Priority Questions
1. Deputy Michael McGrath asked the Minister for Finance the approximate adjustment required to achieve a deficit of below 5.1% in 2014; his views on whether the recent GDP figures which show a continued weak domestic economy support the case for a moderation of the planned adjustment in budget 2014; and if he will make a statement on the matter. [41626/13]
Amharc ar fhreagraThe deficit target of 5.1% of GDP to which the Deputy refers is the maximum general government deficit in 2014 which the Government is required to deliver under the excessive deficit procedure in the Stability and Growth Pact. This is part of an agreed consolidation path which Ireland will follow in order to return the public finances to sustainability. The European Commission, the International Monetary Fund, the European Central Bank and most economic commentators have acknowledged that Ireland has met all of its targets to date and that substantial progress has been made in setting the public finances and the economy back on the road to good health.
However, while it is right to recognise progress, it should be remembered that, regardless of commitments we have made to our international partners, these deficits represent the annual shortfall between what the State collects in revenue and what it spends. Every year in which there is a deficit the Government must borrow money, adding to the quantum of outstanding debt. This borrowing attracts additional interest and in turn this adds to the national debt. Interest payments divert scarce resources from areas where they are badly needed. It must be evident to everyone that this situation cannot persist in the longer term and that every effort must be made to alleviate this burden on the Irish people. This is the primary reason the Government is taking action to close the deficit but in such a way that seeks to find a balance between the need to tackle the deficit and the need to promote growth in the economy.
Last April in the stability programme update, I set out, on a purely technical basis, that consolidation of €3.1 billion would result in a general government deficit of 4.3% of GDP in 2014. That estimate was based on the latest available data at the time. Since then, we have received more up to date information, most recently the quarterly national accounts from the Central Statistics Office and the end of September Exchequer returns published yesterday. My officials are currently analysing these data for incorporation into the budgetary forecasts. The work is well under way and I will not be drawn into speculation on the composition of the budget at this time. However, the Deputy may rest assured that budget 2014 will include the required combination of revenue raising and expenditure reduction measures to ensure that Ireland continues on the road to repairing its public finances while providing an environment suitable to allow economic recovery to continue. This will be done in such a way as to spread the burden as equitably as possible.
Additional information not given on the floor of the House
Turning to your question on recent economic data, while activity in the domestic economy remains at muted levels, I think it is fair to say there is growing evidence of stabilisation in recent months. Personal consumption increased by 0.7% in seasonally-adjusted terms in the second quarter, and more high frequency data point to further growth in the third quarter. Core retail sales, excluding motor trade, have increased in year-on-year terms in each of the past four months. While the impact of the new motor registration regime impacted on headline retail sales in the first half of the year, strong growth in car sales in July and August was reflected in a 3.7% increase in the July-August headline retail sales when compared with the same period in 2012.
Recent labour market developments should also support more robust personal consumption in the second half of the year. Employment has now increased in seasonally adjusted terms in each of the last four quarters, with employment increasing by 1.8 % in year-on-year terms in the second quarter, representing an additional 33,800 jobs over the year. The Government is under no illusions about the importance of a recovery in the domestic economy to sustain the impressive momentum in the labour market of late and will continue to support the domestic economy where fiscal space allows.
I thank the Minister for his response. There were two parts to the question I tabled, the first of which is an attempt to establish the nominal adjustment required in the budget on 15 October to deliver a deficit of 5.1%. As the Minister indicated, we are still going by the April stability programme update numbers. Given that the Minister now has the quarter 2 economic data and the end of September Exchequer returns, can the Minister confirm the adjustment required to achieve a deficit of 5.1%? I am not asking the Minister what adjustment he will propose.
