were a reference to 15 per cent, and

(b) in subsection (4)(a) of that section the following were substituted for subparagraph (ii):

‘(ii) where capital expenditure on the construction of the building or structure is incurred, 7 years beginning with the time when the building or structure was first used subsequent to the incurring of that expenditure.’.

(4) Notwithstanding section 274(1), no balancing allowance or balancing charge shall be made in relation to a qualifying premises by reason of any event, referred to in that section, which occurs more than 7 years after the qualifying premises was first used subsequent to the incurring of the qualifying expenditure on the construction of the qualifying premises.

(5) Where relief is given by virtue of this section in relation to qualifying expenditure incurred on the construction of a building or structure, relief shall not be given in respect of that expenditure under any other provision of the Tax Acts.

(6) A person shall not be entitled to allowances under this section while that person is regarded as an undertaking in difficulty for the purposes of the Commission Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty.”.

(b) Schedule 25B to the Principal Act is amended by inserting the following after the matter set out opposite reference number 50:

50A.

Section 843B (capital allowances for buildings used for the purposes of providing childcare services or a fitness centre to employees)

An amount equal to—

(a) the aggregate amount of allowances (including balancing allowances) made to the individual under Chapter 1 of Part 9 as that Chapter is applied by section 843B, including any such allowances or part of any allowances made to the individual for a previous tax year and carried forward from that previous tax year in accordance with Part 9, or

(b) where full effect has not been given in respect of that aggregate for that tax year, the part of that aggregate to which full effect has been given for that tax year in accordance with section 278 and section 304 or 305, as the case may be, or any of those sections as applied or modified by any other provision of the Tax Acts.

(3) This section comes into operation on such day as the Minister for Finance may appoint by order.".

This section introduces a scheme of accelerated capital allowances for the construction of buildings and structures for use in the provision of child care services or fitness centre facilities by employers to employees. The scheme also provides relief for expenditure incurred on related equipment. The rationale for introducing this relief is to help tackle the cost and availability of child care facilities, both of which we know are barriers to work.

The measures will also support the Government's vision for Healthy Ireland by supporting the provision of fitness facilities by employers.

The tax relief will not commence immediately as approval of the European Commission from a state aid perspective is required, on foot of which the scheme will commence by ministerial order.

The relief will work in a similar fashion to other capital allowances. The accelerated allowances for buildings or structures will apply at the rate of 15% per annum for six years and then 10% in year seven in respect of qualifying expenditure. The wear-and-tear allowances for related equipment will operate at an accelerated rate of 100%. The relief is only available to employers that incur qualifying expenditure. Unlike in the past, passive investors cannot avail of relief under the scheme. Where the employer is a company, employees of other companies connected with that company may avail of the services or facilities. I commend the amendment to the House.

I welcome the amendment. What is the provenance or origin? The Minister signalled the amendment on Committee Stage. Was this issue identified by Revenue or stakeholder groups? Is there a cost on the measure?

I was going to ask about the origins of the child care aspect and the gymnasium part of the measure. Will the Minister explain the allowance? I think I understood him correctly. The amendment allows for 100% of the cost to be drawn down in one year. Is that correct? Is it 15% over six years and 10% in the remaining year? What is the situation currently for capital allowances if an employer provides these services for employees? Can the Minister tell us whether any safeguards are built in, including anti-avoidance measures? If the facility was no longer used for the intended purpose, how long would the company have to use it to be able to claim the accelerated tax allowances? Would the company be able to keep all of the allowance? Would it apply only for as long as the facilities were being used?

I am always suspicious of capital allowances, given what has been happening with capital allowances in other areas, for example, the scandal of the intangible assets, which we will discuss later. Anyway, a range of other allowances are simply mechanisms through which profitable enterprises avoid tax and reduce their tax liabilities.

I assume the logic the Minister is putting forward in this case is that these allowances should be given because of a major shortage in child care capacity. I am keen to hear what the Minister has to say on that point. There are insufficient child care places and we need more. Therefore, the Minister is encouraging greater provision. Perhaps the Minister could clarify the point. Is it only for employers? Is it simply for workplace-based child care? Does it apply to investment in child care places generally, including businesses providing child care? Who exactly is getting the tax break?

Even if providing more child care places is a laudable motive that we should encourage, what is to stop it being abused?

I presume the other measure is about encouraging physical fitness and so on, possibly to tackle obesity or address general health. Perhaps the Minister can elaborate on that.

What is to stop abuse of the provision? What is to stop people putting in minimal facilities to benefit from the allowance without doing much in terms of providing child care or fitness facilities for employees? Perhaps the Minister can come back on that point. Can the Minister clarify whether it is only applicable to workplaces? Does it apply for more general provision of child care by businesses in that sector?

Several different issues have been raised, including the provenance of the idea. I am a former Minister for Transport, Tourism and Sport. When I was involved in the Healthy Ireland initiative I could see opportunities to make sporting facilities available in more workplaces. I thought it was something we should consider.

There has been a debate on the provision of child care facilities for some time now, especially with regard to how we can incentivise and make more facilities available. As I said on Committee Stage, I believe this is something we should look at. We are some time away from having to enact the measure, because I will need state aid approval and that will take some time. As I am getting ready to do all of that I will be in a position to be able to outline the cost, depending on the number of people who might actually access it.

Deputy Doherty put several questions to me. The provision operates with six years at 15% and then the final year at 10%. It is only in the case of equipment that the rate is 100%. I understand this as a standard provision for the provision of capital allowances for equipment.

Is the measure available within businesses? The answer to that question is "Yes". This is something that I anticipate will be provided within the workplace for employees of the workplace or, as I said a moment ago, for employees of companies that might be dealing with the company within which the facilities are supplied.

I was asked how we are dealing with this from an anti-avoidance point of view. As I said, my objective is that it will only be available to employers which incur qualifying expenditure. In other words, money will have to be spent to activate the provision. Then, upon the activation of the provision, the reliefs that I have described will become available.

My question related to capital allowance for six years at 15%. Is that comparable to what is in place now? Are companies or individuals entitled to capital allowances if they construct a gymnasium, fitness centre or crèche at this stage? Are they entitled to claim capital allowances? That was my original question.

I also asked about anti-avoidance mechanisms. Let us suppose two people had a company, which consisted of myself and my wife, who was an employee. Let us suppose I decided to put an extension onto the back of the house and turned it into a nice gym, and we made use of the gym. Let us suppose the same applied to a larger company and the gym was being used. Let us suppose the space was constructed and the company was able to claim accelerated capital allowances for the building in which the gym was situated. In addition, the relief would be 100% for the gym equipment. What happens after three years if the gym closes and it becomes a store for the shop or supermarket that created it in the first place? How do we ensure that smaller businesses would not be able to twist it? I have in mind a scenario where only two or three people are working. How do we ensure such companies will be unable to abuse the provision?

One of the big problems with an amendment like this, which is rather detailed, is that it is coming on Report Stage and we cannot really scrutinise it. We are limited in the number of interactions. The proposed amendment does not say the facilities have to be for the sole purpose of the employees. Let us suppose there was a crèche or gym. I am keen to tease this out with the Minister. Let us suppose I own a company that makes widgets. Then, three miles down the road I decided to create a gym or fitness centre.

If there is a distance or space involved and I allow the use of the gym for my employees, I presume they will have use of the facility free of charge and will not incur a cost. This is not stated in the amendment. Let us say the employees are entitled to use the gym, is the employer allowed to charge other individuals for the use of the gym while at the same time availing of accelerated capital allowances?

I echo Deputy Pearse Doherty's point about introducing detailed amendments at such a late stage when Deputies have not had an opportunity to properly study them. We do not have the explanations that are normally provided in the explanatory memorandum of a Bill, as initiated. While the Minister has an explanation available to him, Opposition Deputies must work out what this proposal, with its various unexplained references to principal Acts and so forth, means. If we are to deal with these types of amendments, we should have an opportunity to read the notes provided to the Minister before the debate. This is also true of other significant Report Stage amendments.

The Minister did not answer the question as to whether these allowances are available to people who are in the business of providing child care services or fitness centres. I ask him to clarify this matter.

Deputy Doherty's question brought to mind another question which follows on to some extent from the point he made. Must the facilities be made available to all employees free of charge in order that the provider can benefit from the allowances? One could imagine a scenario in which an employer or the top executives of a company build a very nice child care facility for themselves which they do not make available to other employees in the workplace. In such circumstances, the facility would be a major boon for the bosses but of no benefit to the workers. Similarly, one could imagine a nice spanking gym being provided for the executives or owners of a company, which would be of no benefit to general employees. Has provision been made to guard against such a scenario and ensure every employee is a beneficiary of the facilities for which the allowances would be provided?

To respond to Deputy Doherty's question, if a gym company were to build a gym-----

My question referred to a widget company building a gym.

If a widget company built a sporting facility or child care facility on site, it would be able to access the capital allowances provided. The reason we are introducing these allowances is to incentivise the provision of such facilities.

As to whether the facilities must be provided on site, the answer is "No". I anticipate it will take a period of time to establish the scheme because, at a minimum, we must obtain state aid approval for it. In addition, its operation will be subject to guidance from the Revenue Commissioners.

As to whether a requirement to provide the child care service free of charge is built into the scheme, the answer is "No". I cannot set the price at which a service is provided, just as I cannot set the price at which, for example, crèches currently provide services to families and parents.

On the issue of regulation, which was also raised, the amendment is drafted in such a way as to require that facilities be provided in full compliance with all child care regulations, as set by Tusla.

The Deputy had a seven and a two.

What does that mean?

The Deputy spoke twice. Members may speak only twice on Report Stage, once for seven minutes and once for two minutes. The only Member who may speak three times is the proposer of the amendment. That is the reason the Minister spoke three times.

On a point of order, we did not receive answers to some of our questions.

The Minister had an opportunity to answer the Deputies' questions.

Seriously, it is-----

The Deputy may not contribute again.

I have a genuine question. If these facilities are charging users, are they businesses within the business?

I cannot allow the Deputy to contribute again.

There is no way I will allow the amendment to pass unopposed if the Minister does not answer our questions.

Is it possible to recommit the amendment to allow us to discuss it further?

I will allow the Minister to contribute if there are outstanding questions to be answered.

I will be happy to appear at any point before the Committee on Finance, Public Expenditure and Reform, and Taoiseach, which oversees the work I do, to discuss the implementation of the scheme. As I indicated, we have a considerable amount of work to do before the scheme is implemented. I would be pleased to appear before the committee in the period in which we are preparing the scheme.

On a point of order, I believe the Minister misheard me. I asked for his discretion to recommit the amendment and discuss it on Committee Stage. I do not want to vote against the amendment but the Minister will force me to do so because there is no clarity on certain issues. While incentivising crèches is a good idea - I am not sure the same applies to fitness centres - this proposal must be teased out. We cannot pass it into law without properly discussing it. If we recommit the amendment, I will give an undertaking not to spend more than ten minutes discussing it. Clarity is required on the scheme.

We have completed Committee Stage and discussed the amendment on Report Stage. It is time Deputies made up their minds.

Amendments have been recommitted previously. We have genuine questions.

If the Minister does not wish to move for recommittal in respect of the amendment, the matter is outside my control.

I ask the Leas-Cheann Comhairle to explain what is involved in a recommital as I am not familiar with the process. At what point would I propose a recommital and what would be the consequences of doing so?

I am informed that the amendment cannot be recommitted as it has been discussed on Report Stage. It should have been recommitted in advance of Report Stage. I must put the amendment.

Amendment put and declared carried.

I move amendment No. 22:

In page 19, between lines 21 and 22, to insert the following:

"Amendment of section 97 of Principal Act

12. The Principal Act is amended by inserting the following section after section 97:

"Accidental landlords

97A. (1) In this section—

'qualifying let property' means a residential property which was acquired, between 1 January 2002 and 1 December 2008 the floor area of which is less than 113 square meters;

'qualifying rented property’ means a residential property, which has more bedrooms than a qualifying let property, where the rent paid is no more than the market rate;

'qualifying landlord' means an individual who—

(a) owns only one premises and—

(i) that premises is a qualifying let property,

(ii) that premises was acquired by that individual as a principal private residence, within the meaning of section 604, and was occupied as such for a period of at least 2 years prior to its first letting, and

(iii) at the time that premises was acquired, the individual was a first time buyer,

and

(b) resides, on a full time basis, in the qualifying rented property.

(2) Notwithstanding section 97(2), in calculating the surplus or deficiency in respect of the qualifying let property, a qualifying landlord shall be entitled to take a deduction for the amount of any rent payable in respect of a qualifying rented property.".".

The purpose of the amendment is to end double taxation of accidental landlords. Families all over Ireland who bought small properties during the boom are in negative equity to this day. Their families are growing and the properties they bought between 2002 and 2008 are not suitable to raise growing families. As a result, they are left with an unenviable set of choices. They can stay in the apartment or small house in which they are living and raise their children in unsuitable accommodation, try to sell their property which is impossible in most cases because they are in negative equity or rent out the apartment in which they are living and try to find a suitable, slightly larger home in which to raise their children. The problem is that if they choose to rent out their apartment and rent an apartment in which to raise their children, they are hit with a substantial tax bill at the end of the year.

Let us say that a couple decides to rent out their apartment for which they take in €1,000 a month in rent and they go and rent a two or three-bedroom semi-detached house to raise the children in on which they also pay €1,000. Obviously, in Dublin they would pay a lot more. Let us assume they take in €1,000 in a month and they pay out €1,000 a month, and their household finances are exactly the same. They have no additional income. They are taking rent in and they themselves are paying rent out, and they are no better off financially. The tax code taxes the rental income they take in. There are some amounts one can write off for interest payments but, in most cases, most of the rent they take in is taxed at the marginal rate of approximately 50%. If a couple is taking in rent of €1,000 a month, they will take in €12,000 by the end of the year. Let us say approximately €10,000 of that is taxable, after deductions, at the marginal rate. Therefore, a couple in a modest situation, taking in €1,000 and paying out €1,000, gets hit with a €5,000 tax bill. What is happening is some such couples are moving and hoping to God the taxman never finds them because they cannot pay it - they do not have €5,000 at the end of the year. Others are moving for the sake of their children but they are caught in a trap because now they cannot save any money because they are getting hit with this extra €5,000 a year in tax. I know people in this situation. No doubt the Minister, Deputy Donohoe, knows people in this situation. We are of a similar age and it is mainly a particular age group who got caught in this who have been trapped.

This is my fourth year trying to get some relief for those who are stuck in this situation. Last year, on Committee Stage, I raised it with the then Minister, Deputy Noonan, who essentially said that he was not willing to accept it on Committee Stage because he believed it could be gamed. He stated there are too many ways around this and it is not restrictive enough and he gave specific instances where he felt it could be gamed. I went and took solid legal advice and I drafted an amendment that was very restrictive and on Committee Stage I went through the various restrictions. I tabled it on Report Stage and the Minister never engaged in the detail. He merely dismissed it using the same logic he had used on Committee Stage, stating this could be gamed.

On Committee Stage this year, I tabled it again, but the Minister of State, Deputy D'Arcy, was substituting for the Minister at the time. I stated that I understood this amendment will be technically flawed. We have just passed an amendment on tax deductibles for gyms and crèches consisting of three pages of technical legal text and I am aware that what I have tabled will contain flaws. That is why I asked that, if the Government agreed that these people have to be taken out of this trap, the Minister would come forward on Report Stage with his own amendment because none of us has access to the civil servants and technical support needed to get the amendment right. I was very disappointed to see the Minister did not submit his own amendment that would free these people from it.

Ultimately, this comes down to political will. It is not a technical issue. I have taken solid legal advice stating there are probably some tweaks and changes that would need to be made to my amendment but the basic idea, what I am trying to achieve here, is well within the wit of legislators to incorporate into the tax code. That is not the issue.

Last year, I engaged at great length with the then Minister, Deputy Noonan, on section 110 entities and closing vulture funds. There was advice to the Minister stating that one could not do this and one could not do that but, ultimately, the then Minister decided it was going to happen. It happened, and an entire section of Ireland's tax code was rewritten. The Government then decided that it was bringing in a new section of tax code, the real estate investment funds, and an entire new chapter of tax law was written for that. I went through that at length with the Minister, Deputy Eoghan Murphy, then Minister of State at the Department of Finance, who went out of his way to explain that businesses could not be double-taxed and there was all sorts being done to ensure that under no circumstances would these be double-taxed. For professional property investors in this country, there are significant tax breaks in place. The vulture funds still use significant tax breaks. Any of the vulture funds that various Members in this House have gone through over the past few years might declare €500 million in assets and €50 million in profit, and will pay €250 in tax. By comparison, one family trying to raise their children, that has rented out their apartment that they wished to God they had never bought and that is sitting in a house, gets hit not with a €250 tax bill like the vulture funds but with a €5,000 tax bill. One family is paying 20 times more tax under the current situation than a vulture fund with €0.5 billion in assets.

I implore the Minister. It is all I can do at this stage because the merits of the argument do not seem to have worked over the past four years. These people are trapped and they need help and we can help them. I ask the Minister to look at the amendment, take it seriously and tell us whether or not he agrees with what it is trying to achieve and then we can work together to see if an amendment from the Minister could be brought forward by the end of the year.

I support Deputy Donnelly's amendment.

As in Wicklow, we in Kildare North are no strangers to accidental landlords and multiple starter homes in negative equity which remain so. The phenomenon of accidental landlords is well understood right around the commuter belt and elsewhere.

As Deputy Donnelly stated, unfortunately these individuals are taxed at the marginal rate. I suppose the key inequality is that - Deputy Donnelly alluded to the vulture funds - any kind of commercial entity or corporate structure, for instance, a local commercial interest, leasing the same house as the unfortunate young couple or individual who has ended up as an accidental landlord avails of far greater reliefs and a far more attractive tax rate and, indeed, draws down far more allowances than the personal taxation levied on the poor unfortunate accidental landlord.

I understood there were moves afoot to include the likes of deduction of local property tax, LPT, to include additional allowances and some sort of gesture towards the time involved in leasing a property, even if not the entire cost. Some may choose to manage the lease themselves rather than incur the additional expense of employing property agents. I understood there was some movement towards that but I am not sure whether that has been reflected in the Bill to date.

I concur with Deputy Donnelly. I support the amendment to put the onus back on the Department to find a solution to this because the issue is so acute for so many families.

The Minister is sympathetic to this issue and I ask him to find a way of dealing with it. We are talking here about a relatively small number of couples who are in quite a horrendous situation. Let us be upfront and straight about it: they are victims of the property crash. The Minister will know them. I certainly know some of them. I had a couple in to me a few months ago who are living in a two-bedroom duplex apartment. They were considering renting that out and renting somewhere else, but when I took them through what that would mean for them, in terms of the taxation treatment of their rental income, the loss of mortgage interest relief on their existing principal private residence etc. they quickly realised it simply was not possible. What they had done previously was divide a boxroom into two bedrooms - the Minister can imagine what that looks like. The reality facing many such people is stark.

We already have differentiation in the tax code in relation to certain rental income. With the rent-a-room relief, for example, up to €14,000 of income is exempt.

The point must also be made that many of these borrowers face the prospect of never owning another home. That is the reality because some of them are still in negative equity and, under the Central Bank deposit rules, as the Minister will be aware, non-first-time buyers face a 20% deposit requirement. Even if they hang on in there until the negative equity is gone and they sell the unsuitable property, they face the prospect of coming up with a 20% deposit for the property which they would like to buy to meet their new family needs and it is just not possible. It is not a runner for the vast majority.

