Joan Burton (Dublin West, Labour) | Oireachtas source

The income tax section of the Finance Bill, and in the explanatory memorandum, has to be one of the shortest I have seen in any budget. In most years, some attempt is made to index tax bands and allowances to the level of the expected wage increase in the next year. While I accept that the Minister had to act with some caution in respect to Brexit and to give it significant consideration, it is nonetheless astonishing. As the Minister has noted on many occasions, including perhaps on budget day, he expects low income increases for most workers, at approximately 3% on average or, in some cases, up to 4.5%. The failure to index tax bands in any way means that for the majority of ordinary workers, the budget is highly regressive. Given the Government's previous commitment to developing greater equality in Irish society, the conscious decision to opt for a regressive budget at a time of a threatening Brexit is wrong. The budget could have made proper provision for Brexit but it need not have penalised ordinary workers at the lower levels of income in the way it did. The only increases, welcome and all as they are, were in the home carer credit, from €1,500 to €1,600, or an increase of €100, while section 4 provides for an increase in the earned income credit for self-employed people from €1,350 to €1,500, or an increase of €150. That is all there is.

Section 8, a significant section, proposes to amend the special assignee relief programme, notwithstanding the research other people and I have done in respect of how it has developed.

The Minister has voiced some agreement with the view that this programme is effectively being abused and has become excessive. In section 8, the Minister has provided relief from income tax on 30% of salary between €75,000 and €1 million to qualifying employees on the special assignee relief programme, SARP. In effect, he is proposing to extend the special assignee relief programme to December 2022. He is doing so while giving a very large and significant benefit for at least another few years to very highly paid people, extending to those paid up to €1 million a year. What the Minister has done will be considered excessive by anyone with any sense of equality. It is not required.

The Economic and Social Research Institute, ESRI, examined the budget last week. This did not get much publicity but the ESRI stated that the budget was clearly regressive. I will make several points in this regard. First, on the losses arising from the freezing of the tax bands, while incomes are going up, tax bands for pay as you earn, PAYE, workers remain frozen. These workers end up paying more tax owing to fiscal drag. This is clearly regressive and creates a very large bounce in tax flows.

Moreover, an issue has arisen as a result of the distinction made between people in employment and those who are self-employed. As the Minister knows, when I was Minister for Social Protection I launched several reviews, in co-operation with his Department, which specifically examined bogus self-employment. People recognise that self-employed people who work hard are deserving of consideration, and we have welcomed this year's long-awaited and long-promised further increase in relief for the self-employed. However, due to the differential which arises on the basis that the self-employed do not make a comparable contribution in areas like social insurance contributions, the incentive to exploit bogus self-employment may increase greatly following this budget. I am sure the Minister could find a way to address that and I hope we can examine it in conversations on the Bill's details.

The Minister has given approximately €80 million to businesses through various tax breaks. These include the increase in the inheritance tax threshold by €15 million per year. I reiterate that, with the exception of a couple of very narrow cases, the Minister failed to offer people on social welfare or low earned incomes any improvement.

I also note a feature which was present in previous years. We will have time to tease it out in the budget discussions. Last year, the Minister said he would cast his eye around to see if he could identify tax-raising measures arising from better compliance procedures. These account for approximately €175 million of the additional money he expects to raise. I wish him luck in that regard. I hope we get that money, and more, but it is something we will need to discuss when we discuss the detail of the Bill.

Regarding carbon tax, the €2 increase to the fuel allowance will not really help the most vulnerable people. I was able to increase the fuel allowance by €2.50 per week when we were still emerging from a very difficult economic collapse. The Minister's increase of €2 per week for roughly half the year is the only social welfare increase. It means that a household on social protection will get an extra €1 per week. The Minister can hardly describe himself as some kind of Santa Claus in the run-up to Christmas.

I now turn to welfare issues in general. The failure to raise social welfare rates will mean a real cut in living standards for people heavily dependent on social welfare. It has done so already. The key issue for people on retirement pensions, carers and those with a disability who are, therefore, likely to be long-term recipients of social welfare is that they have no capacity to go out and find a job or to work extra hours. This is an issue I wish to take up with the Minister and his colleague, the Minister for Employment Affairs and Social Protection. Allowing carers to work more hours each week can result in their income exceeding a tax threshold. This happens when budgets include increases. I want to hear from the Minister that he or his colleague has proposals to address this differential. Everything counts for people on low incomes. They have to budget much more carefully than a Minister for Finance does to ensure they are able to afford the absolute necessities.

