Wednesday, 4 November 2020
Finance Bill 2020: Second Stage
"That the Bill be now read a Second Time."
When the budget was announced three weeks ago, I said that there was no such thing as certainty in the current circumstances and that we must recognise the risks and ongoing challenges. It is fair to say that events in those three weeks have shown that pandemic-related uncertainty will be with us for some time to come. The Covid-19 crisis has proven to be enduring and we will be living with its effects for some time to come. That is not to say that we should give up hope. We have the power to effect change in regard to both Covid-19 and the economy. Neither prospect is easy but, with continued effort, we can and will overcome the challenges facing us.
We confront the pandemic from a position of strength, based on the solid budgetary and economic foundations we have built in recent years. We can borrow today and into the future to fund the supports needed to help our society. Ireland has rightly earned credibility, respect and support for our economic performance in recent years and the improvements in our national finances. We are now two weeks into level 5 restrictions under the Government's plan for living with Covid-19. It has been a very hard time for very many people but we are pulling together and adhering to the public health advice in order to protect lives and livelihoods.
The Government is providing support in many ways, through its policies in regard to business, changes to our taxation system and vital schemes to protect households, businesses and jobs, namely, the pandemic unemployment payment, PUP, the Covid restrictions support scheme, CRSS, and the employment wage subsidy scheme, EWSS.
It is helpful to put numbers on the record in respect of the support being provided through these programmes. As of 3 November, 40,800 employers were registered with the employment wage subsidy scheme while 330,000 individuals were in receipt of the pandemic unemployment payment as of the week beginning 2 November. At the end of September, some 70,000 businesses had availed of tax debt warehousing, with €2.1 billion now warehoused. With further support for the launch of the Covid restrictions support scheme, CRSS, due later in the week, there have been more than 2,200 registrations for the scheme as of lunchtime today.
These policies have been an essential lifeline for businesses, families and individuals and have mitigated the effects of the pandemic on the livelihoods of our citizens. In my budget speech, I said that the health of the country and the health of the economy are interdependent. The better our public health, the stronger our economic health. We need to continue to get the balance right. If anything, pandemic responses and our efforts to support our economy have widened our public policy response into areas that would have been unheard of earlier in the year.
One such response, the employment wage subsidy scheme, continues to play a vital and unprecedented role in supporting businesses through the current crisis. As I mentioned in my budget speech, this is currently set to continue until 31 March 2021, although I have been clear that there will be no cliff edge after that point. It will continue across next year. The Government will decide on the form of its extension when economic and health conditions are clearer, guided by what the economy requires to support its expected recovery at that time. Deputies will be aware that, in anticipation of the move to level 5 restrictions in mid-October, the Government decided to align the rates of subsidy available under the employment wage subsidy scheme with those provided for under the pandemic unemployment scheme, up to €350 per week.
The changes to this scheme will apply until the end of January. Their objective is to minimise the risk of movement from the wage subsidy scheme to our pandemic unemployment payment during the period of the enhanced restrictions. The intention is to legislate for these rate enhancements in the Finance Bill 2020. I will bring forward the necessary legislative text as an amendment on Committee Stage.
In my budget speech, I reaffirmed the Government's commitment to the 12.5% rate of corporation tax and our continued commitment to a corporate tax regime that supports economic activity and that is transparent, sustainable and legitimate. Tax measures announced on budget day included an expansion of the tax warehousing provisions to include the balance of 2019 income tax and 2020 preliminary tax obligations for self-assessed taxpayers whose income has been adversely affected by Covid restrictions as well as the excess temporary wage subsidy scheme payments received by an employer which are due to be repaid to Revenue.
A range of other vital measures are included in the Bill to support businesses across the economy. These are targeted at the agricultural, tourism, film, housing and start-up sectors. The Bill also provides for the announced temporary reduction of the VAT rate for the hospitality and tourism sectors from 13.5% to 9% with effect from 1 November. This rate applies to catering and restaurant services, tourist accommodation, cinemas, theatres, museums, historic houses, open farms, amusement parks, certain printed matter and hairdressing.
One of the key new measures announced on budget day was the Covid restrictions support scheme, which is designed to assist those businesses whose trade has been significantly impacted by, or temporarily closed as a result of, the restrictions set out in the Government’s plan for living with Covid-19. The scheme applies where Government restrictions prohibit or reduce access to a business's premises by customers, as is currently the case throughout the country. Qualifying businesses can apply to the Revenue Commissioners for a cash payment to assist them and to provide targeted support during their time of need. Registration for the scheme is now open and first payments will issue by the middle of this month.
While Covid-19 is clearly the most urgent threat we face, we must not let it distract us from the broader challenge of climate change. The Bill contains important changes to taxation to respond to this great challenge. It implements the programme for Government commitment to increase carbon tax by €7.50 from €26 to €33.50 per tonne of CO2 and to provide for a trajectory of increases out to 2030. The increase in budget 2021 applied to auto fuels from budget night and will apply to all other fuels from 1 May 2021. The additional revenue raised will be used to fund public expenditure measures to meet the goals set out in the programme for Government. The Bill also makes provision for the transition of our CO2-based vehicle registration and motor tax regimes to the new, more robust worldwide harmonised light vehicle test procedure emissions test from January of next year. As a result, our vehicle registration tax, VRT, regime will be based on emissions performance levels which are much closer to performance levels in the real world than is currently the case. Further measures include the extension of the nitrous oxides, NOx, emission regime and the accelerated scheme of capital allowances for energy-efficient equipment.
I will now take the House through the Finance Bill from the beginning but I hope that Deputies will appreciate that it is not possible to cover every single section in the detail normally required. Further detail is, therefore, set out in the explanatory memorandum published with the Bill.
Section 1 is one of a number of interpretation sections. Section 2 increases the universal social charge, USC, thresholds in line with the increases in the national minimum wage applicable in 2020 and 2021. This will ensure that the 2% rate remains the highest rate of USC that is charged on the income of full-time workers earning the minimum wage. It also extends the reduced rate of USC for full medical card holders under 70 years of age whose individual annual income does not exceed €60,000 until the end of the 2021 tax year. Section 3 provides that pandemic unemployment payments are to be treated as an emolument to which Chapter 4 of Part 42 of the principal Act applies.
Section 4 provides an exemption from income tax for certain payments made by or on behalf of the Health Service Executive to a carer in respect of what is generally referred to and commonly known as a home sharing host allowance. Section 5 gives effect to the budget announcement that the dependent relative tax credit is to be increased from €70 to €245. Section 6 provides an exemption from income tax for certain payments made by or on behalf of the Health Service Executive in respect of mobility allowances. Section 7 extends the enhanced help-to-buy relief programme. Section 9 increases the earned income credit. Section 10 extends the sea-going naval personnel credit to 2021 and increases the value of this credit.
Section 11 provides for the Covid restrictions support scheme. Section 12 provides for the extension up to 31 December 2023 of the scheme under which accelerated wear and tear allowances are available for capital expenditure incurred on the provision of certain energy-efficient equipment. Section 13 provides for the modernisation of the professional services withholding tax scheme, an underlying feature of which is the use of electronic means for the transfer of information, data and returns and some other technical amendments.
The commencement of the provision will be subject to ministerial commencement order.
Section 14 provides for an amendment to the emissions-based capital allowances regime for expenditure incurred on business cars. This provision will generally apply to expenditure incurred from 1 January 2021. Section 16 makes a number of changes relating to encashment tax, including exempting companies which pay corporation tax and increasing it from 20% to 25%. Section 17 provides that all intangible assets acquired from budget night are fully within the scope of balancing charge rules.
Section 18 extends the period that the regional film development uplift will be available at the highest rate of 5% by one year. Section 21 provides for the extension of the knowledge development box relief and section 22 makes amendments to address the situation whereby the same foreign currency transferred between bank accounts held by the same person has the potential to crystallise a chargeable gain or an allowable loss without an accompanying economic capital gain or loss.
Section 23 makes a change that provides that the requirement for an individual to have owned a holding of at least 5% of the ordinary share capital for a continuous period of three years in the five years immediately prior to the disposal is being changed so that the shares can qualify for relief if they were held for a continuous period of three years at any time prior to the disposal of those shares.
Section 25 confirms the budget increases in the rates of tobacco products tax and minimum excise duty for cigarettes by 50 cent on a pack of 20 cigarettes. Section 26 provides for ten annual increases to rates of the carbon component of mineral oil tax. The rate increases are based on charging an additional €7.50 per tonne of carbon dioxide emissions each year, as noted earlier. Sections 27 and 28 provide for annual increases to the rate of natural gas carbon tax and solid fuel carbon tax concluding in 2030. Section 30 waives the excise duty due on the renewal of on-trade intoxicating liquor licences in the licensing year 2020 to 2021.
Section 32 provides for changes to the vehicle registration tax, VRT, charging structure under the new worldwide harmonised light duty vehicles test procedure, WLTP, European emissions measuring system. This section also adjusts the nitrogen oxide element of the VRT charge. Section 33 amends section 135C of the Finance Act 1992 by adjusting the amount of relief given to certain electric vehicles. Section 34 gives effect to the motor tax changes for cars that are taxed on the basis of carbon dioxide emissions, as announced in the budget and mentioned earlier.
On VAT, section 36 aligns the definition of immovable goods with the definition applied for the purposes of the VAT directive of 2006. Section 37 provides for the 9% VAT rate and section 38 provides that the flat-rate addition for farmers is increased to 5.6%. Section 42 amends the Value-Added Tax Consolidation Act 2010 to provide for the temporary zero rating of certain goods used in the delivery of Covid-related healthcare services.
Section 46 amends section 31C of the Stamp Duties Consolidation Act 1999, which imposes an additional charge on certain share transactions. Section 47 extends the relief for the consolidation of farm holdings and section 48 extends the period allowed for a partial refund of stamp duty where land is developed for residential purposes.
Section 50 amends section 126AA of the Stamp Duties Consolidation Act 1999 relating to a fixed annual levy of €150 million imposed on certain financial institutions. In order to maintain the yield for the year 2021, the levy is increased from its current rate of 170% to 308% of the DIRT paid in the 2019 base year. Section 51 extends the termination date for consanguinity relief. A number of miscellaneous sections are also included.
Section 56 makes several amendments to the Taxes Consolidation Act 1997 to facilitate improvements to the tax appeals process. Section 59 allows the Revenue Commissioners to make regulations which require debit and credit card issuers to make returns in respect of online credit or debit card payments to non-resident businesses. Section 60 makes a number of amendments to the Taxes Consolidation Act 1997 and the Capital Acquisitions Tax Act 2003 arising from the post-Brexit migration of shares and securities in Irish registered companies from a central securities depository, CSD, in the United Kingdom to a CSD in Belgium and the future settlement of trades in those shares and securities in that CSD.
Section 61 provides for the inclusion of certain proprietary directors within the employment wage subsidy scheme from 1 September 2020. Section 62 makes provision for warehousing of excess temporary wage subsidy scheme payments received by an employer which must be refunded to the Revenue Commissioners. Section 63 section provides for warehousing of income tax payable through self-assessment and includes the balance of income tax due for 2019 and preliminary tax for 2020. Section 67 provides that where a taxpayer appeals an assessment, and in connection with that appeal, makes a payment to Revenue and subsequently wins the appeal, the taxpayer will not be entitled to interest on the amount repaid.
As is customary with the Finance Bill, there are still a small number of matters under consideration that I may bring forward as amendments on Committee Stage. I hope the debate on the important provisions contained in the Bill can be conducted in the normal constructive way. I will always listen to other viewpoints and consider any suggestions put forward during our debate in the context of additional Committee Stage amendments. I commend the Bill to the House.
In finishing his speech, the Minister indicated his hope that the Bill could be discussed and scrutinised in the normal constructive way. I agree with part of that sentiment, as there has always been constructive engagement, although we might disagree sometimes on parts of the contents of the Bill. The reality is that this year there will not be normal scrutiny.
In all the time I have been here dealing with finance Bills, this will be the biggest challenge because of the question of the pandemic, the settings and restrictions placed on us. It is something we have dealt with in committee today in trying to figure out how to scrutinise this legislation in a proper and fitting manner. First and foremost, we are legislators and the most important thing we do is pass laws that affect people right across the State. We clearly have the intention of affecting them positively but that is not always the case, so it is important that there is proper scrutiny. That will be challenging, given the issues facing us this year. I hope some of the proposals I make can be considered so we can have proper scrutiny and time to consider all matters.
I welcome the opportunity to speak on Second Stage of the Finance Bill 2020. I will speak to the circumstances and context in which the Bill comes before us before getting to certain aspects of the Bill in itself. We will not be able to deal with all of it and it is not possible to discuss every section of the legislation on Second Stage but I hope we will have the opportunity for proper scrutiny of all the provisions on Committee Stage and later on.
It has now been three weeks since the Government announced budget 2021 and it came at a time of great challenge for our people, our economy and our country. As I stated three weeks ago, it came at a time of great uncertainty because we were faced with the challenges and damage caused by Covid-19. Budget 2021 was a primary response to that challenge. Since the pandemic began, Sinn Féin committed to engage constructively with the previous and current Governments in the best interests of the people while holding the Government to account, which is the job of Opposition.
Sinn Féin has done so since the outbreak of Covid-19. This was evidenced by my engagement with the Minister and his Department as the temporary wage subsidy scheme, TWSS, was introduced. At the time, I argued for greater levels of wage subsidy for low-income workers to protect incomes and enhance the take-up of the scheme. I also argued that an administrative change could be made by the Revenue to ensure that women returning from maternity leave, in particular, would be eligible for the scheme. These changes have come to pass and I welcome them and the fact the Department and the Minister were open to making these changes.
On 1 September, the Government introduced the employment wage subsidy scheme, EWSS. It is a scheme beset with deficiencies, which I have raised since its announcement. This scheme reduced wage supports by up to 50% and excluded a cohort of the lowest paid workers. It was clear from the time of its announcement in July, that the EWSS would be insufficient to protect jobs and support businesses while the threat of the virus remained in our communities. Sinn Féin, as the Minister knows, was relentless in calling for the scheme to be amended, with higher levels of wage support for workers and their employers to avoid the loss of jobs. We also made particular reference to the inevitable impact of public health restrictions as they increased. The same was also true regarding the pandemic unemployment payment, PUP, with the Government having cut the level of payment in previous months for thousands of workers who had lost their jobs as a result of public health restrictions. These cuts were unjustified, and the future scheduled cuts are also unjustified.
They failed to recognise the level of income loss across the State or the continued threat posed by the virus. On 19 October, as the Government announced its decision to move to level 5, these cuts to the PUP and the EWSS were reversed, and a top payment of €350 per week was reintroduced. This was common sense and recognised that the previous cuts were ill judged while the threat of the virus and further restrictions remained. It was also a vindication of Sinn Féin, with the Government implementing policy decisions we had been calling for in the previous weeks and months.
We welcome those policy decisions made by the Government. Those changes were necessary. The impact of Covid-19 and the level 5 restrictions on jobs in our economy has been seismic. It has also had an unequal impact, however. This is demonstrated by the increase in PUP claimants and income tax receipts recorded to date in 2020. According to figures published by the Department of Social Protection yesterday, almost 330,000 people will receive the PUP this week. That represents a 60% increase in PUP claimants from the beginning of October. These figures confirm the unemployment crisis facing young people, low-income workers and those in the sectors most exposed, such as tourism and hospitality.
The fiscal monitor published yesterday demonstrates the disproportionate impact that public health restrictions have had on low-income workers. Income tax receipts up to the end of October have been almost flat compared to the same period in 2019, if we disregard the €275 million deduction factored in by the Revenue as a result of the Covid-19 restrictions support scheme, CRSS. These income tax receipts reflect the disproportionate level of job losses among those on low incomes. We face an unemployment crisis, and without adequate income supports thousands of people would face an income crisis. Supporting them is not just economic good sense, it is a moral imperative.
As the Minister is aware, the PUP was introduced on 13 March as an urgent needs payment under section 202 of the Social Welfare Consolidation Act 2005. Section 13 of the Finance Act 2018 amended section 126 of the Taxes Consolidation Act 1997 to provide that urgent needs payments under section 202 of the Social Welfare Consolidation Act 2005 would be exempt from taxation. While the PUP was put on a statutory footing on 5 August, for the five months from its introduction in March that payment was not subject to tax as an urgent needs payment. Section 3 of this Bill seeks to retrospectively tax a payment which was exempt from tax by law. Regardless of the amount of tax involved, this is an unprecedented move by the Government and one it has failed to justify.
Given that this Government has found itself in hot water for dubious interpretations of the law in recent weeks, I am unconvinced by the argument the Government has put forward to retrospectively tax a payment that was, by law, exempt from tax for five months. Furthermore, it is hard to understand why the Minister is expending energy to retrospectively tax those who lost their jobs during this pandemic, and as a result of this pandemic, on dubious legal grounds. It speaks to a Government that is simply out of touch and it sets a precedent that we should not go anywhere near. It is simply wrong. Under law, this payment was exempt from tax for months as a result of the Finance Act in 2018, but now we are deciding to go back in time, rewinding the clocks and going to make this payment taxable.
There are measures in this Bill to be welcomed, some of which are long overdue. Section 9 increases the earned-income credit to €1,650, equalising the tax credit for the self-employed with that of PAYE workers. This is a welcome change and one that is long overdue, with the commitment having been made more than four years ago by the previous Fine Gael Government. Section 4 provides an exemption for income tax for payments made by the HSE to those in receipt of more mobility allowances. This is a positive move, which Sinn Féin welcomes. Similarly, the increase in the dependant relative tax credit, provided for in section 5, is also a welcome development.
Other provisions in this Bill, however, are not welcome and will have a negative impact on workers and families, with a disproportionate impact on low-income workers, lone parents and rural households. Sections 26 to 28, inclusive, provide for locked-in increases in the carbon taxes every year until 2030. These provisions will result in a 39% hike in the carbon tax next year alone, followed by further increases year-on-year. Without affordable alternatives, a carbon tax will not reduce emissions. It is only possible to incentivise people to use alternatives if they exist.
