Pearse Doherty (Donegal South West, Sinn Fein)

As we have said, there are ways of doing this through proper stimulus. Sinn Féin has pointed out that we should use the resources we have available. We should inject €2 billion from the National Pensions Reserve Fund into a stimulus package. We argued that we should invest €2.9 billion in total over the next 12 months, which is not only affordable but urgently needed if we are to break the downward spiral created by Fianna Fáil's policies of austerity, which are now being followed by those of Fine Gael and the Labour Party. Such a stimulus would not just get people back to work but would also result in a reduced deficit, increased tax revenues and a reduction in social welfare expenditure.

Sinn Féin would use €2 billion from the National Pensions Reserve Fund to fast-track labour-intensive infrastructure projects, such as constructing schools and hospital buildings, upgrading water infrastructure, developing public transport networks and rolling out State-wide broadband. We would inject a further €500 million into the economy in the form of a family stimulus package, funded through additional tax revenue. The aim of the measures would be to reverse some of the heavy burden placed on working families and those on social welfare by the last Government and, in doing so, boost consumer confidence and spending. In addition, we would abolish the universal social charge.

We have argued consistently that the only way to get out of the mess we are in, the only way to get out of the grip of the recession, and the only way to reduce the deficit and return to positive growth is by investing in jobs, boosting consumer spending and strengthening local economies. The policies of austerity simply are not working. They have not worked in the past and they are not working now. Every time we have a new budget of austerity, we see deepening inequality, a rising deficit and more debt being heaped on ordinary people, and it simply is not working.

When I talked about this before, I told the House it is a case of see no evil, hear no evil, speak no evil. We are in serious trouble. I know the Government understands that. We are probably heading for a second bailout. The Government can present as many fairy-tale figures as it wants, saying we will return to 3% growth by 2013 or 2015, but it is hugely unlikely. The agenda of this Government, which is one of austerity and further cuts, is not likely to lead to anywhere near such growth. As a result, we will not be able to go back to the international bond markets, which is where we should be going, but will have to go back to the pot of the EU and IMF.

There are many things in the Finance Bill as presented that I do not have any problem with. Abolishing the travel tax is a great idea, but that is not what the Bill does. We must recall what the Taoiseach, Deputy Kenny, said during the general election campaign. He described the travel tax as destructive, saying it had cost the economy 3,000 jobs and cost the tourism industry €480 million but had netted only €100 million for the Exchequer. In the programme for Government, Fine Gael and the Labour Party promised to abolish the travel tax as part of a deal with the airlines to restore lost routes. Despite the promises that were made before the election and in the programme for Government, the Bill before us does not abolish the travel tax. Rather, it gives the Minister the power to suspend the tax by way of an order.

The programme for Government also clearly states that the travel tax will be abolished in return for the restoration of routes, but that is not what was stated in the jobs initiative, nor is it what the Minister stated today. He said the Government was now proposing the suspension of this tax in return for an increase in passenger numbers. We are not going to get back the lost routes; it is just a matter of passenger numbers. I can understand the negotiation behind it. We wanted Ryanair to restore lost routes, but it is not doing that, so we are asking it to increase passenger numbers. We will have a review in 2012 and if the proposal is not working, we will reintroduce the travel tax. What if Ryanair decides not to do that? Do we punish every other tourist who comes here for the intransigence of Ryanair? Does the Government not believe what the Taoiseach said just a couple of weeks ago - that the travel tax has cost 3,000 jobs? Why would we keep a tax that has resulted in a loss of €480 million? Those are the Taoiseach's figures, in which I am sure the Minister has full confidence. We should not only suspend the tax but abolish it, and it should not just be about passenger numbers.

Perhaps it should involve the introduction of routes. If, however, the intention is to remove it, then this should be done. We should not punish tourists who wish to enter the country.

Many people are inquiring with regard to why this tax has not already been removed. Those opposite have had approximately ten weeks to remove it and a commitment in that regard is contained in the programme for Government. However, it has been diluted time and again. There is no doubt this tax has caused damage to the tourism industry. I will support the measure but I wish the Minister had brought forward a proposal which lived up to what the Taoiseach, Deputy Kenny, stated previously and what the programme for Government contains.

