Gerald Nash (Louth, Labour)

Leading on from Deputy O'Callaghan's point, we are not serious as a country about innovation, developing and evolving our economic model, developing our notoriously unproductive indigenous SME base and hoping we can scale that to the point that it is exporting and adds value if we are not serious about investment in public research. Instead, we have decided on the tax expenditure side to spend a huge amount of money, diverting it from PAYE workers to the R and D tax credit side, credits that can often be wasteful, really poorly targeted, and often exploited by multinational corporations, not for the wider benefit of the Irish economy. It is a point that is worth making and we need to rebalance and reorient that model. I have favoured that for a long number of years.

We are talking about tax expenditures. I said at the last engagement with the Central Bank that we have about €8 billion in tax expenditures annually, ranging across in excess of a hundred tax reliefs, many of which go uninterrogated for many years and become a permanent feature of the landscape, at some considerable cost to the taxpayer. Insanely, we are about to add another that is likely to repeat ad nauseam, namely, the economically illiterate, fiscally irresponsible and ultimately socially damaging 9% VAT proposition for the hospitality sector. That is not to say I am not concerned about some hospitality sector businesses that might close. There is a natural churn in the hospitality sector and all of the evidence shows it is a sector that is adding jobs and businesses. I appeal to the Minister, Deputy Burke, to publish the data. He has refused to do it and it is unlikely he will do it before the budget. It will be out the gap before he gets to do it properly around November. We have been waiting for this data to inform the policy decision on VAT relief for the hospitality sector, on the number of incorporations, liquidations and trends in that sector. That is good evidence-based policymaking.

It just happens to be that the value of the VAT cut on an annual basis - €632 million - is about the same amount of money it would cost to introduce a second tier of child benefit to finally start to declare war on child poverty in this country. They are the choices. It is as simple as that. I know which side I am on. Setting that €632 million against the context of €1.5 billion in terms of what the Minister for Finance says he has available for tax adjustments, it is a big wedge of money. It is a transfer of wealth from PAYE workers to a sector that has been identified for political purposes to receive some support. This will not be passed on to the consumer. History tells us that it is certainly not passed on to workers in terms of improved pay, terms and conditions in a sector that is addicted to low pay and poor conditions. It is a peculiar decision to take. Looking at it in the round, from what is remaining from the €1.5 billion the Minister says is available for tax adjustments, and accounting for wage growth over the next year, there is no way that we are going to have any form of indexation that is really going to matter for working people. In other words, PAYE workers are going to be paying more tax at the expense of the hospitality sector. They are the calls that are made and that is a call that the Minister seems to want to make.

On tax expenditures, it was mentioned in the opening statement that as far as the Nevin Institute is concerned, the way we should be approaching this budget is to ensure there are revenue-raising measures approaching about €1.5 billion. Significant resources could be generated from reviewing tax expenditures that may have outlived their usefulness. We are not good at reviewing tax expenditures in this country. Only a handful are reviewed every now and again through the tax strategy group and so on. What tax expenditures does Dr. McDonnell believe could be reviewed and could help us to generate some more resources to balance the fiscal situation in a responsible way that does not affect enterprise?