At present, alternatives such as electric vehicles and home retrofitting are least accessible to low-income households. If households are unable to afford these alternatives, they will simply spend more money on heating their homes, cooking their food or running the car. That is the reality. Only last month, my colleague, Deputy O'Rourke, received information that because of Covid-19 restrictions 8,000 homes are waiting for upgrades under the Better Energy Warmer Homes scheme. The Government has sought to justify the increase in carbon tax as a just transition, comparing it to welfare increases announced on budget day.
We must bear two points in mind, however. First, tens of thousands of households do not qualify for the fuel allowance but are struggling to get by at a time of great financial insecurity. Second, many of the social protection measures, such as the PUP, have clearly been flagged as temporary and not permanent. The increases in carbon taxes are permanent, however. This Bill seeks to lock-in year-on-year increases in carbon taxes until 2030. These are increases which the Department of Finance has classified as aggressive. There is no such provision in the Social Welfare (Covid-19) (Amendment) Bill 2020 to lock-in year-on-year increases in social welfare payments until 2030. It remains the case, therefore, that in the midst of an unemployment crisis it will be low-income households that will be disproportionately impacted. This is the wrong time to increase carbon taxes. It is the right time to pause such increases. Sinn Féin will challenge this decision on Committee Stage of the Bill.
These measures and their impact are compounded by sections 33 and 34, which provide for changes to motor tax and reliefs given to certain electric vehicles. These changes, as the Minister knows, will disproportionately benefit wealthier drivers, while penalising those unable to afford an upgrade to low-emission or electric vehicles. This is demonstrated by the fact that many high-end, low-emissions vehicles will be significantly reduced in cost due to the changes in the lowest rate of vehicle registration tax, VRT. These measures enable a transition, but one that caters for high-income earners while making it more difficult for low-income earners. A just transition must be based on prioritising access to alternatives to an increase in carbon taxes for the most vulnerable.
The Finance Bill fails to meet that objective.
Covid-19 and the public health measures introduced to contain its spread have devastated jobs and businesses throughout the State. We know that these restrictions have been a hammer blow for the hospitality and tourism sectors especially. In our submission to the July stimulus debate Sinn Féin argued to reduce the rate of VAT to 9% for the hospitality and tourism sector. The reasons were straightforward and we argued that it should be immediate. With fewer restrictions in the summer it was essential that businesses that were so badly affected in the first round of restrictions in the spring were able to generate as much revenue as possible through trading in the summer. These small businesses could have absorbed this reduction in VAT onto their balance sheets as a margin of support for businesses facing a temporary demand shock, allowing firms to maintain their cash margins with a lower level of demand. Unfortunately, the Government rejected this proposal and I believe it will acknowledge that it was a missed opportunity and a costly one for many of these businesses. Section 37 provides for a reduction of VAT to 9% for the hospitality and tourism sector, effective from 1 November until the end of 2021. That is the right thing to do. I welcome that the Government has implemented this proposal, although late in the day.
Section 11 provides for the Covid-19 restriction support scheme announced on budget day. The scheme is available to businesses that have suffered a turnover loss of more than 75% as a result of Covid-19 restrictions, with qualifying businesses receiving cash payments equivalent to 10% of their previous average weekly turnover, capped at €5,000. The scheme is not going to operate as a grant. Instead it will be a cash flow support, providing an alternative credit for trading expenses, which will reduce the expenses that can be claimed by these companies in the future. This would mean higher taxes or more tax to be paid on their profits. While we leave that aside, Sinn Féin had called for an enhanced grant scheme for Covid-impacted businesses. While we did that, it is not provided for, and we will monitor this scheme in the months ahead.
I am sharing time with Deputy Mairéad Farrell. There are many other things I would like to discuss in this Bill, and we will get an opportunity to do that on Committee Stage if appropriate time is given, if the right arrangements are put in place and if the Bill passes Second Stage here.
Cuirim fáilte roimh an díospóireacht ar an mBille Airgeadais ach admhaím go bhfuil imní orm faoi chúpla rud sa Bhille seo. Ar ndóigh, táimid á phlé seo le linn ama eisceachtúil agus le linn paindéime, ach mar sin féin, caithfimid déileáil leis na rudaí atá go fíor míchothrom sa Stát seo.
There was one thing in this year’s Finance Bill that I admit has caught me by surprise, which is the subsidies for NATO military forces for the exemptions they will receive from 2022 from VAT excise for services and goods. It will be interesting to hear what that actually entails. When I read "NATO", at first I wondered if I had read it correctly, as in whether this is the same organisation that was set up to check the Soviet Union, which does not exist anymore? Why would it now need exemptions come 2022? Nevertheless, there seems to be a will that the taxpayers of Ireland, a neutral country, would provide tax subsidies to foreign military forces from an organisation that our country is not even a member of. I would love to know the benefit of giving such a tax subsidy to a military force. I am very interested to see what kind of cost-benefit analysis was done for the State on this.
We are aware that there are already massive costs to the State from the exemption of fees for US military flights. According to Shannonwatch, between 2003 and 2019 the cost incurred by the Irish Aviation Authority in exempting fees for en route services for military and other flights was €46 million, the lion's share of which is accounted for by US military flights. Furthermore, in 2016 it was reported that the cost of having the Garda and the Army protect US military planes at Shannon Airport was almost €1.5 million a year.
Earlier this year my colleague, Deputy O’Rourke, wrote to the Minister, Deputy Eamon Ryan, who confirmed that US and other military aircraft traversing Irish airspace or indeed landing in Ireland do not pay air traffic control charges. I would like an explanation as to why Irish taxpayers are now being asked to further subsidise conflict, war and aggression. Where does the drive for this initiative come from?
Another aspect of the Bill that concerns me, and which I also referred to on budget day, is that the Government, much like its predecessors, seems to have a housing strategy that continues to rest on the private developer-led model. This has led us to into the housing crisis we face today. It has made housing unaffordable for many and has led to sky-high rents and an unprecedented homelessness crisis. The concessionary measures outlined in the Finance Bill are just the further expression of this. Two measures in particular stand out. These are the extension of the disastrous help-to-buy scheme and the loosening of the requirements for developers to avail of the stamp duty refund scheme for residential development. The former scheme, which increases the tax relief for first-time buyers from €20,000 to €30,000, has been inflationary for house prices and it has been poorly targeted. Effectively, it is a subsidy to developers and no doubt this is why the Government has chosen to extend and increase it. It helped to push up property prices, much to the delight of developers I am sure. There were instances where its introduction pushed up house prices in certain locations by almost €10,000 practically overnight. That is not much use to those who are trying to get onto the property ladder for the first time. Figures have shown that more than 40% of the help-to-buy recipients already had the deposit saved, and therefore it did not help in this regard. One would have thought that the Government would have been concerned about this. A person would have been forgiven for thinking the Government would scrap a scheme where almost half of the help-to-buy recipients did not require what the scheme was intended to do, which was to help.
Another gift to developers has been the stamp duty refund scheme for residential development which allows a refund mechanism to reduce the effective stamp duty rate for qualifying developments to 2%. This is on the condition that these developments are completed in a timely manner within two years. What do we see in this Finance Bill? That requirement has now been pushed back to two and a half years. The developers can avail of the effective 2% rate even if they are now 25% slower in terms of the completion rate. The message is very loud and clear. Instead of giving ever more concessions to private developers, it would be better for the State to break from this neoliberal model and develop a large stock of public housing assets. This is what people need. This is what people in homeless services right now need. This is what people trying to get onto the property ladder need. This is what the Government needs to do.
The Minister, Deputy Donohoe, is very welcome to the Chamber this afternoon. It is fair to say that it is a cliché that Members of the Opposition stand up on budget day and condemn the Budget Statement as a missed opportunity and so on. The Minister has heard that on far too many occasions for his own liking, but sometimes these old clichés and tropes can have an element of truth to them. I believe this to be the case this year. With additional spending of more than €17 billion, it takes a chancer to claim that nothing good whatsoever came from budget 2021, which is evidently untrue. Sadly, it took a pandemic to invest more in hospital beds and in an overburdened health service that has been crying out for more funding, more targeting of funding, and improvements in delivery of services. Much of what was in the Minister's October budget speech and reflected in the Finance Bill sees this Government hand out a series of sticking plasters to hold together creaking public services, with little or no systemic change flagged or planned. The opportunity to use this public health crisis and the unprecedented financing opportunities that are available at this time to create a better, fairer and more socially democratic Ireland has been missed. There is little sign in the Bill of a new direction for Ireland or what we might term a new social contract for the emergence of a different, more egalitarian, post-pandemic society and economic model. It is very much a case of business as usual.
I note the ESRI's commentary in the budget and the survey on income and living conditions, SILC, analysis, but the truth is that the failure to hike weekly social welfare rates will mean that for the second year in a row, Ireland's most vulnerable, those on small fixed incomes and those who depend on the State for their income, will have seen no cash increase paid to them. While it is not strictly a matter for this Bill, it is a point worth making. There are necessary tweaks in the Bill and some recent legislation to cover Brexit-related matters, but one of the biggest Brexit-related harms will be the cost of basic essentials for ordinary households that depend on the State for their incomes.
Such cost increases for normal, day-to-day goods such as foodstuffs, utilities and so on have a regressive impact, with the poorest families paying more.
However, inequality is not just about income. It is also about opportunities. Budget 2021 and this Finance Bill will increase wealth inequality and widen the opportunity gap between those who have a little, those who have some, and those who have a lot. We heard much talk in recent weeks about what was in the budget but the conversation about what was not in it was closed down very quickly in the political system and the media moved on from it. We should talk about what is not in the budget or in this Bill if we are to have a proper conversation about how to recast society and help it change direction into the future.
For example, neither the budget nor this Bill do anything about public childcare, which is perhaps the most economically and socially prudent investment of them all. The evidence from across the world is clear that a high-class investment in affordable and high-quality State childcare more than pays for itself, with up to a tenfold return cited in some studies. Under the Labour Party's vision of a new social contract, we would have supported families to ensure every child has a fair start. We would have invested €60 million as a first step to develop a universal public childcare service and an additional €30 million to ensure every childcare worker is paid a living wage of at least €12.30 an hour. Our childcare workers have been on the front line of Covid-19, caring for our children throughout this crisis, and they have been treated shamefully. They were on poverty wages both before and during the crisis and they will remain on poverty wages after this legislation passes through this House.
Childcare is one example but I could go on to speak about the progressive changes this Bill could have helped deliver. It could have reoriented how we do public and affordable housing, how we advance climate action and a just transition properly through a more progressive tax policy, and the promotion of greater investment in and use of public transport to help bring about the step change we need. It seems the Green Party has failed to make any substantial impact on this Bill, given the opportunities available. Many of the provisions in this Bill would have happened anyway in the Green Party's absence.
This Bill will result in the extension of bad, or at least questionable, policies that will cost the Exchequer a lot of money and which will disproportionately favour people who have more to their names than most. There is little or no objective reason for these policies to remain in operation. One such bad policy is the help-to-buy scheme. This Bill enables the extension of the scheme, which the ESRI has called "poorly designed" and which the Parliamentary Budget Office has shown has a deadweight loss of over 40%. In other words, this policy has been proven to promote activity that would have happened anyway but the State chooses to subsidise it in any case. This is not a housing policy. It is a developer's policy that drives the cost of housing further beyond the means of most people who dream of owning their own home. Announcements were made in the budget about a greater level of spending on subsidising private landlords via the housing assistance payment, HAP, and a reduction of stamp duty for large developers, as referenced earlier, rather than considering more investment in affordable housing on public land, which we require as a society.
Once again, no-strings-attached VAT giveaways are being given to sectors addicted to precarious pay and poor working conditions. The lowering of the VAT rate will cost in excess of €400 million in one year, but like the staycation subsidy, it is another poorly designed scheme with a suspect value. The Minister knows well that a VAT cut for the hospitality sector will benefit higher earners and consumers who have more discretionary income to spend. This is the same cohort whose savings have shot up over the past six months. They are not spending, not because they are short of cash but because of the pandemic. We do not have a demand problem in this country, but we do have a public health problem.
The Minister and his officials know as well as I do that the VAT cut introduced in 2011 very quickly outlived its usefulness soon after the date on which it was introduced. It did not go towards boosting the pay packets of low-paid workers and neither did it go towards making a meal out or a hotel room any cheaper. It was ultimately used, a few years after it was introduced, to boost the bottom lines of some very big and profitable hotel groups and fast food chains. As the Minister is determined to bring the VAT reduction in and it is already in place, this Bill should be amended to make the VAT rate cut contingent on the engagement of hospitality employers with a joint labour committee. That has been the law of this land since 2012, under a system both I and the Minister voted to introduce as Members of this House.
This time last year, my party called for the development of a wage support scheme similar to the temporary wage subsidy scheme, TWSS, for industries that would find themselves at risk in a no-deal Brexit. It took the pandemic for such a scheme to be rushed through. I welcome that the TWSS was introduced as it was very beneficial for businesses and workers. However, this Bill entails little reform of the employment wage subsidy scheme, EWSS. While I welcome the increase in subsidy rates since the start of the level 5 lockdown, this does not go far enough. We need to return to an income-linked scheme like the TWSS, which the Labour Party has called for with our new ObairGhearr scheme, based on the successful German short-time work scheme, to ensure workers do not lose out and that they are upskilled. Such a scheme would ensure State-subsidised workers do not lose out and are protected from economic dismissals or attempts to use the crisis as cover for cost cutting. It would also make employers, with the support of the State, provide tailored training plans to their individual workers as a condition of entry onto the scheme.
This is the best kind of long-term support we can provide as a State to make our SMEs more productive and competitive. This is not only possible, but is actually happening right now across Europe, in the Netherlands, Denmark and France, to name but a few countries. Similarly to those countries' schemes, the scheme we would like to see developed would exclude companies with bad taxation records and companies which pay big dividends to shareholders in the middle of a pandemic while on State support, give excessive pay packages or bonuses to executives or engage in share buy-back schemes.
More generally, tax policy changes included in budget 2021 and provided for in this Bill are projected to result in a net revenue loss of approximately €231 million in a full year, while the tax base is also set to narrow. This will make little sense to workers on wage subsidy supports or the pandemic unemployment payment, who will still be hit with a tax bill on the support they received during the crisis, as referenced under section 3 of this Bill. This comes on the back of many people facing a Covid-19 interest penalty on payment breaks for mortgages and loans. Will the Minister consider addressing this issue and giving people the same kind of tax breaks, tax warehousing and so on that the Government is providing to large businesses which are in difficulty because of this pandemic, under the same principle? Will he show the same kind of mercy to people on the pandemic unemployment payment, PUP, or who benefited from the wage subsidy scheme, who will find themselves with a tax bill based on the incomes they received through those State supports?
In our alternative budget, entitled A New Social Contract, we have shown how €1.8 billion could have been raised by targeting growth-friendly wealth and assets but, unfortunately, this Government has chosen to look the other way. We know from reports published yesterday that because of the situation in which we now find ourselves, a €930 million shortfall in corporation tax receipts has been forecast for October. The Minister has recognised that himself. It is very worrying indeed that there is an overdependence on corporation tax from a small number of companies in this country. That is not sustainable and that is why we need to have a mature adult conversation about ensuring our tax base is not further narrowed, in order that we can obtain the kinds of resources we need to operate top-quality, high-class public services in the modern day.
Chapter 1 of the Bill includes proposals to address USC issues as they relate to the increase in the national minimum wage of 10 cent an hour. This matter, along with issues relating to PRSI thresholds, have been addressed in most years since 2015 to ensure any rises in the national minimum wage find their way into the pockets of those who require those increase most, namely, the workers, and to ensure there is no cliff edge PRSI effect on employers. I am disappointed that a Government which has expressed a wish to achieve a living wage has chosen not to go further than the meagre proposition made by the Low Pay Commission.
The proposal in section 10 to extend the naval personnel seagoing credit is welcome but we need to go much further to enhance pay packets and improve the terms and conditions of the members of our Defence Forces. I know that project is under way and we need to focus on it as a country, and to recognise the important contribution that members of the Defence Forces make to State security and to our State more generally.
Chapter 4 of the Bill contains significant measures relating to the Covid restrictions support scheme, CRSS. This may be a minor issue but I want to raise it with the Minister. I was contacted yesterday by an on-course bookmaker from my constituency who informs me that his business and other similar businesses are excluded from the scheme based on the fact that they do not have bricks and mortar rateable premises. This misunderstands the nature of the business and that quite an expense is involved in paying for their pitch on racecourses throughout the year. These are operations that Horse Racing Ireland would have data and information on. I ask the Minister to look at this to see if access to the scheme could be provided for such businesses.
I imagine other Members of the House were contacted by Chambers Ireland regarding a possible anomaly in the operation of the CRSS system. It highlighted an important issue relating to businesses that form part of a supply chain for the tourism and hospitality sector. Due to level 5, these businesses have lost all or most of their revenue. Section 4.2.4 of Revenue's guidelines states that even if a business meets all of the other eligibility criteria for CRSS, it will not qualify for the scheme unless access to the location, for example, a warehouse, is restricted under Government guidance. These businesses, which are predominantly closed at the moment or running at a low level of activity because of the level 5 restrictions, need support to remain open to support the economic recovery when it comes. The relevant provision of the Finance Bill is in section 485(3)(b)(i) to be added to the principal Act. Chambers Ireland has been in contact with the Revenue Commissioners in this regard and I wanted to raise it with the Minister so that he can consider it before Committee Stage to see if this problem can be addressed.
Period poverty is a serious issue for many women. My colleague, Senator Rebecca Moynihan, has done significant work campaigning in this area. Sanitary towels and panty liners have a 0% VAT rate and section 44 of the Bill will see menstrual cups, pants and sponges included too. That is a welcome development and I give credit to the Minister and his officials for making those important changes. Has the Minister considered calls to reduce VAT on condoms in the interest of positive sexual health? I know a case was made to the Minister by the former Minister for Health, Deputy Simon Harris, in that regard at a point last year and I would like to hear the Minister for Finance's view on that.
