Alex White (Dublin South, Labour) | Oireachtas source

I thank the many Deputies who have made considered and useful contributions to this debate. On Tuesday, Members asked why were we bringing in the Bill so late at night. The phrase "in darkness" was used as if people could not work or journalists could not report on us after sundown. The reason was that the Minister for Finance wanted to make the opening contribution on Second Stage and his schedule meant that this would not have been possible otherwise.

I would like to address the sale of Irish Life to Great-West Lifeco ,which was raised by Deputies Michael McGrath, Doherty and Boyd Barrett. Following completion of the sale, all decisions on employees will be a matter for Great-West Lifeco whose chief executive officer has stated that any job losses that would occur following the acquisition of Irish Life would be on a voluntary basis. The State will recoup in full the investment made by the taxpayer and will also receive a dividend from Irish Life, an asset which the State did not intend to hold for the medium term. We do not expect Irish Life to be asset stripped. Great-West Lifeco views Ireland as an important strategic market and, through its Canada Life subsidiary, has operated here since 1903.

With regard to budget measures generally, a number of Members referred to fairness. Ireland has been consistently assessed highly by the OECD for the progressivity of its taxation system. It is estimated that in 2013, the top 5% of income earners will pay 44% of the total income tax, with those earning €50,000 or less, comprising 78% of income earners, paying 19% of the total. Furthermore, it is estimated 841,000 individuals, some 40 % of the income tax base, will be exempt from income tax. When marginal rates of tax are high, jobs are lost. That has been the experience and that is the evidence. Indirect and capital taxes have a less adverse impact on employment. However, that does not mean that the wealthy should not carry the principal burden of tax. The minimum effective tax restriction on high earners is designed to ensure this.

The question of tax justice cannot be resolved simply by dealing with income tax. Other taxation measures are being taken by the Government, which will bring about further equity across the board. The property tax is one such measure, which will assist in ensuring fairness throughout the tax code. I agree that the tax code is an instrument to bring about equality and fairness, to which the Government is committed. It is not all about income tax, as other taxes can achieve those outcomes as well, which is often ignored by Members opposite, including those who proclaim to be left wing or socialist in their thinking. One of the great contradictions, and there have been many, that has been thrown up by this crisis is the spectacle of socialist commentators and politicians opposing property taxes.

Their position is extraordinary and counter-intuitive of my understanding of socialism and social democracy. In any case, I digress.

Deputies Michael McGrath and Doherty referred to the lack of a stimulus programme for the domestic economy. In striving to restore sustainability to the public finances the Government has always been mindful of protecting the emerging recovery. We outlined a number of steps in budget 2013, including a ten point plan for small and medium-sized enterprises. At the same time, Ireland is in a programme of financial assistance and we have made firm commitments to bring down our deficit to sustainable levels by 2015. We have consistently achieved these commitments and remain committed to achieving the overall deficit reduction objective by 2015.

Capital expenditure was addressed, particularly by Deputies Michael McGrath and Doherty. The Minister for Public Expenditure and Reform was determined to avoid further reductions to the capital budget for 2013 over those already agreed as part of the review of the public capital programme for 2011. A number of adjustments were made which led to the overall ceiling being increased by more than €60 million. The Exchequer capital programme will be augmented by a €2.25 billion infrastructure stimulus package announced by the Minister for Public Expenditure and Reform in July 2012.

Deputies Doherty and Boyd Barrett commented on the effective rate of tax paid by companies in Ireland. It is worth restating that all companies in Ireland pay the standard 12.5% rate on their trading profits which are generated in Ireland. In general, the ability of companies to lower their worldwide rates of tax using international structures reflects the global context in which all countries operate. We have seen much commentary and information recently about the types of procedures and techniques that have been used by companies throughout the world to circumvent national tax codes. The only way to combat such arrangements is for countries to work together to consider how international rules can be amended to ensure fair levels of taxation. It is self-evident that it is not possible for one country to address this issue on its own because it involves a set of techniques and approaches which is international in its effect and can only be combated by a concerted international approach. In this regard, Ireland is an active participant in the OECD project on base erosion and profit shifting. With regard to Deputy Ross's suggestion that the rate of corporation tax be reduced, it would be impossible to justify such a measure as it would have a significant deadweight cost and any change would contradict the Government's stated commitment to the 12.5% rate.

In response to the points made by Deputy Michael McGrath on the National Asset Management Agency and the hotel sector, NAMA does not own or operate hotels. The agency's role in respect of the properties securing its loans is that of a secured lender. Other than properties that have been enforced, all of which are listed on NAMA's website and managed by the appointed receivers or administrators, properties, including hotels, continue to be managed by their existing owners or their professional managers or agents. More than 900 hotels are operating in Ireland and NAMA has exposure to only 13% of the sector.

To respond to Deputy Colreavy's comments about State revenue from oil exploration, this is an expensive business with significant upfront costs. Government policy is based on the need to strike a balance between the need to give sufficient encouragement to those who would search out and extract natural resources and the need to ensure the State secures an appropriate return.

A number of Deputies referred to the local property tax. The Finance (Local Property Tax) (Amendment) Bill 2013 will be considered by the Oireachtas shortly. Deputy Michael McGrath and others suggested that no account has been taken of ability to pay the tax. On the contrary, a range of provisions exist within the Finance (Local Property Tax) Act for exemptions and deferrals which are income related and take account of difficulties faced by people in mortgage distress.

A number of Deputies have also referred to valuing residential properties prone to flooding. As a self-assessment tax, it is, in the first instance, a matter for the property owner to calculate the tax due under the local property tax, based on his or her assessment of the market value of the property. The impact of serious and regular flooding on a property is one factor a property owner would take into account.

With regard to Deputy Michael McGrath's comments about the research and development tax credit, the cost of the regime in 2010 was €224 million. The suggestion to remove the 2003 base year would have a minimum additional cost of €45 million per annum. However, this and other issues will be considered as part of the review being carried out by the Department of Finance.

Deputies Michael McGrath and Doherty made reference to analysis of the outcome of previous Finance Bill measures, particularly the special assignee relief programme. We should have data in respect of the programme's first year of operation later this year.

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