Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

Táim buíoch as an deis labhairt ar an Bhille Airgeadais anseo inniu. Tá Bille cuimsitheach foilsithe ag an Roinn.

Deputy Cowen criticised Sinn Féin's position on Brexit. He is never one to try and stick the boot in although it is acknowledged by the Government that Sinn Féin is being proactive and supportive in this regard. I remember he was one of the Fianna Fáil Members who voted in its last Ard-Fheis for an electronic and frictionless Border with automatic logging of all trade between Ireland, the North and Britain. This is very much akin to Jacob Rees-Mogg's and Theresa May's plans that everybody else throughout Europe has criticised. Maybe Deputy Cowen is more in line with his party's councillor from Louth who has been calling publicly for a hard border. Sometimes, it is hard to figure out which way Fianna Fáil is blowing on these issues. One thing for sure is that they will try and stick the boot into somebody, despite the ramifications Brexit could have on my constituency, the Border counties and the entire island of Ireland.

As usual, our hands are tied with the Finance Bill because of the prohibition of putting down substantial amendments that may have a cost on the Exchequer. That archaic ruling, based on the Constitution and Standing Orders, needs to be removed to ensure the Finance Bill debate can become a real one. We should be allowed to put down substantial amendments, which will not be ruled out of order, and discuss them to improve and strengthen the legislation.

This was a bad budget. It is not what Ireland needs at this point and reinforces the mistakes made over the past several years by eroding the tax income base while other sustainable avenues for revenue, such as wealth, profits and higher incomes, were not tapped into. In the meantime, the books are balanced only by what everybody recognises as temporary, namely, corporation tax receipts. There was nothing of significance in the budget that screamed that it was for a country facing the uncertainty of Brexit.

Much of what we have seen with this budget is similar to what happened during the Charlie McCreevy era. Deputy Cowen should look at what happened at that time. We had to take lectures from Fianna Fáil about responsibility this evening. This is the party that used to give standing ovations to its Minister of Finance as he cut the legs from under people, cut the blind pension, sent countless families to airports to say good-bye to their emigrating sons and daughters and destroyed the potential of local communities. That is the responsibility on which the Deputy lectured me today.

Did we have a rainy day fund in the time of Fianna Fáil? Yes, it was called the National Pensions Reserve Fund. Did we have balanced books and surpluses? Yes we did and we will have the same in the next several years. Did we cut income taxes at that point in time? Yes we did, just as we are doing now. Did the total amount of income tax actually increase year-on-year during that period? Yes it did just as it is now. Did we have an unreliable tax base that was balancing the books and creating a surplus? Yes. It was stamp duty then; now, it is corporation tax. That is why what is happening now is similar to what happened in the past. The crisis will never present itself in the exact same way but there are serious questions as to what we are doing in this Finance Bill by following the mistakes of the past.

There was nothing in this budget which showed we learned from our past mistakes. There was nothing in this budget for renters, the low paid or those living week to week. Income tax and USC cuts this year will amount to €284 million. That is €284 million that the Government and Fianna Fáil say is not needed for our health services, childcare or building houses for those who are homeless or on the waiting lists. In the three Fianna Fáil-Fine Gael confidence and supply budgets, €750 million in tax cuts have been made to the most sustainable type of tax we have.

At the same time, we know that countless citizens are crying out for investment. Whether in home care packages, health or education, they are looking for investment. What seems to be the trend over recent years is to hollow out the tax base. There is an inaccurate idea that everybody got €5 a week but that is not really what happened. The truth is that the low or average-paid worker was lucky if he or she got anything. The Government's own figures published on budget day recognised this fact. They state that a single worker on €20,000 per year will receive €14 over a year as a result of the tax changes. This is far from €5 per week. A worker earning €30,000 will receive €39 a year, which is not even €1 a week. A self-employed married person on €70,000 will gain €15 a week. Some gain in one week what others will not even gain in a full year.

What logic is used to decide that workers on €175,000 need €589 more in their pay while a worker on €18,000 does not get one extra cent, as rents multiply and insurance goes through the roof? This is the truth behind the budget and how the spoils have been dished out by Fine Gael and Fianna Fáil. These figures tell us what we need to know about the budget. It is more of the same. It is tax cuts that benefit the wealthiest, while public services suffer without the necessary investment.