I have been contacted in recent weeks by retail representative groups and I am anxious to see if the Minister will consider introducing measures in the Finance Bill to modify the small benefit exemption gift card initiative in order that the benefit remains in the State. I submitted a parliamentary question a few days ago and received a response yesterday. The response was a little disappointing. It seems that the Minister does not have any plans to change the small benefit exemption scheme at present to ensure that those resources remain in the State and are spent here. It may be the case that the Minister is restricted from doing that but I would appreciate if the Minister would put his position on that matter on the record of this House.
Is the Minister aware of an independent report, about which I provided details in a recent parliamentary question, detailing the benefit of the existing retail export scheme on supporting tourism in Ireland? I know the Minister plans to make changes in that regard in the Brexit omnibus Bill. I have been contacted by many businesses in areas across the country that depend on international tourism and are concerned about the impact of this proposition. If changes are made to the thresholds, they could put those businesses that are in difficulty under greater risk in future. I would appreciate if the Minister would look at that on Committee Stage of this Bill. I look forward with continued engagement with the Minister to finesse and add nuance to this Bill in, as Deputy Pearse Doherty said, a complicated time. It will be difficult to have the kind of engagement that Deputies would like to have and would generally have in the context of such significant legislation. The Minister can be assured of my co-operation and the co-operation of all Members of this House to get the best possible deal for the people of this country in a difficult time in our history, and to do the best we can for the people we represent at this anxious and challenging time for businesses and citizens.
I support the Finance Bill because I believe it reinforces the Government's support for the economy against the challenge of the Covid-19 pandemic and the continued risk of a no-deal Brexit. The Finance Bill 2020 sets out the legislative provisions to give effect to the tax measures announced in budget 2021. Clearly the pandemic continues to provide us with an unparalleled economic and social challenge, but we must also affirm our determination to support the economy and society more broadly, especially those sectors which have been really adversely hit by Covid-19, with the restrictions now at level 5. The Bill shows commitment to tackling climate change with a real course of action with carbon tax, and changes to motor tax and the vehicle registration tax regime, which are both aimed at encouraging motorists to make greener choices.
The new Covid restriction support scheme will provide much-required support to businesses that have had to close or significantly reduce trading as a result of the move to level 5 throughout the country. I note that the scheme is costing the Exchequer €80 million per week as we are now at level 5. That sounds like a lot of money but it is better to spend that kind of money to keep places trading and in some way buoyant as they negotiate these tough, turbulent weeks of level 5 restrictions.
I am delighted to see the VAT reduction from 13.5% to 9% for the hospitality and tourism sector. This will give a 4.5% margin which should be an extra take for people involved in bars, restaurants, hotels and many tourism enterprises. One person told me that if they get back to some semblance of normalcy, if could mean a margin of €8,000 to €10,000 in capital for their business per annum.
LEADER funding is administered by local development companies throughout the country. They feel that adequate provisions were not made for them in budget 2021 and they have been in contact with my office to say that no funding for LEADER projects for 2021 was earmarked in the budget, nor was funding identified for delivery and administration of the LEADER programme, which is onerous. I pay tribute to Doreen Graham and her team at Clare Local Development Company for all that they have delivered in the county over the years. The final thing they will say is that there is no interim national rural development programme in the programme for Government. They want to have more detail and it would be good to hear that.
I wish to raise two other points. One relates to aviation. I was delighted that Shannon Airport received €5 million of capital investment in the budget. It is much-needed money at a time when Shannon Airport is on its knees financially, with virtually no planes in the skies and Aer Lingus and Ryanair pulling back from the airport over the winter months. There was unassigned money in the budget relating to aviation transport and I ask that some of that be activated. We need to look at public service obligation routes, including guaranteed routes out of Shannon Airport to the mainland of the UK and onwards to continental Europe. As we negotiate Brexit and all that it will bring on 1 January, that connectivity in Shannon Airport, which is the most geographically peripheral airport in western Europe, will be all the more important. We urgently need to activate some of that funding. At the Joint Committee on Transport and Communications Networks this morning, the Minister, Deputy Eamon Ryan, said he would bring proposals to the Cabinet, and I ask the Minister for Finance and his colleague, the Minister for Public Expenditure and Reform, Deputy Michael McGrath, to do everything possible to capitalise the efforts required to save the aviation sector.
I wish to raise the issue of Moneypoint power station in west Clare. It is a giant of our economy. It contributes approximately one quarter of all commercial rates in County Clare, which shows how significant it is. When I come to Dublin, by the time I reach Naas, there is commercial premises after commercial premises.
There is quite a large spread of commercial activity, but Clare is very reliant on a number of giants. Clare wants to get more just transition funding. It has been provided to the midlands and is worth approximately €11 million, as the midlands prepare to adjust from peat burning to non-carbon production of energy. That €11 million supports employment, training and other transitional supports. Something similar must happen in west Clare given that by 2025, Moneypoint will not be burning coal any longer. Hopefully, it will be transitioning to carbon-free fuels. However, during this phase of ambiguity the west Clare economy certainly needs to see just transition funding coming to the area to equip the workforce. Some of them may lose jobs and some have already lost them. There are many other people in the local economy who will be adversely impacted by the wind-down of coal burning in Moneypoint in 2025. I look forward to hearing the Minister's reply later.
I have been inundated with individuals and groups over the last few weeks telling me how this budget has affected them. The general consensus is that it is a bad budget for rural people and certainly for older people. Older people have been left behind. In an €18 billion budget, the Government could not find any money, even a small amount, for pensions and for those who are most vulnerable to a pandemic. There is certainly no money to progress towards a living wage and lift thousands out of poverty, nor is there money to establish a hardship fund to tackle the isolation older people are experiencing. They were told to cocoon, and then were promptly forgotten by the Government. That is grossly unfair.
A double income family, with each member on the average industrial wage, gained a massive €5 in the budget, only to have many multiples of that amount taken back through carbon tax. The community employment, CE, supervisors appear to have been forgotten again for another year. Rural dwellers are being crucified by carbon tax - so much for just transition. There is no mention of renters in the budget. Government policy that has an over-reliance on the housing assistance payment, HAP, to help its landlord friends has led to long housing lists, couch surfers and, unfortunately, an increase in the incidence of rough sleeping. Winter is here and urgent action is required if we are to prevent more deaths occurring. Five homeless people have died in the last two weeks. That is five too many. These people were more than statistics. They were real living human beings and we must do more in that regard.
I often say to people that members of the Government must have nobody belonging to them who has experience of our public housing list or the health service. If they did, they would have fixed both long ago. The people who come to my door are crucified. The situation is inhumane; animals have been treated better. The system is broken and I ask the Government to fix it. If it cannot fix it, it should give the job to somebody else who can.
This Finance Bill gives effect to the budget provisions. It is before us at what is unquestionably a very important and challenging time for our country. The Bill arrives in the middle of a global pandemic that has placed immense strain on our society, both in human and economic terms. We must recognise that. Nobody is suggesting that the crafting of the budget and the Finance Bill has been an easy task. It has not been easy, by any means. It has posed major challenges. Lives have been lost, families have been separated, people have lost jobs and Ireland is still grappling with the challenge of Brexit and the unknown future that will arise as a result of that.
It is important that this Bill should not be an attempt to return to the type of Ireland we had prior to Covid-19. It will not be enough to weather the storm and return to the Ireland that was. Before the Covid pandemic Ireland was dealing with the consequences of a decade of underinvestment, lack of access to housing, economic inequalities and lack of opportunities. All these challenges remain, and many have been worsened by the effects of the current crisis. The old normal will still be as difficult and divisive if we do not improve our society at the same time as we try to protect it. We must invest in surviving the worst effects of the Covid pandemic, while keeping people healthy and safe. That should entail providing economic security, protecting both mortgage holders and renters, and keeping businesses alive. There must be a clear commitment to provide the necessary funding to ensure the people of Ireland can get through the pandemic with the right healthcare. It must also support incomes and communities.
We must invest in the sectors that are being decimated by the pandemic, ensure that they survive and offer hope of a social and economic revival. As the Social Democrats have said over recent weeks and in the context of the budget, this must be a budgetary strategy that is not only about survival but also about revival. The revival as we emerge from the pandemic must be to an economy that is not only job rich but also one of quality jobs, with a priority on investing in public services and social goods that will benefit all. We must invest in a fairer future. This pandemic is a once-in-one-hundred-year event, and the budgetary approach must respond accordingly. We must be ambitious. It is important that there is a commitment to borrow sufficiently to ensure we survive the pandemic until a vaccine or treatment emerges, and the sectors and businesses impacted can be revived. They were all mainly viable before the pandemic.
It is important that we return to a situation in the longer term of dealing with deficit reduction, but that should not be on the agenda in the short to medium term. I must express concern at comments that were made in the Minister's Budget Statement about deficit control in the shorter term. That should not be on the agenda. We should use the very favourable situation at European level. The market is potentially very beneficial to Ireland if we take an expansionary response and an approach of borrowing to invest. Certainly, earlier in the year there were worrying signs from the Government that a conservative approach would be taken to the major crisis the country is facing. I am glad that position changed as the months passed. However, I still am concerned about a mindset that focuses on deficit control, by talking about it and trying to put it on the agenda for some time at the end of next year.
Currently, we can borrow at minimal rates and, in some cases, negative rates. That is continuing, mainly thanks to the changed policy approach of the ECB. We should maximise the potential of that borrowing situation. Earlier in the year, it was said that we would frighten the markets if we borrowed too much. There is no indication that this is happening. Obviously, the firepower that has been put there by the ECB is critical, but the markets also recognise that if one invests for growth, there will be good returns on borrowing. That is a key issue. Taking any type of conservative approach at this stage, which will result at some point in the next couple of years with a level of austerity, is not in our interest. It is not in our interest from a human perspective, and it does not make sense economically either. It also does not give any confidence to the markets.
The markets and investors want to see that there is a clear strategy in place to invest in growth and that must be the approach.
Equally, we must take an approach that is about putting people's well-being, both socially and economically, to the fore of everything that is being done. In that regard, one does have to express some concern about the approach that was taken in the budget. It was an enormous budget with a total value of €18 billion, which undoubtedly provided significant supports to business. That was welcome. However, at the end of the day when people looked at their own personal situation, many asked what the budget actually did to change their circumstances. There was very little in terms of support to individuals and families in the budget and in the Finance Bill.
The approach should have been to avail of the opportunity to invest in public services. That must be an overriding strategy of the Government. It makes sense from many perspectives. It is about creating the kind of inclusive, modern, progressive society that we could achieve in this country if we were prepared to invest properly in public services. Unfortunately, that has not been the approach taken by this Government or the previous one. There is still that two-tier approach to the provision of public services. It is very much a Fine Gael kind of approach, which is about public services being for low-income people and the poor and everybody else pays their way. That is a very regressive approach to public services. It results in a very divided society where there are high levels of inequality and where a lot of people do not feel they have a stake. In such circumstances, people on low incomes, who are poorer, have great difficulty accessing public services. I refer to the provision of affordable housing, social housing, healthcare, transport services, various community services or adequate policing services. People have a right to expect all of those critical public services in their lives and when they are not adequately resourced it does mean that people are excluded and left behind.
We talk about the squeezed middle, or whatever cohort the Minister wants to talk about. More and more, people who are not in the low-income category, who are in decent jobs and who are paying their way tax-wise, see very little return for that. Increasingly, they feel they have to pay for everything. That is not what an inclusive society is about. It is not what a progressive society is about either. Unfortunately, there is that mindset, in particular in Fine Gael, that does not see the advantage in having universal, properly funded public services. The approach should be to achieve the kind of social democratic model where public services are available on a universal basis to everybody. Such an approach creates an inclusive, equal society but it is also the type of approach that creates a sense of solidarity among people. There should be a social contract whereby one pays a fair share of tax and, in return, one gets good quality public services. In our lifetime we have never operated that kind of social contract in this country.
Not only does taking that approach create a more equal society and greater solidarity, but ensuring that we have good quality public services for housing, childcare, healthcare or whatever other aspect of public services, makes the country much more competitive. Given that there are such pressures on people's incomes, that they have to pay so much to access healthcare and for childcare, and that housing is such an enormous drain on family incomes, that fuels demands for wage increases and, in turn, makes us less competitive. It is a vicious cycle that has been created. For all of those reasons - socially on the grounds of equity and economically - it makes sense to have universal public services. The Minister has still not accepted that.
It is most disappointing that after all this country has come through over the past decade or so, those lessons have not been learned. Following an engagement with senior people in Fianna Fáil and in Fine Gael in the aftermath of the election, one of the reasons that the Social Democrats decided that we were not going to be a part of this Government was because those lessons did not seem to have been learned. The housing problem is the most stark example of how lessons were not learned. Everybody knows the action that must be taken by the Government is to drive down the cost of housing to make it affordable. We should be a in a position – it is possible – to build houses on publicly owned land. We have large tracts of publicly owned land in the Dublin area and also throughout the country that should be built on for affordable and social housing. We should be able to build decent three-bed houses for approximately €250,000. That is the cost price. That is the kind of intervention that is required by the Government in order to drive down the cost of housing. It is about taking on the vested interests whose sole objective it seems is to maintain high house prices. That has significant implications right across society and the economy. That nettle has not been grasped. We see yet again the Government repeating the mistakes of the past.
I question the lauding of the extension of the help-to-buy scheme. That is a very expensive measure that is not targeted and it fuels an increase in the cost of housing. We have seen that from how it has operated in recent years. It fuels the cost of housing and does nothing to achieve reform. It incentivises a continuation of the kind of dysfunctional housing market that we have here. That is one of the most disappointing aspects of the approach the Government has taken, which is provided for in this Finance Bill. Are we going just to keep repeating those mistakes or are we going to learn lessons and do things differently? Unfortunately, this Finance Bill will make very little difference to individual lives, family incomes and budgets.
The other area it is important to highlight in the Bill is taxation. From a macro-economic point of view, it is very good that the tax take has not been affected too much by the pandemic, but that in itself tells a tale. It tells us that we have a two-tier job situation where the majority of people who have lost out as a result of jobs losses due to the pandemic are people who were in very low paid and insecure jobs. We keep on talking about the essential workers in nursing homes, hospitals, retail and distribution and all of the key areas; they are the people who have lost out. They are the people who have been hurt most and they are the ones who are on the lowest incomes. When we are lauding those essential workers, part and parcel of doing that is for the Minister to put his money where his mouth is in that regard. It should be about recognising the essential nature of the work that so many people in this country do, not just by a round of applause but by ensuring the Government will work to achieve decent levels of pay and security in employment.
The budget and this Finance Bill is disappointing in that respect. We are still caught in a situation where we are not prepared to take that step towards a living wage. We are still expecting people to live on a little over €10 an hour. What is that about? The Minister has to get his priorities right on this. He must ensure some level of equality across society. It is not possible for people to live on that kind of minimum income. It is not possible for them to do that when having that income excludes them from accessing so many services. There needs to be a complete change in mindset. The programme for Government talks about moving towards exploring and considering all of these. One measure the Government is committing to over its lifetime is a living wage. It lacks ambition to a huge extent, taking that kind of approach.
There are many measures the Minister could have taken in raising revenue. He ignored them completely, however. That may have been on the basis that he was prepared to borrow so much. That is fine and nobody is objecting to that. There were also, however, opportunities to create a greater sense of fairness in terms of people's contribution. Obviously, corporation tax is a key area in that respect. A rate of 12.5% is one which people, in the main, are disputing. There is a major difficulty, however, in terms of fairness and perception, as well as lack of contribution to the economy with many companies paying only a fraction of that 12.5% rate. The Government should have moved to introduce a minimum rate of corporation tax which should have been applied across the board in establishing a level of fairness with many multinational companies based here being seen to make a fair contribution to our economy. The Minister should have moved to a minimum level of 6%.
The continuation of the special assignee relief programme, SARP, tax relief displays a mindset which is about giving preferential treatment to a small cohort of people who are high earners. There really is no defence in continuing with that scheme. Again, it is that mindset that some people are worth an awful lot more than others. These are already high-earning individuals. There is no justification for giving them preferential tax treatment. Again, it just fuels that sense that the country is not being run in a fair manner and the tax system does not operate in a fair manner. The opportunity should have been taken to end that scheme. So much more could have been done. It was a missed opportunity to create that kind of fairer and more inclusive society that we had the chance to do with the kind of borrowing involved. It could have been used to invest in people as well as in services.
Will the Minister accept two amendments to the Finance Bill 2020? Both are closely related. The first relates to an amendment to the provisions of the capital gains tax legislation to ensure that in a particular instance of partition or severance of land, that property owners would not be liable for a charge.
On the partitioning of land for a site, under the law as it stands, the relief provided for a parent transferring a building site to a child is defeated by the capital gains rules on the partitioning of an asset where the land is held as a tenancy in common or a joint tenancy. Section 603 of the Taxes Consolidation Act 1997 grants an exemption of the capital gains tax were a parent transfers land up to one acre to a child to enable him or her to build a principal private residence, as long as the site is not valued at more than €500,000. This makes sense and it is only natural that a parent would want to give a site to a child.
However, this exemption does not stand if the land is owned jointly, either as a tenancy in common or a joint tenancy. In order to transfer a site to child to build a home, two joint owners would first have to petition the land. This is where we face an issue. Under section 534 of the Taxes Consolidation Act, the joint owners are exposed to capital gains tax once they partition their land. The tax bill in such cases can be significant and certainly enough to beat the entire purpose of transferring the site to begin with.
I suggest addressing this by amending section 603A of the Taxes Consolidation Act by the insertion of a new subparagraph to ensure that when a parent acquires a site for onward transfer to a child it will not trigger a capital gains tax charge for either of the joint owners in these specific circumstances. I have drafted an amendment to achieve this required outcome.
My second amendment relates to the severance of a joint tenancy. In this instance, capital gains tax is applied to a property held as a joint tendency that undergoes severance. Even in a situation where there is no sale of assets and the two people continue as normal after this technical change to land, the owners can be made liable for capital gains tax. This is wrong.