The second part of the question concerns the moderation of the adjustment. There is a strong case for a modest moderation of the adjustment. I am not suggesting an adjustment of a few hundred million euro would make an enormous difference to the overall economy but it could make a significant difference to those affected by cuts in social protection, health, education and other areas. I am particularly concerned by the spending side. Spending cuts between €1.8 billion and €2 billion are deep and will hurt people severely. The Minister will take that into account but perhaps he can come back on the issue of what adjustment would deliver a deficit of 5.1% based on the current available data.
I do not have the figure yet because my officials are still crunching the numbers. In April, the technical exercise showed that an adjustment of €3.1 billion brings us down to 4.3%. The situation deteriorated after that, when the CSO revised downwards the GDP estimate for 2012. The denominator became smaller so the arithmetic drove the deficit up. There was low growth in the first quarter but then it improved in the second quarter data. The revenue figures published yesterday are consistent with that third quarter growth.
We are working our way through it. A consolidation of €3.1 billion would get one below 5.1%. I saw a letter I received from Deputy McGrath just before I came to the Chamber. I will see what I can do to provide him with some kind of ready reckoner to make it easier for him to make the adjustments when he hears what we announce in the budget. I will provide the same data to other Opposition spokespersons.
I thank the Minister. That would be very helpful in order to allow us to finalise our own proposals which we will submit to the Minister in the coming days. There are a lot of moving parts and without access to such critical information we would have to take a guess at what level of adjustment is required to achieve the different deficit levels.
The Minister indicated yesterday that he would consider an adjustment of somewhat less than €3.1 billion. Is he minded to bring in an adjustment that delivers the 5.1% or is he minded to send a strong signal to the markets by aiming for a deficit below 5.1%? What factors is the Minister taking into account in setting the overall adjustment figure? How important is it to come in below 5.1%, or on 5.1%, and to what extent will he be driven by the composition of the budget? The most important issue is the composition from a tax side and from an expenditure side and the impact the specific individual measures will have on people who rely on essential public services and those who are paying taxes.
The target we must achieve is at least 5.1% to be operating in accordance with the programme. For reasons of market sentiment it is probably important to beat the target. At present, without having the full data available to me, I hope to bring in a deficit in the high fours. I think that would be sufficient to give the kind of market confidence we need on exiting. It will also look at what is implicit in the programme, namely, that we run a primary surplus in 2014. I hope that if one strips out interest rate payments we will get our deficit either into balance or just on the plus side so that we would have a primary surplus because that would be a very strong signal as well.
While there are targets implicit in the level of consolidation, it is more of a means to an end than a target. The targets are the deficit percentage and the primary surplus. I hope we will achieve both but there is final number crunching to be done before I could be certain of that and then there is the composition of the consolidation, as Deputy McGrath pointed out, in terms of what expenditure cutbacks and tax increases will be put in place and the magnitude of both when combined.
2. Deputy Pearse Doherty asked the Minister for Finance the action he will take to ensure those struggling with mortgage repayments will be offered genuinely sustainable arrangements that do not threaten the family home; that the banks do not rely on repossession or a legal process that could end in repossession as the main method of meeting the quarter four 2013 target of 15% and the quarter one 2014 target of 25% for concluded arrangements; and his views on the report by Grant Thornton Debt Solutions that many people in debt will not benefit from new insolvency regimes. [41673/13]
Amharc ar fhreagraAs the Deputy is aware, last March the Central Bank set specific performance targets for the six main banks, requiring them to propose sustainable solutions: to 20% of their mortgage customers who are in arrears of over 90 days by end June; to 30% by the end of September and; to 50% by the end of this year.
The Central Bank also recently announced that it has agreed further mortgage arrears resolution targets with the troika. In that regard, the main banks will now be required to propose solutions to 70% of their mortgage arrears customers by the end of the first quarter in 2014. Even more importantly, given that the primary objective is to put agreed and durable solutions in place, the first targets were also set for concluded agreements and these require these banks to have concluded arrangements with 15% of their arrears customers by the end of December 2013 and 25% by the end of March next year. This initiative should see more long-term restructured arrangements put in place.