I would expect any measure like this to be very tightly controlled. We would need very strong anti-avoidance provisions. Deputy Donnelly has acknowledged the need to tighten up the amendment and work certainly needs to be done on it. As a party, we prepared a policy paper on this issue back in 2012 and it is an issue that needs to be addressed.

I support Deputy Donnelly's amendment. The irony of this is that if the people affected, the so-called accidental landlords who are being screwed at the moment, were to miss one payment, the vulture funds to whom their loans were sold on would end up with tax breaks. Vulture funds are getting tax breaks and are paying only €400 or €500 on millions in profits but the people to whom Deputy Donnelly refers are struggling in many cases. The Minister should listen to the Deputies and accept what they are proposing. If the amendment needs more tweaking to make it foolproof, then so be it. Every Deputy will accept that and I do not think anyone would have a problem with that. It is very sad to see accidental landlords struggling at the moment while the big guns, the vulture funds are getting away with murder with the support of the Government.

While I have some concerns about any possible abuse of this, for the Minister not to consider it when it has been raised on a number of occasions and not try to tie down any possible unintended consequences but to deal with the substance of what Deputy Donnelly is seeking to do would be a gross inequity, given that in many cases vulture funds have been given a tax holiday on rental income or capital gains to the tune of millions. Many of these funds will walk away having paid literally nothing in tax unlike those who are caught up accidentally in a situation which is largely not of their making but the making of another generation of property speculators. That amounts to a supreme irony and inequity. Even if the Minister thinks there is a problem with, or flaws in, this amendment he should explain what he is going to do on the substantive point for the people who are genuinely caught up in this situation through no fault of their own.

I am not convinced by this amendment and think that it could be abused. There would also be an issue of fairness in the context of cut-off dates and so forth. While I am willing to hear more on it, I would be very interested to know if there is any estimate of what this would cost to implement. The amount of property acquired between 2002 and 2008 in this country was substantial, given that we were building approximately 70,000 units per annum at that time. Obviously, the square metre condition would rule out quite a number of non-urban houses. Larger houses could be built for a lower cost in rural communities. I am not convinced by the amendment but would be very interested to hear the cost of this measure to the Exchequer. What would it cost if people could pay no tax on their rental income because they were renting another property?

Deputy Donnelly raised this issue on a number of occasions previously with the former Minister for Finance, Deputy Michael Noonan. He raised it with me in the first instance a week and a half ago. We had a discussion on the matter over the phone. I am sympathetic to the issue that the Deputy raises because many of my constituents are facing the same kind of difficulty to which he refers. That said, when I asked my officials to examine the issue over the past week, many matters arose which made it very difficult for me to be even able to offer an alternative amendment on behalf of the Government.

I will now illustrate some of the issues that arise in the context of Deputy Donnelly's amendment. Three issues came to light when we began to consider it. I want to acknowledge that this is a different amendment which approaches the issue in a different way than was done in the past. I considered this amendment on its own merits, as I have already indicated to the Deputy. Three matters arise from the amendment which mean that I am not in a position to accept it here this evening. However, I am happy to engage with the Deputy on this issue afterwards to see if there is some way to deal with the issue without causing difficulties elsewhere in the tax code or giving rise to tax avoidance issues that I would have to deal with at a future date.

The first point is that the amendment makes a judgment that any property less than 113 square metres, or approximately 1,000 square feet, would be unsuitable as a home for an individual or a family. It is the case, however, particularly in many urban areas that many people will reside in properties that are smaller than that. This amendment, as drafted, will then create a difficulty for citizens in properties that are smaller than 113 square metres. The amendment as currently drafted would involve extending the relief to all first-time buyers between 2002 and 2008 who are renting an alternative or larger property. One of the issues that I ran into quite quickly is the fact that there may be many reasons for people to move on to acquire a second property. Included within that are the issues and pressures to which the Deputy has referred, which I acknowledge. However, there may be other reasons for people moving on to acquire another property. If I accept this amendment, it may cause problems for me in terms of the reasons for which this relief might then be drawn down. Finally, the amendment as written assumes that all accidental landlords have moved on to properties with more bedrooms. Therefore, it might exclude a family that moved to a property of the same or even smaller size in order to be closer to family support, to a school or to public transport. It is for all of these reasons that I am not in a position to accept this amendment. However, what I have not done is reject the amendment giving the same reasons that were proffered last year. The Deputy has submitted a different amendment but the fact that he only raised this issue relatively recently with me meant that I was not in a position to find an alternative way to deal with the issue that would satisfy me. I have just outlined several reasons as to why this particular amendment will not work but I am happy, following this debate, to engage with the Deputy to determine if there are ways in which this issue can be dealt with that do not trigger other problems with which I would then have to deal. It is for these reasons that I am not in a position to accept the amendment.

I thank the Minister for his response. While I know he is not trying to be disingenuous and I acknowledge his offer to meet to see if this can be fixed, it is a deeply frustrating response. As the Minister of State, Deputy Michael D'Arcy, will tell the Minister, I explicitly said on Committee Stage that I did not want to be discussing my amendment on Report Stage but wanted to be discussing the Government's amendment. I know that my amendment is flawed. We have just dealt with three pages of detailed legalese aimed at figuring out how to stop employers from gaming the system if they want to build a gym or a crèche. The departmental officials have thought it through at great length. They have mapped the amendment to different parts of the tax code and to different Acts to make sure it is sound. No individual Deputy in this House has that capability.

On behalf of the families who are stuck in this situation, I do not accept an Ireland where the Government can say it can come up with the most detailed tax plans for vulture funds, property investors, employers who want to invest in gyms and non-domiciled residents, and where we have 1,000 pages of detail and armies of lawyers looking at ways of undermining us, as well as sweeping anti-avoidance powers within the Revenue Commissioners. We are able to do those things because that is our business yet, for these families, it is just too complicated and we cannot figure it out. On behalf of the families who are trapped, I do not accept that and I do not think it is a reasonable point to put forward.

I take the Minister at face value and acknowledge he is not trying to be disingenuous. Again, on behalf of these families, I appeal to the Minister. If he has the political will, in my experience, his very clever officials and their advisers will be able to figure this out in the same way they are able to figure out how to avoid having people get around the tax code in so many other ways.

The Deputy has been good enough to acknowledge I am not trying to be disingenuous, which I am not. The difficulty I faced in dealing with this issue with the Deputy for the first time was that, while I approach all the issues in front of me with fresh eyes, as he would expect me to do, given all the other priorities I had to deal with in the context of putting together a full Finance Bill, it simply was not possible for me to see whether there is any way in which the issue he is raising could be dealt with in a way that would not cause issues for me in other parts of the tax code. I have outlined good reasons why I cannot accept this amendment and, in fairness to the Deputy, he has not challenged some of them, and I understand that he knows how careful we have to be in regard to the drafting of changes in our tax code.

I will commit to the Deputy that, in the aftermath of this Finance Bill, in which, for the reasons I have outlined, I cannot deal with this issue, I will meet him and will engage in a serious way to see if this issue can be addressed without causing issues elsewhere in the tax code. I understand the plight of many families who are in this situation. I do not have a monopoly on good ideas about ways to address serious matters in our society. This is the spirit in which this is being offered.

I did not answer a question Deputy Doherty put to me on the cost were this amendment to be accepted. We cannot give that cost at the moment because of the way the amendment has been drafted, given it makes reference both to the square footage of a property and what the level of rent might be. For that reason, we cannot give the Deputy such a cost. This goes back to the heart of the issue I have. Before going ahead to implement any code, including any other amendment change that I will have to implement across next year, I will only do it when I am certain as to what the cost is going to be. For those reasons, I cannot accept the amendment but I am making an offer to Deputy Donnelly that I will honour later on in the year.

Technically, I guess the Minister is not able to respond to the question I am about to ask him but he can tell me later, if he would. First, I acknowledge the offer, which I think is genuine, and I hope the Minister will be persuaded not by the legal argument but by the political argument - the human argument. People's lives have been destroyed. People have left the country over this. There are people living in fear of getting a call from the Revenue Commissioners saying they have been renting for five years and have not paid any tax, and that they owe €50,000. Obviously, they should not be doing that but there are people in this situation. I have met people who sit down at the end of the year and fill in their self-assessments, trying to figure out where in the name of God they are going to find €5,000 that they never had to pay before when they are not earning a penny more, while their children are growing and eating their wages at an accelerating rate.

I will ask a clarifying question and the Minister might respond to me after the debate. When he says he will meet me later this year, is there an opportunity to get this into law for 1 January 2018 or is he talking about engaging later on in the year with a view to putting it into the budget next year?

There is no provision for the Minister to come in but I am sure he can say "Yes" or "No".

I would prefer to answer that question later on, if I may.

Amendment, by leave, withdrawn.

Amendments Nos. 23, 25 and 79 are related and may be discussed together, by agreement. Is that agreed? Agreed.

I move amendment No. 23:

In page 20, between lines 22 and 23, to insert the following:

13. The Minister shall within 1 month of the passing of this Act, prepare and lay before Dáil Éireann a report considering the merits of a Vacant Home Tax.”.

A couple of weeks ago, we had a good debate on this issue on Committee Stage. I argued strongly that we needed to introduce a vacant home tax. We have the amendment that is tabled in my name but I note that, interestingly, amendment No. 79 commits the Minister to include in the Finance Bill a report within nine months. He is taking our clothes in the sense that we only do this because it is the only way we can put forward these types of amendments, whereas there are no restrictions on the Minister. Usually, a commitment on the floor would have sufficed-----

It is a good precedent.

It is a good precedent because it is in law. If there had even been a commitment on Committee Stage, I do not think the Minister would have had to put this into the Finance Bill because we take his word on these issues. However, there was no commitment and the Minister argued very strongly that, because of the complexity of the issue, he would not go ahead with it. Unfortunately, I was forced to put it to a vote but, given the abstentionist position of my colleagues in Fianna Fáil, I lost that vote, along with many others.

Hand on heart, I welcome the Minister's commitment in this regard. While it is just a report, my view is that it signals the introduction of a vacant home tax. It is one part of the jigsaw and there are many other parts but it is a very serious part. One of the issues we have in terms of the housing crisis and homelessness crisis is the length of time it takes to construct a property and to go through planning. The Central Statistics Office tells us approximately 183,000 properties are lying vacant across the State and while those figures may be disputed, we all know that only a portion would in any way, shape or form be capable of being brought into usage in any meaningful way in a short time. Nevertheless, the vacant home tax is a way of trying to encourage owners to avail of other schemes that are available, like the renewal schemes, to get their homes back into a condition where they can be let or sold and brought back into use.

This is long overdue but I welcome that the Minister has done it. I am glad we were able to have that debate on Committee Stage and I am sure it prompted the Minister to bring forward this amendment. On that basis, I will withdraw amendment No. 23. I note the Minister's amendment refers to "not later than 9 months". The quicker we can bring this in, the better, because there will need to be a discussion in this regard.

As such, it would not be appropriate to introduce it in September, which would be just one month away from budget day. It is key that, instead of us still discussing this issue at the time of next year's Finance Bill, we be enacting it in that legislation.

I welcome the Minister's commitment to completing a report on this issue and making that available in advance of the next budget. The analysis to be done in the coming months will have to take account of the complexities involved, some of which I highlighted on Committee Stage. As a Deputy, a significant number of cases have been referred to me concerning delays around the granting of probate - it can drag on for many months - as well as legal disputes about the ownership of property and questions about properties that are under the control of receivers and properties that belong to people in nursing homes, giving rise to concerns that any rental income would affect the computation of their liabilities under the fair deal scheme.

The House can support the general principle of an analysis, but the Minister will need to get accurate baseline data, which he has recognised in his amendment. We need to see a profile of the more than 181,000 vacant properties divided into some of the categories to which I just referred. If this is to be an effective intervention by the State to help bring more of the housing stock into use, it will have to recognise those complexities.

I was a part of the discussion on this matter on Committee Stage. We have also tabled an amendment. Like Deputy Doherty, I welcome the fact that the Government has acceded to the suggestion that we need a report on a vacant home tax. I will not press our amendment, as the Minister has tabled one, but urgency is critical. I said something on Committee Stage that bears repeating, given that the Minister and the Department will decide how fast to move on this matter. It is immoral that there are, according to the CSO, 180,000 empty units when we are facing a shocking and appalling housing and homelessness crisis. Something that might not be underlined enough is that, also according to the CSO, 65,000 of those houses have been empty for five years.

Deputy McGrath cites, and the Minister probably cited them as well on Committee Stage, complexities and various reasons these units are empty. I accept that, but I do not accept 180,000 units being empty when there are people dying on the streets. That is more unacceptable than a few unintended consequences of the measures taken to deal with it. The crisis is beyond any kind of excuse in light of the hardship and suffering it is imposing on people.

The main priority is to get people who have no place to live into properties that are sitting empty. I do not believe that a vacant home tax is the only solution to this, given that more needs to be done, but it may be part of the solution. We must find out the status of every empty unit, particularly in areas where the crisis is most acute in terms of homelessness, housing lists that are a decade or more long and where there is nothing available for people on ordinary incomes to rent or buy, and get as many of those units as possible into use as a matter of urgency.

While I welcome the Minister's decision to insert an amendment along the lines of the Opposition's proposal, it needs to happen quickly and the wider issue of determining the status of those vacant units and doing everything that is necessary to get people who need homes into them should be a priority for the Government.

Most Deputies will agree with a vacant home tax in principle. We need to keep an eye on a certain matter, though, especially in respect of rural parts of Ireland where, for example, an elderly person's family member built a house that is no longer in great nick. If we do not include provisos to address situations like that, we will be levying taxes on people who receive no benefit from the houses.

The number of vacant houses around the country is incredible. We should do more and people need to be pushed to ensure that those houses are put into use, but we must be mindful of areas where there is no rental need - unfortunately, might I add. I wish there was such a need. We must be mindful of situations where a family has a new house built over the road or an elderly person dies in an old house. The councils had a system to address this if a house did not have running water or electricity.

Everything was going well with Deputy Doherty's contribution until he made the point that he had not been expecting me to introduce the amendment and that my word that I would undertake this report would have been enough. However, I have decided to introduce it because we need to crystallise and understand this issue. There has been much debate in recent months on the role of such a tax. I decided that, in light of the ongoing debate, it would be helpful to lay out the various issues that could be involved.

To clarify for the House, and as the nature of my contributions on Committee Stage bore out, I am not committing to the introduction of this tax. Rather, I am committing to scoping out all of the matters that the Department of Finance, the Oireachtas and I would need to be aware of before a tax like this could be introduced. I am not committing to the principle of it because, before I can commit to the principle of any form of taxation, I must be able to answer basic questions on how it would work. What are we taxing? What do we believe the effects of the tax would be? What do we believe the side-effects would be? Would it deliver against other objectives for that tax apart from raising revenue?

If these complexities were not dealt with, many of the Deputies who support the principle of this tax would be, within moments of their constituency offices being contacted by people who have been disadvantaged by this tax in a particular circumstance, some clear examples of which Deputy Fitzmaurice has just given, condemning me for being either callous or incompetent for implementing a tax that created the kinds of difficulties that they would be gripped by shortly after the introduction of such a measure.

For all of these reasons, I have decided to propose this amendment to lay out the various issues that would need to be addressed. I have done so because a number of Deputies who have been calling for this measure to be introduced do so without taking account of all of the complexities and unintended consequences that could be created by introducing this tax. It is in that spirit that a measure like this would be a helpful contribution, if not even a vital one, to the debate on such a policy across 2018.

We are all on the same page. We have argued for this for quite a long time. We have always said that there is a lot of detail in it and there could be many unintended consequences. I welcome the fact that there will be a report on it.

I referred to a nine-month period. The Bill will pass into law in December, and nine months would take us to next August or September. This needs to be scrutinised. The Minister is giving himself nine months. Will he indicate to the House when he will be able to complete the report and lay it before the House? Will he complete it any earlier? That would ensure it could be properly discussed and we could deal with all of the issues he has outlined, which we are well aware of in terms of potential tax. We could then be fully informed about any scrutiny of such a measure, including by the Committee on Budgetary Oversight, before the Minister makes a final decision on taxation matters and the budget in the second week of October.

We propose to replace the property tax with a landlord tax, which mainly involves wanting to deal with the inequities of the local property tax. In our alternative proposal of a landlord tax, we make a distinction between people who have one additional home and those who own multiple properties and are running a business. A simple distinction could be made in terms of thinking about a vacant home tax.

A dispute in a family over an inheritance may mean that a number of family members are involved in legal issues and so on. Vulture funds, major commercial landowners and so on have multiple properties. Once a person owns more than three or four properties, he or she is involved in a business. It is unconscionable that such people are sitting on empty properties. I cannot think of many complexities in a situation whereby someone who owns multiple properties leaves them empty. This is happening on a major scale.

In the committee, I cited an example of which I have intimate knowledge in my area, namely, the Robin Hill flats in Balally. NAMA sat on them, as it were, and then flogged them to a vulture fund which sat on them and tried to evict tenants because it was profitable for it to let flats lie empty and appreciate in value. That sort of thing is, quite frankly, disgusting. Urgent action could be taken on that, notwithstanding the need to examine the more complex issues relating to families and individuals.

A good starting point for officials examining this issue would be to define what constitutes a vacant residential property. We all know what a vacant house or apartment is, but will a definition and timeline be placed on properties over shops or offices which may have been habitable and occupied up to two or three years ago? These are the kind of complexities which will arise. So-called granny flats which have independent access and adjoin properties are another issue.

We need to deal with repossessed properties which were in a person’s name but are now owned by banks. Such properties are not transferred and are being left idle for a long time. People were thrown out on the road, while at the same time properties were being left idle for a year or 18 months. We should be mindful of that issue and ensure we give banks engaged in such practices as hard a medicine as we can.

I agree that an important starting point would be to define what constitutes a vacant home. One element will involve defining for how long a property has been vacant. We can begin to tease that out. If we set a definition that a home has to be vacant for more than a year, for example, we then get into questions regarding who determines that. Is it a local authority? Is it the Revenue Commissioners? Will there be self-certification?

If we fix on one year, what about a property which has been vacant for eleven and a half months compared with one which has been vacant for twelve and a half months? While many are calling for the prompt introduction of this tax, if these issues are not resolved, they will condemn me for not doing it properly. These are the issues which need to be better understood.

On the direct question put to me, I wish to inform Deputy Doherty that I will try to complete the report quickly enough to allow for its proper discussion. I will ensure this is not a report that we publish on budget day, because that is a criticism he has made of other documents. I will ensure it is available in advance, if possible, in order that it can feed into the political considerations of parties or Independent Members and debates in committees. I do not want this to be a report that we publish on budget day because those who support the tax will have questions that they need to answer which will be highlighted by the report.

Would I support a landlord tax? It would merely accelerate some of the difficulties we have regarding the provision of private sector rental accommodation. The Deputy is well aware of the challenges in that sector.

Amendment, by leave, withdrawn.

Amendment Nos. 24 and 26 are related and may be discussed together.

I move amendment No. 24:

In page 20, between lines 22 and 23, to insert the following:

“13. The Minister shall, within nine months of the passing of this Act, prepare and lay before the Oireachtas a comprehensive cost benefit analysis of the Help to Buy Scheme.”.

