Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I welcome the opportunity to make a contribution on this most important Bill, the contents of which we hope will never need to be commenced. It is work, however, that must be done because of the profound nature of the consequences which would pertain in the event of a no-deal Brexit in several weeks' time. The manner in which the House has conducted itself and the manner in which our political system has dealt with Brexit are in sharp contrast to the chaos playing out on our screens every day in Westminster. It is important that is acknowledged and that we continue to deal with this in a way which seeks to build consensus, putting the national interest first rather than any narrow party-political interests.

It was for that very reason that we as a party made the decision that we would see this process through and not thrust our country into a general election at a time when issues of such fundamental importance for our citizens are in a state of flux. That point that needs to be made.

Against that backdrop, I take this opportunity to take issue with remarks made by the Tánaiste on "Today with Seán O'Rourke" last Friday, when he saw fit to have a go at me. On Thursday last, I had commented publicly about the preparedness of the Revenue Commissioners, particularly in the context of the number of customs officials recruited. I outlined the facts as they are in the media. However, while he was being interviewed by Seán O'Rourke, the Tánaiste stated something to the effect that I was ill-informed, had not done my homework and had run to the microphones. Seán O'Rourke put it to him that the Revenue Commissioners had stated that they need 600 officials as early as possible in 2019 and the Tánaiste responded to the effect they had not said that at all and that it was me who was saying it. In such circumstances, I want to place the facts on the record and let people make up their own minds. On 24 January, officials from the Revenue Commissioners were before the Joint Committee on Finance, Public Reform, and Taoiseach to discuss this very issue. Niall Cody, chairman of the Revenue Commissioners, informed the meeting that the Revenue required an extra complement of 600 staff under the central case scenario. He stated:

Our plan suggested that we would need in the region of 600 staff and the infrastructure to administer them from 1 January 2021. Effectively what we have to do in the event of no deal is to pull that forward to as soon as possible in 2019. The 600 staff required for 1 January 2021 now have to be put in place as soon as possible. We will not be able to have them all in place for 30 March.

Seán O'Rourke had quoted Revenue correctly. That was not what I said, but was the position of Revenue and the Tánaiste's remarks about me were ill-founded and completely unnecessary. Given the position that Fianna Fáil has adopted as a party, including our Brexit spokespersons, namely, Deputy Donnelly previously and now Deputy Lisa Chambers, who is doing an outstanding job, there is no need to be so precious or so self-righteous and take the view that the Government cannot be questioned or challenged, particularly when it is in the context of facts. I want to take the opportunity to state that.

I now turn to the substantive issue of the Bill. Several areas refer to my portfolio and the Department of Finance. The Minister for Finance set out those elements in his contribution. Many relate directly to areas of taxation. It is fair to say that the core objective in respect of the taxation elements is to ensure that the status quo continues and that it will be more of less a case of "As you are" in the event of a no-deal Brexit. It means that the provisions we have currently, essentially recognising the UK as a member state of the European Union, would remain in place in a scenario where the UK is no longer a member state. That deals with particular matters under the income tax code, corporation tax, capital gains and capital acquisitions tax, and stamp duty legislation to name but a few. This is an issue we highlighted some months ago. I raised it through parliamentary questions because we identified that there would be significant taxation implications in the event of the UK leaving the EU as several reliefs within the different codes apply to member states. Take the simple example of a farm that straddles the Border. The application of agricultural relief, where the farm is being passed from one generation to another, would be in jeopardy because that agricultural relief would not apply fully in respect of a country that was no longer a member state in the absence of these provisions. That is why, at a very simple level, provisions such as this are necessary and we fully support them.

I need to put a question on something that I am sure has been fully thought through and have been dealt with. I presume the EU is completely satisfied with the provisions in the Bill relating to taxation. I can see a scenario where other member states that do not have such reciprocal arrangements with the UK from a taxation perspective could raise state aid issues in the context of the application of corporation tax reliefs between Ireland and the UK, for example, which, under this Bill, would continue as normal in a no-deal scenario. There would not be similar arrangements between the UK and France, Spain or some other member state in the event of no deal. I presume this has been cleared with the EU. It is something that the Minister could deal with when he replies.

I particularly welcome the changes around VAT and the provision for postponed accounting in respect of VAT. This is an issue that had been raised by business representative bodies and traders because being obliged to pay VAT when trade took place and imports were coming into the country rather than doing so on a deferred basis would have imposed a huge burden on cashflows. That will have significant cashflow benefits. This is an important change that I welcome.

Many financial services firms have completed their Brexit preparations or else they are at a very advanced stage. However, the Minister acknowledged that there are certain insurance undertakings that have their prudential regulation in the UK or Gibraltar which have no undertaken contingency measures. It is important that we highlight that. This Bill provides that insurance contracts that are already written will continue to be respected for a period of three years after the date of the UK's withdrawal from the EU, but they will not be able to write any new business into Ireland as their prudential regulation will be in the UK or Gibraltar. Questions may arise in that scenario as to what would happen if they did continue to underwrite business because those policy holders would have an invalid insurance policy.

Major competition issues also arise. As we all know, there is a crisis of insurance in some sectors of our economy. Many large pubs, nightclubs, play centres and leisure centres only have one insurance provider, namely, Lloyd's of London. Has it changed its regulatory structure to fall into line with a scenario where the UK leaves the EU? If it has not and is no longer able to write new business, there may be a very large raft of businesses in Ireland which will have nowhere to go on the renewal of their insurance policy in the next 12 months. The officials might advise the Minister who might come back to us on that point, particularly in respect of that one provider on which major sectors that attract significant footfall are very dependent. I would like to know if it has changed its regulatory status to deal with a no-deal Brexit.

Finally, I refer to the amendment that has been flagged in the area of duty free. I understand that the Government's intention is to keep things "As you are" on duty free, and that it not apply between Ireland and UK if the UK leaves the EU, even though the default legal position is that it would become a third country and, therefore, that opportunities would open for Irish airports and ports. The Government wants to maintain the status quo in order to protect the Exchequer. This is because people travelling from Northern Ireland to the Republic would be entitled to refunds of VAT, etc., which could have major implications for the Exchequer. However, the question is whether it would be possible to exclude that aspect and provide for the introduction of duty free at ports and airports, particularly in view of the fact that it is a very distinct activity at an airport where people have boarding passes and must go through security and so on. What consideration, if any, has been given to the introduction of duty free in ports and airports only?

I will leave it at that for now. I look forward to contributing on Committee Stage next week in respect of the areas that fall under my own brief.

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