Vol. 1015 No. 1
I move amendment No. 2:
In page 10, between lines 10 and 11, to insert the following:
“Reports
3. Within three months of the passing of this Act, the Minister shall lay a report before the Dáil, on the cost to the exchequer of abolishing the USC and replacing it with a High Income Social Charge of 10 per cent on all earnings over €90,000.”.
Amendment No. 3 arises out of committee proceedings. Amendment Nos. 3 to 5, inclusive, are related and will be discussed together.
I move amendment No. 3:
In page 12, line 24, after “Placement” to insert “or an Internship Clinical Placement”.
The pandemic placement grant, PPG, is a payment of €100 per week to full-time student nurses and midwives on clinical placements as supplementary financial support in carrying out this placement during the pandemic. Section 4 of the Finance Bill inserts a new section into the Taxes Consolidation Act in order to ensure that the PPG is received net of tax. On 4 November, a Government decision was made to extend the PPG for a further academic year and to include final year intern students at a half rate.
Arising out of these changes, as I indicated on Committee Stage, I am introducing a Report Stage amendment to section 4 of the Finance Bill to extend the tax disregard provided in respect of these payments made in 2021 to include also the payments that will be made in the course of next year. I do not expect the tax cost of this change to be substantial. There are some 7,000 student nurses and midwives in total. The Department of Health estimates a total of 5,300 supernumerary students and 1,695 interns in the academic year 2021-22. All payments in respect of the academic year 2021-22 will occur in 2022. The maximum tax cost in 2022 of the income disregard proposal is estimated to be around €3 million. This assumes that all beneficiaries will pay tax at a blended rate of 30%, plus the relevant USC and PRSI. This is an outside estimate. It is likely the actual outturn will be a lot lower.
I do not have an issue with amendments Nos. 3 to 5, inclusive. This is about ensuring that students are exempt from tax in terms of the PPG. This measure is directed at student nurses.
Where is the front-line workers' bonus? Where is a bonus for all of the other nurses? The Taoiseach committed in June of this year to bring forward a bonus without delay. The Minister for Public Expenditure and Reform, Deputy Michael McGrath, said that had to be done well before Christmas. We are now only a couple of weeks away from Christmas. The Tánaiste said a recognition bonus for front-line workers needs to be rolled out. In the context of the Finance Bill, while we are exempting the PPG for student nurses, will there be a bonus for front-line workers or has the Government decided to forget about that? Will it be taxable? Will the Minister bring forward an amendment to the Finance Bill to make sure that such bonuses are not subject to tax?
The Government will make a decision regarding a recognition payment to recognise all of the efforts of our front-line workers soon. It is not the subject of reference in the Finance Bill. The Taoiseach and Tánaiste have made it clear that we will make a speedy decision in regard to this matter.
The Minister referred to a speedy decision. The Taoiseach said six months ago that a decision would be made. One thing the Government cannot be accused of is speed, especially when it comes to rewarding those on the front line. We stood in the Chamber months or years ago and gave nurses a round of applause. They are, unfortunately, back on the front line dealing with high levels of Covid.
This is the Finance Bill that exempts pandemic payments to student nurses. When will the decision be made? We are dealing with the Finance Bill for next year. Will the bonus payments be subject to tax? That is a fair question. Nurses and front-line workers across the sector deserve an answer from the Government. How long does it take the Government to understand that our front-line workers should have a recognition payment? This has been playing out in the media for six months. The Government said it will make a decision soon and swiftly and well before Christmas. We are on Report Stage of the Finance Bill. This is the place where decisions should be made. Those bonus payments should not be subject to tax.
I guessed that the Minister does not have a clue because we have heard nothing from the Government about this. The Minister, Deputy McGrath, could not tell us when the decision would be made. Will the decision be made before Christmas? If there is a bonus payment, will the Minister exempt the bonus payment from tax, as we are exempting the PPG under this amendment?
The only thing that is certain is that when we bring it forward Deputy Doherty will oppose it. He will condemn whatever proposal the Government brings forward and will say it is not enough and should have been done more quickly. The only thing that is certain in any decision the Government brings forward is that the Deputy will stand up, along with Sinn Féin, and will oppose it, as they do with nearly everything. That is what is certain. The Government has said it will make a decision on this matter. I am aware that other leaders have said it will be done by the end of the year. We are aware that we have an obligation to fulfil and we will do that. When we make that decision we will deal with the matters relating to the taxation and level of the payment. Regardless of what decision the Government makes, Sinn Féin will oppose it.
Is the amendment agreed?
I hate to shock the Minister, but it is agreed.
I move amendment No. 4:
In page 12, line 30, to delete “31 December 2021” and substitute “31 December 2022”.
I move amendment No. 5:
In page 12, line 35, after “student” to insert “in the year of assessment to which it relates”.
Amendment No. 6 arises out of committee proceedings.
I move amendment No. 6:
In page 20, between lines 28 and 29, to insert the following:
“Report on Trans-Border Workers’ Relief in the context of Cross-Border Workers
16. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a comprehensive report on the Trans-Border Workers’ Relief in the context of people who reside in the State and work in the North and the tax status and options of people who reside in the North and work in this State.”.
The last couple of seconds prove the nonsense the Minister is spouting on the floor of the Dáil, namely that we oppose everything. We have just supported three amendments in the Finance Bill and there will be many other sections that, as the Minister knows but refuses to acknowledge, we will support through the passage of the Bill today and tomorrow.
It does not suit the Government's narrative because the reality is it has done diddly-squat about supporting our front-line workers with bonuses. It took it six months even to get to a point where it does not have a memorandum going to the Cabinet. The Minister cannot even give a commitment today, when we are dealing with the final Stages of the Finance Bill, on whether those bonus payments will be subject to tax.
This amendment deals with another issue in the context of the pandemic. It relates to the cross-Border workers and I raised it with the Minister on Committee Stage. It should be noted that cross-Border workers face the prospect of working from home in the context of continued public health advice, both North and South, possibly into 2022, with no clarity on the future of the scheme and its operation. The Minister, like me and any other Member of the House, cannot predict how long the guidance will be in place or whether it will be reintroduced later in the year. The pandemic does not follow the pattern we may want it to follow. One cannot predict the future path of this virus, what restrictions will be needed or what guidance will be offered in any part of the island. Therefore, certainty is required for cross-Border workers who, without action, will face a financial penalty in just over six weeks as they will not be able to avail of the relief. I raised this on Committee Stage and it is a serious and genuine issue. I urge the Minister to act quickly and decisively to extend the Covid-19 waiver for cross-Border workers.
The issue of cross-Border workers was raised during the debates on last year's Finance Bill, specifically in the context of people who reside in the State but who work in the North and avail of the domestic tax relief. It was discussed again earlier last month on Committee Stage of this Bill. The trans-border workers' relief is for people who are resident in the State who travel weekly or daily to work in another country or part of this island which is another jurisdiction and who pay tax in that other country. The tax relief is not normally available for Irish residents who work from home in the State, but in light of the unprecedented circumstances due to the Covid-19 pandemic and the resulting public health restrictions to limit movement, for the tax years of 2020 and 2021 the Revenue Commissioners confirmed that concessional treatment for the relief would apply whereby if employees were required to work from home in the State during Covid-19, such days working at home would not preclude the individual from being entitled to claim this relief provided all other conditions for the relief were met. That is due to expire in six weeks. It is likely the guidance will apply in January, thus ensuring these individuals who are asked for all our sakes to work from home will not be able to avail of the relief.
The relief effectively removes the earnings from a qualifying foreign employment from the liability to Irish tax where foreign tax has been paid on those earnings and such tax is not refundable, in simple terms. The effect of the measure means that individuals who qualify for the relief will not pay any Irish tax on their employment income. Irish tax will only arise where the individual has income other than income from a qualifying foreign employment. In fairness, the Minister said the operation of the trans-border workers' relief would be examined as part of the tax strategy group papers, and that happened earlier this year. The group considered all the relevant matters, including the equity of treatment between Irish residents who pay tax in the State, the competitive position of Irish employers and the established principles of international tax. The paper concluded that "it appears impracticable from a legal perspective, in terms of taxing rights, as well as challenging from a policy perspective when having regard to the interests of the wider body of taxpayers encompassing all Irish resident employees and employers, to place the concessional treatment on a statutory footing". The tax strategy group reached this conclusion based on the issue of taxing rights, equity and competitiveness.
