Olivia Mitchell (Dublin South, Fine Gael)

I welcome the opportunity to speak on the Finance Bill. I have been sitting here for a while and have listened with great patience and restraint to the Government spokespersons talk about the current state of the country, the national finances and the economy generally. They speak as if it all had nothing to do with them and that somehow this was something global that descended on us. In fact, the blame for our particular situation lies firmly and squarely with the Government. We do not blame the Government for the international credit crunch, the global recession or fluctuating currencies but we do blame it for the fact we have come out of years of budget surpluses, which should have left us well placed to withstand the global downturn, whereas we are now so broke we will probably be impacted more than any other country of which I can think with the exception of Iceland. I also blame the Government for the budget, which was a wholly inadequate and inappropriate response when the Government finally got around to acknowledging there was a problem.

Most of what I wish to say relates to my brief, the tourism industry, but I also want to raise one other issue, namely, the reduction in the tax relief being made available for health. There are two aspects to this, the tax relief on nursing homes and the tax relief on general medical expenses. The reduction of tax relief on nursing homes from 41% to 20% has been pushed out until 2010 and the Minister informed us it would no longer be required at the higher rate because people would be subject to the fair deal. If one reads the fair deal, one finds it will only benefit a very small percentage of the population. If one lives long enough and has expended all one's assets, eventually one will benefit from it but the reality is that most families will have to pay for their nursing home costs. In those circumstances, they will not only not benefit from the fair deal, they will not benefit from the subvention they would get at present and also, on top of this — a treble whammy, if one likes — they can only get tax relief at the lower rate. There is no doubt this will cause huge hardship when it dawns on people this is the case.

The real problem is for families, who effectively face a halving of the tax relief on medical expenses. If one has a family of three or four children, it is very easy to rack up enormous medical bills. Even when my children were small, we always reached the monthly threshold and certainly every family would now reach the €100 limit. A GP is €50 or €60 a throw and there are also tests, dental bills and many other costs. Anyone contemplating orthodontic treatment for their children, for example, will now forget about it. The State has totally reneged on its responsibility in this area. This measure will have a huge impact on families who do not have the medical card and must pay for everything — they are the ones who will really suffer. This has not yet dawned on people but it will be a real problem for families and, as usual, it will be mothers and fathers who sacrifice their own health rather than deprive their children.

Ideally, health should be accessible to all and the State should be able to ensure people can attend their doctor freely when there is a need. However, as we are so far from that position, at least we could give tax relief at the marginal rate.

I want to turn to the issue of the impact of the budget on tourism. It seems the Government thinks the departure tax is somehow a victimless tax on faceless people and it does not seem to appreciate the impact this will have on the industry. The Government does not take the tourism industry seriously. It is regarded as something light and fluffy — very nice in good times but really not that important. The reality is that while its role in regard to foreign exchange is important, tourism plays an enormous role in terms of employment, particularly in the regions outside Dublin where there is no other employment. Over 250,000 people are employed directly and indirectly in tourism, which is a vital employment source for the country. Where else will jobs come from in the future? They will not come from manufacturing or agriculture, where output might grow but jobs will not, so jobs growth must come from services. Tourism is the ideal service to grow, yet the Government seems to be trying to tax it out of existence.

Ireland is an island nation. The most crucial element for our economy is aviation access into and out of the island, and close to 95% of all travel in and out is by air. Airlines and airports are vital to us so we should be wooing them and looking after them, not taxing them. Why penalise and disincentivise the tourism industry?

Everybody knows the state of Aer Lingus in particular is extremely fragile, as is the state of all airlines at present. Aer Lingus claims this departure tax will increase its costs next year by €30 million unless, of course, it moves its routes out of Ireland — we know it has already made a first move to Belfast. If it tries to pass on the increase to passengers, it is they who will very quickly move to Belfast. There is direct competition and if we begin losing flights, we can just close down altogether. I do not need to mention the VAT increases relative to the VAT reduction in the United Kingdom, which will cause a flood over the Border. Why would the Government decide to tax an industry that was bound to contract in a world recession? If we lose routes or, worse, entire airlines, which is not beyond the bounds of possibility, we can close up. Only today, Ryanair announced that, as a direct result of this tax, it is cutting yet another route out of Dublin.

The holiday home tax is bizarre. I do not understand its purpose given that all of these holiday homes were built with a tax relief designed specifically to incentivise people to build them. Then, when they built them, the Government put a disincentive tax on anyone thinking of getting into the self-catering business sector. Many of these houses are already lying idle and some I have seen are not well maintained. I do not know what purpose this tax can have except perhaps as a revenue raiser — it is €200 this year but could be €2,000 next year — but it will certainly not help the tourism industry. We will end up with rural tenements and villages that are completely derelict by the seaside, along the Shannon and everywhere else holiday homes were built. On top of all of these specific taxes we also have the other costs which feed into the tourism industry and are extremely relevant. Energy represents 10% of costs to hotels. This is the highest in Europe and we are completely uncompetitive. We had a recent hike in taxi fares to ensure we can fleece the tourists even further when they get here. As well as high energy costs, we also have high costs in transport and communications and poor broadband access. All of these militate against the tourism industry.

Just when profit and capital gains taxes were a memory in the tourist industry and in almost all industries, the Government has decided as part of this financial package, which was to take us out of a hole, that demands for these taxes are to be brought forward. In good times one could borrow to pay these taxes if they were brought forward but access to borrowing does not exist for businesses now.

It is a measure of the Government's failure to grasp the conditions in which businesses are operating that it should look to ailing businesses and expect that they would somehow find it easier than the Government to access cash. It is yet another example of businesses, employers and earners of vital foreign exchange being asked to pay for the Government's mistakes.

I wish to raise an issue mentioned in the budget but which will not become law until next year. This is a new VAT charge on the margins of tour operators. It is accepted that this must come in at some stage as a result of an EU directive but this is not the time to introduce something which will add 3% to the cost of foreign holidays. It is due to be introduced in 2010. Many of these tours are already contracted by the tour operators which means they will be out of pocket. I ask the Minister of State, Deputy Haughey, to bring it to the attention of the Minister for Finance and ask him whether it is possible to postpone this tax until times are better.

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