This amendment relates to the help-to-buy scheme. The wording of my amendment is taken directly from a recommendation in the Indecon report which calls for a comprehensive cost-benefit analysis of the scheme to be undertaken after a period, because given the limited timeframe since the measure was introduced, this report inevitably can only represent a preliminary assessment. In essence, the report found it was too early to determine the impact of the scheme on house prices and the supply of new residential properties.

The report was critical of the Government for not conducting a cost-benefit evaluation of the scheme prior to its introduction. It states that while there were understandable reasons for this, Indecon was concerned that this should not be seen as a precedent for other measures. The wording mirrors what is in the Indecon report. Just like the commitment of the Minister, Deputy Donohoe, that the report on the possible introduction of a vacant home tax would be published in advance of budget day, the same commitment should be given in respect of a cost-benefit analysis of the help to buy scheme in 2018.

Very serious questions have to be asked about the value of this scheme. Property prices are out of control in my area and are completely out of the reach of ordinary working people. It is not just that 6,000 people are waiting for 15 or 18 years on housing lists. Others who cannot even get onto housing lists because their incomes are slightly over the threshold do not have a prayer of buying a house in my area, where average house prices are €400,000 or more.

This is no use to them but it is a benefit for people who could afford a house anyway. It is not helping those whom we need to help because it has just increased house prices. They have risen 12.3% so far this year and they are going up approximately 10% per year. This is wiping out any benefit for ordinary people but giving a nice boon to people who could probably afford to buy houses anyway. The scheme has helped drive up property prices, as the Opposition predicted it probably would. We did not do a cost-benefit analysis and there is no real evidence it is doing anything to help the housing crisis. We need to reconsider its point and whether this money would not be far better spent on directly providing the housing we need or in some other way helping the people at the sharp end of the housing crisis. This scheme has not helped; it has, arguably, made things worse. There may be an unintended benefit for the people who do not need it. I do not see an argument for continuing the scheme.

My views on the help-to-buy scheme have been long on the record. The Government introduced it without carrying out any assessment of its effectiveness and the goalposts have been shifted time and again as to why it was introduced. Originally, it was to help individuals gather their deposit but then the Central Bank pulled the rug from under the Government and changed the rules. We now see very clearly that the majority of people availing of this have no problem reaching the Central Bank's minimum requirements in getting a deposit but they still get up to €20,000 tax-free. We just have to look at this as handing money to individuals.

I have spoken on this many times and house prices are escalating at a dramatic rate. This is a case where the Government is not seeing the wood for the trees. When prices are going up by 10%, 11% or 12% per year, the maximum of €20,000 that one can get in one's pocket is just a fraction of the rate prices are increasing. It is the main problem and we must stop house price inflation. Economists and people with expertise in the area have said time and again that this scheme leads to house price inflation. The best the report carried out by the Government a year after the fact could say is that findings are inconclusive, but it also mentioned everything I referred to on Committee Stage. The issue is supply and this is a demand-side solution. This is quite basic as there is a problem with supply but this scheme increases demand. Therefore, it does nothing to resolve the supply-side problem.

This was put to the former Minister, Deputy Noonan, and he argued this scheme will encourage developers to build houses, therefore increasing supply. That cannot work because there is only a set period in which this scheme will exist. If a party was not planning to build a house in the first place, there would be no planning permission on a site and that process would have to be gone through. There would have to be tenders for the build before the construction. It could be a three-year lead-in period and at that stage the scheme would no longer be available. It simply cannot work.

I have no problem with Deputy McGrath's amendment but I wonder if he is sincere about it and will push it to a vote. When we put forward a similar amendment on Committee Stage that would have monitored the effectiveness and value for money of the help-to-buy scheme, Deputy McGrath did what Fianna Fáil does these days - he abstained and sat on the fence. The amendment was defeated by one vote, arising from Deputy McGrath's refusal to vote. I welcome that he has tried to claw back a bit of integrity with this issue and has put forward his own amendment. I will support it as there should be cost effectiveness and we should monitor such matters. I hope the Minister will agree with us but this should have been done on Committee Stage. There was nothing to fear from the amendment I put down on Committee Stage, which sought a report on the effectiveness and value for money in the help-to-buy scheme.

Deputy McGrath is correct about the recommendations of the report that was published on budget day. The Minister's predecessor gave the commitment it would be published prior to budget day and there was no reason not to do it. The only reason to hold back anything until budget day is if it would have serious consequences for the market. For example, if a report indicated stamp duty should be increased to 6%, I would completely understand a Minister not publishing it until budget day because it would have given a clear indication of where the Government was going on that. This report did not state anything like that. The report in question was published on budget day because it is critical of the Minister's measure and it does not prove that the scheme assists, in any way, shape or form, with supply. It indicates there is a supply-side problem and this is a demand-side solution and it notes that the majority of individuals benefitting from this cash in their pocket do not need this money to meet the Central Bank's rules for minimum deposits. Its findings are inconclusive and there is an indication that more study needs to be done. It is critical of the fact these studies were not carried out beforehand.

As I said, I have no problem supporting the amendment. We discussed this on Committee Stage. Everybody can change their mind and I welcome that Fianna Fáil has done so and wants us to monitor the effectiveness and value for money of this scheme. I would have preferred if Fianna Fáil supported Sinn Féin in seeking to have this scheme ended. All this is doing is contributing to pushing up house prices and putting money into the pockets of developers.

There is merit in the two amendments. We can have a go at the Government but it may have tried something it genuinely thought would help people. I am not saying it was or it was not and there are question marks over it. It is important, especially before we have another budget, for a report to be done to analyse its good and bad elements. There is no point in doing something that might inflate the market, pushing houses from the grasp of people who might be living in a wonderland who think X amount will be coming to them. The reports sought by Deputies McGrath and Boyd Barrett would have unanimous support, from what I have heard. I hope the Minister will consider that and Deputy McGrath should push the issue to ensure the report is done.

The Deputies will be aware that the help-to-buy initiative has been in operation since January 2017. It is designed to assist first-time buyers with obtaining the deposit required to purchase or build their first homes. With a view towards increasing the supply of new housing, the relief is only available in respect of new build or self-build properties. Following its introduction in budget 2017, Indecon International Economic Consultants was commissioned to undertake an independent assessment of the measure, which included examining whether the policy objectives on the supply of new homes were being met, as well as the impact, if any, it was having on house prices and the residential property market generally.

The Indecon review found that the scheme is meeting its objective of assisting first-time buyers of new homes to fund the deposit required under the Central Bank's macro-prudential rules, and that the scheme has not had a measurable effect on house prices to date. Furthermore, it indicated that:

Indecon’s assessment of the HTB is that there was a valid market failure argument for the HTB introduction. We also believe that the HTB, as a tax refund incentive, was likely to be as efficient as a direct expenditure intervention.

On the basis of the Indecon findings, and considering that help-to-buy has only been in operation for less than a year, I decided to allow the measure to continue in its current form for the coming year.

In continuing to monitor the scheme, my officials may draw upon a range of statistical sources, including data on construction activity and house prices from the Department of Housing, Planning and Local Government as well as data from the CSO, such as the residential property price index and elements from the quarterly national household survey. In addition, the Revenue Commissioners publish monthly statistical reports on the cost of help-to-buy. Its report includes the numbers of claims made, approved and paid, as well as breakdowns of the figures by metrics such as property value, loan-to-value ratio and property type. It also includes a geographical breakdown of claims by county.

As regards the amendment proposed by Deputy McGrath, I note the Indecon recommendation that a comprehensive cost-benefit analysis should be carried out “after a period". I think we can all agree that the measure has only been in operation for a limited period and there is, as yet, insufficient data for a meaningful ex post cost-benefit analysis. The period referred to in the Indecon report needs to be considered in the context that there is already a sunset clause in place for the help-to-buy scheme. Absent an amendment to the Taxes Consolidation Act in either Finance Bill for 2018 or 2019, the incentive will cease on 31 December 2019. For this reason and the fact that we have only just received a detailed report from Indecon, I cannot accept the amendment put forward by Deputy McGrath. Also, having regard to the information I have just presented to the House on the approach to keeping the measure under close review, I do not propose to accept the amendment put forward by Deputy Boyd Barrett and colleagues.

There was a parliamentary question for the Minister for Finance in the last round. What people have said here is incorrect. The data that were presented by the Revenue Commissioners on the number of cases, the value of the property and the loan-to-value ratio showed that the vast majority of claims on the help-to-buy initiative were from those who were targeted.

Deputy Doherty questions my sincerity and integrity. I can assure him of both on all matters concerning this Finance Bill. He is well aware of the confidence and supply agreement. When I make a commitment, I stick to it. I am not going to enter into an agreement and then seek to inflict defeats on the Government on the Finance Bill. I am not going to do that. Equally, I say to the Government and to the Minister for Finance that we want the cost-benefit analysis. Last year we insisted that there would be a report, which was subsequently carried out by Indecon. Ongoing monitoring by the Department is not sufficient. I deliberately took the wording from the Indecon report. The comprehensive cost-benefit analysis is a clear conclusion and recommendation from Indecon. I do not accept the argument that the scheme has not been in operation for a sufficient amount of time to carry out such a report. The scheme was originally flagged in July of last year. It was then included and formalised in the budget day announcement and enacted in the Finance Bill last year. In effect the market is made up of buyers and builders. Everyone has been aware of it since July of last year. What I am looking for is that over the course of 2018 the Minister will implement what Indecon, as independent consultants, have recommended on a scheme that is costing tens of millions of euro. I do not think that is too much to ask. I put it straight to the Minister. We want the cost-benefit analysis.

I agree with the Deputy. I believe the scheme should be abandoned, but at the very least we should have the cost-benefit analysis and the Minister should set out clearly how he is going to monitor the benefits and effectiveness of this. To the minds of a very broad spectrum of opinion, including expert opinion, this is something that has actually contributed to the spiralling house prices. It has accrued no real benefit to those at whom it was to be targeted but has had unintended benefits for people who frankly do not need them. Given the squeeze on resources and the desperate need to put resources where they will actually have an impact on the current housing and homelessness crisis, anything less than a proper cost-benefit analysis of this measure, which costs a lot of public money, is not really acceptable.

I was not questioning the integrity of the Deputy. I was questioning his sincerity in pursuing this issue by putting it to a vote. He has his own excuses for that, and that is for him to decide.

I genuinely believe that this issue, which is forcing house prices upwards, is putting house ownership beyond a generation. People who are younger than me tell me that they will never aspire to own their own houses because of how property prices are at this point in time. It only suits one cohort of individuals, and that is the developers.

I put it to the Minister of State that he is misleading the Dáil. He did not name me, but I presume he was referring to me when I said that the information is that the majority of those who benefit from the help-to-buy scheme do not require it to reach the minimum deposit requirements set down by the Central Bank. The Minister of State said that was wrong and that the scheme was targeted. He mentioned a response to a parliamentary question. I have not seen the response. The Minister of State obviously has. However, I have read the Revenue report of October which gives us the monthly statistics on the help-to-buy scheme. It shows that there have been 4,487 claims on the scheme at this point. Some 1,408 of those had a loan to value in excess of 90%. All of the rest were below 90%, falling between 90% and 70%, which is the threshold for entering the scheme. This means that of the 4,487 claims in that report, 3,079 of those who received the money did not need the incentive to make up the loan to value ratio. That equates to 68.6% of the total. It is important that the Minister of State puts the record straight and deals with the facts and statistics, if he wants to rely on those statistics. I am sure that the departmental officials can give the Minister of State the Revenue report. It is produced monthly, and from my memory, on each month that it has been produced since the start of this year it has always shown that the majority of beneficiaries of this scheme did not require the help-to-buy scheme to make up the deposit in terms of loan to value.

I am sorry that I missed the start of the debate. I have been interested in the help-to-buy scheme since it was announced. I was a little sceptical as to the positive effect that it would have. I have a good understanding of the industry and the mentality of all sides involved from my own experience. I remain sceptical that it is the way forward. There is no doubt that people need help, but in a scheme like this it is so difficult to avoid the benefit going into the pocket of the seller. That is not the Government's fault.

There were a lot of things at play but it is not remotely unreasonable to look for a proper analysis of how it has worked and in fact it is a good idea. There are better ways of helping people in this area than by this scheme.

I never question anybody's integrity in this House but Deputy Doherty raised the question of me misleading the House. The figures which I have in front of me are very clear. They show that 53% of properties are less than €300,000 in value, showing that the money is targeted at first-time buyers buying average-price property throughout the nation. The next 30% is between €300,000 and €375,000. While €375,000 does not buy an awful lot where Deputy Boyd Barrett lives, 83% of properties relate to first-time buyers of new properties with very average prices. The figures I quoted were correct.

I accept the advancement of a cost-benefit analysis in 2018 by the Department of Finance.

I welcome what the Minister of State said. To be clear for Deputy Doherty and everyone else, when I table an amendment I do not know whether the Government will accept it. My party and I seek, sometimes through negotiation and sometimes through our work in Parliament, to get things done. This scheme was announced in July 2016 and lasts for 3.5 years, or 42 months. We are now in the 17th month of the scheme and will be half way through it in March 2018. Indecon recommends a comprehensive cost-benefit analysis but is not prescriptive as to when, but it is reasonable to do one half way through the scheme as there is not much point in doing it when it is all over, apart from what one may learn from the experience. If it is to have an input into policy it needs to be done in a timely fashion. Can the Minister of State elaborate on the commitment he gave? He said it would be 2018 but when will it be done? Will he commit to publishing it and will it be available before the budget next October?

The Minister has exhausted his time but I will be helpful and allow him to respond.

Similar to previous reports, it will be concluded before the budget and as quickly as possible. I have to consult with the Minister, Deputy Donohoe, to put in place the structure and there will be a cost implication of such a scheme. It will be done in advance of the budget and a proper analysis will be done.

Did the Minister say he would accept the point or the amendment?

I accept the point.

Amendment, by leave, withdrawn.

I move amendment No. 25:

In page 20, between lines 22 and 23, to insert the following:

“13. The Minister shall within 6 months of the passing of this Act, prepare and lay before the Dáil a report on the introduction of a Vacant Home Tax.”.

I will withdraw the amendment on the basis of the commitment given.

Amendment, by leave, withdrawn.

I move amendment No. 26:

In page 20, between lines 22 and 23, to insert the following:

“13. The Minister shall within 6 months of the passing of this Act, prepare and lay before the Dáil a report on how he will monitor on an ongoing basis the effectiveness and the value for money of the Help to Buy Scheme.”.

Amendment, by leave, withdrawn.

I move amendment No. 27:

In page 30, line 37, to delete “disposals occurring” and substitute “disposals occurring, or unrealised profits or gains recognised in the income statement,”.

This amendment is technical in nature. On Committee Stage I introduced an amendment to the Irish real estate fund, IREF, regime to remove, from 1 January 2019, the exemption which applied to profits arising from the capital gains on land held for more than five years. Given the changes I am making elsewhere in the Finance Bill on CGT and stamp duty, I felt that it was important that this provision was also amended for consistency. In applying this provision from the start of 2019, I am ensuring that this change is introduced in a timely way while avoiding any undue disruption.

As this measure was only introduced in Finance Act 2016 I felt it would be imprudent to completely remove the measure just one year after implementation. Doing so would negatively affect our position regarding the certainty of our tax system, which is critically important in terms of investment. Signalling this change one year in advance will help to negate any negative effect this change may have regarding confidence in the certainty of our tax code.

This technical amendment ensures that the same treatment is afforded to both realised gains and unrealised gains. I commend this amendment to the House.

This is a technical amendment but one that could have some significance. We will not be able to tease it out in great detail as I will be able to come in on it on only two occasions, though I note the Leas-Cheann Comhairle is being a bit more flexible as the night moves on.

I am always pragmatic as long as Deputies stay within guidelines.

Will the Minister explain the addition of unrealised profits or gains recognised in the income statements? What will that mean in practical terms for the accounts in respect of the dividend withholding tax? What would be the position if this amendment were not to be tabled?

Before the Finance Bill, IREFs that held property assets for more than five years were to be exempt from capital gains tax. This year's Finance Bill removes that exemption. As a result, where property assets are sold after 1 January 2019 and gains are distributed to investors, the IREF will apply a 20% withholding tax on those distributions unless the investors are exempt as is the case, for example, with pension funds. This applies regardless of when the asset was bought by the IREF and any realised gains after 1 January are caught.

Amendment No. 27 makes a further technical amendment to deal with the situation regarding unrealised gains. These unrealised gains are recognised in the income statement of an IREF each year and reflect an asset's increase in value but the gains will not be realised until the asset is sold. We are not looking to catch unrealised gains when they are recorded in the income statement each year as we want to catch them when the asset is ultimately sold and the gain is distributed. By making this amendment, we make sure the provision operates as intended and we do not inadvertently catch unrealised gains.

My amendment No. 28 was ruled out of order but it deals with the same topic. It sought to amend section 18 of the Finance Bill on Irish real estate funds and to change the date which shall apply to disposals from 1 January 2019 to 1 January 2018. The section as it currently stands provides that IREFs which dispose of assets before 1 January 2019, and where the five-year period has elapsed, will be still able to avail of the capital gains tax exemption. The implementation of the change from 1 January 2018 would have had the effect of adding to the tax liability of those IREFs currently covered by this section in 2018.

Therefore the amendment has potential to impose a charge on the people, I was told. I do not understand where they came up with that one.

It was discussed at the committee. I do not understand why the Minister could not make it 2018. He might make the argument that this would be springing it on them too quickly, but the amount of profits that REITs have been allowed to make in this country in recent years is out of kilter with anything that has happened in the property sector in my lifetime. The State should be garnering much more from them than it is. To bring the date to 1 January 2018 rather than 2019 would be some compensation by recouping something that the State has lost.

Do I take it that unrealised profits or gains recognised in the income statements now are exempt from dividend withholding tax if that is unrealised for the period of five years? I take it that is the case. Therefore, a person did not actually have to dispose of the asset to be able to avail of the dividend withholding tax. Obviously, however, the other provisions would have applied then where it started to taper off.

I made all the points on Committee Stage which Deputy Wallace has made here. It is appalling that the Minister is not introducing this measure for 2018. We have discussed it on Committee Stage and had votes on it and, unfortunately, the parties are where they are on this matter. It is ridiculous because this is a major benefit to the funds.

There is a question about this amendment. This will mean that any disposals after 1 January 2019 will be subject to dividend withholding tax and any unrealised profits or gains recognised in the income statements from that point on will be subject to dividend withholding tax.

Unrealised profits or gains dated prior to 1 January 2019 will not be subject to dividend withholding tax because of the start date. Is there now an accountancy trick where they can realise them within their accounts?

The Minister will have another opportunity to come in. I call Deputy Michael Fitzmaurice.

Will the Minister put a figure on what he expects to receive as a result of changing this? I support Deputy Wallace. I know his amendment was ruled out of order, and that is shameful. There were parts of the budget which were trying to haul in money from our own. If we thought we could get money from some of these types of big businesses, we should do it sooner rather than the date in the Minister's amendment.

I will get clarity on the point put to me by Deputy Doherty. I am making this change because I want to ensure that we are treating these gains in the right way. The Deputy is asking me a question which I cannot answer now, but I will do so at the latest over the course of the Bill's passage through the Seanad. I do not want to answer it and unintentionally mislead the Deputy or the House.

