Seán Sherlock (Cork East, Labour)

In the interest of an overview, I ask the Minister to indicate the effect on buoyancy within the economy of the most recent budget and the subsequent publication of the Finance Bill. If the Labour Party's estimates are correct, it is proposed that more than €3 billion will be taken out of the economy as a result of the measures proposed in the Bill. This would have an effect on economic buoyancy through returns into the Exchequer. We are very concerned that the lack of buoyancy or the effect on buoyancy is extremely negative. This will have further negative consequences for economic growth in the economy. I would like a coherent and specific response from the Minister with regard to the measures proposed in the Bill and their effect on economic buoyancy. It is important that if we find ourselves in a scenario where we seek to stimulate the economy that we have those figures.

On the pension levy and its effect on part-time public sector workers, I have had representations from constituents who are employed by County Cork Vocational Education Committee. They work on a part-time basis, have never subscribed to a pension plan within the VEC, yet they have been hit by the pension levy. How were these people deemed eligible for the pension levy if they are only part-time employees and have never subscribed to a pension scheme or provisions? Is it legal to apply the pension levy to this coterie of workers, whether within the VEC or any other public sector body with part-time employees who do not pay into pension schemes?

I wish to raise the issue of capital allowances, specifically with regard to the low paid, self-employed and farmers. Section 2, in dealing with the income levy, outlines technical amendments to clarify that the levy applies on gross income. Subsection (1), paragraph (a) states:

'aggregate income for the year of assessment', in relation to an individual and a year of assessment, means the aggregate of the individual's relevant emoluments in the year of assessment, including relevant emoluments that are paid in whole or in part for a year of assessment other than the year of assessment during which the payment is made, and relevant income for the year of assessment;

In the past year a dairy farmer might have had significant capital outlay to comply with EU legislation through the farm waste management scheme and the nitrates directive and would have been subject to the farm improvement scheme, for which there is no economic return. He might have invested €100,000 in respect of those schemes and had single tax credits such as a €3,000 pension contribution. If his gross farm receipts amounted to €150,000 and one factors in costs between variable and fixed of approximately €115,000, his net income would amount to €35,000. Taking into account the income levy of 2%, the health contribution of 4% and the PRSI levy of 3% for the full year the total deductions come to approximately €2,700. The overall deductions on the income, net of capital allowances could be in the region of 9.4%. Adding the capital allowances to the pension contribution they could be in the region of 10.5%. Could provision be made within the Bill for self-employed people who have significant capital outlays to take those capital allowances into account in the calculation of income? That should be done particularly where someone is deemed to fall below a certain income threshold. There is scope to do this for someone who is self-employed when it is necessary to encourage growth, particularly in the rural economy.

In rural Ireland dairy farmers have had a significant outlay and their incomes have been dramatically reduced. It is, therefore, important to have some stimulus to maintain the income status quo. Not taking into account capital allowances made on Government schemes or obligations under EU legislation would bring some equity into play.

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