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

For the fifth year in a row we are presented with a regressive budget followed by a regressive Finance Bill. This is the also the fifth year in a row for us to get the big lie, that there is no alternative. When one takes a step back and looks at the Finance Bill in its entirety and asks who benefits the most, the answer is very clear. This is a budget and Finance Bill for the multinationals, big business, the banks and high earners. It is a Fine Gael budget and Fine Gael Finance Bill from start to finish. There is no alternative to that in Fine Gael's eyes. This is a slightly smaller Finance Bill than that to which we have become used in recent years, but the unfairness crammed into it is all the more remarkable for that. The Government plays around with figures on percentages lost and gained, but it cannot deny the fundamental fact that the Finance Bill will make the wealthy even wealthier while doing very little for low earners or for the real middle-income earners. This year, once again, my party was the only one to provide a costed alternative. Quite literally, Sinn Féin is the only alternative to regressive budgets.

In the interest of a fairer society we proposed to remove regressive taxes such as the water charge and property tax, to take workers earning under €19,572 out of the USC net and to provide relief to the self-employed. We also sought to ask those who earn upwards of €100,000 individually to pay a little bit more. However, that runs contrary to everything that Fine Gael and Labour stand for. They went down another path, one that is clear in the Bill, namely, rewarding the top 14% of taxpayers, 27,996 of whom earn more than €200,000, by €902 each at a cost to the State of almost €182 million. That is the choice the Minister made when faced with all the choices presented by society. Today, we read on the front page of newspapers about elderly people on hospital trolleys. That is not unique to today; it will happen tomorrow, the next day and the day after that. The situation will continue to get worse and deteriorate in the coming weeks and months because of the decisions the Government has made.

Time and time again we hear from Fine Gael and Labour about the difficult choices they have made. The choices in budget 2016 seem like natural reflexes to them. When one has favoured the wealthy five times in a row it must become less of a hard choice. According to Social Justice Ireland budget 2016 widened the gap between rich and poor by €506 a year. This measures the gap between the disposable income of a single unemployed person and a single person on €50,000 per annum, but if compared with people on higher salaries the gap between rich and poor has widened even more.

Sinn Féin’s alternative budget was crafted with the intention of creating a fair society. We proposed to increase the provision and quality of public services, the removal of regressive taxation such as the water charge and property tax, and to take thousands of workers out of the USC net, while at the same time supporting and encouraging the self-employed. What is wrong with asking those with the deepest pockets to pay a little bit more? It would have meant that those individuals earning more than €100,000 would pay a little bit more. However, that runs contrary to what Fine Gael and Labour stand for. They went down another path, one of rewarding the top earners. That is their choice. It is not the republican choice. Our choice would be different. Once again the choices have been made and the Government tries to stand over them. It stands over the non-abolition of water charges and instead gives €182 million of tax breaks to the top 14% in society. The Government stands over the non-scrappage of the local property tax while allowing another loophole for multinationals to avoid paying their fair bills. The Government had choices but in the same way as it did every year, it went for the regressive choice. This year is no different.

While we welcome the introduction of the self-employed tax credit, it lacks the progressive nature of the Sinn Féin proposal in our alternative budget, namely, where the credit for the self-employed would be tapered off between €80,000 and €100,000. I also note the Minister’s lack of commitment to alternative funding routes for self-employed entrepreneurs. Sinn Féin is fully committed in that regard. We proposed that the startup relief for entrepreneurs, SURE, scheme would be broadened to allow the self-employed access the scheme. I encourage the Minister to take the suggestion on board.

In the removal of income from woodlands from the high earner's restriction and the broadening of the employment scheme it is clear that Fine Gael and Labour have once again shown their commitment to the high earners in the State through their weakening instead of strengthening of the high earner's restriction. The high earner's restriction was introduced for the specific purpose of limiting the use of certain tax reliefs and exemptions by high income individuals. However, Fine Gael and Labour think it pertinent to remove income from woodlands from the list of tax reliefs subject to the restriction, as if high earners are under big pressure at the moment and need access to more money which is exempt from taxation.

