Thomas Pringle (Donegal South West, Independent) | Oireachtas source

I welcome the opportunity to contribute to the debate on this Bill to implement changes announced in the budget. The Minister's statement that growth is expected to be 2% in 2014 is unrealistic. Already this year, growth projections have been downgraded on a number of occasions, as they have been in every year in the lifetime of this Government. The projected growth rate of approximately 0.2% this year is effectively zero growth and the budget will not contribute to any improvement in the figure for next year.

I question the need to make the adjustments outlined by the Minister in his budget, including the expenditure cuts he announced. The Department of Finance estimated that a completely neutral budget, in other words, one without expenditure cutbacks, would reduce the deficit to 5.8% next year, based on a growth rate of 0.5%. This indicates that, with only a little work, we could have achieved the troika targets. Citizens would have been confident in the knowledge that they would not experience cuts, which would have achieved a bounce in consumer sentiment in 2014. It was possible, therefore, to meet our targets without the painful adjustments that have been introduced.

I propose to concentrate on two aspects of the Bill. Sections 5 and 6 provide for a home renovation incentive. While the scheme has been widely welcomed, it does not go far enough. After the budget, one commentator argued that the scheme would only benefit people who were in any case prepared to pay VAT and had budgeted for that purpose. I concur with the assessment that it will not have the desired impact on the black economy. Compliant contractors who include VAT in their invoices have many more compliance costs than contractors who are operating in the black economy. Health and safety, insurance and other compliance issues further increase their estimate costs as against those of non-compliant contractors.

Achieving the desired effect in terms of tackling the black economy would require the tax rebate to be set at 20%. I ask the Minister to consider making such a change at a later stage. The effect of such an increase in the rebate would far outweigh the measure's impact in terms of revenue foregone by the State, particularly when one considers that the tax credit is spread over two years after the expenditure is incurred.

On the single parent child carer credit, the Minister indicated that he intends to table an amendment on Committee Stage to allow the non-resident parent or parent who is not the primary carer to avail of the tax credit if the primary carer does not have a tax liability. This is a worthwhile proposal and I commend the Minister on his decision in this regard. I look forward to its implementation on Committee Stage. I have received a number or representations from couples where the primary carer lives in the Six Counties and the father lives in the South. This means the primary carer does not have a tax liability in the State. I presume the proposed change will apply to families in such circumstances and that the father resident in this jurisdiction would be able to retain the tax credit. The proposed amendment will go some way towards alleviating the concerns of many people about the measure provided for in the budget.

Persons who avail of the carer's tax credit are subject to a specific tax band. I understand the standard rate tax band for a person in receipt of the child carer credit is up to €36,800 but the upper limit would fall to €32,800 if the taxpayer were to lose the carer's tax credit. Will the Minister consider providing that parents who lose this tax credit will not have their tax band reduced? This would soften the blow to non-resident parents. I am not sure if such a change would require an amendment to the legislation or could be introduced by means of a direction issued by the Minister to the Revenue Commissioners.

That would soften the blow for many people because it would mean approximately €850 per year for those affected. That would allow them to continue paying maintenance for children who are with the primary carer.

In regard to the start your own business incentive scheme, the budget estimated that it would €1 million in tax expenditure over the next couple of years. I wonder how effective the scheme will be in encouraging people to start their own businesses, particularly in respect of allowing self-employed people to get to the point where they incur a tax liability.

The increase in DIRT is regressive because it targets both small and large savers. The Labour Party lauded this measure as part of the wealth taxes it introduced in the budget but this is not a wealth tax because it affects all savers. It should be possible to introduce a targeted DIRT increase for those who benefit significantly from savings.

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