The ESRI made a point about this budget and its regressiveness. It noted that while there are losses across the board, the loss for those on top incomes is about 1% but the loss to lower-income households will be about 3%. That is a real black mark against this budget. The Minister has inverted expectations about fairness and equality so much that his budget will have a much worse effect on the less well-off than on people at the very top of the income scale. I remind him that a large number of less well-off people are in work. They are the people who get up in the morning, whereas many wealthy people do not even have to get out of bed. Many do need to but because many do not need to, we do not know if they get out of bed. The Government has employed certain rhetoric about people who get up and are active all day, every day. I note that this applies to most pensioners, carers and people with a disability, who the Government has ensured will be left further behind.

The Minister positioned the budget around taking account of Brexit and a no-deal situation. We have had a very extensive discussion about a no-deal outcome in this country. We know that outcome may result in significant increases in the prices of certain foods, particularly manufactured, compounded and processed foods brought into Ireland from the UK. Many of these foods form a significant part of the diet of people on the lowest incomes. They are available in the major supermarkets where families and individuals do much of their grocery shopping. Despite this, in building the budget around Brexit the Minister seems to have entirely forgotten the argument about the price increases to which families are likely to be subjected.

The tax and benefit thresholds have not kept pace with inflation. Lone parents and pensioner couples have lost out most and according to the ESRI the targeted measures have not gone far enough. I have seldom read a more devastating analysis by the ESRI of any budget of the decade since the crash than the one it wrote on this budget. Assuming that we end up with a soft Brexit or better still - we all agree on this - with no Brexit, it is astonishing that the Minister targeted his measures in such a regressive way.

The Labour Party put forward alternatives. It is extraordinary that the banks in Ireland will pay no tax for the foreseeable future. We had the bank levy at the insistence of my party and, in particular if I may say so, of me when I was in government. I insisted on it and eventually won the case with the Minister's predecessor, Deputy Noonan. Those were in the days when the banking system was barely returning to recovery and profitability. The banks have been improving year by year recently. They are fattening themselves up, presumably to sell themselves off to international buyers. It is astonishing that the Minister did not consider increasing by a significant amount the bank levy. Banks should pay corporation tax. There should be a limit on the losses allowed for tax. Notwithstanding the losses they have available, they should be required to pay a minimum rate of corporation tax in each financial year on the profits that they generate. I got one of the Minister's predecessors, the late Brian Lenihan, to agree to that. It is a very simple measure and the alternative is the bank levy. I am really disappointed that the Minister did not review that. I could write down and post to the Minister all the excuses the banks will make as to why they should make no tax contribution on the €1 billion-plus profits that they are now earning. Some of them have gone over the individual mark on an individual banking basis.

In terms of a just and equitable tax system, it is deeply wrong that Fine Gael refuses to address the issue of asking validly for an appropriate contribution from the banks. They collapsed because of their behaviour and who bailed them out? It was the people of this country who pay PAYE tax. Who took salary cuts? It was the people in the public service who took the salary cuts. We welcome the banks being in recovery but we want every penny back or as many pennies of it as we can get.

We want it because the bank crash that they caused has ended up impacting negatively on our health service and housing. There is a series of requests for the further development of higher education in particular which is one of the reasons we attract so much foreign investment. We need investment in primary education so that our children can go on and be successful in school, college and apprenticeships. We need more investment in preschool education because, as the Minister knows, notwithstanding the rather tepid additions he has made in preschool education this year, which are welcome but still need to be worked out, we will still have one of the highest net childcare costs in Europe.

I see the Minister smiling. Inevitably the childcare providers will use the modest improvements in the supports for parents with children in preschool and childcare facilities simply to charge extra fees. The newspapers have reported that when parents see an increase in support for childcare, there is an almost automatic reaction that childcare prices will rise. As I am sure the Minister is aware, our childcare costs are among the highest in Europe. The subsidy is now turning out to be an incentive to the childcare providers to increase prices. In terms of classical conservative economics, it is a subsidy gone wrong. We need to look at a State childcare model like primary education which is provided by the State and the people who are qualified to work in that sector receive decent salaries appropriate to their qualifications, recognising their skills and the importance of this sector for young children and babies.

I raised the minimum wage on budget night. The Minister for Employment Affairs and Social Protection had essentially decided - and said so in her budget press conference - that the increase in the minimum wage was to be parked until we were sure about Brexit. For the people who get up in the morning and go out to work, it was appalling for the Government to suggest that an increase of 30 cent per hour for people on the lowest wages would be parked while people earning between €75,000 and €1 million would get a tax benefit. Where is the justice, equality or progressiveness in that? I cannot find any of those in the budget.

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