Michael McGrath (Cork South Central, Fianna Fail)

When I am on doorsteps people often ask me why middle income families are being hit. This is a difficulty for any government. The majority of people are within that category and if we want to make a serious effort to restore stability to the public finances we cannot, unfortunately, ignore the large swathe of the population that occupies the middle-income bracket. Yes, they are being asked to make a significant contribution to bringing stability to the public finances, as is everyone who is living in this country and working within our economy.

I welcome the Minister's decision not to back-tax redundancy payments from the first four months of the year at the higher income levy rate, which would have been unfair. I raised this issue personally with the Minister and at parliamentary party meetings, and I am pleased he has taken this on board and has agreed not to backdate the higher income levy for redundancy payments.

There will be some issues with the administration of the income levy and the composite rate that has now been set. If we take, for example, a person who is generally a PAYE worker but receives a bonus in the first few months of the year, will he or she be required at the end of the year to file a tax return? If he or she does not do so, will the Revenue Commissioners take action? Could he or she potentially have an outstanding tax liability? Some powers are being devolved to the Revenue Commissioners to deal with that issue and I have full confidence in them to do so. It is important they are given that opportunity.

The Minister has also announced the termination of some property-related accelerated capital allowance tax relief schemes, particularly in the area of nursing homes, which will save approximately €60 million in a full year. I welcome the transitional arrangements that have been set out in the Bill, because there are some important projects in the pipeline and they should be given the opportunity to be completed. They were planned on the basis of reliefs and allowances that currently exist and I welcome the fact that these are being phased out rather than terminated suddenly.

The Minister has engaged with the motor industry and he announced on budget day a shift in VAT policy whereby the industry would be allowed to move to the margin scheme. However, some further engagement has taken place since then and that change will not now be implemented. However, the Minister indicated in his Second Stage speech that he would continue to engage with the industry, particularly with regard to the overhang of second hand vehicles which are clogging up forecourts at the moment. If the Minister can find a fair mechanism for assisting the industry to get out of this crisis it will be welcome. Every TD with dealerships in his or her constituency will be aware of job losses and the 60% to 70% drop in sales that they have experienced. Other sectors are also facing such difficulties, but there are particular issues in the motor industry. I ask the Minister to re-examine the area and identify policy instruments that could help the industry to work its way through these difficulties.

Do I have much time left, a Chathaoirligh?

See this speech in context