Dáil Éireann Debate, Tuesday - 27 January 2015
211. Deputy Mick Wallace asked the Minister for Finance his plans to introduce financial transaction taxes and carbon tax on airline ticket levies in order to raise additional resources to fund sustainable development at scale, as encouraged by the UN Secretary General in his December 2014 Synthesis Report on the post-2015 sustainable development agenda (A69/700); and if he will make a statement on the matter. [3693/15]
Amharc ar fhreagraThe Government's position is that a Financial Transactions Tax (FTT) would be best applied on a wide international basis to include the major financial centres to prevent the danger of activities gravitating to jurisdictions where taxes are not levied on financial transactions. Notwithstanding this, the Government is not prepared to stand in the way of EU Member States that wish to work together to implement a Financial Transactions Tax and in this regard adoption of a decision formally authorising enhanced cooperation took place during the Irish Presidency of the EU in January 2013.
The proposal for a Directive from the European Commission in the area of financial transaction tax was published in February 2013. Ireland had many concerns about the proposal as drafted, not least of which were the potential impacts on, and the trading of, Irish Sovereign debt in the secondary market and in total, the potential negative impact on the liquidity of the financial sector as a whole. Members of the Economic and Financial Sub-Committee on EU Sovereign Debt Markets have stated that the introduction of the FTT would have a significantly negative effect on Sovereign Debt Markets and may impair the good-functioning of secondary markets for sovereign debt resulting in reduced liquidity, reduced investor demand and therefore higher financing costs for States.
Our concerns are widely shared amongst the Member States, including some of the participating countries. These concerns have led to the issuing of a communique by the participating Member States, announcing that they have agreed to implement a financial transaction tax in a progressive manner, with the first step being a charge on shares and some derivatives. However, significant technical and legal discussions will continue to be required at the Council Working Party before the text of the proposed Directive can be finalised. With this in mind, the targeted implementation date for the FTT has been rescheduled to 1 January 2016.
As the Deputy will be aware, Ireland already has a tax on financial transactions, a Stamp Duty on transfers of shares in Irish incorporated companies, which currently stands at 1%. I am informed by the Revenue Commissioners that the provisional yield from this charge in 12014 was €283.67m.
Ireland was one of the first Member States to introduce a Carbon Tax on fossil fuels which as well as providing for much needed revenues also went some way towards addressing environmental concerns. The tax was introduced, at an initial rate of €15 per tonne of CO2 emission, on a phased basis in Budget 2010 and applied to petrol and diesel from budget night 2009 and to all other fossil fuels (except solid fuels) from 1st May 2010. The rate was increased to €20 per tonne of CO2 emission in Budget 2012. It was extended to solid fuels from May 2013 at a rate of €10 per tonne which increased to €20 per tonne in May 2014. The provisional carbon tax receipts for 2014 are €385.2m.
An Air Travel Tax with a general rate of €10, and €2 for shorter journeys, was introduced in the 2009 Budget, effective from 30 March 2009. The Finance Act 2011 provided for a single rate of Air Travel Tax of €3 for all passengers with effect from 1 March 2011, replacing the €2 and €10 distance related rates. Following the success of the 'The Gathering' in 2013, Budget 2014 provided for the removal of the Air Travel Tax from 1st April 2014. This was to encourage the development of new routes, increasing capacity and traffic flows which in turn would boost tourism and lead to the creation of jobs. This built on the success of the 9% VAT rate for tourism related services that was introduced in 2011 as part of the Jobs Initiative. Employment in the accommodation and food service sector has increased by over 20% between the period Q2 2011 to Q2 2014 an increase of 23,000 jobs in the sector.
I am generally not in favour of the hypothecation of taxes as it reduces the flexibility of the Government to prioritise and allocate funds as necessary at a particular time.
