Joan Burton (Dublin West, Labour)

It is limited to 50% and also includes a restaurant, but not a pub. I am used to accountants and tax advisers and it does not take much ingenuity to create attractive tax avoidance schemes. Previously, in less politically correct times, one could have used the back of a cigarette packet and now all it would take is half a page. The point is, a person on €34,000 with some overtime will pay tax at 41%. The Minister for Finance, Deputy Cowen, promised he was phasing out these schemes last year but now he has a new one, much of which relates to his own political backyard. The schemes are a vote getting measure for the property industry to ensure the situation continues, whereby some very privileged individuals pay little or no tax.

The former Minister for Finance, Mr. McCreevy, introduced individualisation as a way to get more women to join the workforce. He acknowledged this himself but the country is more complex today in terms of spatial strategy and where couples can afford to buy a house.

The gap between taxes on single income families and families with two working spouses continues to widen as a result of the changes the Minister for Finance made this year. A single income family can now pay up to €5,250 more in tax than its double income counterpart, compared to €5,060 last year. The gap relating to allowances has been widened by several hundred euro. The standard PAYE, tax credit for each working spouse is €1,760. The home carer's allowance has remained fixed at €770. Therefore, the gap has widened, potentially, to €990. As mentioned, the single parent's tax credit in the Bill has gone up from €1,630 to €1,760. The single income family has been left standing in this Finance Bill.

This is not an easy issue but we must, as a society, give it consideration. The budget for 2007 has exaggerated the discrimination in taxation between these two types of family by continuing the policies initially introduced by Mr. McCreevy through individualisation. The cost of these measures to families is now close to €700 million per annum, based on the Revenue Commissioners' pre-budget analysis. The purpose of the policy was to incentivise, as far as possible, both parents in a family to go out to work, regardless of circumstances.

It is important to note that there are as many single income, married households in Ireland as there are dual income. According to the Revenue Commissioners' annual statistical survey up to 31 December 2005 there were approximately 307,000 of each type of household. There are approximately 75,000 single income households earning between 150% and 250% of average national earnings. Most of these families are committed to caring for their children themselves or to looking after aged relatives. This is now one of the most expensive countries in the European Union and the policy of individualisation is costing them dearly.

Most of the earners in these single income families are employees, not owners of businesses, because spouses and children of owners of businesses and family companies can go on the books of that business as employees or directors, as the Minister knows. More than 80% of these 75,000 middle income households fall into this category. They are people who cannot afford crèche and travel fees and have had the decision made for them in many cases. They are people with sick or disabled children in need of special care that has been denied them. They are people who have elderly parents or relatives who require additional care. They are the people who choose to care for family members at home for long periods rather than use nursing homes either because they are not available or they cannot afford them.

This discrimination was introduced to make work a more palatable choice. However, this is not possible without the provision of many services at a community level, which the Government never had any intention of providing.

My colleague from the Kerry South constituency, Deputy Moynihan-Cronin, pointed out that the home care package for one elderly man in her area, as set out by the Health Service Executive, HSE, came to €60 per week. What will €60 buy in terms of a home care package?

Individualisation continues to widen the gap between single and dual income families and ignores the reality that people's lives change more than once during their lifetimes and that many people will need or want to take time out a various stages, particularly relating to child care or care of the elderly. How many of us have already taken time out to look after our parents in their old age or will want to do so in the future? Is it right that we should suffer a double penalty for doing so? Loss of income is a choice that people who care make, but to pay more tax, at the rate they are paying, is a choice that has been forced upon people by the Government for the past eight years.

If one works in Dublin and moves to Kinnegad, Gorey or Tullamore to get an affordable family home and have two children, crèche fees could cost up to €300 per week, with commuting times of four hours and more per day. Small wonder that in this situation many families decide that it is better for one parent, usually the mum, to opt out of work or reduce working hours while the children are very young. The alternative of getting children up as early as 6.30 a.m., taking them to minders and then doing the long commute is so hard that many families do it for a year or two but, particularly when the second baby comes along, decide that one parent must take time out.

Children need time with their parents. Parents need time with each other and with their children. The burden on families of our current development policies on housing and commuting are not good for relationships and we all know this. Anyone who has had a child or cared for a child knows that the early years fly by rapidly and do not come back. When one adds a €6,000 tax penalty for the decision to opt for home care it makes one wonder how family friendly the Government really is.

