Seán Fleming (Laois, Fianna Fail) | Oireachtas source

I am sharing my time with Deputy Michael Moynihan.

As we all know, the Finance Bill is to give legislative effect to the budget measures for 2017, announced on 11 October. I wish to do deal with a few specifics in the Bill and various sections. There was quite a lot of talk about some of the bigger issues that have attracted a lot of attention.

I will deal briefly with section 8, which covers the help-to-buy scheme. More houses need to be built but the scheme does not deal with this issue at all. It serves only to provide more money to chase the limited number of houses that are being built. It is designed to increase prices. I can see no other function and, to that extent, it is a bad scheme in general. That said, the Minister is proceeding with the scheme. It is the Government's budget and we have agreed that once the general parameters of the budget conform with the agreement we reached with the Government during the summer on the split between expenditure and taxation, we would not oppose it. This does not mean we agree with or accept every detail. The help-to-buy scheme is one of the issues we are not happy about. The measure will do harm but my only real concern is that it will not do too much harm.

On 12 October, the first opportunity I had to speak on the budget after its announcement the day before, I made the following precise point, which I was probably one of the first to make: "The Government has been telling people to save but a condition of the plan is that a person will have to take out a mortgage of at least 80%". I also stated:

That means those who have been prudent and tried to save up 30% of the price of the house will now be penalised. They will not qualify unless they take on additional borrowings. I do not know where that condition came from. The conditions for the scheme require one to be well-off and to have paid a lot of tax over the last four years and force one to take on an excessive mortgage even if one does not need to do so. A slight mistake has been made there and the Minister needs to revisit it.

In that context, I am pleased that he made an amendment to this issue. Perhaps the matter was a little rushed, but he indicated that the Central Bank had approved what he announced here on budget day whereas it is clear that was not the full picture. I am pleased that the point I made that day has resulted in one of the significant changes in the Finance Bill compared to what was announced on budget day.

Another issue I ask the Minister to address regarding this scheme is that of people building their own houses possibly to allow entry into this new scheme based on the date of the final drawdown of their mortgage. Some people commence building and might only have a bit of the work done and they should not be excluded if a lot of the mortgage has yet to be drawn down. I also believe that rental history should be taken into account for deposit or mortgage eligibility purposes in some way or other.

Section 2 deals with the universal social charge. The changes in their own right are welcome, but I want to raise two issues not germane specifically to the Bill, but to the Government, as a result of the USC changes. The changes to the USC are welcome and will increase people's net take-home pay, which is the purpose of the changes. We want to ensure that increase in take-home pay does not result in some people losing a medical cards when they come up for their annual reviews. The medical card criteria are based on gross pay less PAYE, PRSI and USC, so somebody's income could go up a few hundred euro a year, even if he or she is on a low basic income, as a result of this, and he or she could lose a medical card when his or her review comes up. The same principle applies to family income supplement. Family income supplement is based on net income, and if the net income increases, due to a welcome improvement to the USC, that should not be used as a measure to make people worse off through loss of family income supplement, as the case may be.

Another issue I want to raise is section 55, which concerns the publication of the names of tax defaulters. I will quote from the explanatory memorandum. It states:

The section clarifies the amount to be published in these cases. [Clarity is good.] The change puts beyond doubt that the portion of the settlement in respect of which a qualifying disclosure is made will be excluded from publication, and only that portion relating to other matters will be publishable.

I will also read from the next paragraph: "The section also provides that, in the case of defaulters who are to be published in the list and who have failed to pay the settlement sum, the fact that non-payment may be included in the published particulars". I surmise the members of the public think - obviously they are wrong - that when settlements are published, they cover the full amount of the settlement, but that if somebody has an issue and he or she fesses up at the beginning of the audit, admits to having made a mistake and owing €100,000 and is then ordered to find another €50,000, only the €50,000 is published and not the total sum. Maybe there is a rationale for this, but I think people think that when they see these figures published in the papers, they represent the full tax settlement. However, they do not and I wanted to put that on the record. What I find most interesting is that when people read "settlements", they presume the amount was settled. When people see a list published by the Revenue Commissioners at the end of a quarter, I think they think the amount was settled, that is, paid, but it is clear from this amendment that people can agree to a settlement but never have any intention of paying it. They should not get the benefit of that fact not being known. Now there is a recommendation that if the amount has not been paid, that will be asterisked or mentioned somewhere in the publication. That is only right, but I question whether that person should be considered as having made a proper settlement if he or she has no intention to pay at all. People might be interested in that.