On the broader point which Deputy Wallace touched on and on which Deputies Doherty and Fitzmaurice agree, I believe the appropriate taxation regime for these gains is the one to which I am changing it. It is consistent with what I am doing elsewhere in the budget. The trade off that I have had to make, and Deputies disagree with me on it, is because the treatment of these assets and gains was only introduced in the Finance Act 2016. It has only been in operation for a relatively short period. I believe it should change in the way I have outlined but to maintain what I believe is an important part of our tax code, namely, certainty regarding how investment decisions are taxed, I believe the appropriate point at which to introduce this is the beginning of 2019, after which I believe it will be the most effective way of taxing the gains accrued by these entities. I will return to the Deputy with the details in response to his question.

How much will the measure bring in?

Does the Minister have an answer to that? I remind the Deputies that Deputy Doherty has had his two slots, as has the Aire. Does Deputy Wallace wish to come in again?

I get the point that the Minister makes but I take a different position. I find it incredible that we have allowed this to go on for so long. I had a debate with the former Minister for Finance in this House on 16 January 2014. I said to him:

The Government might view real estate investment trusts, REITs, as a quick fix measure to get rid of properties on the books of ... NAMA and the banks, but questions must be asked about the increased corporatisation of property, with little financial gain for the State. REITs are not taxed on their rental income as long as they pay 85% of it to shareholders as a dividend. [There is different corporation tax] as long as their income relates to rental income and non-resident investors are also exempt from Irish capital gains tax. There must surely be implications for the rental market in the years ahead.

That was nearly four years ago. The Minister responded to me with some points: "My officials will be monitoring the uptake of REITs in the Irish property market, but it is not expected that REIT ownership of property will reach the level of concentration at which a distortion of competition in the market may occur." He went on to say:

I also wish to highlight to the Deputy that potential benefits for property tenants were a motivating factor in the introduction of the REIT framework last year. REITs are specifically designed for the long-term holding of income-producing property.

Then he said: “It is hoped that the introduction of this type of professional property management into the Irish market will, in the long term, help to standardise and improve management standards across the rental property sector as a whole, which would be of benefit to both investors and tenants.”

That was four years ago. I do not understand, when we saw that this was going off the Richter scale, why the Government did not act earlier and deal with what was a licence to print money. It had incredible potential to distort the property market, which it did, and especially the rental market. We sat idly by. The Minister is making a change now, and that is to be welcomed, limited as it may be, but can he explain why we did not react at an earlier stage?

I have a problem here. Deputy Richard Boyd Barrett has not been in.

I was on the finance committee when these REITs tax breaks were first introduced. I opposed them from the word go although I did not fully understand what they were, but I knew it was a tax break for people investing in property. I thought it was unbelievable at the time and said so. After the property bubble and the crash that we had gone through and the devastating consequences which it wreaked on the entire country, I found it hard to comprehend that the Government planned to introduce new tax breaks for property.

As Deputy Wallace said, the former Minister, Deputy Michael Noonan, told us at the time that we needed professional landlords to come in and that this would sort of modernise the property sector and be to the benefit of tenants. As against the dysfunctional property sector that had led to the bubble and the crash, we were going to get a new and improved professional, streamlined property sector. However, that is not what we got. We got another property disaster only a few years after the previous one which produced the worst economic crash in the history of the State. Brilliant. Absolutely brilliant.

As I mentioned on Committee Stage, I find the websites of guys such as Deloitte incredible. I quoted from PwC's website earlier and I will quote from Deloitte's website now. Referring to real estate investment funds and the changes in the Finance Bill 2016, it states not to worry about the changes because "the vast majority of Irish regulated funds continue to be exempt from Irish tax on their income and gains with no Irish tax on payments to non-Irish resident and exempt Irish resident investors". Brilliant. It is brilliant if you are a non-Irish resident or an exempt Irish resident speculator in property because there is no tax on income or gains although income and capital gains in the sector are going through the roof.

Last week Hibernia REIT plc had yet another half yearly report on the absolutely unprecedented increase in its profits. Its half yearly profits were up 118% - you could not make it up - and its rental income was up by 31%. They are creaming it off. I-RES REIT plc is similarly creaming it off and making an absolute fortune from the property chaos that is going on in this country due to the mad decision to give tax breaks to these guys and unload all of this property from the banks via NAMA to them. They must think all their birthdays have come at once. They will walk away without paying any tax and the Minister is now letting them know he will close the door. However, it will be long after the horse has bolted, which is no good to anyone. It is no good closing the door after the horse has bolted but that is what is being proposed. We should close the door as soon as possible to try to recover something from the disastrous policies that have brought us to where we are today.

Has Deputy Fitzmaurice spoken?

I have been in once.

You have two minutes.

I will be brief. What sort of figure does the Minister expect to achieve when he closes the loophole? Is giving them until the beginning of 2019 not like telling someone who is going to get flooded to leave the house? Are we not telling them something well in advance and flagging it to them so that they can do something to counteract it? It is an unusual way of doing it. If the Minister is going to do something, he has to spring a surprise and the beginning of 2018 is the time to do it. Basically, we should not be telling everyone our little secrets to ensure they can escape what is to come.

We do not anticipate a significant gain for the State from the change in amendment No. 27 but I still believe that the change needs to be made. Part of this was dealt with by the Minister of State, Deputy D'Arcy, on Committee Stage and I understand that the committee went into private session to allow a number of technical questions which were raised by Deputies to be answered by the Revenue Commissioners. We committed at that point to supplying a technical note to answer formally questions that were raised by members of the committee and we will do that.

On the points put to me by Deputies regarding the change coming into effect on 1 January 2019, the decisions that the former Minister, Deputy Noonan, made about these funds were right given our property market and the economy of our country at the time. However, I have decided it is right to make this change. I am changing the relief because I believe, with the developments in our economy, this is the right policy choice to make. There is a benefit to maintaining a degree of certainty regarding how we manage tax policy and important policy changes in the country. Therefore, as I said on Committee Stage and earlier in my contribution today, as this amendment, which I want to make, relates to a measure which was recently introduced in a Finance Bill, it will not come into effect until early in 2019.

Amendment put:
The Dáil divided: Tá, 51; Níl, 34; Staon, 32.

  • Bailey, Maria.
  • Barrett, Seán.
  • Breen, Pat.
  • Brophy, Colm.
  • Burke, Peter.
  • Byrne, Catherine.
  • Canney, Seán.
  • Cannon, Ciarán.
  • Carey, Joe.
  • Corcoran Kennedy, Marcella.
  • Coveney, Simon.
  • D'Arcy, Michael.
  • Daly, Jim.
  • Deering, Pat.
  • Doherty, Regina.
  • Donohoe, Paschal.
  • Durkan, Bernard J.
  • English, Damien.
  • Farrell, Alan.
  • Fitzgerald, Frances.
  • Fitzpatrick, Peter.
  • Flanagan, Charles.
  • Griffin, Brendan.
  • Harris, Simon.
  • Harty, Michael.
  • Heydon, Martin.
  • Humphreys, Heather.
  • Kehoe, Paul.
  • Kyne, Seán.
  • Lowry, Michael.
  • McEntee, Helen.
  • McGrath, Finian.
  • McHugh, Joe.
  • McLoughlin, Tony.
  • Madigan, Josepha.
  • Mitchell O'Connor, Mary.
  • Moran, Kevin Boxer.
  • Murphy, Dara.
  • Murphy, Eoghan.
  • Naughten, Denis.
  • Naughton, Hildegarde.
  • Neville, Tom.
  • Noonan, Michael.
  • O'Connell, Kate.
  • O'Donovan, Patrick.
  • O'Dowd, Fergus.
  • Phelan, John Paul.
  • Ring, Michael.
  • Rock, Noel.
  • Stanton, David.
  • Zappone, Katherine.

Níl

  • Boyd Barrett, Richard.
  • Brady, John.
  • Broughan, Thomas P.
  • Buckley, Pat.
  • Collins, Michael.
  • Crowe, Seán.
  • Cullinane, David.
  • Daly, Clare.
  • Doherty, Pearse.
  • Ellis, Dessie.
  • Ferris, Martin.
  • Fitzmaurice, Michael.
  • Healy-Rae, Michael.
  • Healy, Seamus.
  • Kenny, Martin.
  • McDonald, Mary Lou.
  • Mitchell, Denise.
  • Munster, Imelda.
  • Murphy, Catherine.
  • Murphy, Paul.
  • Nolan, Carol.
  • Ó Broin, Eoin.
  • Ó Caoláin, Caoimhghín.
  • Ó Laoghaire, Donnchadh.
  • Ó Snodaigh, Aengus.
  • O'Brien, Jonathan.
  • O'Reilly, Louise.
  • O'Sullivan, Jan.
  • O'Sullivan, Maureen.
  • Quinlivan, Maurice.
  • Shortall, Róisín.
  • Smith, Bríd.
  • Tóibín, Peadar.
  • Wallace, Mick.

Staon

  • Aylward, Bobby.
  • Brassil, John.
  • Breathnach, Declan.
  • Browne, James.
  • Butler, Mary.
  • Cahill, Jackie.
  • Calleary, Dara.
  • Casey, Pat.
  • Cassells, Shane.
  • Chambers, Jack.
  • Cowen, Barry.
  • Curran, John.
  • Donnelly, Stephen S.
  • Haughey, Seán.
  • Kelleher, Billy.
  • Lahart, John.
  • Lawless, James.
  • McConalogue, Charlie.
  • McGrath, Michael.
  • Moynihan, Aindrias.
  • Moynihan, Michael.
  • Murphy O'Mahony, Margaret.
  • Ó Cuív, Éamon.
  • O'Brien, Darragh.
  • O'Keeffe, Kevin.
  • O'Loughlin, Fiona.
  • O'Rourke, Frank.
  • Rabbitte, Anne.
  • Scanlon, Eamon.
  • Smith, Brendan.
  • Smyth, Niamh.
  • Troy, Robert.
Tellers: Tá, Deputies Joe McHugh and Tony McLoughlin; Níl, Deputies Pearse Doherty and Eoin Ó Broin.
Amendment declared carried.

Tá leasú Uimh. 28 as ord.

Amendment No. 28 not moved.

I move amendment No. 29:

In page 30, after line 40, to insert the following:

"Gambling

19. The Minister shall, by way of follow-up to the report published in 2015 by the Department of Social Protection and entitled Playing Social Roulette: The Impact of Gambling on Individuals and Society in Ireland prepare a report under this section on the potential for increased taxation of gambling operations, including as a Government response to the incidence of problem gambling.".

The amendment is self explanatory so I will not delay unduly other than to make two short points. The report to which Deputy Burton refers in the amendment gives a very clear indication of the severe impact of gambling on individuals and society. We often use taxation as a measure to deter such behaviour, for example, in relation to cigarettes, sugary drinks and alcohol. I urge the Minister to consider the study outlined in the amendment in order that we can effectively tax gambling. It would also bring in very useful revenue which would assist public expenditure in other areas.

The report referred to by Deputy Burton explored gambling behaviour in Ireland, specifically the issue of problem gambling and its impact on the individual, the gambler's relationships with social connections, and the wider impact of problem gambling behaviour on community and society.

In a significant move in the area of regulating betting services, the Betting (Amendment) Act 2015 brought remote bookmakers and betting intermediaries offering betting services in Ireland into the regulatory regime for the first time. At the same time, these operations were brought into the betting tax net, effectively doubling the revenue receipts from this source.

The 2015 Act was seen as a temporary measure pending the introduction of a wider Government approach to gambling under the gambling control Bill being prepared by the Minister for Justice and Equality. The Bill, as proposed, will update all existing laws on the regulation and licensing of gambling activities, including betting and gaming. It also includes a proposal to establish a social fund to assist in counteracting the ill effects for society, as well as for persons and their families, of irresponsible gambling. The scheme does not include the national lottery whose activities are separately regulated under the National Lottery Act 2013. Having been given special responsibility in this area, the Minister of State, Deputy Stanton, is working to ensure that legislation providing for the regulation of the gambling sector can be published at the earliest opportunity. Discussions with the Office of the Attorney General are under way.

The Deputy will be aware that a review of betting duty was published in the tax strategy group paper earlier this year. As part of this review, which included consultation with stakeholders and interested parties, consideration was given to the impacts, benefits and drawbacks of both imposing betting duty on the customer and also of increasing betting duty rates. As part of the process, Department officials met various stakeholders, including advocacy groups such as Problem Gambling Ireland and the Rutland Centre. The review can be found as part of the tax strategy group papers published on the Department's website. Accordingly, I do not propose to accept the amendment.

I accept that the Minister of State has outlined a number of measures the Government is examining and the work done by the Minister of State, Deputy Stanton, in particular. Will the report to which Deputy Burton refers be considered in that context?

In that case I will not press the amendment.

Amendment, by leave, withdrawn.

Amendments Nos. 30 and 32 are related and may be discussed together. We are due to conclude at 12 midnight, and lest anyone has any ideas about going on after that time into the early hours of the morning, the Business Committee has already agreed that we should conclude at 12 o'clock. We are supposed to be pursuing family-friendly policies. We should also note that some of the decisions made here in the past in the early hours of the morning have not exactly been sterling.

I move amendment No. 30:

In page 30, after line 40, to insert the following:

"Real Estate Investment Trust (REITS) and impact on Housing/Rental Market

19. The Minister shall, within 6 months of the passing of this Act, prepare and lay before the Oireachtas a report analysing the impact Real Estate Investment Trust (REITS) have had on rental prices, and residential and commercial property prices throughout Ireland, and particularly Dublin.".

My amendment calls on the Minister, within six months of the passing of the Bill, to prepare and lay before the Oireachtas a report analysing the impact real estate investment trusts, REITS, have had on rental prices, and residential and commercial property prices throughout Ireland, and particularly Dublin. There are several good reasons that should happen.

I was amused listening to the latest report from Hibernia REIT boasting about the incredible money it is making. People might not have noticed but we tabled amendments to the commission of investigation into NAMA that was set up under the auspices of Mr. Justice Cooke. We added in a third module to examine the establishment of the Hibernia REIT. It was set up in 2013 following a three-year stint at NAMA by one of its founders but the company was planned long before the individual left NAMA. Some business men on the east coast of the United States were briefed on the plan for Hibernia REIT as early as 2012. The same founder is on the record as stating that they know enough people in Dublin to be able to go buy properties in Dublin without having to go to auction or having to go onto the market. If one looks at some of the assets it has purchased, the links back to NAMA begin to appear, for example, the Forum Building, the Dublin Observatory building, the Harcourt Street building, Windmill Lane, and New Century House on Central Quay. All of those assets were in NAMA and are now in the hands of Hibernia REIT either through direct purchases or secondary deals. If the State is going to continue to turn a blind eye to how these people operate and allow them to have such an impact on the property game in Ireland, be it in terms of ownership or rental, that would be a huge mistake on the part of the Government.

REITs are subject to an entirely different tax regime from individual landlords. They are not subject to any tax on their rental incomes nor are they subject to tax on their gains. To achieve those gains, REITs must distribute 85% of all property income profits annually to shareholders.

The manner in which REITs were set up in the first place is worthy of research given that Bill Nowlan of WK Nowlan, the father of Kevin Nowlan, spent nearly two years lobbying the Department of Finance and they got the best sweetheart deal anyone in business in Ireland ever got. We are calling for research on whether this is good for the State and if we should allow it to continue in the manner in which it is working currently. The question is whether it is worthy of examination of the impact on the property game in Dublin, as it is mostly Dublin in which the REITs are operating. We want to examine the impact they have had and how big a part they have played in the escalation of rental prices in Dublin city in particular and other cities around the country.

I referred in an earlier amendment to a discussion I had nearly four years ago on the issue with the then Minister for Finance, Deputy Noonan. I refer to one of his main arguments against me at the time when I was warning him about REITs.

I reminded the Minister that one of the big problems we had with our building bubble was that a small group of people gained control of most of the land in the city and they land-banked it. They owned over 90% of the land with potential for development and thus controlled the price of it. The prices went crazy.

I have said it before, but I ended up paying €5 million for one fifth of an acre in a rough part of Dublin's north city. It was not the developers and builders who were making the mad money; it was the land-banker. This was in January 2014. The Minister for Finance, Deputy Noonan, argued:

There is a huge overhang of property, including portfolios held by NAMA and properties being held as collateral for impaired loans across the banking system. The banks have been deleveraging rapidly, especially Ulster Bank. There is potentially an enormous amount of property on the market. Part of the Government's job is to clear the overhang first because there will be no property development in this city or country until that is cleared. It is surprising that the overhang is being cleared so fast.

I am unsure why he was so surprised given that NAMA was absolutely flogging it at fire-sale prices. The take-up was powerful because it was money for jam.

It is all well and good to say that the horse has bolted and that there is no point in worrying about it from here on. Actually, that is not true. In recent years, real estate investment trusts have bought one fifth of all new residential properties in Dublin and the figure is rising. Those involved have a cartel now. That is why an investor can get €2,700 for two-bedroom properties in some parts of the city. The former Minister for Finance, Deputy Noonan, argued at the time that we needed professional landlords. By God, we have got them, but we have paid the price for it.

Is the Government happy with the fact that rents are the price they are in this city? A person can rent an apartment in the centre of Turin for €400 per month. The Government may believe that we are going in the right direction by having a rent of €2,000 per month, but I do not agree. It is nuts and it is unsustainable. The Government needs to look at how REITs operate and how the Government relates to them.

My comments are on a similar note. The points were made in the earlier discussion as well. We have a similar amendment. What has happened in recent years in this country is really extraordinary. The approach that Fine Gael and its partners, the Labour Party and the Independent Alliance, have taken to the property sector is quite extraordinary given what had happened previously. We could talk about amnesia.

How could anyone think it was a good idea to incentivise property speculators after a bubble and crash that was caused by property speculators? How could anyone think of bringing even bigger property speculators in to replace the mostly-domestic property speculators that helped to produce the crash of 2008? It beggars belief. Those responsible must be literally off their rockers. However, that was a concerted policy for real estate investment trusts and vulture funds. The then Minister for Finance, Deputy Michael Noonan, or Department officials had 64 meetings with these people in the period when many of the tax changes to benefit these entities were brought in. It was a conscious decision to bring these players in in the belief that it would restore the property sector. The last thing we needed to do was to restore the property sector to enable it to do all of the things that led us to the last property bubble and crash. However, that is what we have done with these tax breaks.

As a consequence, rents and property prices are now spiralling out of control. Moreover, there has been a massive hand-over of property assets which, for a brief moment, we had in our hands. That is the awful thing. For a brief moment, via NAMA, we actually had these assets where we needed to have them, that is, in the hands of the State. We could have taken that opportunity and utilised those property assets and the revenues that were derived from them to provide housing and help small and medium-sized enterprises with office space. Had we done that, we would have done society a major favour and we would have prevented the possibility of crazy booms and slumps of the type that have wrecked the country in the past and that are likely to wreck the country again. Instead, we handed over the assets to an even smaller bunch or clique of enormous funds and international property speculators, mostly from the USA.

I wish to highlight an additional point that has not been made. We do not even know how much tax is forgone in all of this. That is the other extraordinary fact. In the case of most tax loopholes, allowances and reliefs, we know how much tax is foregone. That allows us to assess whether any benefit arose, and we can carry out a cost-benefit analysis. In this case, for the cost analysis one need only look at the property sector, with the unaffordability of property and rents and the vast profits that keep rising for these entities. However, we cannot even assess the revenue side because we simply do not know. We cannot get figures. The Government cannot even tell us how much tax was forgone.

