John Dennehy (Cork South Central, Fianna Fail)

I welcome the opportunity to contribute to the debate on the Finance Bill 2005, the first introduced by this Minister for Finance. The Minister holds the primary position in the Cabinet after the Taoiseach so there has been great interest in how he would set the tone both in the budget and in this Finance Bill. Many people were interested in seeing how Deputy Cowen would adapt to his new portfolio. On the basis of comments from across the board, he has played a blinder. In my time in the House I have never heard of such consistent approval from so many different sources, including Opposition spokesmen, for his short period in the Department of Finance. The Minister is already widely experienced and is bringing that experience to bear quickly.

The Minister is building on the strong foundations laid by the former Minister, Charlie McCreevy, but he has also indicated that he brings his own philosophy, expertise and experience to the post. He stated in his speech that he looks forward to a constructive debate and the speakers I have heard so far have been positive in their approach.

There are differences of opinion. Deputy Durkan said this is not an election Bill but only 30 minutes ago, Deputy Eamon Ryan, who wanted to be President, told us the Bill is a warm-up for an election. It is either an election Bill or it is not. It is, however, getting on with the business of Government.

I am also concerned about Deputy Eamon Ryan's approach to decentralisation, which is the typical Dublin-based Deputy's approach in that nothing should move outside the capital. Is Deputy Boyle of the same opinion? I heard every argument that has been trotted out this time around when the Central Statistics Office was moved to Cork. We were told that staff would not move and transport was insufficient. People were still clamouring to move.

This Bill could be summed up under four headings: reducing income tax and stamp duty, removing minimum wage earners from the tax net, extending Revenue powers to deal with major cases and cracking down on certain tax avoidance schemes.

I have been a PAYE worker all my life. I have a slightly jaundiced view of some of the so-called tax shelters, tax concessions and pro-development schemes that have been introduced from time to time. I do not mind admitting that I have mixed views. I recognise fully the need to develop indigenous industries and that concessions might have to be made to enable businesses to survive. I also recognise the need to encourage the supply of certain facilities, such as student accommodation, health centres and so on. That can be done by way of tax incentive. I subscribe to the original thinking behind the scheme to encourage the arts by way of non-application of income tax requirements to certain performers. My greatest difficulty with such schemes is that they are deliberately abused, they are left in place although they have outlived their usefulness, or the return allowed to any single source is excessive. That has been referred to by other speakers.

I do not suffer from the begrudgery syndrome, but I was one of the unfortunate people who in 1986 and 1987 paid 67% of earnings in stoppages, with nine to feed from a single source of income. I might have developed a chip on my shoulder because of that, but I did not. However, it is wrong that someone pays no tax because they happen to be a performing artist, even though they may be able to offer from €10 million to €15 million for a premises.

There has been a tendency to lump all schemes together and to suggest that everyone involved in them is a crook. That is unfair and helps no one. Some of the most vocal in that regard have held ministerial office. What sickened me is that several of those who spoke against the stallion scheme led the charge last year and the year before in pursuit of the same concession for the film industry. That displays a total lack of consistency. It is playing to the gallery, it is a manifestation of begrudgery. It is playing all sides on the issue.

As has been suggested by the previous three speakers, what is needed is a cool and calm examination of each scheme. To take an example, the scheme for artists is worthwhile. It saw the State replacing the patronage that was bestowed on struggling artists by landowners and wealthy people. The public agrees with promoting and assisting culture and art. However, it is obvious that there should be an income limit. There is a case for keeping the scheme almost as it is, imposing a cut-off and ring-fencing the income for the arts in general or for some level of redistribution. I believe the public would subscribe to such an idea, but it must be sickening for them, no matter how popular artists may be, if they are among the highest earners in the world and pay no tax in Ireland. That scheme should be examined with all the other schemes.

Deputy Connaughton and others mentioned that the good schemes seldom get a headline. The areas mentioned are the ones that get the headlines. Some schemes, such as the derelict sites scheme, have been very good for the public. We need to examine all schemes. In the area of taxation there are the tax avoidance schemes and the issue of tax compliance. It is worth noting when discussing these schemes that the record on tax compliance has been second to none since 1997. Since 1997 as many as nine different issues were dealt with in successive budgets and Finance Bills to ensure tax compliance. That is a very positive approach. Schemes were introduced by different Governments. The designated seaside resort scheme was introduced in 1995 and finished in 1999. The Temple Bar scheme was introduced in 1991 and finished in 1999.

