Tuesday, 8 October 2019
Financial Resolutions - Budget Statement 2020
This budget could, and should, have given workers and families a break but it has not. Instead of giving workers and families a break, and securing Ireland’s future, the Government has underestimated the economic challenge of Brexit, and has done nothing to ease the pressure on workers and their families. On top of out-of-control rents, rip-off insurance premiums and unaffordable childcare costs, they are faced with increased charges in the form of a hike in carbon taxes. What starts today with a €6 increase will continue to increase, squeezing households with no alternatives. They will pay the cost rather than the bankers, the insurance companies or the vested interests this Government and its partners in Fianna Fáil have never stood up to and will never do so. This budget comes at a time our country and our people face significant challenges. It is a time for big ideas, for bold policies and for solutions for ordinary people. It is a time to reset our economy, how it works and who it works for. Tá an buiséad seo á nochtadh inniu agus tá dúshláin mhóra romhainn mar thír. Tá sé thar ama go gcuirfear smaointe móra agus beartais ceannrodaíocha i bhfeidhm ionas go dtig linn cuidiú a thabhairt do na gnáthdaoine agus dul i ngleic leis na fadhbanna móra atá os comhair muid uilig.
Since the economic crash a decade ago, the people have carried the weight of a recovery that has been enjoyed by some, but not by all. For five years, this State has had the fastest growing economy in Europe but GDP only tells us one part of that story. A strong economy with crane-scattered skylines does not show the full picture. Many in Ireland today are trapped in the present, crippled by rip-off costs and unable to plan for the future. This Government has failed to turn a growing economy into real returns for those who have built it and for those it should serve. That is the issue and the problem with this Government. Rather than seeing incomes rise, too many have seen costs soar and their pay packets squeezed. For too many, life has become unaffordable with sky-high insurance premiums, unaffordable rents and ever-increasing childcare costs. Workers and families were looking for a break in this budget but they did not get one.
With the political will and the right ideas, this budget could have put money back in their pockets and could have improved access to public services. It could have begun to broaden their horizons; making sure that work pays and delivers security and the chance to plan for the future. It could have begun to build a fair taxation system, making sure those who benefit most from our economy pay their fair share such as banks, multinationals and international property investors that have enjoyed a free ride for far too long. However, this budget has failed to deliver on these modest demands in any meaningful way. It is a budget short on ideas, short on policies and short on solutions. It is a budget that unfortunately lacks ambition, lacks direction and lacks hope.
With nothing constructive left to offer, the Taoiseach has nothing to offer but cheap jibes and cynicism, while workers and families are struggling to keep the wolf from the door. Regardless of anything he says about Sinn Féin; introducing wolves to Ireland is not as far-fetched a policy for this Government as it may sound. After all, this Government introduced the vultures that have bought tens of thousands of family mortgages at discount rates. This Government has introduced child homelessness as a permanent feature in our society. It has laid out the red carpet for the cuckoo funds and speculators that have bought up our cities, pushed up prices and left young people and families locked out of the property market and locked into an unaffordable rental system. That is the record of this Government.
This budget appears to have heeded some of the calls we in Sinn Féin have made for many years to tackle serious tax avoidance among property investors through REITs and IREFs, not least the capital gains tax exemption for properties sold when they have been held by REITs for three years or more. I note that in the detail of these measures, however, which we will go into further with the finance Bill, it is only 20%. That does not level the playing field when any other company will have to pay capital gains tax of 33%. The budget does not deal with other issues we have been highlighting to the Government. For example, in April this year, Green REIT, a billionaire property fund that has made a fortune from the property crisis, used the rules of the game to avoid paying €100 million in tax because it was CGT-exempt. It is also avoiding commercial stamp duty at 6% and it is now able to use a 1% loophole, which will cost the taxpayer €67 million in revenue. The Government is not indicating it will close this loophole for it or for any other similar transaction in the future. This measure alone would have stemmed the sell-off and generated €36 million that would fund the provision of medical cards to more than 17,000 cancer patients for the duration of their treatment. That is the type of political choice a Minister for Finance faces when he or she sites down to write the budget. This is about real policies and real solutions. Unfortunately, this Government has chosen the side of international investors and allowed some of these loopholes to persist, instead of making choices in favour of people who are suffering from cancer, as I have just outlined, who will continue to be denied a medical card under this Government's policies, until some review in December that may or may not provide an outcome. This Government has nothing left to offer. Níl aon ní fagtha ag an Rialtas seo le tairiscint.