We know tax cuts can prove to be very popular in terms of votes. If we need a reminder of this it is Fine Gael's posters on abolishing the USC. I am sure it has them in storage somewhere, like the nonsense perpetrated during the general election. Fianna Fáil was no better. It wanted to get rid of 90% of the USC. The Labour Party just followed suit and went to 80% of the USC, which would take more than €5 billion out of our tax base. It was crazy stuff. Now we know that plan is gone and we have another plan, which is to merge the USC with PRSI. There are very strong arguments, and all of the international evidence would suggest we are weak in terms of PRSI, but where is the plan? There was not even a paper published at budget time. Any requests we have with regard to freedom of information are refused because of the budgetary timeframe. It appears there is no coherence or vision and it is just blind cuts year after year, sniping away at the tax base, just like Fianna Fáil did during the Charlie McCreevy era.

There are some positives in the Bill that I want to acknowledge. One of these is the further progress for the self-employed credit but the Minister needs to make up his mind on whether they deserve equality. The idea the Government is dragging this out for another year is simply not on. These employees should have got equal treatment and this should have been equalised in 2019.

The headline budget change this year is on VAT and restoring profitable sectors to pre-crisis rates of taxation makes sense. I wish to distinguish the hotel sector and raise a very grave concern about how this increase is being passed on by some businesses. I will start with this latter concern. Having been contacted by a number of employees, I believe the VAT increase is not being passed on to the customer but instead is being applied to workers' wages. Let me be clear about how this is working. It is completely unacceptable and probably illegal. I urge the Minister to back me in a call for businesses not to try to use the VAT increase to cut employees' wages. The VAT rate must be applied to services and that is it. If a company can absorb the cost by reducing its prices so be it but this cannot be at the expense of workers who, for example, are paid mainly on a commission based on that price. It is scandalous abuse and cannot be tolerated. These are very low-paid workers part of whose wages is made up of commission. It is post-VAT commission so they are now taking a reduction in their wages but are doing exactly the same work because the 4.5% increase in VAT is an increase of nearly 50% in their sector.

On hotels, the Minister knows I have long argued for the removal of the special rate. I first proposed this two years ago. The question needs to be asked as to how many hundreds of millions has the State forgone because it hesitated on this proposal. The price reduction was never passed on to customers in the hotel sector and the Department's report shows this very clearly. Hotels in Dublin, Cork and Galway are extremely full by any international standards and the revenue per available room metric shows Irish hotels are among the busiest and most lucrative in Europe. Of course, I am very familiar, coming from Donegal and the western region, that not every hotel is in the same position but this ongoing subsidy is not justified and should not have been justified last year or the year before. The Government hesitated on this and it should not have done so.

Where I differ with the Minister is that I believe the increase should have been limited to the hotel sector. Lumping in restaurants, pubs, hairdressers and others was wrong. It was the wrong thing to do to increase those sectors to 13.5%. There is no justification for a 50% increase in VAT on these services. The Minister went too far on this issue and that will cause a lot of pain to those sectors and may cause job losses. It is far too sudden and too steep a change for these sectors to take place in one year.

Major changes to the flexibility granted by the EU on VAT rates and applications are, hopefully, coming down the line and they need to be used. This will present a huge opportunity to recast our VAT system in a more socially oriented way, such as looking at zero rating for mountain rescue equipment, defibrillators, and adult bike helmets to name just a few. I had the opportunity to attend the BUMBLEance when it came to Donegal and a number of Deputies were there. Unfortunately, and fortunately, one of my close family members has reason to use it over and over and it has been a great help to the family. It is funded by voluntary contributions and people are out cycling the length and breadth of Ireland and rattling buckets. It is unacceptable that the State takes a lot of the donations raised to buy these ambulances and kit them out. We need to look at the changes and flexibility coming from the EU and make sure we are more socially oriented in how we deal with our VAT system.

This is another year when we see the Finance Bill promise to do its best to clean up Ireland's reputation when it comes to its role in international tax systems, but it is another year with another failure. The main element of this failure is that yet again the exit tax, despite Government spin, is something we are legally obliged to implement. I see no logic as to why the 12.5% rate was chosen. It is the rate applied to profits while what we are speaking about is capital gains, which are normally charged at 33%. I accept the old exit tax was not fit for purpose but it seems the Minister cannot let any opportunity pass without adding just a little bit of Irish exceptionalism for corporations. The same goes for the implementation of the multilateral convention under the BEPS programme, a step we were obliged to take but where the minimalist approach was taken by opting out of article 12. This pattern is undeniable. It is why the Government opposes public country-by-country reporting, why we are appealing the Apple case decision and why the Minister simply refuses to do the sensible thing and include pre-2015 onshored assets under the 80% cap he introduced last year. The former Minister, Deputy Noonan, made a disastrous decision when he raised the cap to 100%, effectively allowing corporations write off all of their profits. The Minister has closed the barn door at bit but refuses to clean up the mess. What this policy position alone puts at stake is €750 million. This is €750 million that could be on the cards each year for houses, flood defences, roads and rail, except Fine Gael and its partners in Fianna Fáil will not tax these billions of assets. This is shameful.