To put this in context, I will use a hypothetical situation. A brother and sister, Sean and Julia, acquired 38 acres of farmland for €300,000 in 2014 as joint tenants. In 2018, they decided to divide the land equally between them to pursue different farming interests which constitutes severance of the joint tenancy. The market value of the land at the end of 2018 was €400,000. The €100,000 difference between 2014 and 2018 valuations would be subject to capital gains tax. This means that both Sean and Julia would be subject to pay capital gains on €50,000 each. We should not be expecting two people to pay capital gains tax on a property from which they have not yet profited. There is no material benefit to them. They still own the land. They are not selling it. However, because of this severance under the Act, they are expected to pay for profits they have not actually made. In this situation, both Sean and Julia are disposing of a lesser interest in a larger part of land for a greater interest in a smaller piece of land. This constitutes a part disposal of an asset for capital gains tax purposes. Sections 537 and 557 of the Taxes Consolidation Act are relevant here. There is no immediate financial gain to this. Will this technicality be addressed in this area to avoid unfair and unjustified hefty tax bills?
I thank the Minister for listening to these proposed amendments. I sincerely request him to take these issues on board. They are a common-sense approach to take two specific areas with little or no impact on the Exchequer. For families who are affected by these two measures, they can have severe financial impacts. I earnestly request the Minister to take those two amendments on board.
I welcome the reversal to the cuts to the pandemic unemployment payment and the wage subsidy scheme which Sinn Féin had been seeking.
On behalf of my constituents in north Kildare, I am raising overarching concerns about the Government's financial priorities in this tricky time ahead. Covid-19 leaves the world in uncharted waters. I am worried that with this Government it is the poor and the barely hanging on who will be cast adrift first. I am especially worried because these are people who do not have an in with the Government. They have no personal access, no pull, nothing to be shared with them. Over the past several months, people have seen clearly how the Government operates. In deciding when to open up after the initial lockdown, it put the desires of lobbyists and party public relations over the public interest and public health. It ignored the Chief Medical Officer's advice and then the Tánaiste went on to disparage that advice on national television.
Now we are back in lockdown, this time for a longer period. Small businesses and ordinary people are paying the price. This Government continues to operate on the basis of access and entitlement for the favoured few, starting with its own members, over the needs of the public. Unless one of the favoured few falls foul of the Government there is no bargepole long enough to put distance between them, as we all witnessed last night in the Dáil.
The Government has had a Damascene conversion to mental health. Mental health features heavily in almost all the calls to my office on housing, debt and other financial matters. All I hear about is people on the edge, who cannot cope, who are on medication for depression or are worried about their children. In light of the Minister's financial priorities I am worried for all of them. Cuts and charges are to be inflicted on those to who can bear them the least. I refer for example to carbon taxes. There is enough here to keep people awake at night, but apparently not the people in the Dáil. What will this Bill do to protect and rescue these people, like Fianna Fáil rescued Fine Gael last night? We hear that Fine Gael's party leader always delivers. Will the Minister follow suit and deliver for the outsiders in my constituency of Kildare North?
I am something of a political nerd when it comes to finance Bills. I am fascinated by the way they provide a mechanism to transfer the wealth generated by society and by working people into the hands of the very wealthy in an opaque manner, year after year. For the most part, working people do not know the details of how they are being robbed of the wealth they collectively produce. I play a game with the finance Bill every year in which I try to find the tax relief that will benefit the rich. I then try to find the sneaky tax that will punish the poor. It is a game I strongly recommend people who care about injustice in society learn to play. They would learn a lot by examining these opaque mechanisms through which the very rich and big business rob the poor. They do so by not paying a fair contribution in tax on the enormous wealth they acquire through profits generated by working people, working people who have to pay their taxes because they are taken directly out of their pay packets every week. Many of the very wealthiest people, who own some of the biggest and wealthiest companies, effectively write their own tax bills. Year after year, finance Bills provide a mechanism for the wealthy to avoid paying tax, either through omission, by failing to discontinue tax reliefs given in previous years, or through proactive moves.
I want to talk about specific instances of that phenomenon. I should mention some of the highlights, most of which were mentioned in the main budget discussions. If for no other reason, we will be opposing the Finance Bill 2020 because of the carbon tax. It is the latest in a long line of regressive taxes which punish ordinary people, often on the grounds of protecting the environment as in the case of bin charges and the attempt to bring in water charges. In fact they are just ways of regressively taxing working people for things that are not their fault but the fault of other people. That is what the carbon tax does. The net effect of the €7.50 increase in carbon tax this year will cost ordinary people about €60 or €70 a year. Increasing carbon tax by €60 or €70 every year up to the targets proposed will slowly chip away at the income of ordinarily people, disproportionately hitting the poorest as a substitute for taxing the polluting corporations that do the real damage. We do not want to tax them. In fact we go out of our way to make sure they do not pay taxes by providing them with a multiplicity of tax breaks.
Because we will not do that, we tax people who live in council houses they are not even allowed to retrofit. Such people cannot do anything to reduce their energy bills until the local councils decide to retrofit their homes, but they are going to be punished with additional energy costs to keep their houses warm. People are going to be punished for the fact that they cannot afford electric cars. A wealthy person can afford a brand new electric car, but someone who does not have the money for that will be punished for it year after year on a progressive basis. That is one reason we will be opposing the Bill.
The employment wage subsidy scheme is another major issue. We welcomed and supported the measures to support people's incomes and maintain their relationships with their employers. There is an interesting contrast with the case of Debenhams workers. We are looking for €10 million for them to get their two plus two. We cannot get it because it is too much to ask, it will set desperate precedents etc. However, Boston Scientific, a major multinational company that produces medical equipment, was fully operational during the pandemic but it benefited from the temporary Covid-19 wage subsidy scheme. This company is hugely profitable but fiddled around with its manufacturing process to meet the required 25% reduction in turnover and benefited from the scheme as a result. A range of quite profitable companies are benefiting. I support any Government measure to keep people employed and maintain their relationship with their employers, but there should be oversight over companies' cash reserves, their ability to contribute and any top-ups they are making. Are the CEOs and executives of these companies paying themselves massive salaries? Are they operating offshore in order to avoid tax? Those oversights were not imposed on many very profitable and wealthy companies that benefited from the subsidy schemes.
Returning to my favourite game, I notice a couple of tax benefits for the rich. One was mentioned earlier. Section 48 provides a partial refund of stamp duty where land is developed for residential purposes. This extends from 24 months to 30 months the period in which construction must be completed for a developer to benefit. In layperson's terms that is a tax benefit for land hoarders and speculators, people who are already profiting very handsomely from our inflated housing market. That market benefits developers while the lack of public and affordable housing has the wider social effect of a housing crisis.
I do not really understand this section 23, which provides for capital gains tax relief for individuals who dispose of assets of a qualifying business or shares in a qualifying company if they have owned them for three years in the five-year period before their disposal. I will not go into all the detail. We can do that on Committee Stage. However, that seems like another tax giveaway for the haves instead of the have-nots.
That can be added to the litany of tax reliefs and allowances that allow very big corporations, some of the wealthiest corporations in the country which have seen their profits double in the past ten years from approximately €80 billion gross profit in 2008 to approximately €180 billion gross profits before tax deductions in 2020, to pay tax on only approximately €90 billion of those profits. They avail of tax loopholes for the other €90 billion. The loopholes include things such as the research and development tax grant, intra-group transactions and tax relief around amalgamations, which is another big one. Many of them are detailed in a very interesting list I have before me which is produced by Revenue. I wave it about every year. It lists all of these tax reliefs which amount to approximately €20 billion or €30 billion per year.
A tax relief I have highlighted for the past few years is that relating to intra-group transactions. That is how big multinational corporations essentially write down their tax bill by stating they owe money to another subsidiary of their company money and therefore do not have to pay tax on those profits. Interestingly, that heading on this little Revenue list has changed and disappeared. I suspect that is because I keep highlighting it. It has gone from the list and been merged into a few other headings. It is worth pointing out that Pfizer has 27 subsidiaries in Ireland, Johnson & Johnson has 23, Merck has 23, Abbott Laboratories has 13, Thermo Fisher Scientific has eight, Gilead Sciences has seven, Boston Scientific has six and Eli Lilly has six. There are loads of companies that have a network of subsidiaries through which they organise their tax affairs basically by paying each other loans and money and royalties and all the rest so that they end up paying little or no tax. I do not have time to go into all of the details but I think it is a scandal. Every single year at budget time the House should be examining every single one of these tax reliefs, looking at who benefits from them and assessing what benefit, if any, is actually going to society. I think we would find they are of very little benefit to society.
I will conclude on section 481 tax relief. I pay tribute to the Minister, Deputy Donohoe, because he has genuinely listened on this issue and made genuine changes relating to the section 481 tax relief from which film production companies benefit to the tune of approximately €80 million each year, in addition to the approximately €20 million they get from Screen Ireland. That adds up to €100 million per year, or €1 billion over the past ten years, that has gone to the film industry, but how many people have actual permanent jobs of any description in the film industry? There may be 50 such jobs if we are lucky. At one stage, the people who get all this money appeared before an Oireachtas committee and stated there were 17,000 jobs. Members stated that was not true and that there were nothing like 17,000 jobs. The Department of Finance looked into it and discovered there were approximately 2,000 jobs, all of which were Strumpet City style jobs. People would go down when the film was set up and ask if there was any chance of a job but be told that film company did not really like them and would not give them a job. That is how the film industry in this country works. Nobody working in the industry has a pension or any basic entitlements in terms of continuity of service. One can work in the Irish film industry and be blacklisted tomorrow, as some people have been because they actually highlight these matters. Those people get absolutely nothing, but the State hands out very large sums of money totalling approximately €100 million each year.
Deputies should not get me wrong. I want money to be put into the Irish film industry. In fact, I would not like a cent less to go into it. However, I believe the funding needs to be tied to ensuring there is proper employment, decent contracts, pensions and so on for those who work in the industry and a recognition of their service and the years they have worked in the industry, something that does not currently happen. In that regard, I point out to the Minister that according to the Revenue figures, several of the big production companies get €10 million to €30 million on a production. It is probably a breach of the EU rules in terms of reporting state aid not to be sure whether they were given €10 million or €30 million of public money. That is unacceptable for a start, but those same companies have gone to the Workplace Relations Commission, WRC, in recent weeks and stated that they have no employees, that it is a designated activity company, DAC, that has the employees rather than the company that receives the money from the State. Despite the reforms the Minister brought in, the companies are still playing the same game of trying to hide behind the DAC and not take legal responsibility for their employees. That must stop. I appeal to the Minister to look further into how these companies are saying one thing on a declaration they are supposed to sign to get the relief and saying another thing when they go before the WRC.
I refer to the proposal in the Bill to tax people who have received the pandemic unemployment payment, PUP. The maximum rate for the PUP was €350 per week. Many people who were on that rate had already taken a big hit to their income. People who were on €600, €700 or €800 per week saw their wages halved. The proposal is to tax them on that. That is wrong. It is particularly wrong when it comes as part of a Finance Bill and budget which is handing out billions in corporate welfare. One law for the rich, one law for the rest. The Minister may argue that it is €524, that people will not have to start to pay until 2022 and they can stretch it out for four years, but that is not the point. The point is that it is wrong in principle and it should be withdrawn from the Bill.
I wish to raise a point about Debenhams, as I often do. There is €10 million at stake to settle this dispute. The workers were at the WRC last Friday. They were informed by the liquidator, KPMG, that it may walk from the process by 23 December if it has not been resolved before then. That puts a question mark over a just settlement for the workers, as well as the €20 million in revenue that is due to the State from the liquidation. The money is owed to the Revenue Commissioners, local councils for rates and so on. All of this points to the urgent need for the Government to intervene directly and to put money on the table. That would resolve the dispute, allow stock to be moved out of the stores and ensure workers get their payment. It would free up the situation and ensure the State gets at least some moneys from the liquidation. The Government must intervene and put money on the table in respect of that dispute.
While I am on the issue of liquidations and redundancies, it does not take a rocket scientist to figure out that next year will be a big year for redundancies, unfortunately. What the State says in that regard has big implications for workers and the public finances. Mr. Kevin Duffy and Ms Nessa Cahill appeared before the Joint Committee on Enterprise, Trade and Employment this morning. I understand there was a meeting of what is described as a stakeholders' forum this afternoon to discuss the programme for Government commitment to improve workers' rights in a liquidation situation and to discuss the Duffy Cahill proposals. I know that is not the direct responsibility of the Minister of State, Deputy Fleming, who is present, but the question of redundancies and what the State pays very much are his responsibility. I would like the members of that stakeholders' forum to be identified on the record of the Dáil. The press statement referred to it being made up of social partners. I wish to know which groups are involved in it. Is it made up of IBEC, the Irish Congress of Trade Unions, the Irish Small and Medium Employers association or other groups? Does the forum have terms of reference? If so, where are they published? If not, why not? Does it have a deadline for completing its work, either by producing a report or making recommendations? What is that deadline? When will it meet again? There is not enough information around the establishment of the forum. The Minister of State, Deputy Fleming, may not be able to reply to those questions, but he could raise them with his line Minister. I am putting the issue out there.
On the issue of the temporary wage subsidy scheme, TWSS, and the employee wage subsidy scheme, EWSS, 66,500 companies benefited from the former scheme, according to Revenue information published last weekend.
By no means were these overwhelmingly small companies or medium-sized businesses but included some of the biggest businesses in the country, such as Brown Thomas, JD Wetherspoon, Zara and Volkswagen with 85% of the wage bill paid.
One of the companies that got paid under the scheme was Penneys, a company that is set to make £350 million profit in 2020 between Ireland, Britain and a few other international outlets it has. Penneys wants to reduce the hours of the workers in shops at the moment. Workers who are on 11-hour contracts but would have been getting 30 or 40 hours of work are back down to 11 hours or close to it. Workers are having their income slashed while the company is benefiting significantly from the scheme. That needs to be looked at more carefully.
Aer Lingus workers have still not been able to get their social welfare arrears for the period from March to September. In some areas the Intreo offices are accepting the claims, but in most areas they are being refused. The company has played havoc on this in an attempt to drive people out without having to pay redundancy or to enforce changes to work practices, but the State is complicit by not giving a direction to Intreo as it should. Aer Lingus management should be called before an Oireachtas committee to answer for what is going on there which is scandalous.
I wanted to make some points about the capitalist system, but I have only nine seconds left. No doubt I will make them some other day.
I appreciate the opportunity to speak on the Finance Bill 2020. As we all know, it is a very difficult time for businesses across the country. The measures in the Bill are intended to go some way to reinforcing the Government's support for the economy against the challenges of the Covid-19 pandemic and the continuing possibility of a no-deal Brexit, which is a very serious risk for the Cork East constituency I represent.
The new Covid restrictions support scheme and measures such as the reduction in VAT will provide much-needed support to businesses that have been forced to close or significantly reduce trading as a result of the move to level 5 restrictions. Throughout the country businesses, particularly in the hospitality sector, have been feeling the pinch of the Covid-19 pandemic. Cork East is famous and well regarded for its many hotels and tourist attractions. It is also the home for the Irish agrifood industry. They have all taken a serious hit with the Covid pandemic and Brexit. It is important that the Government is taking proactive action to try to help companies and employers as we try to rebuild the economy in the post-Covid era.
I greatly appreciate the difficulties that businesses and individuals face in dealing with Covid-19. In addition to the day-to-day challenges of Covid, they have difficulty with financing and getting accounting practices up-to-date and correct. Many business owners I am engaging with have found it very difficult to find finance to keep their businesses open. It is great that the Government has taken proactive action by helping with community banking and credit unions. In my constituency I know the Minister actively engaged with Midleton Credit Union which is very welcome. I hope he will continue to do that in his ministerial position.
The Covid restrictions support scheme, CRSS, will be very good for businesses and provide them with certainty to allow them to plan accordingly when faced with a greater level of restrictions. Unfortunately, as the Chief Medical Officer told me yesterday when I was questioning him at the Joint Committee on Transport and Communications Networks, we do not know when we will be able to completely move away from restrictions on our everyday life. However, as I have said many times in this House and elsewhere, we need to introduce measures that give people clarity so that they can plan despite the uncertainty faced throughout the Covid-19 pandemic.
Budget 2021 represents the single largest investment in the history of the State. We are making this investment at a time when it is needed most to protect the lives and livelihoods of people and to rise to the challenges of Covid-19. The CRSS scheme will come at a cost to the taxpayer of €80 million a week during the level 5 restrictions. This will be up to €480 million until 1 December. I do not think anybody can come to the House and say the Government is not supporting local businesses and industry on the ground to try to protect jobs. It will provide grants of up €5,000 a week to businesses that have been forced to close and operate with significantly curtailed restrictions. I hope the scheme will bring a level of certainty to the businesses hardest hit by these restrictions, such as the consumer-facing sector of the economy, including retail and hospitality.
I have engaged extensively with the Irish Hotels Federation on the supports hotels need to get through this crisis. Other tax measures included in the scheme, such as the temporary reduction in the VAT rate for the hospitality and tourism sector from 13.5% to 9% with effect from 1 November 2020, are also very welcome. The VAT rate reduction will ensure that when the sector reopens, people will be encouraged to go and use hotel facilities once again, which will be critical for the recovery of that sector.
I have long been of the opinion that hotels are a safe controlled environment for people to engage in socially distanced activities. I hope the reduction in VAT will see a similar boom in tourism as we saw in the early part of the last decade which greatly helped us get out of the last recession. The Departments with responsibility for investing in this area should put in place measures such as the Gathering which we had at the start of the last decade, which was quite an effective measure.
The extension of the employee wage subsidy scheme into 2021 will come as a considerable relief. This will ensure fewer redundancies and lay-offs. It is vital that we maintain the link between employers and employees. This will allow businesses to return quickly when the restrictions are lifted.
The continuation of the commercial rates holiday and tax warehousing also gives employers certainty on cashflow and ensures there is not an increase in additional costs causing debts to grow during lockdown periods. The hospitality sector is a key component of the Irish economy. On several occasions I have outlined to the Dáil how important it is to my constituency. As a collective it is worth up to €7.6 billion and employs over 180,000 people across the country, which is staggering. It shows how important it is to have a multilateral approach to the Government to get this industry on its feet again once we get through the worst of the pandemic. Any support we can put in place to protect such industries is timely and welcome. The leadership the Minister has shown in putting the necessary financial resources in place and taking advantage of the current low interest rate is highly encouraging.