Really, the Mafia could have designed a scheme of the sort that we have seen with NAMA, with the combination and interlocking of the hand-over of NAMA assets with the myriad or array of tax breaks. PricewaterhouseCoopers was the firm that advised these speculators to come into the Irish property market. It referred to the array of tax breaks that will allow certain organisations to walk away paying no tax whatsoever. We do not even know how much that tax foregone is. The figure is in the hundreds of millions of euro, without question. More likely, it is in the billions of euro. The Government cannot even tell us.

The least we could do is produce a report on all of this to establish the consequences for the property market, including the residential market, in terms of the taxes forgone. People need a proper explanation and understanding of what the Government has done and what the consequences have been for all of us. That should include the consequences for the economy in a macro sense and for people who must now pay a fortune or who simply cannot afford the prices and rents that these entities are seeking for the properties.

I welcome the two amendments. We have discussed this at the finance committee. I have been raising the matter for a considerable period. I will say it again: the Minister needs to open his eyes to what is happening around him. I have told him time and again. I have been banging this drum for well over a year now in respect of what has happened in the property market.

We can talk about the results of the crisis and how it presents itself, but we must look at the source. Families are being outbid by what are called tax-efficient or tax-evading companies. Such companies have been allowed to operate while paying virtually no tax because of our tax code. They are able to outbid families in Dublin and elsewhere in the property market.

I have given the Minister the figures and I have gone through them time and again. I keep repeating different figures because the figures continue to get worse as time goes on. Let us consider the figure for non-household buyers. A large proportion of this figure is made up of REITs and IREFs. These groups purchased 42% of new homes in Dublin up to July this year. That figure compares to 25% of properties purchased by first-time buyers. Does the Minister for Finance believe that is appropriate? It is not only those on the left who are saying it. Stockbrokers are coming out and calling for penalties on non-household buyers for outbidding and out-purchasing families who want to purchase homes.

The Government is allowing this to happen. Nearly half of all properties in Dublin are bought up by real estate investment trusts, REITs, and Irish real estate funds, IREFs. In addition, 13% of all homes in the State are bought by non-household buyers. When we strip out local authorities and approved housing bodies, the figure falls to 10%. We estimate that the national figure for 2017 will be higher again. It is an absolute disgrace that these tax avoiding structures are pushing up house prices by increasing demand for property. They have the fire-power to buy off large tranches of housing resulting in ordinary families being outbid and pushed out of the market. They can only dream of having a home.

A number of steps must be taken immediately. We must change the way in which these tax avoiding structures operate, remove their competitive edge and set a minimum amount of tax they must pay to protect the tax base. One immediate measure would be to increase dividend withholding tax for non-resident investors to 25%, with no reductions available. We should also abolish the capital gains tax exemption on properties sold while proceeds are kept within the fund.

The Minister of State, Deputy D'Arcy, described REITs as long-term investors when he appeared before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach. Hibernia REIT blew a big hole in that argument when it stated it may sell some of its property assets. Funds are not long-term investors. Hibernia REIT's rental income increased by 31% in the first half of 2016 and has been increasing by more than 50% in different periods. According to its chief executive, Mr. Kevin Nolan, it is considering selling some of its properties to other investors should the right opportunity arise. Deputy Mick Wallace is correct. The Ministers should read the book NAMA Land to see how some of these structures were set up, the inside information and all of the rest.

REITs are able to sell off property and the State, through the finance code, is incentivising them by having no capital gains tax, CGT, within the fund and allowing them to flip assets for massive profits and reinvest this money tax-free to expand their holdings. That is what is happening.

I asked a number of questions in the joint committee, including on the 85% minimum the REITs must disburse as dividends. I also asked how their income was calculated. It is clear that, for example, with regard to deductibles, when computing their annual property income - this is crucial because not less than 85% of this must be in distributions - local property tax, remuneration, including bonuses, which is an absolute scam within the REITS, asset manager fees, which is another scam to ensure the 85% is reduced, are all deductible or may be written off.

I have done an analysis of the accounts of REITs, all of which are published every year, including 2017. I put to the Minister again that 85% of REITs are foreign owned because they are structured in order that foreign capital can buy up our assets in a tax efficient manner. It is an absolute scandal that the Government is allowing this to happen. Fianna Fáil needs to start to flex its muscles on this issue which is having a major impact on the property sector.

Let us consider the three REITs operating here. In 2016, their combined value was €2.637 billion and their profits, including their asset value, was €329 million. As part of this, they made rental profits of €117 million, on which they paid €8 million, or 8%, in dividend withholding tax. When we consider all the profits recorded in their accounts for the same year, the effective tax rate paid was 3%. The three REITs paid €8 million of tax on the €329.1 million profits recorded in their annual reports. It is a scandal that the Government is allowing this to happen. The 2017 accounts are worse because the total value of the three REITs was more than €3 billion with Hibernia REIT having a value of €1.2 billion, Green REIT having a value of €1.3 billion and the other I-RES REIT having a value of €480 million. The dividend withholding tax paid on their profits continues to be 3%, which is pathetic. All of this is done because of the double tax treaties and so forth.

We must apply capital gains tax within the fund, increase the dividend withholding tax and no longer allow for the deductibles that currently apply. The Minister must start to penalise these non-household funds for outbidding people who want to put a roof over their heads and call it a home.

I support the amendment. The previous Government, with the then Secretary General of the Department of Finance, Mr. Moran, took a decision to openly invite vulture companies to invest here. We decided to sell the country when things were bad and we are trying to buy it back now that it has become expensive. The vulture funds are here to make a quick buck. Lives have been lost as a result of what some of them have done. They are crucifying people and they show no mercy. Their only concern is figures and how much profit they can make. For every €1 they invest, they will get at least €2, if not €3 or €4, back. What have we done? We have let them away with every scam in the past five or six years to ensure they do not pay taxes. They can get away with whatever they want because they bought assets when the country was in a bad state. They have screwed Irish people and rather than crucifying them, we are allowing them to use whatever loopholes they can find, patting them on the back and telling them what great fellows they are. When one is robbed one generally tries to catch the robber and put him in jail. These vulture funds have robbed Governments and citizens and, worse still, they have robbed lives, yet we are not doing anything about it. It is about time the Oireachtas put these fellows back in their boxes. We should screw them in whatever way we can and impose whatever penalties we can on them for what they have done to this country.

I, too, support this reasonable amendment on real estate investment trusts and Irish real estate funds or, to use their acronyms, REITs and IREFs. The Government and its predecessors appear set on preserving the status quo and supporting the rich and famous at the expense of ordinary citizens. This beggars belief after all we have been through and the rape and plunder visited on us by the banking scandal, the National Asset Management Agency and the vulture funds. While REITs and IREFs are not vulture funds, they are of the same species.

I hate mentioning names but we brought a mercenary into the Department of Finance who has since left these shores again and moved on to the next rich pickings. We should have looked at the stables he was in, although I objected at the time of his appointment and referred in the House to the trail of destruction he had left behind him in the United States. The Minister for Finance invited him back to lead us here. This was all part of his dream.

The Deputy should not identify anyone.

I did not mention any names.

Nor should he mention anyone who could be identified.

Mercenaries deserve to be identified and put out of action as opposed to being embraced by Governments and the Civil Service. They led the attack on our people. Deputy Fitzmaurice is right; it is as bad as what the Black and Tans did and many lives have been wrecked. Many people have taken their lives and many families are distraught, not to mention all the homeless people to whom we pay lip service.

Hand in hand with all of this, we are not building houses. There is something very sinister taking place at the heart of Government. We are unable to build houses, yet we built houses in the 1940s, 1950s, 1960s, 1970s, 1980s and 1990s when we did not have a crane or a JCB. In the past, houses were built with picks and shovels and ropes were used to move cement. Everywhere one looks in Dublin one sees cranes.

One would get dazzled with them at night-time through the haze. However, they are not building houses. They are building more offices for the companies we thought we would get over here in the past couple of days, but we saw where our friends were there as well. We pulled out of one of them and we lost the other.

These policies are disastrous and they are having a negative impact on our country. Men gave their lives to get our independence and here we are selling it for 30 pieces of silver in a Judas-like sale, and we keep doing so. We expect to dose the medicine on the ordinary people - to hell or to Connacht. Now it is to hell or to anywhere. Connacht has not even room for them anymore, but we do not care. We let all these fellows have their bonuses and their big dividends and tax havens. It is despicable.

Deputy Donohoe is a relatively young Minister. I wish him well. I am not saying that the Minister is too young or anything like that. Deputy Donohoe is a married man with a couple of children. I am sorry, I cannot say anything about children or being married anymore. The Minister knows what I mean. He is new on the job, a new kid on the block and we expect a great deal of him.

We expect that the Minister has a nose on him that is smart enough to see what is going on, that we are being ripped asunder. We are being mauled and plundered, like we were back in the days when Cromwell was here. It is the very same. I stated, through the good offices of the Ceann Comhairle, on Leaders' Questions to Deputy Donohoe's great leader a few weeks ago that the bank robbers are no longer on the streets as I used to see them when I was young, with the gardaí following them and the Army minding the money for the courier services. They are inside, deep in the boardrooms. They are inside in these Ponzi schemes and they are doing what they want to whom they like when they like with impunity. We even pass legislation to support them. We say, "Off you go, lads.", and pat them on the back. I have said on many occasions that it is like rubbing butter into a fat sow's you-know-what. I will not say you-know-what but the Minister knows it is a big behind - we all know what it is. It is craven. It beggars belief that we, as an elected Parliament, would allow this to go on in this day and age, in 2017. With all the education, all the advisers and all the financial gurus, it beggars belief that these fellows can come in and run rings around us and have Ponzi scheme after Ponzi scheme, and as Deputy Fitzmaurice and others have said, rape and plunder, ride into the sunset and let us all go to hell.

How can any ordinary person buy a house? Then we try to bring in a rejuvenation scheme. The former Taoiseach announced it one day, in what I called the "Four Roads to Glenamaddy", in Edgeworthstown, somewhere over in Longford. It was like "Four Country Roads." I do not know where he has gone now, what road he is on. I would say, a road never travelled - I do not know was it Mick Foster or which of them said that.

We are not afraid to travel, but these fellows are travelling all of the time. They are running rings around us and we are supporting them. We try to rejuvenate towns and people want to turn offices and failed businesses into living apartments, and we cannot take the VAT off for them because we would be helping the builders. I say we can easily just take it off for the person buying the property who wants to get a house for himself. We cannot take the charges and development fees off because the local authority needs them.

I have asked on countless occasions that we bring up the county managers to explain why we cannot build houses. We are sick of announcements of all the funding the Minister is giving. The people out there are wide awake to this. I have stated previously that they are waiting in the long grass for the Government. They waited previously and by God, they gave Fine Gael a fair clipping in the grass too. The few of them who survived were like hares in tufts of grass so that they could not be rooted out, but they will root them out the next time. The people are coming for Fine Gael because they are educated. We have young families out there who are educated now and they understand a fraud for what it is.

Fraud is being perpetrated on the people in the name of democracy, and it is awful. I am surprised at the Independent Alliance. The Labour Party, the ordinary working man's people, supported Fine Gael. Founded in my own town, it could not even hold its conference there. We know what it did and what happened to it. Now it is the Independent Alliance's turn. Fine Gael was trying to export them to North Korea - some of them would not come back - and it was happy out to be part of the laugh, a diversionary tactic.

Here we are. We had heavy rain today but the fog is lifting. The scamaill on the mountains are lifting and we can see what is going on. I doubt the Government wants people rioting on the streets, as they did over Mugabe - I mentioned his name here two weeks ago and I was told he was nearly finished, and he is. The Government's day is coming too because the people are awake. It used to be the west awake. The whole of Ireland is awake to see the misery on the streets, the people who cannot get homes and the homeless, and we then ridicule the priests and the nuns and all the volunteers who help to feed the hungry and clothe the needy.

However, there are no needy with the Government, only the boys who need and want everything, and they will not allow anything, not even the scraps. When we were young, we would feed the hens with the scraps from the table. These fellows will not even give the scraps to anybody. They want it all to themselves, with big deep pockets. I would remind the Minister that there are no pockets in a shroud. They want to be everywhere. Greed is alive and well, and kicking. The culture, here in this Parliament, and in the Department of Finance and the Government circles, in the past number of years is feeding that greed enormously. Unless we get food poisoning or something, I do not know how we will get rid of it.

It is good to know that the Deputy's sow is well lubricated.

I am not sure how I will follow that.

I recognise the role of international capital in a modern economy. I recognise the role of collective investment vehicles. They are widely used internationally. I understand the taxation rules that apply and the objective of avoiding double taxation and of ensuring that the profits are taxed on distribution.

What we are lacking here is a proper analysis. The Minister published on budget day the 136-page report of the working group on tax and fiscal treatment of rental accommodation providers. I wonder how many people read it. The report needs to be gone through in some detail.

The issues raised in these amendments, REITs and IREFs, got scant attention in that report. There was less than two pages on REITs and the taxation of REIT shareholders, and literally a few lines on IREFs. There was no analysis whatsoever on their role in the economy. The report states that 18% of households now are in the private rental sector. That figure is rising rapidly for a whole host of reasons.

What we need here is a detailed analysis of the impact of these collective investment vehicles. Obviously, when one has limited residential supply in the market, ordinary buyers are competing with REITs and IREFs. That is a statement of fact. I would like to know what impact they are having on supply, on the traditional landlords in the market and on the rental market, for example, on tenants. We need an evidence-based approach to this issue.

I understand why the taxation environment and taxation laws were designed to facilitate them coming into Ireland and I recognise their role in a modern economy, but there is a lack of analysis. There is a lack of detail on the impact that they are undoubtedly having. We need that analysis.

There are amendments before the Minister. On Committee Stage, there was a commitment given that the tax strategy group would examine this issue and the role of REITs, IREFs, etc., in some detail. Can the Minister elaborate on that? Can the Minister give us more detail on exactly what he is asking the tax strategy group to do because it needs to address all of the issues that have been raised here by a number of Deputies?

Before I start, I will put on the record information I have that is contrary to what Members have been saying about the quantum of properties involved.

There are three REITs in Ireland. In relation to activity within the property market, of the three REITs, I-RES is the only one that has concentrated on residential property. I-RES has approximately 2,450 apartments. As of May 2017, the top 20 large professional landlords, including corporate vehicles, REITs, investment funds and individuals, accounted for 2.83% of residential tenancies.

Section 23 of the Finance Act 2016 introduced a new tax regime for funds that hold Irish real estate to be known as Irish real estate funds, or IREFs. The section was introduced to address the use of certain fund vehicles to invest in Irish property by non-resident investors.

IREFs are investment undertakings, excluding UCITS, where 25% of the value of that undertaking is made up of Irish real estate assets. Where the main purpose of the fund is to invest in Irish property, this will also fall into the regime regardless of the level of property. Where an IREF makes an actual distribution or on the redemption of units in the IREF, non-resident investors will be subject to a withholding tax of 20%. Certain investors, such as pension funds, life assurance companies, charities and credit unions, are exempt from the withholding tax as this is the norm for such bodies across the tax Acts.

The new regime applies to accounting periods beginning on or after 1 January 2017.

I am advised by Revenue that the first returns from IREFs will be filed in the middle of next year. If any areas of concern are identified, these will be addressed. I am also advised that my Department has been working with the CSO in order to get a more granular breakdown of the non-household buyer category classification into further categories. However, it is likely to be March 2018 at the earliest before this information is available.

Real estate investment trusts, REITs, were introduced in the Finance Act 2013. The regime provides for a collective investment vehicle for persons wishing to invest in property. REITs must be widely held, as it is a requirement that the REIT not be a close company, that is, a REIT cannot be under the control of five or fewer participators. A REIT must hold at least three properties and carry on a business of letting property. No one property may account for more than 40% of the total value of the property in the REIT. The REIT must derive at least 75% of its profits from property rental and must distribute at least 85% of its property income to shareholders.

I understand from the Revenue Commissioners that as there are only three REITs in Ireland at present, for reasons of taxpayer confidentiality it will not be possible to share the information sought by the Deputy with the House or with myself. However, I understand that Revenue’s large cases division has a dedicated team who look after REITs. As the REIT regime was introduced in the Finance Act 2013 that team is, as part of Revenue’s normal compliance review process, reviewing the structures of those REITs and the tax payable by those companies. Should any issues arise from that review, Revenue will bring those matters to the attention of my officials.

On Committee Stage I agreed that certain issues raised in amendments tabled by Deputy Doherty in respect of IREFs and REITs would be examined by the tax strategy group. However, given the constraints regarding availability of information and taxpayer confidentiality, I do not think it would be appropriate to put the preparation of the requested reports into legislation. I cannot commend these amendments to the House but I can assure the Deputies that both IREFs and REITs are being kept under constant review.

The Minister of State made reference to some figures showing the low percentage of residential units that are held by REITs relative to the amount of properties in the country. The point I made is that these guys have gotten hold of an incredible number of properties that have been made available to rent in Dublin city. They bought them in bulk from NAMA and from the banks. They are buying an incredible proportion of what has become available in the last few years. They are having an incredible impact on the system.

One of the most frustrating things for me since I came into this place in 2011 is the fact that the problems around how we supply housing in all forms are not being dealt with in the way they should. I do not see anyone doing what needs to be done. There are so many problems in our construction industry and in how we supply housing and they are not being addressed. It is inevitable that we will continue with boom and bust. I promise that there will be another bust in a number of years, probably four or five. I will be shocked if there is not because the fundamentals are completely wrong. The Government is looking for trouble.

I am not saying it is easy to fix but the Government is not doing what needs to be done. I do not know to whom the Government is listening but there are people in the industry who know where the bodies are buried and where the problems lie. It is fixable. It might take a long time but the Government could make a start. Rome was not built in a day but it was started. The REITs are only one element of the problem but the Government has allowed them to grow so much. The former Minister, Deputy Michael Noonan, told me in 2014 that they were only worth €400 million. He also said that if it got out of control, he would address it but it has not been addressed.

We tried to get Hibernia REIT into the NAMA inquiry as a module. In a few year's time, the Government will be checking to see if that entity was built on the proceeds of crime.

I welcomed the commitment that the Minister of State gave us on Committee Stage when I tabled amendments on REITs and funds, particularly with regard to the issue of non-household buyers of which REITs and funds make up a major part. I understood that text would have been provided to us at some stage outlining exactly what was agreed. I ask that such text be provided at some stage just so we know exactly what type of report to expect because we took the commitment that the Minister of State gave us at face value. I have no doubt that the Minister of State will deliver on that commitment, as he has repeated it here this evening.

The issue here is one which I will keep raising until we take action rather than just producing a report. The Minister of State made reference to the fact that there are only three REITs in the country and 2,450 IREFs. Hibernia REIT also has residential property, with approximately 9% of its portfolio made up of such property. Green REIT also has some such property but on a smaller scale. When I talk about non-household buyers, and I make this clear every time, I am not just talking about the REITs but the IREFs as well. The CSO, which we cannot dispute, will provide more granular detail but what they are telling us now is that over 40% - I think the figure is 45% up to July 2016 - of new homes in Dublin were bought by non-household buyers compared to 25% by first-time buyers. The amount of new homes in Dublin is not big anyway. It does not run into the thousands as we all know. There is an issue in terms of supply but the problem is that in a vacuum these funds, which are tax efficient, are going in and grabbing these properties. Revenue is not going to see anything wrong in that. It might see an issue in terms of the deductibles that I mentioned earlier because my understanding is that Revenue is saying that that could not happen but Revenue is not going to see anything wrong because the 3% effective tax rate -----

The time is up Deputy.

I will finish on this point.

No, the time is up Deputy.

