Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I move:

"That the Bill be now read a Second Time."

When the budget was announced three weeks ago, I said that there was no such thing as certainty in the current circumstances and that we must recognise the risks and ongoing challenges. It is fair to say that events in those three weeks have shown that pandemic-related uncertainty will be with us for some time to come. The Covid-19 crisis has proven to be enduring and we will be living with its effects for some time to come. That is not to say that we should give up hope. We have the power to effect change in regard to both Covid-19 and the economy. Neither prospect is easy but, with continued effort, we can and will overcome the challenges facing us.

We confront the pandemic from a position of strength, based on the solid budgetary and economic foundations we have built in recent years. We can borrow today and into the future to fund the supports needed to help our society. Ireland has rightly earned credibility, respect and support for our economic performance in recent years and the improvements in our national finances. We are now two weeks into level 5 restrictions under the Government's plan for living with Covid-19. It has been a very hard time for very many people but we are pulling together and adhering to the public health advice in order to protect lives and livelihoods.

The Government is providing support in many ways, through its policies in regard to business, changes to our taxation system and vital schemes to protect households, businesses and jobs, namely, the pandemic unemployment payment, PUP, the Covid restrictions support scheme, CRSS, and the employment wage subsidy scheme, EWSS.

It is helpful to put numbers on the record in respect of the support being provided through these programmes. As of 3 November, 40,800 employers were registered with the employment wage subsidy scheme while 330,000 individuals were in receipt of the pandemic unemployment payment as of the week beginning 2 November. At the end of September, some 70,000 businesses had availed of tax debt warehousing, with €2.1 billion now warehoused. With further support for the launch of the Covid restrictions support scheme, CRSS, due later in the week, there have been more than 2,200 registrations for the scheme as of lunchtime today.

These policies have been an essential lifeline for businesses, families and individuals and have mitigated the effects of the pandemic on the livelihoods of our citizens. In my budget speech, I said that the health of the country and the health of the economy are interdependent. The better our public health, the stronger our economic health. We need to continue to get the balance right. If anything, pandemic responses and our efforts to support our economy have widened our public policy response into areas that would have been unheard of earlier in the year.

One such response, the employment wage subsidy scheme, continues to play a vital and unprecedented role in supporting businesses through the current crisis. As I mentioned in my budget speech, this is currently set to continue until 31 March 2021, although I have been clear that there will be no cliff edge after that point. It will continue across next year. The Government will decide on the form of its extension when economic and health conditions are clearer, guided by what the economy requires to support its expected recovery at that time. Deputies will be aware that, in anticipation of the move to level 5 restrictions in mid-October, the Government decided to align the rates of subsidy available under the employment wage subsidy scheme with those provided for under the pandemic unemployment scheme, up to €350 per week.

The changes to this scheme will apply until the end of January. Their objective is to minimise the risk of movement from the wage subsidy scheme to our pandemic unemployment payment during the period of the enhanced restrictions. The intention is to legislate for these rate enhancements in the Finance Bill 2020. I will bring forward the necessary legislative text as an amendment on Committee Stage.

In my budget speech, I reaffirmed the Government's commitment to the 12.5% rate of corporation tax and our continued commitment to a corporate tax regime that supports economic activity and that is transparent, sustainable and legitimate. Tax measures announced on budget day included an expansion of the tax warehousing provisions to include the balance of 2019 income tax and 2020 preliminary tax obligations for self-assessed taxpayers whose income has been adversely affected by Covid restrictions as well as the excess temporary wage subsidy scheme payments received by an employer which are due to be repaid to Revenue.

A range of other vital measures are included in the Bill to support businesses across the economy. These are targeted at the agricultural, tourism, film, housing and start-up sectors. The Bill also provides for the announced temporary reduction of the VAT rate for the hospitality and tourism sectors from 13.5% to 9% with effect from 1 November. This rate applies to catering and restaurant services, tourist accommodation, cinemas, theatres, museums, historic houses, open farms, amusement parks, certain printed matter and hairdressing.