The Minister will note I referred to capital spending because I accept the corporation tax bonanza will not last forever. Using these windfalls for infrastructure is the logical thing to do while they are here. It was reported yesterday that the Irish Fiscal Advisory Council will increase its warnings about using one-off funds for permanent spending. It is right because Fine Gael refuses to raise taxes or make savings so we enter another year of fantasy budgeting. We had it last year when we had the major hole that was clearly recognised. I pointed it out, as did the chief executive officer of the HSE within weeks of the budget, and the Government buried its head in the sand. If corporation tax receipts do collapse, the Minister cannot say he was not warned by this side of the House or the other bodies that have flagged the issue.

Rents are now at record levels, as are waiting lists for housing. The scales of supply and demand are weighted heavily on one side, yet the budget and the Finance Bill help landlords. Indeed, Fianna Fáil has argued that the Government did not go far enough and should do more to help landlords. What type of analysis is behind such a move? Every week, we see scandalous instances of landlords renting smaller and smaller spaces for higher and higher prices. The refrain is that not all landlords do so, but at this point it is renters who need a break rather than landlords. My biggest problem with the 100% mortgage interest relief for landlords is that there are no conditions attached to it. A landlord is already entitled to 100% relief if he or she takes in a social housing tenant but that incentive will be eclipsed. There should be strict rules on prices, tenants' rights and security but instead the budget threw money at a group of people who control all of the pieces. The alternative proposed by Sinn Féin is to bring in rent relief equivalent to one month of rent for all renters not already subsidised by the State. For that to work, there would need to be a rent freeze. There needs to be a rent freeze anyway, but actual relief is also needed by renters at a time of sky-high rents. That should be the headline measure of the budget rather than an unconditional, unlimited tax break for landlords as rents spiral out of control.

On betting tax, like the VAT rate change for hotels I welcome in principle the adoption of another Sinn Féin position through its increase. In 2008, the then Minister for Finance announced an increase of the betting tax to 2% but that was never put into effect. There were issues with that proposal and there are issues with the current increase. I strongly disagree with how the Government is raising the tax. A simple jump to 2% will hurt smaller local bookmakers. Their concerns are not exaggerated and this measure threatens jobs. I have met several such bookmakers and examined their accounts. It is clear that the 1% increase will wipe out their profits and their customers will move to larger operators. Betting is a vice which does enormous damage to our society and it should be taxed to reflect that fact. For several years, I have proposed that the tax be increased to 3% but insisted that it be paid by punters. The rate is crucial, as is it being a tax on winnings and paid by the punter. If that were done, every bookmaker would be equally affected and the larger dominant market players could not simply absorb the cost, thus giving themselves another edge over local independent bookies. It would also mean that betting duty would cover the cost of the horse and greyhound fund, which must currently be topped up from general taxation. I am sure this will be considered in detail on Committee Stage. In a way, the change is the worst of both worlds. It is small enough to be absorbed by Paddy Power and similar bookmakers and large enough to ensure disaster for small bookmakers in remote rural areas. I urge the Minister to consider this on Committee Stage. Sinn Féin will table amendments to the proposal.

I was deeply disappointed that no changes are proposed to the rules regarding bailed out banks. The banks are entering a period of high profitability but because of built-up losses the rules allow them to do so tax free. Ireland is almost unique in the OECD in having neither a time limit nor a cap on losses which the banks are allowed to carry forward to write off profit. This situation is not acceptable in the context of the damage done by the banks. They want a return to normality regarding bankers' bonuses and pay but will not tolerate a return to a normal tax situation whereby profits are taxed. That must not go on for the planned ten or 20 years. The Sinn Féin proposal is to bring in a 25% cap, which would recoup €175 million for the State this year and every year until the losses are exhausted. It is a huge missed opportunity. The Minister commissioned a report on the back of the Finance Act 2017, which showed that a potential drop in value of the State's shares in the banks would be more than offset by the recurring value of the taxes raised. It is an absolute disgrace that the Government has not dealt with this or considered the banking levy.

I wish to mention a number of other issues but I am running out of time. On small and medium-sized enterprises, SMEs, I note the changes to the key employee engagement programme, KEEP, scheme. That should be scrutinised on Committee Stage. I am disappointed that the research and development tax credit, which should be changed, is not addressed in the Bill. It disproportionately benefits large corporations. Some 167 of the large divisions benefit by €543 million while more than 1,300 other companies only claimed €127 million. The credit should have been increased to 30% for SMEs and reduced to 20% for larger divisions. A scheme similar to that in operation in the North should have been introduced, whereby SMEs can avail of the credit and have easier access to it. I will revisit the matter on Committee Stage.

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