Paschal Donohoe (Dublin Central, Fine Gael)
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I move: "That the Bill be now read a Second Time."

When I made my Budget Statement in this House two weeks ago, I said this was a budget to safeguard our national finances and to help rebalance our economy. It was a budget to promote fairness and provide for modest but sustainable improvements in the lives of those we serve. Many of the measures to help us achieve these goals are contained in the Finance Bill 2017, which we will begin to discuss today. The Bill is the means by which we will legislate to ensure these changes happen. Before I go through its sections in detail, I would like to look at some of the overarching themes contained therein.

In budget 2018 I am continuing to fulfil the Government's commitment to make steady and sustainable progress in reducing the income tax burden, with a particular focus on low and middle-income earners. I have been clear that my intention is to preserve a broad and stable income tax base. Therefore, to ensure that I do not narrow the tax base, the universal social charge, USC, measures to be introduced in this Finance Bill focus on reductions to USC rates, while also maintaining the current entry threshold to the USC of €13,000. I am also establishing a working group to plan, over the coming year, the process of amalgamating USC and PRSI over the medium term. It is my intention that, throughout this process, the income threshold of €13,000 will be maintained as the general point of entry to the new amalgamated system.

A key objective of the group and of mine, as Minister for Finance, is that we do not narrow the tax base but ensure our personal taxation code is both competitive and resilient in the future. In this Finance Bill I am reducing the 2.5% USC rate to 2% and reducing the 5% rate of USC to 4.75%, with the result that the top marginal rate of tax on income up to €70,044 will fall to 48.75%. It is the fourth budget in succession in which this marginal rate has been reduced. I am also introducing a small but important increase to the ceiling of the second USC rate band, from €18,772 to €19,372. This ensures that the salary of a full-time worker on the increased minimum wage of €9.55 per hour will remain outside the higher rates of USC. Finally, I have also extended, for a further two years, the relief from the higher rates of USC which is available to medical card holders with income up to €60,000. The point at which an income earner enters into the higher 40% rate of income tax will rise next year by €750.

This will increase the entry point for single taxpayers from €33,800 to €34,550 and for married-one-earner families from €42,800 to €43,550.

I am conscious of the challenges facing small and growing businesses around the country due to the changing international environment. I am introducing two measures in this Finance Bill to support this vital and vibrant sector. First, building on the progress made in the last two budgets, I am providing for a €200 increase in the earned income credit, bringing it to €1,150 per year from 2018. This increase will be of benefit to more than 147,000 self-employed individuals generating economic activity across the country.

Second, research has shown that employee financial participation can be effective in increasing competitiveness and helping companies to attract and retain staff in a competitive labour market. This Bill, therefore, provides the details of the new key employee engagement programme announced in budget 2018, which will support small to medium enterprises in their efforts to attract and retain key employees in a competitive international labour market. This scheme will facilitate small to medium enterprises in providing key employees with a financial incentive, in the form of share options, linked to the success of the company.

In support of the climate action strategy set out in Ireland’s national mitigation plan, the Bill provides for a 0% rate of benefit-in-kind on electric vehicles. While this relief is provided for an initial period of one year, it is my intention that the zero rate will remain in place for a period, a minimum of three to five years, sufficient to incentivise the uptake of electric vehicles, EVs. A comprehensive review of benefit-in-kind on vehicles will take place in 2018 and it is expected that this review will set out proposals for longer-term benefit-in-kind relief for electric vehicles, as well as informing decisions for budget 2019 more broadly. To further support this measure I am exempting electricity used in the workplace for charging vehicles from benefit-in-kind.

I am also introducing a number of measures in support of public health. As announced in the budget I am introducing a tax on sugar-sweetened drinks in April of next year, subject to approval from the European Commission, to coincide with the introduction of a similar tax in the UK. The tax will apply to non-alcoholic, water-based and juice-based drinks that have an added sugar content of 5 g per 100 ml and above. Sugar-sweetened drinks with less than 5 g of sugar per 100 ml will be outside the scope of the tax. If the sugar content is 5 g or more but less than 8 g per 100 ml, a tax of 20 cent per litre will apply. Sugar-sweetened drinks with a sugar content of 8 g or more will have a rate of 30 cent per litre.

The introduction of a tax on sugar-sweetened drinks will contribute to the broader public health strategy to tackle obesity levels in Ireland, particularly among younger people. Since the announcement of the tax in budget 2017 there are indications that manufacturers of sugar-sweetened drinks are reformulating their products to avoid the tax. This is to be welcomed and is a sign that this measure is having a positive effect even before its introduction. I have also increased the VAT rate on sunbed sessions from 13.5% to 23% in line with the Government's national cancer strategy.

In 2011, stamp duty was reduced on non-residential property to 2% to encourage investment. It was successful and that sector in particular is recovering strongly again and it is now opportune to increase the rate to encourage our economy to focus resources elsewhere. For budget 2018, I announced an increase in the stamp duty rate for all non-residential property transactions, including agricultural land, from 2% to 6%. To encourage the development of residential homes, a refund scheme will be introduced where certain criteria are met and I will provide full details of this measure on Committee Stage. I am mindful that non-residential property includes agricultural land and of how this measure impacts on the farming community, particularly families. The Bill provides for certain measures the address this. First, as announced on budget day, I am extending consanguinity relief for another three years and I am fixing the stamp duty rate applying under that scheme at 1%. In addition I have decided the age rule for the consanguinity relief will be removed. This will be revisited again when the measure comes up for review towards the end of 2020. This means that it will be possible for all gifts and sales of farmlands to closely-related family members who do not qualify for the 100% exemption available under the young trained farmer scheme to benefit from consanguinity relief at a stamp duty rate of 1%, thereby protecting the position of succession within farm families.

I will now take Members through the Finance Bill but Deputies will appreciate that in the limited time available to me I cannot describe every single section in as much detail as I might like.

Part 1 of the Bill deals with universal social charge, income tax, corporation tax and capital gains tax. Sections 2, 3, 4 and 5 provide for the changes I have mentioned. Section 6 provides for the tapered extension of mortgage interest relief for existing recipients for three years. Section 7 deals with benefit-in-kind on electric vehicles. Section 8 inserts a new section, section 112AA, into the Taxes Consolidation Act 1997. This section provides that where an employee of a health or dental insurer or of a tied health insurance agent receives a health or dental insurance policy in the course of his or her employment, any discount received on the policy shall be a taxable emolument for the employee.

Section 10 introduces the key employee engagement programme, KEEP. Section 11 relates to the scheme for accelerated capital allowances for energy efficient equipment. The accelerated capital allowance scheme is designed to improve energy efficiency among Irish companies and sole traders and to assist Ireland in meeting its national targets. I am extending the end date of the scheme to 31 December 2020. Section 12 provides that pre-letting expenses incurred on residential premises that were vacant for 12 months or more may be allowed as a deduction against rental income from those premises. This is a time-limited relief and the relief will be clawed back if the property ceases to be let within four years.

Section 14 makes two amendments to the tax treatment of life assurance funds. The first amendment provides that where the life policy is assigned to a section 110 company which has acquired the mortgage, it will not trigger an exit tax charge. This change mirrors the treatment of the assignment of a life policy as security for a debt to a financial institution. The second amendment provides that where the life company incurs foreign tax in respect of its policyholder business, the life company may not claim double tax relief for that tax against the Irish tax arising on its non-policyholder business.

Section 15 provides for investment undertakings to supply financial statements annually to the Revenue Commissioners. It is proposed to require for the financial statements to be in iXBRL, which is a computer language that allows the presentation of financial information in a computer-readable format and which allows for more effective risk analysis by Revenue. This is in line with the format that most companies are required to use. This will be brought in on a phased basis through regulations made by the Revenue Commissioners, with my consent.

