Joan Burton (Dublin West, Labour)

The publication yesterday of the report on tax shelters revealed in an extraordinary way the extent to which nine years of Fianna Fáil-Progressive Democrats Government have succeeded in creating an amazing two-tier tax structure for Irish society. The Labour Party has repeatedly demanded two principal changes to our tax structures to restore some sense of fairness. We propose the introduction of a minimum effective tax rate, such that even where incentives are retained, no one can avoid making a reasonable contribution. Alternatively, schemes could be capped. Our second proposal concerns the creation of a standing committee on taxation which would undertake an independent and costed review of all tax breaks as they arise. I am disappointed to hear the Minister specifically rule out the notion of ongoing review and cost-benefit analysis.

Opposition spokespersons must play a game of blind man's bluff with the Minister as we try to second guess some of the arcane secrets of our annual Finance Bill. The Da Vinci Code has nothing on the mysteries of the annual Finance Bill. The only thing about which one can be sure is that every year for the past nine the small print of the Finance Bill has contained a secret bonanza for those who understand the Masonic rituals of tax avoidance for the super rich.

This year, contrary to his promises to mend his ways, the Minister has included several hidden nuggets for Ireland's super rich. Many pensioners on modest incomes must have struggled yesterday to understand the case studies supplied by the Department of Finance which showed pension funds of €100 million being built up for an individual, with a €25 million tax free up-front payment, the balance to be invested in further attractive approved retirement funds with more tax breaks to come. Not only will the pensioner concerned receive a €25 million tax-free payout on retirement but these schemes are arranged in such a way as for the benefits to be passed on to the spouse and children.

I heard the Minister uncharacteristically moaning on "Morning Ireland" that people did not understand how necessary it had been to allow Ireland's tax structure to become a milch cow for the super wealthy. It must have been too early in the morning for him. His extended appreciation of the super rich contrasts with the position of the young single person earning just over €30,000 per annum who will pay income tax at a rate of 42% on any bonuses or overtime earnings he or she receives. That is the reality of tax equity in this Fianna Fáil-Progressive Democrats Administration: funds of €100 million for the super wealthy and a tax rate of 42% on overtime payments for a young single worker.

The Bill shows that the Minister is determined to brazen this out. Not alone has he been timid in applying sunset clauses to some of the most lucrative tax shelters such as hotels and car parks but he is determined to extend the principle of property based tax breaks to new areas of economic activity. The Bill will copperfasten the financial health of investors worth €1 million who will be allowed a new set of tax breaks and conditions to develop private psychiatric hospitals and what the Bill describes as mental health centres.

Section 34 extends the private hospital tax relief to private psychiatric hospitals and mental health centres. In addition, sections 35 to 37, inclusive, contain changes in the investment regime in private hospitals. Private psychiatric facilities will now qualify for tax breaks at the top rate of 42%. This will provide significant extra investment opportunities for very wealthy private investors wishing to take advantage of these reliefs. In sections 37 and 38 existing institutions such as nursing homes which qualify for tax breaks but are converted into another type of facility such as private psychiatric hospitals will receive roll-over relief and, therefore, continued tax breaks. We have recently heard of several unfortunate scandals involving nursing homes. However, nursing homes closed by the health authorities, thereby losing tax breaks, could, under the Bill, be turned into psychiatric or other health care institutions and carry valuable tax breaks in the special roll-over relief the Minister has introduced.

The Minister has been forthcoming on this issue before and I hope will be so again. Were these new reliefs the subject of specific representations to the Department of Finance? On Committee and Report Stages I will tease out why the Minister has undertaken to introduce such generous roll-over arrangements allowing cross-travel among care institutions in respect of valuable and lucrative tax breaks.

The massive extension of tax breaks for private health care institutions is uncosted, contrary to the promises made by the Minister in his Budget Statement. Given that he is in an alliance with the Progressive Democrats, the Tánaiste and Minister for Health and Children may call the shots on these issues in Government discussions. Nevertheless, the Minister promised to provide information and costings. If he proposes to limit property breaks for certain types of investment such as hotels and car parks, he is opening up a new area of tax breaks. I agree with his eminent friend on the backbenches, Deputy Ned O'Keeffe, who told me hospitals were the new hotels. As the Minister closes one door he opens another.

Section 17 reflects the Minister's budget announcement that he would introduce a limit on the use of tax reliefs by certain high income individuals. It will apply to those with an income of over €250,000 per annum, with tapered relief for those with an income of between €250,000 and €500,000 per annum. High income earners who pay no tax need not worry too much. The new rules will apply only from 1 January 2007 and any reliefs not claimed by virtue of the new rules can be used later. The relief will be spread over a longer period. The Minister is not capping the total amount. He is simply providing for roll-over relief. This is not an effective minimum tax rate.

