Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I move: "That the Bill be now read a Second Time."

I appreciate the opportunity to speak on the Bill, which is relatively short and provides for some of the cost-of-living measures announced by the Government last month. The full package of measures will cost more than €1.2 billion and will put money back into people’s pockets, help with bills and ensure there is no cliff edge for the temporary measures already in place.

In the past year, Ireland has experienced a broad-based surge in inflationary pressures, leading to higher prices for households and businesses alike. The key driver of these pressures has been Russia’s illegal war in Ukraine. The Government appreciates the difficulties facing families and that is why significant measures, both within and outside the annual budgetary cycle, have been implemented in an effort to protect households and businesses. As a result of the prudent management of the public finances to date, we are in a position to help mitigate some of these price increases. In my remarks, I will concentrate on the measures contained in the Bill. A number of these measures were debated in the House on 22 February when the financial resolutions to give them temporary effect were approved. I thank the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach for its constructive engagement to date on the outline of the Bill, which means these important measures can move as quickly as possible through the legislative process.

The Bill is very short, consisting of six sections. Sections 1 and 4 deal with agri-tax reliefs. Deputies will be aware that a number of agri-tax reliefs were introduced or extended in Finance Act 2022, but, as the revised EU agricultural block exemption regulation, ABER, had not yet been agreed, it was at that time only possible to provide for them to the end of June this year. The new regulation came into effect on 1 January 2023.

Section 1 provides for the extension of farm restructuring capital gains tax relief to 31 December 2025, young trained farmer stock relief to 31 December 2024 and registered farm partnership stock relief to 31 December 2024, as well as the extension and amendment of the publication requirements of the accelerated capital allowance relief for capital expenditure on slurry storage to 31 December 2025 and the amendment of the publication requirements for the accelerated wear and tear allowances for farm safety equipment. The amendment of the publication requirements is necessary under the requirements of the revised ABER.

Section 4 deals with two reliefs provided for in the Stamp Duties Consolidation Act 1999. It provides for the extension of the farm consolidation stamp duty relief and the young trained farmer stamp duty relief to 31 December 2025 and for the amendment of the period during which an individual can qualify for the latter relief after acquiring land, from four years to three, to comply with Article 18(6) of the revised regulation. The sections also provide for transitional arrangements relating to the coming into effect of those changes.

Section 2 provides for the phased restoration of the rates of excise on petrol, diesel and marked gas oil that will take place in three stages in the coming months, as announced on 21 February. This will see rates restored on 1 June by 6 cent per litre of petrol, 5 cent per litre of diesel and 1 cent per litre of marked gas oil. On 1 September these rates will increase by a further 7 cent for petrol, 5 cent for diesel, 1 cent for marked gas oil. Rates will then be fully restored on 31 October, with a final increase of 8 cent for petrol, 6 cent for diesel and 3 cent for marked gas oil. The extension and phased reintroduction of these excise reductions is estimated to cost €383 million. These changes have been introduced by financial resolution and approved by the Dáil. I note that oil prices have fallen back in recent weeks, with Brent crude oil now down 14% in the year to date. Along with weakness in the US dollar, I am hopeful this will soon result in reductions in prices paid by motorists at the forecourt, in advance of the commencement of excise duty changes.

Section 3 deals with VAT changes, some of which were introduced by financial resolution on 22 February. It provides for the extension of the 9% rate of VAT on the supply of electricity and gas until 31 October 2023, as well as the extension of the 9% rate of VAT on the supply of certain goods and services in the hospitality and tourism sectors, among others, until 31 August 2023. Finally, it provides for the continuation of the application of the zero rate of VAT to the supply of Covid-19 testing kits.

I have already spoken on section 4 with section 1 as both sections deal with agri-tax reliefs.