Section 16 makes a number of technical amendments to the Irish real estate fund, IREF, regime introduced by the Finance Act 2016. In line with the treatment to other pension funds, this section provides that IREFs need not operate withholding tax on payments to approved retirement funds, approved minimum retirement funds and vested personal retirement savings accounts. I also wish to flag to the House that I intend to bring forward amendments on Committee Stage regarding the five-year capital gains tax exemption for IREFs. The amendments also clarify that sub-funds may make a declaration in respect of unit holdings in other sub-funds of the same umbrella scheme and they provide for advance clearance procedures to deal with a situation where a full refund of any tax withheld would be made. The section also provides for EU Markets in Financial Instruments Directive, MiFID, regulated intermediaries to make a declaration on behalf of pension funds, charities and credit unions.

Section 17 makes a minor amendment to section 110 of the Taxes Consolidation Act 1997 to include shares that derive their value from Irish land in the definition of specified mortgages. The ability of companies which are taxed in accordance with section 110 to deduct interest against their Irish property profits was restricted in the Finance Act 2016. This section expands the type of Irish property profits to which that restriction applies.

Section 18 is a technical amendment to the loss relief provisions that apply where a company has claimed relief under the knowledge development box, KDB. It ensures that the amount of relief that can be claimed for a loss incurred in the KDB trade cannot be greater than the loss itself.

At present, the legislation restricts the amount of loss which can be offset against other income and fails to reduce the amount of the loss which can then be carried forward. A technical amendment is required to repair this unintended consequence.

Section 19 makes a number of amendments to section 76A of the Taxes Consolidation Act relating to the replacement of former Irish GAAP with current Irish GAAP accounting standards. Section 20 amends section 247 of the Taxes Consolidation Act to provide for relief for interest on a loan used to acquire, or in certain circumstances lend to, a holding company that indirectly holds ordinary shares in a trading company through one or more intermediate holding companies. Section 247 of the Taxes Consolidation Act currently provides relief for interest where the loan is applied in acquiring or lending to a holding company that holds shares directly in a trading company. The changes introduced by this section have been operated administratively by the Revenue Commissioners. The changes reflect and clarify the extent to which the administrative practice has been operated. As a result of the changes to section 247, consequential changes have been made to sections 243 and 249 also. The changes to section 249 ensure that an investing company will be deemed to recover capital where, subject to exceptions, an intermediate holding company recovers capital from another company.

Section 21 provides for the budget day announcement regarding an 80% limit on the quantum of relevant income against which capital allowances for intangible assets and any related interest expense may be deducted in a tax year. This will ensure some smoothing of corporation tax receipts over time. Sections 22, 23 and 24 provide for amendments to be made to sections 29, 626B and 980, respectively, of the Taxes Consolidation Act. These sections are being amended to address certain capital gains tax and corporation tax avoidance practices that Revenue has identified and which are being addressed in the Bill.

Section 25 proposes an amendment to section 604B of the Taxes Consolidation Act regarding relief for farm restructuring. The European Commission has introduced requirements for the publication on a central website of details of any state aid granted on or after 1 July 2016, if it exceeds certain thresholds. Currently, Revenue is not in a position to publish this information in the case of the CGT farm restructuring relief, as the existing legislation does not require the necessary information to be collected as part of tax returns in order to have it supplied to the Commission. This is being corrected by these proposed amendments to 604B.

Section 26 provides for an amendment to extend the availability of capital gains tax group relief to companies in countries with which Ireland has a double tax agreement. This amendment puts capital gains tax groups on an equal footing with loss groups and will legislate for existing Revenue practice. Section 27 provides exemptions from capital gains tax for those availing of compensation under the 2017 voluntary home owner relocation scheme administered by the OPW.

Section 28 provides for changes to section 604A of the Taxes Consolidation Act, known as the seven-year CGT relief. As I announced in budget 2018, I propose that, subject to this amendment, any eligible asset purchased in the qualifying period, which ran from 7 December 2011 to 31 December 2014, can be sold at any time between the fourth and seventh anniversary of its purchase and enjoy a full relief from CGT. Sales made before the fourth anniversary will receive no relief, while sales made after the seventh anniversary will continue to enjoy the tapering relief previously provided for. This measure will contribute to a freeing up of development land and residential properties purchased in the qualifying period, the sale of which might otherwise have been delayed until the seventh anniversary of their purchase.

Sections 29 and 64 address my budget announcement that I intend to allow the leasing of agricultural land for solar panels to be classified as qualifying agricultural activity for the purposes of specific capital acquisitions tax and capital gains tax reliefs with certain conditions. Agricultural relief from capital acquisitions tax and retirement relief from capital gains tax will be amended to allow solar panels on agricultural land to be considered qualifying assets for these reliefs. The amount of farmland that can be used for solar panels will be restricted to 50% of the total farm holding. This condition is to ensure that genuine agricultural activity will continue to be carried out on the farm, thereby maintaining the overall objective of agricultural relief in particular.

Sections 30 to 42 and Schedule 4 give effect to the tax on sugar. Section 44 gives effect to the increase in the rates of tobacco products tax. Section 46 will make two minor amendments to substitute fuels legislation introduced in the Finance Act 2016 to ensure consistency and protect the revenue base by clarifying that a relevant product is "a substitute fuel or an additive". Section 47 amends the diesel rebate scheme to ensure that a qualifying road transport operator, who is regarded as an undertaking in difficulty, is not eligible for the tax refund. This measure is to ensure compatibility with state aid guidelines. Section 48 will amend the definition of a category A and B vehicle and insert a new bodywork code definition so that the preferential rate intended for commercial vehicles will be restricted to those vehicles that are genuinely used for commercial purposes. Section 49 will ensure that the amount of VRT repaid under the export repayment scheme cannot exceed the amount of VRT originally paid on the vehicle at import.

Section 51 increases the VAT rate on sunbed services from 13.5% to 23% from 1 January 2018. Section 52 updates the VAT exemption on education services to ensure that all bona fide vocational training and retraining continues to be exempt from VAT.

Section 55 amends section 1 of the Stamp Duties Consolidation Act 1999 to give effect to a number of measures. The rate of stamp duty applicable to conveyances and transfers of non-residential property is increased from 2% to 6%. Transitional provisions apply for purchasers with binding contracts in place before budget day 11 October and where the instruments for the transfers are executed before 1 January 2018. I have already outlined the changes in relation to consanguinity relief. In relation to residential leases, the threshold above which leases are chargeable to stamp duty is increased from the current €30,000 to €40,000 per annum. This higher threshold should ensure that the vast majority of renters will not be liable to stamp duty.

Section 56 makes a number of technical amendments to the Stamp Duties Consolidation Act 1999 to align that Act with the other tax Acts in relation to the delegation of functions to Revenue officials. Section 57 provides that the Housing Agency will be exempt from stamp duty on land or buildings purchased or leased. Section 58 makes two amendments to stamp duty reliefs for young trained farmers which are designed to take account of EU state aid requirements. The first amendment places on a statutory footing the conditions that a young trained farmer must submit a business plan to Teagasc and must come within the EU Commission definition of "micro, small and medium enterprises". The second amendment allows Revenue to provide information to the Minister for Agriculture, Food and the Marine in relation to an exemption from stamp duty on leases on farmland. This information is required for compliance with EU regulations.

Pat Gallagher (Donegal, Fianna Fail)
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The Minister has exceeded his time but I estimate he will need a further five minutes. Is that agreed? Agreed.

