John Gilroy (Labour)

Senator Byrne needs to refresh his memory. The cutbacks he outlined were required because of the mismanagement of the economy by his own party. Perhaps if previous Governments had been more careful we would not be in this position.

I welcome the Finance Bill 2012 and look forward to a healthy and robust debate on its contents. It is widely accepted by most reasonable commentators that the legislative content of the Bill will go a long way towards implementing the pro growth measures the country requires. I am sure Senator O'Brien and myself will find plenty to agree on in the Bill. However, I am afraid both the Minister of State and I will be a great disappointment to Senator Barrett. I welcome his mention of the general anti-abuse rules of the United Kingdom. This is something in which I have a great interest and I hope we can have a fuller debate on that at a later date. It would be worthwhile and the Government would look favourably on such a debate.

The Bill increases the exemption threshold from €4,000 to €10,000 for over 30,000 people and they are now no longer required to pay the universal social charge. This must be welcome, even to the most negative among us. We also note the new rate of mortgage interest relief of 30% in respect of qualifying interest paid by those who took out their loans between 2004 and 2008, at the height of the housing bubble. I seem to remember a Minister of State with responsibility for housing exhorting people in February 2008 in a press release to buy a house, saying it was a great time to do so. A few months later, the housing market collapsed.

To support businesses, we have put in place mechanisms whereby new companies may be exempt from corporation tax for the first three years of their trading income. This is welcome. We welcome the fact that key employees engaged in research and development activities can avail of a reduction in their income tax liabilities also, thereby supporting and extending a vibrant research and development sector in the country. This is an area in which we have made changes with regard to copyright, patents and trademarks and we are putting in place an infrastructure whereby Ireland can become and remain an attractive place for such investment. Over half of the world's leading financial services companies have an Irish base, creating over 30,000 jobs and contributing approximately €2 billion to the Exchequer every year. This Bill puts in place a range of incentives that will ensure that Ireland remains an attractive place for this important sector.

An important part of Ireland's recovery is investment in a strong and vibrant green economy. The Bill provides numerous incentives to ensure that the green economy is supported and expanded. In a move to ensure that the tax base is more evenly distributed and that the tax burden does not fall disproportionately on labour, the Government has decided to increase the standard rate of VAT to 23%. This is in line with moves by other countries throughout Europe. KPMG has pointed out that the average standard rate of VAT across the European Union was 25% until recently. We see this in the context of a reduction in the standard rate of VAT to 9% across certain sectors of our economy that has helped to drive growth, especially in the area of tourism. We see the evidence of this in the increased tourist figures from last year. An increase in capital gains tax and capital acquisitions tax goes some way towards ensuring that those in society who have the most will contribute most in terms of our economic recovery. Everyone here would agree that is right.

I have a lot more to add to this debate at a later stage, but I will finish for now. Suffice to say, the Bill gives effect to measures that will ensure our economy will recover. All fair minded people in the House will agree that the Government strategy for economic recovery is working, albeit slowly and painfully. The measure of the recovery must be seen in the progress we are making towards regaining our decision making power over our economic processes. When we came into Government last year, our international reputation was poor, we lacked political stability and it seemed we were at the bottom of an abyss. Now 12 months later, confidence has returned, our reputation has been re-established and our political system is stable. We see evidence of this when we look at the interest rates being charged on our debt. Ten-year money is now reduced to 7% from close to double that last year. The measure of our independence is an ability to return to the financial markets, to borrow at sustainable rates and to control our economic destiny.