Thomas Pringle (Donegal South West, Independent) | Oireachtas source

This Government’s budgetary strategy continues to prioritise high earners and industry at the expense of vulnerable people, people on low incomes and those on social welfare. Despite a few relatively positive initiatives in the Bill, such as the increase to the home carer tax credit, the fuel grant for disabled drivers and country by country reports on parent companies filing their tax returns, there is actually very little in the Bill that attempts to reform our current tax system and make it reflective of a fairer, more equal society.

I would be naïve in thinking this would ever be Fine Gael or Labour’s way. I do, however, want to counter the argument that the Bill is a progressive one. I will start with the notion that the new petroleum production tax is a progressive measure when, in fact, the Government took the option that affected industry the least. I sat on the Oireachtas committee on communications, energy and natural resources and I read the report on oil and gas exploration published in 2012, which recommended that, on smaller-scale petroleum fields, the tax should be 40%. The Government proposes a rate of 30% in the Finance Bill, which is giving effect to a decision made by the former Minister for Communications, Energy and Natural Resources last year. That 30% is 10% less than the recommendations of the joint committee. Worse still, the report recommended that for large profitable fields, the tax should be 80%, but the Minister, Deputy Noonan, in this Bill puts the maximum tax on productive fields at 55%. It would not be fitting to call this a progressive tax as it is far removed from the committee recommendations, where rates were in line with the INDECON report findings. It is also a perfect example of the Government’s loyalty ultimately lying with industry and compromising its policies to kowtow to industry needs.

Another anomaly in the Bill is in regard to the annual stamp duty charge of €2.50 on ATM and debit cards, which is being abolished from 1 January 2016, when it will be replaced with a new 12 cent ATM withdrawal fee. While this might seem progressive, it will impact most on those who do their business through cash transactions and will also attack vital services such as the post offices, which work mainly through cash transactions. What we should do in the Finance Bill is make it cheaper for retailers to do their business. There should be incentives to support post offices, alongside the introduction of this measure. That would show the Government is serious about economic recovery across rural Ireland.

Most of the supports and tax benefits in the Bill are oriented towards the tech giants, which get preferential treatment for bringing in the jobs and putting Ireland on the global tech map. When will we see progressive policies to bring about indigenous industries that do not end up getting bought out or exported? Fostering local industry and alternative industries like biomass and renewable production has the potential to grow local and sustainable rural jobs. These industries would foster companies that could be established in peripheral counties, like Donegal and the counties of the western seaboard. The introduction of the tax exemption for the felling of trees will actually benefit larger operators more than the family farmers in the forestry industry.

A first step could have been introducing a measure in this Bill that would prioritise the rollout of broadband to rural peripheral areas, working its way from rural areas into urban areas and offering scope for people to create their own jobs and grow their businesses. The impact broadband connectivity could have on the growth of SMEs and start-ups in rural constituencies in Donegal and across the country is huge. ISME recently published statistics stating that only 14% of SMEs are currently capable of fully trading online, while a further 8% can take orders but not payments online. This presents small businesses and potential start-ups with a disadvantage and should have been reflected in this legislation.

The introduction of initiatives such as the knowledge development box, providing for a 6.25% rate of corporation tax for multinationals which avail of it, is basically another way of assisting them to avoid tax and avoid paying their fair share. We could have included in the Bill a measure to introduce a minimum effective corporation tax rate across the economy, for example, setting a minimum effective rate of 6% on corporations, which would be less than half of the headline figure of 12.5% and would bring an extra €1 billion into the Exchequer. This could then be used to the advantage of many people across the country.

There is an issue with capital gains tax for farmers whose land is subject to a compulsory purchase order, CPO. I ask the Minister to consider exempting the purchase of land through CPO from capital gains tax. In these cases, the farmers are not looking to gain on their asset; instead the asset is being taken from them without their consent and being compulsorily purchased. There is no doubt this is done to progress vital infrastructure projects such as road developments. However, I do not believe farmers should be penalised by having capital gains tax levied on the income from the CPO. It is different when someone sells an asset in order to profit from it and in such cases this should attract a tax liability.

On an issue that affects the Border area, where one partner of a separated couple has custody of the children in the Six Counties and the other partner lives in the South and has access to the children, they are not able to avail of the single person tax credit. This should have been dealt with in the Bill. While it does not affect a huge number of people, for those it does affect, it has a big impact on their ability to support their children when living outside the State.

Beyond the packages outlined in the Bill, the Government has missed an opportunity to present a more progressive stance on the areas of taxation and regional development. While the USC increase in tax credit to €13,000 means that 700,000 people will be taken out of the USC net, and this is good for them, it shows we are focused on a low pay economy in this State. Some 700,000 workers represents about 35% of the entire workforce and this highlights the low income focus of this Government and the number of people who are struggling. Instead of finding quality jobs for people to work in, and making the transition to get that work easier, the Government is subsidising low income jobs. We are developing into a low pay economy and it means rural areas like Donegal will remain with incomes well below the national average. I do not believe this is progressive but we should not have expected anything better from the current Government.

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