Róisín Shortall (Dublin North West, Social Democrats) | Oireachtas source

I very much welcome the opportunity to again discuss budget measures. I will concentrate, in particular, on tax measures contained in budget 2025 that, overall, are bad for the public and bad for the State. Budget 2025 can only be characterised as a naked attempt to buy the election. As I said on budget day, it has all the hallmarks of a Bertie budget. The Government's overriding priorities should have been protecting the most vulnerable and investing in good quality public services but, instead, the priority was self-preservation.

This budget was a real opportunity to make a substantial difference to people's lives and to strike a balance between providing relief to hard-pressed households and dealing with long-term challenges that the country faces. Instead, the Government has given a bit to everyone through tax cuts and an array of one-off measures. What happens when those one-off payments dry up? Will the number of households struggling to pay their bills or put a roof over their heads have reduced? I think not. What happens in the new year when the cash payments are gone and prices continue to rise?

Yet again, most of the permanent changes are skewed towards better-off households. It is important to look at the distributional impact of the budget and to be honest about that. While there has been a change at the top of Government since budget 2024, very little else has changed in the approach to the budget. Like his predecessor, the Taoiseach has attempted to portray this budget as "objectively progressive". There is clearly nothing objective about his analysis because the facts speak for themselves. This is a regressive budget. This Government may have thought that targeting voters with one-off payments would mask that but it has not and people have seen through its strategy. The electorate will not be fooled yet again by the spin that we have heard from the Government and will not be listening to its electioneering speeches. I know from speaking to people on the doorsteps that they have seen through what the Government is doing and they reject it. People were fooled once by Fianna Fáil in government, with horrendous consequences, and they will not be fooled again by a party, along with its colleagues in Fine Gael, that tries to buy an election.

This year's budget was published with an accompanying distributional analysis that many Government representatives have cited. Based on that report, it has been said that households in the lowest income deciles will benefit most from the budget's measures but when we dig into the data, we find that is not exactly true. When we strips away the one-off measures, we find that the permanent changes to tax and welfare benefit the highest earners most. For example, a single earner scraping by on €30,000 will receive a weekly gain of just €5.34 while a single earner on €100,000 will be up by more than €19 each week. A one-income couple on €30,000 will receive just 55 cent extra each week in 2025, compared to €32.91 for a two-income couple on €100,000 per week. How can that be fair? It cannot be because it widens the gap between the rich and poor. Of particular concern is the analysis by Social Justice Ireland, which calculates that the gap between the highest and lowest earners will increase by €23 per week in 2025. Cumulatively, that is a gap of €990 per week and per year or a shocking €52,000. We should know at this stage that more equal societies are much more successful. Crime rates go down, there is better social interaction and a better sense of community in countries that go out of their way to create a more equal society. The converse of that, obviously, is true as well. The wider the gap between rich and poor, the more lacking a country is in cohesiveness and social solidarity and that is exactly what is happening in this country now. The gap between the lowest-income households and middle-income households is also widening, amounting to €396 per week or €20,000 per year.

Social Justice Ireland also looked at the overall impact of this Government's five budgets and, unsurprisingly, found that low-income households have gained least. From 2020 to 2025, a low-income couple on €30,000 will have gained just over €3 per week compared to €120 for a couple on €200,000 per year. This is the stark reality. The Minister and his predecessors have widened the income gap through what appears to be a very deliberate policy on tax cuts. It seems that the Government's tax package is based on one principle, which is the more you have, the more you get.

One of the other concerning aspects of this approach is the erosion of our tax base. It is frankly reckless that this Government has designed yet another tax package that narrows the tax base. We know that a large part of our tax revenue is unsustainable but instead of future-proofing it, the Government has again ignored the very real challenges facing our country. As detailed in IFAC's budget analysis, the amounts of corporation tax currently being collected are exceptional. There is no doubt about that. Just three companies account for 43% of all corporation tax. That is very concerning but it seems that inadequate consideration has been given to that fact. The State should broaden the tax base, not just to maintain existing levels of public services and supports but to scale them up.