There are issues raised in the paper that are warranted and require due consideration, but there are other issues that fail to be addressed. Section 6 of the paper considered social insurance and noted that social insurance rates in the North are higher than those in the South. However, the example in section 3.2, which considered equity, failed to take account of employee social insurance contributions when comparing the effective tax rates paid in both jurisdictions. I believe this is a flaw that undermined the comparison and I would welcome a comment from the Minister on that.
The proposal of the Cross-Border Workers Coalition was to limit the number of days cross-Border workers could work from the State to 183 days while still being able to claim the relief. It is proposed that other controls could be introduced, such as limiting the scope of those in non-effective roles and the consideration of a salary threshold. A number of proposals have been made. Given this is the case and given what should be the importance of developing the all-Ireland economy and the move to remote working, I believe this warrants and requires further examination of this relief. Its extension is also warranted given the prospect of continuing health guidance, as I mentioned, with regard to remote working in the months ahead. I ask the Minister to accept this amendment and to go back to the drawing board and re-examine this issue which is affecting cross-Border workers, families and businesses. It is necessary that the Minister extend the relief in the context of Covid-19 and undertake work with my colleague, the Minister of Finance, Mr. Conor Murphy, in the context of the North-South Ministerial Council.
In the amendment the Deputy is requesting a comprehensive report on the trans-border workers' relief. I acknowledge Deputy Doherty has been raising this issue since the Covid pandemic changed work patterns and work flows on this island. This issue was discussed during the debates on last year's Finance Bill, when I undertook that the relief would be examined as part of the work of the tax strategy group, TSG, for 2021. This commitment was fulfilled and it was examined in a TSG paper. The Deputy also raised the issue of the relief on Committee Stage and, in particular, the Revenue Commissioners' temporary concession for the years 2020 and 2021 that was introduced in light of the exceptional and unprecedented circumstances arising from the pandemic. The concession provides that employees will still be entitled to claim trans-border workers' relief where they might be required to work from home in the State due to restrictions, provided all other conditions of the relief are met.
As matters stand, this concession is due to lapse at the end of the year. The Deputy has asked if the concession would be extended further due to the recent public health advice recommending that everyone should work from home unless it is necessary to attend a workplace in person. The Revenue Commissioners have been reviewing this matter and, having regard to the current circumstances, I can confirm that the Revenue Commissioners will continue to adopt a pragmatic and flexible approach by allowing for a further extension of the temporary concession. This extension will apply for the period of time in 2022 during which the public health advice recommends everyone should work from home unless it is necessary to attend the workplace in person. The Revenue Commissioners will issue further guidance on this extension in due course.
More broadly, with regard to the Deputy's request for a further report on the trans-border workers' relief, a comprehensive examination of the issue was undertaken by the tax strategy group. This encompassed very detailed consideration of all relevant matters, including the equity of treatment between Irish residents who pay tax in the State, the competitive position of Irish employers and the established principles of international tax. Ordinarily, to avail of the relief, the duties of employment must be performed wholly outside the State and in a country with which Ireland has a double taxation agreement. The relief was not designed to apply to remote working scenarios, and when examining whether the temporary concession should be placed on a statutory footing, the review identified a number of significant concerns from a policy perspective having regard to the interest of the wider body of taxpayers encompassing Irish-resident employers and employees.
The review noted that if the temporary concession regarding trans-border workers' relief was placed on a statutory footing, it would allow residents in the State to avail of the relief while working in the State and pay no tax to the Exchequer in respect of the foreign employment income. Where employment duties are carried out in the State, Ireland has a taxing right over that income. Not to tax that income would be asking the State to give up a taxing right it rightfully has under the Irish tax code. It is not clear why Ireland would not exercise those taxing rights and it is also unclear how another jurisdiction would then have taxing rights over income earned in the State in respect of duties carried out in the State.
The review identified issues relating to equity for Irish taxpayers. Currently, there may be different tax liabilities and different effective tax rates between those Irish residents who can avail of the relief compared with those who cannot avail of the relief. However, there is a key distinguishing factor in that the employment duties are exercised outside the State for a non-resident employer. The move to increased levels of remote working, including blended working arrangements, within the State weakens that critical distinction.
If trans-border workers' relief were to be relaxed to allow for work carried out in the State to qualify for the relief, there would no longer be a distinguishing factor between Irish residents as both sets of residents would be exercising their employment duties in the State.
In such circumstances some, those with Irish-resident employers, would be liable to tax at the Irish tax rate - income tax and USC - and the potentially higher effective tax rate, while others, those with non-resident employers, would be liable to tax at the tax rates in the other jurisdiction and a potentially lower effective tax rate. This would give rise to a question as to how Irish income tax rules could apply the different tax treatment for Irish income tax to an Irish resident solely because of the location of his or her employer as opposed to the location where that resident carries out his or her employment duties, as is the current position. From the perspective of all resident employees in the State, it would raise issues of equity and fairness that are fundamental features of our income tax system. It is unclear how this would be sustainable and acceptable from the perspective of all Irish-resident taxpayers.
The review also found that the competitive position of Irish-based employers or Irish-based activities could potentially be undermined. This is particularly the case where salaries would be subject to lower rates of tax. That may have implications for Irish-based employers' cost base and their ability to attract and retain employees from the talent pool.
On Committee Stage, Deputy Doherty suggested that if the temporary concession were not extended, individuals would be double taxed if they are working at home. It is unclear how this would be the case. Ireland has an extensive network of double taxation agreements, including with the United Kingdom, which have the effect of relieving double taxation on the same income source. If an individual does not qualify for trans-border workers' relief, he or she may be entitled to relief from double taxation under the terms of the relevant double taxation agreement. Thus, a double taxation charge would not arise for cross-Border workers.
It is important to note that Ireland is somewhat unique in having such a relief in its domestic tax code. There is no comparable measure in the UK tax code nor in many countries in mainland Europe that share land borders. This issue was reviewed in depth in recent months, including in the report we have discussed. I have also confirmed that, providing that all the conditions for the relief are met, Revenue's temporary concession will be further extended into 2022 for the period while the public health advice recommends working from home. Revenue will issue further advice on this extension in due course.
Therefore, in the absence of a new or compelling change in circumstances, a further review is not necessary now, which is why I cannot accept the amendment.
I welcome Revenue's pragmatic approach on the extension of this waiver allowing those individuals to avail of this relief during the time of public health restrictions, which may go into next year. That was what I sought to achieve by raising this on Committee Stage.
On the wider issue of the amendment, I have always said we need to look at this from an all-island point of view and in the context of the Good Friday Agreement. All the statistics indicate the Border region is one of the most neglected and poorest with the lowest median income. The problem here is the practicalities for a company in, for example, Derry or Strabane with employees literally from across the bridge who can currently avail of this relief. That is fine. That means they are not taxed in the State because they work in Strabane. However, the problem is, if they work from home, it is extremely messy. That is the way with some people's work patterns and I am not talking about working from home 365 days a year. We need to introduce a pilot scheme to provide a set number of days when individuals are allowed to work from home in the context of the island of Ireland. I am not talking about people who fly to London, Manchester, Glasgow or elsewhere for their work. This would benefit the Border region and especially employers in the region. I strongly urge the Minister to consider this.
The Minister spoke about equity for taxpayers and I can understand much of the rationale for what he said. However, he needs to remember this campaign is supported by IBEC, the largest employer body in the State.
I appreciate the Deputy's recognition of the decision made by the Revenue Commissioners. I am aware of IBEC's interest in and support for the campaign, but I stand by the indication I gave earlier that there are important issues of equity here. Someone who is resident here in Ireland is liable to pay tax here in Ireland. This is a long-standing principle upon which our personal taxation code and system have been based. I will continue to monitor the issue. I believe we will get to a point where Covid is no longer the presence it is in our country and on our island as it is now. When we reach that point, I believe there will be a change in work practices and in how and where people work. The broader change is under way, not just on this issue but on the mobility of workers, where they work, the work they do and where and how they pay tax that will pose questions for the tax regimes in open economies like ours where people have considerable mobility.