Furthermore, Fine Gael and Labour made the tough choice to increase the overall investment limits under the employment investment incentive, which allows investors to obtain income tax relief on investments of up to €150,000 per annum. Broadly, the Government has increased the annual and overall investment limits for a company from €2.5 million to €5 million and from €10 million to €15 million, respectively, and extended the required minimum holding period from three years to four years.

The Bill also expands the availability of the relief to allow companies that already own and operate nursing homes to raise funds for the purposes of expanding their existing facilities. Let us compare that to Sinn Féin’s commitment to restrict the high earner's loopholes. We will table amendments on Committee Stage but, as I have said every year since taking on the role of finance spokesperson for Sinn Féin, we will go through the farce and the motions on Committee Stage. The debate will be good, as it always is. I enjoy the debate across the committee room, but we are not allowed to propose certain amendments. Most of the amendments we propose will be ruled out of order by the Chair. This year will be no different because the Government refused to accept the legislation I put before this House to allow for a constitutional amendment to allow for Members other than on the Government side to propose motions or amendments to legislation that would place a charge on the State. We must do that if we are serious about political reform. The Minister made the same argument when he was on the Opposition benches a number of years ago. If we are serious about political reform then that constitutional restriction should be lifted.

The accelerated scheme of allowances for industrial buildings provides for tax depreciation over a seven year period instead of the normal 25 year period. That is something we must examine. Accelerated tax deduction is allowable on buildings costing up to €5 million where the expenditure is incurred by a company and €1.25 million where the expenditure is incurred by an individual.

When I initially heard about the changes to the petroleum production tax, I thought the Minister had finally done the right thing with regard to ensuring the proper taxation of earnings from natural resources, in particular given the report issued by the Joint Committee on Communications, Natural Resources and Agriculture which recommended a major overhaul of Ireland’s tax terms for its offshore oil and gas. The committee recommended that the tax for future licences would be increased to 40% for small commercial discoveries, 60% for medium commercial discoveries and 80% for very large discoveries.

What is proposed here clearly falls short of what the committee recommended and Ireland still has one of the lowest tax returns from natural resources of any state. In addition, there is no discussion or mention of retrospective action being taken against existing oil and gas fields, including the Corrib gas field, as these changes will apply in the case of any oil and gas exploration licences first awarded after 18 June 2014.

Deputy Michael McGrath mentioned the issue of Bank of Ireland and I ask the Minister to outline what he intends to do with Bank of Ireland. What will the Minister do, given he has a major shareholding in that bank which he holds in trust on behalf of the people, as this bank again has turned around and is screwing the very same people who rescued it? The changes announced today that are being defended by Bank of Ireland simply are not acceptable. It is not acceptable that it has closed the door to thousands of its customers in respect of over-the-counter services below certain thresholds. I ask the Minister to do something in this regard. The Minister sat on his hands in respect of mortgage distress, bankruptcy terms and all the rest but on behalf of people who are contacting my office and, I am sure, those of other Deputies, I ask him to do something. These people are deeply concerned that a bank that was rescued by this State and which only exists today because a Government stepped in and rescued it, is shutting its doors on customers because they simply do not have enough euro to deposit across the counter or because their withdrawals are below €700. This matter must be addressed and the Minister should make strong comments and should face down the bank in this regard.

I find it disturbing that the Minister did not see fit to support my legislation concerning mortgage interest rates, which would have benefitted thousands of hard-pressed families, but did find time in this Bill to legislate for further tax deductions for the banks. The Finance Bill 2015 proposes to allow a deduction for certain interest-dividend payments made in respect of capital instruments issued by banks to satisfy their tier 1 capital requirements. As no deduction has been permitted for interest payable with regard to any tier 1 capital until now, this represents a significant change of course. The Bill confirms that banks will now be able to get a tax deduction for costs associated with a tier 1 instrument held for capital requirements and furthermore, as a result of this Bill, an exemption from interest withholding tax for the banks also will apply to some of these instruments. If there is one ideological commitment holding this coalition together, it is a commitment to the banks. I welcome the extension of the bank levy but as the Minister is aware and as Sinn Féin has advocated, it could have been significantly increased.