That is why I am going to finish on this point.

The Deputy is over time.

With respect, I ask the Ceann Comhairle to let me finish my sentence.

While I am not asking for individual company's tax details to be provided, it is very clear because there are only three and we can see the dividend withholding tax paid, their accounts are published and we can see the profits recorded within them.

I just want to address the issue of the deductibles. The Finance Act 2013 introduced the regime for REITs. I have addressed the fact that it cannot be a close company. We had a good conversation about that and we went into private session at one point to go into the details. In general the trading profits of companies is subject to corporation tax at 12.5%. Rental profits and corporation tax in relation to these is at 25%. Rental profits arising from REITs are exempt from corporation tax provided the REIT distributes at least 85% of its annual rental profits. Profits from any other activities within a REIT are subject to corporation tax in the normal way.

I am advised by Revenue that while a REIT must distribute 85% of its annual rental profits, the Companies Act sets out the amount of profits that a REIT has available for distribution. In accordance with the Companies Act and taking a REIT which has rental profit, the profits available for distribution by the REIT would be the rental income of the REIT less all expenses of the REIT, including but not limited to local property tax, remuneration including bonuses and asset manager fees. It is important to note that a REIT does not get a tax deduction for the local property tax. In calculating the amount of a dividend a REIT is able to pay, the local property tax gets deducted along with other expenses paid. This reduces the amount of dividends a REIT can pay. The expenses come out of the profits. Therefore, the profits available for distribution are the profits after deducting all expenses incurred. The investors are then taxed on the profits as distributed.

I gave a commitment to look into the matter of providing information to Deputies on Report Stage but I have been told that I am disallowed from going there and I have to adhere to that.

My amendment states: "The Minister shall, within 6 months of the passing of this Act, prepare and lay before the Oireachtas a report analysing the impact Real Estate Investment Trust (REITS) have had on rental prices, and residential and commercial property prices throughout Ireland, and particularly Dublin.” I do not think that is an unusual or unreasonable request. We make decisions in here all the time and, obviously, the Government of the day makes most of them. Whatever we do, it has to be in our interest that it is well-informed. I challenge the Minister of State to sit down and argue with me about where the property game in Dublin is going, where the housing industry is going and what is happening. I will sit down with him at any time and argue it out with him. We need to be better informed in order to make better decisions. Doing something like this is a small step but it is a small step in the right direction. It is not unreasonable and it would be a positive for this Parliament if we decided to do this.

I ask the Minister of State to clarify what the Tax Strategy Group is tasked with doing in regard to these issues. When we look at the content of the amendment and what it is suggested a report would examine, can the Minister of State confirm whether or not the Tax Strategy Group will actually deal with these issues? A comprehensive amount of work needs to be done. Has it the capacity to do it? Some of the issues veer outside the taxation issues and, presumably, these will not fall within the scope of the strategy group, which will be focused on the taxation side.

For the purposes of clarity, the Minister of State cannot answer that question as he has spoken twice already. I call Deputy Boyd Barrett.

There are two Ministers sitting there. The second Minister could answer.

We would be getting two for the price of one, but it is not that simple.

He is another Teachta Dála so he can answer the question.

We have withdrawn some previous amendments on foot of commitments by the Government to look at these things and I note the Government has conceded on producing a report on the vacant homes tax. As far as I am concerned, this is part of an array, to use PwC's term, of things that we need to know more information about, for example, what the impact and cost, or benefit for that matter, is to the people of this country. This area is not all of the problem but it is a significant part of the problem.

The percentages the Minister of State quotes are slightly misleading because the question is how much property is actually moving at any point in time, and how much of the available property is being grabbed, and the Minister of State also concentrated on particular areas. We see that the combined impact of these entities, along with some of the other entities that are buying up large blocks of property from the banks or from NAMA, is having a very distorting, damaging and adverse effect on the property market. More important than the markets are the people who need housing and accommodation. We need to know what commitments the Government is making to produce a report that will tell us what the impact is on the property sector, and in regard to the taxes paid and the taxes foregone on the various tax breaks that have been given to these entities.

I will allow the Minister of State a brief reply.

I have the figures. The top 20 landlords, which are large professional landlords, including corporates, legals, REITs, investment funds and individuals, account for 2.83% of residential tenancies. The commitment given on Committee Stage stands. We will be replying back to committee in regard to what can be done, what is allowable and what will be allowable following conversation between the Department and Revenue. We will adhere to the commitment I gave on Committee Stage.

Amendment put:
The Dáil divided: Tá, 34; Níl, 51; Staon, 30.

  • Boyd Barrett, Richard.
  • Brady, John.
  • Broughan, Thomas P.
  • Buckley, Pat.
  • Collins, Michael.
  • Crowe, Seán.
  • Cullinane, David.
  • Daly, Clare.
  • Doherty, Pearse.
  • Ellis, Dessie.
  • Ferris, Martin.
  • Fitzmaurice, Michael.
  • Healy-Rae, Michael.
  • Healy, Seamus.
  • Kelly, Alan.
  • Kenny, Martin.
  • McDonald, Mary Lou.
  • McGrath, Mattie.
  • Mitchell, Denise.
  • Munster, Imelda.
  • Murphy, Catherine.
  • Murphy, Paul.
  • Nolan, Carol.
  • Ó Broin, Eoin.
  • Ó Caoláin, Caoimhghín.
  • Ó Snodaigh, Aengus.
  • O'Brien, Jonathan.
  • O'Reilly, Louise.
  • O'Sullivan, Maureen.
  • Quinlivan, Maurice.
  • Ryan, Eamon.
  • Smith, Bríd.
  • Tóibín, Peadar.
  • Wallace, Mick.

Níl

  • Bailey, Maria.
  • Barrett, Seán.
  • Breen, Pat.
  • Brophy, Colm.
  • Burke, Peter.
  • Byrne, Catherine.
  • Canney, Seán.
  • Cannon, Ciarán.
  • Carey, Joe.
  • Corcoran Kennedy, Marcella.
  • Coveney, Simon.
  • D'Arcy, Michael.
  • Daly, Jim.
  • Deering, Pat.
  • Doherty, Regina.
  • Donohoe, Paschal.
  • Durkan, Bernard J.
  • English, Damien.
  • Farrell, Alan.
  • Fitzgerald, Frances.
  • Fitzpatrick, Peter.
  • Flanagan, Charles.
  • Griffin, Brendan.
  • Harris, Simon.
  • Harty, Michael.
  • Heydon, Martin.
  • Humphreys, Heather.
  • Kehoe, Paul.
  • Kyne, Seán.
  • Lowry, Michael.
  • McEntee, Helen.
  • McGrath, Finian.
  • McHugh, Joe.
  • McLoughlin, Tony.
  • Madigan, Josepha.
  • Mitchell O'Connor, Mary.
  • Moran, Kevin Boxer.
  • Murphy, Dara.
  • Murphy, Eoghan.
  • Naughten, Denis.
  • Naughton, Hildegarde.
  • Neville, Tom.
  • Noonan, Michael.
  • O'Connell, Kate.
  • O'Donovan, Patrick.
  • O'Dowd, Fergus.
  • Phelan, John Paul.
  • Ring, Michael.
  • Rock, Noel.
  • Stanton, David.
  • Zappone, Katherine.

Staon

  • Aylward, Bobby.
  • Brassil, John.
  • Breathnach, Declan.
  • Browne, James.
  • Butler, Mary.
  • Cahill, Jackie.
  • Casey, Pat.
  • Cassells, Shane.
  • Chambers, Jack.
  • Collins, Niall.
  • Cowen, Barry.
  • Curran, John.
  • Donnelly, Stephen S.
  • Kelleher, Billy.
  • Lahart, John.
  • McConalogue, Charlie.
  • McGrath, Michael.
  • Moynihan, Aindrias.
  • Moynihan, Michael.
  • Murphy O'Mahony, Margaret.
  • Ó Cuív, Éamon.
  • O'Brien, Darragh.
  • O'Keeffe, Kevin.
  • O'Loughlin, Fiona.
  • O'Rourke, Frank.
  • Rabbitte, Anne.
  • Scanlon, Eamon.
  • Smith, Brendan.
  • Smyth, Niamh.
  • Troy, Robert.
Tellers: Tá, Deputies Mick Wallace and Richard Boyd Barrett; Níl, Deputies Joe McHugh and Tony McLoughlin..
Amendment declared lost.

I move amendment No. 31:

In page 30, after line 40, to insert the following:

“Income volatility for the farming sector

19. The Minister shall within three months of the passing of this Act, prepare and lay before the Oireachtas a report on the feasibility of introducing further tax provisions and stabilisation tools to deal with income volatility for farm enterprises both in terms of income tax and corporation tax.”.

This amendment relates to the important issue of income volatility in the farming sector. In recent years, some provision has been made in the taxation code to recognise the extreme difficulty farmers face because of the uncertainty around their income, in particular commodity prices, milk prices and so on. We now have an income averaging system which allows taxable profit to be averaged over a five-year period. There was a further enhancement last year in respect of an opt-out scheme of income averaging for a particularly poor year.

We are all aware of the variables, not least the weather, which affect the farming sector. A number of farming organisations brought forward specific proposals to go further in regard to income stability measures. They were considered by the Minister, but he was not minded to include them in the budget. He has given a commitment, as part of an overall review of agri-tax, to re-examine this issue. We are asking for a report on the options to determine how we can further improve income stability measures for the farming sector.

The budget was a tremendous source of disappointment to many in the farming sector and many farming organisations. There were realistic and genuine expectations that something would happen in this budget. There was a belief that there was political will across all parties and a willingness on behalf of the Government to introduce measures to help to equip farmers to deal with income volatility. There have been some measures in recent years. Income averaging, in particular, has been some help to farmers in this regard. However, it has flaws and additional tools are required.

Over the past two or three years, incomes in the dairy sector have varied greatly from one year to the next. Last year, as the Minister is well aware, given that the Minister of State, Deputy D'Arcy, has a background in dairy farming, dairy incomes were on the floor and people were under significant pressure. This year, dairy incomes are likely to be much higher and it has been a good year. We do not know what next year will hold. That can hold across various sectors of agriculture, in particular the dairy sector over the past two or three years.

In order to assist farmers, it is important that the tax code and Government policy work to try to mitigate against peaks and troughs. It is something we will consider as part of the next CAP programme in terms of how European policy can help to address the issue and provide a greater suite of tools to assist farmers. At national level, we need a greater range of tools within the tax code and the way with which income is dealt.

Several farming organisations, including the Irish Creamery Milk Suppliers Association, ICMSA, and the Irish Co-operative Organisation Society, ICOS, put forward very reasonable and clear proposals. It is exceptionally disappointing that they were not adopted and progressed by the Minister in the budget. The amendment asks that within the next three months the Minister conduct a report into the viability and various advantages of the different proposals which were put to him and that we then set settle on introducing measures which would assist farmers and provide them with new options.

I ask the Minister to accept the amendment and give an explanation as to why, for the second year in a row, the Government balked at this idea when it came to the crunch. There were very real expectations in the previous year that something would be done and certain expectations were heightened this year that consideration had been given to the proposals on the table. It was hoped that action would be taken and something real would happen as a result.

The first day I came into the House there was a discussion on equalisation of the rebate for farmers and the self-employed, and it was announced that they would get €1,600 back over a three-year period. It was disappointing to note in the budget that the figure for this year is approximately €250. A commitment was given for a three-year process, which has not happened.

On the farming sector and price volatility, as Deputies McGrath and McConalogue pointed out, milk prices were on the floor and farmers were losing money. Luckily, this year, milk prices are good. There has been a drive from the Department to encourage many people to return to the milk sector.

Many people are currently very heavily invested and there is a danger that in two or three years, with the amount of money that has been borrowed and if milk prices get bad again, we will see the banks from which people have borrowed money closing in once more. History has a habit of repeating.

Something must be put in place. I agree with doing a report but with everything I have heard tonight, it seems we are doing a report on this, that and the other. Actions speak louder than words. We need something where a farmer can park part of a good year to give some breathing space. There is ferocious price volatility now. In the beef sector, we have been told that with the likes of the Mercosur deal, if it comes about the way people are saying it will, there will be a reduction in beef prices of between 8% and 16%, which will blow the beef sector in this country. That is before we even talk about Brexit. The way prices are flying over a five-year period, if we do not allow an opportunity to benefit from a good year, more farmers will be lost. People may not like to hear it but with the likes of factories, one in seven people is involved in the agricultural sector, either directly or indirectly. If we do not ensure it is protected, we will be running down a very dangerous road. We will not be "rural-proofing" the system and this will lead to land abandonment, fewer exports and more unemployed people.

Whatever about having a report, we must ensure that we can face down crises and leave people on a solid footing. Currently, it is like they are on a wave as they are up and then down. Price volatility is a major problem in the agricultural sector. The comments about Europe earlier were correct. We need to bring in some sort of minimum price as some stores in Ireland and other places are deciding to sell products below cost, leaving farmers basically rudderless; they can do nothing about it and it is driving people from the sector. If there is plenty of product at hand, people do not worry. We are in danger, particularly with small farms, which are affected more by this. They cannot weather the storm as they do not have the resources to do so. If we do not do something about this, we will have fewer farmers. When we joined what is now the European Union, we had 300,000 farmers, but we are now down to 120,000. We know we have a problem with age but it is not encouraging youngsters to come in when we have price volatility like we do. Nobody can survive with it.

Before the budget, all the indications were that volatility in farming incomes would be addressed. I support the comments of my colleagues, Deputies Michael McGrath and McConalogue. Volatility is a problem for the dairy sector and, unfortunately, there is a probability other sectors will come under severe pressure. It is in the dairy sector that the problem really exists.

There has been very significant investment in the dairy sector and, unfortunately, prices fluctuate from year to year. In 2016, we had a year of very bad prices but I am thankful that this year they have improved somewhat. All the indications and reports from Ornua predict that 2018 will again be a difficult year. Milk production is up around the globe. Some markets did not recover throughout 2017 and the butter price has dropped very significantly in the past couple of weeks. The indications are that prices will be under pressure in 2018. When the day comes for income tax to be paid next October, the cash flow on dairy farms will be under pressure and a significant tax bill will have to be paid. This happened in 2016, when income was at its lowest and significant tax bills had to be paid. Unless we address this volatility, we will seriously hamper a sector that has great potential for the economy and which could really deliver for rural Ireland. This is one sector that is driving on and that has the potential to deliver for rural Ireland, which has come under major pressure in the past number of years. Production has rocketed in this country since the abolition of quotas in March 2015 and the predictions of Food Wise 2025 may even be exceeded.

How to handle volatility is probably the greatest pressure on dairy farmers. We have reneged on our responsibility to tackle it in this year's budget. I recommend that the Minister look very seriously at this matter. We are not talking about tax avoidance but rather having a level tax bill year after year. If we are serious about farmers who have invested huge amounts, we must realise that making predictions about cash flow and everything else can be virtually impossible because of the fluctuations in the market. We have the Targeted Agricultural Modernisation Schemes, which have brought investment to the sectors, but the Department of Finance can help rural Ireland and these farmers, who will be the backbone of rural Ireland into the future.

In rural Ireland we have two resources, the agrifood sector and tourism. In 2016, farmers had to borrow to pay their tax bills. We cannot allow that to happen indefinitely. The Irish Creamery Milk Suppliers Association and the Irish Co-operative Organisation Society had proposals that had met a good hearing from the Department of Finance but it was extremely disappointing that some element of their submissions was not included in this year's budget. I request most strongly that we formulate a solution that could negate the differential in taxation from year to year from the system. It is imperative on us to deliver this change for the sector. I hope other sectors will see this in future but currently the dairy sector is the one that experiences the problem. It is incumbent on us to formulate a solution.

We are putting this proposal to support farming families. It is normal for a farmer to see income going up and down from good years to bad years. It is price volatility and it is the norm on any farm enterprise. The aim is to smooth the tax burden as it does not make sense to pay a big tax bill in a poor year. If we smooth it out, it will give certainty in a very volatile enterprise. The feasibility study being requested here would give a better handle on how to implement this process, what it would cost and what would be behind it. It would be a very positive step in giving certainty to farm families. There were positive indications before the budget that something would be done on price volatility and there was disappointment when that did not come about. This is an opportunity for the Minister to help farmers and give some level of certainty without any major cost to the State.

I support this important amendment. Our flagship industry is the agricultural economy. I am now old enough to remember a number of recessions and each time it was the farming sector that took us through. When the farmers are doing well, they spend money locally. They spend it with local suppliers and on local equipment. We cannot just pay lip service to the problem of income volatility and we should formulate some balancing scheme for the good and bad years. We need some equalisation with respect to taxation. Farmers may be able to pay in advance, which may not be a good idea, or pay when they are able to pay. They always pay.

They have no choice but to pay because they are levied with punitive interest and penalties. On the other hand, when the Minister for Agriculture, Food and the Marine, Deputy Creed stands up and explains that a computer glitch is delaying the payments or blames human error the farmer then has to wait. He gets no interest, and he owes his suppliers money. He has no way of charging penalties. It is a one-way system and it is terribly unfair. Farmers make a large amount of investment. Nothing is happening in terms of house building in rural Ireland, or anywhere else outside the Red Cow. That is clear from this budget. For all the infrastucture investment only a tiny bit went into Kildare. The rest of the country is forgotten about.

The only people who have invested anything in the last number of years are the farmers, especially the younger farmers and dairy farmers. They have made huge investments. The banks have lent them the money. Two different banks held public meetings in my town - one of which we own almost 100% of - and they shovelled out the money to young farmers. It frightens me. I have a business that was a beneficiary. The young farmers always pay as well. They have made massive investments to double and triple their herds, lease land for 20 years and build new buildings. They are very important for the concrete industry, the construction industry and for tradesmen. Planning permission has been sought by many of them for tunnels under the roads. The county council cannot do them but the farmers can do them. The council cannot repair bridges but the farmers can get permission to close a road and put down an underpass. They can show the council how to do it. These are the people who put their shoulder to the wheel and took out those loans. Many of them have young families, are married and are setting out in life. They keep the last vestiges of rural Ireland alive. Everything else has been taken away from it.

There was a big story yesterday concerning a €30 million investment in An Post, in the form of a loan. One might think we were getting a gift. These people did not ask for any gifts. All they want is fair play and to be allowed to carry out their business with some supports. There is a spin-off of employment for the industries that service them. They pay back their loans, but they want to be able to pay their taxes when they are able to pay. They do not want to evade taxes, but want to put money away for the difficult years because it is a very volatile industry. Look, for example, at the weather patterns that are completely upside down. The farmers have to have certainty. After the harvest this year the grain prices are appalling, the beef prices are very uncertain, and the milk, thankfully, was better. We had three or four terribly lean years, and these farmers have huge bills all the time. They always pay their bills. When these farmers try to buy a bit of land with the intention of expanding by increasing the number of cows they have to stay viable, they have no chance. It is certainly the case in my county anyway, with the home-grown vulture fund which the Minister refuses to deal with. There is the equine industry fund and the money from Japan and China, but the local man has to borrow from the bank to match that. Many of them have been put to huge expense. The Minister will not tackle that issue either.

Deputy Fitzmaurice and I had an amendment which would have meant that vulture funds who buy land would have to pay a larger stamp duty. Anything more than 500 acres or 750 acres is not a farm any more but a large business. They are investing money but we do not know where the money comes from or how long it will stay. The young farmer and the family farmer must be supported. They are the backbone of this country and have got us out of many a recession. When they do something they spend and they pay. They borrow to do this.

