Mary Upton (Dublin South Central, Labour)

I wish to share my time with Deputy Durkan and Deputy Hayes.

I would like to begin on a positive note by welcoming the innovations by the Revenue Commissioners in providing an on-line service allowing members of the public to manage their tax affairs directly. This extension is provided for in the Finance Bill. However, tax relief and tax credits place the onus on individuals to draw down the benefits available from Revenue. While many people can manage the system very well and avail of all their entitlements, unfortunately, a section of the population is less able to do so, and very often they miss out on the benefits to which they are entitled. For example, they may have literacy difficulties and-or lack the confidence to tackle revenue matters. This section of the community repeatedly do not get what they are entitled to, even though these are the people most in need of help.

The very wealthy can call in professional advice and competent tax advisers to help them minimise their obligations, which they do much of the time. I would like to see a general tax advocacy service on offer to members of the public to advise them on how to ensure they receive their entitlements. MABS, for example, has been very valuable and productive in advising people on managing their money matters generally. A similar provision would be very welcome in helping people with their tax concerns.

There is a need for greater equity in the tax system, especially as it relates to the two-tier taxation system. Just over half of PAYE taxpayers will be caught in the higher tax bracket of 42%. It is wrong that a single person who earns just over €30,000 starts paying tax at the higher rate of 42% on overtime or a small additional amount of work they might do. It is inequitable that this group of people are taxed at the same rate as the very wealthy. The Department of Finance appears to have taken a policy decision that half the PAYE sector should be caught in the higher rate, thereby taking the burden of taxation, while the very wealthy are allowed to escape paying their share.

The PAYE sector is a dependable source of income. They are an easy target for Revenue. As they are taxed at source, they cannot avail of tax avoidance schemes. To that extent, the Finance Bill is unfair to PAYE workers. My colleague, Deputy Burton, highlighted the success of some very wealthy people in reducing their tax obligations to zero. This is because of the loopholes left open by the Department of Finance and by the expertise that becomes available to the very wealthy. Such revelations have highlighted the need for ongoing reform.

The Labour Party has called for the establishment of a separate tax commission or tax reform commission, which I support. Departments and agencies such as the Revenue Commissioners too often downgrade consideration of policy choices in favour of crisis management and administration. This inevitably leads to poor long-term strategic planning and an absence of transparency as to how decisions are made. The announcement by the Minister, Deputy Cowen, of a review of tax or even exemption for high earners is welcome. I look forward to the outcome of this process in budget 2006. However, such a process of reform should not depend on local election results, but should be an ongoing process. It is the sort of work a tax commission should do on an ongoing basis.

We should examine innovations such as hypothecated contributions to pay for public services and new public projects. There is currently little or no discussion of possible new ways of organising taxation. Taxation policy is based on policy choices. Under the current system these choices are made behind closed doors. There is little public acknowledgement of the policy aims sought by the Department. There is also little accountability as to the effectiveness of taxation measures. For example, Deputy Burton highlighted issues regarding tax reliefs for private hospitals. An independent tax commission would bring the policy choices behind taxation policy to the fore and it would allow for transparent consideration of policy choices as well as the monitoring of relief already in place. The Minister, his Department, officials and Revenue would have nothing to fear from such an independent tax commission. We are very much in favour of transparency.

I welcome the comments of my constituency colleague, Deputy Ardagh, on the skewed use of retirement reliefs by a number of wealthy individuals. I agree with the proposal for an upper limit on the level of income that can be used as a basis for calculating pension contributions for tax relief purposes.

I would like the Minister to address an anomaly regarding the operation of the disabled drivers' and disabled passengers' tax concession scheme. I raise this specifically on behalf of the Walkinstown Association which provides services for people with an intellectual disability from the wide Dublin 12 area. The association has a landmark facility on the Longmile Road and it provides an excellent outreach service for people with an intellectual disability. Part of its service involves providing transport, in particular, as many of its clients are adults living at home with their elderly parents. The Walkinstown Association has brought to my attention the anomaly that this organisation cannot avail of VRT and VAT concessions for providing services simply because its clients have an intellectual rather than a physical disability. It is incongruous that these concessions are available only to those organisations which provide services to people with physical disabilities. I raised this matter with the Minister's predecessor and I would be grateful if this issue could be revisited.

The recent First Active share payout also highlighted a discrepancy in the exemptions available to older people in paying capital gains tax. Customers of First Active received payments of €3,000 in January 2004 following the acquisition of First Active by the Royal Bank of Scotland. However, many of the long-serving customers were elderly and not fully aware of their tax liability. This share payout was a once-off benefit to this elderly group of people who saved all their working lives. It is unfair that they were subject to capital gains tax on the same basis as everyone else.

According to tax law, preferential treatment is already given to older people in assessing liability for capital gains tax where the sale of home, business or farm is involved. Older people also benefit from more generous exemption rates in calculating income tax. This exemption should have been extended to share pay-outs to pensioners up to a maximum amount. I would be grateful if the Minister would re-examine this issue.

The tax code could be used to encourage volunteerism. Many social and health services would benefit from the supplementary assistance of people with high skills. The tax code could be used in an imaginative and more effective way to foster volunteerism and encourage people to give up their time for others. I appreciate that volunteers are just that and are not seeking to be paid, but some tax exemption might encourage more people to become volunteers, as we badly need them.

I wish to address some agricultural matters. The ICMSA sent the Minister a detailed submission recently outlining its concerns and I would like to highlight a number of issues on its behalf. Section 27 of the Bill deals with the taxation of certain farm payments, but the table on page 54 lists the schemes included for the purposes of this section. It appears that the dairy premium scheme is missing from the table and I would be grateful if the Minister would examine this. I would also be grateful if he would examine the liability of farmers to capital gains tax and land swaps, which some of my colleagues have mentioned.

While the stamp duty issue has been addressed such transactions may still be liable to capital gains tax. The Minister should also examine the liability for capital gains tax on the purchase of lands by farmers for the purposes of consolidating holdings — this issue has been raised a number of times — and such liability in respect of lands that are the subject of a CPO.

Under the early retirement scheme, tax relief is not available where land is leased within a family but is available if leased to strangers. Perhaps this anomaly will be reviewed. This provision seems to be somewhat discriminatory against families.

The ICMSA has requested that 100% stock relief should be available to all farmers to allow for the expansion of farms. Given the times that are in it and the somewhat uncertain future for many farmers, it is important that these tax issues are addressed in a sympathetic way.

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