The strong view of the Government is that, in respect of co-operating borrowers under the mortgage arrears resolution process, MARP, repossession of a person’s home should only be considered as a last resort. The policy measures adopted by Government make that quite clear. The code of conduct on mortgage arrears places an onus on the banks, in respect of a co-operating borrower, to explore all the options for an alternative repayment arrangement to address a mortgage difficulty before any legal action is considered and any proposal to a co-operating borrower by a bank under the mortgage arrears resolution targets, or MART process, will have to comply with the code of conduct.
The Central Bank’s MART document sets out three modes of generating a sustainable solution. The preferred solution is an arrangement where payments are re-established on the original, or an agreed revised schedule. The second mode is where the borrower opts for a personal insolvency arrangement. The final option is where an arrangement could not be reached or is not appropriate, ultimately involving surrender or repossession of the property. As the Deputy is aware, in his appearance at the Joint Committee on Finance, Public Expenditure and Reform, the Governor of the Central Bank acknowledged that more than 60% of the end of June proposals by the relevant banks involved the final option. The Governor also informed the committee that the Central Bank has commenced the audit of the banks’ returns on the end of June target and the Central Bank will have initial results of the audit in November. This will ensure that the mortgage modifications proposed by the lenders are in fact sustainable.
Additional information not given on the floor of the House
Regretfully, it must be accepted that not all mortgages, due to the individual circumstances, can be made sustainable. There will sometimes be circumstances where the person will have to lose ownership of the home. Indeed, in such cases this may be in the best overall long-term interests of all parties. The Central Bank does not expect that repossession will be the lender’s preferred solution to mortgage difficulties and in most cases engagement by the borrower will make the legal course unnecessary. However, in circumstances where the borrower does not engage with a lender to address a mortgage difficulty and, subject to fully complying with the code of conduct on mortgage arrears, then there may be no other option for the lender but to commence legal proceedings.
The Keane report clearly stated that without an effective insolvency system the mortgage arrears problem will not be solved. The Insolvency Service of Ireland began accepting applications on 9 September 2013 and while work has commenced on the initial cases, it is too early to make any specific determination on the numbers of individuals that may avail of the different options. There is, of course, a range of options available for the first time such as a debt relief notice, a debt settlement arrangement, personal insolvency arrangement and ultimately the fundamentally reformed bankruptcy arrangements which are more in line with international norms. The detailed operation of the insolvency service and the Personal Insolvency Act is a matter, however, for my colleague the Minister for Justice and Equality.
We had a debate during the previous two days in the House on mortgage distress as a result of the Bill introduced by Deputy Joan Collins. The question is specific. We ventilated in this Chamber and at committee level how the banks have used 14,720 legal letters to meet the targets that were originally set down for mortgage holders who will be offered long-term solutions. We know that is wrong. The Minister said it is not allowed or should not be included as part of reaching the targets but it appears the Governor of the Central Bank will allow those letters to be used. We will wait for the audits to be carried out before making a determination on that. The question relates to the real targets - the concluded arrangements - and the targets that have been belatedly announced, that are nonetheless welcome, of 15% in quarter four and 25% at the end of quarter one 2014.
Could the Deputy ask a question, please?
Will the banks be able to meet those targets by repossessing homes and when does a concluded arrangement take place if it is in the repossession category?
The targets will be verified by the bank by means of audit. As I understand it, whatever arrangement is put in place will have to be operating successfully for six months before it will be signed off by the bank. It is not enough to say the deal has been done, but that the deal has been done and the person with the impaired mortgage has paid on the new schedule for six months. That would be the definition of success.
Some repossessions take place all the time. To date, most have been by voluntary surrender because sometimes it suits people to surrender their home voluntarily and give up. It is the Government’s policy that if at all possible people should remain in their own home. That is why in the Keane report there are a number of options, including split mortgages and the effective take-over of houses by local authorities where the status of the resident changes from owner-occupier to tenant but they still remain in the family home. It will be up to the Central Bank to audit the returns and decide what it regards as a sustainable solution.