It is a vital industry. As Deputy Cahill said, we only have agriculture and tourism. There is nothing else. We do not get factories or jobs; the Government will not give them to us. We are not even allowed to build houses now. Farming is so onerous now. It is so onerous to get planning. Not only do the planners want to know how long farmers have been farming, or if a farmer was born and reared there, but also if they were conceived on the farm. That is what planning wants now. The regulations are just mad. The Government cannot build houses. The young farmers will build their own with a borrowing, but they cannot get planning. The will is not there to allow rural Ireland the oxygen to survive. The Government is cutting off the oxygen and strangling it.

The rural independent group, in our budget submission lobbied the Government to look at some sort of equalisation system whereby farmers could pay in the good years instead of the bad years. The farmers are not saying that they will not pay. They will pay when they are able to pay. They have to pay all of their suppliers, otherwise the suppliers would not work with them. The service people would not work with the farmers if they were not paying them, but they always pay, unless something unforeseen happens. There is also the TB racket and the other rackets to contend with. The most unfair part of it all is the inordinate delays in the GLAS payments due to what we are told was a computer glitch or incorrect information being fed into the computer. If anyone else is behind in paying the Revenue they face punitive penalties and interest and there is no choice but to pay them.

I hope that this will be pushed to a vote and that the Government will be forced to change it because it is for the good of all of Ireland. When rural Ireland is going well there is a spin-off because the farming community all come to the towns and cities and spend money, whether it be for a match, for education or for shopping for Christmas. They all contribute to the economy.

We are supporting the amendment. Sinn Féin supports the concept of having a means of looking at farmer's taxation over a number of years. It was in our pre-budget submission. Many parts of the farming community are open to volatility in income. We regularly hear about the dairy sector's problems in this regard, but it exists in many other sectors as well. Deputy Mattie McGrath mentioned the delays in payments, which result in this. I often come across farmers who have a delay in getting their rural environment protection scheme or REP scheme or green low-carbon agri-environment scheme, GLAS, payments. When it is delayed it runs into the second year and they get two GLAS payments in the same year. For many farmers the payments they receive from supplements of that nature are actually a large portion of their income. The grain farmers were before the Committee on Agriculture, Food and the Marine this morning. Some 85% of the grain farmer's income actually comes from that cheque in the post. That gives an indication of how important the GLAS payments are to them. If that is delayed and runs into the second year they will be taxed on the two cheques together, and it is a huge hit to that farmer's income. The idea of equalising the tax payments over a number of years is very simple and honest and a decent way to do so. I implore the Minister to look at this and support the amendment because at the end of the day the farming community is the backbone of our society.

Where I come from most farmers are on areas of natural constraint, ANC. They are very dependent on ensuring that they can get a decent income. Many of the farmers will not pay much tax because they do not have much money, but they need to be able to see that they will not be hit with a big tax bill when they have a good year. It is vital that they are given fair play. People who live in that part of the world need to have a chance of making a decent living and a chance to ensure that farming can provide for themselves and their communities into the future. At present that does not happen and that is something that needs to be looked at and resolved. Looking at agriculture into the future, we need to find a way of ensuring that the family farm can be sustainable. If it is to be sustainable these tax measures will have to be part of that. I implore the Minister to support the amendment.

I live on a farm in rural Ireland. People come to this Chamber and say that rural Ireland is dead. That is not correct. There are challenges within rural Ireland, of course there are. However, some areas in rural Ireland are flying. Some areas are not, but to come in and state blankly that rural Ireland is dead is wrong.

I am conscious of the prevalence of farm income volatility in the agriculture sector. I am a dairy farmer myself. I do not know if there are many dairy farmers in the Dáil any more. There are a number of other Members from a farming background. The dairy sector is the area with the highest price volatility. At the lowest point in 2016 the price of milk was 19 cent a litre. It currently 41 cent per litre for farmers who are providing winter milk on contract price. The volatility in the same product is reflected in this way in the difference between summer supply and winter supply. It is huge and I know more about it than most.

In response to this volatility, a targeted relief is already available to farmers under the income averaging regime. It allows farmers to pay tax based on the average of the aggregate profits and losses of the farming trade over a five-year period. In acknowledgement of income volatility in the sector, my Department has introduced further flexibility to the income averaging regime in recent budgets. In the Finance Act 2014, the availability of income averaging was extended to allow farmers in receipt of income from an on-farm diversification trade or profession to opt into the averaging regime. The period of income averaging was also extended from three to five years, thereby providing a longer period over which income volatility can be smoothed out. In the Finance Act 2016, an optional step-out from the regime was introduced to allow for farmers to temporarily opt-out from the scheme in a year when they experience lower than expected incomes. The aim of this was to ease associated financial pressures and improve cash flow for farmers in a particularly difficult year, which 2016 was.

As referred to during discussions on this matter on Committee Stage, I have committed to undertaking a review of agricultural tax incentives more generally, in co-operation with my colleague the Minister for Agriculture, Food and Marine, Deputy Creed. This will involve an examination of existing schemes, with a particular focus on income volatility and income stabilisation measures, as well as engagement with relevant stakeholders in advance of budget 2019.

We are going to do what the amendment seeks. The aim of the review will be to update the findings from the 2014 agri-tax review to ensure that the schemes are operating in an efficient and effective manner and meeting their policy objectives in this area. Everybody I know in the agricultural sector believes that was a very successful review for the sector. Therefore, on the basis that there is already a targeted tax measure available to full-time farmers under the income averaging regime and given a commitment by the Minister for Finance to undertake an update of the agri-tax review with a particular focus on income stabilisation, I do not propose to accept this amendment.

I acknowledge the Minister of State's bona fides on the issue and his in-depth understanding of it as a farmer. I also acknowledge the progress that has been made on income averaging and the optional step-out year, which has made a difference. The review he is pledging now should have taken place by now as 2016 was a particularly bad year. Volatility affects the farming community far more than any other. Many businesses come to us and tell us they have ups and downs, as they do, but the Minister quoted the price of a litre of milk at its low point at 19 cent, with its high point having been 41 cent.

It is about managing cash flow. I understand the reluctance on the part of the system, including Revenue which understandably takes a pretty conventional view of taxation obligations, but the reality for farmers is serious. I include incorporated farmers and we made particular reference to corporation tax because a significant number of farms are now incorporated.

I welcome the pledged review. Can the Minister give any more information as to when he expects it to be completed? Can he give a commitment that it will be published in advance of the next budget? He said it will have a particular focus on income stabilisation and measures to address income volatility. We will hold him to that commitment and the report should set out options as to how, in the next Finance Bill, this issue can be addressed.

I echo and support what Deputy Michael McGrath has said. The commitment to a review is welcome but it should have taken place last year and it is overdue. Unfortunately, this budget has now passed and the opportunity to bring about real action has been missed by the Government. There is an air of complacency over the suite of measures which is in place at the moment. I accept that the Minister of State understands the sector exceptionally well, but his tone suggests he believes the measures are sufficient. They are not sufficient and we need additional measures. It is crucial we explore the options and have a clear timeline for when the report will be completed, as well as a clear commitment to real engagement so that we expand the options available to farmers to deal with income volatility in time for the next budget.

There is a danger, as Deputy Cahill said, that 2018 will be a more difficult year, income-wise, than 2017. Had there been some movement in the budget the options to farmers could have been widened but it is never too late to do the right thing. I urge the Minister to expedite these measures.

I did not hear anybody talk about whether rural Ireland was good or bad. We were talking about a suite of measures to deal with volatility and to keep farmers going. The current suite of measures is not good enough for what we need and are facing. The Minister of State knows the dairy sector, but it is like the crest of a wave. With the forces coming, in the beef sector or dairy, we have to make sure we are adequately armed and what Deputy McGrath proposes is common sense. We need a proper suite of measures.

I welcome the Minister's commitment to a review in this area. As one of the few surviving dairy farmers here, I understand the volatility issue. I can go back further than the Minister. In 1998, the price of a litre of milk was the equivalent of 28 cent. The problem is that costs have increased by 50% in the intervening 20 years. We must remember that a number of instruments have been introduced by the co-ops, such as forward selling and set contract prices, where a supplier sets a price for a certain period and which are very important. Last year, a €150 million low-interest loan was introduced, which was very welcome and well accepted by farmers. A similar scheme is due to be announced in a number of months, which will also be very helpful in dealing with volatility.

Volatility does not just apply to the dairy sector but applies across the farming sector. Deputies McConalogue and Martin Kenny spoke about the tillage sector, which we were dealing with in committee today and where there are huge differential problems as farmers in the sector depend on the basic payment to make up their income. That issue also has to be taken on board.

When the new loan scheme is introduced early next year, a certain amount must be ring-fenced for sector-specific funding, whether it be for tillage, horticulture or dairy. In general, I welcome the Minister's commitment to introduce a review based on the principles drawn up in 2014.

The confidence supply seems to be very confident. Maybe my Fianna Fáil colleagues are over-confident that the Government is going to do what it says on the tin. Why do we need a review or report? Why has it not been done already? Is the permanent government totally in charge that it would not let it do it? The sooner that changes the better. The Minister can be ag gáire if he likes, but that is the fact. The real Ministers are the lads behind him and beside him and out here on the corridor, there is hardly room for them, they barely fit. The Minister will have to get a new pen to put them in, maybe near the Visitors Gallery. The permanent government is running the show. Do we need another report? I am glad that Deputy Deering said that he is a dairy farmer himself. Everyone knows it and one does not need to be in farming to be aware that it is across the sector, whether it is dairy, grain, potatoes, pigs, any sector, and that is without mentioning Brexit and its repercussions.

Now there is to be a report and a review to fill up some other building's shelves with reports, and more consultants to be hired in to do it. It is farcical. We do the business or we do not. We look after our farmers or we do not. Do not pay lip service to them and say live horse and get grass. Dúirt bean liom go ndúirt bean léi go raibh fear i dTiobraid Árainn a bhfuil póca ina léine aige. I do not know if the Minister understands that. There was a saying 40 or 50 years ago, "A woman told me that a woman told her that there is a man in Tipperary with a pocket in his shirt". This is the type of tomfoolery that is going on. Get on and do it and let the farmers who want to work put their shoulders to the wheel and do it and have a buoyant economy. No more reports.

The compliments are flowing across to the Minister of State on everything he knows about farming. Fair dues to him, I would not take that away from him, but if he insisted and anyone in the Fine Gael party would insist that it happen, they should bring the Dublin Jackeens down to see what is going on with the farmers. There was horticulture damage in Tipperary recently and also in east Cork and the Minister of State would not even visit. He told them they could find some other grant scheme. Live horse and get grass is the adage here, it seems to be the new buzzword. Put it off. There are missing emails, people did not read the emails and a merry-go-round takes place. Then there's Leo's spin team with its €5 million. No bother.

The income averaging is not available to any other sector. It is a hugely beneficial opportunity for the agriculture sector. It is not to be discounted and people should not ignore it. That came following the 2014 review. We are doing another review, and it will be a good one, so that we can have targeted measures for the areas that need the most. If that is income volatility, it will come out in the wash with the analysis led by the Department of Finance in conjunction with the Department of Agriculture and the stakeholders. That is the right thing to do. Whatever funding we have and whatever resources we put towards the farming sector, which I know better than most and I would say I know no less than anyone involved in the sector, we want to prioritise the areas that need them most in order to keep a vibrant agricultural sector and rural sector. We are doing what the Deputy is asking but we will undertake a bigger review. I hope and anticipate that we can make sure that the areas that might need it most are targeted. The only way to do that is based on analysis and focusing funding where it is required. That is what we will do.

I respect what the Minister of State says and the commitment that he has given that it will be an important feature of the agritax review. He did not say when it would be completed but I assume that it will be in advance of the budget.

It will be similar to the commitments on the other reports.

It will be published in advance. There will be a full opportunity for the relevant Oireachtas committees to examine then. On that basis I will withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment No. 32 was discussed with amendment No. 30. Does Deputy Boyd Barrett wish to press the amendment?

I move amendment No. 32:

In page 30, after line 40, to insert the following:

“19. The Minister shall within 6 months of the passing of this Act, prepare and lay before the Dáil a report on the impact of Irish Real Estate Funds and Real Estate Investment Trusts on the Irish Property and Housing sector and the effective tax rates on the profits paid by these entities and their shareholders.”.

Amendment put and declared lost.

Amendment No. 33 is in the name of Deputy Burton. There is no one here to deal with it.

Amendment No. 33 not moved.

I move amendment No. 34:

In page 30, after line 40, to insert the following:

"19. (1) The Minister shall within 6 months of the passing of this Act, bring a report on the potential to raise additional Corporation Tax revenue by closing down loopholes, examining the extent, legitimacy and abuse of all corporate tax expenditures, exemptions, allowances and deductions, such as losses forward, R&D tax credits, the Knowledge Development Box, Intra-group Transactions, allowances on Intangible Assets and establishing a minimum effective tax rate of 12.5 per cent on gross trading profits and incomes.

(2) The Minister shall, within 6 months of the passing of this Act, bring a specific report and comparative study on the relative social and economic benefit of Research and Development Tax Credit expenditures, benefitting private corporations as against the investment of the equivalent funds into Research and Development in public universities.".

As we approach midnight it is appropriate that we would discuss the dark side of the Irish tax code, where the wealthiest corporations and the individuals who own them succeed in sucking vast profits using our tax system out of the view of the public and out of the hands of the tax man to enrich themselves to extraordinary levels. Sadly, most of this stays in the dark because the Government and the main opposition party, which acted similarly when it was in Government, have colluded to cover up the extent to which our tax code ensures that some of the most extraordinarily profitable corporations in the world have dodged tax and used Ireland as a base from which to do so.

This amendment seeks to require the Government to produce a report which will go through all the tax loopholes, the black holes in the tax code, forensically. These suck out tens of billions in terms of profits made by these corporations out of taxable income through the mechanisms of allowances, deductions and reliefs. These are tax loopholes which I believe were designed deliberately in order to facilitate tax avoidance by these corporations. These are a select group. The European Union found Ireland guilty of state aid but I have no doubt that it was not only in respect of Apple. It was the company which was exposed but more cases will follow. A select group of corporations benefitted from this. They were corporations which had the ear of Ministers for Finance, the Department of the Taoiseach through bodies such as the IFSC Clearing House Group and so on, who more or less wrote Finance Bills in the area of corporate tax, in order to benefit themselves. These are loopholes which, for the most part, do not benefit small and medium enterprise in this country, which do genuinely pay the 12.5% corporate tax rate. These huge spectacularly profitable corporations get away with murder because of the tax loopholes.

Seamus Coffey's report is an eye opener on this. I refer particularly to page 120 where he details the extraordinary growth in loopholes. He says figures published by the Revenue Commissioners allow us to get a better insight into the allowances and deductions used to off-set against gross trading profits to arrive at taxable income for the years since 2011. He says that these allowances and deductions have increased from €18.9 billion in 2003 to €97 billion in 2015. That is extraordinary. Most of the jump from €18.9 billion to €97 billion has happened in recent years.

Of a whole array of tax breaks, the one most recently exposed is that relating to intangible assets. We have another amendment which deals specifically with that. This tax break benefits big IT corporations such as Apple and Facebook, which, faced with the prospect of the double Irish tax scam being closed down, moved to exploit another tax loophole in respect of tax allowances for the purchase and use of intangible assets. Coincidentally, at exactly the time they were forced, due to popular and political pressure, to move away from the double Irish tax structure, lo and behold another loophole opened up in the form of the intangible assets cap being moved from 80% to 100%. As a result, all of the purchases of intangible assets from one arm of a corporation to another become tax free. There is then an absolutely extraordinary jump from just more than €2.5 billion in allowances in this particular area in 2014 to, I think, €28 billion in one year. This benefits the likes of Apple, Facebook and Google, which move their intellectual property assets around to exploit loopholes that were conveniently opened up for them by the former Minister for Finance, Deputy Michael Noonan.

There are plenty of others as well. The research and development tax credit jumped considerably between 2014 and 2015. Intra-group transactions jumped from €2.9 billion to €9.1 billion in one year. Massive loopholes are opening up all of a sudden to the benefit of these corporations and this is against a background where profits are absolutely going through the roof. They reached the extraordinary level of €149 billion in gross trading profits in 2015, which is double what they were earning only five or six years previously. However, because of these €90 billion worth of allowances, the actual taxable income is reduced to pitifully low levels so that they can avoid billions in tax. These loopholes, and many more I have not had time to mention, need to be investigated. They need to be exposed and closed down. The public needs to know how much money we could have for health, housing and education if they were closed down.

The Deputy's time is up. I call Deputy Paul Murphy.

Some important work has been done recently and more will be done. The role of this country, stood over by this and previous Governments, as an important link in a chain of tax avoidance around the world by global corporations, which are robbing from public services in Ireland and, in particular, developing countries to the tune of $100 billion a year, will be exposed more and more. The Government will be badly exposed not only for not doing anything about this but also for having consciously facilitated it.

Last week, Christian Aid made available a couple of good papers that highlight the reality of this in terms of tax avoidance. The papers in question make matters real by, for example, comparing the tax revenue lost by so-called developing countries with the overseas aid they get from this country. Christian Aid concluded that the cost of the tax Zambia lost was 40% of the overseas aid they gained from this country. Further, according to Christian Aid, South Africa potentially lost out on withholding tax revenue of over three times the value of the Irish aid it received in 2015 thanks to the Ireland-South Africa tax treaty.

Another aspect of this matter has become very clear. The Minister has referred to the so-called "single malt" as a new loophole that has been discovered. Of course, it is not new. The single malt existed from the moment the corporations discovered that the double Irish was going to be phased out over a period. Big corporations such as Microsoft and LinkedIn immediately began to put in place processes to take advantage of the different tax treaties Ireland has with other countries - Malta is one, but it is not the only example - to continue to avoid paying all corporation tax. The Government knew about it. There is no way the Government did not know. There is no way that this is new. Eight days after the budget speech in which the former Minister for Finance, Deputy Noonan, under pressure as a result what was happening in terms of Apple's tax at that stage, spoke about closing the door on the double Irish, there were already discussions about the use of the single malt.

A very good example of how this operates in order that big corporations can effectively avoid paying any tax is given in one of the Christian Aid papers to which I refer. That example relates to LinkedIn and the myriad different corporations that exist as part of the wider LinkedIn family and their different tax residencies. This is reminiscent of the Apple operation and all various aspects of Apple International that managed, through the double Irish, to avoid paying any tax and, presumably, that continue to do so. The paper states:

LinkedIn Ireland is tax resident in Ireland, and thus subject to Ireland's 12.5% tax rate. However, its available accounts from 2010 and 2011 show that it made a substantial operating loss in these years, thus being liable for no Irish tax ... One of the reasons for the reduction of its profits is the fact that LinkedIn Ireland pays 25% of its turnover as a royalty fee to a second Irish-registered company, LinkedIn Technology Ltd, for the use of LinkedIn proprietary intellectual property. In turn, LinkedIn Corporation in Delaware USA [which is obviously a tax haven within the US], the ultimate holding company of the group, licenses the use of this IP to LinkedIn Technology Ltd. LinkedIn Technology Ltd is registered in Ireland but is tax resident in the Isle of Man, which levies no corporation tax on corporate profits ... LinkedIn's non-US revenue was already [$168 million] of which a quarter ... was placed as royalties in the Isle of Man. By 2016, its non-US revenue had ballooned nearly seven-fold to over [$1 billion].