The objective of the measures introduced since 1997 was to ensure tax compliance. In doing that we have also, through successive Finance Acts, broadened the tax base, closed off loopholes and discouraged tax avoidance. In the meantime revenue to the State has increased greatly, the primary reason being the creation of hundreds of thousands of extra jobs. Individuals are earning more and paying less tax. What is important is that more people are paying tax.

There is a third strand, and that is tax evasion, which is a criminal act. This is the area where offshore accounts and other schemes come into play. We are now well aware of what was happening in many areas and of the reason I had to pay 67% of my income in 1987, getting only £33 out of every £100 I earned. The reason I had to pay so much was that so many others were paying nothing.

We have dealt with offshore accounts through the DIRT inquiry and with other issues. I compliment the Minister for including in this Bill a very important measure for dealing with those issues. The Revenue Commissioners have outlined to the Committee of Public Accounts, of which I am a member, the difficulties that were faced, the figures and the numbers of people who had offshore accounts or other ways of hiding money. The case has been made consistently that most of these people, many of whom are now very old, were ordinary workers, perhaps shopkeepers, getting on with their lives and with some money coming in, and they saw a way of hiding away some of that money in order not to have to pay too much tax on it. A consistent aspect of that trend was the presence of advisers, whether they were professional tax advisers bank officials or other professionals in the financial area. They were present, they were advising, and to date it has been impossible to do anything about prosecuting or in any way reprimanding any of them.

The Chairman of the Revenue Commissioners outlined to us over the past 12 months that there had to be a change in the definition of facilitating tax avoidance. He consistently made the point that under the existing legislation Revenue could not possibly deal with the cases that were arising because although the figures suggested that some of these people had committed criminal acts and had aided and abetted tax evasion, it could not be proved. What the Minister did was outline in the Finance Bill what is needed, and he will put it into practice. With every other Deputy here, I have friends in the financial sector who are accountants. They all have the same fear that in some way they could fall into the wrongdoing side of the business by error. I do not think that will happen. They had concerns but the Minister has been around long enough to assure them and help them.

I have seen the Revenue present its case. I do not think there will be any attempt at entrapment or to coerce people or push them one way or the other. The law will be laid down. The bottom line will be that where people carry out honest transactions they will have no difficulty. If people deliberately manipulate the system, hide or falsify figures they will be in trouble. I do not believe that people will be falsely accused of facilitating tax evasion. I am open to correction but it is highly unlikely it will happen. The Minister and the Revenue are big enough to look at the position if any provision needs to be amended. It is one of the most important aspects of the Bill outside of the good news concerning the reduction in taxes and stamp duty. Most of the time we are working on the historical side and are looking back over a number of years and asking why this, that or the other was not done, but we find the laws were not in existence to enforce the particular course of action. I am glad we are moving on that issue.

An issue that has been hitting the headlines — it is a handy headline catcher — is the tax exemption for stallions. I am concerned at the way in which this has been presented in reporting that Ireland is in the dock. That is denigrating us as a nation and is the wrong approach. The issue is under examination as are many other issues throughout the EU. The bottom line is that when we bought into a single currency and accepted all the regulations we presented and argued our case on corporation tax, VAT rates or whatever and got agreement, and we have to comply with that agreement. When the EU seeks to examine an issue it does not always mean we are wrong. I appeal to the media to be more patriotic and to present the case properly when an examination is taking place.

I referred previously to being in the dock. Approximately four years ago, when Minister for Finance, Mr. McCreevy, argued on the issue of the 3% expenditure regarding the GDP and what we could spend, he made a simple case to Mr. Prodi and others which was that Ireland was doing well, had money to spare and should be able to spend more, but he got into trouble. The EU said he was wrong and he had to argue his case, as any Irish Minister would, but the reaction here was terrible. He was the Irish Minister and he had to be wrong. Members asked how could he talk down to the rest of the Europe and they said we would suffer for it. The amazing outcome is that three years later — this month or next month, whenever it gets around to it — the EU will change the regulation exactly as he had asked that it be done. It is slackening its requirement exactly to meet the case put by Mr. McCreevy. I make that point, not for the purpose of scoring a political point, but to ask people to have more confidence in our Ministers and in ourselves as a nation.

This is a time when I would hate to be on the Opposition benches. This is the second battering it has got, first with the budget and now the Finance Bill. It must be hard on a spokesperson or even a humble backbencher like myself to get up and make a case against it. Given that we have accepted from Deputy Durkan that it is not a budget Bill, let us try to imagine what the position will be like in two years' time, please God.

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