I draw Members' attention to the time limit which is 15 minutes.
Financial Resolution No. 5: Small Benefits Exemption
I move:
(1) THAT section 112B of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended in subsection (1)–
(a) by the substitution of the following definition for the definition of “qualifying incentive”:
“ ‘qualifying incentive’ means a relevant incentive that is the first or the second relevant incentive given to an employee in a year of assessment where–
(a) in the case of a first relevant incentive, the value does not exceed €1,000, and
(b) in the case of a second relevant incentive, the cumulative value of the first and second relevant incentives does not exceed €1,000;”,
(b) by the insertion of the following definition:
“ ‘relevant incentive’ means either a voucher or a benefit that is given to an employee by his or her employer in a year of assessment where the following conditions are satisfied:
(a) the voucher or the benefit does not form part of a salary sacrifice arrangement;
(b) the voucher can only be used to purchase goods or services and cannot be redeemed, in full or in part,
for cash;”, and
(c) in the definition of “salary sacrifice arrangement”, by the substitution of “relevant incentive” for “qualifying incentive”.
(2) THAT this Resolution shall have effect on and from 28 September 2022.
(3) THAT paragraph (1) of this Resolution shall apply for the year of assessment 2022 and subsequent years.
(4) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the
Provisional Collection of Taxes Act 1927 (No. 7 of 1927).
I welcome the opportunity to speak on the resolution which deals with section 112B of the Taxes Consolidation Act 1997, the so-called small benefit exemption. The exemption currently allows an employer to provide an employee or director with a small non-cash benefit that is a voucher or benefit with the value not exceeding €500 without the benefit being liable for income tax, PRSI or USC, provided all the conditions contained within section 112B of the Taxes Consolidation Act 1997 are satisfied.
These include that the reward benefit cannot be exchangeable for cash or part of a salary sacrifice arrangement.
The resolution will increase the limit of the small benefit exemption to €1,000 and the number of benefits in a year that an employer can give will be increased from one to two per year. It is, therefore, a maximum total of €1,000 in a year. It comes in light of the decision the Government made to provide a tax-free payment of €1,000 to many public servants involved in the response to the pandemic. This increased limit and permitting two small benefits in a calendar month will allow employers greater scope to grant employees non-cash awards tax free. The resolution, if passed, will have effect from tonight, which means it will apply in this current tax year. Even if an employer has already given the benefit of €500 this year, that employer can give a further voucher for up to another €500 this year as a tax-free bonus.
The measure we are debating to increase in the amount that is allowable for the small benefit exemption is not something that I would oppose. However, in the overall context of today's budget, the biggest losers in this budget are the squeezed middle - a group the Tánaiste has spent much time in this House talking about as has the Taoiseach - and they have been badly let down.
Some 1.8 million workers in this State who get up early and go to work, as the Tánaiste once famously said, will not get 1 cent from the Government's main tax measure in this budget. The Tánaiste, his party and the Government shafted 1.8 million workers today when it came up with a package of €1 billion on tax measures. Someone earning €130,000 will gain €830 a year under Fianna Fáil, Fine Gael and Green Party measures today on taxation; someone earning €35,000 will get only €190. That is a clear definition of a regressive set of tax measures. It is an absolute disgrace that those workers who earn the least and the squeezed middle whom the Tánaiste and his party keep talking about but do not deliver for are the ones who got shafted today. I do not know how he and his party can stand over a budget that excludes 1.8 million workers from its main taxation measures in the budget. How can he justify giving to somebody earning €130,000 a tax cut six times more than somebody who earns €35,000? That is unforgivable. It is not fair and it is not a good use of taxpayers' money. The €1 billion that was spent on taxation measures should have been spent on targeting those on the lowest incomes and the squeezed middle rather than the high earners as the Government has done.
I will finish on this because others want to come in. I say this time and again and many people in Fine Gael get very upset when I say it. I say it because it is a fact. Fine Gael represents a cosseted privileged class and every time the Tánaiste comes in and proposes measures like this where the Government delivers for that cosseted privileged class, he proves it again. That is what the Government has done with this overall package of taxation measures today.
I welcome this measure wholeheartedly because the relationship between employer and employees is a very important relationship in companies and across the board. In the main, it is very productive and is very beneficial both ways. I welcome the fact that it can be included this year because so much of the year is gone and the second benefit can accrue. We need to acknowledge the role of entrepreneurs and business people and I welcome them being able to give benefits to employees. I am not happy with the taxation measures in the budget. Like the previous speaker, a large cohort of people were included with so much money moving inside, playing catch-up with the policies that the Government has brought in that are reckless for business and everything else. However, I certainly support this measure.
We in Labour also called for this increase in the small benefit exemption from €500 to €1,000. We welcome a provision enabling an employer to provide an extra €500 in tax-free vouchers to staff. It is one way of ensuring that workers will get a pay rise. However, not enough has been done in this budget otherwise to ensure that workers get the pay rise they need, in particular, low- and middle-income workers. We have put forward a much more significant measure to increase the minimum wage by €1.50 per hour to €12 per hour to reflect the real and growing impact of inflation rather than the rather derisory increase the Government has proposed that amounts effectively to a pay cut because it comes nowhere near meeting the rising inflation for those on minimum wages. My colleague, Deputy Nash, also referred earlier to the inequitable effect of the taxation changes and the fact that lower-paid workers will simply not benefit to the same extent as higher-paid workers. While we welcome this provision, it is only one measure in a budget that otherwise does not go anywhere near to delivering for those on low and middle incomes.