Revenue, through the decision it is has made, deals with this matter while the public health guidance is in place. While I will not accept the amendment, I have twice met the group involved in this proposal and I will continue to monitor the matter. I accept it raises issues for those who are affected by it. That being said, there is a broader issue of equity within our tax code and I do not believe meeting the particular needs I am being asked to meet at the moment would be consistent with standing over those principles.
I acknowledge the Minister has met the groups and I appreciate his comments that he will continue to monitor the matter. However, this is a very important issue, and not just for the workers. It is challenging for somebody who works from home even three, four or five days in a year because the relief is not available. The Minister referred to the principle that somebody who is resident here is taxed here, but that is not the case with the trans-border workers' relief. That is the whole point here. People who are resident here in this State and who work full time across the Border are taxed there because they can avail of this relief. I make this point in the context of Covid which has challenged everybody and the way our work patterns are moving. If an individual is working from home, they are not able to avail of this relief even for a handful of days. That is why I feel the amendment needs to be pressed to a vote.
Amendments Nos. 7 and 8 are related and may be discussed together.
I move amendment No. 7:
In page 20, between lines 28 and 29, to insert the following:
“Report on tapering out of income tax credits
16. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on tapering out income tax credits for incomes between €100,000 and €140,000 at a rate of 2.5 per cent for each €1,000 earned.”.
If we look at tax revenue in the State, even before the pandemic, we had the situation of an aging population; a potential over-reliance on corporation tax, which has been flagged; and an inevitable decline in motor tax receipts, and petrol and diesel taxes as we transition to more environmentally friendly types of transport. As we emerge from the pandemic, it is clearer than ever before that we need to be more agile. We need to be a more responsive State. A stronger social safety net must be provided for those who need it. We need a health service that works and a public childcare option for parents that is genuinely affordable. This cannot be done unless we are willing to make the necessary investments and look at the sources of revenue for that necessary expenditure.
We know the Commission on Taxation and Welfare will examine these options, as the Economic and Social Research Institute has done. However, if we look at the programme for Government, we can see that basically all tax-raising measures are excluded unless they are behavioural-type measures suggested by the Government and we know the purpose of those measures is not to raise taxes, but to change behaviour. Therefore, the additional resources will not be generated. This amendment seeks to introduce a levy of 3% on incomes above €140,000. It would be an additional 3% on the portion of an individual income above €140,000. The amendment also seeks to taper the tax credits on incomes above €100,000. On incomes between €100,000 and €140,000, tax credit would be tapered out. I am mindful that the Labour Party across the water introduced a measure like this many years ago in Britain that it is still being maintained, even by the Conservative Party. Tax credits play an important role in our taxation system. They are intended to support those on low, middle and modest incomes. When people reach €100,000 in individual income, it is fair that they do not lose all their tax credits overnight at that threshold, but that they start to lose them as they earn above that amount.
These two measures combined would bring in more than €400 million. That is money that could be invested in the areas I outlined in terms of a stronger social safety net, better childcare and reduced fees for children's services, or indeed in making our health system fit for purpose. I commend amendments Nos. 7 and 8.
In speaking to this amendment, I am always concerned and worried about what I consider to be an additional wealth tax. This is simply because we have to be careful in the future not to give the impression to businesses or people from abroad that if they come here, they will be taxed exorbitantly. I thank Deputy Pearse Doherty for his excellent work, as always, but I want to use this opportunity to speak about the group of people working diligently for the Government who have been trying to come up with imaginative ways to extract more money from our hard-pressed taxpayers as a result of the declining use of diesel and petrol.
A great deal of revenue was collected from those sources and they were a very easy target. The Government has its eyes on petrol and diesel and wants us to stop using them. What have they done? In case it is not public knowledge, I will tell the House what has been done.
Not only are the people the Deputy has spoken about ingenious, but he is fairly ingenious himself if he thinks he can speak on this group of amendments for that purpose.
I am coming to a point. I will be finished within 60 seconds. The Minister can time me. These people are coming up with an attack on energy, in other words, an attack on the ESB. It is the one thing people cannot get away from and need to have, even though the Minister's Government has done absolutely nothing to ensure a surety of supply. Like I always say, the lights are on here tonight because oil is flowing into Tarbert and coal is flowing into Moneypoint. The Government closed these stations down but they are now open again because the lights would be off here if they were not. That should never be forgotten. I remind the Green Party of that. The reason Green Party Deputies will be able to boil the kettle and turn on their electric blankets when they go home tonight is that Moneypoint and Tarbert are open, no thanks to those Deputies. I will remind people of something and let everybody know about it. I hope the Minister will correct me if I am saying anything that is factually incorrect. The Government is targeting the ESB through the cost of energy. It is looking at more imaginative ways to put further punitive taxes on that resource which each and every one of us relies on, whether we come from a very low-income, a middle-income or a higher-income household. The children and the mom's purse will be further attacked every week by the Government's proposal in respect of the price of electricity. If what I am saying is factually incorrect, I would love for the Minister to put me down, to put his thumb on top of me and to tell me that I am wrong.
The Minister has not been born who would put the Deputy down.
I will speak to the amendments first before I come to Deputy Michael Healy-Rae's comments. Deputy Doherty's amendments refer to reports on the tapering out of income tax credits on certain incomes and the introduction of a levy on high incomes and new income tax rates across particular income ranges. I will make the point that in order to fund all of the improved public services and the social security net Deputy Doherty refers to, we need an economy that is growing. In order to have an economy that is growing, we need to have a competitive environment here in Ireland in which jobs are created and kept. The competitiveness of our personal tax code matters in that regard. That is the key reason I will not be accepting the amendments Deputy Doherty is putting forward which propose that these reports be prepared.
Let us examine the impact of the Deputy's proposals on the marginal tax rates. Were the personal tax credit of €1,650 to be tapered out at a rate of 5% per €1,000, the marginal tax rate at those income levels at which the tapering would take place would be just over 60%. Once that tapering has happened, an income of more than €120,000 would revert to a marginal rate of 52%. I believe that taxation of €60,000 on an income, albeit a high income, would make it more difficult to attract jobs into Ireland. We want to get consultants back to Ireland to work in our hospitals. I look at how much they are paid. A marginal tax rate of 60% would be an impediment to our efforts to get consultants back and to bring to Ireland the jobs and decision makers in companies who are critical to the growth and retention of foreign direct investment in Ireland. That is the main reason I am opposed to the policy Deputy Doherty is seeking to advance through his proposed reports.
While I accept that there would be a potential gain in revenue from the measures being proposed, this gain would be threatened and lost over time as a result of the effect the measures would have on the competitiveness of our tax code and on the kind of incentives we need to ensure that those who can make a valuable contribution to our economy and public services, who I accept are paid at a high level, do not face marginal tax rates that high.
With regard to Deputy Michael Healy-Rae's point, I would never attempt to put him under my thumb, although I do disagree with him. I assure the Deputy that the Government does not have an agenda to extract money from or target the ESB. I accept that what we are doing has an impact on the price of energy and contributes to it. The Deputy mentioned diesel. We are making changes to taxation to try to change behaviour over time and, while this behaviour is changing, to bring in revenue that we can, in turn, invest in getting our country, our economy and our environment ready to deal with the consequences of climate changes. We can also use this revenue to fund our efforts to use less carbon, thereby reducing harm to our environment. I hope and expect that the rest of the world will do the same. That is why we are making changes in respect of carbon taxation. Some 70% of the change we have seen in the price of a litre of diesel during the year has had nothing to do with taxation.
I do not know if it was an error on the part of the Minister but the amendment speaks to tapering out the tax credits on incomes between €100,000 and €140,000 at a rate of 2.5% for each €1,000. The Minister, in giving his figures, mentioned 5%. Anyway, that is not the biggest issue. I am not surprised that the Minister has decided to vote against this amendment. Budgets are all about decisions and political choices. You cannot do X unless you have Y. You cannot make investments unless you have resources. The Government will argue that certain things will happen if we raise taxes to a certain effective rate. Let us talk about that. The Minister talked about an income of €120,000. The effective rate this year is 40.7%. Under these proposals, that would increase to 41.8%. The levy of 3% of individual earnings above €100,000 means €300 for every €1,000 a person earns above €140,000. I believe that is fair. However, that money cannot go into a black hole. We need to have a proper social contract involving investment in public services, a proper safety net and so on. The effective tax rate for an individual on €120,000 was higher in 2014 than it would be under these proposals. There is no evidence to suggest that these types of effective tax rates would impact on the economy but they would bring in the resources required to invest.