It is undoubted that in the future we will need a far wider tax base and far greater capacity to raise taxes to meet the challenges ahead across a number of different areas, not least the fact that people are living longer, the population is getting bigger and of course we face huge climate challenges.

How many more times does the Government need to be warned about the unsustainable nature of corporation tax? That is in addition, of course, to the demographic pressures and the climate challenges. The Commission on Taxation and Welfare also recommended increases in the overall revenue raised from tax and PRSI. Aside from the 0.1% increase in PRSI, that recommendation has been almost completely ignored. The Government's approach over the past five years has been desperately short-sighted. Using record surpluses to reduce taxes is utterly careless and indeed reckless.

In the Social Democrats' alternative budget, we put forward a very different tax package. At the heart of our plan was equity and fairness, a far cry from what the Government did. Our package would have avoided that narrow effects of its tax changes, which would see larger benefits accruing to higher earners rather than low earners. We proposed increasing tax credits by €450 and making them refundable so that the benefit was shared equally. This approach would also have cost the State much less than the Government's tax package; in fact just one third of what its tax package cost. Let us imagine what could have been done in boosting our in many cases threadbare public services with that additional funding of more than €1 billion. Let us consider what is happening with disability services and the fact that in this day and age the State still does not pay the full cost of our schools. We expect people to go out fund-raising to heat schools. We know that there is a huge shortage of special education places. There is an endless list of things it should have been doing with that money that would have brought much better public benefit than simply a lining the pockets of the better-off.

Using the tax credit system is by far the fairest way to reduce taxes on income. This is because any increase in the credit is of equal benefit to all recipients regardless of whether they earn the minimum wage, the average wage or indeed a high salary of €100,000. In this way, they are preferable to using changes in the standard rate cut-off point as those changes benefit only those above that line. A €450 per year increase in tax credits is worth exactly €450 to all earners regardless of salary.

In tandem, we also proposed withdrawal of tax credits beginning at €108,000. This proposal included a rate of €1 credit withdrawal for every €10 in additional income until tax credits were exhausted at a salary of €150,000, again a much fairer measure. This would have ensured that we could claw back some of the benefits of increased tax credits to higher earners who actually do not need any tax benefits at all. That includes the Minister of State, me as a TD, anybody in this House and the thousands of other people who are not on very big salaries. There was no case whatsoever for tax cuts for people earning in excess of €100,000. I accept that the Government introduced some increases in tax credits but they needed to be much higher. Once again, it is clear this Government is largely content for higher income earners to disproportionately benefit from its tax package.

I turn now to Part 5, which relates to capital acquisitions tax. While most of budget 2025 was not well targeted, this is a measure that was indeed very well targeted and I do not mean that as a compliment. The increase in the threshold for inheritance tax will have a very targeted effect benefiting mainly people who are very well off. This is not a measure that will assist any supposed squeezed middle. The tiny number of people who pay inheritance tax are almost always among the wealthiest in society. The idea that we need to act to ensure "family homes" are not taxed is misleading because the fact is that this rarely happens. The idea that a child inheriting a house might have to sell their home to pay the charge is also bogus as fair exemptions are in place to avoid this. Inheritance is not earned; it is received based on the luck of a person's birth, yet we give it greatly favourable treatment compared with productive activities like work. We do not tax wealth very much in Ireland; now we will tax it even less. We know that less than 3% of households ever receive an inheritance greater than the old threshold of €330,000. Now even fewer will pay inheritance tax and it is the better-off who are being spared.

Targeted benefits are again in order when it comes to standard fund threshold increases for pensions. Just like with inheritance tax, it seems that well publicised lobbying campaigns getting air and print time have done the trick. Sound bites and misrepresentation of numbers have proven more influential on policy than solid analysis. That is a damning reflection of how this issue has been responded to at a political level but also within the Department. There has been plenty of purposefully confused reporting of issues on the standard fund threshold, suggesting candidates for high level Civil Service positions would end up financially worse-off from taking promotions. This is simply not true. People whose pension benefits cross the threshold might face higher marginal rates, but those apply solely on the amount of pension benefit that is over the threshold, which was an already generous €2 million. This is an amount that only a tiny fraction of people can ever hope to save for their retirement. The effect of this increase will also filter through to the private sector where the very highest earners will do very well indeed from it.