I will put the question in a simple way. The Joint Committee on Finance, Public Expenditure and Reform will have the bankers in again after the end of this year and will ask them how they have reached the 15% target of concluded arrangements to the end of this year. If they say to us that 10% of the figure is made up of repossessions of buy-to-let properties and family homes, is that allowable under the targets issued by the Central Bank and the Government in terms of the 15% target for the end of the year and the 25% target in quarter one of 2014? The statement that was made by the Central Bank contains one paragraph. It is important that we know whether it is possible for the banks to factor in repossessions as part, a bulk or the majority of the targets they are being asked to meet in terms of concluded arrangements.
As I and the Taoiseach have stated on a number of occasions, it is a key responsibility of financial institutions to do more to assist those in severe financial difficulties.
Letters threatening repossession or legal action could not be considered a sustainable solution under the mortage arrears targets and should only ever be considered after every possible avenue for a solution has been exhausted. That is the Government's position. The audits will be carried out not by the Government or the Department of Finance but by the Central Bank. They will be presented publicly to the committee of which the Deputy is a member in a transparent manner. He will see exactly what is included and what is not.
3. Deputy Catherine Murphy asked the Minister for Finance if the stated goals of his Department include creating a resilient Irish economy founded on sustainable and balanced growth and leading to significant increases in employment numbers; if he shares the concerns of the former IMF head of mission to Ireland that there is a risk we could enter a long-term hysteresis process; if not, the reason for this; in view of the extent and skill set of long-term unemployment, if a risk assessment has been done in his Department on the issue; if so, if he will outline its findings; and if he will make a statement on the matter. [41671/13]
Amharc ar fhreagraAs stated in my Department’s statement of strategy for the period 2011 to 2014, one of our principal goals is to create a resilient Irish economy founded on sustainable and balanced growth and leading to significant increases in employment numbers. I stress that all of the economic policies of the Government, be they on repairing the banking sector or public finances or bringing down the costs of doing business, are designed to get the economy growing at a sufficient pace so that we can reduce the excessively high level of unemployment. The economic crisis has taken a heavy toll on the labour market. In particular, the collapse of the construction sector has had a detrimental impact on employment. I have some concerns that there may be a mismatch between the skills of some of those currently unemployed and the skills demanded in the expanding sectors of the economy. This is why retraining is so important.
As part of the formation of the Action Plan for Jobs 2013, the issue of long-term unemployment was examined in depth and the following schemes have been targeted at the long-term unemployed: the JobsPlus initiative, which supports the long-term unemployed in returning to the workforce; the momentum programme, which provides education and training places to the long-term unemployed; and youth work services, which address the critical issue of youth long-term employment, which accounts for over half of all youth unemployment.
In addition to the Action Plan for Jobs, Pathways to Work 2013, published in July, is a 50-point action plan that focuses on labour market activation. This plan focuses on more regular and ongoing engagement with the unemployed; greater targeting of activation places and opportunities; incentivising both the take-up of opportunities and employers to provide more jobs for people who are unemployed; and reforming institutions to deliver better services to the unemployed.
The Government has prioritised getting people back to work, and the recent labour market figures are very positive in this regard. The Quarterly National Household Survey results for the second quarter of this year showed the strongest job creation since 2008. Encouragingly this growth consisted of both full-time and part-time employment and was broad based across the various sectors of the economy.
Additional information not given on the floor of the House
In addition, the standardised unemployment rate reduced further in September, to 13.3%, which is the lowest level since March 2010, but still unacceptably high. The elevated long-term unemployment rate remains a concern to the Government; however, progress has been made. In the year to the second quarter of 2013, the long-term unemployment rate decreased from 9.2% to 8.1%.
We must now continue to build on the progress made over the past year as there is clearly still lots to do, and I want to assure the Deputy that addressing unemployment remains the main economic priority for the Government. My Department continually monitors developments in the economy, including in the labour market, with a view to providing appropriate advice. It also produces forecasts for the labour market, and the next set of forecasts will be published with the budget.
