Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I thank the Deputies who contributed to the debate. I will respond, inasmuch as I can, in the short time available.

I will make one overall point, which is that one must bear in mind that we are responding to the Covid-19 crisis, the threat of Brexit and the longer-term but not any less urgent issue of climate change and the Finance Bill must necessarily take account of all of these issues. All three are important. All three must be dealt with.

The issue that was probably raised most frequently here during the debate is a difficult one but it is clear. I genuinely believe that most Deputies knew from the day it was announced that the pandemic unemployment payment is and always was taxable. The Minister for Finance has said so repeatedly since its introduction. The effect of section 3 of the Bill is to designate the pandemic unemployment payment in the tax code as an emolument to which Chapter 4 of Part 2 of the Taxes Consolidation Act applies and, accordingly, charged to tax under Schedule D to the Taxes Consolidation Act. While that language is somewhat technical, if this requires ordinary traditional PAYE workers to file a tax return, I understand the complications of that. It is not something they would normally have had to do and that is a valid issue which, I am sure, will get discussed in detail on Committee Stage.

From the very beginning, the Social Welfare (Covid-19) (Amendment) Act 2020, the legislation for the pandemic unemployment payment, PUP, referred to that payment as a payment made under section 102 of the Social Welfare Consolidation Act, and that section was used only as a convenience to get money out in a hurry. That is normally what people might use for supplementary welfare payments or emergency payments. The onset of Covid was an emergency and that section allowed payments be made in a hurry, immediately, quickly and promptly. That is why we used that particular section of the Act to make this payment through.

It was never a payment, such as the supplementary welfare allowance, that normally would go through that section of the Act because supplementary welfare allowances by their nature are normally a once-off payment. The PUP payments that were made between 13 March and 15 August were not once-off payments. They were made week in, week out on several occasions.

The PUP is an income support and shares the characteristics of jobseeker's benefit. Everybody knows jobseeker's benefit is taxed. To give a layman's version, payments through social welfare, such as supplementary welfare allowance and jobseeker's allowance, are not subject to tax. Payments in relation to income and contributions, such as jobseeker's benefit, have always been taxed. If somebody was in employment for a month or two or three during a normal year which had nothing to do with Covid, and he or she was on jobseeker's benefit drawing on his or her contributions - the PUP relates to people who were in employment as it is employment related - it was included in the person's total income at the end of the year. The simple rule of thumb - not precise but the one that most people will understand - is that if the payment is akin to a jobseeker's benefit payment, it is subject to tax like jobseeker's benefit already is and always has been, whereas if it was akin to jobseeker's allowance, a long-term social welfare payment or supplementary welfare allowance, it normally would not be subject to tax. There is a complete difference. There is a Schedule to the Social Welfare Act - it has been there for a long number of years - and unless something is listed in that particular Schedule, it is subject to tax. The Schedule lists mainly issues such as allowance payments and jobseeker's allowance.

I know Deputies are disappointed with that reply. There was much discussion over many months about when this tax comes to be paid. The question is, will people get a shock at the end of the year - several Deputies on all sides of the House were involved in this discussion - and when would they have to pay it back. Deputies were told the Revenue will come to an arrangement. Now the Minister has agreed it does not have to be paid or commenced if there is tax due and the Covid payment results in a person having to pay tax, which includes the tax on the employment they are already in.

If somebody does not go back to work and is not in a taxable situation, then this payment may not bring them into the tax net. For those who do go back into employment and have other taxable income, this will come into the reckoning in that situation. The Minster has said that can roll out for up to four years, to pay it back. I raise this because there were several debates in the House about when the tax was going to fall due and some Deputies are almost suggesting they never knew it was taxable, despite us having discussed the arrangements for the payment and the tax on the PUP all along. I just want to be straight on that. It might not be the easy thing to say but if Deputies check the Official Report, they will understand. I am trying to be straight with people because the last thing I want is for people to have the wrong impression and to then get a shock. I do not want to sidestep the issue, I want to make it crystal clear that that is the actual situation.

There was a lot of discussion about the carbon tax. Many Deputies have referred to the tax, particularly the increase to €100 per tonne by 2030, suggesting that it was the wrong approach. Across a series of studies dating back to 1992, independent modelling undertaken by the ESRI has confirmed that a rising carbon tax is likely to be the single most effective climate policy that can be pursued by Government. In order to protect the most vulnerable from the impacts of these increases a targeted package of social protection interventions has been developed. The package is informed by the ESRI research that was commissioned to specifically address this issue. It includes an increase in the fuel allowance by €3.50 per week, an increase in the qualifying child payment of €2 for children under 12 and €5 for those over 12 and an increase in the living alone allowance worth €5 per week. Therefore, there are mitigating measures acknowledging that people in those categories will suffer most. The point that a carbon tax can hit people on lowest incomes the most is well made, well accepted and well understood. That is why we have put these balancing mitigation measures in place. The point is accepted across the board and there is no dispute on it. It would be very unfair to increase the carbon tax without these extra compensatory measures. They might not be as much as everybody would like but they deal with those who are in the front line as far as extra costs are concerned. I hope the measures will be of benefit when they come in early in the new year.

