Paudie Coffey (Waterford, Fine Gael) | Oireachtas source

I thank the Deputy for raising this matter that is of concern to her and many others. I am taking this Topical Issue matter on behalf of the Minister for Finance, Deputy Michael Noonan.

The Minister for Finance announced in his budget 2014 speech that the 0.6% pension fund levy introduced to fund the jobs initiative in 2011 would be abolished after this year. He did, however, introduce an additional levy on pension funds at a rate of 0.15% for 2014 and 2015 to continue to help fund the jobs initiative and also to help provide for potential State liabilities that may emerge from pension funds facing difficulties.

The abolition of the 0.6% levy after this year and the application of the 0.15% levy for this year and next are reflected in the Finance (No. 2) Act 2013 which gave legal effect to these budget 2014 announcements.

The reduced VAT rate of 9% on tourism and certain other services was one of the very significant and successful measures introduced by the jobs initiative. It was due to end in 2013. In his Budget Statement the Minister announced the continuation of the reduced 9% VAT rate. He also announced that the air travel tax was being reduced to zero with effect from 1 April 2014. The 9% VAT rate has helped to create thousands of new jobs as well as protecting existing jobs. Since the budget announcement about the reduction in the air travel tax, airlines have announced the opening up of new routes, resulting in significant increases in passenger numbers with the associated increase in tourism activity and employment.

The Minister for Finance also said in his Budget Statement that the additional 0.15% levy for 2014 and 2015 would be used to help make provision for potential State liabilities which may emerge from pre-existing or future pension fund difficulties, although funds from the levy would not be specifically set aside for this purpose. The Government decided that such liabilities will be met by the Exchequer as they arise.

The value of the moneys raised from the stamp duty levy on pension fund assets has been used over the period since 2011 to fund the wide range of measures introduced in the jobs initiative to protect existing jobs and create new jobs. These include expenditure measures such as the JobBridge and the Springboard schemes. Aside from the reduction in the VAT rate from 13.5% to 9% for the tourism and hospitality sectors, other tax measures introduced as part of the initiative include halving the lower employer PRSI rate.

With regard to the impact of the jobs initiative, the most up to-date data, the Quarterly National Household Survey for quarter two, 2014, indicates an additional 40,300 individuals are employed in the economy when compared to same period in 2011. Furthermore, an additional 23,300 individuals are employed in the tourism and hospitality sectors, which are the sectors that specifically benefit from the reduction in the VAT rate from 13.5% to 9%.

The jobs initiative also included a number of current and capital expenditure measures, including a number aimed at retraining the workforce. The JobBridge scheme, for example, has exceeded the 5,000 places originally set out in the jobs initiative programme. Due to demand for places, extra funding was provided to the scheme, with funding for a weekly average of 6,740 places in 2014. As of the end of August 2014, the total number of internships taken up under JobBridge, the national internship scheme, had passed 32,000. Indecon economic consultants undertook an evaluation of the scheme in 2012, which was published in April 2013. Its report found that 61.4% of the JobBridge survey respondents were in employment within five months of finishing their internships.

The Government is conscious of the significant contribution of taxpayers generally to the rebalancing of the public finances and to the measures introduced to support and develop the economy. There has been progress in these areas. These efforts are ongoing, including the continuation of measures in the jobs initiative designed to improve the economic environment by providing the means to encourage job creation in the areas of our economy most likely to deliver employment in the shortest timeframe possible.

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