I welcome this measure. I fully appreciate and value the massively important role that employers play in Ireland. I hope that the Government would also appreciate them, but I do not think it does sometimes. It is not just the big employers. Of course, we very much appreciate the people who come from overseas and invest here. We welcome the very big employers that we have - the ones we would call homegrown. Above all else, we have to place great significance on the small employers, the people who first of all created jobs for themselves and then maybe one or two others. It could then go to five or ten. They are the backbone of Ireland.
I always said that I believe the Government is poorer because not many people in government have to pay people on a Friday. I really believe that if all those in government did, they might know much more about the realities of day-to-day business. If some of them were paying people on a Friday it would give them a greater understanding of what really goes on - trying to balance books, keeping banks at bay and keeping everybody paid. It is unfortunate that very few of them are.
Having said that, this measure is welcome. I would like to see many more initiatives like it. Employers work in conjunction with their employees. It is all part of a team and everybody trying to keep the show on the road and keep a business afloat. There is a terribly important job of work to be done.
We welcome this particular measure and support it. It was much trumpeted in advance that the Government was going to give a serious break to working people. However, as has been said, overall that has not panned out in the budget. Some of the examples provided in the Government's budget book of tax policy changes that were so much trumpeted have turned out to be unfair and pretty derisory. I mentioned this earlier. Those earning between €25,000 and €35,000 make up a significant cohort of workers. A single private sector employee will be only €4 better off, which is pathetic given the scale of the cost-of-living crisis and that these people are on pretty derisory levels of pay. Given the same cost-of-living hikes that people are facing and the rents they have to deal with, the derisory 80 cent increase in the minimum wage is a drop in the ocean.
It is worse than that, given the situation we are now in. In real terms, people are going to have less. That is the truth. Then we have the inequity of people in the higher income brackets. Whereas the ones I mentioned between €25,000 and €35,000 will get €191 over the course of the year, someone in the higher income brackets will get €831 a year. Another table shows a married couple with one income, who have no children, and are private sector employees. People at the highest income levels get €900 a year, whereas the ones between €25,000 and €35,000 only get €266 a year. To be honest, I just do not know how the Government could have designed something like this. Despite all the spin and all the trumpeting, the people who are being most crushed and crucified with the cost of living and the housing crisis, and who need the most help, have been very badly let down in this budget.
I wish to comment on what the Government has done on tax. There is a significant tax package of €1 billion and it is completely regressive. The Tánaiste has spoken about this several times. It seems he is very much in favour of unfair tax treatment. He has been promoting this all along. I want to correct something he and his colleagues frequently say, which is that inflation increases the amount of tax people pay. That is simply not true. There is a case for a level of indexation and that should only relate to wage increases, which according to the CSO has been just over 2% in the past year. While there is a justification for increasing the entrance onto the higher tax band by 2%, the Government has gone far further than that with a 9% increase. There is no rationale or justification for that other than shifting money to the people who are better off. There is no explanation or defence for what the Government has done in that regard. Whatever about assisting middle-income people to a certain extent, the only way the Government can justify that is by having a clawback at the higher end. Why would the Tánaiste be entitled to an extra €800? Why would I or anybody in this House be entitled to an extra €800? It makes no sense whatsoever when we have large numbers of people who are literally on the bread line. This is a deeply unfair move. The Tánaiste seems to be claiming a lot of credit for it. He has indicated direction of travel for next year, which is to make our tax system even more regressive. Many people will be paying a high price for the Tánaiste's kind of ideology.
Deputies are entitled to their own opinions, but they are not entitled to their own facts. They are being very disingenuous. This is one of the most progressive income tax systems in the world.
But it is becoming less so after today.
If Deputies look at the budget in the round, which they should do, they will see that the Department of Finance analysis shows this was a progressive budget. Those on the lowest incomes gain the most whether it is done by centiles or any way Deputies want. These are the facts. This was a progressive budget. What Deputy Shortall has done is to have focused solely on the tax package. Some 35% of income earners in Ireland do not pay any income tax at all. That is the very good thing. We do not tax people at all in Ireland who are on very low incomes. How could one benefit from a tax package if one pays no income tax at all? That is like saying somebody with no children did not benefit from the increase in child benefit or someone who lives with five other people-----
Some 1.8 million workers who pay tax got shafted.
The Tánaiste should be allowed to speak without interruption.
I am being interrupted because they hate the facts. It is like saying somebody who lives with five other people does not benefit from the living alone allowance. If Deputies want to look at the benefits for the squeezed middle, if they are defined as people who earn less than €37,000, they have to look at it in the round. They have to look at the social wage, as the Irish Congress of Trade Unions would describe it: the reduction in the cost of childcare, more people qualifying for the SUSI grant, the working family payment, the free school books, the double child benefit payment, the rent tax credit, and the increase in the national wage. When we take all those things into account, this is a progressive budget. Those are the facts. The analysis is there from the Department of Finance. Members are entitled to their own opinions and ideology. They are not entitled to their own facts.
Question put and agreed to.