This resulted in total tax savings of perhaps $100 million between 2010 and 2015. Different corporations set up transfer pricing and profit-shifting between them to take advantage of Ireland's tax treaties and ended up paying no tax. The Irish Government knew about this. The double Irish is still in place for those corporations that were able to avail of it. They are able to continue to avail of it and, in effect, the Government is doing nothing about it.

There is an interesting observation in the Christian Aid papers regarding the so-called BEPS process. The Government likes to go on about this. It covers itself by saying that people should forget about the EU and all of that because it will deal with the issue through the OECD BEPS process. The Government tells us that it thinks the BEPS process is the best. Interestingly, however, Christian Aid highlights that Article 12 of the new OECD multilateral instruments arising precisely from that OECD BEPS process seeks to alter parties' tax treaties to widen the "permanent establishment" definition to prevent sales being arranged in one country but income being booked in another country. Ireland signed that instrument on 7 June 2017. The former Minister for Finance, Deputy Noonan, announced that the new instrument means:

If you make the widgets in Dublin, the tax liability on the profits from the widgets is an Irish tax liability ... It will be illegal to transfer tax liability to other jurisdictions to avoid taxes.

In reality, however, the Government, when it signed the multilateral instrument, opted out of Article 12. It opted out of a key part of the instrument in order to avoid actually cracking down on some of this tax avoidance. This proves a point. The BEPS process and going on about the OECD is simply a cover for the Government to continue to operate in a way that Ireland is the sixth worst tax haven in the world. The answers to deal with these are clear. All double-taxation agreements need to have anti-tax avoidance measures as part of them. The transfer pricing regime, which incredibly is currently only one way, only applies if Ireland-----

I thank the Deputy. His time is up

There are extra things hyped up here as opposed to the other way around. They have to be made two-way. We need public country-by-country reporting so we can see what corporations are paying tax where.

One is not being unpatriotic if one raises issues regarding how this State of ours is allowing multinational corporations to use it as their next tax loophole. One is not being unpatriotic when pointing out, time and again, that the State is facilitating tax avoidance. Perhaps the Minister has reasons to do that; I am sure he does. My point is not just about what the two Deputies have talked about in respect of their amendment, about which there is nothing to fear. The thinking I am referring to is littered throughout the Finance Bill. The Minister will offer various justifications for this. I am sure the Government side will vote down the amendment on the banks and the banks will continue to fail to pay tax. We will consider issues concerning non-bank lending and section 110 provisions. Again, there will be a shutdown in this regard. We referred to the REITs paying tax at an effective rate of only 3%. There are funds that pay no capital gains tax. There was the tax advantage that was introduced and that the Minister has just closed down, but it is to be allowed to continue for another year. All of these mechanisms provide considerable opportunities for those in charge of international capital to exploit the tax system. The Minister is handing them opportunities on a plate. This results in commentary such as that of the Comptroller and Auditor General, who talked last month about 13 of the top 100 companies in the State paying tax at an effective rate of less than 1%. This was not said by a member of Sinn Féin or Solidarity-People Before Profit; it was said by the Comptroller and Auditor General.

In earlier contributions, we heard a lot about millions and billions of euros. I do not know how many of these points have been absorbed at 11.30 p.m. We know from the Paradise Papers, however, that this island is in the middle of an international tax avoidance storm or scam. We had the Panama Papers before them. There was a response to those but it was nowhere near enough in regard to dealing with this issue.

I am open to correction but I have serious suspicions that when the tax residency issue concerning stateless companies was dealt with by the Government as a result of serious international pressure and pressure from my party it - and the Administration that preceded it, whose Minister for Finance was Deputy Noonan - deliberately, on foot of lobbying by multinational companies and tax advisers, including the American Chamber of Commerce Ireland, increased the rate. The Government knew there would be onshoring of IP because that is what was stated in black and white in the submissions made to it. Those concerned sought certainty in respect of how intangible assets would be dealt with. The Government increased the rate to 100%. I simply refuse to believe that this was not some type of cosy deal with Apple in mind. The Commission will consider this case, as it has the other.

I asked the Taoiseach yesterday about this case but he did not answer. It is my understanding that the Apple case will be heard in 2018. I would like the Minister to confirm whether it will be heard by the European courts in 2018. Have they notified the Department about this? It is also my view that Apple will not be the only company involved. Google will be involved. We will wait to see how the Amazon appeal bears out in terms of Luxembourg but I have no doubt that Google is in the cross-hairs. Pepsi and Pfizer will also come into scope. We can shake our heads at the Commission and say it is infringing on sovereignty but that is nonsense because we know that state aid approval is associated with tax measures. In this regard, the Minister mentioned earlier the taxation for the gyms and crèches in terms of state aid approval. Tax is a state aid issue in certain regards. We are allowing this to happen.

A vote was nearly lost in the German Parliament because almost 300 MPs there believe we are operating some type of tax avoidance scam or tax haven. Therefore, it is time to clean up our act and have these issues dealt with. The single malt is not something that just appeared out of thin air. We have been raising this for a considerable period. Mr. Matt Carthy, one of my party's MEPs, has been raising this in the European Parliament. He put it directly to the Minister for Finance when there was a claim that the double Irish was closed down. The double Irish was closed down but there is a tail period. Even in that scenario, one can still operate the same type of system because of jurisdictions with no double tax treaties. Malta is one but it is not the only one. There are many of those types of cases so we need to tackle tax evasion aggressively.

Yesterday, we heard - I am not sure if it was from the Minister - that more attention would be paid to the issue of the single malt and that the only problem is that it is out of our control. It is the exact same script that we heard about the double Irish. It is the exact same script we heard in respect of stateless companies. Of course, they play off the tax systems in two jurisdictions but any jurisdiction can change its tax system and close a loophole. We need to be careful that we are not deliberately or unintentionally opening another loophole. As I stated, there is nothing unpatriotic or anti-jobs about closing down tax loopholes or producing a report on this.

I do not support the views of the two Deputies on raising corporation tax because I believe they are missing the point. However, this amendment gets to the point. It is not about the 12.5% rate. If some of the companies in question were paying at a rate of 12.5%, we would be building schools, hospitals and houses for our citizens. The country would be awash with money. The companies are not paying at a rate of 12.5%; they are not even paying near that. As the Comptroller and Auditor General said, some are paying less than 1%. Thirteen of the top 100 companies are in this category.

This is a sensible amendment. It gets to the real nugget of what is done. We need a Government to stand up and say we are taking it no more. The international view will change also. As was said before, some companies are considering green energy that is environmentally friendly. The mood is changing and we need to be a leader so we will no longer pimp out our country to the next multinational that wants to exploit it for tax reasons.

Pimp out our country: is that the best the Deputy has to offer? I am proud of the efforts of successive Governments to attract investment into our country. If the best that the Deputy can offer in a serious debate is to describe this as "pimping out our country" and if the only reference he can make to jobs is the phrase "anti-jobs", he is doing a grave disservice to the role of international investment in creating jobs in our country and sustaining communities. The only reference I heard in the contributions by the Deputies on the role of these companies in creating jobs was when Deputy Pearse Doherty used the phrase "anti-jobs". Deputy Boyd Barrett and Deputy Paul Murphy did not make a single reference to employment or the fact that the corporations to which they refer are employers in our country. Those same companies play and have played a valuable role in creating the tax revenue that has allowed for the funding and improvement of public services. They have played a valuable role in creating jobs in our country. If the best Deputy Doherty can offer is to describe this as "pimping out our country", he does not recognise the value of many of the good jobs that have been created by the companies in question.

Reference was made to a number of contributions. I do not believe it is unpatriotic to have a debate; I have never suggested that. It is important that we have an open debate on any element of public policy.

I would never question the motive of any Deputy in doing that, but I will challenge his or her language, as is done to me, and I will challenge the intent, as is done to me every time I make a point on why I support Government policy.

Let us look at the report of the Revenue Commissioners and what Deputies have said in response to it. The report did make the point that 13 of the top 100 companies pay an effective rate of tax of just 1%. There are explanations for that and on the engagement between the earnings of those companies, how they pay tax abroad and the role of exemptions that are available in the tax code for economic activity. However, what none of the Deputies mentioned when referring to the report is that 79 companies paid an effective rate of tax of 10% or more and almost two thirds paid rates in excess of 12%. Reports published by the Revenue Commissioners have pointed to the fact that our effective tax rate moved to between 9.7% and 9.8% and for 2012 and 2013 the effective tax rate was 10.1%. They are the other things in that report that were not mentioned by any Deputy quoting from the report.

The other thing that was not mentioned by any Deputy who made reference to corporation tax and what is happening with the trends is the fact that corporate tax receipts have grown and that was listed in various reports, including the Coffey report, which was commissioned and published by my Department. The Coffey report makes very clear that since 2000, corporation tax receipts have moved from €3.9 billion to €7.35 billion. In all of the commentary on corporation tax so far in the debate no account has been taken of the role played by the companies that pay those taxes in creating very important jobs within the economy or the fact that corporation tax receipts in recent years have increased, so we are raising more taxes from companies that are subject to corporation tax. Neither did the commentary take account in any way of the fact that the companies that have been referred to here by name by some but not all Deputies employ people in this country and the general sector overall is a critical employer within the country.

A specific question was asked about Article 12. From the way that was referenced by Deputies one would think Ireland was the only country that is not in it. I will explain why we are not part of that provision at the moment. Not only are we not part of it but countries such as Denmark and Germany are not part of it either. One of the reasons for that is because work is still under way at OECD level to determine what profits, if any, would be attributable to a new permanent establishment created under this test. As we have to play a role then in providing clarity to companies so their tax liabilities can be generated here in Ireland, once we are clear how this will be calculated I believe that we will be happy to include this test in our tax treaties but that is the reason that article has not been triggered.

As to the allegations that have been made that this or any Government was involved in deals with any particular company, I repeat again that this and any other Government that has preceded it did not make agreements on tax policy for any individual company. We tax for the economy in its entirety or sectors of the economy. That law is then applied impartially by the Revenue Commissioners. While some Deputies have either doubted the intention behind it or the impact of moves that have been made to dealing with stateless companies and winding up the double Irish agreement, all of those decisions were taken because we want to be in a place where we have a tax code that is a source of competitive advantage and we do so in a way that meets the growing international consensus regarding how these matters will be dealt with, and I will do that. However, of course if any job is lost or if any employer were to change the investment it has in this country because of any change that was made, some of the Deputies who are in here tonight criticising what is happening would also be the ones criticising job losses.

I said that it is not anti-jobs to raise issues regarding corporation tax and the first thing the Minister did was to accuse us of being anti-jobs. That is the problem. That is the kind of thing that says, in effect, that we should keep quiet and not raise issues.

The vast majority of companies in this State, including multinational companies, pay their fair share of tax in terms of the 12.5% rate, but the issues on which I focused relate to companies that do not pay, who pay as little as 1% or 0%, or as little as €250, as we discussed in the finance committee in terms of section 110 companies. That is the problem and that is why I say to the Minister that when he deliberately puts that into the tax code what he is doing is pimping out this country to those companies and allowing them to use and abuse our tax code and pay little or no tax. The Minister might stand for that but I will not. I believe that is completely and utterly wrong. I do have my suspicions on intangible assets and what the Government has done.

In terms of the great work the previous Government did on stateless companies and the double Irish, the Minister should pull the other one. We had to drag the Government kicking and screaming into the light regarding that. The point I am making, and this is an issue relating to jobs, is that companies are starting to wake up internationally to this and they do not like to invest in a country that has a cloud hanging over it or where there is a smell about some type of tax avoidance scam going on and the Government is facilitating it. We have got ourselves in hot water. By "we" I mean the Government, because of Apple and state aid issues. I believe it is not over at that and that we got ourselves in more hot water because we did not collect the money for the escrow account. What is patriotic and what will defend jobs in the future and put us on a solid footing is for us to deal with a minority of issues but ones that have a big effect. Let us clean up our back yard and stop pretending that everything is okay just like the Minister's predecessor did when I put it up to him about stateless companies, section 110 companies and the double Irish. On all three occasions the Minister had to come into the light but it was done after being kicked and dragged there.

I am not sure whether the Minister has heard of the term "the finance curse", which comes after "the resource curse", which describes the apparent paradox of countries with valuable natural resources. Rather than thriving they crumbled and often had something significantly less than democracy, which became known as "the paradox of plenty". The finance curse was coined by Nicholas Shaxson who wrote Treasure Islands, a book about tax havens where Ireland features quite prominently. It is described in an article in The Atlantic:

When the "finance curse" strikes a country, there is a recurrent pattern: While its democracy, economy, and culture remain formally intact, they are increasingly oriented to and co-opted by international elites. In other words, such countries gradually become organized around the interests of people who don't even live there, to the detriment of those who do. The services produced by these countries protect cosmopolitans’ wealth, but the riches never flow to the local producers, undermining their capacity for self-governance and social cohesion, as well as the development of infrastructure and institutions.

That is a pretty good description of what is happening in this country and it is a pretty good description of the kind of policy capture that has gone on in terms of enshrining the interests of those corporations. When one looks at companies such as Apple, the companies themselves that are avoiding the tax did not employ anybody in terms of what we thought was going on. There is a separation between the actual value-producing activity and the tax avoidance that is going on with the elevation of those corporations on an absolute pedestal.

Yet, we elevate these corporations on a pedestal. The scale of the money we are talking about is immense, and includes the €13 billion from Apple. If we doubled corporation tax revenue in this country, we would raise in excess of €6 billion. That would transform people's lives. It is a choice of the Irish Government to hold to our current industrial policy. It has chosen to continue being a corporate tax haven. That is a choice that goes absolutely nowhere because the clock is ticking on it.

Let us be absolutely clear: we want jobs, if there are decent well-paid jobs, from wherever they might come. However, those companies making astronomical profits should pay a fair share in taxes. The Minister has yet again quoted figures to do with effective rates and so on. I will put some figures to the Minister. In 2015 the figure for gross trading profits plus other income equalled €161 billion. The tax paid in that period was €6.2 billion. That is an effective rate of less than 4%. In fact, it is approximately 3.9%. That is not 12.5; it is 3.9%. If the Government charged 12.5% on that, it would get €20 billion. That is what is at stake.

We were more modest than that in our pre-budget submission. We simply said that we should close the loopholes to the extent that we would double corporate tax revenue for the Exchequer. That would only bring the minimum effective rate up to 8%. That is modest. The Government could do that even if it had no wish to go as far as we might want to go in terms of taxing these corporations. Why would the Government not do that when everyone knows that these companies are avoiding tax? Why would the Government not close the loopholes to ensure that these companies pay more? All the evidence points to the fact that we facilitate these companies with loopholes.

It is appropriate that we debate, scrutinise, critique and question our corporation tax code in all its respects. However, we also need some balance in the debate. It should be acknowledged that Ireland has been to the fore in terms of the OECD BEPS process and the reforms at an international level that are being introduced. Undoubtedly, there is a journey to travel; there is no question about that. However it should be acknowledged that several of the items referenced in amendment No. 34, which proposes to introduce these items in a report, are described as tax loopholes. In fact, they are legitimate tax deductions. They are based on our corporation tax code, which is in statute.

We have a broad base in respect of the calculation of taxable profits. We have limited deductions in Ireland. We heard that evidence when we examined the common consolidated corporate tax base proposals. Other countries have higher headline rates but lower effective rates because they have a far more expensive way of reducing their taxable profits.

We should acknowledge that we have no God-given right to inward investment in this country. We have no God-given right to be boxing far above our weight in terms of jobs, investment and so on. Let us make no mistake about it: what is at play here as well is a desire by other countries to win over the investment, jobs and tax receipts that Ireland is getting.

The flagship reform in corporation tax that is proposed by the European Commission is the CCCTB. The Commission is proposing that the distribution of where taxable profits are taxed and where corporation tax is based would be on the basis of where the assets are, where the jobs are and where the sales are. How would Ireland fare in that context? It would not fare well at all and we would not be long in seeing our corporation tax receipts, which amount to approximately 15% of all tax income in the State, getting a fair whack rather quickly.

We need to have certainty. I do not support amendment No. 34. I believe it would introduce great uncertainty. I believe it conflates several issues by describing legitimate tax deductions, in some cases, as tax loopholes. If we were to announce a great review of our corporation tax code, including all of these individual items, it would introduce uncertainty.

I liaise with representatives of multinationals on a regular basis. Their contribution to the Irish economy is considerable, with 200,000 direct jobs provided by foreign-owned companies in this country. Many more jobs arise from indirect employment as well in support services, suppliers and so on. There is no problem in critiquing or going through our corporation tax code and playing our part in the reforms - I fully support that. However, we should not seek to open up an entire rewriting of the corporation tax code. It has been an important element in Ireland doing so well with inward investment.

In the whole debate we need to be mindful that we are an island. We are on the playing field with countries like France. We hear people from such places shouting one thing out of their mouths on a given day to the effect that they want harmonisation, but they are the same people who actually give lower tax rates to certain entities. Ireland has to fight for business because we are on the periphery of Europe.

Whatever is good for the goose is good for the gander, whether an Irish company or a multinational. We should ensure that we treat both types the same because we have to look after Irish companies as well.

Multinational companies are important to this country; there is no doubt about that. We must ensure that we bring jobs in. We need to ensure that the striving by Europe to get rid of our 12.5% rate is not touched. Ultimately, that is the most important point of all. We need to ensure we protect that. Whatever the big guns say abroad in Europe, we should not take it on board or listen to them. There should be a fair rate for everyone in the country in the line of corporation tax - I agree with that. Every business should be treated the same, whether a small business in the west, south or north. Such businesses should have the same tax incentives as anyone else.

Ireland has to go out and fight for business. We are against some of the countries in the middle of Europe. We are punching above our weight, in fairness. We need to keep punching above our weight.

I will conclude briefly. I never said that any Opposition Deputy was anti-jobs. I simply said that Deputy Boyd Barrett and Deputy Murphy never mentioned them. I simply made the point that Deputy Doherty gave jobs a passing reference. That is what I said.

I do not base my arguments on appeals to patriotism. I believe we should be able to openly critique and debate policy. However, we should also acknowledge the fact that, as Deputy Fitzmaurice and Deputy McGrath highlighted, there are jobs in our country that many other countries throughout the world want in their countries. We need to ensure that we are competitive while making the right to changes in our tax code. The idea, as Deputy Murphy appeared to suggest, that if we doubled our tax rate, we would-----

I was referring to revenue.

He suggested we could double our revenue by doubling the rate.

He suggested we could do it by closing the loopholes.

The idea that we would be able to make significant changes in the tax code, as has been suggested by Deputy Murphy and Deputy Boyd Barrett, but not create opportunities that would be used by others to affect the share of jobs and investment in our country does not reflect the kind of world that Ireland is competing in.

When we discuss the amendment on intangible assets tomorrow, we will discuss the specifics of one particular loophole. I suggest the Minister read Mr. Seamus Coffey's papers on this issue. He points out, for example, that following their introduction, the other changes in the area of intangible assets provided for in successive budgets from 2009 onwards applied to all claims made under the relevant allowance. This is the first time this has not happened, as the Minister stated the change will only apply in future. Mr. Coffey stated explicitly in his paper that the Minister did not have to make that choice and if he had not made done so and instead applied the 80% rate to all claims made under this measure, it would have generated an additional €1 billion in tax revenue in 2018. That point was not made by us but by Mr. Seamus Coffey in a paper and I will quote the relevant passage tomorrow.

Debate adjourned.