Seán Fleming (Laois-Offaly, Fianna Fail)

I welcome the opportunity to speak to the Finance (No. 2) Bill 2011. While the general view is that the levy on pension funds will raise €1.88 billion over four years, I believe the Minister fully expects it to raise at least €2 billion over the period in question. I concur with Deputy Michael McGrath that the measures will result in reductions in revenue of the order of €315 million from the air travel tax, €880 million from VAT and €537 million from employer PRSI. In addition, the Bill provides for additional capital expenditure of €29 million in the first year and €164 million over four years on labour activation measures. This brings the total cost of the measures to €1.95 billion. Clearly that is more than was suggested in the original statement, which was €470 million. It is clear therefore that the Minister is expecting that there will be some increase in value in the funds over the period and he has factored that into his initiative. He expects to raise closer to €2 billion and if there is growth in the fund I expect him to raise in excess of €2 billion, which is a considerable amount of money. When the industry takes that fully into account it will appreciate that the amounts are much greater than have been suggested publicly, to date. While the money is being raised and I am sure the Bill will be passed by the House in due course, we on this side of the House will have no option but to vote against Second Stage. That is due to the harshness of the measure, including the imposition on private pension funds and in particular because so many wealthy people will be exempt.

In the section dealing with payment dates, the Minister states that the first payment date in 2011 will be 25 July and the next payment date will be 25 October. The first payment date next year will be 25 March 2012, while from thereon in he will bring forward the payment date to 25 September each year. Therefore in a 14 month period from 25 July 2011 to 25 September 2012, we will have a full two years' pension levy being implemented and collected. In that case, a 24 month levy will be collected in a 14 month period, which in itself will cause another significant shock. It will be in the region of €1 billion, which is much less than people originally thought of as €470 million this year and the next two years. When one examines the dates the Minister has specified in the legislation one can see that he has taken 50% of the four-year amount in a 14 month period, which is significant. People will have to take that seriously into account when they are considering their views on the legislation. Will the Minister address that point from a cash flow point of view, as well as explaining in further detail why the two years' amount is coming out in a 14 month period?

An important issue concerning the Bill is to clarify the situation of people who have worked or are working abroad. The legislation says that excluded assets will relate to people whose employment in relation to the scheme was wholly exercised outside the State when this measure is enacted. I understand what the Minister is doing, but its implementation will cause phenomenal practical problems. Will the Minister create a new regime for tax exiles here? I do not know the names of companies involved, but it is important that in the course of debating the Bill we should be told the type of characters to which the Bill applies. I am thinking of ESB workers who gave up a pay increase to top up their pension fund because it was in deficit recently. Meanwhile, their colleagues' portion of the fund may be exempt from the overall fund because they were working abroad for ESB International. This may also be the case for Aer Rianta staff. In addition, in recent years, Ryanair staff have been based at a greenfield site in London. Will that pension fund be excluded from this provision because they are deemed to be based in London?

I am thinking above all of the Irish banks. Apart from not managing what they were doing at home, many of them extended too far and too vigorously abroad. Many of their staff are also working abroad. Will we therefore find that the AIB, Bank of Ireland and Anglo Irish Bank pension funds are exempt from this legislation for employees based in England, the Continent, the USA or elsewhere abroad? I would like that matter to be clarified. People would find it offensive if on the one hand we bailed out AIB and Anglo Irish Bank at the taxpayers' expense, while on the other hand we introduced a measure to exclude employees of such organisations who are working abroad, either in a foreign branch or a subsidiary. That point needs to be clarified.

Staff of many other semi-State companies could have worked abroad, although I do not know the employment contract details of those who work for agencies such as Fáilte Ireland, IDA Ireland, Córas Tráchtála - the Irish Export Board - or other such companies. We need to know the number of people who will be exempt from this measure by virtue of being employed overseas. In addition, how will the Minister work out how the Bill will apply to those who were working abroad for part of their careers, but not all their working lives? What is the definition of someone whose employment was almost wholly abroad? How will the value of their pension fund be calculated versus that of their salaries when they were contributing to such a fund while abroad? We need to get details on this because I see it as a way for many people to wriggle out of paying, which was the original intention of the legislation. These exemptions could cause more trouble than they are worth.

Some of those people could have been working abroad but might have been resident in Ireland for tax purposes. They therefore got the benefit of tax relief going into the scheme, but will they be exempt from the levy because they were, or are, working abroad? I do not know. The House, the people concerned and industry generally need to know the answer.

In his statement, the Minister said that the levy will not apply to the extent that the scheme is intended to provide retirement benefits outside the State. Does that refer to people who are currently abroad and are no longer living here, or those who worked outside the State but are now living here? Do they have to have been in both categories? We need to have that matter spelled out in further detail because it is not in the Bill. It is important that we should know because it is relevant to a person's domicile during the course of their working career.

Even though I cannot see any Labour Party Members here, hardly a week went by in the last five years when Deputy Joan Burton did not refer to tax exiles and non-resident tax dodgers. Will this Bill open up a new scheme for tax exiles to avoid the levy? If so, I would like to hear the Labour Party's view on the matter. It needs to be thrashed out in further detail.

I am concerned that some wealthy people will be able to escape from the fund, which would be horrific. On 12 May, the Taoiseach, Deputy Enda Kenny, confirmed that the retirement income held in flexible pension accounts will not be liable to the pension levy. He added that approved retirement funds, into which most wealthy people have moved their pension funds on retirement for tax efficiency and estate planning purposes, were not considered pension funds. It is abhorrent to the public that a select handful of people will get away with it again. The general view seems to be that Michael Fingleton's pension pot will be exempt from this levy, as will that of Mr. David Drumm who is regularly preaching to us from the east coast of the United States. If so, it is abhorrent. If the Minister has to amend the legislation to bring those people back into line, he will be doing what everyone in this House, and the general public, consider is the right thing to do.

There is something immoral about the fact some of the people we are bailing out will avail of a tax loophole in the legislation. It is bad enough to have to deal with legacy issues concerning some of these people, without introducing new measures whereby they can escape from the new levy. Everybody here would find that abhorrent. I hope the Minister will work on that. We need to know much more about wealthy people who may escape the levy.

I am also concerned about whether there will be a flight of assets from the country during the period of this levy. Some experts say there might be such a flight of funds out of the country. Ireland has been renowned for its excellent financial services facilities. Ireland has developed a market as a financial services centre. Arising from this single measure, our country might well see a significant outflow of funds and employment in related services, perhaps extending beyond pension assets. This will put the shiver up people who have other assets under management.

Will the Minister clarify a point? I am not as convinced as others by his statement that he will not touch people's deposit savings. A few minutes ago, he stated: "I assure the House that the Government has no plans in this regard", that is, to raid investment funds or deposit accounts. Of course it has no plans, but it must give the House an absolute guarantee for the lifetime of the Government that the latter will not do it. There is no use in saying that it has no plans today, as it could have them tomorrow or next week. The statement is unconvincing.

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