Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

In finishing his speech, the Minister indicated his hope that the Bill could be discussed and scrutinised in the normal constructive way. I agree with part of that sentiment, as there has always been constructive engagement, although we might disagree sometimes on parts of the contents of the Bill. The reality is that this year there will not be normal scrutiny.

In all the time I have been here dealing with finance Bills, this will be the biggest challenge because of the question of the pandemic, the settings and restrictions placed on us. It is something we have dealt with in committee today in trying to figure out how to scrutinise this legislation in a proper and fitting manner. First and foremost, we are legislators and the most important thing we do is pass laws that affect people right across the State. We clearly have the intention of affecting them positively but that is not always the case, so it is important that there is proper scrutiny. That will be challenging, given the issues facing us this year. I hope some of the proposals I make can be considered so we can have proper scrutiny and time to consider all matters.

I welcome the opportunity to speak on Second Stage of the Finance Bill 2020. I will speak to the circumstances and context in which the Bill comes before us before getting to certain aspects of the Bill in itself. We will not be able to deal with all of it and it is not possible to discuss every section of the legislation on Second Stage but I hope we will have the opportunity for proper scrutiny of all the provisions on Committee Stage and later on.

It has now been three weeks since the Government announced budget 2021 and it came at a time of great challenge for our people, our economy and our country. As I stated three weeks ago, it came at a time of great uncertainty because we were faced with the challenges and damage caused by Covid-19. Budget 2021 was a primary response to that challenge. Since the pandemic began, Sinn Féin committed to engage constructively with the previous and current Governments in the best interests of the people while holding the Government to account, which is the job of Opposition.

Sinn Féin has done so since the outbreak of Covid-19. This was evidenced by my engagement with the Minister and his Department as the temporary wage subsidy scheme, TWSS, was introduced. At the time, I argued for greater levels of wage subsidy for low-income workers to protect incomes and enhance the take-up of the scheme. I also argued that an administrative change could be made by the Revenue to ensure that women returning from maternity leave, in particular, would be eligible for the scheme. These changes have come to pass and I welcome them and the fact the Department and the Minister were open to making these changes.

On 1 September, the Government introduced the employment wage subsidy scheme, EWSS. It is a scheme beset with deficiencies, which I have raised since its announcement. This scheme reduced wage supports by up to 50% and excluded a cohort of the lowest paid workers. It was clear from the time of its announcement in July, that the EWSS would be insufficient to protect jobs and support businesses while the threat of the virus remained in our communities. Sinn Féin, as the Minister knows, was relentless in calling for the scheme to be amended, with higher levels of wage support for workers and their employers to avoid the loss of jobs. We also made particular reference to the inevitable impact of public health restrictions as they increased. The same was also true regarding the pandemic unemployment payment, PUP, with the Government having cut the level of payment in previous months for thousands of workers who had lost their jobs as a result of public health restrictions. These cuts were unjustified, and the future scheduled cuts are also unjustified.

They failed to recognise the level of income loss across the State or the continued threat posed by the virus. On 19 October, as the Government announced its decision to move to level 5, these cuts to the PUP and the EWSS were reversed, and a top payment of €350 per week was reintroduced. This was common sense and recognised that the previous cuts were ill judged while the threat of the virus and further restrictions remained. It was also a vindication of Sinn Féin, with the Government implementing policy decisions we had been calling for in the previous weeks and months.

We welcome those policy decisions made by the Government. Those changes were necessary. The impact of Covid-19 and the level 5 restrictions on jobs in our economy has been seismic. It has also had an unequal impact, however. This is demonstrated by the increase in PUP claimants and income tax receipts recorded to date in 2020. According to figures published by the Department of Social Protection yesterday, almost 330,000 people will receive the PUP this week. That represents a 60% increase in PUP claimants from the beginning of October. These figures confirm the unemployment crisis facing young people, low-income workers and those in the sectors most exposed, such as tourism and hospitality.

The fiscal monitor published yesterday demonstrates the disproportionate impact that public health restrictions have had on low-income workers. Income tax receipts up to the end of October have been almost flat compared to the same period in 2019, if we disregard the €275 million deduction factored in by the Revenue as a result of the Covid-19 restrictions support scheme, CRSS. These income tax receipts reflect the disproportionate level of job losses among those on low incomes. We face an unemployment crisis, and without adequate income supports thousands of people would face an income crisis. Supporting them is not just economic good sense, it is a moral imperative.

As the Minister is aware, the PUP was introduced on 13 March as an urgent needs payment under section 202 of the Social Welfare Consolidation Act 2005. Section 13 of the Finance Act 2018 amended section 126 of the Taxes Consolidation Act 1997 to provide that urgent needs payments under section 202 of the Social Welfare Consolidation Act 2005 would be exempt from taxation. While the PUP was put on a statutory footing on 5 August, for the five months from its introduction in March that payment was not subject to tax as an urgent needs payment. Section 3 of this Bill seeks to retrospectively tax a payment which was exempt from tax by law. Regardless of the amount of tax involved, this is an unprecedented move by the Government and one it has failed to justify.