Tax reliefs on pensions are extremely generous and we know they broadly benefit the better-off the most. Given this generous support, it is perfectly legitimate for Government to set a limit on the kinds of pension funds it is willing to support and that limit should not be a high one. All this move represents is an underhand way of giving extra money to the highest paid civil servants in the country. Furthermore, it will give an additional tax break worth more than €300,000 per person to some of the best-paid people in the private sector and that will happen by 2030.

The one-year extension to mortgage interest relief is a deeply cynical and divisive move. Again this budget made no attempt to target measures at those in mortgage distress. Instead, many customers who availed of very low rates in the previous decade and some who simply do not require assistance will continue to receive it. According to an interesting piece by Cliff Taylor in last weekend's edition of The Irish Times, fewer than 25,000 people claimed this on their 2023 returns earlier this year. While that figure has likely increased, clearly nowhere near the potential 130,000 to 140,000 eligible mortgage holders have availed of it, so why is the Minister extending it?

On the subject of housing, the 5% increase in stamp duty on bulk purchases is entirely tokenistic. The Social Democrats have repeatedly called for a 100% rate of stamp duty on bulk-bought homes. This would act as an effective ban on the practice. As the Minister of State comes from County Kildare, he should know the damage that the practice has done. There should be an end to the bulk-buying of properties. It is in nobody's interest except the vulture funds and the Government should not allow it to continue.

There is absolutely no reason investment funds should be allowed to buy up housing estates. It benefits nobody but their shareholders. By allowing it to continue, the Government is driving up house prices and locking up first-time buyers. This increase from 10% to 15% will have little or no impact.

I raise another issue regarding which I have been really disappointed with the Department of Finance's response to a number of representations I made, which is the tax treatment of charity-run GPs. The Ceann Comhairle will be aware of this issue, and he and many others have made efforts to address this. Unfortunately, those efforts have fallen on deaf ears. My colleague Deputy Gary Gannon and I have repeatedly raised this with the Ministers for Finance and Health, and Revenue. However, a permanent solution still has not been found and I ask the Minister of State, Deputy Lawless, to please pay attention to this issue. I am sure my plea is supported by the Ceann Comhairle. Something has to be done about this urgently.

I acknowledge that the Department of Health and the HSE have tried their utmost to do this but the same cannot be said about the Department of Finance. It is clear that the Minister for Finance and his Department simply do not recognise the critical importance of intervening in this issue. How is it that a solution could be found for GP partnerships last year but not for charities? I am not asking the Minister to fundamentally alter the tax code but to simply allow charity-run GP practices to operate under a salaried GP model. This small adjustment would permit much-needed healthcare services to continue and expand in disadvantaged areas where market-driven solutions have failed. I cannot overstate the need for an immediate amendment. This Bill is the appropriate vehicle for that. Charity-run GP practices cannot wait for the strategic review of general practice to conclude. They need an interim solution.

There is an excellent GP practice, a charity, GP Care for All, operating since 2016 in the Summerhill primary care centre in inner city Dublin. It is a fantastic service. It provides hugely needed services to a whole range of very disadvantaged local people. I have also made it very clear that through working with GP Care for All, there was a new practice due to open in Finglas later this year - again, an area that has been very poorly served by traditional GP practices. That was due to open in the coming weeks. Now both of those vital services are in jeopardy. because of the fact that there was a change to the tax treatment of partnerships. I ask the Minister of State to please take a personal interest in this, raise it again with the Department and take the steps necessary to preserve those essential services that are serving two very deprived areas in the Dublin area. The Minister of State could make a huge difference to many thousands of people's lives if he was to take that action.

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