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

I wish to announce a number of other new measures in budget 2024. An issue which has been regularly raised with me, including by colleagues across the House, is the VAT treatment of audio books and e-books. E-books are currently subject to a VAT rate of 9%, unlike printed books, which are zero-rated. Audio books are not currently included in the VAT zero-rating. Therefore, I have decided to zero-rate these items from 1 January 2024.

It is important that the wider familial relationships which foster children have by virtue of their foster parents are recognised for inheritance and gift tax purposes. In line with the Commission on Taxation and Welfare recommendation, I will bring forward amendments to ensure foster children can avail of the group B capital acquisitions tax threshold based on their relationship to their foster parents.

AGRICULTURAL RELIEF MEASURES

Farming is the lifeblood of rural communities across our country. A number of important agricultural tax reliefs are due to expire at the end of this year. These reliefs provide important supports to our farmers and the farming sector generally, as we all know.

EXTENSION OF CONSANGUINITY RELIEF

Consanguinity relief is a vital measure which supports the transfer of farms from one generation to the next. I will extend this relief for a period of five years to provide more certainty to farming families as they plan for the future over the years ahead.

I am also extending the accelerated capital allowances for farm safety equipment.

I am increasing the maximum aggregate lifetime limit of a number of farm-related reliefs to €100,000, which is the maximum allowable under the new EU agricultural block exemption regulation which came into effect on 1 January. These reliefs include the young trained farmer stamp duty relief, stock relief for young trained farmers, and the relief for succession farm partnerships. The maximum amount of enhanced stock relief for farmers who are partners in a registered farm partnership will be increased from €15,000 to €20,000 in line with the maximum permitted under EU regulations.

The land leasing income tax relief will be amended so that it only becomes available when the land has been owned for seven years so that it is better targeted to active farmers.

EXTENSION OF BANK LEVY

It is important that the banking sector continues to make a contribution to the Irish economy following the support banks received from taxpayers during the financial crisis. In that context, I have put a plan in place to introduce a revised bank levy in 2024 to raise €200 million. I will review the levy again next year to ensure it remains appropriately calibrated.

TOBACCO

I am increasing excise duty on a packet of 20 cigarettes by 75 cent, with a pro rataincrease on other tobacco products. This will bring the price of cigarettes in the most popular price category to €16.75 and supports public health policy to reduce smoking levels further in Irish society. A financial resolution will be introduced tonight to enact this measure.

E-CIGARETTES

In light of public health interests, continuing delays to the revision of the tobacco products tax directive at EU level and the programme for Government commitment to tax e-cigarettes and vaping products, I am proposing to introduce a domestic tax on these products in next year’s budget.

Considerable preparatory work will need to be carried out by my Department and the Revenue Commissioners in drafting this legislation over the period ahead.

CHARITY, PHILANTHROPY AND SPORT

Due to the important role the charity and community sector plays in ensuring the most vulnerable people in our society are supported, I have decided to increase the funds available under the charities VAT compensation scheme from €5 million to €10 million. In simple terms, this will mean that charities will get back more of the VAT they pay on the goods and services they purchase. I am also increasing the threshold for tax relief on the donation of heritage items from €6 million to €8 million.

Ireland, as we all know, has a rich sporting culture. I believe we need to fully utilise the opportunities to invest in our sporting facilities and clubs. Our taxation system currently provides a number of reliefs to sporting organisations and to charities. However, I believe there is potential to do more. To assist our national governing bodies with their capital programmes, I intend to examine how the tax system can be utilised to further support these organisations with the upgrade of their facilities or the development of new ones. This will involve examining the tax treatment of long-term strategic development funds established by approved sporting bodies to promote capital investment in our sports facilities. I will conclude this work next year.

Additionally, I am committed to considering how our tax system can better encourage and support philanthropy. I will engage extensively over the period ahead on this issue.

FUTURE IRELAND FUND

The prospect of headline budgetary surpluses in the coming years affords us an opportunity to prepare now for the challenges we know are on the horizon. I will now provide more details in relation to the two funds that we propose to establish. We will put in place a new savings fund, to be called the future Ireland fund, using some of the windfall corporate tax receipts. To be clear, this is not a rainy-day fund because it is for costs that we know are coming our way in the years ahead. This fund will benefit all of us: the children of today, people of working age today, our pensioners and also future generations. It will help us to meet the costs of running the State in the future and it will make a contribution to the cost of healthcare, pensions, home care and much more. For example, we know we are facing considerable costs in relation to an ageing population. Age-related spending will be around €7 billion to €8 billion higher by the end of this decade than it was at the start of this decade. This is simply the stand-still cost and does not involve any new measures or any new policy initiatives. The twin transitions of digital and climate, while more difficult to quantify, will also involve significant costs. It is imperative that we act now. I am announcing that we will invest 0.8% of GDP annually into the future Ireland fund from 2024 to 2035. This will be a sum of approximately €4.3 billion in 2024. In addition, we will transfer seed funding of just over €4 billion into the fund next year from the dissolution of the current National Reserve Fund. It is expected that with a funding level of 0.8% of GDP annually, the fund could potentially reach a total of €100 billion by 2035. It is intended to preserve the fund over a longer period and that the investment return would be used to support Government expenditure. It will be a matter for the Government of the day when the drawdown occurs to use the return from the fund appropriately. There are of course risks that could crystallise over the contribution period ahead, such as a national or global economic shock or reduced corporate tax receipts. However, as we stand here today in this House, this is a realistic and achievable plan for Ireland. The window of opportunity will not remain open indefinitely and we must seize it now.

INFRASTRUCTURE, CLIMATE AND NATURE FUND

The second fund - the infrastructure, climate and nature fund - will also invest a portion of the windfall corporate taxes and is intended to operate in a counter-cyclical manner in terms of fiscal and economic stress to provide resources for capital investment. The fund will grow incrementally by €2 billion for seven consecutive years when it will reach €14 billion plus interest accrued. In 2024, the first €2 billion contribution will come from the dissolution of the National Reserve Fund. While it is important that we prevent a reoccurrence of "stop-start" public capital investment as we have seen in the past and that we invest through the economic cycle at whatever stage of that cycle we may be, we must also consider the known challenges facing our society and economy. The impact from rising global temperatures as a result of climate change will affect all parts of our society. No one will escape. This Government has taken action to manage the transition to a climate-neutral and climate-resilient society in the knowledge that it will have macroeconomic and fiscal implications for all of us. In this regard, the infrastructure, climate and nature fund will have a climate and nature component worth more than €3 billion, the aim of which is to help the achievement of carbon budgets through capital projects where it is clear our climate targets are not being reached. Both funds will be vested in the Minister for Finance and will be managed and invested by the National Treasury Management Agency, NTMA, subject to an investment policy and investment strategy. The funds will be audited by the Comptroller and Auditor General. I have this morning secured Government approval for the heads of a Bill providing for the establishment of these two new funds. I hope there will be broad consensus across this House in support of this strategically important legislation for our country.

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