Given that this Government has found itself in hot water for dubious interpretations of the law in recent weeks, I am unconvinced by the argument the Government has put forward to retrospectively tax a payment that was, by law, exempt from tax for five months. Furthermore, it is hard to understand why the Minister is expending energy to retrospectively tax those who lost their jobs during this pandemic, and as a result of this pandemic, on dubious legal grounds. It speaks to a Government that is simply out of touch and it sets a precedent that we should not go anywhere near. It is simply wrong. Under law, this payment was exempt from tax for months as a result of the Finance Act in 2018, but now we are deciding to go back in time, rewinding the clocks and going to make this payment taxable.

There are measures in this Bill to be welcomed, some of which are long overdue. Section 9 increases the earned-income credit to €1,650, equalising the tax credit for the self-employed with that of PAYE workers. This is a welcome change and one that is long overdue, with the commitment having been made more than four years ago by the previous Fine Gael Government. Section 4 provides an exemption for income tax for payments made by the HSE to those in receipt of more mobility allowances. This is a positive move, which Sinn Féin welcomes. Similarly, the increase in the dependant relative tax credit, provided for in section 5, is also a welcome development.

Other provisions in this Bill, however, are not welcome and will have a negative impact on workers and families, with a disproportionate impact on low-income workers, lone parents and rural households. Sections 26 to 28, inclusive, provide for locked-in increases in the carbon taxes every year until 2030. These provisions will result in a 39% hike in the carbon tax next year alone, followed by further increases year-on-year. Without affordable alternatives, a carbon tax will not reduce emissions. It is only possible to incentivise people to use alternatives if they exist.

At present, alternatives such as electric vehicles and home retrofitting are least accessible to low-income households. If households are unable to afford these alternatives, they will simply spend more money on heating their homes, cooking their food or running the car. That is the reality. Only last month, my colleague, Deputy O'Rourke, received information that because of Covid-19 restrictions 8,000 homes are waiting for upgrades under the Better Energy Warmer Homes scheme. The Government has sought to justify the increase in carbon tax as a just transition, comparing it to welfare increases announced on budget day.

We must bear two points in mind, however. First, tens of thousands of households do not qualify for the fuel allowance but are struggling to get by at a time of great financial insecurity. Second, many of the social protection measures, such as the PUP, have clearly been flagged as temporary and not permanent. The increases in carbon taxes are permanent, however. This Bill seeks to lock-in year-on-year increases in carbon taxes until 2030. These are increases which the Department of Finance has classified as aggressive. There is no such provision in the Social Welfare (Covid-19) (Amendment) Bill 2020 to lock-in year-on-year increases in social welfare payments until 2030. It remains the case, therefore, that in the midst of an unemployment crisis it will be low-income households that will be disproportionately impacted. This is the wrong time to increase carbon taxes. It is the right time to pause such increases. Sinn Féin will challenge this decision on Committee Stage of the Bill.

These measures and their impact are compounded by sections 33 and 34, which provide for changes to motor tax and reliefs given to certain electric vehicles. These changes, as the Minister knows, will disproportionately benefit wealthier drivers, while penalising those unable to afford an upgrade to low-emission or electric vehicles. This is demonstrated by the fact that many high-end, low-emissions vehicles will be significantly reduced in cost due to the changes in the lowest rate of vehicle registration tax, VRT. These measures enable a transition, but one that caters for high-income earners while making it more difficult for low-income earners. A just transition must be based on prioritising access to alternatives to an increase in carbon taxes for the most vulnerable.

The Finance Bill fails to meet that objective.

Covid-19 and the public health measures introduced to contain its spread have devastated jobs and businesses throughout the State. We know that these restrictions have been a hammer blow for the hospitality and tourism sectors especially. In our submission to the July stimulus debate Sinn Féin argued to reduce the rate of VAT to 9% for the hospitality and tourism sector. The reasons were straightforward and we argued that it should be immediate. With fewer restrictions in the summer it was essential that businesses that were so badly affected in the first round of restrictions in the spring were able to generate as much revenue as possible through trading in the summer. These small businesses could have absorbed this reduction in VAT onto their balance sheets as a margin of support for businesses facing a temporary demand shock, allowing firms to maintain their cash margins with a lower level of demand. Unfortunately, the Government rejected this proposal and I believe it will acknowledge that it was a missed opportunity and a costly one for many of these businesses. Section 37 provides for a reduction of VAT to 9% for the hospitality and tourism sector, effective from 1 November until the end of 2021. That is the right thing to do. I welcome that the Government has implemented this proposal, although late in the day.

Section 11 provides for the Covid-19 restriction support scheme announced on budget day. The scheme is available to businesses that have suffered a turnover loss of more than 75% as a result of Covid-19 restrictions, with qualifying businesses receiving cash payments equivalent to 10% of their previous average weekly turnover, capped at €5,000. The scheme is not going to operate as a grant. Instead it will be a cash flow support, providing an alternative credit for trading expenses, which will reduce the expenses that can be claimed by these companies in the future. This would mean higher taxes or more tax to be paid on their profits. While we leave that aside, Sinn Féin had called for an enhanced grant scheme for Covid-impacted businesses. While we did that, it is not provided for, and we will monitor this scheme in the months ahead.

I am sharing time with Deputy Mairéad Farrell. There are many other things I would like to discuss in this Bill, and we will get an opportunity to do that on Committee Stage if appropriate time is given, if the right arrangements are put in place and if the Bill passes Second Stage here.

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