The knowledge development box is a matter that will be dealt with in great detail on Committee Stage but it illustrates the Minister's lack of commitment to domestic small and medium-sized enterprises, which still face a myriad of problems from legacy debt to problems accessing credit. I am informed by industry sources that this regime will be of limited benefit to the domestic corporate sector given the significant costs associated with investing in and generating the qualifying intellectual property, as well as the requirement to engage in substantive operations that have a high added value for the Irish economy. One must be upfront and not shy away from the debate on Ireland's corporation tax regime and reputation. Sinn Féin is for an all-Ireland corporation tax rate. It is for Ireland being a responsible member of the international community with no cloud hanging over its tax reputation. Sinn Féin is for foreign direct investment and for domestic indigenous enterprise. It is for being a responsible member of the international community and not simply a cog in the system that deprives the developing world of tax due to it. However, I am far from convinced that the Government shares that aim and am deeply concerned, as I have stated repeatedly, at what the Government is planning with regard to the knowledge development box.

Budget day also saw the announcement that the local property tax would be frozen until 2019, that is, until after the next general election. Is it not a strange commitment for a tax that is based on value to be frozen for so long? The truth is this tax is unpopular and rightly so. As a system of funding local government, it has failed miserably and likewise, the attempt by the Government to remove the burden of this tax from houses infected by pyrite has been a disaster and this should be remedied as soon as possible. I also take this opportunity, given the dreadful situation that has emerged for the residents of Longboat Quay, to call again for them to be exempt from the property tax until their homes are safe. When I put this question to the Minister, the reply was not satisfactory. Basically, as if the residents of Longboat Quay did not have enough problems, the reply from the Minister states it is up to each individual to determine whether his or her home is habitable and therefore to make that decision for himself or herself. If the residents make the wrong decision or if they read the legislation wrongly, then the Revenue could come after them. Second, it is up to them to decide what is the value. The Minister needs to lead in this regard. It is not the fault of the residents of Longboat Quay that they found themselves in this position. These homes are not supposed to be habitable but as people are living in them at present, the Minister should make a clear statement to the effect that these homes should be exempt from the local property tax and each resident should notify the Revenue that his or her accommodation does not fall under the terms set down in the legislation. However, the Minister has not done this and basically has placed the responsibility on the individuals, which carries consequences in respect of the Revenue itself. If anyone from the Revenue is listening, perhaps the Revenue Commissioners might take a lead on this by examining the legislation and, given what is known about Longboat Quay, writing to some of these individuals to tell them their homes are not eligible under the local property tax.

The best the Minister could have done about the housing crisis in this Finance Bill was to increase the tax clearance threshold. It is incredible that the Government had no announcements on alleviating pressure for renters struggling to make ends meet or to deal with the issue of supply in the housing market. However, once again showing where the priorities of Fine Gael and the Labour Party lie, the Minister did find time for an amendment that has been made to increase the threshold for obtaining a CG50 tax clearance certificate from €500,000 to €1 million for houses. The CG50 clearance provisions provide for a deduction of 15% from the purchase price of certain property-related assets, to be paid over to the Revenue Commissioners in certain circumstances where a tax clearance certificate is not provided by the person disposing of the assets. However, there is an exemption where the proceeds are below the threshold, which now has been expanded by the Minister. Many people look to the budget to see where the priorities of the State lie. These people would quite rightly have been disgusted by the lack of action on rent certainty or house building in the budget. At a time of a severe housing emergency, the total capital spend next year will decrease. This is a damning statistic, which shows where the priorities of the Government lie.