I will tender a question to the Minister. The Government has ruled out every single type of tax revenue increase. The Minister has talked about abolishing the USC. Was that what was printed on the placard he and his party leader, Deputy Varadkar, held at one stage? There are many photographs of that, taken just before an election campaign. It was then to be merged with PRSI. There have also been other commitments but from where will the revenue be raised to pay for these?
We are raising revenue to improve public services. Changes we have made in local property tax and carbon taxation are bringing in revenue. We are using the additional revenue coming in from those changes to tax policy to pay for improved public services. We will see tax revenue increase across next year due to the effects of a growing economy. Deputy Doherty and I have different views on this issue. I believe that it is not just about the average level of taxation but also about the marginal level of taxation. It is about how much tax people pay as their incomes go up due to their hard work, their entrepreneurship, their getting a promotion or their taking on different or more demanding work within our public services.
The return of those kinds of marginal rates of taxation would threaten the competitiveness of our economy and the ability of our public service to attract those public servants we require to do important work, particularly in our hospitals and especially consultants. I am not accepting this amendment for that reason.
Tapering out tax credits does not increase the marginal rates. They will remain the same. The impact would be on the effective rate. I mentioned to the Minister that this, combined with the other measure, would bring the effective rate below where it was in 2014. Tapering out the tax credits, therefore, would not impact on the marginal rate of taxation, which brings in €232 million.
I asked the Minister where he is going to get the revenue from, and he outlined that it will come from the 97% of the population who earn below €100,000 in individual income. Regardless of income, people will be liable to pay the local property tax, LPT. Similarly, regardless of how poor people may be - they may not even be in employment - they must pay the carbon tax if they are filling their car with petrol or diesel or trying to keep their homes and children warm. The Minister is saying that he is willing to get the revenue for all these proposed initiatives from that 97% of the population. He does not even want us to talk to him about looking at the 3% of people who have individual incomes of more than €100,000.
They are going to be protected by this Minister, just as he brings in measures to protect the really wealthy in Irish society. Measures such as the special assignee relief programme, SARP, allow individuals coming into the State to write off €111,000 of their tax liabilities. Nobody else can get that relief. It is not possible for a butcher, a painter, a decorator or a hairdresser to get that rate. The Minister, however, brings in measures, such as SARP, that are only available to the wealthiest in society. It applies to people earning up to €1 million, and includes the ability to write off private tuition fees for children and to fly home to one's parent country once a year. Those are the types of favours or policy measures that are brought in to support those at the higher end of incomes. By God, though, local property taxes and carbon taxes will come from those on the lower incomes and flow to this Government.
I move amendment No. 8:
In page 20, between lines 28 and 29, to insert the following:
“Report on income levy on high incomes
16.The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on the introduction of a high-income levy on high incomes in excess of €140,000.”.
I move amendment No. 9:
In page 20, between lines 28 and 29, to insert the following:
"Report on income tax relief
16. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on an income tax relief equivalent in value to 8.3 per cent of annual rent to all private rental tenants not already in receipt of any State subsidy, examining the social and economic impact of this measure in the context of high levels of rent and other policy levers such as a ban on rent increases.".
This amendment deals with the issue of skyrocketing rents right across the State. This is no longer unique to our capital city or other cities where there is acute housing pressure; it is now felt in the most remote regions because of the lack of curtailment in respect of the escalating rents that so many individuals are facing. In our party we have raised this issue consistently with the Government. It has fallen on deaf ears. The Government has continued to take the side of landlords on this issue and has left renters at the mercy of ever-increasing prices. Ludicrously, legislation was passed through this House by the Government, including the Minister opposite who signed off on it at the Cabinet, that allowed rents to be pegged to inflation. This meant a rent increase of 5.1% could happen last month. That is the rate of inflation. It meant that the average Dublin city rent, which currently stands at €2,032 and with which the Minister will be more familiar than I am because he lives in Dublin city, was legally eligible to be increased by €104 per month, or €1,248 per year.
The penny has still not dropped with the Government because, after having been shamed and embarrassed into addressing the situation in which, owing to its incompetence, even Eoghan Murphy’s flawed rent pressure zone cap of 4% has been exceeded, it has pegged rents to inflation with new legislation. The cap is a maximum of 2%. When rents are sky high, you do not legislate to push them a little higher; what you do is look for faoiseamh, relief, for ordinary people right across the State. There are 300,000 people renting privately across the State. The amendment calls for a rental tax credit up to a maximum of €1,500, which is the equivalent of putting one month’s rent back into the renter’s pocket. It is about real relief for individuals. It will work only if we introduce a rent freeze over the same period.
I am conscious that we did have a rent tax credit. The Minister may try to suggest it is left field and that we could not do something like this here. A rent tax credit operated in this State up until 31 December 2017. It was recommended for abolition by the Commission on Taxation in 2009 because it was being absorbed into the rental prices that landlords were charging. That was why a rent freeze must accompany the credit. Before the credit was recommended for abolition - it was fully abolished only at the end of 2017 - a married couple, both aged 55 or over, were able to get a rent tax credit of €1,600, which is more than what we are suggesting in this amendment. Therefore, this is not left field; it is common sense. It is what a Government would do if it had the interest of tenants rather than the interest of landlords at heart.
I have mentioned the crazy price people are being charged in Dublin city: €2,032, possibly going up this month by €104, which is legally allowed owing to the incompetence of the Government. What is happening in other parts? Seventeen counties have had double-digit rent inflation under the Government at a time when rents were escalating anyway. Rents are soaring outside the Dublin area. They have increased by over 20% in Mayo. That is just mind-boggling. Put yourself in the shoes of a family who might be struggling with the cost of living. This year their rental bill is 20% more than it was last year. In Leitrim the increase is over 20% and in Roscommon it is 20%. What is the Government doing? It is legislating to require that rent can be put up by only 2% more. Putting up already-high rents is putting more pressure on affected families. The Government has completely and utterly failed to have the interests of renters at heart. It has continually taken the side of landlords. Our pleas, which we have made time and again, have fallen on deaf ears.
I do not know what rents will have to be charged, by landlords or institutional investors, which charge the highest rents in the State, before the Government realises there is a serious problem. Not only do we need to stop rent increases; we also need to give relief to renters. People who are younger than me, including those who are starting out in life and possibly thinking about starting a family, are asking how the hell it can be done in Dublin. What is happening is crazy.
The amendment would introduce what we used to have until it was finally phased out in 2017. It would do so in a way that works because we would introduce a rent freeze. This is what a Government should do. This is what I would do if I were sitting in the benches opposite because I know the choices I would make would put renters first, not landlords. The average rent in this city is over €2,000. The rent increases we are seeing in many counties, including mine, are in double digits and in some cases exceed 20% per annum.
Like I always do in the interest of doing my business properly in this Dáil, I want to declare what could be perceived as a personal interest in this matter. However, as I always say, I believe this prepares me better for being balanced and seeing every side of this issue, which is so important. It has rightly been stated that the pressure on people, particularly young families, because of the ever-increasing cost of rent is frightening. Any type of relief or assistance that can be given to those families should be given, and be seen to be given, to make a genuine difference for them. It is no surprise anymore to hear of rent of €1,500, €1,700, €2,000 or more per month. It is a frightening amount of money to have to pay just to live in a rented house. However, the one thing we cannot get away from and which we must always remember, in the interest of looking at both sides of the coin, is that the Government in power is taking in over 50% of the rent received by the owner of the property in tax. The Minister should not forget that.
Deputy Doherty rightly referred to €2,500. The Minister should not forget that the Government is taking €1,250 of that every month. The person collecting the rent, paying the mortgage and property tax for the property, paying for the maintenance and updating of the property, keeping to all the regulations and doing his or her business right is giving half of the rent to the Government in tax. The Minister should not forget it. I always want to drive that home because, even if we are talking about a more normal rent, say a rent of €800 or €900 per month, the Government is taking half of that also. The Minister should not forget that. It is a very important point.
