Tom Parlon (Laois-Offaly, Progressive Democrats)

I wish to share time with Deputies Andrews and Fiona O'Malley.

I am glad to have the opportunity to contribute to this debate and to raise a number of important issues that may assist the debate on taxation matters.

The Finance Bill demonstrates the continued commitment of this Government to use the tax system to expand our economy, reward work and alleviate the burden on taxpayers, especially those on lower pay. It also underlines the Government's commitment to a fairer and more equitable tax system.

I welcome the income tax changes confirmed in the Bill which will have the effect of removing all those on the minimum wage from the tax net, excluding workers on the average industrial wage from the higher tax rate, ensuring that high income taxpayers pay a minimum amount of tax and ending the remittance basis of taxation. The ESRI has said that budget 2006 had a more progressive impact on the distribution of income than any other in the past decade or more.

With reference to tax changes which impact positively on particular sectors of the economy, I welcome those affecting the farming community, including the continuation of the stamp duty exemption for young trained farmers for a further three years, the increase in the tax exemption limits for income from long-term farm leasing, a further improvement to the special tax relief for farm pollution control measures and the extension of certain existing capital acquisitions tax, capital gains tax and stamp duty reliefs to cover the EU single farm payment entitlement in appropriate circumstances.

With reference to the construction, meat processing and forestry sectors, I welcome the tightening of rules on relevant contract tax which will help tackle shadow economy operators and eliminate the competitive advantage enjoyed by non-compliant operators.

The Bill confirms the introduction of a tax disregard of up to €10,000 for child minders minding up to three children in their homes. It proposes significant improved tax reliefs aimed at restoring Ireland's competitive position as a film location. The Bill introduces a new scheme of relief for heritage property donated to a proposed new Irish heritage trust.

With regard to pension improvements, I applaud the significant pension initiatives in the Finance Bill which are aimed at SSIA investors and individuals who are 55 and over. These measures will greatly assist those on lower incomes or those not using their current full entitlements to provide themselves with reasonable retirement arrangements.

On the subject of Revenue powers, the proposed requirement for automatic reporting by financial institutions to Revenue of interest payments and other profit payments made to customers is reasonable and justified on the grounds of transparency and openness. Likewise, the proposed surcharge of 10% of the tax payable on undisclosed transactions that are ultimately determined to be purely tax avoidance transactions should send out a clear signal to those who seek to circumvent the system that they will be penalised if they flout it at the expense of others. Taxpayers who are open about their earnings and tax planning arrangements have nothing to fear from these revised arrangements.

There are no increases in VAT rates or in excise duties on petrol, tobacco or alcohol. In addition, a halving of excise duties on certain home heating oils is significant. These policy measures will make a significant contribution to ensuring that overall inflation is kept low during 2006.

I welcome the phased five-year scheme of targeted excise relief for biofuels introduced in the budget for 2006 with a view to assisting biofuels to achieve an initial target of 2% penetration of the transport fuel market by 2008. I understand that when fully operational in 2008, this relief is expected to support the use and production of 163 million litres of biofuels per year. I also welcome the vehicle registration tax relief of 50% for new flexible fuel vehicles — vehicles capable of running on both conventional fuel and high-grade biofuels — which is being introduced for a pilot two-year period with effect from 1 January 2006.

This Finance Bill builds on the solid achievements of recent years and supports the progress of our economy. In its totality, it reflects the Government's commitment to consolidating our economic gains and creating the conditions for future employment growth. It is a Finance Bill which should be broadly welcomed by both the ordinary taxpayer as well as members of the business community.

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