One of the key new measures announced on budget day was the Covid restrictions support scheme, which is designed to assist those businesses whose trade has been significantly impacted by, or temporarily closed as a result of, the restrictions set out in the Government’s plan for living with Covid-19. The scheme applies where Government restrictions prohibit or reduce access to a business's premises by customers, as is currently the case throughout the country. Qualifying businesses can apply to the Revenue Commissioners for a cash payment to assist them and to provide targeted support during their time of need. Registration for the scheme is now open and first payments will issue by the middle of this month.

While Covid-19 is clearly the most urgent threat we face, we must not let it distract us from the broader challenge of climate change. The Bill contains important changes to taxation to respond to this great challenge. It implements the programme for Government commitment to increase carbon tax by €7.50 from €26 to €33.50 per tonne of CO2 and to provide for a trajectory of increases out to 2030. The increase in budget 2021 applied to auto fuels from budget night and will apply to all other fuels from 1 May 2021. The additional revenue raised will be used to fund public expenditure measures to meet the goals set out in the programme for Government. The Bill also makes provision for the transition of our CO2-based vehicle registration and motor tax regimes to the new, more robust worldwide harmonised light vehicle test procedure emissions test from January of next year. As a result, our vehicle registration tax, VRT, regime will be based on emissions performance levels which are much closer to performance levels in the real world than is currently the case. Further measures include the extension of the nitrous oxides, NOx, emission regime and the accelerated scheme of capital allowances for energy-efficient equipment.

I will now take the House through the Finance Bill from the beginning but I hope that Deputies will appreciate that it is not possible to cover every single section in the detail normally required. Further detail is, therefore, set out in the explanatory memorandum published with the Bill.

Section 1 is one of a number of interpretation sections. Section 2 increases the universal social charge, USC, thresholds in line with the increases in the national minimum wage applicable in 2020 and 2021. This will ensure that the 2% rate remains the highest rate of USC that is charged on the income of full-time workers earning the minimum wage. It also extends the reduced rate of USC for full medical card holders under 70 years of age whose individual annual income does not exceed €60,000 until the end of the 2021 tax year. Section 3 provides that pandemic unemployment payments are to be treated as an emolument to which Chapter 4 of Part 42 of the principal Act applies.

Section 4 provides an exemption from income tax for certain payments made by or on behalf of the Health Service Executive to a carer in respect of what is generally referred to and commonly known as a home sharing host allowance. Section 5 gives effect to the budget announcement that the dependent relative tax credit is to be increased from €70 to €245. Section 6 provides an exemption from income tax for certain payments made by or on behalf of the Health Service Executive in respect of mobility allowances. Section 7 extends the enhanced help-to-buy relief programme. Section 9 increases the earned income credit. Section 10 extends the sea-going naval personnel credit to 2021 and increases the value of this credit.

Section 11 provides for the Covid restrictions support scheme. Section 12 provides for the extension up to 31 December 2023 of the scheme under which accelerated wear and tear allowances are available for capital expenditure incurred on the provision of certain energy-efficient equipment. Section 13 provides for the modernisation of the professional services withholding tax scheme, an underlying feature of which is the use of electronic means for the transfer of information, data and returns and some other technical amendments.

The commencement of the provision will be subject to ministerial commencement order.

Section 14 provides for an amendment to the emissions-based capital allowances regime for expenditure incurred on business cars. This provision will generally apply to expenditure incurred from 1 January 2021. Section 16 makes a number of changes relating to encashment tax, including exempting companies which pay corporation tax and increasing it from 20% to 25%. Section 17 provides that all intangible assets acquired from budget night are fully within the scope of balancing charge rules.

Section 18 extends the period that the regional film development uplift will be available at the highest rate of 5% by one year. Section 21 provides for the extension of the knowledge development box relief and section 22 makes amendments to address the situation whereby the same foreign currency transferred between bank accounts held by the same person has the potential to crystallise a chargeable gain or an allowable loss without an accompanying economic capital gain or loss.