Paschal Donohoe (Dublin Central, Fine Gael)
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I thank the Leas-Cheann Comhairle. The Companies Act 2014, which came into effect on 1 June 2015, consolidated and amended existing company law statutes. The main changes affecting the Taxes Consolidation Act 1997, the Stamp Duty Consolidation Act 1999 and the Capital Acquisitions Tax Consolidation Act 2003 related to company structures and the new streamlined procedures for the merger and division of companies. The Finance Bill also provides for updating the referencing in the Taxes Acts and the insertion of provisions in the Taxes Acts to ensure that the intended tax consequences of a merger or division under the Companies Act 2014 are provided for and do not have an unintended impact. This is addressed by means of sections 59, 60, 73,74 and 75.

Section 62 of Part 5 of the Bill provides for an amendment to section 85 of the Capital Acquisitions Tax Consolidation Act 2003. That section of that Act already provides for a CAT exemption on the inheritance of certain retirement funds to prevent a double tax charge on the same event, that is, income tax and CAT where the inheritance is taken by a child who is over 21 years of age. Section 85 now needs to be amended to remove the potential for such a double charge in the case of personal retirement savings accounts and retirement annuity accounts that were not vested on the death of the disponer after the age of 75.

Section 63 makes a number of minor amendments to the dwelling house exemption from capital acquisitions tax. The changes clarify that, first, a liability to inheritance tax will not be triggered where a donor dies within two years of making a gift to a dependent relative and, second, in the case of both gifts and inheritances, to qualify for the exemption, a property transferring to a dependent relative does not need to be the principal private residence of the disposer. This is line with policy changes made to the operation of the dwelling house exemption in last year's Finance Act.

I have described section 64 with section 29.

The final Part, Part 6, deals with miscellaneous matters. Section 66 makes a technical amendment to section 122 of the Taxes Consolidation Act, TCA, to ensure the provision operates as intended and to prevent certain tax avoidance opportunities in respect of employer-provided loans. Section 67 and Schedule 3 make minor amendments to a number of appeals-related provisions in the TCA.

Section 69 provides for a number of largely technical changes relating to the PAYE modernisation project. It is the most significant review of the PAYE system since its introduction in the 1960s and will result in a move to a real-time PAYE system from January 2019.

Section 71 introduces two amendments to the domicile levy legislation found in section 531AA of the Taxes Consolidation Act 1997. The amendments proposed ensure, first, that capital allowances and losses are not allowed as a deduction for the purpose of the world-wide income test. Second, there is a technical amendment to delete the term "final decision" from section 531AA as it conflicts with section 531AC of that Act on "Credit for income tax paid". These amendments will strengthen the legislation, thus reducing the number of domicile levy appeals and improving compliance, as well as serving to protect tax revenue.

Section 72 is the first step in the legislative procedure required to give effect in Irish law to the OECD base erosion and profit shifting, BEPS, multilateral instrument. Ireland signed the instrument on 7 June 2017 along with more than 60 other countries. The instrument provides a mechanism for countries to transpose recommendations made by the OECD BEPS project into existing bilateral tax treaties. Further legal steps will be needed before Ireland's ratification of the instrument is completed and these steps can begin once this Bill is enacted.

A small number of matters are still under consideration, which I may bring forward on Committee Stage. I will, of course, also give consideration to the suggestions put forward during our debate over the next few days and in the context of the Finance Bill process and discussions generally.

Michael McGrath (Cork South Central, Fianna Fail)
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I welcome the opportunity to contribute to the debate. It is important to recall the backdrop to the budget. Election 2016 left Dáil Éireann in an uncertain state of affairs with no clear mandate for any party to govern but it was clear that the people resolutely rejected the right-wing policies of the previous Government. They did not want tax cuts at the expense of investment in vital public services. We recognised our responsibility as a party to ensure the country was provided with a stable government and it was in this context that we negotiated the confidence and supply agreement. The agreement ensures a stable government and a 2:1 split at least between investment in public services and tax cuts. This is the second budget in which this overarching requirement has been achieved, yet the agreement is much more than a ratio between investment in public services and tax reductions as it goes much deeper than that. It is because of the agreement that changes to the USC were directed at lower and middle income earners, that pensions and other social welfare payments have been increased for the second successive year and that there will be more investment in health care, in particular, mental health, an area deprived of much attention for many years.

Yet again, the agreement has made this budget a fairer and more progressive one. It is by no means a perfect budget and many of the changes are only incremental and certainly modest but without the influence of Fianna Fáil, it would not have been as progressive.

However, there are fundamental challenges that demand delivery and not spin. Before turning to the tax measures in the legislation, it has to be pointed out that under the watch of both this Government and the previous one, the crises in housing and health care continue to worsen. Almost 700,000 patients are on some form of hospital waiting list and more than 8,000 people are homeless, including over 3,000 children. These statistics are a stain on our society but behind them are real people who are still failing to experience the economic recovery that we all welcome. The Government has consistently published report after report and press release after press release on housing, yet there has been previous little action on the ground. There has been a blatant lack of attention on social and affordable housing. We welcome the moves on social housing in the budget but they will not make up for the damage done by decisions made in the past. We do not need another report; we need more action in respect of the delivery of social and affordable housing throughout the country. We also welcome the €55 million increase for the National Treatment Purchase Fund, NTPF, in the health sector to reduce waiting lists. When the confidence and supply agreement was being negotiated, this measure was opposed but it now seems to be the centrepiece of the health care strategy.

The headline figures for the economy are positive. Economic growth is up and unemployment is down. GDP increased by 5.2% last year and it is expected to increase by 4.3% this year and 3.5% next year. While these figure are undoubtedly positive, they must be treated with a degree of caution. They can obscure the many serious issues people face in their daily lives, they can obscure the issues I mentioned in housing and health and they can obscure the still-pervasive mortgage arrears crisis while the prospect of a hard Brexit hangs over us. On the fiscal side, it is vital that we meet the medium-term objective in 2018. It is not legally required but it is the right thing to do. We need our finances to be on a stable footing into the future.

I turn to the announcements on budget day, which are reflected in the Bill. On income tax, we welcome the increase in the tax band for individuals earning more than €33,800 and commensurate with that single income families on a higher level. However, we only welcome it in the context of reductions in the USC which will be directed at lower and middle-income earners. This is consistent with the confidence and supply agreement and this is what we stuck to during the negotiations. It would have been unpalatable for us as a party if the tax reductions were solely focused on increasing the entry point to the higher tax rate. While increasing the entry point will only affect those earning more than €33,800, in contrast the cuts to the USC will affect more than 1.8 people earning more than €13,000 per annum. Though the measures are certainly modest, cutting the 2.5% and 5% rates of USC is the fairest option to take. Through them, we have ensured the budget will be far more progressive than it otherwise would have been. Taken with last year's reductions in tax, the effect on people's disposable income will be significant. While some may scoff at the weekly gain from them, I assure the House it is not insignificant for many. For a family facing higher rents and insurance and child care costs, the combined effect of the tax reductions will be a modest help, but a help nonetheless. There are those who argue there should be no tax cuts at all but I remind the House that in 2007 some 2.156 million workers paid €13.6 billion in income tax while in 2017 some 2.063 million workers will pay more than €20 billion. Therefore, 100,000 fewer workers are paying €6.6 billion more in income tax now. It is clear that income tax payers need sustainable and progressive relief from the burden placed on them during the economic crisis and the necessary budgetary correction that occurred over the past number of years. Some people argue that the higher paid should pay even higher taxes but Ireland has one of the most progressive income tax systems in Europe and the OECD. This is as it should be. People who earn more should contribute more but applying more taxes to individuals earning in excess of a threshold of, say, €100,000, which is often quoted, would only serve to discourage investment and job creation. Colleagues should not take our word for that; they should take the word of those who are marketing Ireland as a destination for further investment.