I hope we continue to engage in sustainable investment patterns to ensure we have a robust and future-proofed economy for the challenging times that lie ahead. We must not be afraid to spend now to save in the future.
The Finance Bill is the bread and butter of the changes the Government makes as a result of what most people call the budget which happens each year. It comes and it goes overnight. Most people do not know how the budget affects them until they see changes on a payslip, apply for social protection supports or go to the shop to buy some goods. The changes to the USC threshold for lower earners will give people a small increase in their earnings. Any increase is welcome, but the amount will certainly not be life changing. What little money is given is taken back faster.
My colleagues and I have repeatedly raised the increase in the carbon tax. Ordinary people and families do not have alternatives to heat their homes. They are being punished due to no fault of their own. What does the Minister say to the elderly person or the family with children who have an open fire and buy their bags of coal or a tank of oil to keep their house warm this winter? Will he tell them what they can do as an alternative to heat their home? People are living in poverty and the Minister must accept this increase is not fair. With the Covid-19 pandemic, people are told to stay in their houses. Are they to stay in their freezing homes because they cannot afford fuel to keep them warm?
These increases will happen every year for the next ten years. The Government has to bring people along and this measure does not do that. It is punishment of the weakest.
On the help to buy housing scheme, how can young people get interest relief on savings when they cannot afford to save because they are paying enormous rents? Affordable housing, built by Government and local authorities is needed, not saving schemes that increase the price of houses.
I have some questions on the Bill which I hope the Minister will address. There is a great deal of speculation about a possible vaccine for Covid-19. Hopefully it will start to bring the virus under control but priority must be given to encouraging the maximum uptake possible, including among young people, when it becomes available. Vaccine hesitancy is a major issue that will arise. It will come very much into focus in the coming weeks and months. An issue that will arise soon is that of indemnity for suppliers of those vaccines. Will the Minister clarify if indemnity has yet been sought from any of the manufacturers? There is always a risk with any vaccine. That risk may be very small, particularly compared to the risk of not being vaccinated, but it must be acknowledged. However, we are one of the few, if not the only country, in the European Union that has failed to introduce a national vaccine injury compensation scheme for adverse reactions, if they occur. Sadly, the approach in this country has been to brush this problem under the carpet and to force victims and their families through long years of legal battles which ultimately only benefit the legal profession, not the patient.
Back in the spring of 2002, 18 years ago, I had a meeting with the then Minister for Health, now the Taoiseach, with Margaret Best from Cork. The then Minister, Deputy Micheál Martin, gave a commitment to investigate the feasibility of providing support for parents but especially their children who had been damaged by State-run vaccination programmes. That ultimately led to the vaccine damage steering groups whose report was published in 2009. Eleven years later, we are still looking at this issue and still sweeping it under the carpet. We are still forcing patients to go to the courts to find fault where no fault exists just to get an acknowledgement of what happened them. That is wrong. I will continue to raise this until it is addressed. I would rather not have to raise it in the House as we deal with the roll out of the Covid-19 vaccine. I will advocate that people should take the vaccine when it becomes available but I will not allow the issue be brushed under the carpet any longer. I hope that during the process of the passage of this legislation that the funds are put in place to establish such a compensation scheme.
The second issue relates to section 6 of the Bill which refers to providing an exemption from income tax for payments under the mobility allowance. I welcome that provision but only a small number of people are eligible for the allowance because it was suspended eight years ago. Only people in receipt of the allowance eight years ago are eligible for this incentive. The allowance was suspended at the same time as the motorised transport grant, two of only three supports that were available for people with a physical disability who did not have access to public transport. The third support was the disabled driver scheme which has now been suspended because no new applicants can go into it because they cannot get a primary medical certificate as the Minister for Finance instructed the HSE to suspend processing those on foot of a court decision. This means that anyone who has a physical disability from this day forward is effectively marooned in their home if they do not have direct access to public transport. It might be someone who was involved in an accident, say someone who was unfortunately involved in a farm accident, who is marooned because he or she does not have the financial resources to adapt a car or purchase a new accessible car and no scheme is available. Will the Minister update the House on when primary medical certificates will be issued once again? What provision is being made in this legislation to address that?
The third issue, which I will raise in more detail on Committee Stage, relates to the supports that must be put in place across the midlands with the closure of Lanesborough and Shannonbridge power stations. Twelve months ago, during the passage of the Finance Bill, I put forward proposals that were rejected. The Government has had 12 months to come forward with constructive proposals. This Bill has no specific proposals for the communities that are being decimated by the closure not only of the two power stations but the 20 Bord na Móna works sites across the midlands, including in the Minister of State's constituency, that will be wound down as a result of the move from brown to green. It is a move that I agreed with and worked on with Bord na Móna but one that was supposed to be a transition over a decade, not 12 months. I am disappointed that Kieran Mulvey, the Government-appointed just transition commissioner, has been quite critical of the fact that the Government has not sought changes to EU state aid rules. He told a conference late last month that there is an urgent need to change state aid rules to better support local authorities, businesses and communities in the midlands moving away from reliance on peat production towards the just transition. He went on to point out that there is absolutely no point in encouraging local communities to think big and come up with innovative solutions if they will be blocked in developing those innovative solutions in creating jobs in their local community because it breaches state aid rules or has an impact on competition rules.
The European Committee of the Regions produced a report earlier this year which stated that changes are needed to the state aid rules. However, the responsibility and onus is on the Government to seek those changes for the midlands region in order to support local jobs there. It is imperative that we have very specific and focused incentives in the Finance Bill to stimulate job creation in that area. I accept that the issue may not have got the priority it should have because of the Covid-19 crisis, but we are now weeks away from the closure of the power stations to which I referred. The Government must pull up its socks and provide the types of incentives that are needed.
I am sharing time with Deputy Fitzpatrick. At first glance, the Finance Bill looks like legislation for the ultimate Ross O'Carroll Kelly budget. When one looks more closely, it is clear that a phenomenal number of sectors have been left out of its provisions. In the case of older people, for example, who are most vulnerable and exposed in this particular crisis, there is not even a tenner a week for them out of an €18 billion budget. Another group that has been massively stuffed in this budget is student nurses. They were promised by the then Minister for Health, Deputy Harris, that they would be paid for the work they do on placement during the pandemic. That has not happened and it is absolutely wrong. It is unacceptable that nurses, who are most central to our management of the pandemic, very vulnerable to infection and holding the whole process together, have not been looked after in the manner that was committed to by the Government. I pay credit to Aontú representative, Paul Lawless, who has been leading the fight on this issue.
A shocking figure has come to light today, namely, that half a million people are now unemployed in this State. That does not take into consideration the people who are on wage subsidy schemes, who number in the tens of thousands. These people were made unemployed in large part due to the level 5 restrictions that came into place before the outputs of the level 3 restrictions materialised. The mantra of the Government from the start has been that we are all in this together. The Minister of State will have to agree that this is plainly untrue. Hundreds of thousands of workers and businesses have had their ability to earn an income taken away from them. Many have had their incomes radically reduced and hundreds of thousands have been pushed into poverty. The restrictions have imposed a massive cost on many people throughout the country.
We in Aontú believe that politicians cannot represent if they cannot relate. There is a song by Beck which includes the line, "You can't write if you can't relate". The same is true for politicians. We cannot represent the people if we cannot relate to the situation they are in. When a Government is making decisions for the population while its members are themselves immune from the consequences of those decisions, it does not make for good governance. If politicians do not share in the cost of those decisions, if they are blind to the real experiences of so many people, that is wrong. In the last economic crash, there was a logical downward pressure on the incomes of elected representatives in line with the rest of society. On this occasion, however, elected representatives' incomes are going in the opposite direction from the incomes of the people they represent.
I submitted a Bill to the Dáil today which seeks to cut Deputies' salaries by 25% for the period of level 4 and level 5 restrictions and during level 3 restrictions when pubs, cafés and restaurants are closed. If the body politic is going to make a decision to radically reduce the incomes of up to half a million people, even if that decision may, in some circumstances be logical, then we in this House should at least take some of that burden upon our shoulders. Talk of everybody being in this together has been thrown around like confetti in this House since the start of the pandemic. It is time we put our money where our mouth is. I will seek to amend the Finance Bill to allow for the provisions of the Aontú Bill to be taken into consideration.
Rural Ireland gets bits and pieces of support from the Government, with some money going to this scheme and some money to that scheme. The truth of the matter is that those schemes are, in many ways, like social welfare for rural Ireland, providing enough to just get by but never enough to strive. We have a radical problem in this country with a lopsided development that is turning Ireland into a city state. This budget will in no way address that problem. The trends we have seen over the past four Governments will continue under this Government unless we start to address that issue.
Finally, Ireland is an outlier in European terms when it comes to childcare provision. The shamefully low investment in the sector was completely ignored and allowed to continue for far too long. Since the start of the Covid crisis, many childcare operators have had to shut their doors for good and others are struggling to survive. I urge the Minister to accept our amendments seeking to give the childcare sector the support it needs.
We are in the middle of a worldwide pandemic and also facing the prospect of a hard border within two months. Overall, I believe this budget is the right budget for this time and will give us an opportunity to get the economy back on track, once we get over the Covid crisis. Brexit, on the other hand, will be a more difficult challenge and will, I fear, have longer-term consequences for the country, particularly for Border counties like my own constituency of Louth. The budget has not delivered answers or solutions in this regard.
The devastating effects of Covid on our livelihoods and day-to-day lives are unprecedented. The last time we were faced with a similar level of economic collapse was during the banking crisis. At that time, the decision was taken to introduce austerity. In hindsight, this was clearly wrong and it put too much of a burden on the ordinary people of this country. I am pleased that the Government has not taken that approach in this crisis. What the economy needs now is access to money. Businesses that have been forced to shut their doors during the lockdown must be supported. In fairness, a number of support measures are in place. Many of the businesses most impacted are small businesses, often family-owned for two or three generations. I know from speaking to business owners in Dundalk, Drogheda, Ardee and Carlingford that they are extremely worried about their futures. They are fully supportive of any measures that will protect the public and they have shown their willingness to put their shoulders to the wheel to support the public health measures. In return for their support, we must ensure they are given every opportunity to reopen their businesses once it is safe to do so.
The universal social charge, USC, was introduced as a temporary austerity measure during the last economic crisis. It is time now to put in place a plan for the winding down of this tax. It has done what it was supposed to do and we need to see it removed from the tax code.
Section 3 of the Finance Bill seeks to amend the tax treatment of the pandemic unemployment payment, PUP, which will now be treated as income for tax purposes. This change is wrong. People who lost their jobs through no fault of their own will now face the prospect of having to pay additional tax on their PUP at some stage over the coming year. That will only cause additional stress and worry for the thousands of people currently receiving the payment. The Government must clarify the tax treatment of this payment in order that the many thousands who are receiving it a have certainty as to their tax liabilities.
Section 11 makes provision, by way of the insertion of a new section 485 in the Taxes Consolidation Act 1997, for the introduction of the Covid restrictions support scheme, CRSS. This scheme is targeted at businesses that have been significantly impacted by the lockdown restrictions and it has been welcomed by many businesses. However, it is targeted only at businesses operating out of a fixed premises and which have had to close that premises to the public. I have spoken to many tradespeople in the construction industry who are unable to avail of the scheme. They generally work alone or perhaps in two-person teams, going into people's homes. The Minister needs to look at their situation and offer them some type of solution.
Section 25 of the Bill confirms a price increase on tobacco products. I have been a constant critic of the tobacco industry and am of the view that it should contribute more to the health costs arising out of the use of its products. It costs billions each year to treat people who have illnesses associated with tobacco. It is time to charge additional taxes on those companies as a contribution to the yearly costs of treating patients affected by their products.
Section 26 makes provision to increase the rate of carbon tax. For the record, I am totally in favour of carbon neutral activities and fully support any moves to make homes more energy efficient. However, I am totally against taxing each and every person in such an aggressive manner. This tax will affect those most in need. It will impact on the people who do not have the resources to make their homes more energy efficient or to upgrade their cars, if they have one, to a more energy-efficient model.
The carbon tax will affect these people most and this is unfair. With regard to electric vehicles, I fully support their use and I hope they become more affordable. The provision of charging points needs to be improved. We need to incentivise people to install charging points at their
homes. We are way behind in this area in comparison with our European neighbours.
I welcome the reduction in the VAT rate to 9% until December 2021 for the hospitality industry. This has been called for constantly. Let us be clear, however. This reduction will be of no value if businesses are forced to close due to the lockdown. We have to look at this issue and put in place measures to further support the sector. As I have said, the reduction in VAT is of no benefit if the business is forced to close.
The recently announced tax credit for staycations, while welcome, is not fit for purpose. It is too cumbersome to use. There is too much red tape involved and it is of no benefit to many of the businesses it was intended to help. As I have said before, we need to get money into people's hands to spend on staycations. A simple solution would be to give people a voucher to spend in the hospitality sector. People would then have money in their hands and the hospitality sector could gain directly.
We should be thankful that the Government did not introduce austerity and decided that supporting businesses to stay open is the correct policy to pursue. Let us be clear, whatever needs to be done now to keep our economy open, must be done. If we need to borrow money, that is what we need to do. If a business is forced to close permanently as a result of lockdown, there is no comeback for that business. It must be remembered that behind every business are people.
I offer my full support to the many great businesses in Louth that have made great sacrifices in the name of public health and closed during the lockdown. They have made very difficult decisions that were not based on income but on human needs. For this, we must support them in reopening.
I will confine myself to commenting on three aspects of the Finance Bill because of the lack of time available. I want to ask the Minister about the tax treatment of the pandemic unemployment payments, PUP. The PUP scheme is very different from ordinary social welfare schemes. There are different rates, different conditions and so on. The reason for this is very simple. We are all familiar with the reasons people find themselves on social welfare in the ordinary course of events but people find themselves on the PUP because the businesses for which they work have been closed by Government decree to protect health. We all accept this was a necessary move for the Government to make but, nevertheless, these people find themselves in this position because of a Government decision rather than through any fault of their own. Many of them have suffered a very considerable drop in income and will have considerable bills to pay when and if they finally get back to work. It is very unfair to include the PUP in a person's total income for tax persons because this means that, when they get back to work and try to restore their financial position and pay their bills, they will also have a tax bill from the Revenue Commissioners. I realise the Minister will allow them to pay this bill over a period of three or four years but it is, in principle, wrong. The Government was forced to reverse its reduction of the PUP and to restore it to the original rates. It is now proposing that, when people get back to work and are at their most vulnerable, they will face an income tax bill. That is unfair and unjust and should be examined again.
There are many arguments both for and against the help-to-buy scheme. I will not get into the question of whether it increases house prices but the scheme as currently constructed does not, to a large extent, meet one its stated objectives, which is to allow people on lower incomes to purchase houses. The difficulty is that, because of Central Bank rules on mortgages, the mortgages of those on lower incomes are determined by the size of their salaries. I am talking about people on €40,000 a year or less, of whom there are hundreds of thousands in this country. To qualify for the help-to-buy scheme, one's mortgage has to be for at least 70% of the value of the house but people on low incomes will not be able to borrow enough. They will not get a mortgage equivalent to 70% of the value of a house in most cases. The difference has to be made up with their own savings, if they have any, or with support from family. The higher one's salary, the greater one's opportunity to avail of this scheme because, under Central Bank rules, a higher salary will allow one to get a mortgage equivalent to 70% of the value of a house.
I did a calculation recently based on a person earning €35,000 a year. The most such a person could borrow would be €125,000. To get any kind of a half decent house in Limerick one would pay €240,000 or €250,000. Such a person would therefore fall short of the 70% and would not qualify. People on much higher incomes, however, would. One can receive a refund of a maximum of €30,000 of the tax one has paid over the past four years. The irony is that people on low incomes will not qualify for that amount anyway because they will not have paid that much tax over the past four years. I ask the Minister to comment on that in his response.
My final point relates to the Covid restrictions support scheme, CRSS. In his budget statement, the Minister for Finance made a very expansive announcement about this scheme but, if one looks at section 11 of the Finance Bill and at the detail of how this scheme will operate, it is by no means as extensive as we were led to believe. I note that it is confined to businesses that have premises. Why is that? Can anybody explain the logic of that to me? The rates rebate applies only to those who have premises because those who do not obviously do not pay commercial rates. They are advantaged over what we might call "the man in the van". The way in which this scheme is drafted means they now have a second advantage over the sole trader or small company that does not have a business premises. That is wrong.
I notice that the Revenue guidelines on section 11 say that a company that supplies a service, equipment or whatever to a number of businesses which have closed down because of Covid will not qualify for this scheme. Quite frankly, I do not understand the logic behind this. I spoke to somebody in Revenue and it seems that, if a person is supplying sound equipment for the entertainment industry and all of the local pubs and entertainment venues close down, that person will not qualify. The logic appears to be that he or she can find other customers. That is all very well if one is selling hamburgers or something like that but it certainly does not apply if one is selling specific items for which there is a limited number of customers. It is very unfair.
With regard to the CRSS, section 11 states that the scheme will be paid as an advance credit against future trading income. All of the documentation that has been released by the Government and the Department of Finance has referred to this as a grant. What does this subsection mean? Is it an advance against future tax credits such that, when the business starts paying tax again, it will lose some of its credits until such time as it has repaid what it has collected from the State? This would mean that the more a business collects from the CRSS, the higher its tax bill will be in the future. If that is the case, the Department of Finance should stop referring to this as a grant as it would, in effect, be a loan against future tax credits. I was hoping it would be a grant. On the day of the budget, I thought it was. If it is an advance against future tax credits and will be clawed back through future tax on trading income, it makes the incentive very limited indeed.
My time is up. I look forward to what the Minister has to say on those three brief issues.
Coicís ó shin, bhí mé ag caint mar gheall ar rudaí a bhí in easnamh sa bhuiséad. Leis an méid sin airgid a bhí ag an Rialtas, cheap mé nach mbeadh seans ann go dteipfeadh air ach níl an iomarca sa Bhille Airgeadais chun daoine laga agus oibrithe a chothú. Mar shampla, cuirfidh an méid cánach ar dhíosal na hiascairí cladaigh faoi bhrú. Following the recent High Court ruling, the collapse in lobster and crab prices and the increase in the price of diesel, smaller fishing boat owners will have to borrow for next year.