Section 23 makes a change that provides that the requirement for an individual to have owned a holding of at least 5% of the ordinary share capital for a continuous period of three years in the five years immediately prior to the disposal is being changed so that the shares can qualify for relief if they were held for a continuous period of three years at any time prior to the disposal of those shares.

Section 25 confirms the budget increases in the rates of tobacco products tax and minimum excise duty for cigarettes by 50 cent on a pack of 20 cigarettes. Section 26 provides for ten annual increases to rates of the carbon component of mineral oil tax. The rate increases are based on charging an additional €7.50 per tonne of carbon dioxide emissions each year, as noted earlier. Sections 27 and 28 provide for annual increases to the rate of natural gas carbon tax and solid fuel carbon tax concluding in 2030. Section 30 waives the excise duty due on the renewal of on-trade intoxicating liquor licences in the licensing year 2020 to 2021.

Section 32 provides for changes to the vehicle registration tax, VRT, charging structure under the new worldwide harmonised light duty vehicles test procedure, WLTP, European emissions measuring system. This section also adjusts the nitrogen oxide element of the VRT charge. Section 33 amends section 135C of the Finance Act 1992 by adjusting the amount of relief given to certain electric vehicles. Section 34 gives effect to the motor tax changes for cars that are taxed on the basis of carbon dioxide emissions, as announced in the budget and mentioned earlier.

On VAT, section 36 aligns the definition of immovable goods with the definition applied for the purposes of the VAT directive of 2006. Section 37 provides for the 9% VAT rate and section 38 provides that the flat-rate addition for farmers is increased to 5.6%. Section 42 amends the Value-Added Tax Consolidation Act 2010 to provide for the temporary zero rating of certain goods used in the delivery of Covid-related healthcare services.

Section 46 amends section 31C of the Stamp Duties Consolidation Act 1999, which imposes an additional charge on certain share transactions. Section 47 extends the relief for the consolidation of farm holdings and section 48 extends the period allowed for a partial refund of stamp duty where land is developed for residential purposes.

Section 50 amends section 126AA of the Stamp Duties Consolidation Act 1999 relating to a fixed annual levy of €150 million imposed on certain financial institutions. In order to maintain the yield for the year 2021, the levy is increased from its current rate of 170% to 308% of the DIRT paid in the 2019 base year. Section 51 extends the termination date for consanguinity relief. A number of miscellaneous sections are also included.

Section 56 makes several amendments to the Taxes Consolidation Act 1997 to facilitate improvements to the tax appeals process. Section 59 allows the Revenue Commissioners to make regulations which require debit and credit card issuers to make returns in respect of online credit or debit card payments to non-resident businesses. Section 60 makes a number of amendments to the Taxes Consolidation Act 1997 and the Capital Acquisitions Tax Act 2003 arising from the post-Brexit migration of shares and securities in Irish registered companies from a central securities depository, CSD, in the United Kingdom to a CSD in Belgium and the future settlement of trades in those shares and securities in that CSD.

Section 61 provides for the inclusion of certain proprietary directors within the employment wage subsidy scheme from 1 September 2020. Section 62 makes provision for warehousing of excess temporary wage subsidy scheme payments received by an employer which must be refunded to the Revenue Commissioners. Section 63 section provides for warehousing of income tax payable through self-assessment and includes the balance of income tax due for 2019 and preliminary tax for 2020. Section 67 provides that where a taxpayer appeals an assessment, and in connection with that appeal, makes a payment to Revenue and subsequently wins the appeal, the taxpayer will not be entitled to interest on the amount repaid.

As is customary with the Finance Bill, there are still a small number of matters under consideration that I may bring forward as amendments on Committee Stage. I hope the debate on the important provisions contained in the Bill can be conducted in the normal constructive way. I will always listen to other viewpoints and consider any suggestions put forward during our debate in the context of additional Committee Stage amendments. I commend the Bill to the House.

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