Section 5 deals with the temporary business energy support scheme, TBESS, which was announced in budget 2023. To date 27,531 claims, with a total value of €60.61 million, have been approved under the scheme. A motion agreed by the House on 22 February approved a number of draft orders. These orders extended the TBESS to the end of April, while the monthly cash cap was increased from €10,000 to €15,000 for a business with a single premises and from €30,000 to €45,000 for a business with multiple premises. These changes took effect from 1 March. I said at the time that legislation would be required to implement the other changes announced by the Government. This Bill will provide for those changes. The TBESS is provided for in sections 100 and 101 of the Finance Act 2022. Section 5 will amend section 100 of the Finance Act 2022 to provide that I may make a ministerial order extending the scheme to a date not later than 31 July 2023. Section 101 of the Finance Act 2022 will also be amended by the Bill.

First, the scheme will be extended to 31 May 2023. The scheme was due to end on 28 February but, following exercise of the power contained in section 100 of Finance Act 2022, I extended the scheme to the end of April, which is the latest date provided for in that legislation. The further extension to the end of May will help businesses deal with the continuing impact of high energy costs, while the power to extend to 31 July will provide flexibility to further extend the scheme if considered appropriate. Second, the energy cost threshold is being reduced. To be eligible for TBESS currently, a business must have experienced a 50% increase in the average per unit cost of electricity or natural gas relative to the reference period. This is being reduced to 30%. This change will be applied retrospectively from 1 September, when the TBESS commenced. That means businesses whose average unit price for electricity or natural gas increased by 40%, for example, in September, October, November and December 2022 relative to the same months in 2021 and that are currently excluded from the scheme will qualify. Moreover, they will be able to submit a claim going back to 1 September 2022. Third, the amount of relief a business will receive is being increased. Businesses are currently entitled to a payment equal to 40% of the uplift in their energy costs. From 1 March, this will increase to 50%. Finally, the Bill provides for a new time limit for making claims under the scheme, which will be two months from the end of the specified period rather than four months from the end of the claim period to which the claim relates. As the amendments are subject to state aid approval, provision is made for a commencement order to give effect to the amendments when such approval is received. We hope that approval will be forthcoming shortly.

Deputies will be aware that the Government announced recently that a separate scheme will be considered for businesses that use oil and liquefied petroleum gas, LPG. The Minister for Enterprise, Trade and Employment has committed to exploring options for such a scheme and to revert to the Government on this matter in due course. The final section of the Bill is the standard one dealing with the Short Title.

Deputies will be aware that I recently announced a temporary change in the benefit-in-kind regime for vehicles and that I intend to bring forward a Committee Stage amendment to deal with this. While the move to a CO2-based benefit-in-kind system, which incentivises the use of electric vehicles and lower emission vehicles, is an important element of achieving our climate targets, a significant number of employees with vehicles in the typical emissions range experienced exceptionally large increases in their income tax liabilities since the start of 2023.

The Government has agreed to introduce a relief of €10,000 to be applied to the original market value, OMV, of cars in categories A to D, inclusive, in order to reduce the amount of benefit-in-kind payable. This is not applicable to cars in category E. In effect, this means that for the purposes of calculating benefit-in-kind liability, employers may reduce the market value by €10,000. This treatment will also apply to all vans and electric vehicles. For electric vehicles, the OMV deduction of €10,000 will be in addition to the existing relief of €35,000 that is currently available for electric vehicles, meaning that the total relief in the current year will be €45,000. The upper limit in the highest mileage band is amended by way of a 4,000 km reduction so that the highest mileage band is now entered into at 48,001 km. These temporary changes will be retrospectively applied from 1 January this year and will remain in place until the end of the current year.

As I said at the outset, this is a short but important Finance Bill. We already discussed some aspects of it in terms of motions and financial resolutions on 22 February last. I look forward to further constructive discussion on it now on Second Stage and as it progresses through the legislative process. The Bill provides for a number of targeted tax changes and specific measures to support families and businesses dealing with the impact of high inflation. I am glad to commend this Bill to the House.

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