We have to work imaginatively. The main way to bring down the ever-increasing cost of rent is by increasing the housing supply in the market. I am aware that is not what the amendment is about but, at the end of the day, it is the answer to the problem we have. It is a matter of local authorities providing more local houses and of the builders we always had — the traditional builders, not big companies — building more houses. I am talking about the kind of man we all had in every village and town: a medium- or small-time builder who might build five or ten houses every year and sell them on the open market for what I would call reasonable money. He or she made a profit, kept local people in business and had subcontractors working for him or her. It was a great system but, sadly, such people are gone. The reason they are gone is that it is no longer profitable, viable or sensible for a person to buy a piece of ground, get it zoned if it is not already zoned and build five or ten houses on it.
If you take the cost of the material, the cost of the labour, the VAT, the other tax and every other charge out of that, it does not make any sense for that builder to produce those ten houses and then to try to sell them at an affordable rate. I am not talking about profiteering. I am talking about a good, respectable builder selling them off to young or middle-aged couples who want to start out on their own in the property market and buy an affordable house.
When I was growing up, it was an awful sum of money, but the average house cost £30,000. Whether you worked in the local co-op or whether you were a garda or a teacher, the average house the length and breadth of the country, when I was a teenager, cost £30,000. In our heads we thought it was an unimaginable amount of money. If you think about it pro rata, however, and given what the garda's, teacher's or council or local authority worker's pay was at that time, it made sense to buy a house for £30,000. However, when you see the prices being quoted today and what property is fetching, it does not make sense for a person to buy. Killingly enough, though, it does not make sense for a person to build to sell either. That is the ironic thing. Deputy Doherty knows - I am sorry to mention him all the time - that an awful lot of what Sinn Féin says I understand. I just want to get us all in the same frame of mind. It makes no sense in Ireland today to build a house to sell it. Therefore, the people who want to buy a house cannot do so because the houses are not there. When sufficient supply is not there, the supply that is there is extraordinarily expensive. It is a real conundrum and it is like a pressure cooker at the moment. It is getting worse and worse.
I am listening 100% to nothing but well-intentioned people standing up here and making proposals because they are just trying to help with the situation, but I do not see it helping. A number of different things have gone wrong in Ireland. In the past 24 months we have had a new problem, of which I know the Minister and every other Deputy is aware, and that is the cost of material. I could frighten the House with statistics and percentages for the prices of different pieces of timber and steel because I know acutely how much they have gone up by. It is no exaggeration to say that €5,000 worth of timber last year costs €11,200 today. It costs €6,200 more 12 months later to buy the exact same box of timber. That is crazy. From doors to steel girders, the price of everything has gone up enormously. What is that doing? It is ensuring, again, that that small builder I am talking about who used to go and build his few houses does not see the sense in doing so because when he goes to the market to advertise those houses, he will have to charge exorbitant amounts that the young couple cannot afford.
We really have a problem in front of us. I am not fighting with the Minister about it. I am only standing here saying we must come together, all of us, to try to do something that will help. If there are imaginative ways of giving tax relief to renters to try to bring down the amount of money they are parting with every month, of course we should do that.
I will make a brief point and ask the Minister a question. We support the amendment. Renters have been hammered from pillar to post in recent years. I will not go back over all the points. They have been debated here many times. There is a clear need, in our opinion, for, at the very minimum, a national rent freeze. Many renters would say we need to go further than that and find a way to reduce the cost of rent by way of legislation. The Government does not agree with us on that. The Government is putting forward legislation which would cap rent increases at 2% or the rate of inflation, whichever is the lower at the time. That is off the mark. It misses what needs to be done.
The other day I asked the Taoiseach a question he was unable to answer. He said we would come back to it, so maybe we can revisit it this evening. I asked him about the report that appeared on a national newspaper's website the other morning which said that the rent cap would be set at 2% but that if a landlord had not raised the rent on a property in the previous year or the year before that, he or she would have the right under this legislation to increase the rent by a multiple of 2%. The Taoiseach said he could neither confirm nor deny that and that we would come back to the issue. Is the Minister in a position to give clarity on this? I have seen no denials of that report from Government sources, and the legislation would seem to me to indicate that that is the case, in other words, that the Minister for Housing, Planning and Local Government has left a giant loophole through which many landlords and their legal representatives will be able to drive a cart and horse when the 2% proposal itself was not adequate in the first place. Maybe I am getting it wrong. Maybe the Minister will be able to clarify the matter. I ask him to do so. What is the position on that?
I support the amendment.
As the Minister well knows, people of all ages are struggling to pay their rent. I regularly have people come to me - friends, family, neighbours etc. - who are struggling or unable to pay their rents. These are people my age who may be looking to start a family and who have to move back to the family home because they simply cannot pay their rent or, if they can, they certainly are not able to save for a mortgage to be able to move out of their rented, shared, overcrowded accommodation.
However, it is not only my age group that is suffering like this. I am becoming increasingly aware of older people hitting their pension age or already in their pension age who find it increasingly difficult to pay their rent, who are increasingly concerned their rent will increase and that they will no longer be able to pay it and who do not know what alternative they will have if that happens. These people will have either to move in with their children or to go looking for alternative accommodation, knowing that in the likes of Galway city, where I am from, that accommodation will be very hard found and, if it is found, will be at an extremely high price. Galway city has extortionate rents, which is not often mentioned when a lot of the conversation is about Dublin.
However, this is no longer only a city-based issue. We have seen increasingly along our coastal regions that people over the lockdowns, when they were able to work from home, moved back home or moved to more rural areas and to areas along the coastlines. We have seen huge increases in that regard. I have seen increasingly people come to me saying they can no longer rent in the area they have long lived in in rural or coastal communities because these increases are just continuing and they are no longer able to afford them. At this stage the rental crisis is affecting so many different age groups, people and communities.
What people now need, and what they have needed for a very long time and can wait for no longer, is urgent action by the Government in this regard. What we clearly need is a ban on rent increases. We have been saying that for a very long time, and the Government really needs to act in that regard. Reference was made earlier to the legislation that pegged rent increases to inflation. The Minister himself has often said he was aware inflation would rise. It is just unfortunate the Minister, Deputy O'Brien, did not seem to realise that would happen. That was clearly a massive mistake by the Government. The reality is these kinds of mistakes hurt people and make their lives more difficult.
This amendment seeks just a report. I do not see any reason the Government cannot accept it. The report would examine the social and economic impact of these measures. We know that what has been happening up to now is not working so we need the Government to do something urgently that will work to protect and help renters. The Government could certainly look at doing a report to help renters, who are struggling so much.
I am absolutely aware of the huge challenge that many tenants face at the moment. I meet them in my own constituency of Dublin Central. I meet people who are very concerned about the level of rent they are paying currently. They are worried they will not be able to pay their rent in the future, or that renting has undermined their ability to save for a mortgage. They are worried about whether they will still have accommodation or a place to rent and call home in a few years' time. I experience all of those pressures. I see the anxiety and the worry in the eyes of renters and tenants who come to me concerned about their future.
The long-term answer to how we make progress on these issues, and the way in which we do it, is by building more homes. That is the answer to it. I was struck by a phrase that Deputy Doherty used. It is one I have heard him use before. He talked about me prioritising the interests of landlords over tenants. Deputy Doherty and Sinn Féin want to turn the word "landlord" into a term of abuse. It is a pejorative term for Deputy Doherty. Every time he stands up and uses the word "landlord", it is a form of political attack. The only reason why I and this Government are taking the measures that we are in relation to landlords is to get more rental accommodation built. That is the only reason why. That is not prioritising the interests of one group over another; it is putting in place the plans that will lead to an increase in rental accommodation. By having more homes, houses and apartments available to rent, it will provide a way in which we can get rents down and make them affordable. That is the truth. What we hear, day after day in this Dáil, is Sinn Féin using the phrase "landlord" as a term of political attack. What we and I want to do is to support policies that will lead to more rental accommodation being available.
