Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I welcome the opportunity to speak on the Finance Bill 2023. This legislation at its most general is a response to the cost-of-living and energy crisis that has impacted the financial resilience of households and businesses right across the State. In what follows, I wish to comment on the main provisions of the legislation. First, however, I would like to make a point regarding the very need for this legislation in the first place.

This legislation, providing as it does for tax provisions, comes outside of the normal budget cycle. In recent times, we have heard from Government Minister after Minister who have spoken against any suggestion that measures should be introduced outside the normal budget cycle to support households that are suffering under the cost-of-living crisis, yet here we are today with a Government doing just that. Of course, the fact that we are voting on this legislation is evidence that the recent budget last year was an insufficient response to the unprecedented cost-of-living crisis, as we pointed out at the time.

I will begin by commenting on what is absent from this legislation, which is the lack of any response to the sharp and sudden rise in mortgage interest costs facing so many homeowners. From tomorrow, the European Central Bank, ECB, lending rate will increase for the sixth time since July. This will take effect tomorrow. This rate hike will immediately impact more than 250,000 Irish homeowners who have already seen their mortgage repayments steadily increase since last summer. It will also hit the pockets of tens of thousands of borrowers who have had their mortgages sold on to vulture funds. These mortgage holders are effectively trapped with nowhere to turn. They have no option to fix their rates or switch. This is despite repeated assurances from Government Minister after Government Minister. Indeed, even the Taoiseach himself said they would not be any worse off if their mortgages were sold to these vulture funds. These borrowers are without doubt a lot worse off today. Many are now set to pay thousands of euro more in interest costs per year. I have seen letters from individuals that show me they are paying €5,000 and €6,000 more to service their mortgages to keep a roof over their families' heads compared to where they were last year, and still there is no response from the Government.

Speaking before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach in recent weeks, a representative from the Money Advice and Budgeting Service, MABS, said, "The interest rate hikes serve as a particularly alarming trend during a cost-of-living crisis, and it is having disastrous effects." That is what representatives from MABS told us. These are people who work on the front line. I echo the words of MABS, which is a State agency with first-hand experience of the difficulties borrowers are facing as interest rates rise. Irish mortgage holders are already paying interest rates 50% higher than the European average. The average interest rate on outstanding mortgages was 2.88% in December compared to 1.89% in the rest of Europe.

Sinn Féin has proposed the introduction of mortgage interest relief to absorb 30% of the increased interest costs for struggling borrowers. This is temporary and intended to run until the end of the year. It is targeted, absorbing a portion of the increased costs since interest rates began to climb. The Government rejected this proposal out of hand and it has come to the table with nothing to offer these individuals and families. This is despite the fact that it allows landlords to deduct 100% of their mortgage interest for tax purposes. However, it is refusing to provide any relief whatsoever - anything at all, no matter how small - for struggling homeowners who are trying to keep a roof over their families' heads and pay their mortgages. That is the missing piece in this Finance Bill.

Section 2 provides for the extension of the reduced rates of excise duty applying to petrol and diesel, although on a staggered basis, with the rates gradually increasing. While I welcome the fact that the current reduced rates have been extended until June, I believe the rates need to be kept under review. We have staggered increases in this legislation and the rate of tax on petrol and diesel is now going to be more than what it was when it was reduced. It will be exceeded as a result of further hikes in carbon taxes in October which, again, is the wrong decision. In this regard, I will point out that this section provides for the rate of excise across several fuel types, including home heating oil, to be increased. As we can see from this section, the Government is going to increase the rate of tax on home heating oil in the grip of a cost-of-living crisis. This is the second time it will have done this since last year. The Government will increase the price of a 900 litre fill of a tank by another €20 in the midst of soaring inflation, reducing the living standards of families. I cannot understand why the Government is moving in this direction.

Section 3 provides for the extension of a reduced rate of VAT on electricity and gas until the end of October. It would be fair to describe this as the Government's signature or headline cost-of-living measure announced last month to support households with their energy bills. It is important to lay out how little support this measure will actually provide, however. The Minister for Finance confirmed to me that the VAT extension will benefit the average household with its electricity bills by a total of €38, or less than €5 per month. The VAT extension will benefit the average household with its gas bills by only €3.25 per month. At the same time, the Government is going to increase gas bills with another carbon tax hike in May. Therefore, let us be clear. The Government made a decision last month not to provide any meaningful support to households with their energy costs until October at the very earliest. Even at that stage, we do not know if it will come up with anything. This is despite the fact that households consume as much, if not more, electricity in April, May and June as they do in October, November and December according to the Central Statistics Office, CSO.

As energy prices remain high, disrupting household finances and undermining living standards, it is worth considering the action that is being taken in other European countries to support families. Governments across Europe have capped the price of electricity so that their citizens can afford to run their homes. In Germany, the Netherlands, France, Poland, Austria and elsewhere, that is exactly what they have done. They have protected their citizens. This Government refuses to take similar action, however.

This section needs to be put into context. The support it offers household is minimal and throws into sharp relief the inaction of the Government in comparison to other European states in response to the energy crisis. I want to touch briefly on the decision to extend the reduced rate of VAT for the hospitality and tourism sector. I made it clear in a debate I had with the Minister earlier in the year that the reduced rate should be extended if it were found that failure to do so would have a negative impact on employment in the sector. In a written response, the Minister for Finance made it clear to me that the Department compiled a ministerial briefing, including an economic assessment, regarding the VAT rate in the sector. It noted that "the reduced rate is both regressive and very costly, and that this cost represents a transfer from taxpayers to the sectors which it covers."

In addition, the Minister said the Government accepted this assessment and the view was there was no case for the temporary 9% rate to remain. I ask the Minister to publish this briefing because the discussion surrounding this measure will re-emerge on the date it is due to revert to 13.5%, as that approaches at the end of August. We need full transparency. He should publish the assessment and let us have a proper informed discussion in relation to the appropriate rate.

I will conclude with some remarks on the TBESS. It is widely accepted that this scheme, as it was introduced, is a failure. As of 19 February, only €34 million had been paid in claims under the scheme, despite an allocation of €1.2 billion. I, therefore, welcome a number of changes that have been made to the scheme in the legislation. We have been calling for this scheme to be changed. Reducing the energy cost threshold from 50% to 30% means that businesses who experience significant energy cost increases but did not reach the threshold now will, and will be able to submit claims backdated as far back as September of last year. The amount of relief is also increasing from 40% to 50% and the monthly cap will increase from €10,000 to €15,000, but only from March. While welcome, this increase in relief under the scheme is not being backdated to September. I am interested to know why this decision was made given that the allocation for the scheme is unlikely to be fully drawn down even with these changes.

Finally, I want to express my incredulity and disappointment that despite the repeated calls made in the past six months, we do not have an energy support scheme for businesses that rely on oil and liquified petroleum gas, LPG. It is absolutely scandalous. The Government has knowingly abandoned businesses in my county of Donegal and right down the west coast that do not have piped gas as a source of their energy. The Government has just left them high and dry. We were told there was an announcement that this was going to be rectified and there is nothing in this Bill to deal with this. It is not acceptable. It is completely unjust and it is unfair. Areas that are particularly economically depressed are the worst hit. The Minister needs to sort this out quickly. We were told that the Minister for Enterprise, Trade and Employment, Deputy Simon Coveney, and his Department are examining options but it is simply too slow and not good enough for those businesses that have been locked out of TBESS.

There are elements in this legislation that I welcome but there are also sections that expose the weak response of Government on the issues bearing down on households.

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