If Ireland, with its small, open economy, is to have an export market, the United States and European Union economies must be doing well. Dr. Ashoka Mody said it is not just a case of having prudent fiscal managers since the markets will be looking at us to see if we are sound from an investment perspective. Investors want to know that Ireland is capable of repaying the huge debts with which it is burdened. Dr. Mody, in speaking about long-term unemployment, has put us in the same frame as Japan.
The Minister gave us a list of what the Government is doing. Does he share our concerns? Has he carried out a risk assessment on long-term unemployment? It is a critical factor in terms of the health of the economy.
We have no shortage of advice from some of the celebrity economists attached to some of our business schools or from various people who worked in the IMF over the years. We read all the advice. Sometimes it misses the point and at other times it is accurate. It is true that one of the big problems facing us is long-term unemployment. What has happened since we entered Government is that the live register measure of unemployment has reduced from 15.1% to 13.3%. Despite all the difficulties associated with the programme, we are beginning to make ground. Some 33,000 jobs, net, were created in the past 12 months or so. This is approximately 3,000 jobs per month. However, there is a difficulty and I do not believe labour activation measures alone will solve it. There is a skills mismatch between many people on the live register and the kinds of people industry is looking for. There are approximately 80,000 people with construction industry skills. The next phase of job creation will involve getting people back to work in the construction industry.
I do not dispute that there has been a net improvement in the number of jobs. Some of the jobs, however, are part-time jobs. Some people who were formerly on the register are not counted as unemployed. They are pushed into taking means-tested welfare payments if there is an employed person in the household. They are actually not counted. This must be factored in when determining the real level of unemployment.
Would the Minister pay particular attention to advice or concerns expressed by a person such as Dr. Mody given his involvement in the original programme and with the IMF?
I would listen to the advice of any world-renowned expert or economist. I read a lot, but much of the advice is contradictory. One must adhere to one's best judgment. It is true that one can argue about the statistical composition of the live register, as the Deputy suggested, but it is not generally known that 90,000 people working part-time, all included, are on the live register. One must make allowances for that also when considering what is going on.
So far, we have made many good judgment calls, in addition to some bad ones. I have explained several times at committee meetings that standing still is not an option. We must take initiatives as a Government to get people back to work. I am fully conscious that one will not get ten out of ten right. Not every initiative works. However, if a high percentage of them work, the system will be working. We are working on creating jobs at present and will continue to do so. We will take advice from the Deputies opposite. I will assess any good idea.
4. Deputy Michael McGrath asked the Minister for Finance his views on the operation of the 9% VAT rate; his views on whether it has been successful in supporting jobs in the domestic economy; and if he will make a statement on the matter. [41627/13]
Amharc ar fhreagraThe 9% reduced VAT rate for tourism-related services was introduced in July 2011 as part of the Government's jobs initiative. The measure was designed to boost tourism and create additional jobs in that sector.
With regard to the economic impact on the tourism sector due to the introduction of the 9% VAT rate, the most recent data available from the CSO on economic growth broken down by sector relate to 2012 and show that there was a year-on-year growth in gross value added for the accommodation and food services sector compared to 2011. Expenditure by overseas travellers to Ireland recorded an increase of 0.6% in 2012 over 2011. In addition, quarter one of 2013 recorded an increase in expenditure of 12% compared with the same period last year. There is a clear impact in terms of employment in the accommodation and food service sector which increased by over 13% between quarter 2 of 2011 and quarter 2 of 2013 – an increase of 15,000 jobs in the sector. For the period May 2013 to July 2013, the number of trips to Ireland increased by 7.6% over the figure for the same period last year. In the period January to July, the number of trips to Ireland increased by 6%.
