Jack Chambers (Dublin West, Fianna Fail) | Oireachtas source

I acknowledge everyone who has spoken. There was a wide array of topics referred to and I will try to respond on some of them. On amendments numbers 2, 3 and 4, on the universal social charge, the Rural Independent Group has requested a report on the abolition of the charge for those earning less than €70,000 per annum and a report on abolishing the charge for all employees in the State. Deputy Boyd Barrett has requested a report on abolishing the USC and replacing it with a wealth tax. Deputies Doherty and Conway-Walsh have requested a report on removing the USC from the first €45,000 a person earns.

For 2025, it is estimated that the USC will yield in the region of €5.6 billion. With regard to the proposal to abolish the USC for all those earning less than €70,000, I am advised by the Revenue Commissioners that it is estimated that this would cost in the region of €1.3 billion in the first year and €1.5 billion in a full year. It is estimated that 33% of all taxpayer units will not be liable to USC in 2025. Increasing the entry threshold to €70,000 per annum would exempt around 3 million or 86% of taxpayer units from the USC. The second proposal by the Rural Independent Group relates to abolishing the USC in its entirety. This was also proposed by Deputy Boyd Barrett.

With regard to Deputy Boyd Barrett’s proposal to introduce a wealth tax to offset the Exchequer shortfall, taxes on wealth are already in place. Various taxes operate, in effect, as wealth taxes in Ireland, and these include the local property tax, capital gains tax and capital acquisitions tax, as well as certain forms of stamp duty. The total net receipts for these various forms of tax came to just under €4.2 billion in 2023.

The 2022 report from the Commission on Taxation and Welfare has found that a new tax on net wealth, if desired, should not be introduced without attempting to substantially amend Ireland’s existing taxes on capital and wealth. Rather than introducing a specific tax on wealth, the commission noted it would be more effective to re-examine the primary existing forms of wealth tax, such as capital gains tax and capital acquisitions tax.

On the proposal of Deputies Doherty and Conway-Walsh, which is to remove the USC on the first €45,000 a person earns, I am advised it would be at an estimated cost of €1.56 billion in the first year and €1.8 billion on a full-year basis. It would mean that approximately 2.49 million or 71% of tax units would not be liable to the USC.

More broadly, Ireland has one of the most progressive personal income tax systems, which plays a crucial role in the process of income redistribution. A redistribution tax system has been acknowledged by the IMF, the OECD and, indeed, the ESRI. The budget package we introduced is built around three key pillars: changes to tax credits, the standard rate band, and the USC. The Government has sought to use each of these levers to spread the benefit of the package as effectively as possible. Following the discussion on the USC amendments, the section on the income tax package has an estimated cost of €1.1 billion in 2025 and approximately €1.3 billion in a full year. For 2025, the main tax credits would be increased by €125, which represents a 6.7% rise. The personal tax credit will increase to €2,000 in the case of single persons and to €4,000 for married people and civil partners who are jointly assessed for tax. The value of both the employee tax credit and the earned income tax credit will also increase, by €125 from €1,875 to €2,000.

It is important to note that approximately 76,600 taxpayer units will be removed from the income tax net. These changes ensure many low-income earners will continue to remain outside the income tax net as incomes rise. A single person earning €20,000 or less in 2025 will now be outside the income tax net.

I could go on about this but I just want to come back to some of the other points made by Deputies. Deputy Ó Cuív, who has just left the Chamber, referred to a variety of revenue costings concerning individuals who hold a medical card. I will revert to him on this.

Some have raised the effective tax rates across our economy, as have been set out. According to the latest figures, from 2022, the top 10% of companies paid 12%. Deputy Boyd Barrett and Murphy raised this and I can send them the information.

Under pillar 2, a minimum effective tax rate of 15% has been in force for turnover over €750 million for accounting periods commencing on 31 December 2023, and this reflects the changes in the international taxation landscape. The OECD agreement, when implemented, is such that there is a risk of a net cost to the Exchequer in terms of reduced tax receipts in time. We believe, however, that our involvement is a price worth paying to provide stability and predictability regarding Ireland’s role in the international tax framework. The estimated cost of joining both pillars has previously been published. Ireland has a small, open economy connected to the rest of the EU and, indeed, many other global trading partners, and that is why we have to maintain a competitive position when it comes to personal and corporate tax. What makes us attractive is not just our tax rate. We are also English-speaking, we provide access to the EU market, we have a young, educated workforce, and we have a common law jurisdiction, all of which continue to attract foreign direct investment.

Much has been said about Ireland’s corporate tax regime in recent years. However, a few of the facts are often left out of the discussion. Ireland’s corporate tax policy and broader industrial policy have been consistently focused on attracting real and substantial investment, creating jobs and promoting prosperity. Our corporation tax regime has been an important part of our offering to indigenous businesses and foreign direct investors and it cannot be taken for granted.

