Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

There was a vote. There was a vote on budget night. Deputy Michael McGrath was on RTE that night. There was a vote on budget night to pass the Government's resolution which nullified the amendment tabled by Deputy Fitzmaurice. This hung farmers out to dry and Fianna Fáil Deputies sat on their hands as that went through and decided not to vote with Deputy Fitzmaurice.

The Government is now trying to cover up its mistake by eliminating the cap that limits certain reliefs to those under the age of 67. However, the Government's incompetence continues because this would negate the original purpose of the Government's measure, which was to incentivise the early lifetime transfer of land to the next generation and to encourage young farmers to extend their holdings. The Finance Bill needs to be amended in order to ensure that working farmland is not subject to stamp duty at 6% in situations where the reliefs in place do not apply. We all know that taxation can do two things, namely, it can lead to behavioural change and introduce additional revenue. Sometimes we do it for both reasons and at others we do it for one or other of the reasons. However, we need to incentivise and encourage farmers to be economically viable. In some cases, that requires them increasing their land holdings.

The implementation of the transition period in this Bill raises more questions. There is confusion among farmers involved in sales. They are told they will not be charged 6% but that was the law passed before midnight on budget day. I mentioned a particular case to the Minister and, in fairness, he has asked me to provide the details to him. The problem is that the law of the land states that 6% is applicable and that the individual has four weeks to make the transaction. The Finance Bill will rectify that but it will be weeks before it is passed. Individuals who went to the bank and took out hundreds of thousands of euro to purchase and to pay the stamp duty simply do not have the money to pay an additional 4%. We need to rectify that as quickly as possible. As the banking inquiry highlighted, commercial real estate was one of the major causes of the banking crash. For that reason, it needs to be monitored and taxed appropriately and that is why we support the principle of an increase in commercial stamp duty. Indeed, it is something for which we called not just in this budget but last year as well. I am concerned, though, that simply multiplying by three the expected revenue will not result in the full potential being reached. We will measure that as we go along.

Another measure in need of amendment is the bringing forward of the seven-year CGT exemption, which is a stroke that will mainly benefit auctioneers and speculators. The Government is moving forward the cash-in date for land and property to be sold CGT-free without any guarantee of any effect on housing supply. The measure needs to be limited to land. Why would we allow them to cash in on commercial properties that were bought during this period and that will be sold next year in any event? Why would we allow them to avoid paying over 30% CGT? This should apply only to land, not property, and it should only be land that is suitable for residential development. By allowing landowners to cash in on this land and property years early, the Finance Bill is creating a bonanza for certain speculators. We discussed how it is the €5 budget but certain individuals who were planning to sell major commercial buildings next year did not get €5, they got millions of euro as a result of not having to pay any CGT. Furthermore, this proposal is not relevant to the vulture funds that have bought up huge amounts of prime development land in the State. That is because the seven-year CGT exemption does not apply to such funds. The international funds that have been buying up land were never liable for CGT. This was used as the new pin-up for the construction industry by the Fianna Fáil spokesperson, Deputy Cowen, as a way of trying to get this bonanza for speculators and developers. The reality is that vulture funds do not pay CGT so they will be completely unaffected by this move because of the way they structure the companies that purchase these assets.

The Finance Bill is missing the wood for the trees. The real flaw is the five-year exemption for funds that was introduced last year. Even Department of Finance officials have said that this measure is clogging up the market, yet there was no reference to this rule on budget day when the announcements were being made. I note, however, that the Minister has flagged an amendment to the Finance Bill. We need to see whether that amendment will go to the heart of this issue. I fear that some misguided commentary by Fianna Fáil has focused too much attention on the seven-year rule. The reality is that it is the five-year CGT rule that is really clogging up the markets. If we look at the basis for Fianna Fáil arguing for ending the seven-year CGT rule in respect of all properties, not just land, we can see that it talked about the NAMA internal memo but that memo shows that only 20% of the land the agency sold was in the timeframe eligible for the exemption. The other 80% fell outside the relief. In particular, the relief was not available when sales really ramped up from 2015 onward, as revealed in a NAMA internal memo. NAMA's sale of land really took off from 2015, with the potential delivery capacity from the land that NAMA sold of 37,892 residential units or 75% of the total residential delivery capacity from land sales by NAMA. They were not sold within that window of opportunity in respect of the CGT exemption so why are they still hoarding them? As a result of last year's Finance Bill, there is now an incentive for these funds to hold on and not sell until 2020, 2021 or 2022 because they are counting down the clock on the five-year dividend withholding tax exemption so that they can get out of Dodge, tax free. The Government needs to immediately end this tax break for vulture funds and amend the seven-year CGT rule so that it only applies to land, not property, and land that is designated for residential development.