I ask the Minister to provide for the last few years or quarters the total number of settlements published and the total amounts actually paid in respect of those settlements. I am sure Revenue has this data because it must have looked at the issue. I will be surprised and disappointed if there is a big difference between the two. This appears to be so, otherwise the issue would not be addressed here by the Department of Finance. It would be good to see that.

Another issue I want to raise is section 23, which deals with country-by-country reporting on corporation tax and - I risk losing my audience - base erosion and profit shifting, BEPS. During the formation of the Government during the summer, the Oireachtas had to set up a special sub-committee, of which I was a member, chaired by a member of the Fine Gael Party. It dealt with a recommendation of the European Commission on country-by-country reporting. This issue came to the committee, which was an ad hoccommittee because the full committees had not been set up. We considered the issue and we got Dáil Éireann to express reservations about what was proposed. I want the Minister, by Committee Stage, to announce the outcome of the Dáil's reservation because we were not the only country whose parliament expressed reservation. It was also noted that the recommendation came from the Commissioner with responsibility for jobs, enterprise and innovation and not from the Commissioner with responsibility for tax. It sounds a little like the Apple ruling. Commissioners not involved in tax seem quite happy to start making recommendations that have taxation impacts. We seem to be seeing a little of that again. Officials from the Department of Jobs, Enterprise and Innovation attended that meeting, and we asked them how this would impact on traditional Irish large multinationals, such as Glanbia, Kerry Group and so on. They could not tell us then how many companies might be involved. They said there was no mechanism. I note that the turnover mentioned here only applies to companies that have turnover in excess of €750 million and the report will have to give a breakdown of the amount of revenue, profits, taxes and other indicators of economic activity. There is probably nothing wrong with that, but it is wrong for us to pass legislation without knowing the impact of this or at least how many Irish companies could be so affected. It was extraordinary that when that was going through the Dáil early in the year that question could not be answered, so it is important that it be answered before we complete the Finance Bill.

The last section I will mention is another one on which some commentators comment quite a bit, namely, section 21, which deals with companies availing of section 110 tax status. The reason I mention this is that I submitted a parliamentary question to the Minister on this issue on 13 October. I had presumed people claimed this as a taxation expenditure and I wanted to know how it is accounted for and how much it is worth. I was surprised to get the reply I got from the Minister, Deputy Noonan, but pleased to get the information. He stated:

The rationale for not deeming section 110 a tax expenditure is due to the fact that it is part of our normal tax structure. It is the legal framework for Ireland's securitisation industry [and] is a key feature of tax regimes internationally.

Many people thought this was a loophole. In fact, it was specifically designed for the purpose for which it is being used. As the Minister said, "it is part of our normal tax structure". I say to people who thought maybe something was slipping through in this regard that it is actually worse than that. It was designed to achieve the fact that some of these huge companies with billions in assets were paying €1,000 in corporation tax in Ireland. It is good to see that was brought to an end. I do not know the intention of the Finance Bill in this regard, but I ask the Minister to clarify on Committee Stage - I will not be there myself but he can clarify it for the record - to make sure that there is no grandfather clause. Companies have availed of this until now. That is one thing. Maybe we cannot look back, and that might be the way taxation works, but from next year and in subsequent years, if companies make profits in Ireland, they must pay profits. They cannot say that because they were here before the change happened, they should not be affected by it. When hundreds of thousands of citizens took out mortgages over the years, they took them out based on the mortgage interest tax relief regime that was in place. It changed during the course of the mortgage, but they could not say that because they took out their mortgages before the changes were made, they should not be affected by the changes. None of that should be allowed in this situation. The Minister will come under pressure from the industry, but companies cannot continue this practice into the future.

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