Willie O'Dea (Limerick City, Fianna Fail) | Oireachtas source

I will confine myself to commenting on three aspects of the Finance Bill because of the lack of time available. I want to ask the Minister about the tax treatment of the pandemic unemployment payments, PUP. The PUP scheme is very different from ordinary social welfare schemes. There are different rates, different conditions and so on. The reason for this is very simple. We are all familiar with the reasons people find themselves on social welfare in the ordinary course of events but people find themselves on the PUP because the businesses for which they work have been closed by Government decree to protect health. We all accept this was a necessary move for the Government to make but, nevertheless, these people find themselves in this position because of a Government decision rather than through any fault of their own. Many of them have suffered a very considerable drop in income and will have considerable bills to pay when and if they finally get back to work. It is very unfair to include the PUP in a person's total income for tax persons because this means that, when they get back to work and try to restore their financial position and pay their bills, they will also have a tax bill from the Revenue Commissioners. I realise the Minister will allow them to pay this bill over a period of three or four years but it is, in principle, wrong. The Government was forced to reverse its reduction of the PUP and to restore it to the original rates. It is now proposing that, when people get back to work and are at their most vulnerable, they will face an income tax bill. That is unfair and unjust and should be examined again.

There are many arguments both for and against the help-to-buy scheme. I will not get into the question of whether it increases house prices but the scheme as currently constructed does not, to a large extent, meet one its stated objectives, which is to allow people on lower incomes to purchase houses. The difficulty is that, because of Central Bank rules on mortgages, the mortgages of those on lower incomes are determined by the size of their salaries. I am talking about people on €40,000 a year or less, of whom there are hundreds of thousands in this country. To qualify for the help-to-buy scheme, one's mortgage has to be for at least 70% of the value of the house but people on low incomes will not be able to borrow enough. They will not get a mortgage equivalent to 70% of the value of a house in most cases. The difference has to be made up with their own savings, if they have any, or with support from family. The higher one's salary, the greater one's opportunity to avail of this scheme because, under Central Bank rules, a higher salary will allow one to get a mortgage equivalent to 70% of the value of a house.

I did a calculation recently based on a person earning €35,000 a year. The most such a person could borrow would be €125,000. To get any kind of a half decent house in Limerick one would pay €240,000 or €250,000. Such a person would therefore fall short of the 70% and would not qualify. People on much higher incomes, however, would. One can receive a refund of a maximum of €30,000 of the tax one has paid over the past four years. The irony is that people on low incomes will not qualify for that amount anyway because they will not have paid that much tax over the past four years. I ask the Minister to comment on that in his response.

My final point relates to the Covid restrictions support scheme, CRSS. In his budget statement, the Minister for Finance made a very expansive announcement about this scheme but, if one looks at section 11 of the Finance Bill and at the detail of how this scheme will operate, it is by no means as extensive as we were led to believe. I note that it is confined to businesses that have premises. Why is that? Can anybody explain the logic of that to me? The rates rebate applies only to those who have premises because those who do not obviously do not pay commercial rates. They are advantaged over what we might call "the man in the van". The way in which this scheme is drafted means they now have a second advantage over the sole trader or small company that does not have a business premises. That is wrong.

I notice that the Revenue guidelines on section 11 say that a company that supplies a service, equipment or whatever to a number of businesses which have closed down because of Covid will not qualify for this scheme. Quite frankly, I do not understand the logic behind this. I spoke to somebody in Revenue and it seems that, if a person is supplying sound equipment for the entertainment industry and all of the local pubs and entertainment venues close down, that person will not qualify. The logic appears to be that he or she can find other customers. That is all very well if one is selling hamburgers or something like that but it certainly does not apply if one is selling specific items for which there is a limited number of customers. It is very unfair.

With regard to the CRSS, section 11 states that the scheme will be paid as an advance credit against future trading income. All of the documentation that has been released by the Government and the Department of Finance has referred to this as a grant. What does this subsection mean? Is it an advance against future tax credits such that, when the business starts paying tax again, it will lose some of its credits until such time as it has repaid what it has collected from the State? This would mean that the more a business collects from the CRSS, the higher its tax bill will be in the future. If that is the case, the Department of Finance should stop referring to this as a grant as it would, in effect, be a loan against future tax credits. I was hoping it would be a grant. On the day of the budget, I thought it was. If it is an advance against future tax credits and will be clawed back through future tax on trading income, it makes the incentive very limited indeed.

My time is up. I look forward to what the Minister has to say on those three brief issues.

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