I am disappointed that there are no proposed changes to the research and development tax credit. The research and development tax credit is currently out of control. It increased drastically from €224 million in 2010 to €708 million in 2015, while the number of claimants is decreasing. On budget day last year, the Government published recommendations, none of which has been implemented. The research and development tax credit serves a useful purpose. Its aim is to stimulate the use of research and development activity across the State, which is welcome. However, the credit is currently out of control. It has increased sharply over the space of five years while the number of companies in receipt of the credit is decreasing. Ten companies are currently claiming two thirds worth of this credit - €460 million. In terms of helping smaller companies develop and grow, it is clearly failing. This raises significant questions about the accessibility and suitability of such opportunities for our smaller companies that could utilise such funding to develop and grow. It was revealed to me on foot of a freedom of information request earlier this month that concerns have been raised within the Department of Finance that companies are inflating the amount of research and development they are engaging in when claiming the credit. It is clear that urgent action needs to be taken to protect the Exchequer from this out-of-control tax credit. This is basically what the report the Government published last year called for. The Finance Bill must be amended to restructure the credit to ensure that it is targeted at areas most in need of with special priority given to smaller companies undertaking actual research and development. Companies found to be exploiting the credit must be rooted out and limits for claim amounts, as suggested from Department of Finance correspondence, need to be introduced.

This would reduce the overall cost of the credit while ensuring smaller companies get a fair share.

One measure I welcome is the exemption from the benefit-in-kind, BIK, charge for electric cars and vans that are provided to employees and the exemption from BIK on electricity used in the workplace for charging vehicles. However, the measure does not go far enough to promote electric vehicles as it is only directed at employees who get a car through work. In our alternative budget we proposed to raise the Sustainable Energy Authority of Ireland, SEAI, grant for electric vehicles by €1,000 per band to encourage greater uptake in people using electric vehicles.

I welcome the proposed changes to the domicile levy, which may have an impact on the appeals to the domicile levy. I also welcome the clarification that worldwide income for the purposes of the levy is income before deducting capital allowances and losses. However, I am still surprised the levy only raised €2.3 million in 2015. I hope we can work together in the finance committee to ensure it brings in more revenue to the State.

The Finance Bill does not include measures to introduce a VAT refund scheme for charities, which was announced on budget day. It strikes me as unusual and I seek clarification from the Minister as it is my understanding that charities should begin to prepare a claim in 2018 for payment in 2019. It seems logical that the rules and details would be laid out in the Finance Bill. I seek reassurances that the lack of detail does not imply a lack of action.

On the sugar-sweetened drinks tax, sections 30 to 42, inclusive, of the Bill contain the required legislative provisions and are subject to a commencement order. I strongly support this measure and look forward to teasing out the details. I hope some day in future we will be able to delete this from the finance legislation because it will have done its job.

The decision not to make any changes to the help-to-buy scheme amounts to another €40 million going straight into the pockets of developers. It is a baffling decision. It is one that will cost tens of millions on a bad idea. I am weary of the Government trying to justify demand-side solutions to a supply-side problem because the €40 million being spent on the help-to-buy scheme could build 836 houses. Which is better value?

I have touched on what is missing from the budget in the likes of the help-to-buy scheme and the changes to the research and development tax credit system but there are many other noticeable absences. What about our friends in the banking sector? There are no increases in their levy. They have tax-free status for another two decades. How does the Government stand over AIB and Permanent TSB not paying a penny of corporation tax for two decades? We are told the Government is now considering all of this. Why is that? It is because the media have forced it to. They have raised the issue to such a level that there is now a judgment in political circles that it would be damaging electorally for the Government not to start making some noises about the issue. I look forward to teasing out, as we do every year with the Finance Bill, why the Government is allowing some of the most profitable banks in Europe to go without paying any corporation tax.

I note the introduction of the KEEP scheme and will tease out the details at committee level. I am disappointed there has been intense lobbying which has scared the Government from increasing VAT on hotels and betting for another year. The right thing to do would have been to increase VAT on the hotel sector and retain it for the other parts of the tourism sector. I am sure we will be back at this next year.

We reject the Bill because we are in favour of having a functioning health system and we believe people have the right to a home. The Sinn Féin alternative would have delivered relief for those who needed it most but would have unashamedly championed public services over tax cuts. It would not open up huge gaps and breaks in the tax system to benefit those who need them least. This is a bad Finance Bill not just for its tax cutting agenda at a time of crisis but also because it leaves out the big changes needed to make our tax system fairer.

Earlier today, the Minister for Foreign Affairs and Trade, on behalf of the Taoiseach, told us the State chose not to provide the €1 million necessary to fund necessary research into sexual violence. That is €1 million not available yet the Finance Bill cuts €335 million of taxes. We know where the Minister's priorities and those of Fianna Fáil lie.

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