On the CRSS, a number of Deputies mentioned that businesses that do not operate from a fixed premises are not eligible to participate in it. Support provided under this scheme will be in the form of valuable upfront cash payments which will enable eligible businesses to meet costs associated with their premises, such as rent, insurance and utilities, at a time when, because of the specific terms of the restrictions announced by the Government, they cannot provide goods or services to their customers or can only do so to a limited extent. To increase the scope of scheme to cover any businesses impacted by Covid-19 would fundamentally change its targeted nature. It is important that most schemes the Government will be operating now will take sectoral and targeted approaches rather than be across the board for every business, some of which might not need the support as much as others. The Government understands the difficulties faced by businesses and there are a number of other measures of which Deputies will be aware. The Covid pandemic payment can help in some of those as can the employment wage subsidy scheme. There are also schemes for businesses to warehouse VAT and PAYE debts. The temporary wage subsidy scheme can be of help to some people in these situations also, and arrangements are in place for warehousing of unpaid income tax for 2019 and preliminary tax for 2020 for self-assessed taxpayers, if applicable. I understand that the scheme has just opened up and over 2,600 businesses have registered nearly 2,900 premises for the CRSS revenue in recent days. Payments will hopefully be made as quickly as possible.

The issue of coach operators was mentioned and they may be able to avail of the coach tourism business continuity scheme. There are a large number of schemes available through Fáilte Ireland which are specific to the hospitality, catering and tourism sector. Schemes are also available through local authorities. If I have one criticism it is that there are so many schemes out there from so many organisations and State bodies that one would need a compendium to put them all together. Some people might feel they are excluded from this scheme but in many cases there are other ones that can help them, so it is important to say that.

Several Deputies made the point about the help-to-buy scheme that 40% of applicants have a loan-to-value ratio of less than 85%. The Deputies might appreciate that they may have been referring to houses that were purchased rather than those which were self-built. There are different metrics applied to both because the value of the site does not come into account with the loan-to-value ratio when we are dealing with this scheme for people who are self-building normally on their own sites. It is important to say that. On this scheme, most people understand that the State has always helped people who are in a position to do so to buy their own homes. We had the mortgage interest relief scheme for decades upon decades. Most houses in Ireland were bought under that scheme and most of us were reared in houses bought under it or in social houses owned by local authorities. The concept of the State giving some little help through the tax system to people who are going to house themselves is almost part of the DNA of the people. Frankly, I am shocked that there are so many Deputies against the concept of the State helping people buy their own homes. I just cannot understand it. One may say that the builder might make a few bob out of it and argue about the statistics but the essence of the scheme is that first time buyers own their home. It is a great thing that the State should support people in this. We have done it for decades and I hope it continues. Maybe some Deputies do not like people owning their own homes and have a different political agenda. That is a matter for another day, however. I have made the position very clear on this issue.

Deputies Mairéad Farrell and Pringle referred to the provisions of the Bill in respect of NATO and the EU member states. I had to look this one up; it is definitely an interesting issue. It concerns member states undertaking a common defence effort. Ireland has a legal requirement to transpose the provision of the VAT and general excise directives to apply a zero rate of VAT and exemption for excise to certain supplies of goods and services with effect from 1 July 2020 to forces of the member states undertaking a common defence effort under the European Union's common security and defence policy. As such, failure to do so would be an infringement by Ireland. We are required to do that as a result of our involvement in the European Union's common security and defence policy.

The issue of corporation tax was raised, with some Deputies suggesting we move to have an effective rate of 6% imposed. Deputies will not be surprised when I say this Government certainly has no plans to change the current 12.5% rate. We know the importance of corporation tax and the major multinationals in Ireland because they pay very high salaries and wages compared to those paid to people in Irish-owned companies. They are normally nearly double the amount. The employees pay nearly twice as much in income tax as people working for Irish companies because the multinationals pay such high wages. That is one of the main reasons income tax receipts have remained high during the pandemic. Higher-paid workers have continued paying tax even though many people have lost their jobs and are now on the PUP and the TWSS. Due to the progressive nature of the Irish tax system, those on higher wages and salaries pay a very high level of income tax and many of those are still on the books and being employed by their companies and that is why the income tax has kept up so much.

Deputy Boyd Barrett mentioned the issue of the film industry. It is indeed a requirement that for people to benefit from this scheme, they must be in compliance with the relevant employment legislation in order to claim film tax relief. I think people would accept that that is only fair. We cannot be giving tax incentives to people who do not meet the normal employment conditions.

I refer to the disabled drivers scheme. There was a Supreme Court decision on this matter recently. The Department is currently examining a range of options, including amendments to the regulations and the primary legislation. The Minister is anxious that this be done as quickly as possible.

Finally, Deputies Paul Murphy and Mairéad Farrell implied that the increase in time allowed under the stamp duty refund scheme is a gift to developers. This is a particular section in the Bill and the Deputies were the only ones to mention it.

Nothing could be further from the truth. This is not the case. It is a limited measure in the legislation that takes account of the impact of Covid 19 measures and the ability to complete development in the time allowed. It also seeks to address issues with the completion of large-scale multi-phased developments, mainly for apartments. Covid has slowed down the development of some of these. It is only right the stamp duty legislation reflects this but obviously somebody has a different view on the matter.

I have tried to deal with most of the issues that have been raised as best I can. Several Deputies asked me to comment on free money and whether we are spending a lot of money, and the Deputies understand that. Deputy Ó Cuív had a 20-minute philosophical discussion on the matter and a few other speakers contributed on the topic. All I will say is there is no free money. Every penny we get has to be paid back. The reason we call it free is that interest is low at present. When the time comes to be repaid, interest rates may have risen. Calling it free money implies we are getting money for nothing and that it is like a grant. No grant is being given to Ireland under these measures. We are borrowing and every euro we borrow ultimately will have to be paid back, and the interest on that debt is an issue that may arise in due course. All of this money has to be paid back. I will be happy to continue the philosophical discussion with Deputy Ó Cuív on another occasion outside the Chamber.

I thank all of the Deputies for their comments during the debate yesterday and today. As the Minister, Deputy Donohoe, has already said, we will consider any suggestion made during the Committee Stage debate, including amendments that are proposed. I commend the Bill to the House and I look forward to Committee Stage.

See this speech in context