At a time when we face a crisis in our health service, penalising medical staff with highly sought-after specialised skills will only compound the problems we face in that sector. Tax hikes would cripple any chance of attracting more foreign direct investment and attracting and retaining key personnel across important sectors of our economy.

I am glad that we have seen movement in this budget on the home carer tax credit. This will impact on nearly 81,000 households. Caring for a loved one, as thousands of stay-at-home parents and carers who care for people with disabilities or infirmities choose to do, is a key part of any functioning and just society. It is only right that we reward these people for the vital role they play. Again, I call on Revenue to undertake some form of awareness campaign to bring this tax credit to the attention of the many people who I believe are entitled to it but who are not claiming it.

We welcome the improvement in respect of the earned income tax credit. While it is disappointing that it was not fully equalised with the PAYE tax credit, it is moving in the right direction nonetheless and will impact on nearly 150,000 self-employed workers throughout the country. It cannot be right that, on the one hand, we want to encourage enterprise and job creation yet, on the other, we tax the self-employed unfairly. We must work over the coming years to fully equalise the taxation treatment of the self-employed with that of PAYE workers. This is an objective to which I commit our party.

Similarly, we are encouraged by the introduction of the key employee engagement programme, KEEP, a share-based remuneration scheme, in the budget. If set up correctly, this scheme will enable smaller companies in particular to retain key employees who are essential for them to grow. We hope this scheme will be given approval under state aid rules and can be set up speedily in order that companies might participate in it. The Minister might provide an update on the state aid approval process and on when this measure will become operational.

We are disappointed that there has been no move on the CGT lifetime limit for entrepreneurs, particularly in the context of Brexit. This is potentially a vital tax relief to encourage enterprise and growth in our economy, particularly in areas of highly mobile investment, and it will have to be addressed in upcoming budgets. Similar entrepreneurs in the UK can earn up to £10 million over their lifetimes and be taxed at 10%, while the threshold here remains at €1 million.

We welcome the continuation of mortgage interest relief, albeit at a tapered rate. Mortgage arrears continue to be a major issue, with nearly 32,000 families in arrears of more than two years. For them and others like them, there is little light at the end of the tunnel. Ultimately, this will lead to more court proceedings and more repossessions unless we continue to reform the process of dealing with mortgage arrears and tilt the balance in favour of those who are trying hard to keep their family homes.

As we know, the mortgage-to-rent scheme has been woefully inadequate in dealing with this crisis to date, with fewer than 300 cases completed. Tomorrow morning, at a meeting of the Joint Committee on Justice and Equality, I will introduce for legislative scrutiny a Fianna Fáil Bill that aims to tackle serious mortgage arrears cases. The Bill passed Second Stage and is now commencing scrutiny. I urge everyone in the House to get behind the Bill, which, essentially, would remove the bank veto in cases involving principle dwelling homes or family mortgages.

It was in this context that Fianna Fáil committed in the lead-up to last year’s election to extend mortgage interest relief beyond its current end date of December 2017. Due to our influence, we secured that measure in the confidence and supply agreement, resulting in this budgetary measure whereby the relief will be extended, albeit on a tapered basis, for a further period of three years rather than ending overnight at the end of this year, which is the existing legal position. As we know, mortgage interest relief provides tax relief at source to people who purchased their homes between 2004 and 2012 when house prices had peaked. These are the people who are most likely to be still affected by negative equity, where the loan outstanding exceeds the value of the house or apartment. These people cannot move to a more sustainable solution by moving to a more affordable home because they are trapped. The average annual relief to each of the near 300,000 mortgage accounts is approximately €600 currently. I welcome that it will not end completely at the end of 2017.

The bedrock of our industrial policy is our competitive corporation tax regime. Not only do we have the exceptionally competitive 12.5% rate but we also have the research and development tax credit and the knowledge development box. Currently, foreign multinational companies employ approximately 200,000 people in Ireland. This is altogether aside from the indirect jobs created in domestic companies that rely on multinational business to grow and prosper. In recent times, there has been increased focus on our corporation tax regime from both Europe and the US. On the one hand, we see many countries, including the UK, reducing their rates, with others such as the US promising to do so. On the other hand, we have seen the revival of the common consolidated corporate tax base proposal from the European Union. This proposal would harmonise corporation tax throughout the European Union and, if implemented, will serve to narrow our base. Fianna Fáil resolutely opposes any such move from Europe and Ireland needs to be very clear that, under the Lisbon treaty, corporation tax policy is the competence of sovereign member states.

We must continue with the BEPS programme that we signed up to through the OECD and we must work with our European partners in a constructive and positive way to make corporation tax policy throughout Europe more transparent. In this context, Fianna Fáil welcomes the publication of the Coffey report. This is an extensive report on a highly complex area of tax and Fianna Fáil welcomes the public consultation exercise now under way in respect of a number of the recommendations made by Mr. Coffey. We look forward to contributing to the debate on these issues. The Minister announced in the budget a move to limit the amount of income that can be offset by capital allowances on intangible assets and we welcome those proposals. Provision for this is made in the Bill. The global corporation tax environment is changing rapidly and, as I have outlined, our tax policy is being challenged in a variety of ways. We must continue as a country to be ahead of the game. We cannot afford to take a back seat and watch these changes unfold. We must play an active role on the world stage, in Europe and in the OECD.

Brexit is the single biggest threat facing Ireland, both economically and politically. Economically, we have all seen the depreciation of sterling against the euro and how this is making Irish goods more expensive relative to British goods. This issue is particularly acute in the Border region already and has manifested in online shopping. The fall in the value of sterling has already had a notable impact on the tourism sector. While overall tourism numbers are up, the number of those travelling from the UK is down. UK tourists are spending less time and less money here. We agree with the decision to maintain the lower 9% VAT rate for the tourism and hospitality sector. While the tourism sector appears very strong in Dublin, in many other parts of the country it is nowhere near as strong.

I want to make it clear that Fianna Fáil resolutely opposes any return to a hard border between the North and the Republic. We have consistently held this position since the Brexit vote despite what some Members and, indeed, individuals in our own party and others might say. While it is ultimately a decision for the UK, we still believe it is in the best interests of all concerned that the UK remains within the customs union. While this may not turn out to be the case, we all must work to avoid a hard Brexit. A reversion to WTO rules would spell disaster for Ireland, particularly for the agrifood sector where tariffs of up to 40% could be charged on our exports. We need a detailed sector-by-sector analysis and we must not shy away from considering the implications of a hard Brexit, which we do not want to see happen, but this is by no means an unlikely outcome and we must be prepared for it. The Taoiseach argues that this will serve only to be a self-fulfilling prophecy. We heard no such argument when the Department of Finance undertook a sectoral analysis of the economy and the impacts of Brexit on it. I heard no such argument when the ESRI published its analysis of what a hard Brexit might look like. Indeed, I recall debating these issues openly with the previous Minister for Finance on how Revenue was preparing for Brexit. These were and are important reports. They have influenced the debate on Brexit and how we respond to it. Simply put, I cannot see how withholding reports that have already been completed informs the debate on Brexit. We believe Northern Ireland should be designated a special economic zone and that state aid rules should be relaxed in certain areas and sectors most affected by Brexit. In that light, we welcome the setting up of a Brexit lending fund for SMEs and we hope it is approved on state aid grounds by the European Commission.