A perfect example of this is how Sinn Féin voted on the Finance Bill on Committee Stage, in relation to the extension of section 97A, which is all about providing a form of tax relief to landlords to make rental accommodation available to those who need or want to rent homes. Sinn Féin voted against that. It is a measure that, in the last two years for which information is available, brought 3,200 more properties back into rental supply. Sinn Féin voted against that. What does Deputy Doherty say to the tenants who are living in those properties, which are now available for rent through a tax measure, the continuation of which Sinn Féin opposed while at the same time saying it was standing up for the rights of tenants? The reason why we have measures in place that look to try to increase the availability of rental accommodation is so we can bring rents down and make more rental accommodation available so that rents will fall and that rental accommodation will become more affordable.
What Sinn Féin is doing is saying that it wants to fix the problem of high prices and rents by ultimately putting in place a lower level of supply. That is what its policies will do. It will lead to lower levels of rental accommodation available and a lower supply of new homes and apartments that are available to rent. That is what will happen. Looking at the policies of the Government, they support rental accommodation and support tenants through all of the measures that we have in place, including HAP and other payments that are there to support tenants who need additional support to pay the rent. Without that support, they would face even more difficulties regarding their future. In addition to all of that, what we are doing as a Government is directly building homes. That is what we are doing for next year. There will be 9,000 directly built social homes in our country to help bring forward the overall housing mix that we need to make progress on the rental challenges that we have and all of the other challenges that we have in relation to the availability of homes in our country. The Government will also bring forward and deliver 2,000 new cost rental homes.
Our answer to how we can bring down the price of rent and make rents more affordable to tenants, who I know are currently facing such challenges, is to build more homes to increase rental accommodation. Rent caps and the measures that Sinn Féin is bringing forward will lead to less supply. Less supply will mean that the challenges we face at the moment will only grow more intense, will only grow more difficult and are a recipe for the kind of affordability issues that we acknowledge are there for many, but that we are trying to overcome, to beat and to reduce over time. The policies that Sinn Féin is putting forward are a recipe for them getting worse. That is why I do not support the Report Stage amendment that has been brought forward by Sinn Féin and why I certainly do not believe that the policies that it is bringing forward will make any difference to those who need help and those who need to see their rents fall.
The Minister can accuse me of whatever he wants and can say what my policies or those of my party may or may not do. But look at the Minister's track record. We do not have to look into a crystal ball to see what may happen. The Minister has been in Cabinet for well over a decade and has been Minister of Finance for a period of time. He has huge sympathy for all these poor créatúrs that are screwed because of the high prices of rents, but he is the guy who has the ability to change that. The Minister says to look at what the Government is doing. I can tell him the result of what it is doing. The highest rents in any city in Europe are in this city. The average rents are over €2,000. In 17 counties rents are increasing by double digits. Families are squeezed to the brink. We have high levels of homelessness because people cannot pay their rents. The Minister's own officials advised him in relation to apartments and institutional investors and he ignored those views. We look at the Minister's record. It is on the floor. As Minister for Finance and as a Member of Cabinet for over a decade, his policies have resulted in the highest rents in Europe in this city. They have resulted in rents that are increasing beyond the reach of normal families. They have locked out generations and have cause misery and suffering for people.
The Minister talked about why we voted against an amendment which seriously did not bring 3,000 properties back into rental supply; 3,000 people availed of them. Is the Minister trying to suggest that they were going to leave those properties empty forever? What the Minister should have done this year, last year or any year when he has been in government is what we have been calling on him to do, namely, to introduce a vacant property tax. That is why we voted against the Government's amendment. Every time, the Minister's solution is to give more tax relief and comfort to the landlords. The Minister needs to look at the results of his policies. They have failed. I ask the Minister to turn around to me now and tell me that the fact rents in this city are over €2,000 is the result of positive policies introduced in his time in government not over the past number of months, but for nearly a decade. I ask him to tell me that the 20% increase in rents in counties outside of Dublin are the result of positive policies. I ask him to tell me that the fact that there are thousands of people who are homeless and cannot get affordable rent is the result of the positive policies of his contribution in government. It is nothing but failure, failure and failure over again. That is the problem.
The Minister spent quite a bit of time going on a big attack against Opposition Deputies, but he did not answer the question that I put to him, so I will put the question to him again. Can he clarify, in relation to the Government's new housing legislation, that it is indeed the case that landlords who did not increase the rent last year or in previous years will be permitted, under this legislation, to increase the rent by a multiple of 2%?
I must say that when the Minister got up to speak earlier, I thought I was in some kind of alternate reality or universe, whereby we, in Sinn Féin have been in government for the past years, when he said that the thing we need to do is to build homes. That is something that we have long been calling for. However, it has been the Minister and his party who have been in government and have overseen this housing crisis and the increase in homelessness and the absolute desperation of people trying to pay rents and find places to live. The Minister mentioned HAP.
Does the Minister know how many properties were available in Galway city under the housing assistance payment, HAP, limits in October of this year? It was one. That is what the Government is saying to people. That is the reality for people in Galway city. That is the reality for people across the State. This is because of the Government's policies; it is not because of Sinn Féin policies. It would be wise for the Minister to actually listen to our policies and maybe enact some of them to try to help those who are struggling. I absolutely believe our policies will be of benefit to ordinary people who are struggling to pay the rents, who are struggling in overcrowded conditions because they cannot pay their rent, and who are struggling living at home with their parents. The Minister might say he hears all of this in his own clinics, and I am sure he hears about these realities in his own clinics because this is the reality for so many people. The Minister would do well to listen to what these people have to say and ensure his Government enacts policies to help these people. They simply cannot continue the way they are going.
The Minister said one thing that I was very glad to hear him say. I said it 20 minutes ago and I have heard the Minister say it now. I am very glad the Minister has said on the record of the Dáil that we have to build more homes. I put the question back to the Minister, however. What can we do to make it possible for us to build more homes in Ireland? When I say "We", I mean us, our local authorities and our small builders. I must say once again that we have lost those people. I want to see us being able to win them back. Those builders might be too tired to go taking on that role again because it is not an easy life and being a small or medium-sized builder is not an easy thing for any person to do, but we have to make it attractive for them to do so, or perhaps it will be their sons and daughters. I remind the Minister they were a source of employment and business locally. They kept local hardware stores going, with local hardware merchants, timber yards and steel yards, and we want to try to get all of that going again.
It is nearly gone to the stage where if you were driving the car and you saw a gap after being burst into a field with somebody building a house, you would nearly stop and take a picture of it to send to your friends saying, "Look who is building a house." My goodness, if you saw a builder going building five or ten houses, you would definitely take a picture of that and send it around saying, "Look who started building, isn't it great", or, "How are they managing it at all?" Ten or 20 years ago you would take no notice. I do not want a situation like during the boom when if you stood in the one spot for too long, somebody could build a house on top of you, because we were gone crazy that time. We want to see measured building and the homes being sold at an affordable rate. The Minister is the Minister for Finance and I am once again putting it back to him. What can the Government do to make it profitable and sensible for the person to build them, for the local authority to build them, and for the person to be able to ultimately purchase? Ideally, we want to see people getting local authority houses or getting a tenancy for those, or getting the right buy them in the future, or young people being able, after a period of time, to buy their own house and getting going on the road for themselves.
I do not know the answer to the specific question Deputy Barry put to me this evening. I do not have the answer to the question that he is looking for in that legislation. I will see if I can find the information and I will certainly share it with Deputy Barry if I can.
On Deputy Healy-Rae's comments about how we can sustainably build homes, we can sustainably build homes by the State playing its role in the next year by investing €4.1 billion in directly building homes ourselves, or by paying for the infrastructure that will allow the private sector to build homes. Inside that very simple description there is a huge number of very complex things that we need to do quicker and better than we are doing at the moment. I accept what Deputy Healy-Rae has said, that we are not building homes at the pace, at the speed, and in the locations we need to. I am well aware of the huge concern and anxiety that so many have to endure because of that.
With regard to Deputy Doherty's contribution, I stand absolutely over everything I have said with regard to Sinn Féin a moment ago. I never inferred anywhere in anything I said that Sinn Féin policy was contributing to the rental difficulties of recent years.