In line with best international practice, the 9% VAT rate was introduced as a temporary measure and is due to expire at the end of December 2013, at which point it will revert to 13.5%. Retaining the 9% rate would be very costly to the Exchequer and would require an increase in taxation or a reduction in expenditure elsewhere. Any proposal to maintain the 9% VAT rate will be considered in the context of the budget.
I thank the Minister for his reply. He referred to some of the positive impacts of the lower rate of VAT on the hospitality and tourism sector. It costs around €350 million a year, a very substantial amount of money. That is the gross cost, but I would like to know if the Department has carried out an assessment of the net cost on the Exchequer, in view of the positive impacts to which the Minister referred, in terms of tourism and employment numbers. The net cost is not €350 million and there are various estimates of what it is. It is important, when the Minister is making a decision in the context of the budget, that this information be available.
Second, as the Minister knows, the VAT reduction was part of the jobs initiative which was funded by the pension levy. It was estimated at the time that the Department would take in approximately €1.9 billion. I note that the pension levy, in the last week or so, came in ahead of profile. In 2013 it came in at approximately €512 million, over €40 million more than the Minister had expected to receive. It is clear from the figures provided by the Department of Finance that not all of this money is being spent on the jobs initiative. Somewhere between €200 million and €300 million has not been spent on the measures for which the levy was initially introduced.
Has any decision been made on the 9% VAT rate at this stage? I ask the Minister to give us an indication of the position in that regard.
The 9% VAT rate was a pump-priming exercise and like all pump-priming exercises, one primes the pump, the engine fires and when the engine is going, one does not need to prime the pump again. We must measure whether the industry can now go without special measures and, like any other sector, pay the VAT rate which applies to it.
On the issue of cost, part of the jobs initiative was that we would abolish the travel tax, provided the airline companies did a deal to bring extra tourists into Ireland. We could not negotiate this and as a consequence, the travel tax receipts have been retained within the system. That accounts for a significant portion of the discrepancy. It is true that the pension levy figure is above the estimate, on the basis of the returns published yesterday. That is because the capital value of pension funds in 2012 rose by 11% or 12%. The Deputy will be aware that the equity market internationally has moved which means that there is now a bigger base. We would recover our money by putting up the VAT rate to something less than 13.5%. The cost was €350 million, but because of the expansion of activity in the sector, we could recover the money by not quite going to 13.5%.
The key question is whether the Minister is determined that the income from the pension levy and the cost of the various initiatives under the jobs initiative will total zero and even out. It is very clear, based on the figures provided by the Department, that it is not the case so far, unless a policy decision is taken in another direction. The gap has increased because of the additional revenue from the pension levy which is linked, as the Minister indicated, with some recovery in equity values. It is important that those affected by the pension levy be reassured that every cent of the money has been spent on the jobs initiative. There is a discrepancy, as the Minister has acknowledged, but he will have the opportunity in the budget on 15 October to ensure it is properly accounted for and that decisions taken will ensure all of the money is spent in the appropriate way, on job creation.
There is only a discrepancy if one puts a ring around the jobs initiative back in May 2011 and assumes that the Government never took any other initiative on job creation subsequently. The jobs initiative was rolled into the wider jobs programme under the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton. Enormous amounts of money have been spent on job creation measures all across the economy. There is no spare money left in a drawer or a press on Merrion Street. The money is used but -----
There might be some spare money under Tom McFeely's bath.
Is that in the Deputy's constituency?
No, I believe it is in the constituency of the Minister, Deputy Ruairí Quinn.
5. Deputy Joan Collins asked the Minister for Finance his views on whether the tax on maternity benefit is a retrospective tax; and if he will review this tax in budget 2014. [41737/13]
Amharc ar fhreagraIt is a general principle of taxation that, as far as possible, income from all sources should be subject to taxation. In line with this principle, the majority of social welfare payments are reckonable as income for tax purposes. These include long-term payments such as disablement benefit, the State pension, widows', invalidity and blind pensions, carer's allowance and the one parent family payment, as well as short-term benefits such as jobseeker's benefit. Treating these payments as income for tax purposes is essentially a matter of equity.
