Thomas Pringle (Donegal, Independent) | Oireachtas source

At this stage, Opposition Deputies are used to going through the Finance Bill, which follows the budget, with a fine-tooth comb. There are often attempts to bring in provisions for additional taxes or reliefs that did not form part of the budget week leaks and announcements. It is just business as usual for the opaque way that Fianna Fáil, Fine Gael and the Green Party govern. That said, there are some welcome measures in the Finance Bill 2020, such as section 2, which increases the universal social charge thresholds, and section 4, which exempts the home sharing host allowance from income tax and other small improvements for taxpayers.

I have issues with section 7 and the extension of the enhanced help-to-buy relief until the end of December 2021. There has been no evidence to show that the relief has done anything except push up prices for people who could already afford homes.

The Finance Bill should not include section 3 on taxing the Covid payments. Section 3 proposes to amend section 126 of the principal Act, regarding tax treatment of certain benefits payable under the Social Welfare Acts. This has been a difficult year for people and businesses in Donegal and across the country. We are coming up to the time of year that means so much for a lot of businesses, and due to coronavirus restrictions, many of these businesses have had to close their doors to the public. Now is exactly the time that the Government should be trying to keep as much money in the local economy as possible. Many businesses in Donegal and elsewhere are still trading online during lockdown, and the public can support them by shopping local. There is a great risk of many small local businesses closing permanently and devastating local economies. By not taxing the pandemic unemployment payment, the amount that people can spend locally will be increased and can go some way to supporting local businesses and economies to survive.

I, like many other Deputies, have been encouraging people to support Irish businesses this Christmas. Local businesses can provide many of the same services as multinational giants like Amazon, while also saving jobs in local communities. When we shop local, we are supporting our neighbours, local jobs and local communities, whereas shopping on Amazon is just adding to Jeff Bezos's trillions and supporting a huge corporation with notoriously bad working conditions for many of its workforce.

The coming weekend of 6 to 8 November is #BuyDonegalWeekend, an initiative of Donegal County Council in collaboration with businesses across the county, to highlight the range of Donegal products available. The Letterkenny Chamber has been getting out the message, "Shop Local - Stay Local", to encourage people to shop locally online during lockdown. I encourage people to visit the websites and social media accounts of our local businesses to see how they can shop with them online during lockdown. Local authorities and agencies are trying to help local businesses and have explicitly said that removing this tax liability would be a way for the Government to support those efforts.

Section 3(2) states that some provisions shall be deemed to have come into operation on and from 13 March 2020 and section 3(3) provides for retrospectively applying the law from 5 August 2020. It is reported that approximately 600,000 people will be affected by this underhanded tax change.

The Finance Act 2018 stated that urgent needs payments paid under section 202 of the Social Welfare Consolidation Act 2005 were included under tax-free income. The political journalist, Gavan Reilly, has produced some very informative Twitter threads on this issue. The Minister's Department’s statement to Virgin News stated:

Section 202 was used as a vehicle of convenience from March last to get payments out quickly ... However, this does not mean that the PUP is an urgent needs payment.

The Revenue Commissioners backed up the Minister's position, saying, "As the PUP is not specifically exempted from income tax the payment is subject to tax." As Gavan Reilly put it on 23 October, "both the taxman and the Government say: the PUP was a Section 202 payment in practice, but not in spirit."

There is a very interesting paper from 2009, The Constitution and Retrospective Tax Legislation, by Paul Brady, BL, where he concluded that there ought to be only two justifiable circumstances for retrospective tax legislation, which are curative legislation, and when the legislation is necessary to stop the State going bankrupt. He states:

Part of a taxpayer's property rights is the right to know where he or she stands. That is, a right to know in advance what the tax implications of his or her actions will be. Any interference with that right should only be justified when prospective legislation is inadequate to prevent an extreme financial crisis for the State.

