Seán Ardagh (Dublin South Central, Fianna Fail)

I wish to share time with Deputies O'Connor, Fleming and Mulcahy.

I will forgo the platitudes justly earned by the Minister of Finance and refer to important issues relating to the legislation. The first is the 10% surcharge on undisclosed transactions, which, ultimately, are determined to be in breach of anti-avoidance rules. This is an excellent idea and I can understand why tax consultants oppose it. However, it is just and equitable that people who dream up schemes to avoid tax should inform the Revenue so that if they are found to be in breach, no surcharge would apply. It is not the intention of law makers to provide tax avoidance opportunities so that people can dream up such schemes. The opposite applies and there is a good case for increasing the surcharge.

The automatic reporting to Revenue by financial institutions of interest and other profits is also a positive idea. DIRT is applied at 20% and a number who have large deposits in financial institutions should pay tax at 42%. There is a perception that if they have paid DIRT, there is no need to mention the deposit in their tax returns. That is also just and equitable.

I am worried about one aspect of relevant contracts tax as it applies to tradesmen. To qualify for a C2 certificate, a subcontractor must be tax compliant historically. The Bill provides that Revenue must have good reason to expect that the subcontractor will also be tax compliant in the future. That is a heavy-handed approach. For example, if somebody buys IBM, he or she will never be fired from his or her job. In this instance, a tax inspector may refrain from issuing an RTC card because it is easier not to issue such a card to a subcontractor. This should be changed to ensure that if the tax inspector does not have good reason to believe the taxpayer will not be in compliance in the future, the card is issued. We must endeavour not to hamper, but to give encouragement to people in the trade who are the basis for our growth and engineering our economy.

On the Private Residential Tenancies Board, there is one line in the measures proposed which states that it is envisaged the linkage between registering and complying with registration with the Private Residential Tenancies Board and eligibility for mortgage interest relief on rental properties will improve registration compliance rates. That is the greatest understatement I have ever heard. Effectively, registration with the PRTB costs €70, but if an individual does not register and one takes a €400,000 apartment at 3% interest, it amounts to €12,000 interest a year. If this is disallowed at 42%, it will cost over €5,000. The number of investors who own and let apartments and who have not yet registered is huge. This will be an incentive to everyone to register. If one does not pay the €70 to register, Revenue will have no option but to disallow relief on the €12,000 interest, therefore, it will cost €5,000 not to register. It is important that everyone registers and that the Private Residential Tenancies Board is allowed to operate effectively. It cannot do so unless everyone is compliant. This is a very good proposal, which should be advertised widely so that everyone is given a chance to comply fully with it.

On tax relief on pensions, the maximum allowable pension fund on retirement for tax purposes will be €5 million or higher depending on the value of the fund on 7 December. This is a very high maximum. If one works on the basis of a factor of 20, it would represent a pension of €250,000 per annum, which should be more than enough for anyone. When the budget was discussed at the parliamentary party meeting, I suggested that the limit should be €5 million, and I am pleased it has been set at that amount. Some people might say it is very high. However, there are certain people — I do not include anyone in the House at the moment — who have worked hard and built up businesses whose pensions would amount to that sum. I do not believe anything in excess of that sum would be just or equitable.

In the internal review of certain tax schemes, the current regime of relief for pensions may be perceived to be inequitable — this was a conclusion of the Department of Finance — in so far as more generous reliefs are available to those in occupational pension schemes than to the self-employed using RACs or relying on PRSAs. There is a huge divergence. There is no PRSI relief, particularly in regard to the absence of earnings caps on employer contributions or the absence of age-related percentage limits. What I have said is quite technical but I am sure the officials will take note of it. It is very important and needs to be addressed.

I am pleased to have had an opportunity to contribute to the debate.

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