Séamus Kirk (Louth, Fianna Fail) | Oireachtas source

I am glad to have the opportunity to make a brief contribution to this debate. A number of underhand changes included in the budget will have a significant impact on people's incomes, for example, the increase in the DIRT tax, the reduction in the tax credit for medical insurance and the abolition of the single parent tax credit. I am glad to hear the Minister is contemplating introducing an amendment in that regard. People who save, either by putting money aside for their pension or on deposit in a bank, are being hit by punitive taxes. The €500 million jobs package is grossly exaggerated. Changes to the pension regime, the expiry of the reduced 4.5% rate of employer PRSI and changes to sick leave benefit will have an impact for all business in terms of cost of employment. Increases in excise duty will do much to negate the benefit of the retention of the 9% VAT rate for the hospitality sector.

I would like to focus on a number of elements of the Finance Bill and will begin with the issue of medical insurance tax relief. The reduction in tax relief for medical insurance is based on a flawed and misleading understanding of the market. The Government has said that this change will only affect "gold-plated" policies, but it will impact approximately 90% of all private health insurance products currently on the market. Customers will end up paying more for their health insurance and more people will be driven out of the private health insurance market, despite the Government's stated intention of creating a system of universal health insurance. The CEO of GloHealth stated that given the obvious benefits, the decision to cut health insurance tax relief is counter productive.

We have a struggling public health system that is becoming ever more overloaded and patients will wait longer for their treatment, with all the consequent distress and suffering. It does not need to be this way. By keeping health insurance affordable, the Government could support the use of additional capacity in private hospitals, while also protecting the HSE's revenue from private patients in public hospitals. Where is the fairness both Fine Gael and Labour always talk about? This measure will have an impact on 90% of people. People in my constituency will be affected, from the Cooley mountains to the Boyne River. This is unfair and wrong. It needs to be changed. In the Fine Gael 5-point plan, Fine Gael promised it would "create a completely new, fairer, more efficient health system." We are still waiting for these changes. The Government has been in office nearly 1,000 days, 974 days to be precise, but these changes are non-existent.

The increase in DIRT tax is another example of short-term and short-sighted action on the part of the Minister. Section 18.4 of the Fine Gael manifesto referred to DIRT tax and stated that deposit interest retention tax would be increased from 25% to 30% to encourage higher levels of household consumption. The Government has increased the tax on deposit savings by a massive 14%, with an additional 4% PRSI also applying. This is a punitive tax on people who have prudently saved money from their after tax income. Any pensioner earning over €18,000, or €36,000 for a couple, is liable for DIRT at the full rate of 41%, even if they are only subject to income tax at 20%.

For low income families under 66, the threshold is even lower. The Department of Finance appears to believe engineering an environment of low returns on savings will prompt consumers to increase spending. However, this strategy severely penalises people who are putting money aside for expected future expenses, including children's education, medical costs and nursing home care. The increased DIRT rates take no account of people's income level. Low income earners who have put aside some savings pay the same rate of DIRT as millionaires. Why has the policy been changed in this area? DIRT penalises the prudent, the smart and sensible people who want to save to make a better life for themselves, their children and grandchildren.

Before I conclude, I would like to welcome the start your own business scheme. This is a progressive and positive move that offers some prospects of creating employment. However, there is a need to peel away the suffocating costs that stifle development. Take for example the issue of farm expansion. Food Harvest 2020 suggests the world needs more food. In the dairy sector alone the capital expenditure required to gear up production levels on individual farms is horrendously challenging for farmers. Capital write-off is over a period of seven years, but there is a strong case to be made for reducing that to a three year period or to give individual farmers the choice of three or seven years. The suckler cow scheme is the basis of our beef industry. While any encouragement to retain the number of suckler cows in the national herds is welcome, there is a need for an overall strategy to ensure we have the raw material for the beef industry in the future.

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