The Bill gives effect to a reduction in the rate of VAT to 9% in respect of tourism-related goods and services from July next until the end of 2013. This measure must, of course, be welcomed if the effect of it is to boost spending in the tourism sector. Once again, however, we are faced with a Government presenting a half-baked measure against the backdrop of more general policies that will have a negative impact on the economy. I do not have a problem with the measure contained in this Bill but we all know what is going to happen to the other elements involved because the position in that regard is set down in the programme for Government and the EU-IMF deal. Basically, what is involved is that the higher rate of VAT will increase to 23%.

The Finance Bill that will give effect to the budget to be introduced in December will contain the necessary measures relating to VAT. What effect will the implementation of such measures have on the Government's jobs initiative? The Minister should visit Donegal and neighbouring counties and discuss with local retailers the effect an increase in the higher rate of VAT - from 21% to 23% - will have on their businesses. The previous Administration increased VAT at a time when VAT in the North was reduced as a result of a decision taken at Westminster. The scale of the increase was only 0.5% but the retail sector in the Border region was hammered as a result. The Minister's Government is now proposing to increase VAT by 2%. This will not just affect the retail sector, it will also have an impact on people who have very little disposable income. As already intimated, it will have a major effect on those who live in my constituency and in other constituencies in the Border region.

The core element of the Finance (No. 2) Bill 2011 is the imposition of a 0.6% levy on pension funds for the next four years. The Government plans to raise €470 million by means of this levy. In my view and that of my party, the pension levy proposal is deeply inequitable. It excludes the approved retirement funds used by many high earners to invest in their pensions. It also fails to differentiate between pensions held by ordinary workers and those of high earners.

I was extremely interested to discover the position of Fianna Fáil in respect of this matter. When I heard about the impending introduction of the pension levy, I carried out some research regarding when it began to emerge and who was responsible for bringing it forward in the Dáil as an option. I did not know whether it was the brainchild of Fine Gael or of the Minister. However, I discovered it was first raised on 19 January by the former Fianna Fáil Deputy Charlie O'Connor. The latter tabled a question to the then Minister for Finance in which he asked whether consideration had been given to introducing an annual levy on pension funds. The former Deputy also inquired whether the levy would be set at various levels from 0.25% to 1%. The then Minister, Deputy Brian Lenihan, less than two weeks prior to the dissolution of the previous Dáil, stated, "An annual levy on pension funds is a potential alternative that could be considered in this regard." I place this matter on record because I wish to illustrate the thinking of Fianna Fáil. I accept that elections change many things, but that was the thinking of the then Minister for Finance in response to a matter raised by another member of the Fianna Fáil Party.

There are far more equitable ways to raise funds through the pension system in order to assist job creation. Sinn Féin has long advocated the standardisation of pension tax reliefs at the lower rate. I am sure this will happen in due course. A measure such as that which we propose would not only remove an unjustifiable inequity in the current system, it would also generate significant revenue for the State to invest in economic recovery right now. Based on figures from a 2009 ESRI report on pensions, standardising pension tax reliefs would generate an additional €1.1 billion, of which €616 million would come from the top 10% of earners. It is estimated in the report to which I refer that in 2009 some 82% of all pension tax relief went to the top 20% of income earners. This demonstrates - if ever such a demonstration were needed - the grossly unequal nature of this relief and also the need for its immediate reform.

Sinn Féin would invest the money to which I refer in a very different way than that outlined by the Government when it announced its jobs initiative. In the context of the Finance (No. 2) Bill 2011, the Government had a clear choice between raiding the pension funds of all or targeting new revenue-raising measures at those who can most afford to pay. Those were the options. The Government decided to target everyone, regardless of how large or small their contribution or the size of their income. It did not consider standardising tax reliefs. As already stated, 82% of the tax reliefs to which I refer, or just over €8 out of every €10 foregone by the State in such reliefs, goes to the top 20% of income earners. That is simply amazing.

The Bill does not deal with an issue which it should address, the universal social charge. I accept the Government's position on this charge is that it will carry out a review in respect of it at some stage. I am aware it has stated that the terms of reference of the review will be published and we will be in a position to participate in it when the time arises. The Bill before the House presented us with an opportunity to get rid of the universal social charge. We could have ensured that one of the most grotesque and unfair taxes or charges ever introduced by an Irish Government would be abolished. Everyone is aware this charge hits workers on low incomes. In addition, it significantly shifts the tax burden away from high earners and places it on their low-paid counterparts.

