Timmy Dooley (Clare, Fianna Fail) | Oireachtas source

I welcome the opportunity to contribute to the debate. I will take up where my colleague, Deputy Browne, has just left off in respect of the one-parent tax credit. If the Acting Chairman will allow me to do so, I propose to read into the record of the House an e-mail I received from a constituent whom I will not identify. The e-mail in question sets the tone with regard to why we really need to re-examine the position on this matter. It states:

It is with deep regret that I learned about the proposed Single Person Child Carer Tax Credit in the most recent Budget - it effectively means that I now face the reality of having to reduce the contact time I am currently granted with my two children in order to save this Govt ... a paltry €18 million.

Should it be passed I will lose approximately €40 per week in a tax credit, or €160 per month. I currently pay over a third of my salary in maintenance towards my kids - and this is right & proper; I am a responsible parent, whose first thought is ALWAYS what is best for my children. I continue to pay maintenance even when I have my children for a weeks holiday over each of the holidays and every second weekend. I try to feed them with healthy foods but consequently cannot afford cinema trips, fun activities at weekends, etc.

I live 40 miles away from my kids, do all the driving out to collect and driving out to drop them off.

I have to pay rent on a place that is comfortable enough to act as a second home to my two kids, and all the utility bills that accompany such a home.

My home is in negative equity. I am in considerable arrears on my mortgage. I also continue to pay off debts accrued during the course of the marriage.

My weekly expenditure averages at just under €500, which my weekly wage does not currently cover. The withdrawal of the current One Parent Family Tax Credit effectively means an 8% reduction in my weekly income...

... something has to go in order to accommodate this loss; the only thing I can cut is petrol money, which will inevitably mean I will have to reduce the amount of time I can spend with my children.

He proceeds to refer to the necessity for us to do something.

The e-mail I have just read into the record clearly highlights the desperate straits in which people find themselves. There are individuals who, through no fault of their own, find themselves separated and some of them never married in the first instance. The additional costs associated with managing a second home are burdensome. It was partly this fact that led to the introduction of the relevant tax credit in the first instance. In the context of budgets introduced by the Government, this move has been identified by the ESRI as being particularly regressive. Prior to the most recent general election the Labour Party promised that there would not be any cuts to social welfare rates and Fine Gael promised that there would not be any tax increases in terms of a broadening of the bands or the rate at which people pay. This has forced the Government into taking an awful lot form a small cohort of individuals. In my view, this is deeply unfair and it is making life intolerable for those affected. I really hope the Minister of State will be able to bring his good offices to bear in respect of this matter.

Pensions have again been targeted in the budget. When the pension levy was first identified as a method of stimulating the economy, it was stated that it would be in place for a relatively short period until this year. However, it is now being extended for a year and a little kicker has been included, namely, that there will be a reduced pension levy into the future. The levy currently stands at 7.7%, which is relatively small in real terms but it will of course be escalated as the Government needs to generate additional revenue. It seems that the Government will be returning to pensions time and again. Many pension plans and funds are experiencing significant funding difficulties at present and this is adding further to their woes. The long-term impact will be to discourage people from saving. We try to encourage people to put money aside in order that they might invest in pension funds and thereby save for a rainy day. People are living longer and pensions are an important part of their managing their existence beyond the end of their working lives. We are now in the process of discouraging them from saving and that is a matter to which consideration is going to have to be given in due course. People save money, they pay into their pensions and they expect to be able to deal with and pay nursing homes, live their lives, etc.

Another matter about which I am deeply concerned is the statement made by the Minister for Finance on budget day to the effect that medical insurance, particularly gold-plated schemes, would attract an additional charge or tax. There is nothing gold-plated about the policies of the people upon whom the provision in this regard is going to impact. When I realised the amount of money the Minister intended to raise from the move he is making in this regard, it became clear to me that it would affect a much wider group than initially appeared to be the case. This will hit families in a particularly hard way and it will be a deciding factor for some in the context of whether to retain their health insurance. Fine Gael's policy in this area is to create a system of universal health insurance but this measure will drive people away from health insurance. That is regrettable.

I always listen with interest to Deputy Kevin Humphreys, who offers the odd nugget but, unfortunately, most of the time one is obliged to search for it. The Deputy referred to all the classrooms which have been opened and the efforts the Labour Party is making in this regard. Earlier this week the Chairman of the Joint Committee on Finance, Public Expenditure and Reform - I suppose in an effort to beat the Tánaiste onto the front page of the Sunday Independent - informed us when he appeared on "Morning Ireland" that he was in the process of writing to the Chairman of the Revenue Commissioners. The object of the exercise was to bring her in for a show trial, which defies logic. This matter is fairly straightforward. The Chairman of the Revenue Commissioners is implementing Government policy and she is doing so in line with legislation. However, we still had the spectacle of the Chairman of the joint committee taking to the airwaves. The matter will play out today at a meeting of the committee and everyone will get through it.

I am a member of the Joint Committee on Finance, Public Expenditure and Reform and some time ago I asked the Chairman to bring before it the chief executives of the private health insurance companies in order that members might discuss with them their views on what will be the implications of the changes announced in the budget. I received a response which indicated that the matter would be addressed in due course. However, that has not proven to be the case. These are the kind of matters on which we must focus rather than the mock battle between Labour and Fine Gael in the context of who is going to take responsibility for opening the next door.

It is nauseating that it has come to that.

The changes in DIRT tax announced in the budget will discourage people who are putting aside money to educate their children or providing for the eventuality that they may experience ill health or unemployment for a period. Savings will be subject to a DIRT tax of 41%, and an additional 4% PRSI levy will be applied to unearned income. The cumulative effect of these measures will be to discourage people from saving, which is regrettable. While I accept that in the current economic climate it is necessary to discourage people from saving excessively, we must not return to circumstances in which people do not save anything. As the Minister of State will be aware, a previous Fianna Fáil-led Government introduced helpful measures during better times to encourage people to put a little money aside. I will have serious concerns if the Government goes further down the slippery slope of discouraging saving.

The retention of the 9% VAT rate for certain sectors has been the subject of some positive comment. While I also welcome this decision, I fail to understand the reason this measure could not have been funded through moneys collected last year when the Government decided to take money from private pension pots. The reasons for doing so was to fund a reduction in the air travel tax and the VAT rate applicable in the tourism sector. It did not use this money to fund the reduction in the travel tax, however. I do not know where it has gone. Furthermore, the Government had decided to reduce the travel tax for only six months this year. A pot of money taken from private pension funds is missing, as it was not used for the purpose the Government indicated. I do not believe the Government has continued to invest the money in the manner that was expected.

See this speech in context