I now come to the sections of the Bill dealing with an extension of the rules in investing in private medical facilities, psychiatric hostels, nursing homes and so on. The individuals in question are of very high net worth and have very high incomes. When God or the Minister for Finance closes the door on one tax break, he never does so without opening another. The consultants' report shows that, regarding private hospitals, €500 million in tax breaks awaits projects already in the system in the short period during which they have been available. That is why a cost-benefit analysis is essential.

Perhaps the Minister should check this with his colleagues in the Progressive Democrats. It can involve a triple whammy against the State, the first being that, according to the Tánaiste and Minister for Health and Children, Deputy Harney, private hospitals and psychiatric institutions will receive public lands on which to build. Second, they will get the tax breaks that the Minister for Finance is so generously providing. For an investment of €1 million a bed, they will receive €420,000 in tax breaks. For a €100 million private hospital of 100 beds, some €42 million will come from the taxpayer. They will also be guaranteed business from the National Treatment Purchase Fund, NTPF. We already have reports from the Comptroller and Auditor General showing that, while the NTPF has undoubtedly improved access to procedures for those who badly need hip replacements and so on, the cost has been extraordinarily high, since many of the procedures have been carried out by the same consultants in their private business in whose queues patients were waiting in public hospitals.

We urgently need a serious, detailed breakdown of all the implications of the policy in the taxation feel good factor of the Minister for Finance's predecessor, former Deputy McCreevy. I knew the Minister well and he was a great man for betting on a horse or dog, as well as for a punt on a tax break. A hunch told him that it would do the trick. I noticed that the Minister recently used the term "health industry". The Government has abandoned the concept of health care as something we hope to provide for our people on the basis of need rather than the size of their wallets.

The Minister's review of tax relief concluded in his own words on budget day that "any new reliefs should be time-limited and should, where relevant, be subject to an assessment of costs and benefits prior to their introduction". He said he would follow that advice as far as appropriate. Why, in his speech a few moments ago, has he denied us this and said he will not provide any public information on a cost-benefit analysis? Was it because the Progressive Democrats pulled the plug on greater transparency? It would be interesting to find out why the Minister has signalled such a change from what he announced with some confidence on budget day.

All the Opposition parties in this House would join in appealing to the Minister to change the position he has just announced and publish the evaluations and cost-benefit analysis of the entire area of tax breaks for private medicine and the investors who are queueing up to put money in. The Minister for Health and Children advised me that she had met a representative of the Department of Finance and her own adviser on economics in separate meetings regarding the hospital in Blanchardstown in my constituency. I understand they took place in one of the Kildare Street clubs rather than in James Connolly Memorial Hospital in Blanchardstown. According to her reply to my question, the Minister had had discussions with the consultants and, together with someone from the Department of Finance, prospective developers. We have since heard that developers are queueing up for this.

The Dáil in general and the Opposition, in particular, would be remiss unless they asked the Minister for Finance time and again to give us some information on costings. We know that projects worth €500 million are in the pipeline, at a minimum cost to taxpayers of €250 million. There may be an argument that there is a better way to improve health and we deserve to be able to make an assessment.

I welcome the scheme to encourage low income SSIA-holders to invest in pensions, but one should not forget that pension fees are generally high, particularly in the early years. The Minister should clarify how he proposes to ensure the pensions industry does not appropriate that benefit, or a great deal of it, and rip off lower income SSIA-holders. His colleague, the Minister for Social and Family Affairs, Deputy Brennan, knows well that one of the reasons the PRSA structure has fallen flat is that it is so costly for low income earners to enter that they perceive no benefit in doing so.

Section 2 of the Bill sets out the standard rate bands and increases for 2006. These expansions, although welcome, will still see approximately one third of taxpayers continue to pay income tax at the top rate of 42%. The Government promised that only 20% of taxpayers would pay at the top rate. The Bill confirms that after nine years in office, the Government remains as far away as ever from meeting its biggest promise to ordinary taxpayers. The challenge for the Minister is to introduce policies that support sustainable growth and employment in the economy, while ensuring a fair system of taxation.

Despite record levels of growth, a series of recent reports, including from the National Economic and Social Forum, NESF, are a damning indictment of our two-tier economy and tax system. I spoke on this issue at the time of the budget. Every year significant numbers of young men leave school with no qualifications to compete for minimum wage jobs or face a life on the dole. They are written off. We are allowing the potential of many young men in working class areas who attend schools where the drop-out rate is high to be wasted. It is an extraordinary indictment of nine years of the Government that yesterday the Minister for Education and Science, Deputy Hanafin, classified no fewer than 750 schools as disadvantaged. That may be a pre-election stroke to try to spread some extra resources.

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