I previously tabled a parliamentary question to the Minister in respect of the number of people brought into the tax net as a result of the introduction of the universal social charge. If I recall correctly, his reply indicated that the ballpark figure was 500,000. That highlights the impact of this charge. Those to whom I refer are not 500,000 high earners and neither are they tax exiles. They are the people who did not have much money in the past and from whom the Government now wants to take a little bit more to pay for the recklessness of the bankers and the developers and to offset the lack of regulation applied by regulators and the lack of oversight exercised by senior politicians.

The Bill presented an opportunity for us to address this matter by replacing the universal social charge. At least there was some measure of equality in respect of the income and health levies, which were superseded by the universal social charge. The rate of the latter is 2% in respect of those with incomes upwards of €4,004. These people earn just over €77 per week. The rate of the universal social charge increases to 4% at €10,037 and to 7% at €16,017. That shows how progressive is this measure, which the current Government has left in place. A person earning €308 per week is paying the charge at the same rate as someone who earns €3,000 per week. That is simply not fair.

The changes relating to the universal social charge have led to an increase in what are termed the "working poor". As already stated, the charge is less progressive than the health and income levies which it replaced. When the previous Government introduced the universal social charge, consideration was not given to people's ability to pay. In addition, an impact assessment was not carried out in respect of the real affect this charge would have on tens of thousands of ordinary people.

Fine Gael and the Labour Party had, in the form of the Bill before us, the opportunity to abolish this charge. Any decision to do so would have improved the daily lives of 500,000 of the State's lowest earners. This is the second such opportunity with which it has been presented in as many months. However, just as in the case of Sinn Féin's Private Members' motion relating to the universal social charge, the Government has again chosen not to take action.

We have been informed there will be a review and that the terms of reference relating to this will be published. However, the Government has still not indicated when the review will take place, when the terms of reference will be published and when people can contribute to the review in order that they might argue their case. There are Fine Gael and Labour majorities on many local authorities throughout the State and these have informed the Government, by means of voting in favour of particular motions, that they want the universal social charge to be abolished. The local authorities are of the view that this charge is simply wrong.

Earlier today I raised with the Taoiseach, Deputy Kenny, the issue of the civil partnership Act, which has been in place for almost a year. In January, the Minister, the Labour Party's finance spokesperson at the time and I had a meeting with the then Minister for Finance.

At the time, we were told by the then Minister for Finance, Deputy Brian Lenihan, that because of the rushing of the Finance Bill, the measures to give legal effect to tax arrangements under civil partnership legislation would not be prepared in time. Consequently, he said, a second finance Bill would be required. All parties around the table gave a commitment to introduce such legislation as quickly as possible.

This Government's legislative programme, published in the first week of April, stated the Finance (No. 2) Bill would include these measures. Again, however, these measures are missing in the Bill as presented to the House. What is the hold-up? Why have the measures not been included? They have been worked on by departmental officials for over two years. While I accept there are pressures on the Department, why is this necessary legislation not in place? When will the finance Bill dealing with the civil partnership tax measures be introduced and enacted? Will it be used specifically for such measures or will it be used to sneak in several more austerity measures?

The Finance (No. 2) Bill is a missed opportunity. If the Government had kept to its pre-election promises, we would have been debating real and substantive measures aimed at creating jobs in the public and private sector. We could also have been discussing changes to taxation aimed at boosting consumer demand and easing the pressures on struggling businesses and families.

Instead, we have more of the same tired old approach of the last Fianna Fáil Government. These austerity policies, designed by Fianna Fáil but now supported by Fine Gael and Labour, are not working. These policies, written under the watchful eye of the European Commission, the European Central Bank and the International Monetary Fund, will continue to push our economy and society further into the cycle of unemployment, debt and deficit.

This Finance (No. 2) Bill reinforces the lack of ambition and political will that underlies the jobs initiative itself. It will not play any meaningful part in creating jobs or stimulating economic recovery. Only an alternative approach, based on investment in jobs and boosting consumer demand, can break this cycle. The economy is crying out for stimulus while ordinary people are crying out for a change of direction.

There is an alternative. It is one that sees investment in jobs, the country's future and society while stimulating the economy. It is time for the Minister to wake up and realise the other way has failed. The policies that have been pursued have not just cost billions of euro but have broken families and imposed real hardships. Will the Minister for Finance examine the alternative proposals put forward by Sinn Féin again today?

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