The inadequacy of the pandemic unemployment payment levels has been subject to much debate. To now bring forward a provision shafting those who lost their jobs because of a global pandemic and leave them with further income tax bills will just add to the mental health strains already evident across the country. As usual, it is those at the lower end of earnings who will suffer the most. I hope to submit an amendment in opposition to section 3 on Committee Stage.

Why have beauticians not been exempted from the VAT reduction that was extended to hairdressers? In Part 3, section 37, which pertains to value added tax, seeks to amend section 46 of the Value-Added Tax Consolidation Act 2010. It reduces the VAT rate to 9% from 1 November 2020 for certain businesses. This VAT reduction is to remain in effect until the end of December 2021 and will apply to restaurant and catering services, admissions to cinemas and museums, etc. Point 13(3) of Schedule 3 to the principal Act is included and applies this reduced rate of 9% to hairdressing services. I have been contacted by many small business owners in Donegal who provide beautician services and they are unhappy with their exclusion from this reduction. I know that beauticians are not provided for in the 2010 Act under other services but surely they should be included in any of the measures that are being introduced to assist businesses in continuing despite disruptions due to Covid.

There is another section I wish to draw to the Minister's attention and on which I have a question. In Part 2, section 29, which pertains to excise, provides for the amendment of section 104 of the Finance Act 2001. It inserts two new subsections (ba) and (bb) after section 104(1)(b) of the 2001 Act. Section 104 of the 2001 Act states:

104.—(1) Subject to compliance with any conditions or limitations the Commissioners see fit to impose, the duties of excise imposed by the provisions referred to in section 97 shall not be charged or levied on excisable products delivered— (a) under diplomatic arrangements in the State,

(b) to international organisations recognised as such by the State, and the members of such organisations based in the State, within the limits and under the conditions laid down by international conventions establishing such organisations or by other agreements.

The new subsections (ba) and (bb) relate to the exemption of excise on products delivered to NATO forces and, from 1 July 2020, forces of EU member states taking part in activities related to the Common Security and Defence Policy. The explanatory memorandum with the Bill states that this is "to transpose Article 12(1)(ba) and (c) of the EU General Excise Directive, 2008/118/EC, as amended by Article 2 of the EU Directive 2019/2235". Council Directive 2019/2235 of 16 December 2019 amended Directive 2006/112/EC "on the common system of value added tax and Directive 2008/118/EC concerning the general arrangements for excise duty as regards defence efforts within the Union framework". This directive is also provided for in the Finance Bill 2020 in Part 3, section 40, which pertains to value added tax. Goods and services supplied to NATO are exempt from VAT, and from 1 July 2022, goods and services supplied to forces of member states undertaking a common defence effort under the Common Security and Defence Policy of the EU will also be exempt from VAT under the Bill. What assessments of costs have been done on these measures? How much will be lost to the Exchequer as a result of granting these exemptions? When were these measures communicated to the Dáil?

Article 29.9 of Bunreacht na hÉireann states: "The State shall not adopt a decision taken by the European Council to establish a common defence pursuant to Article 42 of the Treaty on European Union where that common defence would include the State." In December 2017, Ireland voluntarily signed up to the European Council's permanent structured co-operation on security and defence, PESCO. The webpage of the European Commission's representation in Ireland, under the heading of "Foreign affairs, security and defence", reads:

PESCO is a sophisticated legal instrument central to the Common Security and Defence Policy (CSDP) that enables the EU to play its part in global peacekeeping, crisis management and conflict prevention. The CSDP is an integral part of the EU's Common Foreign and Security Policy (CFSP), through which the EU speaks and acts as one in world affairs.

Does that include NATO as well? At the end of December 2018, we were informed that being part of PESCO had not cost the State anything. Despite strong opposition from me and other Members, this went ahead and now provisions are being made for tax exemption in our Finance Bill, without any discussions, clarity or debates as far as I can tell.

It would be far more helpful if the Government was transparent about the annual Finance Bill. It is unfair on Deputies, media and the electorate when it only highlights the few stories that it wants to talk about during budget week. I continue to be disappointed with this Government and will be voting against the Bill.

See this speech in context