Deputy Doherty asked about my record and I will tell him what my record is. My record is that I have had the privilege of being in government, representing the people and serving the people as a member of Cabinet. I began my time as a member of the Cabinet in the aftermath of a housing crash that saw so few homes being built, that saw social housing output on the floor, and saw such misery after the last housing crash our country had to endure. With regard to where we are now, housing output was on the verge of recovery before the pandemic. I accept it is not recovering at the speed that was acceptable to enough people. In the aftermath of the pandemic, I believe we are seeing 6,000 homes being delivered for social purposes and we are seeing housing output recover. I accept that is not happening quickly enough for many, but I equally contend that the policies Sinn Féin puts forward are a recipe for fewer homes being built.
The Minister has been there for ten years. His record is the highest rents in this city in Europe. His record is generations locked out of home ownership. His record is thousands of people homeless as a result of sky-high rents. That is the reality and things are getting worse. In 17 counties in Ireland rent increases are in double digits. The record is the Government brought forward legislation, which the Minister signed off in Cabinet, that allowed landlords to increase monthly rents in this city by another €100 on top of the €2,000 per month they already charge. That is the Minister's record. The record is the Government has sold this city and surrendered it to institutional investors who charge the highest rents in the State, who do not pay a penny in corporation tax on them, and who are exempt from capital gains tax when they sell those assets in the future. That is the Minister's record after ten years in government.
This amendment calls for a rent relief for tenants of €1,500 for private rental tenants. This relief was in existence right up until the end of 2017, which is less than four years ago. It can be done if the political will is there. I make no apologies for saying the Minister has taken side of landlords over the side of tenants. When will the penny drop that this amount is too much for individuals? I say very strongly that €2,000 per month rent in this city is too much. We need to act. This is why we put forward this proposal.. How would this scare off landlords? This money goes to the tenants, as with the old rental relief. This is €1,600 for married couples over the age of 65. This rent relief would put €1,500 into the pockets of those renting privately. The Minister may try the scaremongering act that this would destroy the economy and so on. This is about a government that we want to be, which would put the interest of renters first-----
It is a recipe for fewer houses built.
This is a government who would stand up for the constituents the Minister feigns sympathy for when they tell him they struggle to make ends meet.
It is a recipe for fewer homes.
That is what we would do. We would be a government that would-----
Higher rents and fewer homes.
-----put those individuals into homes, instead of introducing higher rents.
Fewer homes and higher rents, Deputy Doherty.
The Minister does not like to hear the truth.
Deputy Doherty does not like a debate.
Can we do this through the Chair, please? The proposer was allowed to come back in a third time and that is why I allowed that. Does the Minister want to come back in?
The Minister is not entitled to come back in.
Well, we can swap places if Deputy Doherty wants. I would be happy to move out of here.
It is a point of order.
I move amendment No. 10:
In page 20, between lines 28 and 29, to insert the following:
"Reports
16. Within three months of the passing of this Act, the Minister shall lay a report before the Dáil, on the abolition of the Special Assignee Relief Programme on tax justice grounds.".
Not too long ago, I was listening to the radio in the morning and heard the Minister for Health talking about the question of subsidising antigen testing. He said there are very sharp limits on what the Government can do in this regard. In the end, as we all know, it did not subsidise the tests whatsoever. The Minister said to the interviewer: "We have limited funds at our disposal. If we go further than I am indicating here on your radio show, it will come out of the budget for paying nurses." It is not the first time we have heard this kind of argument. There are scarce resources, which means one deserving group cannot have its demands satisfied because another deserving group will lose out. Of course, this argument ignores the fact there are very large amounts of wealth in this society. It is in the hands of a very small minority, whom the Government refuses to go after.
This is a good example of that. We are talking about a tax break for foreign executives who earn anything between €75,000 and €1 million per annum. Of course, if we give a tax break to foreign executives, or any such privileged group, other people will pay for it. How much will the taxpayer pay? We are not quite sure because we do not have the up to date figures. We know that in 2016 this tax break for foreign executives cost €18.1 million. We know that for 2018, the last year for which we have figures, the figure more than doubled to €42.4 million.
The Minister for Health goes on the radio to say we cannot subsidise antigen tests without taking money from nurses and a thousand other similar types of arguments are used by Ministers day in day out, but the reality is that foreign executives in this country have a tax break paid for by taxpayers to the tune of €40 million, and rising. We would love to put forward a proposal that the tax break be abolished, but we do not have the power to do that. The most we can do is ask that a report be laid before the House within three months. That is what the amendment states.
The special assignee relief programme, SARP, is designed to help reduce the cost for employers of assigning skilled individuals in their companies from abroad to take up positions in Irish-based operations of their employer or an associated company, thereby facilitating the creation of jobs and the development and expansion of businesses in Ireland. The scheme currently has a sunset date of 31 December 2022.
As I stated on Committee Stage, there is an essential context around SARP. The context is that it is part of our foreign direct investment policy which allows our country to be competitive and attract certain senior decision makers here to particular companies. This is fundamental to the creation and retention of other jobs. If we get rid of the scheme, it makes what we offer uncompetitive versus the offerings from competitor jurisdictions, for example, France, Portugal, the Netherlands and Italy, to name but a few.
Ireland's enterprise policy is based on export led growth. FDI has been and continues to be an integral part of Ireland's economic development. The existence of an incentive like SARP is an acknowledgement that we are competing on a global basis for highly skilled and mobile executives. Competition for this talent is intense, in particular the type of skills required to facilitate the development and expansion of businesses in Ireland. The existence of similar and, indeed, more attractive special assignee type tax reliefs creates a market failure that could not be addressed but for the continued existence of SARP.
On budget day, the annual Revenue report on SARP for 2019 was published. It found a significant reversal in the overall cost of the scheme in 2019 to €38.2 million, compared to 2018 when the cost was €42.4 million. The cost is €4.2 million lower than the figures quoted by Deputy Barry. This is attributable, at least in part, to my decision to introduce a salary cap of €1 million on the amount of a person's income that can benefit from the scheme in the Finance Act 2018. The change applies from 1 January 2019 for new entrants and from 1 January 2024 for existing recipients.
The aggregate number of jobs that were reported as created and retained as a result of the scheme has increased since 2018. There were 379 additional employees, compared to 226 in 2018, and the number of employees retained was 483 compared to 348 in 2018. This combined total of 862 SARP related jobs in 2019 represents a cost of €44,000 per job created or retained, a decrease in cost per job compared to 2018 when there were 584 jobs at an average cost of €73,000. This represents a decrease in cost of over 39%.
The benefits of SARP, apart from enhancing our international competitiveness, are detailed clearly in the Indecon report. They include the following: increased employment and retention of staff within SARP companies, associated additional investment, additional corporate tax receipts, additional PAYE receipts and research and development spillover activity.
In 2019, I commissioned an independent review of the scheme. The report of the review confirmed to me the strong policy rationale for the continued relevance of SARP to the Irish economy. The report is available on the website of the Department of Finance. The review highlights the following data regarding companies that availed of SARP for 2017: they paid €2.5 billion in corporate tax, employed over 155,000 individuals and paid over €1.9 billion in PAYE taxes.
With regard to the concerns of Deputies, I recognise that there is, of course, a balance to be struck between the principle of equity within our tax system and the need to compete internationally for highly skilled and mobile personnel. In this regard, and in order to seek to ensure that the appropriate balance is maintained, the issue is kept under regular review through detailed examinations of the type carried out by Indecon. As the scheme sunsets next year, there will be a further opportunity for review. Therefore, I do not propose to accept the amendment.
We can boil down the argument of the Minister to there being one law for the rich and one law for the rest. That is actually what SARP amounts to. People who earn more than €70,000 - quite a few of these people earn millions of euro a year - get a special and very substantial tax break on their enormous earnings which ordinary workers do not get. Such people also get tax relief on sending their kids to private schools. We are doing this because if we did not these people would not come here.
We will throw tax justice out of the window because of our fear, or blackmail, if we like, on the part of people who say they will not come to our country and bring investment along with them unless Ireland gives them a special tax deal which no other ordinary worker will get. We have to give into that and, essentially, have a different tax code and special tax deals for these super rich executives.