It has been a bad year for this Government and its management of the public finances. Despite a growing economy, the country's debt is higher now than it was when it took office. At the same time, the Taoiseach’s flagship tax policy lies in tatters. In 2016, his party promised to abolish the USC, a promise it has spectacularly broken. Last year, at the Fine Gael national conference, the Taoiseach promised a €2.3 billion tax cut for workers paying the higher rate in every budget over the next five years. Today, he has again broken that promise, and it is just as well. Based on the Government’s own figures, his only big idea would have blown a hole in the public finances and created a budget deficit of more than €350 million next year, with more borrowing and with higher debt. His short stint in office has been marked by bad ideas, broken promises and a reckless misuse of public resources. At a time every euro is precious for so many people, who work hard to pay their rent, to cover their childcare costs and to pay their bills, Fine Gael has made wasting taxpayers' money official Government policy. Through the national broadband plan, taxpayers will subsidise a private consortium to the tune of €3 billion for infrastructure the State will never own. We have a national children’s hospital for which costs have escalated by more than €450 million. We have found out just this past weekend that the Department of Health will require an additional €350 million bailout next month just to break even. I only hope the Minister, Deputy Harris, is not reshuffled to the Department of Finance any time soon because the country would be bankrupt within a month, given his track record in managing the Department of Health's finances.
The headline figures from the Government's White Paper last weekend showed that the public finances will generate a budget surplus of €600 million for 2019. The figures also reveal that this surplus has been delivered entirely by unexpected and unsustainable corporation tax receipts. As we have said many times, corporation tax is now the third biggest revenue raiser for the State, with almost half of it coming from just ten companies, any one of which could decide to leave tomorrow. If they did, what then for our public finances and the services that rely on them? Our tax base would be eroded, our public finances vulnerable and our public services exposed to the whims of foreign multinationals.
Our country faces the challenges posed by Brexit in this context. As everyone in this House will be aware, the strategy of Prime Minister Boris Johnson and the DUP has no regard for business, workers and communities; the Good Friday Agreement and our peace process; or the consent of the people of this island, North and South. There is no good Brexit; there is no such thing. There is no safe landing zone for this country in that scenario. However, no-one is more at risk than those who have endured the sharp edge of partition, and those in the North and in our Border counties will feel it the most. Is léir gurb é Éire aontaithe agus neamhspleách an t-aon réiteach amháin ar fhadhb an Bhreatimeachta sa ghearrthéarma agus sa mheánthéarma. The industries most affected by a no-deal Brexit will be small exporters, particularly those in the agrifood sector. Uncertainty and the threat of customs checks will bring significant disruption to North-South supply chains.
Sinn Féin has supported the EU's strategy of negotiating with the British Government alongside other parties across the island to protect the Good Friday Agreement and our all-island economy. We support the Minister's decision to deficit spend in the event of a no-deal Brexit. Sinn Féin's economic response to Brexit is based on two priorities. It is about supporting businesses, sectors and regions that are vulnerable and will be the worst affected; it is also about stimulating the wider economy to protect jobs and livelihoods. What does this mean, and what can be done? It means increasing capital investment. Sinn Féin proposes an increase of €1.3 billion and the creation of 5,000 additional apprenticeships, increasing funding for Enterprise Ireland, Fáilte Ireland and Údarás na Gaeltachta and increasing the research and development tax credit for SMEs. Whatever the outcome, these measures should be taken.
The greatly anticipated rainy day fund has finished before it has even started, with no money going into it from this year’s revenue. The rainy day fund was badly designed policy from the start. Sinn Féin opposed it from its inception. The legislation that underpinned it allowed it to be used only in exceptional circumstances. Exceptional circumstances laid out in the legislation include bailing out banks, major structural reform or natural disasters. Indeed, when Sinn Féin proposed amendments to allow it to be used in the context of Brexit, Fine Gael and Fianna Fáil voted against them. Lo and behold, the chickens have now come home to roost. We have been proven correct and the Minister has had to dump the idea of putting €500 million into this fund, because if he does, he cannot use it to deal with Brexit. This was, again, misguided, and I am worried that it took this long for the Government to see the sense in what Sinn Féin have been saying.
By announcing a €1.2 billion potential fund, the Minister has heeded much of what Sinn Féin has been saying about the negative fiscal impact Brexit will have. For at least a year we have called for the rainy day fund to be replaced with a €2 billion stabilisation fund to support jobs, businesses and communities at risk of disruption. This is needed and the Government would do well to stick to this advice. The measure the Minister has introduced today, while welcome, simply does not go far enough. In my view, he has underestimated the real impact a no-deal Brexit will have on regions, jobs and sectors. Supports will need to be beefed up.