There is nothing else in the budget for them.
Carers have had an incredibly difficult time during this pandemic. There is an absence of day care services, respite nearly ground to a halt, and they had additional spending for personal protective equipment, PPE, heating, groceries and sanitiser. Many carers in Kerry spoke to me, saying that when they apply for the carer's allowance, it seems there is an automatic policy of refusal on first application. I am not sure if they are right or wrong. Carers and the people for whom they care are vulnerable and many may be older and have underlying conditions. We must do everything we can to support them.
Much has been said already about the pandemic unemployment payment and making it taxable income. Dozens of my constituents are distressed because their application for the Covid-19 payment has been declined on the basis of the Department not having any recent record of PRSI contributions made by them in specific classes. Operational guidelines must be published so that people can understand this.
In the previous lockdown the staff in my office in Tralee dealt with three people in the Limerick social welfare office. They were Anne, Gráinne and Jim, and I know them well. They were able to deal with things on the spot. A new email system has been set up, often taking two full weeks for us to get a reply for people who have had to go on supplementary welfare to get the Covid payment. PRSI contributions were previously not a problem and this stinks of an attempt to reduce by any means necessary the numbers of people taking the payment. We cannot get through this pandemic on the cheap but the Finance Bill seems to be trying to do this.
The Covid restrictions support scheme, CRSS, seems to have been written for one industry at the expense of another. Food suppliers in Killarney, who supply hotels and catering facilities, have contacted me as they seem to have been deliberately and precisely excluded. These are family businesses with good employees over the years and they are wondering what they ever did to upset the Department.
Bizarrely, in the budget there seemed to be scope for VAT to be reduced across a broad range of goods and services delivered to NATO members and European states engaged in the EU Common Security and Defence Policy. This effectively amounts to a State subsidy for these activities, and this must be subject to proper scrutiny. It is an irony not lost on me that the effect of this Finance Bill will be to increase fuel costs for small fishermen while decreasing them for the US military.
I will be voting against the Bill, mainly due to the regressive carbon tax measures in it. The carbon tax is an attack on the people of rural Ireland and the people of my constituency of Cork South-West. It is an attack on the lorry driver, the agricultural contractors, the fishermen who must fill their trawlers and the ordinary father and mother who go to work every day and take their kids to school. They are being hit in the pocket at the filling station when they move.
The same politicians from Cork South-West voting for this Bill will be knocking on people's doors at some stage looking for a vote with a smile on their face, saying they did well for those same people. What did they do? They are set to destroy those people and take money from their pockets. They are hurting the same people who must fill the home heating oil at some stage at an extra cost. They cannot fill the car or buy a bag of coal, which is now an outrageous price.
The days of balancing the books are truly behind us and governments all over the western world are now running expansionary budgets. The allocation of €5 million in funding for digital hubs and €132 million for the national broadband plan is completely inadequate. In 2021, many parts of rural Ireland will be without adequate broadband despite opportunities being created for remote working by this crisis. The budget is a missed opportunity to recalibrate for a society that has changed to remote working, and this could completely transform many parts of rural Ireland into vibrant communities, with consequent benefits.
The Minister, like me, probably knows of blackspots all over his area. In my area there are parts of Bandon, Kinsale, down to Ballinadee and right back to Bantry and Skibbereen where there are broadband blackspots that could be easily solved with a small bit of funding and thought. It is not forthcoming and the least amount of money is being put forward again this year. Broadband will be spoken about down the road.
There is funding for Irish Water but there is little or no funding for major projects that must be carried out in Cork South-West. It is only about what money can be grabbed from us so we can insulate the homes of people in Dublin and beyond. It is what I can see. There are projects in Bantry that are in desperate need of progression but no funding is to be set aside for it.
The 600 houses required in Clonakilty will not be going ahead because serious investment in water infrastructure is needed. I have spoken to developers in Clonakilty who have even been refused planning permission. It is one of the most vibrant towns in west Cork, and I admit it is great to see it and we should not deny any bit of vibrancy in a community. These towns need investment in the local community but they cannot get it.
I had a Zoom call with the Bandon business association the other day. They want the southern relief road to progress the town, which was partially done before people walked away 15 or 20 years ago. There was talk of doing half of a proposed northern relief road as well. It seems only half of everything comes to west Cork, or even zero, as there is nothing happening with the northern relief road. These people need the southern relief road finished. There must be funding to get towns like this up and running. There was a big announcement on St. Brogan's school in Bandon, but no sod has been turned yet. There is a desperate need for a stand-alone community college in Bandon. It is the kind of investment we need in places like Bandon.
Why are people paying VAT on PPE? There should be zero VAT on Covid-related PPE, so why is the Government profiting from people who are desperate to protect themselves from illness?
Many businesses want financial institutions to lower card transaction costs, given that most transactions are now cashless. This is a big issue for smaller businesses, who wish to lower the transaction costs for credit card payments. I have very little time left but we must also consider putting in place a mortgage moratorium for all businesses affected by Covid-19. This was discussed before. It should also apply to homeowners for the months in which they are struggling.
Publicans are losing businesses and the Government shut them with the click of a finger. They got away with it but when we caused a bit of excitement here, they were reopened. The Government is happy to have them shut again. I spoke to a publican the other day who spoke to his bank, which is not willing to give him any grace. It is game over as far as that bank is concerned.
At the outset I will highlight the great concerns I spoke of in my speech after the budget. One of the first concerns is the absolutely crazy anomalies created by the tax reform group, which was set up by the Revenue Commissioners. It is actively discussing the raising of further excise duties to compensate for the excise duties that will be lost with the introduction and pushing of electric cars and other vehicles on the public.
I can translate this into very straight and ordinary English. Any person doing what might be considered the good and right thing, if he or she can afford it, might buy an electric motor car. The Government is trying to devise ways of increasing excise duty and putting it on electricity bills. This is where the group is looking to increase excise duties. This is absolutely crazy. If what I am saying is incorrect, I would like the Minister to correct me. If it is not true, he should highlight it. Unfortunately, I am sorry to say that what I am saying is factual. It is a Government report and it is trying to dream up ways of hitting people with more excise duties to compensate for the duties it will lose.
This Government has signed itself and future Governments up to the carbon tax, which will affect people living in rural Ireland most. We do not have adequate public transport and we must rely on our own motor cars to transport us from A to B. We should always remember that the person living in the Black Valley or Ballinskelligs is as entitled to live as the person who resides in Blackrock. These people are entitled to go from their homes to their place of work or to an education as much as anybody else. It costs us more to do that because we must travel.
We are delighted to keep the lights on in those because they are the very areas this Government and other Governments would like to see shut down. The Government would be delighted if there were no lights on in Portmagee or in a lot of rural Ireland. The Government would be happier if that was the case, because it would like to centralise people in towns, villages and cities, despite those areas being unable to cater for the people they have already.
I have no doubt that in the years ahead electric vehicles will probably be a good thing. They are not fit for purpose at the moment, however. It is like the mobile phone I have now. Current models are elaborate computers, whereas 20 years ago were very basic and were just phones. It is the same with the current electric vehicles. Great advancements will be made in the years to come in electric vehicles, and that will be welcome. We must remember, however, that the green agenda we are forcing onto people is expensive. I remind people that what this Government and this Bill is signing them up to will result in it costing much more for people to transport themselves from A to B.
It will also cost people more money to heat their homes. I refer to buying fuel, such as a bag of coal. Elderly people, in particular, adore their little open fires. We must remember there is nothing wrong with having an open fire in one's home. We were always told that the right thing to do was to keep the home fires burning at all costs. This Government is now trying to quench those fires to satisfy the green agenda. That is exactly what we are doing in this Bill. People need to be told the truth.
I welcome the VAT decrease to 9% which is included in this Bill for the hospitality and other sectors. However, we begged the Government to not increase that rate in the first place. We begged the Government to reduce it, but it would not do that, and then it reduced it when the businesses were already shut.
I come from the tourism capital of the western world, Kerry. Killarney town is the focal point of all tourism for all of the world. It is a leading light. Sadly, those businesses are now closed, but I look forward to the day when they will be open again. I want to ensure, however, that the 9% VAT rate will not only be retained beyond the 12 months being proposed, but for much longer. We must ensure that businesses are allowed to continue to operate. The Government is clapping itself on the back for making that change, but I will not applaud it because it is being done too late.
Moving on to the increase in the tax on tobacco, I would be much happier if we lived in a world where nobody smoked. I do not believe, however, that it is right to penalise people who do smoke.
I have been requested to highlight an anomaly regarding wholesalers. Wholesalers to the catering industry will not qualify for any package. Even though the Government has said they will, that is not the case according to the Revenue. That is very unfair. It is possible for them to stay open, but what are they going to do without customers? They cannot live on the wind. Suppliers of fish, vegetables and meat and bakeries that were supplying hotels and restaurants are not functioning at all.
Turning to carers, the extra €10 million the Government has said it would dedicate to them is not enough. It is not enough for home and respite services, because there are now no day services. We must compensate for that situation and ensure that these carers, who are already being driven into the ground, can pay for people to help them. The housing adaptation grant is a welcome part of the local authority grants system in Kerry, but we need to get more funding for it. It is intended to help people with disabilities who need to adapt their houses, but there is not enough money to go around for all the applicants.
The provision of primary medical certificates for people with disabilities has been suspended since the middle of the summer. I appeal to the Minister, because people with disabilities are again stranded in their homes. I am referring to people who get strokes and elderly people who cannot move around and who need to adapt the car or buy a specially adapted car to allow them to go out of their homes for certain things. There used to be grants to help people in poor circumstances if something went wrong in their home, but that has been scrapped. That is very unfortunate, because a person with a reasonably good house might need some work to be done on it. We need more money for home helps and to keep people in their homes for as long as possible.
The closure of beds in Killarney Community Hospital and in other community hospitals will have to be made up in some other way. Rooms will have to be adapted or rented in hotels to ensure that people who are sick and need attention can go into hospitals and be seen. We cannot just tell them not to get sick. When this pandemic started, the Government said that it would be different from the experience of the recession ten or 12 years ago. The Government said funding would be available at low interest rates, that work would continue and we would work our way out of this difficulty. I am calling, therefore, for funding for infrastructural schemes such as the sewerage scheme in Kilcummin. Places such as Kenmare, Curragh, Scartaglin, Castleisland, Brosna and Caherdaniel all need work done to their sewerage systems. There is no sewerage system in Scartaglin or Curragh and we need funding to realise projects in those places.
I also request funding for the Killarney bypass, because the town can be choked by traffic at times. The Ring of Kerry road also needs a special improvement grant for the stretch from Caherdaniel to Sneem and then onward to Blackwater Bridge. I am also calling for funding for group water schemes, which appear to be in trouble with new red tape and guidelines. The Government reduced the grant for treating water in wells from €2,200 to €1,000. We also need funding for rural cottages, housing maintenance, a tenant purchase scheme and broadband. I refer to €3 billion being provided over five years. When is that €3 billion going to arrive? We are also bereft of mobile coverage in many parts of Kerry.
This Bill shows how far out of touch the present Government is with reality. I refer to the reality of rural Ireland. It shows how little the Government thinks of anyone outside a large city. The Government wants those people to pay the most for all its projects, but it returns nothing to the counties. A budget of €18 billion was presented for 2021, but the allocation of €5 million in funding for digital hubs and €132 million for the national broadband plan is completely inadequate. This was a missed opportunity to benefit people working from home. Can we imagine what it is like to be asked to work from home and not have access to broadband?
It is then necessary to drive to the nearest crossroads or village to see if it might be possible to pick up broadband. This is an unbelievable situation. Let us try to imagine that we are students in college and we must go online for our lectures. Who would believe there is no broadband available? The obvious solution in the budget was to provide adequate funding to accelerate the roll-out of broadband. Imagine the way that could have transformed parts of Ireland into vibrant rural communities, with all the associated benefits for the entire area in which people live. That was again a missed opportunity.
The increase of carbon taxes in the budget, which affected the haulage industry and motorists, was grossly unfair. I agree with the report from the Economic and Social Research Institute, ESRI, which stated that rural households will be more affected than urban households because they spend a greater share of their incomes on heating fuels and transport.
I had said earlier in a Dáil debate that one has to incentivise a change in behaviour. The Government cannot ask people in rural Ireland to change when they have no alternative options. As Eddie Punch from the Irish Cattle and Sheep Farmers Association, ICSA, said, "If you have a Luas outside your door, you may decide to take it if it is more expensive to drive your car into town." That is all very well when people have alternatives but living in rural Ireland there is no alternative.
The Government is taxing the people of County Limerick and investing nothing back into infrastructure. There is nothing for the sewerage plant that has been asked for in Askeaton for more than 30 years. Nothing is being invested in basic maintenance so people can keep their houses from flooding even when they are not on a flood plain. If travelling to Dublin from where I live in Granagh, I have to either drive to Newcastlewest to Adare and to Arthur's Quay in Limerick or to Mungret or Annacotty to get on a green bus. There are no parking facilities for me to park there, so I must get someone to drive me there. That is when I come up to Dublin on the bus. When I go back down I also have to get someone to collect me. That is four journeys but we will get no infrastructure.
What did the Government do when denying medical certs for drivers who have a disability? The Government went to the Supreme Court but lost the case when five Supreme Court judges voted against it. The then Minister for Finance met with the then Minister for Health and cancelled all the medical certs for drivers with disabilities and now there are some 1,700 waiting. The Government continued the assessments and told them they were on a list, but that list does not exist.
The Government invests in nothing in rural Ireland. Rural Limerick and rural Ireland will not stand for it. I put it to the Minister that the next time he comes knocking on the door in a rural area I hope all the people in Ireland will remember the Government for another Dublin budget and for giving nothing back to the county of Limerick.
Last year we all accepted Brexit was the main immediate threat to the economy. This year, while we still face Brexit, we now have the coronavirus. We are still unclear what the outcome of Brexit will be, even with an agreement on a trade deal. It is still the case that the UK is leaving the EU whether we like it or not. This will certainly bring changes. It is important we are ready for these changes for citizens and for businesses.
After years of austerity, it is heartening to see that with budget 2021, the largest investment in the history of the State, we are making preparations for all these scenarios. It might have surprised people, but it is the right thing to do. We need to make sure we can face the challenges of Covid and Brexit by giving people hope based on realism and on a plan.
As these are my priorities, I am heartened to see the massive investments in health, in housing and especially in education. I am working with the Minister for Further and Higher Education, Research, Innovation and Science, Deputy Harris, on the technological university status for Carlow IT in the south east. It is money well spent when we invest in our children's future. I welcome that funding but we need to make sure we access it as soon as possible.
Funding is important for local sports clubs, local community groups, accessing affordable healthcare or medical cards, finding ways to access and pay for education, receiving help to buy a home or accessing social or affordable housing. We need to look after people so they can have ways and means to access what they need to do. People need a quality of life and we need to make sure we give this to them in the budget.
Now that Covid-19 is on top of us, it is important we arm our society with the tools to live with it. We cannot afford rolling lockdowns, so I really look forward to using this time to see where we can help and what we can do.
The HSE and health are a big issue for me. I am aware that with Covid-19 there are restrictions and so on, but a large number of people are calling my office who are waiting on operations, be it a hip operation or an eye operation. We need to make sure we invest this budget wisely and that we make sure people are not waiting two and three years for hospital appointments. That cannot happen anymore. We need to make sure we deliver on that.
A total of €38 million will be available to implement new measures under the Sharing the Vision, our national mental health strategy. There is a massive spend on health but it is important we do not forget our mental health. It is another key area for me in the context of this pandemic. Again, it is about accessing the services and making sure the money is delivered and filtered down to where it is needed. We must make sure our most vulnerable people and those who are suffering get these services. I have spoken to the Minister of State, Deputy Butler, about mental health and she is committed to the issues. I firmly believe that.
There is a €3.3 billion spend in housing, which is a huge budget. While I welcome that, we also have the extension of help-to-buy scheme at an enhanced rate of €30,000 in this budget. I am concerned about reports I have received regarding the scheme. I was contacted just last month by a home buyer who was approved in principle for a mortgage for a property in Carlow, which had been advertised at a price close to €300,000 in July. When that home buyer went about finalising the process and buying the home in question, they were told the price had gone up. By how much? It had risen by approximately €30,000. That cannot happen. These are the things we need to watch. We cannot just say that we have these measures, which we all welcome. We also have to make sure the people and families on the ground get what they deserve or get that €30,000 they should be getting. This is what we need to make sure to do.
I have always been very vocal on local authorities, and especially Carlow local authority. A big issue for me is capital funding. The local authority has always been underfunded by the Government. We are always struggling and there are always huge cutbacks in Carlow County Council. The staff and everyone there are doing their best. We need to deliver now on funding. The services have been cut and it is even harder to get funding in. I welcome the nine month rates waiver and that the commercial rates waiver has been extended to December, but this is not good enough. I can only fight for my own, but the local authority needs extra capital funding.
The threshold to qualify to apply for going on to the local authority housing list needs to be addressed. People are becoming homeless because they do not qualify for inclusion on the local authority housing list. They cannot afford a home and yet they cannot go on the housing list. This is unacceptable. We need to make sure that when we are investing this €3.3 billion, it is put in the right place. The urban regeneration and development fund, which I have put in for, is a big project and hopefully we will get the funding from that. I will fight hard for that.
An allocation of €65 million is being made to facilitate energy efficiency improvements to social housing homes and another €60 million will be provided to adapt the homes of up to 10,700 older people and people with a disabilities. I welcome these schemes but these people are vulnerable and we need to ensure this work is carried out as quickly as possible, especially for elderly people in the winter. The criteria for these schemes are sometimes not right. I believe that needs to be looked at with a view perhaps to getting it done quicker. It can take months for an occupational therapist to assess people. This is through no fault of the therapists; it is because of Covid. We need to look at changing those criteria.
