Seán Kyne (Galway West, Fine Gael) | Oireachtas source

In a little over one month the country will take the momentous step of regaining its economic sovereignty. Exiting the bailout arrangement is possible because of the contribution made by every citizen in the past few years to restore the nation’s finances. However, we must not lose sight of the fact that State expenditure continues to exceed income. Regaining our economic sovereignty is not an excuse to go back to the old ways of irresponsible and reckless spending. The Opposition has attacked the budget for being unfair and not targeting those most able to contribute. However, the provisions contained in the Finance Bill expose the hollowness of this accusation. The increases in DIRT, exit taxes on payouts from investment funds and life assurance policies and the earlier changes to capital gains tax are among the measures that ensure those most able to contribute will do so.

There are a number of very positive provisions in the Bill. For example, the provision to consolidate the tax implications of the JobsPlus scheme is very welcome. JobsPlus is an enormously important programme which exemplifies how the Government and business can work together to tackle long-term unemployment. Another major positive is the home renovation incentive which is providing assistance for a sector under significant pressure as a result of the downturn.

Regarding sections 13 and 21, I wholeheartedly appreciate the amendment to ensure tax relief for expenditure on research and development is available only once a person or an organisation is fully tax compliant. However, we should examine the introduction of a more targeted relief for employees who register a patent. We are all aware of how vital innovation is for Irish companies and companies based here. New and better processes, components, products or services have a direct, positive impact on expansion and job creation. We should reward employees for being innovative by, for example, exempting from income tax the first €2,000 of any reward payment provided for that employee by the company. Any cost would be offset by the great likelihood of the company expanding when implementing the innovation. With such a measure the Government would be encouraging creativity in the business sector and helping in facilitating job creation.

One issue on which there has been a good deal of correspondence is the provision in section 7 concerning the one parent family tax credit. The move to replace it with a single person child carer credit arises from a recommendation made by the independent Commission on Taxation. Given the extraordinarily positive announcement in recent days on the plans to extend civil marriage and provide for legal recognition of Irish families in all their shapes and sizes, section 7 appears out of step. I appreciate that this measure is intended to inject equality into the tax treatment of cohabiting and non-cohabiting parents. However, in a genuine attempt to prevent exploitation of a tax relief by a small number of people, I fear this measure will cause hardship for responsible parents, particularly fathers. While I accept the need to reduce exemptions and other tax relief measures on account of the State’s financial position, it would be more equitable to continue with a shared, albeit reduced, tax credit for both responsible parents. Such an amendment would be in keeping with the Government’s desire, shared by most people, to give equal recognition and rights to all family types.

Another measure which I ask the Minister to reflect on and consider implementing is the reform of the Triple E accelerated capital allowance, ACA, tax incentive scheme. This is vital for indigenous companies such as Galway based C&F Tooling to increase their overseas business and thereby expand and create new jobs. The Triple E ACA tax incentive scheme is, however, dependent on an accreditation process which is time-consuming to the extent that it is a disincentive to customers placing orders for, in this case, new renewable energy products. The situation could easily be remedied if the Department of Finance were to introduce a new pre-accreditation certificate or letter which would outline that the tax relief would become available were the product in question to meet the assessment at the accreditation stage. The UK Government provided such a letter of confirmation regarding the available tax reliefs two years ago.

I ask the Minister to give strong consideration to these three measures, in particular, that I have raised, namely, the tax relief for employees receiving a monetary reward for being innovative and registering a patent, the retention of a reduced tax credit where both persons share parenting responsibilities and the creation of a pre-accreditation certificate or letter which would confirm the tax relief available to customers of Irish companies should their products achieve certain minimum standards.

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