As a result of maternity benefit payments becoming liable to income tax for all claimants, from 1 July 2013 a number of possible tax outcomes could arise. An individual may pay no income tax on the maternity benefit payment as her tax credits will be sufficient to reduce her tax liability to zero or an individual may pay income tax on some or all of the maternity benefit payment solely at the standard rate. In some cases, an individual may pay income tax at the standard rate on a portion of the maternity benefit and the higher rate on the balance of the maternity benefit payment, while in others an individual may pay income tax on all of the maternity benefit payment at the higher rate.
I am aware that some employers do not pay a top-up payment to their employees while they are on maternity leave. However, in such circumstances many mothers will not be subject to income tax on the maternity benefit payments as their personal credits will ensure no tax arises on the social welfare income. Of course, the extent, if any, to which taxation actually arises in a given case depends on the total level of income of the individual or couple concerned in the relevant tax year or years. Maternity benefit payments will remain exempt from the universal social charge and PRSI. I do not believe taxation of maternity benefit is a retrospective tax for a number of reasons. In budget 2013 I announced that maternity benefit paid by the Department of Social Protection would become taxable from 1 July 2013. The underpinning legislation for this measure was contained in the Finance Act 2013 which was passed by the Oireachtas and signed in to law on 27 March 2013. Maternity benefit payments only became liable to income tax for all claimants from 1 July 2013.
As the Deputy will appreciate, I receive numerous requests for the introduction of new tax reliefs and the extension of existing ones, but I must be mindful of the public finances and the many demands on the Exchequer, given the significant budgetary constraints.
I thank the Minister, but his reply is the standard one we have heard since the introduction of this tax on maternity benefit. It is a retrospective tax in that the Minister is taking money from people's pockets when they most need it. If those women still had that money, they would be able to spend it in the economy, buying what they need for their child, but the Minister has just taken it out of the economy. A young woman contacted me recently about this matter. The tax came into force in July and people are only starting to feel the effects of it now. The young woman told me that her wages had dropped from €2,452 to €2,102, which means that €350 is being taken out of her wages every month, or almost €90 per week. Effectively, the maternity benefit payment has been reduced from €260 per week to approximately €170.
The Commission on Taxation has stated maternity benefit should not be taxed and I agree. Why the maternity benefit of women who are expecting children is taxed when the Government will not touch corporation tax is beyond me.
As I said, it is a question of equity. Disablement benefit is taxed, as are State pensions, widows' pensions, invalidity and blind pensions, carer's allowance and the one parent family payment. If one has an income from work and a benefit in excess from social welfare, the general principle is that it is taxed. Maternity benefit was an exception and, in some circumstances, this led to a situation where women on pregnancy leave had a higher income than if they had stayed at work.
The women were pregnant. They had to leave work.
In the times we are in and in trying to fix the mess Fianna Fáil left behind, one is left with bad choices.
One is measuring one choice against another. When the Deputy’s neighbours do their shopping, they pay VAT and excise. Why should they be the people who carry the burden when other people at work on an extra payment should not pay tax? I know the Deputy has an argument, but there are as many arguments on my side as there are on the Deputy’s.
I do not know about that.
Taking maternity leave is not a choice but a need. It is about preparing for the birth and, afterwards, adjusting to having a new child. The Minister expected to make €14 million a year by taxing maternity. It is a bad choice and there were no calls for such a tax. It is a cut for a woman who had a child three years ago and will have another this year. The Minister might as well have reduced maternity benefit payments, as it is six of one and half a dozen of another. He should consider reversing this decision in the forthcoming budget. It would be a significant relief for women in receipt of this payment and would mean they could spend money on their children in the economy. This is what maternity benefit was given for in the first place.
We will consider any advice, particularly from elected Members. To be frank about it, it is unlikely I will reverse a decision made just 12 months ago.