Brexit was always going to have an impact on this budget but it should not have defined it. The Minister has used Brexit as cover. Indeed, we have heard from Fianna Fáil that it seems to be that party's only fig leaf, excusing its continued support for the Government's budget and reign in office. It is an excuse for failure. Outpatient waiting lists are at their highest since records began in this State. More than 569,000 patients are waiting for a hospital appointment; that was not caused by Brexit. More than 10,000 citizens are homeless and average rents have increased by 20% since the Government took office; that was not caused by Brexit. Everything and anything this budget has failed to deliver and the issues the Government believes it cannot invest in at this point have been blamed on Brexit by the Minister and by Fianna Fáil.
However, the public finances can be safeguarded and the people's priorities can be delivered at the same time. The parameters of this budget were not set by Brexit; they were set by the Minister and his Government. This budget could have given workers and families a break had the right choices been made. Ba deis é an buiséad seo chun faoiseamh a thabhairt don lucht oibre agus do theaghlaigh atá ar an anás, agus cabhair a thabhairt dóibh.
I will not go through every tax measure because time will not allow it, but I will make some observations. Regarding the earned income tax credit, we have another year in which the Government does not get there. It will be another year before it is fully equalised. No ifs, no buts, it should have happened this year. Indeed, it should have happened last year. Commercial stamp duty is being increased by 1.5%. This is a policy position that Sinn Féin has advocated, but the Minister should have gone further. It should go up to 4%. There is a bubble in commercial stamp duty and we need to redirect workers in that sector towards building the necessary homes. Speculators are making millions of euro from property, especially in this city, and they need to be taxed more. Regarding SARP, what has to happen before a discredited tax relief for super-high earners is scrapped? The tax loophole lobby cannot believe its luck that it has the ear of the Minister for Finance again. With the support of Fianna Fáil, he will continue with this tax credit. It is absolutely ridiculous, given the fact that the Government has not invested the necessary supports in areas such as mental health, children in need and the housing and homelessness crisis that we face.
It is has been a decade since taxpayers bailed out the banks to the tune of €67 billion. The Government pumped billions of euro into Anglo Irish Bank, Irish Nationwide, AIB, Bank of Ireland and Permanent TSB at a great social and financial cost to the taxpayer. Today that bill stands at €42 billion, with the State's financial watchdog telling us that taxpayers will continue to pay €1 billion every year just to service the bankers' debt. All the while, these banks enjoy a privileged tax break they have done nothing to deserve. By being allowed to carry historic losses forward against their profits, banks have been able to reduce their corporation tax bill to zero. They will continue to do so for the next 20 years despite making multi-billion euro profits. It is unjustifiable that AIB and Bank of Ireland, which each record €1 billion in profit per year, will pay no tax at the same time the Government is putting an additional squeeze on ordinary people through unfair carbon taxes. This is unfair and unjustified, and the Minister should move on this issue. It is time to listen to Sinn Féin and end this tax break for the bailed-out banks. His friends in Banking and Payments Federation Ireland may disagree with me, but the ordinary people of this country will not.
Ending this tax break would bring in €175 million each year. That measure alone would pay for a €5 increase in the carer's allowance and carer's benefit and a €9 increase in the disability allowance. In addition, it would cover half the cost of Sinn Féin's proposal of an annual back-to-school bonus of €140 to help families send their children to school. These measures alone would have delivered for citizens with disabilities, prioritised the interests of our children and given parents a break. Those are the choices Sinn Féin would make but which the Minister has not. He has again prioritised the interests of the banks over of those of the ordinary person.
He has finally attempted to get a handle on the tax avoidance exploited by property investors but it is too little, too late. Indeed, by increasing the dividend withholding tax to 33%, and the rate of capital gains, the Minister could have raised an additional €35 million. This, in turn, could have provided free public transport to all children up to the age of 18, as Sinn Féin argued for. This would encourage the use of public transport and provide the alternatives needed to reduce emissions. Ending the special assignee tax relief, which allows multinational executives to write off a third of their salary in income tax, would have raised an additional €15 million.
I will give an example of what exists in our tax code. I know the Minister understands this, but perhaps the people listening at home do not.
This is a loophole or tax relief for a multinational executive who moves to Dublin on a €1 million salary and is able to dodge income tax of more than €123,000 because of a measure introduced by the Minister and supported by Fianna Fáil. Any worker pays at a rate of 40% on income above the standard rate band, but these individuals are able to pay at an effective rate of 28% as a result of this measure. As I said, it is unjustifiable. Ending the scheme would help to provide the improved pay and conditions the Defence Forces much deserve. It would end the scandal of Defence Forces staff living in poverty or sleeping in cars. It would restore the weekly training allowance of €32 for school leavers with disabilities which the Minister for Health cynically cut last month. This is not fantasy economics; it is about political choices. Does the Minister want to provide tax relief for multimillionaires who can avoid paying tax, or should we restore a cut that should never have been made for those with disabilities and ensure the provision of additional supports?