The key revenue raising measure in this budget is the increase in non-residential stamp duty from 2% to 6%. This measure was not outlined in the confidence and supply agreement and broadly Fianna Fáil is in favour of it. It certainly can be argued that the commercial construction sector is growing at an exceptional pace and it is directing scarce and vital resources away from the residential construction sector to build and provide the homes we need for our people. However, the proposal raises concerns. First and foremost is the estimated extra revenue from this measure in 2018. It is expected that €376 million will be received through this measure. The budget is based on this premise. This estimate is based on 2016 and 2017 values and volumes and if they do not perform to the same level the Exchequer may be left short in 2018. It is a risk which has to be highlighted. Another concern is its effect on the agricultural sector and I welcome the moves the Minister has made in this regard, particularly the changes to the consanguinity relief.

Housing is the most acute issue facing our society. The increase in house prices and rents is pushing more and more people into emergency accommodation. House prices have increased by over 12% in the past 12 months and rents have increased by close to 12%. The State needs to step in. We welcome the extra funding for social housing but it does not go far enough. Social housing provision was gutted in recent years and there is a long way to go before it can be fully restored.

We welcome the new fund which is being established and which we debated earlier during Oral Questions to the Minister for Finance for the provision of debt finance to the private sector for the construction of new homes. That is an important measure. We have consistently called for the establishment of a vacant site tax, a tax on vacant property will tend to lower the price of that property and make it more affordable for residential development. We hope the measures announced in the budget will tackle the land hoarding issue. There is a lot more work to be done in that regard and we will discuss it on Committee Stage.

The moves on sugar tax for soft drinks and an increase in tax on tobacco are positive, as is the increase in VAT on sunbeds. The Minister did mention EU state aid approval for the sugar tax. Given that the deadline is quite tight for implementing this measure, he might update the House on that issue and say what stage that approval process is at. There are positive initiatives in this Finance Bill on electric vehicles and changing the taxation treatment from a benefit-in-kind, BIK, perspective. We very much welcome that.

Fianna Fáil will stand by the commitments we made in the confidence and supply agreement. We did that last year and we intend to do the same this year but we will engage in robust debate throughout the course of this Bill and we will bring forward proposals on it. The agreement has made this budget a fairer and more progressive one. What we need on the key issues facing our society now is action, particularly on housing and health. I look forward on Committee Stage to going into a detailed section-by-section analysis of the measures set out in the Finance Bill 2017 and will contribute as positively as I can to that debate.

Pearse Doherty (Donegal, Sinn Fein)
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Tá mé sásta labhairt ar an Bhille seo anocht. Sílim go bhfuil an Bille seo lochtach mar gheall ar an dearcadh atá ag an Rialtas agus ag Fianna Fáil, atá ag tabhairt tacaíocht don Rialtas an Bille Airgeadais seo a thabhairt fríd na Tithe. Is é an dearcadh sin ná go bhfuil sé ceart agus cóir go mbeadh muid ag gearradh na céadta milliún euro i gcánacha agus géarchéim mhillteanach os ár gcomhair ó thaobh tithíochta de, agus daoine gan tithe, agus ó thaobh chúrsaí sláinte de, agus othair ina luí ar thralaithe agus othair ann nach bhfuil ábalta fáil isteach chuig na hoispidéil agus iad ar liosta feithimh fada. Sin an fáth nach mbeidh ár bpáirtí ag tabhairt tacaíocht don Bhille Airgeadais seo i mbliana.

The Finance Bill, like the budget, is deeply flawed. The fixation on personal tax cuts at a time of crisis in our public services is inexcusable. I heard Deputy Michael McGrath talk about the level of personal income tax we are paying compared with 2007 and I am not sure whether he wants us to return to the unsustainable period of 2007, the boom and bust where his party year after year supported cuts to personal taxation and drove this economy into the ground. We all know this. It is not distant memory, it is real for many families who still have loved ones in different parts of the world as a result of that party's stewardship of the economy at that time. I really fear that this Minister is doing the same again. He is doing it at the expense of public services which are crying out for investment in areas such as health and housing. It is no good coming into this Chamber and saying we want a budget that will support investment in housing and health and deciding to strip away resources worth hundreds of millions of euro with cuts to income tax and universal social charge, USC.

That USC and income tax cuts of €335 million are being made at a time when we have a housing emergency and a health service that is creaking at the seams is inexcusable. My party is opposed to this Bill as it implements a budget that is not good enough for the country in 2018. The main part of the budget as far as the Government is concerned is the cuts in personal tax. The same Government Deputies will come in here at Christmas when people are freezing on our streets or our hospitals have crashed under the winter pressure and they will decry the crises and call for action. I ask all those Fianna Fáil, Fine Gael and Independent Deputies to leave their crocodile tears at the front gate when those days come, as they inevitably will. By supporting this budget and this Finance Bill, with its tax cuts, they are making those days inevitable. Let us be clear on that at least, passing this Finance Bill means no new houses additional to those promised by the former Minister for Housing, Planning, Community and Local Government, Deputy Coveney, over a year ago. It also means a real cut to the health service when inflation, demographic pressures and other issues are taken into account.

The Finance Bill is about the details but we cannot divorce it from the big choices that it represents. Even in terms of the details it fails and there are major omissions and gaps that need to be addressed. We often talk about loopholes in Finance Bills. For me it is not a loophole, it is a policy choice. As I said on budget night, one of the flagship announcements, the crackdown on multinationals that have onshored intellectual property worth hundreds of billions of euro here over recent years, using these as write-offs against their profits, is flawed. The result of the change is that a multinational is no longer able to completely wipe out its company's tax liability. However, as drafted, the Finance Bill would apply this cap only to assets onshored from 11 October this year. That means the hundreds of billions of euro transferred here in recent years, especially in 2015, can be still be used by companies to potentially neutralise their entire corporation tax bill.

This is totally unacceptable and in this regard I welcome the recent comment from Mr. Seamus Coffey, the author of the report produced on behalf of the Government. He asks why the Government's new cap on the write-down of intangible assets should not apply to all assets, as opposed to the Government's proposal, which "grandfathers" the new measure, meaning that the 80% cap will apply only to intangible assets acquired post-budget. Due to the proposed cap's not applying to all intangible assets, the State could be missing out on a huge amount of corporate tax revenue, which might not materialise in the future.

Mr. Seamus Coffey notes that if the cap applied to all claims, existing and new, then the additional corporation tax to be collected in 2018 could be up to €1 billion using the 2015 figure published by the Revenue Commissioners and estimates from that time used by the Department of Finance, as opposed to the €150 million that the Government expects to raise through the grandfathered measure. If we applied it to all intangible assets we would be talking about €1 billion of additional taxation and would that not be nice to have to try to address the concerns and problems we have in health, education, housing and homelessness and other areas? We are paying for these onshored assets because they count towards our gross national income, GNI, which is pushing up our EU contribution. We are letting these companies pay no tax through their intangible asset write-downs and the State is picking up the tab by way of increased contributions to the EU budget due to the tax-free earnings many of these companies have from intangible assets. The State is making payments of approximately €200 million per annum to the EU budget as a result of this gross income which makes no contribution to Ireland's national budget.

Over a ten-year period, this led to payments to the EU of approximately €2 billion as a result of those intangible onshore assets. However, tax will not be applied in this instance because the provision only applies post-11 October. That is wrong.

