Financial Resolution No. 4: General (Resumed)

Debate resumed on the following motion:
THAT it is expedient to amend the law relating to inland revenue (including value-added tax and excise) and to make further provision in connection with finance.
- (Minister for Finance).

Given the way this debate has been organised, there is an extent to which it feels like eating one's Christmas dinner at the end of January. I have no alternative but to eat this Christmas dinner at this time because unfortunately the budget debate was not continued when it should have been, namely, when it was fresh in everyone's mind. I admire the versatility of the Minister of State, Deputy Phelan, tonight. He was here earlier to deal with social welfare matters and he is here now on the budget. I hope he wields as much power in government as it appears he does tonight.

When the current Dáil was formed, there was a great deal of talk about fundamental reform and how we do our business. It is amazing, but old habits die hard and the budget day charade goes on. There was a time when budget day was a very exciting day here. A big parcel of surprises was unwrapped for the electorate, some of which were good and some of which were bad. The place used to be thronging with people, but the people are always ahead of us. On budget day, we were warned about only getting two tickets each and about the overflow space in the coffee dock. However, nobody turned up. The people have realised that the show we put on for budget day is a bit of a charade. On the other hand, we have not gone where I would like us to go. I would like us to go to a truly iterative process. It is an iterative process in the Cabinet where things go over and back, one looks at scenarios, rejects things and takes things on and I would like that to happen in committees of the Dáil too. While we have set up a budget committee, it is like a lot of committees here and is not iterative. These committees do not propose various scenarios and then tease them out. They listen to all sorts of groups who come in, take down what is said and publish a report. That is not a real debate in the way a debate should take place between politicians.

I spoke earlier about fundamental changes in welfare and I want to speak now about fundamental change in something which a lot of people talk about but in respect of which very little action is ever taken. That is fundamental change in respect of climate change, carbon taxes and all of that. Climate change and carbon taxes are normally approached in a very anti-rural way. The idea is that if people are living in rural Ireland, the cost of diesel will be put up until it is sky high to force them to live in towns. If one is raising beef cattle, one will be forced to go into tillage, even if one's land consists of rock and bog. That is not the way to deal with an issue. There are always positive, win-win approaches to issues but we never think. In particular, environmentalists seem hell-bent on the idea that there must be a great deal of pain in everything they propose rather than a lot of gain with little pain. As a rural Deputy, the Minister of State, Deputy Doyle, will know about something I have been harping on about for a long time. I accept that public transport has a major role to play.

I accept that, particularly if environmentally-friendly vehicles are used, public transport can be more environmentally friendly than private motor cars, especially those with an internal combustion engine. It is also an efficient way of transporting people. Although we tend not to debate it, we spent €60 million on buses for Dublin and €40 million on buses to serve the 3 million people who live outside the capital. One would think it would be very expensive to provide buses but if one adds in rural buses such as Rural Link, the total cost might be €50 million. That is a ratio of at least 3:1 in terms of per capita spending in favour of the urban area around Dublin which has a population of approximately 1.1 million. If one were unaware of the figures, one would intuitively think it was the other way around and that far more would be spent per head of population in rural areas. If the Minister, Deputy Ross, decided to invest in public transport in order to make it practical for all, he could begin in a county such as that of the Leas-Cheann Comhairle. Letterkenny is by far the biggest centre of population in County Donegal. Many people living in a 35 mile radius of the town work, go to hospital or attend the third level institution there. In the south of the county many people travel to Sligo for similar reasons. I would bet that there are very poor morning and evening commuter services between Letterkenny and places such as Dungloe and Gweedore. If it is anything like the situation in Connemara, the last bus to Dungloe or Gweedore probably leaves Letterkenny at 6 p.m. If one is a student in a third level college, one does not want to go home at 6 p.m.. The student's parents are forced to drive in and out like yo-yos. In planning for the budget, we must be clear that we must tackle this problem and that there are certain positive ways we can direct the money which would improve the lifestyles of many people and also achieve another target, namely, the reduction of our carbon footprint.

I wish to raise an issue which arises in the context of the Estimates. There is some curious thinking going on in the Government. I admire the Minister for Rural and Community Development, Deputy Ring, because he manages to get a significant amount of money for his Department. However, it frustrates me greatly that he never spends it. Year after year, he gets a wad of money for his Department but cannot spend it and it is returned to the Exchequer.

The Minister pulled the coup to end all coups this year as he managed to get €55 million for the rural regeneration scheme. However, there is not a snowball's chance in hell of him spending that €55 million between now and this time next year, no matter how much talk there is of shovel-ready projects. He must first approve the projects and will then find that many of them are not as shovel-ready as he thought they were. He will then have to seek tenders for the projects. The Minister of State opposite, Deputy Doyle, knows the delays involved in that process. There are cooling-off periods and arguments and one must get bonds and so on. Most of the projects will not begin until June of next year, if they begin at all. There is no way that €55 million will be spent in time to have a mature liability by this time next year.

On the other hand, bhí príomhfheidhmeannach Údarás na Gaeltachta istigh linn anocht. We had the chief executive of Údarás na Gaeltachta in with us tonight. One must remember that up until 2009-10, at a time when we were spending a lot of money on infrastructure in the Gaeltacht, Údarás na Gaeltachta was responsible for spending over €25 million in public funds in addition to money it had from its own resources. It was selling factories to owners who were and always will be based in the Gaeltacht because it suited the purchasers to have údarás factories on lease and to be able to develop them. Its overall annual spending amounted to up to €30 million. Its funding was increased in this budget. However, the total capital expenditure announced for the Gaeltacht, including Údarás na Gaeltachta, was €13.7 million. If Údarás na Gaeltachta had been given €15 million or €20 million it could begin refurbishing its buildings, achieve the mature liabilities and spend the money. If it was given the modest amount of €8 million rather than the €30 million for which it was responsible in the past, and the allocation to the Minister's rural regeneration scheme was decreased to €50 million, the Minister would still end up with far more money than he could spend for the third time in a row since his Department was established. That money could be spent on the Gaeltacht. It seems that the Minister for Finance, Deputy Donohoe, is allergic to the Gaeltacht, the Irish language and spending money where we know it can be spent in a profitable way and on an agency that successfully creates jobs in the most disadvantaged and peripheral parts of the country. I do not understand what is going on in that regard.