I welcome, following Sinn Féin's lead, the reduction in this Bill to the administration charge applying to the export of a vehicle for the purposes of the vehicle registration tax, VRT, export repayment scheme, from €500 to €100. However, the Minister did not go as far as Sinn Féin, which called for its complete abolition. Sinn Féin welcomes the amendment regarding the alcohol products tax rebate for microbreweries, which may now be claimed at source. Unfortunately, the Minister again did not go as far as Sinn Féin's proposal in its alternative budget, which was to broaden this relief by 5,000 hectolitres. Sinn Féin fully supports this burgeoning indigenous industry, which is a good example of a fine indigenous industry.

On budget night, I supported the move to lower the burden of commercial road tax. However, I must now ask whether the urgency behind the motion passed that night had anything to do with the then pending Supreme Court decision, of which Members now are aware, in which that court ruled that for the purposes of motor tax, the trailer weight of a vehicle should not have been included in the weight. This is a major rule that could have serious repercussions on revenue and the entire commercial motor tax system. Does the Minister intend to bring forward legislation on foot of that decision? Is the State liable in respect of repayments or may there be calls on the State to deal with overpayments of motor tax by certain individuals?

I note the abundance of amendments in relation to the funds industry. Had the Minister focused as much time on legislating for those facing home repossessions or being screwed by high mortgage repayments as he did on the funds industry we would all be in a better place. The effect of the changes announced in the Bill is to apply to the Irish Collective Asset management Vehicle, ICAV, the same tax treatment from which Irish fund structures that are defined as collective investment undertakings currently benefit, and includes the application of tax exemptions in respect of Irish income and chargeable gains. Elsewhere the Bill clarifies that the appointment of an Irish Alternative Investment Fund Manager, AIFM, to a non-Irish alternative investment fund does not bring the AIF within the charge to Irish tax in respect of income or gains from the fund solely as a result of the AIF being managed by an independent Irish manager. I am on record expressing doubt about the need for the ICAV legislation and the manner in which it became law. Only months later we are back fine-tuning it. Sinn Féin will be keeping a close eye on these sections.

The increase in the minimum wage is welcome but we all know that this 50 cent increase will soon disappear. Sinn Féin called for a €1 increase in the minimum wage but, again, all we got was a minimalist approach by the Minister and the Government in this regard. I welcome other positive aspects of this Bill. For example, I am happy that the home renovation initiative has been extended and I welcome the introduction of country by country reporting. I welcome also the increased powers for Revenue, which will hopefully yield greater income for the State. The increase in the carer's credit is also welcome.

I recently reviewed the statistics on lending over the last couple of months by our financial institutions. It is clear that the banks are not lending to households. There has been a decrease month-on-month in regard to mortgage lending for homes. Short-term lending of less than one year is the only area in respect of which there is growth, although in the context of overall contraction. I assume this relates to extension and renovation of houses under the home renovation scheme. There is a serious problem in regard to lending to households by our financial institutions which needs proper scrutiny in order that we can identify what needs to be done in this regard.

Last week to little fanfare the Central Bank published an economic letter which states that the affects of austerity were underestimated because many households cannot borrow at low interest rates and that the crisis in financial markets caused by zero interest rates also affected others - which were unstated but are presumably businesses. In its jargon, "The cumulative multiplier over the 2011-2013 period amounts to 0.7 and 1.0 in the baseline, but increases to 1.3 with a reasonably calibrated financial accelerator and a crisis-related increase of the share of credit constrained households". It goes on to say, "In the latter scenario, fiscal consolidation would be largely responsible for the further decline in GDP relative to its pre-crisis trend during 2011-2013". This is just one of the latest reports that shows up the argument that austerity did not work and that it was not necessary. Members on the benches opposite seem to think they have done the right thing, that all the cuts were just hard choices they had to make. No right thinking person would, of course, agree. What is clear is that when some fiscal space does become available the priority is not to build a fair recovery, rather it is to cut taxes in a way that makes the wealthy even wealthier.