The Government needs to amend its proposal to include all intangible assets in order to safeguard our tax base and ensure that the State is not unnecessarily picking up the tab for increased EU budget contributions relating to tax-free multinational corporation activities. That is not a loophole. It is a deliberate policy choice on the part of the Government. The same was true when the double Irish was phased out but companies using it can carry on doing so until 2020. Let us do the job right first time around. Of course, what we are doing is reversing a past Fine Gael decision brought in because the double Irish was being closed down.

There was dismay among the farming community and farm organisations on foot of the Government's proposal to triple to 6% the rate of stamp duty on farmland, despite the assurances of the Minister for Agriculture, Food and the Marine that the increased rate would not apply to farmland after the budget. We need to question how the Minister came to that conclusion. Was he given an assurance by the Minister for Finance or did he just not understand it? Sinn Féin supported an amendment tabled by Deputy Fitzmaurice in an attempt to amend the Government's proposal but Fianna Fáil abstained when the matter was put to a vote. As a result, this measure came into effect on budget night.

Michael McGrath (Cork South Central, Fianna Fail)
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There was no vote.

Pearse Doherty (Donegal, Sinn Fein)
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There was a vote. There was a vote on budget night. Deputy Michael McGrath was on RTE that night. There was a vote on budget night to pass the Government's resolution which nullified the amendment tabled by Deputy Fitzmaurice. This hung farmers out to dry and Fianna Fáil Deputies sat on their hands as that went through and decided not to vote with Deputy Fitzmaurice.

The Government is now trying to cover up its mistake by eliminating the cap that limits certain reliefs to those under the age of 67. However, the Government's incompetence continues because this would negate the original purpose of the Government's measure, which was to incentivise the early lifetime transfer of land to the next generation and to encourage young farmers to extend their holdings. The Finance Bill needs to be amended in order to ensure that working farmland is not subject to stamp duty at 6% in situations where the reliefs in place do not apply. We all know that taxation can do two things, namely, it can lead to behavioural change and introduce additional revenue. Sometimes we do it for both reasons and at others we do it for one or other of the reasons. However, we need to incentivise and encourage farmers to be economically viable. In some cases, that requires them increasing their land holdings.

The implementation of the transition period in this Bill raises more questions. There is confusion among farmers involved in sales. They are told they will not be charged 6% but that was the law passed before midnight on budget day. I mentioned a particular case to the Minister and, in fairness, he has asked me to provide the details to him. The problem is that the law of the land states that 6% is applicable and that the individual has four weeks to make the transaction. The Finance Bill will rectify that but it will be weeks before it is passed. Individuals who went to the bank and took out hundreds of thousands of euro to purchase and to pay the stamp duty simply do not have the money to pay an additional 4%. We need to rectify that as quickly as possible. As the banking inquiry highlighted, commercial real estate was one of the major causes of the banking crash. For that reason, it needs to be monitored and taxed appropriately and that is why we support the principle of an increase in commercial stamp duty. Indeed, it is something for which we called not just in this budget but last year as well. I am concerned, though, that simply multiplying by three the expected revenue will not result in the full potential being reached. We will measure that as we go along.

Another measure in need of amendment is the bringing forward of the seven-year CGT exemption, which is a stroke that will mainly benefit auctioneers and speculators. The Government is moving forward the cash-in date for land and property to be sold CGT-free without any guarantee of any effect on housing supply. The measure needs to be limited to land. Why would we allow them to cash in on commercial properties that were bought during this period and that will be sold next year in any event? Why would we allow them to avoid paying over 30% CGT? This should apply only to land, not property, and it should only be land that is suitable for residential development. By allowing landowners to cash in on this land and property years early, the Finance Bill is creating a bonanza for certain speculators. We discussed how it is the €5 budget but certain individuals who were planning to sell major commercial buildings next year did not get €5, they got millions of euro as a result of not having to pay any CGT. Furthermore, this proposal is not relevant to the vulture funds that have bought up huge amounts of prime development land in the State. That is because the seven-year CGT exemption does not apply to such funds. The international funds that have been buying up land were never liable for CGT. This was used as the new pin-up for the construction industry by the Fianna Fáil spokesperson, Deputy Cowen, as a way of trying to get this bonanza for speculators and developers. The reality is that vulture funds do not pay CGT so they will be completely unaffected by this move because of the way they structure the companies that purchase these assets.

The Finance Bill is missing the wood for the trees. The real flaw is the five-year exemption for funds that was introduced last year. Even Department of Finance officials have said that this measure is clogging up the market, yet there was no reference to this rule on budget day when the announcements were being made. I note, however, that the Minister has flagged an amendment to the Finance Bill. We need to see whether that amendment will go to the heart of this issue. I fear that some misguided commentary by Fianna Fáil has focused too much attention on the seven-year rule. The reality is that it is the five-year CGT rule that is really clogging up the markets. If we look at the basis for Fianna Fáil arguing for ending the seven-year CGT rule in respect of all properties, not just land, we can see that it talked about the NAMA internal memo but that memo shows that only 20% of the land the agency sold was in the timeframe eligible for the exemption. The other 80% fell outside the relief. In particular, the relief was not available when sales really ramped up from 2015 onward, as revealed in a NAMA internal memo. NAMA's sale of land really took off from 2015, with the potential delivery capacity from the land that NAMA sold of 37,892 residential units or 75% of the total residential delivery capacity from land sales by NAMA. They were not sold within that window of opportunity in respect of the CGT exemption so why are they still hoarding them? As a result of last year's Finance Bill, there is now an incentive for these funds to hold on and not sell until 2020, 2021 or 2022 because they are counting down the clock on the five-year dividend withholding tax exemption so that they can get out of Dodge, tax free. The Government needs to immediately end this tax break for vulture funds and amend the seven-year CGT rule so that it only applies to land, not property, and land that is designated for residential development.

I am disappointed that there are no proposed changes to the research and development tax credit. The research and development tax credit is currently out of control. It increased drastically from €224 million in 2010 to €708 million in 2015, while the number of claimants is decreasing. On budget day last year, the Government published recommendations, none of which has been implemented. The research and development tax credit serves a useful purpose. Its aim is to stimulate the use of research and development activity across the State, which is welcome. However, the credit is currently out of control. It has increased sharply over the space of five years while the number of companies in receipt of the credit is decreasing. Ten companies are currently claiming two thirds worth of this credit - €460 million. In terms of helping smaller companies develop and grow, it is clearly failing. This raises significant questions about the accessibility and suitability of such opportunities for our smaller companies that could utilise such funding to develop and grow. It was revealed to me on foot of a freedom of information request earlier this month that concerns have been raised within the Department of Finance that companies are inflating the amount of research and development they are engaging in when claiming the credit. It is clear that urgent action needs to be taken to protect the Exchequer from this out-of-control tax credit. This is basically what the report the Government published last year called for. The Finance Bill must be amended to restructure the credit to ensure that it is targeted at areas most in need of with special priority given to smaller companies undertaking actual research and development. Companies found to be exploiting the credit must be rooted out and limits for claim amounts, as suggested from Department of Finance correspondence, need to be introduced.

This would reduce the overall cost of the credit while ensuring smaller companies get a fair share.

One measure I welcome is the exemption from the benefit-in-kind, BIK, charge for electric cars and vans that are provided to employees and the exemption from BIK on electricity used in the workplace for charging vehicles. However, the measure does not go far enough to promote electric vehicles as it is only directed at employees who get a car through work. In our alternative budget we proposed to raise the Sustainable Energy Authority of Ireland, SEAI, grant for electric vehicles by €1,000 per band to encourage greater uptake in people using electric vehicles.

