Pearse Doherty (Donegal, Sinn Fein)

I move amendment No. 19:

In page 35, between lines 16 and 17, to insert the following:

“Report on costs of increasing standard fund threshold to €2,800,000 25. The Minister shall, within one month of the passing of this Act, prepare and lay before Dáil Éireann a report on the costs of increasing the standard fund threshold to €2,800,000 taking account of behavioural change, clearly outlining the cost to the Exchequer, as well as the number of likely beneficiaries.”.

I have raised the issue of the increase in the standard fund threshold from €2 million to €2.8 million on numerous occasions. I am sure the Tánaiste stands by the answers that have been given. He claims that the cost of this measure will be €10 million. I made the point in the finance committee that it will be laughable if this cost is €10 million. It is not going to be €10 million. It will be multiples of that. When I pushed the Department on this, it told me that it was based on no behavioural change. It was based on existing claimants. Of course, there will be behavioural change. If the standard fund threshold is increased from €2 million to €2.8 million, it will be the biggest tax break for an individual that I have ever seen in a finance Bill. No tax break in my recollection benefited an individual to the tune of €320,000. That is what people will be able to gain from this measure. Of course, there will be behavioural change. Wealthy people will put more into their pensions as a result of this. If someone with spare cash goes to a financial adviser, the first thing the adviser will say is, "Have you maxxed out your pension?" because that is the best way to gain wealth. For every euro a person puts in, for every €100, for every €10,000, the Government will give him or her 40% of that back in tax relief. That is the first thing an adviser will say. After that, they will talk to the person about investing elsewhere and so on.

People with wealth will max this out. If I were in this position, had a pension of €2 million and had wealth at my disposal, of course, I would put the money in here because I would get 40% of it back, could draw down €200,000 of it tax free and €300,000 at a 20% rate and, after that, pay tax on a pension. This measure is only available to people who already have gold-plated pensions. The standard fund threshold is currently €2 million, which means that someone retiring at the age of 66 can get a pension of €85,000 and still be under the standard fund threshold. They could have a pension of €85,000 every single year and have a tax-free lump sum in excess of €100,000 and still be under the standard fund threshold. This wee tax break that Fine Gael and Fianna Fáil introduced that would benefit an individual to the tune of €320,000 is only available to people who already have pension pots in excess of €2 million. These people are already entitled to more than €85,000 of an annual return. Most people - my constituents and those of the Tánaiste - do not have a whiff of €85,000. This is not about supporting them because they are not getting to that point. This is about people with serious wealth who will now be able to avail of this tax break for only wealthy people.

The Tánaiste claims it will cost €10 million. It will not cost €10 million. This is the nonsense we have from the Government about budgeting. I have made this point on numerous occasions. I have attended the Committee on Budgetary Oversight. Some of the stuff coming from the Government at the minute in terms of budgeting is ridiculous. I have been doing this as an Opposition spokesperson for a decade and a half. There is less transparency from the Government now than ever before. That is just fact. The budget book presented by the Government has less information that would allow us to decipher what is going on than ever before. Standstill costs always used to be there and be clear. They do not exist any more in terms of the budget book. It is worse than ever. What the Irish Fiscal Advisory Council called the Government out on is true. It makes budgeting meaningless when the Government introduces a budget on budget night and says a measure like this will cost €10 million when it will cost multiples of that. Worse than that is when the Government introduces a budget and every year for the past five years, we know there will be billions more spent outside of the budget cycle. It is pathetic budgeting. We are talking about 12 months ahead. Of course we understand it in respect of things like the Covid pandemic or a flood of people fleeing war but the €2 billion on additional Estimates this year is not about any of those unforeseen things. Many of them were foreseen but were overruns or badly budgeted for or things like this. There is a wider issue about the standard fund threshold. This is a tax break that the Government has decided to prioritise and that will only go to people who already have gold-plated pensions. It is not about somebody who is working in the local shop or a butcher or nurse. They are not benefiting from this. This involves people who have wealth and will decide where to put it.

A further issue I wish to raise is one I have been raising since 2018. I put down a parliamentary question. I raised the issue of a pensions loophole and in fairness, the Government closed it last year but people with serious wealth benefited from that scheme. It took me two years to convince the Government to close it down. There is a serious amount of transfer relating to pensions that is plain to see. Financial advisers are advising people to transfer their pensions to Malta because there are tax advantages in doing so. Someone can transfer their pension to Malta if they want to. It is legal to do so but only under certain circumstances. It is illegal to do it for tax purposes. That has to be clamped down on. It is happening, just like the loophole I raised a couple of years ago. Financial advisers are telling people to do it. That is what is happening at the minute. It has been pointed out by the Department and other practitioners. This is happening.

10 o’clock

It is happening in a big way. It is people with serious wealth who are not happy with even the regime here and want more tax reductions. As I said, it is illegal to do it if you are doing it for tax purposes.

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