As I said, the strengths we are admired for cannot be taken for granted, in terms of the talent of our workforce, the quality of our education system and how it connects with industry, our stable political system and the wider predictability around tax policy, which are central to ensuring we continue to run budgetary surpluses. This way, we can continue to invest in our economy and support the more than 2.7 million workers working in the economy and recognise the important value of our current tax policy. Our workforce is central to driving that.

I addressed some of Deputy Boyd Barrett's points around the wealth tax. If the Deputy looks at what the Commission on Taxation and Welfare has set out, he will see that there are options regarding existing capital taxes. We must, however, maintain a competitive position when it comes to corporate tax and the other capital taxes in our economy.

Deputy Aindrias Moynihan raised a number of issues, some of which related to USC. He also raised the issue of inheritance tax with regard to a couple who do not have children but wish to leave their property to their niece or nephew and the exemptions or reliefs available to them. The relief is there and we have made an adjustment to the thresholds around these reliefs in categories A, B and C in the budget. It is also worth noting that there is an exemption from CAT where dwelling houses are bequeathed by individuals who have lived there for a specified period of time before the inheritance, who will continue to live there for a specified period of time after the inheritance and those who have no beneficial interest in any other residential property on the date of the inheritance.

Deputy Troy raised specific queries relating to the help-to-buy scheme. I will revert to him directly on that. I know he has submitted parliamentary questions to me on this in the context of the existing legislation. Others have raised the issues of housing supply and the decision the Government made around increasing and revising our housing targets. If we look at where we have come from over the past four years, a number of years ago, more than 20,000 homes were being built per annum. That figure is now heading towards 40,000, which is above our Housing for All targets for 2024. We have set out ambitious and deliverable targets for the next number of years to make sure we deliver affordability, hope and a greater housing supply in our economy for many young workers who want to buy and own their own home.

Many Opposition politicians would abolish many of the schemes that help people, including the help-to-buy and first home schemes. We have set out for the Minister for housing, Deputy O'Brien, a revised target of 41,000 new homes in 2025 with a trajectory to 2030. It is an ambitious and incredible pathway to support increased housing supply in our economy. The national planning framework will underpin that. It will be an issue when we set out our stall in the coming days during the general election campaign.

Deputies McAuliffe and Shortall raised an issue they have raised with me previously. I will set out some of the detail as regards GP Care for All. I am familiar with Dr. O'Carroll who has been a fantastic GP in his community and a wonderful advocate for healthcare for people in Dublin and a leader in healthcare in the country. A particular practice model has been highlighted whereby incorporated charities such as GP Care for All operate a medical practice while employing GPs to provide clinical services. In such models, it appears the employee GP's income under GMS contracts has, to date, been incorrectly treated as the income of a medical practice in which the individual GP is an employee rather than income of that individual GP. It also appears the HSE made the GMS payments into the bank account nominated by the relevant GP, which is an account for medical practice rather than an account of the GP. This has led to a perception by such medical practices that the HSE, by making payments to the nominated bank account, is approving the reassignments of earnings in some way. The Department of Health has confirmed that this does not change the legal position, which remains that the individual GP is the person being contracted and is therefore paid for the GMS contract, regardless of who owns the bank account in which the GP has nominated to receive the GMS income. As such, that individual GP has always been and remains the chargeable person as regards taxation of income arising under the contract.

Section 1008A is being perceived as a change to the legal position for all GP practices. That is not the case. The provision did not change the underlying legal position that the individual GP is the chargeable person as regards income arising under the GMS contract. Revenue issued guidance notes during 2023 clarifying the correct tax treatment of GMS income under tax legislation. Although the guidance was widely reported as a proposed tax change, it does not introduce a change to the tax treatment of GPs. Instead, it simply clarifies the existing legal and administrative position.

When section 1008A was introduced in the Finance (No. 2) Act 2023, it was noted it was expected to resolve some, but not all, of the issues arising from contractual arrangements. This is because there are a number of business arrangements and models in the GP sector, including partnerships, companies, employees and employers. It was further noted, therefore, that the Department of Health had agreed to this approach and had confirmed that the strategic review of general practice, which is currently under way, would examine the relevant HSE contracts and propose measures necessary to modernise them. Although I am conscious of the difficulties being experienced by GP practices, it is important to set out the wider legislative context and the fact that there was not a change here. I have also been engaging with my colleague, the Minister for Health, Deputy Donnelly, on the matter.

On the specific issue relating to GP Care for All, which is an important service in the community it serves, I understand the Department of Health and the HSE have met representatives of GP Care for All on four separate occasions in an effort to find a solution to the issue. I am informed that it was made clear during the early engagements that the Department and the HSE value the work of GP Care for All and their focus was ensuring the continued delivery of services. That engagement is ongoing between the parties and is focused on a model of funding or an operating structure that would allow GP Care for All to deliver its services on a sustainable footing. I understand that is the current position.

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