I welcome the proposed changes to the domicile levy, which may have an impact on the appeals to the domicile levy. I also welcome the clarification that worldwide income for the purposes of the levy is income before deducting capital allowances and losses. However, I am still surprised the levy only raised €2.3 million in 2015. I hope we can work together in the finance committee to ensure it brings in more revenue to the State.

The Finance Bill does not include measures to introduce a VAT refund scheme for charities, which was announced on budget day. It strikes me as unusual and I seek clarification from the Minister as it is my understanding that charities should begin to prepare a claim in 2018 for payment in 2019. It seems logical that the rules and details would be laid out in the Finance Bill. I seek reassurances that the lack of detail does not imply a lack of action.

On the sugar-sweetened drinks tax, sections 30 to 42, inclusive, of the Bill contain the required legislative provisions and are subject to a commencement order. I strongly support this measure and look forward to teasing out the details. I hope some day in future we will be able to delete this from the finance legislation because it will have done its job.

The decision not to make any changes to the help-to-buy scheme amounts to another €40 million going straight into the pockets of developers. It is a baffling decision. It is one that will cost tens of millions on a bad idea. I am weary of the Government trying to justify demand-side solutions to a supply-side problem because the €40 million being spent on the help-to-buy scheme could build 836 houses. Which is better value?

I have touched on what is missing from the budget in the likes of the help-to-buy scheme and the changes to the research and development tax credit system but there are many other noticeable absences. What about our friends in the banking sector? There are no increases in their levy. They have tax-free status for another two decades. How does the Government stand over AIB and Permanent TSB not paying a penny of corporation tax for two decades? We are told the Government is now considering all of this. Why is that? It is because the media have forced it to. They have raised the issue to such a level that there is now a judgment in political circles that it would be damaging electorally for the Government not to start making some noises about the issue. I look forward to teasing out, as we do every year with the Finance Bill, why the Government is allowing some of the most profitable banks in Europe to go without paying any corporation tax.

I note the introduction of the KEEP scheme and will tease out the details at committee level. I am disappointed there has been intense lobbying which has scared the Government from increasing VAT on hotels and betting for another year. The right thing to do would have been to increase VAT on the hotel sector and retain it for the other parts of the tourism sector. I am sure we will be back at this next year.

We reject the Bill because we are in favour of having a functioning health system and we believe people have the right to a home. The Sinn Féin alternative would have delivered relief for those who needed it most but would have unashamedly championed public services over tax cuts. It would not open up huge gaps and breaks in the tax system to benefit those who need them least. This is a bad Finance Bill not just for its tax cutting agenda at a time of crisis but also because it leaves out the big changes needed to make our tax system fairer.

Earlier today, the Minister for Foreign Affairs and Trade, on behalf of the Taoiseach, told us the State chose not to provide the €1 million necessary to fund necessary research into sexual violence. That is €1 million not available yet the Finance Bill cuts €335 million of taxes. We know where the Minister's priorities and those of Fianna Fáil lie.

Joan Burton (Dublin West, Labour)
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I said on budget day it was much ado about nothing because it is a very modest budget. People will be relieved that taxes are not rising. At the same time, the tax increases that have been brought in, while welcome by individuals, make very little difference in the greater scheme of things. I do not know if the Minister has read the ESRI analysis which contains a verdict that by the end of 2018 the effect of the budget will be to lead to small losses in income at all levels because it fails to index bands and allowances and gives quite small levels of taxation. I will take the Fianna Fáil argument for its budgets of 2009 and 2010, which it claimed were progressive, as an example. They were progressive in the mechanical and mathematical sense that when one makes 330,000 people unemployed, they lose their earned income and most, if not all of them, go on social welfare. They then move down to a social welfare income. Therefore, in Fianna Fáil's mathematical model, 330,000 people losing their job results in a progressive budget. Try telling that to the poor Greeks and those in other countries. The ESRI analysis of the budget is very important. I am glad about the social welfare increases for 2018, which follow on from the increases in 2016 and 2017.

In terms of tax justice as a concept, what we want is a balance in taxation that results in a tax system that is effective, fair and sufficient to achieve the tax levels necessary for the kind of investment and service levels that we want to see, particularly in health, housing, education and social protection. In social protection, we need pay related social insurance sufficient to continue to fund adequate pensions in retirement. The recent Social Insurance Fund report that was only published last week - I am not quite sure what the delay in publishing it was - and which was carried out by KPMG, tells the story that we cannot continue to fund the Social Insurance Fund in a way that will meet people's pension and retirement expectations unless we ensure it is sufficiently funded. The Minister will know as a former Government colleague that, as Minister for Social Protection, I fought very strongly to successfully resist the demands the troika imposed on Ireland in terms of the social welfare cuts it wanted at the outset. When I met the troika and others, including some people from the Minister's Department, everybody wanted cuts in the weekly rate of pension payments to pensioners. I am happy to say I resisted it and my colleagues in that Government supported me. There were no cuts to the core weekly payment whereas under Fianna Fáil, the core weekly payment was cut in two tranches by €16.40 a week for all payments, including unemployment, disability, carers and blind pension payments. They are cuts that even at this point in time, notwithstanding Fianna Fáil support through the confidence and supply arrangements, are yet to be fully restored. The critical problem that the previous Government and I faced was that by the time Fianna Fáil left office, there was a hole in the Social Insurance Fund that amounted to €2.8 billion. By the time that Government left office, it was back in surplus to the tune of about €200 million. The Minister might confirm that this year, the surplus will be somewhere in the region of €1 billion. Next year it could possibly double if employment and growth levels continue as we expect.

Every year that I was Minister for Social Protection, I had to find an extra €200 million to fund the new pensioners coming into the system. The actuarial report on the Social Insurance Fund shows that figure rising to €220 million per year. It is a big burden and a large amount for any Minister for Finance to find. It is so important to social cohesion in Ireland that, collectively, all the parties in this House should contribute to maintaining a very solid pension system whereby the people working in this generation fund the retirement pensions of the people in retirement and, in turn, the later generations working will fund the pensions of the people currently paying into the system when they retire. It is only possible to do that if the funding is maintained at an adequate level.

We will get an opportunity to discuss this on Committee Stage. The Bill makes a number of proposals on taxpayer information and the information that can be obtained from employers in respect of their payment of PAYE, PRSI and so on. I would be very confident that this will subject to the appropriate data protection requirements which may arise. It is also to allow us to work towards what is sometimes called a real-time system of information and data.

I want to make one plea to the Minister. He should not go down the road of the UK system of universal credits. When I was Minister, I looked not only at the UK system, which in a lot of its manifestations is pretty cruel on people on social welfare, but also at the systems in Sweden, Norway and Austria. Universal credit has all but broken the British social welfare model, which dates back to the 1930s and 1940s, because, particularly for people on very low incomes, universal credit simply cannot be dealt with in a sufficiently timely way in order to prevent depriving people on very low incomes of stoppages in their payments for six weeks, eight weeks or even longer at a time. The UK Minister responsible for this has been doing it on a trial basis. The outcome of the trial has been extremely disappointing. If people in the Department of Finance are considering offering the British model in Ireland, I would seriously caution that we should not do it. I accept that it would be very desirable to move to an IT system with real-time information. We have a very strong legislative underpinning of social welfare entitlements. For people who qualify, either by contribution or based on a means assessment, we can then deal with them directly. The UK is trying to combine the tax and social insurance systems and this is resulting in the people at the bottom of the ladder losing out in a very worrying way.

In the North of Ireland, social welfare payments are significantly lower than in the Republic. If people in the UK have additional accommodation, charges are levied through the bedroom tax. The impact of this can be extremely cruel. I would like an assurance from the Minister that all the parties in the Dáil would work to maintain the Irish system and the funding relating to it, and not go down the road the UK has chosen. Most UK politicians of any party will say that they wish they never did this because they have damaged their system in such a way that if it is repairable, such repair will take decades.