It is very strange to be speaking on the budget after having spoken on the Finance Bill. The normal sequence is for Deputies to have the opportunity to contribute on the budget and then on the Finance Bill or social welfare Bill. I spoke on the social welfare Bill and the Finance Bill before I got the chance to speak on the budget.

Our tax system is extremely complicated. Deputies fill out forms for a living. Very few ordinary small taxpayers fully understand the tax system. I refer to people earning €30,000, €40,000, €50,000 or less, not those earning big money. If ordinary taxpayers were asked which social welfare payments are taxable and which are not, very few would answer correctly. Many ordinary people are missing out on allowances because there are so many and it is so complex. The Revenue has admitted that. I am not talking about extraordinary allowances involving big accountants who are paid hundreds of thousands of euro by multi-millionaires. There is such a fear of filling out forms that people do not claim allowances. For example, a non-standard tax allowance is available to those employed in certain professions. How many people know about or receive it? I am not talking about the employee allowance of €1,650. We need a radical simplification of our tax system. It should be accessible to and understandable by all.

As I stated in my contribution on the Finance Bill, I am convinced that it is time to abolish the USC. The Minister of State will point out that it was introduced by Fianna Fáil. Yes, we introduced it at a time of crisis but it was always intended to be a temporary measure. Having USC, pay-related social insurance and income tax is wrong. I have always believed that there should only be two such charges. It should be very simple for the ordinary punter to claim allowances.

I always said at Cabinet that we should abolish all the small allowances and use the saving to give a better basic allowance to everybody. Otherwise, it is those who are good at understanding the complications of the system who gain and it is those who are afraid of inquiring and who do not read into these things who lose.

The other thing that is amazing is the lack of interaction between our tax code and our social welfare code. That catches many people. In that context, I would like to mention something that is creeping up on people now. The age exemption used to be €20,000 for a single person and €40,000 for a couple. That was very handy because when people got to a certain age, they did not owe any PRSI. If their main income was welfare, they did not have any USC liability as long as their income was under €12,000. If their combined income as a couple was under €40,000, they did not have any tax liability. This meant that most of the people in question were exempt from filling in tax forms. During the downturn, the €40,000 threshold in the case of a couple was reduced by €4,000 to €36,000 and the threshold for a single person was reduced to €18,000. The reality is that we increase pensions by €5 every year. The increase of €10 in the case of a couple amounts to €500 a year, or €1,500 over three years. As a result, more and more pensioners are coming back into the tax bracket. It would have been very simple this year to have raised the threshold to the previous level of €20,000, or €40,000 in the case of a couple. The amount of additional tax that is collected because of the move from €40,000 to €36,000 is small. The change is a nuisance for people who were not paying income tax but now have to do so.

I welcome Revenue's decision to require employers to make returns in real time every week. I hope this system is used to the benefit of the taxpayer. This can be achieved by giving back the information. Most people who ask get a pre-printed form from Revenue. If a self-employed person or somebody who has a PAYE income gets a pre-printed form 12, form 11 or form 11S in June, for example, Revenue will already know how much PAYE income that person has, or how much is being declared by employers. I can never understand why Revenue does not tell people it knows that. If it were to provide the relevant figures, people could compare them to the figures on their P60s. Revenue already knows how much social welfare people receive. This is facilitated through data matching. Revenue knows exactly what taxable income people are being paid as social welfare. Rather than making life easy for people, Revenue requires them to write to the Department of Employment Affairs and Social Protection to get the relevant figures again.

To sum up at this late hour, I think this has been a standing-still budget. There is nothing radical in it. There is nothing in it that will lift the country. The two big fundamentals remain with no resolution in sight. The first one is the whole housing crisis. Nothing that was announced on budget day recognises that not enough houses are being built. Nothing is being done to streamline housing and make it attractive. Nothing is being done to make it affordable for people on reasonably good incomes - €40,000 a year, or €80,000 in the case of a couple - to buy a house. It is amazing how we have gone so much against house ownership. Some years ago, one could get tax relief at one's marginal rate of tax in respect of the interest on one's loan. The first-time house buyer's grant that was available some years ago was worth the equivalent of €15,000 in today's money. I appreciate the point that could be made about a tax break in that context. The first-time house buyer's grant was great because it was paid at the end. There are always extra costs when one is buying a house or building a new house. It was useful to get this money in such circumstances. Traditionally, there was a very big social value on house ownership for those who had jobs. We seem to have lost that ethos.

Last month's budget did not do anything philosophically for carbon. In other words, it did nothing to deal with climate change in a positive way rather than in a negative way. It did nothing significant with regard to social housing. It did nothing to make it affordable for people whom one would expect to be able to buy their houses to do so. It did nothing on the health crisis. It provided for no reform to make the bureaucratic machine, which is getting more complicated by the minute, easier for the people to approach. It was not a good budget.

Debate adjourned.
The Dáil adjourned at 10.35 p.m. until 10.30 a.m. on Thursday, 15 November 2018.