I now turn to broadband. We ask people to work from home because we are at level 5, but we really need to have a proper broadband service in every area, including in my own area of Carlow, Tullow, and Bagenalstown. We need to make sure it is there, but it is not currently. Again, people call me about it and they are very upset. There are two brilliant colleges in Carlow, namely, Carlow IT and St. Patrick's College. Students are working and studying for their college courses at home and their broadband is very bad. It needs investment.
I welcome the €5 increase in the weekly living alone allowance, although it is not being paid until January. I am aware the Christmas bonus double payment will be paid early in December. A budget is a budget, but the most vulnerable people in our society, those people who need it most, need to be able to get what they deserve from this budget, and to access the funding they need, be it through a social welfare payment or a carer's payment, so that they are not fighting and can get whatever payment they deserve. We must make sure we give them as much as we can.
Quality of life means so much and people are struggling every week. Many people are now not working due to Covid and through no fault of their own and many shops are closed. People are in a different place and we need to make sure we look after them and that they have a proper Christmas. Santy is coming in December. We have to make sure the children of Ireland get a proper Christmas and that we do our best to secure the best we can for them.
These are not normal circumstances and this is not a normal budget. We thought we would be dealing with Brexit and we are dealing with this pandemic instead. The only way I can put it is to say we need to provide people with the supports required. We need to do all we can and to be seen to do so. It is straightforward. It has been noted by many people here that, unfortunately, the carbon tax proposals in the Bill are regressive. They will impact on those who do not have resources, who have less money and are not wealthy. They will have a particular impact on those who live in rural Ireland and who do not have a huge number of alternatives. That is a mistake. There are no two ways about it.
We welcome the increases in the PUP during level 5 but I will take some time to deal with a few questions. Others have already spoken about the difficulty and worry people have about the tax liability that may relate to the PUP. This is another thing that gives people the idea the Government is not backing them and it needs to be rectified. There is also an anomaly where some people applying for the PUP may not have PRSI contributions due to the fact that they are paid less than €352 per week. A requirement that is not necessarily stated is that, to gain the PUP at the moment, people need to have made one PRSI contribution in the previous four weeks. These situations are being dealt with. People are being given a PUP-related email address and the issues are being worked through but it is an anomaly we could do with sorting. We could be in this circumstance again at a later stage and we need to get these problems sorted as quickly as possible.
I recently engaged with the Minister of State, Deputy Fleming, about ensuring small self-employed operators would be able to avail of debt warehousing and getting an extension for filing returns to 10 December. I welcome that. It will deal with many cases but there is also another issue. I have been told today that Revenue has stated it will be pragmatic in dealing with people who are given the surcharge but who may not necessarily avail of this debt warehousing or may not be aware of it. We need to be very careful with that. I call on the banks to be more pragmatic with forbearance. I think the Government is going to have to call them back in. We are hearing stories of individuals and businesses not being offered the sort of forbearance that is absolutely necessary and they are expected to pay as if their earnings are normal. In some cases the businesses have been profitable but they are in the circumstances they are in and we need to back up them and our people. It is as simple as that.
I welcome the restoration of the full PUP to €350 a week and the restoration of the wage supplement. This should have been included in the budget but as I noted during the budget debate, it was inevitable that we would move to stricter restrictions very soon. The proposal to tax the PUP is mean, miserly and unnecessary. The last thing workers who have been laid off and whose incomes have been cut need is another debt but that is what is being proposed. The amounts may not be huge but a debt of more than €100 is still a debt. For that reason, I and my colleague from the Independent Group, Deputy Pringle, will be moving an amendment to oppose this measure on Committee Stage. We will be opposing part 1, chapter 3, section 3 of the Bill and we ask other Deputies to support us in that. It is just not necessary to do this, particularly during the situation we are in. It is one thing to introduce measures, but it is another to be able to access the payment, as has been already mentioned.
A significant number of self-employed people have contacted me who have received replies from the Department of Social Protection stating that it does not have any recent record of PRSI contributions paid by them at the relevant classes. They have been without payment since 21 October. That is over two weeks now of waiting for a payment after losing their jobs due to the level 5 restrictions. This has to be dealt with immediately. In another case, an 18-year-old hairdressing apprentice applied for the PUP and was refused even though she got it during the first restrictions in March. I do not know why this is happening. Back in early August when the €250 PUP was brought in a number of people, including people in the arts and entertainment industry and taxi drivers, contacted me because their payments were being reviewed. Many of them were brought down to €203 even though they had sent in their tax certificates and it was very clear they were self-employed and should have received the €350 payment. I made representations for them and sent in the exact same thing to the Department and every single one of the people for whom I sent in representations received the €350. That is a huge number of people to be restored to the €350 payment. Normally when one makes representations for people who have lost payments, one in ten or 20 would be reinstated. When the Government puts in place public policies and supports for workers, those workers should be able to access them easily and not be left without any money for a number of weeks.
The other area where the Government has let down people is that of under-18s who are working but who have not received the PUP, as well as people over 66 who are on pensions. They should be getting a supplementary payment to bring them up if they are due to be on the €250 a week. That has not been dealt with and the Government has let down these people very badly. It is obviously not in this together with them.
The PUP is welcome but the ESRI has stated that 40% of the people who lost their jobs are much worse off now due to financial commitments like mortgages. That was discussed at the Joint Committee on Social Protection, Community and Rural Development and the Islands this morning and it was said that the mortgage interest supplement should be reinstated immediately to support people in this situation. The matter of rent supplement was not raised at the committee meeting but that payment should be also advertised more widely. Many people do not even know they might be entitled to the rent supplement payment.
I am raising these issues because there is no point introducing measures if workers are made jump through hoops to get the payments to which they are entitled. It is bad enough losing one's job but then to be left for weeks without payment is a double-whammy. The PUP and the wage subsidy scheme should remain in place for the duration of the pandemic. The Taoiseach has said publicly that the pandemic mainly affects low-paid workers and he is right about that. Life circumstances do not change for workers whether they are at level 5 or level 1 and the PUP and the wage subsidy payments should remain as they are from here on in.
The 2021 budget, which this Finance Bill will underpin in law, is a response to the exceptional circumstance brought on by the Covid-19 pandemic. The pandemic has exposed serious, fundamental and structural problems in Irish society, particularly the underfunding of essential public services. An opportunity has been lost, not just to dramatically increase the funding available but to carry out fundamental and necessary reforms. As regards Covid, the bulk of extra spending is going to supports for businesses, the wage subsidy scheme and the PUP. These supports are necessary but other areas are also crucial to combatting the pandemic. We need a properly funded and functioning public health service; a functioning test and trace system; to tackle overcrowding by solving the housing crisis; a properly resourced Health and Safety Authority to ensure safety in the workplace; an emergency programme to close down direct provision; and funding to reduce class sizes.
This Bill and the budget fail in these key areas. Despite the extra funding to help the health service, there are significant problems with staff recruitment. The reality is that more funding is required. Are there emergency places opening in colleges for health workers and teachers? I know something was brought in with regard to education yesterday. The testing and tracing has been undermined by a similar failure to recruit the necessary staff. Those staff were being recruited. From what we are hearing, the jobs are not paying well. Their pay and conditions are bad.
On housing, the key to a solution is a commitment to public housing and public land. The €500 million for capital expenditure contrasts sharply with the €2.4 billion for current expenditure by the Department, with €1 billion of that going to landlords for housing assistance payments and rental accommodation scheme payments. There is no commitment to build real public housing to deal with the crisis, and this has been going on for years. We are in the middle of a pandemic and people are in overcrowded circumstances. There is no commitment to build public housing on public land. We know there is sufficient public land to build at least 100,000 mixed tenancy homes, including traditional council housing and cost rental.
Our education system, particularly in primary schools, has suffered from years of chronic underinvestment. Covid is now showing up the lack of basic facilities such as a hot water supply, minimal provision for cleaning, and cramped and overcrowded facilities for learning and play. We have the highest class size in the EU, with one in five pupils having a pupil-teacher ratio of 30:1.
We entered the crisis with almost 700,000 people living below the poverty line, including 225,000 children. The Society of St. Vincent de Paul commissioned a study which shows that a single adult needs a minimum of €249 a week to get by. Leaving core welfare rates at their present level means a continuation of widespread poverty, which will undoubtedly increase as unemployment grows due to Covid-19 restrictions. We are heading towards a 50% jobless rate for workers under 25 years of age. Under-25s make up 11.7% of the labour force but make up 22% of those on the pandemic unemployment payment. A high proportion will have been in part-time, low-paid jobs and are therefore on the lower level of the pandemic unemployment payment. With regard to jobseeker's allowance, 13,000 or 85% of under-25s are on the lowest rate of up to €112 a week. The National Youth Council estimates that a young person living alone in an urban area, taking rent into account, needs €466 for basic needs. Some €112 is a quarter of that, with HAP still short of €190 a week for basics.
This Government had an opportunity with the budget and the Finance Bill to try to address the fundamental issues facing ordinary people in this period and into the future. We know that the ability to borrow at almost 0% interest was an opportunity to begin to address the problems in public healthcare, affordable housing and access to quality education where it matters the most, at primary level, and to tackle unacceptable levels of poverty. It is an opportunity that has been missed.
At this stage, Opposition Deputies are used to going through the Finance Bill, which follows the budget, with a fine-tooth comb. There are often attempts to bring in provisions for additional taxes or reliefs that did not form part of the budget week leaks and announcements. It is just business as usual for the opaque way that Fianna Fáil, Fine Gael and the Green Party govern. That said, there are some welcome measures in the Finance Bill 2020, such as section 2, which increases the universal social charge thresholds, and section 4, which exempts the home sharing host allowance from income tax and other small improvements for taxpayers.
I have issues with section 7 and the extension of the enhanced help-to-buy relief until the end of December 2021. There has been no evidence to show that the relief has done anything except push up prices for people who could already afford homes.
The Finance Bill should not include section 3 on taxing the Covid payments. Section 3 proposes to amend section 126 of the principal Act, regarding tax treatment of certain benefits payable under the Social Welfare Acts. This has been a difficult year for people and businesses in Donegal and across the country. We are coming up to the time of year that means so much for a lot of businesses, and due to coronavirus restrictions, many of these businesses have had to close their doors to the public. Now is exactly the time that the Government should be trying to keep as much money in the local economy as possible. Many businesses in Donegal and elsewhere are still trading online during lockdown, and the public can support them by shopping local. There is a great risk of many small local businesses closing permanently and devastating local economies. By not taxing the pandemic unemployment payment, the amount that people can spend locally will be increased and can go some way to supporting local businesses and economies to survive.
I, like many other Deputies, have been encouraging people to support Irish businesses this Christmas. Local businesses can provide many of the same services as multinational giants like Amazon, while also saving jobs in local communities. When we shop local, we are supporting our neighbours, local jobs and local communities, whereas shopping on Amazon is just adding to Jeff Bezos's trillions and supporting a huge corporation with notoriously bad working conditions for many of its workforce.
The coming weekend of 6 to 8 November is #BuyDonegalWeekend, an initiative of Donegal County Council in collaboration with businesses across the county, to highlight the range of Donegal products available. The Letterkenny Chamber has been getting out the message, "Shop Local - Stay Local", to encourage people to shop locally online during lockdown. I encourage people to visit the websites and social media accounts of our local businesses to see how they can shop with them online during lockdown. Local authorities and agencies are trying to help local businesses and have explicitly said that removing this tax liability would be a way for the Government to support those efforts.
Section 3(2) states that some provisions shall be deemed to have come into operation on and from 13 March 2020 and section 3(3) provides for retrospectively applying the law from 5 August 2020. It is reported that approximately 600,000 people will be affected by this underhanded tax change.
The Finance Act 2018 stated that urgent needs payments paid under section 202 of the Social Welfare Consolidation Act 2005 were included under tax-free income. The political journalist, Gavan Reilly, has produced some very informative Twitter threads on this issue. The Minister's Department’s statement to Virgin News stated:
Section 202 was used as a vehicle of convenience from March last to get payments out quickly ... However, this does not mean that the PUP is an urgent needs payment.
The Revenue Commissioners backed up the Minister's position, saying, "As the PUP is not specifically exempted from income tax the payment is subject to tax." As Gavan Reilly put it on 23 October, "both the taxman and the Government say: the PUP was a Section 202 payment in practice, but not in spirit."
There is a very interesting paper from 2009, The Constitution and Retrospective Tax Legislation, by Paul Brady, BL, where he concluded that there ought to be only two justifiable circumstances for retrospective tax legislation, which are curative legislation, and when the legislation is necessary to stop the State going bankrupt. He states:
Part of a taxpayer's property rights is the right to know where he or she stands. That is, a right to know in advance what the tax implications of his or her actions will be. Any interference with that right should only be justified when prospective legislation is inadequate to prevent an extreme financial crisis for the State.
The inadequacy of the pandemic unemployment payment levels has been subject to much debate. To now bring forward a provision shafting those who lost their jobs because of a global pandemic and leave them with further income tax bills will just add to the mental health strains already evident across the country. As usual, it is those at the lower end of earnings who will suffer the most. I hope to submit an amendment in opposition to section 3 on Committee Stage.
Why have beauticians not been exempted from the VAT reduction that was extended to hairdressers? In Part 3, section 37, which pertains to value added tax, seeks to amend section 46 of the Value-Added Tax Consolidation Act 2010. It reduces the VAT rate to 9% from 1 November 2020 for certain businesses. This VAT reduction is to remain in effect until the end of December 2021 and will apply to restaurant and catering services, admissions to cinemas and museums, etc. Point 13(3) of Schedule 3 to the principal Act is included and applies this reduced rate of 9% to hairdressing services. I have been contacted by many small business owners in Donegal who provide beautician services and they are unhappy with their exclusion from this reduction. I know that beauticians are not provided for in the 2010 Act under other services but surely they should be included in any of the measures that are being introduced to assist businesses in continuing despite disruptions due to Covid.
There is another section I wish to draw to the Minister's attention and on which I have a question. In Part 2, section 29, which pertains to excise, provides for the amendment of section 104 of the Finance Act 2001. It inserts two new subsections (ba) and (bb) after section 104(1)(b) of the 2001 Act. Section 104 of the 2001 Act states:
104.—(1) Subject to compliance with any conditions or limitations the Commissioners see fit to impose, the duties of excise imposed by the provisions referred to in section 97 shall not be charged or levied on excisable products delivered— (a) under diplomatic arrangements in the State,
(b) to international organisations recognised as such by the State, and the members of such organisations based in the State, within the limits and under the conditions laid down by international conventions establishing such organisations or by other agreements.
The new subsections (ba) and (bb) relate to the exemption of excise on products delivered to NATO forces and, from 1 July 2020, forces of EU member states taking part in activities related to the Common Security and Defence Policy. The explanatory memorandum with the Bill states that this is "to transpose Article 12(1)(ba) and (c) of the EU General Excise Directive, 2008/118/EC, as amended by Article 2 of the EU Directive 2019/2235". Council Directive 2019/2235 of 16 December 2019 amended Directive 2006/112/EC "on the common system of value added tax and Directive 2008/118/EC concerning the general arrangements for excise duty as regards defence efforts within the Union framework". This directive is also provided for in the Finance Bill 2020 in Part 3, section 40, which pertains to value added tax. Goods and services supplied to NATO are exempt from VAT, and from 1 July 2022, goods and services supplied to forces of member states undertaking a common defence effort under the Common Security and Defence Policy of the EU will also be exempt from VAT under the Bill. What assessments of costs have been done on these measures? How much will be lost to the Exchequer as a result of granting these exemptions? When were these measures communicated to the Dáil?
Article 29.9 of Bunreacht na hÉireann states: "The State shall not adopt a decision taken by the European Council to establish a common defence pursuant to Article 42 of the Treaty on European Union where that common defence would include the State." In December 2017, Ireland voluntarily signed up to the European Council's permanent structured co-operation on security and defence, PESCO. The webpage of the European Commission's representation in Ireland, under the heading of "Foreign affairs, security and defence", reads:
PESCO is a sophisticated legal instrument central to the Common Security and Defence Policy (CSDP) that enables the EU to play its part in global peacekeeping, crisis management and conflict prevention. The CSDP is an integral part of the EU's Common Foreign and Security Policy (CFSP), through which the EU speaks and acts as one in world affairs.
Does that include NATO as well? At the end of December 2018, we were informed that being part of PESCO had not cost the State anything. Despite strong opposition from me and other Members, this went ahead and now provisions are being made for tax exemption in our Finance Bill, without any discussions, clarity or debates as far as I can tell.
It would be far more helpful if the Government was transparent about the annual Finance Bill. It is unfair on Deputies, media and the electorate when it only highlights the few stories that it wants to talk about during budget week. I continue to be disappointed with this Government and will be voting against the Bill.
It is difficult to understand how the previous speaker could have issues with this budget, of all budgets, or with the budgetary approach of the Government during the pandemic. Essentially, billions of euro have been spent on the most vulnerable in our society. As I have mentioned on a number of occasions, there is an unwritten social contract between the State and its citizens whereby the citizen hopes that in a time of crisis the State will be there for the citizen. The manner in which the State has behaved over the last ten months has been impeccable, and exemplary in comparison with some neighbouring countries, in how it has sought to look after its citizens during this time. Has it always been right? No, and some of the wrongs were corrected, particularly in respect of the pandemic unemployment payment being restored to €350. The Government must always be acutely aware, and my party colleagues are aware, of the difficulties for people who have to live on €300 or €350 per week, particularly coming into winter when fuel costs are higher.
The thing that characterises the pandemic from a fiscal perspective is that, unlike the financial crash ten years ago, no country in the world is unaffected by the pandemic. Even though the financial crash was described in global terms, many countries were unaffected by it. However, nobody has escaped the impact of the pandemic, and every country must do what it can to ensure its citizens get through it safely.
With regard to the commitment to and care for those who are out of work and who previously had their mortgage payments suspended, the State must go back and talk to the banks about that. The State bailed out the banks. It was that act which allowed us to borrow, and borrow at the low interest rates that those on the left talk about, as well as how we should spend the money that is borrowed at low interest rates. They never mention the fact that if we had not bailed out the banks, and none of us liked it or was keen on doing it, this country would not have any credit rating abroad and would simply not have been able to borrow, even for the pandemic, the amounts of money it has had to borrow to look after its citizens.