The budget, we were told by the Minister and the Taoiseach, would be pay-back time. Were water charges or the property tax abolished? The answer is "No", because when they said it was payback time they meant it was payback time for the top earners. Fine Gael and the Labour Party have sold the family silver. They have watched hundreds of thousands of our people emigrate and have stripped our communities of resources in the name of austerity. They now have no intention of building a fair recovery. The Government has decided on one policy and one policy only and that is tax cuts. It has set out its stall. It is about hollowing out our society and building an unfair and an unjust Ireland for our children.

We have all heard the harrowing stories in regard to services. We hear all the time in our constituency offices of children with disabilities being unable to access the type of supports they need from the health services. We have all heard the stories about children going to school without breakfast. We have heard from teachers that these children are easily identifiable because they are the children who cannot concentrate, who grip their pencils weakly and who continually turn around because they are unable to focus owing to a hunger in their bellies. The Government could have addressed all of these issues or it could at least have begun to address them. It could have started by addressing some of the issues that present in this capital city, including that right now, at 8 p.m., there are many parents who, because they and their families are homeless, are tucking their children into bed in a one bedroom hotel room, similar to the type of room in which I stay while in Dublin when on Dáil business, and all because this Government had different priorities.

I do not understand why we have a Finance Bill before us that provides €182 million of tax breaks to those individuals that earn over €70,000 per annum. It does not make any sense. At the same time, there were over 400 people on hospital trolleys today. The Minister can pretend as the Taoiseach did earlier today that this is the result of hospital managers not doing their jobs. The Taoiseach said earlier that he did not know why this problem is not being solved given hospitals have been provided with sufficient money, nurses and doctors to do so. I am sure when it comes to the housing crisis the same will be said, that the county council managers and councillors will be accused of not doing their job despite the fact they are being given the money and so on to do so. That is all bull and we know it.

This country has been starved of resources for the last number of years. What the Minister is now doing is setting us down a very dangerous path. We know that tax receipts have increased and that an additional €2 billion in corporation tax has been taken in so far this year. That might continue for the next number of years because with the introduction of country by country reporting, for which we have been calling for many years, companies will be trying to get their act together before they have to start reporting next year. Under questioning from me the officials in the Department of Finance said they could not understand why there has been a 40% increase in corporation tax. It is not that companies are 40% more profitable. We all know that they could not all be 40% more profitable. There are serious questions remaining around the economy yet this Government has set out a stall of cutting stable taxes, which is income tax, while at the same time starving public services of necessary funds to deal not only with demographic pressures but enhanced service provision and to address crises in a number of key areas such as housing, education and, in particular, health. We all know that there are other crises coming down the road in terms of the pension time-bomb and a number of other issues.

If all of this goes belly-up the Minister, Deputy Noonan, will be long gone. He will be sitting back enjoying his pension and, hopefully, his retirement. If this goes belly-up who will pay the price? What the Government is now doing is exactly what Fianna Fáil did. Professor Honohan and others, including members of the Irish Fiscal Advisory Council, have pointed out to the Minister the dangers of what he is doing in terms of cutting stable taxation and starving public services of the type of investment needed. What he is doing is reckless.

When we make the claim to the Taoiseach that homelessness is this Government's policy, that patients on hospital trolleys is its policy, we do so because we believe that these are the choices made in this Finance Bill.

The Government has chosen to cut taxes for the wealthiest in our society. It cannot have it both ways. We cannot fix the crisis in these areas if the Government continues to cut taxes for people who are not demanding that it do so. The Government can tinker around the edges of the homelessness crisis, the health crisis and the trolley crisis but it will not solve those crises if it does not have the political will to invest the necessary resources. It is very clear that the Government has done what it has done and that it believes it is popular in terms of the forthcoming election. However, it is playing with fire in terms of the economy. The Government has chosen a very dangerous road, one which it has stated it will continue to go down over the coming years. Deputy Michael McGrath was right when he asked how the Government would abolish the universal social charge without increasing taxes in the next five years. It must be remembered, however, that his party is saying the same thing, namely, that it will also abolish the universal social charge. The Deputy is right in saying that the Government cannot do it but he is not acknowledging that his party cannot do it either.

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