Beverley Flynn (Mayo, Fianna Fail)

I wish to share time with Deputy Niall Blaney. I welcome the opportunity to speak on this Bill. It was only some months ago, before the summer, when I spoke on the economy. The position has changed drastically in that short period. I will discuss the economic downturn and the global credit crisis. I recognise that Deputy Mitchell referred to the problems in Ireland in this regard, but clearly this is a global problem. The world economy is suffering and as a result the economy in Ireland is in difficulty.

I refer to the banks about which I spoke last July. I am very concerned at the inability of the banks to function in the interests of business. I am not referring to the ability of the banks to function in their own interest, but I am concerned about the lack of availability of moneys for small businesses which are struggling. I understand that in many cases such businesses are receiving help from the banks, but onerous rates of interest are being charged, which puts further pressure on businesses that under normal circumstances would not have a difficulty. I am keen to see tighter regulation in the financial sector and would like to see the Minister for Finance bringing about a recapitalisation of the banks. This needs to be done, along with private investment, sooner rather than later. There should be a significant injection of confidence in the marketplace. Combining private investment, which I believe is available, with Government money is the best way to proceed. I encourage the Minister to do so as soon as possible.

Let us consider the situation when the bank guarantee was introduced some months ago. The Government was the first to make such a move, however most other countries have followed suit. I note that the vast majority of countries in Europe have injected capital in the banks and it is clear we must do the same at this stage. Consider the level and duration of the guarantees provided to banks in other countries. Most were offered a guarantee of between three and five years as opposed to the two-year guarantee introduced in Ireland. I accept that our guarantee was a blanket guarantee and this was not the case in many other countries. However, the duration of the guarantee and the fact that we have not yet injected any Government money into the banks needs to be addressed very quickly.

I call on local authorities to support businesses and re-examine the level of commercial rates. Rates should be frozen for this year and development levies should be reduced in local authorities, because the level of development, not only in County Mayo, but throughout the country is so small at present. The development levies charged in the past are unsustainable. I understand that local authorities are also experiencing financial difficulties, but there is no point killing off potential development by imposing onerous development levies. Any measure to stimulate growth at this stage should be welcomed.

I refer in particular to one area of the Finance (No. 2) Bill 2008, namely, air travel tax. Since the budget, I have spoken with the Minister for Finance on the matter. I am especially concerned about this measure as I come from the county in which Ireland West Airport, Knock is located. I recognise that the Minister has reduced the departure tax from €10 per passenger to €2 per passenger and has taken account of the concerns raised by the regional airports, especially those on the western seaboard. The lower €2 tax will apply to departures from any Irish airport to a destination 300 km or less from Dublin Airport. This means all Irish departures to locations such as Manchester, Liverpool and Glasgow will be subject to the €2 charge. This measure is more equitable than that proposed in the budget and it removes the advantage given to passengers flying to UK destinations from Dublin rather than Knock. However, I am still not satisfied and I do not believe the €2 charge should apply at all to the airport at Knock. The charge has and will continue to have a negative impact on tourism. The benefits to the State coffers will be negated by the drop in tourism revenue which will occur in the west of Ireland as a result.

I wish to correct several assumptions made concerning smaller airports. There is an assumption that the airport in Knock is dependent on operational subsidies, that the main services connect to Dublin and that it is a loss-making airport. These assumptions are incorrect. Ireland West Airport, Knock is a low-cost, profitable, independent airport. It receives no operational subsidy. Some 97% of the traffic is direct to 28 international destinations. Will the Minister acknowledge that certain aviation policies currently in place in the country provide the airport in Knock with a competitive disadvantage and constraint? The Minister should examine abolishing the €2 charge altogether. I draw his attention to the fact that when a similar tax was introduced in the UK the Government exempted the highlands and the island regions of Scotland because of the scarcity of the population, the peripherality of those regions and their reliance on air services. That situation is very similar to that which pertains in Knock.

I draw the Minister's attention to the fact that the current system of state operational support, namely, the core airport expenditure system, rewards failure not success. The airport at Knock is a victim of its own success. If Knock airport were loss-making there is no doubt that under that expenditure scheme help would have to be provided. However, because the airport operates on a profit or breakeven basis, it does not receive such support. Since State airports receive supports and services not available to Knock a competitive disadvantage exists. I have strong views on this issue, because most of those who avail of the services at Knock airport come from the UK as tourists and I am conscious that a negative impact will be felt. The airport receives no hand-outs for air traffic control, it does not benefit from usage by Government sponsored military aircraft, it has no preferential tax status, it does not benefit from any accelerated infrastructure in the region and it does not benefit from free marketing. I highlight these facts and draw the attention of the Minister to the fact that those in County Mayo and the airport at Knock are already discriminated against. Given the similar experience of the regions in the UK referred to above, there is a good case for exempting Ireland West Airport, Knock from the €2 charge. It is still not too late to do this and I call on the Minister to examine the possibility.

I refer to the income levy which is among the measures in the Finance (No. 2) Bill 2008 changed since the budget. I welcome the new 3% income levy on those earning in excess of €250,000 per year. This measure will bring in 20% of the tax take. This is a welcome measure. It sends the right signal to the market that those who are in a position to pay more are paying more. I am also happy to see that all social welfare recipients will be excluded from the levy, as are those with an entitlement to a medical card. That is necessary. I welcome the exemption threshold of €18,304 per annum, which excludes those on low incomes from the levy. In addition, I welcome the introduction of the age-related exemption for persons aged 65 of over €20,000 per annum for a single person and €40,000 for a married couple. This shows compassion on behalf of the Government. Those who are in a position to pay more — those paying the 3% levy — will contribute 20% of the overall take from this levy. This has enabled the Minister to provide these exemptions and increased thresholds to help those who are less well off in our society. I welcome that.

I also welcome the measures to support business, although I will not get a chance to go through them in great detail. I welcome the introduction by the Minister of the three-year exemption from corporation tax on trading profits and chargeable gains for new companies, which is to commence next year. This is a welcome development. In addition, the research and development tax credit has been increased from 20% to 25%. Lastly — again, I do not feel the Minister went far enough in this regard — the reduction in stamp duty for new residential property from 9% to 6% is welcome. However, there is a need to stimulate growth in the construction industry. I have spoken about this in the past. I do not believe enough has been done and I would like to see a few more measures to help in this regard. I would have liked to see stamp duty reduced further but, at the same time, I recognise that the Minister has gone down the route of trying to improve matters, and I welcome that.

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