Dáil debates

Tuesday, 14 February 2012

Finance Bill 2012: Second Stage

 

7:00 pm

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)

An individual on approximately nine times what a person on social welfare gets per year, who signed up to some of these section 23 reliefs and is able to avail of these legacy property tax reliefs will be able to continue to avail of them. After all the bluster we got from Fine Gael and the Labour Party in Opposition, this is what they have mustered up. Even a Minister of State earning in excess of €100,000 will pay only 5% on such money that is sheltered. It is appalling to allow individual high earners continue to avail of these schemes at this point in time when the Minister and every other Minister tells us the country is broke. Everyone has to take a hit, but the person earning €90,000 with these tax reliefs will be able to avoid paying tax on that amount. It is staggering and breathtaking.

I want to spend some of my remaining time outlining some of the choices the Minister could have taken but decided not to. I also want to signal that my party intends to bring forward a number of amendments on Committee Stage aimed not at grandstanding or political points scoring, but at giving the Minister the choices the Government seems to have failed to offer itself. Our amendments will be constructive and credible and will be designed to create a Finance Bill that is progressive.

We in Sinn Féin, have long argued for real reform of the tax system. Such a programme of reform would aim to increase the tax take as a percentage of GDP towards the 35% mark, an objective shared by the previous Government and by this Government. Crucially, we would do so in a way that ensures those most able to pay would pay their fair share. Sinn Féin is the fair tax party. Taxing the very wealthy during the boom would have left the State with the resources it needed to cope during the bust. Instead, Fianna Fáil broke the tax system. The opportunities to correct Fianna Fáil policy have been ignored by Fine Gael and Labour. Sinn Féin’s proposals would see a reduced tax burden for those on low and middle incomes, increased taxes for those who can afford them, and the closing of loopholes which are still used to avoid paying tax. The point at which one can close a deficit through taxation and not deflate the economy is sensitive, and the only way to reach it correctly is by targeting tax from those who can afford to pay it. Taxing those already struggling redirects their diminishing disposable income away from essential services in the community and contributes to the economic contraction, job losses and human suffering. Rather than the half measure to be implemented in this Finance Bill, Sinn Féin would take all of the 500,000 people affected by the universal social charge out of the income tax net. Effective tax rates according to our proposals are 45.4% on income between €100,000 and €175,000 and 51% on income in excess of €175,000.

In the longer-term, Sinn Féin wants to see a move away from indirect and consumption taxation, which disproportionately hits low-earners. An Irish Congress of Trade Unions study in 2010 showed that for every €100 paid in income tax, a further €147 is paid by everyone, including children, on spending taxes. These spending taxes are not progressive but income tax and wealth taxes are.

Government backbenchers often demand where Sinn Féin would get the revenue to fund our spending programmes. If they had bothered to read our pre-budget submission published last November they would know the answer. Our combined tax reform proposals would have brought in a net total €3.263 billion in 2012. We would introduce a new third rate of tax of 48% on income in excess of €100,000, raising €410 million. We would adjust PRSI exemptions for share options, share-based remuneration and capital gains, raising €97 million. We would introduce a wealth tax of 1% on all assets in excess of €1 million, excluding working farmland, business assets and the first 20% of value of primary residences worth in excess of €1 million, raising up to €800 million. Our proposed changes to capital gains tax and capitals acquisitions tax regimes would raise an additional €360 million.

Sinn Féin would also make substantial changes to the excessive tax reliefs introduced by Fianna Fáil and supported by Fine Gael and Labour. We would place an earnings cap of €80,000 on pension contributions and grant relief at 20%, raising €550 million. We would abolish the ability of incorporated bodies to claim trading losses against profits made in previous years for tax return purposes. This once-off measure should save over €100 million in the year it is introduced. We would halve mortgage interest relief for landlords while simultaneously looking at proposals to cap rents so that landlords cannot pass rent increases onto their tenants. Where there is genuine hardship for landlords, this should be dealt with through measures other than interest relief. In 2013 this measure on its complete abolition would save the State another €385 million.

We would standardise all discretionary tax reliefs, excluding donations to charity, raising €628.3 million. We would abolish group relief availed of by companies to transfer losses to profitable companies and write down tax receipts, raising €450.3 million. Unlike Labour, we would keep our word and abolish legacy property reliefs, raising €341.8 million.

These are just some of the headline taxation measures contained in our pre-budget submission that would generate a significant portion of the revenue required to invest in jobs and services while assisting in reducing the deficit. Our proposals are fair, sustainable and credible. Crucially, they avoid all of the inequalities inherent in the proposals contained in the Finance Bill.

I will conclude by quoting the Minister for Social Protection, Deputy Joan Burton, which I like doing because I like to remind her-----

Comments

No comments

Log in or join to post a public comment.