What about all the nurses who leave because they cannot afford to live here? Where is the special tax break for them, given that we do not have enough of them? What about all of the other allied health professionals, including doctors, who leave because their earnings are not enough to put a roof over their heads due to sky high rents? People on very high salaries are contributing to this because we build accommodation for very wealthy, rather than ordinary, people.
If we want to put this in terms of competition, we are losing out on a lot of the skills we desperately need because people feel it is not worth their while to stay here. We get high flying executives who are, let us be honest, greedy enough that, on top of their extraordinary salaries, they want additional tax relief, while a lot of our people whom we have put public money into educating and training are leaving. There are no special deals for them to keep them here. It is gross tax inequity at every level and it is literally the embodiment of there being one tax law for the super rich and one law for the rest of us.
It is obnoxious. Whatever arguments the Minister might make, I do not see how one can get around that question of inequity.
To be fair, Deputy, you have time left on the clock.
It is fine. I have made the point and I made it extensively on Committee Stage.
This throws into stark contrast the discussions we had earlier. We had discussions about cross-Border workers and the Minister spoke about equity and fairness among taxpayers. Many people would ask a question about that in respect of the SARP policy being pursued by the Government. It has been said previously by me, Deputy Boyd Barrett and others, and this is probably a reflection on us in the Opposition, that if people knew this tax measure existed, there would be uproar. This is a special tax rate that only people who are earning over €75,000 and with incomes up to €1 million can avail of. It is not available to anybody else, regardless of the contribution a person makes to society. Whether one is a nurse, a teacher, a street cleaner or somebody who works in the local authority, it is not available to such workers. It is not available unless somebody is one of these special people in the eyes of the Minister for Finance. The person must be foreign, must come into this country and must have an income above €75,000. If he or she has an income of up to €1 million, the Minister for Finance will cut his or her tax bill by €111,000. He will also give him or her €5,000 for private education for the person's children and allow the person to write off the payment for his or her flights home against his or her tax bill.
As has been mentioned, 50 millionaires availed of this in 2019 - 50 people who had incomes of between €1 million and €3 million. That means each one of the 50 got a tax write-off of €111,000. The butcher, hairdresser, nurse, teacher and street cleaner all must pay tax at the marginal rate of 40%, but, by God, if you are one of these lucky 1,574 people, the Minister for Finance has brought forward a sweetheart deal that will allow you, up to a maximum, to reduce your tax liability by €111,000. This has no place in a State that believes there should be equality of treatment for taxpayers. There are many people who feel hard-pressed by taxation. We need taxation to pay for services and everything else, but they get no relief when it comes to these special measures. The SARP is absolutely outdated. Looking at the projections for the cost from 2018 to 2028, it is going to cost the State half a billion euro. That is half a billion euro in a ten-year period only for individuals with incomes above €75,000, only for people with incomes up to €1 million and only for these very special people in the eyes of this Minister, who can also avail of other special conditions as a result. It is appalling and should not be there.
There are multinationals in this State that we want to retain. There is no doubt about that. We have argued in terms of the Minister's role in trying to secure the 12.5% rate. That was impossible in the negotiations. There was a mountain to climb in that regard in the context of those who came under the OECD. We want to retain those investments, but I must make something clear. If a company feels that a so-called key person in its employment needs to have a higher take-home pay, the company must pay the person more. Do not ask for the tax that is paid by the butcher, the nurse, the teacher or the doctor to allow that person to have a reduced tax liability. It is unacceptable, it should not happen and it has no place in our tax code.
The people I represent and the people who I want to have better public services, to have a good standard of living, who want their children to go to good schools and who I want to see living in good homes and having a better future in our country are the butcher, the street cleaner and the teacher, the people that the Deputies, in different ways, have referred to in their contributions. In order to ensure we have the resources and money we need to deliver for the needs they have and that I want to see met, a small economy of our scale located where it is must be open and competitive. Being open and competitive are the cornerstones of how we have built over decades an economy in which we see rising living standards. We still have many difficulties and many challenges to overcome, but we have seen the living standards of many people rise across that period. I believe we will see their living standards grow again in the future.
The views put forward by the Deputies, particularly the view put forward by Deputy Doherty, are a direct threat to the competitiveness of our country and our ability to attract and retain jobs. The proposals they are putting forward are a recipe for sending those jobs elsewhere. They are a recipe for losing jobs, losing investment and losing the type of multinational investment that I believe is critical to the success of our country. Why do I say that? Consider what is available in other countries. This is what other countries are doing; it is the scheme that France, Malta, the Netherlands, Italy and Portugal is offering. Deputies Doherty, Boyd Barrett and Barry would be happy to see the jobs that I want to see kept in Ireland moved to those countries. That is the consequence of the policies they are proposing.
I heard Deputy Doherty use the phrase "special people" and his tone and language dripped with contempt for them. The people we are referring to here earn far more than I or any Member of this House does, but they play a role in the creation of jobs, income and investment that, in turn, ensure more resources are available to help the butcher, the teacher and the street cleaner. It is those people I have in mind when I make the case for the retention of this scheme.
The Minister has taken out his big, bad wolf script again about how terrible things would be if Sinn Féin's policies were accepted. He wants us to thank him for this provision for these special people, which is not my language but his. This provision is called the special assignee relief programme. The Minister named them special, not me. This provision for these special people, who make up 0.5% of the highest income earners, is really being done for the butcher, the baker and the teacher. We need to give the tax cuts to the mega-wealthy in the State so that the people struggling down below will have a better future. They need to understand, poor créatúrs, that the reason we are cutting the tax bill of the millionaire by €111,000 is for their benefit, the teacher's benefit and the nurse's benefit.
The Deputy is happy to see the jobs go elsewhere.
The Minister does not like the truth.
I am giving the Deputy the truth.
The Minister does not have the floor. This is for the benefit of the butcher, so please thank the Minister for Finance. They just do not understand the reason we give these tax cuts to what the Minister has called these special people.
The Deputy should respond to my argument.
The Minister does not like the truth. I will tell him this - the butchers and teachers I know are not thankful that the Minister is cutting the tax rates of those millionaires and thinking that it is for their benefit. They know exactly what is at stake here. Dr. Micheál Collins appeared before the Committee on Budgetary Oversight and said that the special assignee relief programme beneficiaries would have an average income of at least €313,000. That would put them in the top 0.5% of earnings distribution. He said:
While there are economic benefits to schemes such as this, one could make similar arguments for many other jobs and roles, do earners at this level of income need a tax reduction? On the grounds of fairness, the scheme is hard to justify. Simply, there are better uses for these resources.
I agree 100%.
It is unfair and a bad use of resources. Many people in other jobs and roles in society that the Minister does not view, in his words, as special could do with similar supports.
We tabled this amendment because we believe in tax justice. We believe in an equitable distribution of wealth and income which we are a very long way from. The Minister says we would not get these people whom we need and we would not be competitive given the tax breaks that these incredibly well-paid executives can get elsewhere and therefore we need to do the same. I do not know the chronology of which of the countries the Minister mentioned introduced these tax reliefs first. However, I certainly believe we have helped spearhead where others have followed a certain model which is to attract investment on the basis of cutting taxes on the profits of corporations and now on the income of high-flying executives. To my mind that is a race to the bottom and somebody pays for it.
The distribution of wealth around the world is ever-more concentrated in the hands of the CEOs and top executives of a relatively small number of corporations. I am talking about staggering wealth in the billions and tens of billions of euro. It is beyond comprehension and it gathers apace. It is because of the notion that unless we make them pay little or no tax, whether it is on their income or on their profits, we cannot have a viable economy and therefore we must do it. From the point of view of ordinary people that is a zero-sum game where we will lose. The 99% of ordinary people, the butcher, the baker, the nurse, the street cleaner and pretty much everybody, are losing out and ultimately will lose out by that approach which I fundamentally reject.
In all sincerity, I ask the Minister to think about all the really special people. He can say these people are special people, have special skills or whatever it is. However, to my mind the student nurses, 70% of whom say they will leave the country after they are qualified, are just as special. The construction workers who go to Australia when we need them are just as special and they are not getting these kinds of breaks. It is fundamentally unfair.