It is almost as though the policy of individualisation continued like an unchecked juggernaut after Charlie McCreevy introduced it. It grew and grew and nobody has examined it to see if what was appropriate seven or eight years ago is still appropriate now, in its expanded and hugely costly phase. I find it problematic that the Government considers things gone, done and dusted and considers that we must merely live with the consequences.

This policy of individualisation has led to dramatic transfers from families with children and dependants to two income households, many without dependants. This is the reality of Government policy towards the family and care in the community and it provides a startling contradiction to some of the rhetoric we heard this week and last week about the €184 billion in the national development plan. It is time we debated this matter.

The Minister for Finance made a number of changes relating to stamp duty in the Bill. They are unlikely to benefit the first-time buyer or the person trading up from a first to a family home.

The scheme for gifting an acre, or a €254,000 site, is well and good for those who have such sites. As the Minister stated, the provision in this regard tightens a loophole that was obviously open to abuse. In the course of discussing the Bill will the Minister outline the instances and costs of the abuses in the structure? He did not address the issue of large property deals in Dublin such as that concerning the Irish Glass Bottle site which seemed to escape stamp duty or property tax through an arrangement for a transfer of shares rather than property. I have spoken before about deals that each netted the movers and shakers involved savings of €30 million plus. The Minister is silent on this issue.

I welcome the provision exempting sports bodies from stamp duty. While discussing the past two Finance Bills, I referred to GAA clubs being obliged to pay stamp duty on fields they buy rather than availing of the exemption that applies to charities. I am glad the Minister has listened to my proposal in this regard.

The Labour Party has proposed a number of reforms concerning stamp duty. We have talked about the introduction of a stamp duty allowance, or tax credit, attaching to the family home or the principal private personal residence such that duty would not apply to second homes or investment properties. The stamp duty regime would be reformed in order that it would only be payable on amounts over the threshold. That measure could be introduced either singularly or over a period of years, as resources permit.

Stamp duty thresholds should be indexed on an annual basis. If indexation were applied annually, it would reduce the risk of spikes in house prices when the threshold is raised on a once-off basis. This is what happened the last time the former Minister for Finance, Mr. McCreevy, increased the threshold significantly. It was clawed back within a couple of months by the property industry.

The Labour Party also wants to examine a system of relief for older people who are downsizing to a smaller family home or arranging personal retirement care facilities.

Let me turn to the new scheme the Minister has introduced in respect of the Shannon region. His constituency is one of approximately six or seven, all within a 12 km radius of the mid-Shannon area, to benefit from his proposals. He needs to show us what his scheme involves to ensure it is not a vehicle for the high flyers and very well heeled to avoid paying their fair share of tax, as is the case with the other property-based schemes.

Goodbody Economic Consultants, in a report published during the passage of the Finance Bill last year, stated the cost of area-based tax incentives to the Exchequer was very high and that the area-based schemes already in existence were and would cost the Exchequer many tens of millions of euro. In its review of the schemes it stated:

These tax costs are high relative to the outputs achieved. For example, the present value of tax costs represent up to 43% of the building costs associated with developments undertaken as part of the schemes.

The fact is that the Minister has decided to blatantly fly in the face of his expensively commissioned consultants' report and the statement of the Taoiseach and others that the property-based tax schemes would be wound down, particularly in the context of the construction boom which we are still experiencing and the inflationary impact of such schemes on property prices in the designated areas. It is particularly worrying that the scheme has been announced without any evidence, cost-benefit analysis or consideration for the overall environmental impact on the beautiful Shannon region. We need to learn from earlier schemes which resulted in certain mass developments of apartment blocks and holiday homes in parts of the upper Shannon region that simply do not appear to be sustainable in the long run. Where is the environmental audit of such schemes? When the former Minister for Finance, Mr. McCreevy, announced the upper Shannon relief scheme some years ago, he said it would make a Klondike of the region. The Klondike made the gold miners and others who could get there rich. However, one must question the current position of the Klondike and its economic activity.

We want long-term sustainable investment and development in beautiful areas such as the Shannon region. We want quality employment rather than quick bucks for property developers who build and then leave the locals to play catch-up forever afterwards, which practice is not sustainable. One should bear in mind that those who will benefit from the schemes are not the ordinary Joe Soaps. They are earning incomes of millions of euro and pay little or no tax, even under the arrangements the Minister introduced last year, compared to the single person on an income of €34,000. If the latter is offered overtime, a bonus, a second job or extra work, he must pay tax at a rate of 41%. This is not fair.

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