I welcome the move to get more information to taxpayers on a real-time basis and the other improvements in the system and records which hopefully will also make it easier for employers to deal with.

I raised the banks' tax losses with the Minister last year, as I have done on many occasions. The reason the tax losses of the banks are now relevant is that the banks are now making profits. When companies are making losses, nobody is interested in tax losses because they have no taxable income. Now that we have banks with significant taxable income, I recommend to the Minister a system I suggested to the late Brian Lenihan when he was Minister for Finance and which he accepted, namely, to provide for a minimum effective corporation tax rate or to restrict the use of the losses. Losses have a legitimate function where companies lose for a couple of years but then get back into profitability. However, the level of losses built up by the banks in Ireland is extraordinary. The Revenue Commissioners gave me details of this, which I published almost two years ago. We again need to get agreement that it is wrong that a bank could make €700 million in profit but end up - here and now, when the country needs resources - making no contribution in corporation tax. I think that is folly. It is a slightly academic argument when banks are losing money and, therefore, have no taxable profits in any event. However, once they come into profit, these losses potentially mean that they can wipe out their tax bills for many years. That is unfair on ordinary taxpayers, including ordinary business taxpayers who never got the kind of bailout afforded to the banks. Irish taxpayers, including public servants, paid dearly in contributing to that bailout. The banks may have factored this in as a form of off-balance-sheet asset. We will get an opportunity to discuss this more on Committee Stage and there are several ways of doing it. We should introduce a minimum effective tax rate or limit the amount of losses banks can use in any one year.

On the banks and the tracker scandal, when the Governor of the Central Bank, Professor Lane, appeared before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach, to some extent he put his hands up and said, "What can I do?" There is a divided responsibility there. On the one hand, there is the need to try to have functioning banks for a vibrant economy. On the other hand, the banks have not bothered to deny that they have treated people in a very harsh and despicable way at a time when individuals have been incredibly vulnerable and terrified, particularly of losing their family homes. Pretty well all the banks have behaved in the same way. I acknowledge that AIB was probably the first to provide a specific unit and, therefore, that it has addressed far more cases than any of the other institutions. Perhaps that is because it is publicly-owned. The European Central Bank may need to examine this matter.

It does not have a direct responsibility but confidence in the banking system is a function of fairness and equity in the system. It is not to be subject to a cartel of seven, eight, ten, 11 or 12 banks acting together in an extremely onerous manner towards ordinary customers of the banks. We also know that the interest rates charged by the Irish banks are very high. The Minister might be able to explain why they should be as high. By and large, they are one to three points higher than their European equivalents. For hard-pressed families and businesses, that is an enormous extra premium and charge they have to pay in this country. The Irish authorities may be able to deal with some of this but we now have European supervision of banks and it may require the European supervisory authorities to come in and examine what has happened. Within the Irish banking system traditionally, consumer protection and information have been bottom of the list in terms of the objectives of the banking system. Given the scandal that has happened and the suffering experienced by many people with some having lost their homes and businesses - the Minister suggested in his conversations with the banks' executives that they should have made the principal repayments of the excess payments people made by Christmas - I believe there will also have to be some redress for what people have suffered. The banks are experts at long-fingering everything. The Minister must set them a timeline and a specific objective for what they have to do. The banks were happy to have their hand out when they crashed and to take every cent that the taxpayer had to offer, but they are like the person who lends one an umbrella on a sunny day but the umbrella vanishes when the rain comes down. That is the way they act. There was a term always in use in America regarding the banks, that the people in banking on Wall Street used to characterise themselves as the masters of the universe. We have a set of bankers in Ireland who see themselves as masters of this particular universe-island of Ireland. It is not good enough. I encourage the Minister, in every way, to sort them out. If the Department, the Central Bank or Minister do not seek to influence them now that the economy is in recovery - much of this was different when things were very bleak and black and the banks were trying to get out of the hole they had put themselves into - and if we do not get a handle on this, it is not impossible that it could come to pass that they would drive us all into the ground again. They have to understand that they cannot treat people, citizens of this country and their customers with the kind of disdain that they do. I also believe it will help us to sort the issue of restrictive credit that is choking off and stopping an adequate supply of new housing coming forward. We also have to address the interest rates in that regard.

Notwithstanding the developments with the house building agency, we also have to find better mechanisms to encourage more local authorities to build social housing at a rate much faster than that to which they have currently committed. We need to consider as a matter of urgency the question of how we tax land. I have no difficulty in the reduction in the seven-year period to encourage more land supply. In the context of where we are at, that is certainly worthwhile. We will have to examine the issue of the taxation of land. In my constituency one does not get much in the line of a three or four-bedroom house below €400,000 - that is the price for a three-bedroom house on a fairly restricted site.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Thank you, Deputy.

Joan Burton (Dublin West, Labour)
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That is because a great deal of the value is now in the cost of land. The developers are trying to recover every cent they lost during the bust. It is our job to make sure they cannot profiteer on the backs of people who need housing and that instead we have a fair playing field for them and also for the young couple, perhaps both working in the Minister's Department, who have built up a deposit for a house and want to buy a family home in which to reside. They should be the Minister's first priority and all the other individuals and couples like that who want to buy a house.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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I call Deputy Boyd Barrett.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The Minister has praised the budget for what he would see as its prudence and pragmatism as against what he might imagine would be our more extreme or radical approaches to the budget. Fianna Fáil has largely supported the Minister, although it wants its cake and to be able to eat it, by taking credit for what its sees as the good measures in the budget but distancing itself from its failures. I put it to the Minister that this is a budget that simply does not address the big problems our society faces and that the people who needed help in the budget would have hoped for. We can talk all we like about prudence and balancing the books but what people hoped for after seven or eight years of crushing austerity - which robbed them of their incomes and, in some cases, their homes and their jobs, which saw the destruction of public services and cuts that have landed us in a diabolical housing crisis and that have landed the public health system in just about as bad as shambles as it could possibly be in - was that the budget might have substantially addressed some of those issues. They might have hoped for that in particular because the Government never stops crowing about what a success the Irish economy has become, about the recovery and about the fact that we are fastest-growing economy in Europe. Against that background, people might have expected more, but the fact of the matter is that the budget is not going to solve the problems. When we boil it all down and we hear all the talk about balancing books, the reality is that 3,800 new council houses will be built next year against a background of 100,000 families who have now been waiting up to 17 or 18 years on a housing list and against a homelessness crisis that continues every week to spiral further and further out of control. The promises on social housing arising out of the budget allocations are that there is no increase in the output of social housing next year over and above what had been promised previously; in the case of the health service, the nurses and doctors have told us - it is not the radical left saying this - that the additional allocation for the health service will just about, if at all, keep pace with the additional demands that will come on the health service next year; and for everybody else the increase is a fiver a week. That is against a background of the bills people have had to pay increasing dramatically. Rents have gone up 60% in recent years. Motor insurance premiums have gone up 60%. Bin charges are set to go up by another €30 a year next year. There are increases in the public service obligation levy, increases in electricity and gas prices and so on.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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I am sorry to interrupt the Deputy in full flow but I ask him to propose the adjournment of the debate. When we resume in the morning, Deputy Boyd Barrett will be in possession.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I propose the adjournment of the debate.

Paschal Donohoe (Dublin Central, Fine Gael)
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Deputy Boyd Barrett proposed the adjournment in a very statesmanlike way, with panache and a little flourish.