Heather Humphreys (Cavan-Monaghan, Fine Gael) | Oireachtas source

I commend the Minister for Finance, Deputy Noonan, on the competent way in which he has negotiated on our behalf in Europe and I compliment him on his huge achievements in the context of regaining our credibility on the European stage. He and the Minister for Public Expenditure and Reform, Deputy Howlin, have skilfully crafted difficult budgets in order to reduce expenditure and meet troika targets, while simultaneously stimulating the economy through incentives designed to support businesses and create jobs. The introduction of the 9% VAT rate in the hospitality sector was a major success. I welcome the fact that this reduced rate of VAT has been retained. I commend the Irish Hotel Federation and the Restaurant Association of Ireland on their excellent lobbying campaign in the lead-up to the budget. This very effective campaign was similar to that engaged in by the IFA.

The home renovation incentive is very welcome for self-employed builders whose businesses were decimated in recent years. I am glad that work done from 25 October last onward will qualify for tax relief in 2015 and 2016. I know this measure is going to prove effective, particularly as a number of individuals have already made inquiries with my office regarding the works that will be covered under the scheme. This incentive will encourage people to spend and will ensure others return to work. It is in this way that our domestic economy will recover.

Earlier today the Minister for Finance reiterated the Government's commitment to our 12.5% corporation tax rate. While the latter is obviously a major incentive in the context of inward investment, reputation is also vital. The job the Government has done to restore our international reputation as a country in which it is safe to do business is paying huge dividends in the context of the number of international businesses that are locating here. How matters have changed in the past two years. Instead of listening to a constant stream of announcements relating to job losses on morning radio programmes, we now listen to good news regarding job creation. Proof of this lies in the fact that we are creating 3,000 jobs per month and that the numbers on the live register have fallen for 16 consecutive months. I want that trend to continue and I want to hear more good news about job creation, particularly in respect of the Cavan-Monaghan constituency I represent. I am committed to working hard with my colleagues in order to ensure this is achieved. There is a concern among those in rural areas that they could be forgotten, particularly as the majority of job announcements relate to our cities.

Under section 23, the exemption from deposit interest retention tax, DIRT, relating to credit union share accounts will be abolished from 1 January 2014. This means that the exemption applied to members of credit unions who opted not to pay DIRT will be removed. Credit unions currently maintain two types of share accounts, namely, special share accounts and regular share accounts. DIRT is deducted from dividends relating to the first of these but it is not deducted from the second. The categories of those who hold regular share accounts include members who hold DE1 tax exemptions, namely, those who are over 65 and whose total incomes are less than the relevant limit and those who are permanently incapacitated, those who are otherwise exempt from paying tax on foot of their income levels and those who are liable for tax and who declare their dividends by means of annual tax returns. A regular share account is, therefore, a good workable choice for credit union members who are not liable to pay income tax.

The proposed changes will mean that apart from DE1 tax exemptions, all regular share accounts will be liable for DIRT and this will be deducted at source. Credit union members who are going to be adversely affected by these changes will be those whose accounts are not liable for tax, particularly those of children. We are striving to instil in our children the value of saving regularly. Not only will what is proposed act as a disincentive for them, it will also impose - for a negligible return in terms of revenue - a huge administrative burden on the Exchequer and credit unions. Perhaps the Minister will consider extending the tax exemption system to take into account children up to the age of 18 or 21, if they are not in employment. He might also consider inserting a monetary limit after which DIRT would become payable on dividends paid by credit unions. In that context, I suggest that only those credit union members who earn dividends in excess of €50 per annum in respect of their regular share accounts should be liable for DIRT.

On the subject of credit unions, we are trying to stimulate spending in the economy. In that context, the Central Bank needs to re-examine its approach towards credit unions that have demonstrated their improved financial circumstances. Now would be a good time to review some of the restrictions that have been put in place. Many credit unions have made great progress in developing their business models. They have also made good progress in building up their reserves and provisions. Surely the Central Bank should revisit this matter and show some latitude by easing restrictions on credit unions and allowing them to lend reasonable amounts again. Many credit unions reach their lending limits for a particular month within the first week. I ask that the Minister raise this matter with the Central Bank.

I reiterate that I welcome the many positive measures included in the Finance Bill. I ask the Minister to examine the points I have made in respect of credit unions.

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