Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

I wish to speak on my amendment, No. 37, which differs from Deputy Broughan's amendment. We have heard the argument from Government that the retention of the 9% VAT rate for the tourism and hospitality sectors requires the continuation of the pension levy. Sinn Féin welcomes the retention of the 9% VAT rate, having called for its retention. The industry itself lobbied very effectively for its retention and hopefully we will see the fruits of that lobbying over the next 12 months in the form of increased activity and job creation. However, it is beyond belief what the Government has done in using that very effective lobby not only to retain the levy but to actually increase it for the coming year. There is no need to increase the levy to 0.75% for 2014 in order to retain the 9% VAT rate. My amendment calls for the levy to be retained at a level of 0.5%, but if one actually does the maths, it could be reduced further if the income from the levy is just to be used to retain the 9% VAT rate. It could be set at less than 4% for that purpose. There is absolutely no justification for continuing with this levy beyond next year because the Government has given no indication that it intends to retain the 9% VAT rate beyond that time.

There has been talk to the effect that the Government is going to use this money in the event of pension fund double insolvency. While it is important that we have some type of insurance fund to deal with such issues, it is not appropriate that pension contributors should have to pay for it. The Government spin at the time of the introduction of the levy was that there was enough fat in the system to allow the industry itself to soak up the pension levy, but it is very clear that this is not what has happened. It is the pension contributors who have had to bear the brunt of this. In terms of a fund for dealing with cases of double insolvency, as we found out from the Government during the debate on Committee Stage, the 0.15% of the levy will not be going into a ring-fenced account. The money is going into the general Exchequer fund and in cases of double insolvency where the State picks up the bill, the money will come from Exchequer funds. The Government is playing with words here and is trying to make it easier for the public to swallow the fact that the levy is continuing and that it has breached its own commitment in that regard. The Government commitment was that the levy would be in place only until the end of this year. Now, not only will it continue beyond 2013 but it will actually increase next year and continue on at a lower level thereafter.

If the Government is genuinely considering a levy on the pension sector to deal with cases of double insolvency, then it should be setting up a ring-fenced fund, which is not unique and has been done in many other areas such as insurance and banking, whereby money contributed from the sector is put into a fund to deal with problem issues. If the Government made such a proposal I would be willing to discuss it, but the proposal before us today is to increase the pension levy in 2014 to a rate of 0.75%, which is not required to cover the extension of the 9% VAT rate for another year, and then to continue with the levy at a lower rate beyond that. I cannot support that. I have put forward a fair amendment which would allow for the levy to remain in place in 2014 at a rate of 0.5%, which would more than adequately cover the 9% VAT rate extension, and then to set the levy at 0% thereafter. We specified 0% in our amendment because otherwise it would have been ruled out of order. The effect of setting it at 0% is that the levy would not exist beyond 2014.

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