I welcome the significant educational input of the budget. The Minister, who was present earlier, could not go into all the detail due to circumstances and time limits, but the educational input will result in the pupil-teacher ratio being reduced. That was never more important than now in terms of class sizes and the impact of the virus. There is an increase in resources for children with special needs, and we are only at the first stage of this. I raised an issue in my constituency in the last Dáil, and the Minister for Education and her Department are beginning to move on this. There is only one autism spectrum disorder, ASD, unit in the postal addresses of Dublin 6, Dublin 6W and Dublin 16, whereas the postal districts of Dublin 24 and Dublin 12 have multiple ASD units. That led to the ratio of children with special needs in some of the schools in Dublin 24 and Dublin 12 being out of proportion with the ratio of children with special needs in schools in Dublin 6 and Dublin 6W, which is simply not right. I and other colleagues raised it when we were in the Opposition. Small moves are being made on it, but it must be addressed. It is an area that must be resourced significantly.
I also commend the Government on the recent announcement of the agreement with caretakers and school secretaries. It was long-running issue, and the Minister of State, Deputy Fleming, will be familiar with it. That has been warmly welcomed by people in the sector.
My constituency covers the areas of Greenhills, Templeogue, Rathfarnham, Tallaght, Ballycullen and Citywest. It has two major Garda stations in Tallaght and Rathfarnham. Obviously, Tallaght would be considered the mother ship. I am delighted with the additional Garda resources, including Garda cars and personnel, that will be allocated. The Garda has had significant drugs finds. It beggars belief that drug suppliers can get the drugs through even during a pandemic. They have used all sorts of creative methods to get their drugs to recipients, ranging from An Post to Parcel Motel. In fact, drug seizures were up approximately 5% on the same period in 2019, which is remarkable given how the country has been locked down for so long.
The waiving of commercial rates and the VAT reduction for businesses are to be welcomed, but a VAT reduction for a business that cannot trade is quite useless.
I urge the Minister and my Government colleagues to support businesses. I spoke informally to the Taoiseach about it recently. We must have some sense now of the pattern of the virus. There have been a few challenges in Dublin but we had begun to succeed with level 3, plus the ban on household visits. It was certainly stabilising the virus and the level 5 measures will be important for driving it down. The Minister knows that some businesses will simply not reopen. We must have the data now on the infection rate in non-essential businesses and in all the large multiples and retailers. I refer to the staff rather than the customers. I know as a fact from talking to supermarket owners locally that the rate has been virtually zero. What are the figures the National Public Health Emergency Team, NPHET, has in that regard?
Likewise, we must have figures on the efficacy of mask wearing. I get it that NPHET wants to cut down on mobility but it does not make sense to many citizens to close businesses when juvenile teams of 15 can engage in non-contact training, but the same children cannot play on the local tennis courts or the people who are training them cannot play on the local golf course. We need to reflect on that to ensure we fall back to some degree on people's sense of self-responsibility and to treat people like adults.
Businesses need to be encouraged and a number of things could be done in the hospitality area. I see some innovation in the city in terms of outdoor furniture. Irish people have shown that they will do what is necessary to keep themselves warm. We could provide grants for the provision of canopies and give planning exemptions for the erection of canopies within a certain square footage, as applies on the Continent, so that outdoor space is more protected if we do open up a little, given that people feel more comfortable outdoors because the virus has less chance of spreading. However, we need to incentivise businesses to do that. I was talking to a local publican this morning who is very keen to provide street furniture but given that he has had no income since March, he is concerned about the outlay. If a business owner wants to erect a fairly solid canopy outside his or her premises, he or she must apply for full planning permission and that would take three months and could take longer if there were objections.
We must be really creative about how we deal with this. We need to look at the possibility, when we get back to level 3 in the future, that non-essential stores or services would be allowed to open. Experts could look at the issue. Google must have significant data on people's movement and mobility in the past eight or nine months. All stores do not have to open at the same time. It would be great if we staggered the opening of stores and in doing that there was evidence to show that people are not congregating in great numbers for that reason. It would allow non-essential services to open. For example, hairdressers could open from 5 p.m. until 10 p.m., which would means they were not caught up in the rush of people shopping and it would be a quieter time for people to move around. The same could happen with a range of other non-essential services that could open at different hours. We could encourage employers to stagger lunch hours in order that people are not queuing at the same time for a sandwich, coffee or whatever else, thereby increasing the chance of contracting the virus. We can never come back to level 5. It is clear the country could not bear it economically but I really do not think people could bear it psychologically either.
I am like a broken record, in that in every contribution I make I keep harping back to the only precedent in Ireland for something similar, which was the Spanish flu. It had a surge in October and November and another surge in March and April, so we ought to anticipate a third surge and prepare accordingly for it.
We need to be more agile in our policies and much more flexible. We must consider measures such as the ones being introduced on the Continent now, for example, curfews. It is a very easy thing to police. If there is a curfew from 10 p.m. until 6 a.m. then businesses are shut, people should not be out, there are no house parties and no house visits. It does not have to be every night of the week but it is a really easy thing to police and it is certainly a good way of stopping people's mobility as a short, sharp, shock measure. The Minister should not bring us back to level 5.
Again, there must be data on an issue I mentioned at the Joint Committee on Health this morning. There are four local electoral areas in my constituency and, as we know, the figures for Covid are available for local electoral areas. Three of the four are under the national percentage for positive cases but one area is above it and it has been above it consistently. One does not need to be a rocket scientist to figure it out. It relates to housing conditions, perhaps working conditions and a number of other factors as well, yet we do not seem to be targeting those areas to help them drive the figures down. It is in economically deprived areas that the numbers are most significant. That is the case throughout Dublin, yet we do not seem to be adopting or coming up with any measures that attempt to deal specifically with that.
I know I have strayed off the Bill but these are all economically related issues. As the Minister is aware, I am a big fan of micromobility. I think it is something the Government needs to get its teeth into. I know the Minister extended the bike-to-work scheme to e-bikes but a good electric bike costs a lot of money. One has to shell out €1,500, €2,000 or €2,500 for a really good bike before one gets the tax back. There is a system in Belgium, for example, whereby if employers provide any facilities in the workplace such as shower facilities, equipment such as bicycle parking stations or bicycle lockers or if they buy the bikes themselves, it is tax relievable to 125%. There is huge take-up on that in Belgium. In fact, some employers pay their employees a very modest rate as a further incentive. A Belgian man gave a keynote speech in this convention centre a year ago at the cycling international conference, Velo-city. Belgium is the leader in this area. The man earned €70 a month from his employer for using an e-bike to go to work because he had not taken his car.
Dublin Chamber will forward a paper on micromobility in terms of e-scooters. The British Government did not introduce laws, it just introduced a trial of e-scooters for a period of up to a year. A number of constabularies in the UK have requested e-scooters. We have brought no regulations in here yet, although we have halved the capacity on buses, so people have got back into their cars, as they do not have any alternatives. Part of the reason the Government has not done it is because most Ministers have never been on an e-scooter or used an e-bike. It is not until one has that experience that one sees not just how much fun they are but how practical they are, particularly in a city or town. They are the last mile people talk about, and unlike a bus or a taxi they are incredibly convenient.
I signed up to the dublinbikes scheme this year because there is a bike station outside the convention centre and there is also a bike station outside Leinster House. One can imagine if we had an e-scooter station. We would not need our cars. That would be a sight for journalists. I am sure Miriam Lord would have a field day if she saw us but I am talking about the practicality of it. Other countries are way ahead of us on this. All it requires is a little change in the law. I would like to see a little bit more innovation. Some of my colleagues organised trials, which had to be done off the public road as e-scooters are illegal at present. Again, it is only when one has the experience of an e-scooter that they become more robust and practical. Young people would love them. We have cut back significantly on public transport, in particular in the early days of Covid. We probably cut 75% of the seats that were available and then we were up to 50% capacity and now the capacity is being cut again so people are being forced back into driving their cars.
This evening, RTÉ news reported that the High Court has approved a settlement in the case of a 15-year-old boy who developed an incurable sleep disorder and a debilitating autoimmune condition after receiving a swine flu vaccine ten years ago. By pure coincidence, I had a call with a constituent this morning who is the mother of a young girl who was administered the same vaccine, along with her mother, but who had side effects as a result. It was just a fluke. As her mother said, they were not anti-vaxxers and her husband has just had the normal flu vaccine. What she pleaded for, and what the High Court provided for today, is a certain amount of facilities.
The decision by the High Court is a ground-breaking settlement that paves the way for a further eight people. The agreement means that any financial compensation received as part of these settlements would be disregarded when assessing a person's means for eligibility for State supports such as medical cards, exam fees and student accommodation costs. When some of the parents involved appealed decisions to reject a medical card on behalf of their children, the Department of Health stated that it could not deal with them because the matter was subject to court proceedings. The reason that these issues were subject to court proceedings was that the people in question were looking for the tiniest break. They were not looking for compensation or anything like that.
The woman with whom I had a conversation this morning told me that there needs to be some identifying mark on the Department of Social Protection and HSE system that automatically provides discretion when someone like her daughter applies for either a medical card or some kind of assistance. This woman's daughter has to take a nap at school at 1 p.m. and a nap after school from 4 p.m. to 5 p.m. She said that her energy levels are a bit like when one recharges a battery. She only ever gets to 30% or 40% recharge as a result of the damage the vaccine did. Our conversation was not dominated by the vaccine, it was dominated by how bloody difficult it is for her to access even the most basic of assistance and help for her daughter in terms of State support. The mother's big concern is that, while her daughter is 15 or 16 now and she is 52 or 53, in the future her daughter will require assistance. She is, otherwise, a healthy human being with the same dreams and ambitions as any other young kid. However, she will need some kind of care for the rest of her life and everything has to be fought for.
What happens is that the High Court rules in favour. It always seems to end with a High Court decision. I am hopeful because colleagues like the Ministers of State, Deputies Butler and Rabbitte, have incredibly compassionate streaks. However, the court case today really illustrated the point I am making. I was not aware that the decision on the narcolepsy issue was going to be handed down today. Will the Minister use his influence in the Government to ensure that this issue is addressed?
Survivors of the mother and baby homes were looking for this as well. I remember meeting them with the Minister of State, Deputy Rabbitte, last year. They were looking for little things like discretionary medical cards because they might not qualify for regular cards on the basis of their normal income. They had suffered so much, whether it was psychologically, mentally or emotionally. If we could create in the system a little red tick that would indicate the position when such a person applies for additional help or for modest additional resources or would alert the State to the need to treat his or her application with discretion, it would mean that matters would be dealt with in a different way.
I welcome the opportunity to speak on the Finance Bill. It is an important Bill, a version of which we see every year giving effect to the financial and tax measures in the budget. With that in mind, I want to speak to some of those tax changes, specifically in respect of the Covid restrictions support scheme, CRSS, and on some business and workers' rights related matters.
One key measure announced on budget day was the CRSS. In his budget speech, as well as over the following days, the Minister and his Government colleagues outlined how it was designed to assist those businesses whose trade had been significantly impacted upon or temporarily closed as a result of restrictions set out in the Government's living with Covid-19 plan. The details of this scheme are laid down in the Bill. We can see from the finer details as to how the scheme will generally operate when level 3 or higher is in place and will cease when those restrictions are lifted. Will the Minister provide some further details on this matter?
Section 485(1) of the Taxes Consolidation Act 1997 describes business activity with three separate subsections below the definition. Prior to the detail being relayed in the Bill, many suppliers were concerned that they would not be included. They were specifically concerned that they would not be included during level 3 restrictions due to how the Minister articulated the details of this scheme on budget day. Section 485(1) of the Taxes Consolidation Act 1997 states that one example of business activity is:
... where customers of the trade acquire goods or services from that person other than through attending at a business premises, that portion of the trade which relates to transactions effected in that manner shall be deemed to relate to the business premises or, where there is more than one business premises, shall be apportioned between such business premises on a just and reasonable basis.
Will the definitions of business activity not exclude suppliers, cash and carries and so on? Suppliers upstream in the business chain may be drastically affected by the impact of the public health measures on their customers downstream who are affected by levels 3 to 5 restrictions. It is important that they are explicitly included in level 3 through to level 5.
The scheme provides for qualifying businesses to apply to the Revenue Commissioners for a cash payment to assist them and provide targeted support during their time of need. My understanding is that this cash payment is essentially an advance or a loan from the State to the businesses. However, it actually involves lending businesses their own money because the scheme is an advanced credit for trading expenses. Accordingly, it is an advance on the business tax credit scheme. It is their own money. This is not a grant. This is the State fronting the money with Revenue just to make the tax credit available directly in cash. The result is that the CRSS payment will reduce the amount of trading expenses that are deductible in computing the taxable income of a business.
We had the July stimulus package only five months ago. The VAT reduction for tourism and hospitality should have been delivered then, a point now acknowledged by some on the Government benches. We welcome the measure but it should have been done in July. The problem now for businesses is not only that this measure is five months too late but that it is currently of no use to them, while the level 5 restrictions mean that they cannot operate or take advantage of the reduction.
I want to focus on one group of workers who feel totally let down by the Government and who had hoped that, either through the budget or another way, that their situation would have been resolved by now. The workers at Aer Lingus have been locked in a battle with the airline and the Department of Social Protection for the past nine months. We all understand the ongoing impact that Covid-19 has had on the aviation industry and that workers' hours across all airlines have been dramatically reduced. For many workers, this has meant that they are now only working one, two or even three days a week. These reductions are not, however, the source of their anger. Their frustration stems from the failure of the Department of Social Protection to ensure that they receive their entitlement to short-time work support for the months March to August when they were on the temporary wage subsidy scheme.
Aer Lingus has consistently dragged its heels with these workers and has refused to sign necessary forms so that they can access welfare that they absolutely and desperately need. These people have spent their savings. Any savings they had are gone. They are entitled to this social welfare benefit but the company will not fill out the forms, while the Department of Social Protection will not accept the forms without the stamps on them. It is beyond ridiculous at this stage. These are people who pay a lot of tax and work extremely hard. It is not their fault that they cannot go to work. They are being punished as a result of a refusal on the part of the Government and the Department of Social Protection to instruct the company to fill out the forms or instruct the Intreo offices to accept them without the stamp. I am appealing to the Minister to take action on this as a matter of urgency.
I echo the points made by Deputy O'Reilly on the CRSS. It is important that as many as possible businesses are included. It is probably not the scheme that we would like in that it is effectively lending businesses their own money. We would rather have seen some sort of grant scheme.
That said, some businesses will benefit from it, which I welcome and I encourage them to apply, but I ask the Minister to ensure that as many of the affected businesses as possible are able to avail of it.
Other positive things came out of the budget. I refer in particular to the reversal of cuts to the Covid-19 pandemic unemployment payment. This happened because of sustained pressure by Sinn Féin and other parties. In hindsight it is incredible that the payment was ever cut. The reversal of the cut is welcome, though it did not go as far as we would have liked. It is hard to comprehend the logic behind cutting supports like that and supports for businesses when the pandemic looked very likely to escalate. Workers were in a very uncertain position and still faced the prospect of hardship. The payment should never have been cut. I welcome the reversal, but the Government should have listened to us during the budget discussions, after which the decision was made.
We have concerns about other issues. The changes in the vehicle registration tax are hard to comprehend. In many respects they anticipate a motor industry that does not yet exist. They anticipate consumer behaviour that not only does not exist but is not even possible yet. We are asking people to pay more for the cars they have or will buy or else to choose an electric vehicle as an alternative. DoneDeal.ie features only about 80 such cars for less than €10,000. A brand new electric car costs €40,000 or possibly more. These are not affordable or realistic options. I agree with the objective of shifting to electric vehicles and reducing the overall number of cars on the road in the longer run. However we will need significant improvements to public transport infrastructure to achieve that. That motor industry does not exist yet. Those cars are not there. Consumers do not have the option to choose them.
I also note the things that are missing from the budget. When will an affordable housing scheme be brought forward? We have been talking about it for ages. The last Government promised it any number of times. Fianna Fáil said there would be a housing budget every year. There never was such a budget. Affordable housing was never built. The last Government was a catastrophe in that respect. I hope this Government will be better. The scheme has been delayed repeatedly and we still have not seen anything. I am concerned that this scheme will just be a fig leaf and a press release, perhaps in the form of some kind of shared equity scheme. The last such scheme did not work out that well. It must give councils the ability to build their own affordable housing schemes. They have land to which debt is attached. Several schemes in Cork city and county will not proceed unless the debt attached to the land is dealt with. This will prevent people who do not qualify for social housing but who cannot afford a mortgage from getting housing.
Finally, I wish to discuss schools. There has been no increase in the capitation grant at primary or post-primary level. I find this hard to comprehend in light of the additional costs that must be paid. Rental incomes from halls and other rooms has more or less disappeared, heating costs will be massive this winter as schools try to deal with ventilation and refuse costs will increase as personal protective equipment, PPE, will have to be disposed of. It is incredible that there is no increase in capitation grants. A lot of schools are already under serious financial pressure and will be even more so by the end of the school year. They will barely be able to make ends meet. The Government must begin the process of revisiting that now.
It is incredible that schools are losing teachers at this point. One school in Cork city that is part of the Delivering Equality of Opportunity in Schools, DEIS, programme has lost a teacher. It will have to combine two classes. The school is not benefiting from the reduction in the pupil-teacher ratio. Some of the most disadvantaged schools in the State did not benefit from that. That is shameful and wrong and must be revisited. I will be raising that matter with the Minister. Schools should not be losing teachers at this point.
Like the budget, this Bill is most notable for its lack of vision. It largely ignores the fact that 637,000 people in Ireland are living in poverty and 193,000 of those are children. Some of the contributions from the Government show that trickle-down economics are still in vogue. That is not how things should be. I will focus on what is missing from this and why I believe the Government has fallen at the first fence and failed to bring about the transformational long-term change that we need.
Sinn Féin proposed a tax on multinational corporations that would raise €720 million in 2021. We included this proposal in our general election manifesto before the Covid-19 pandemic and in the alternative budget we proposed last month. Our proposal would change a rule on the taxation of some of the multinationals here. I am tired of hearing that if we ask these companies to pay tax they will disappear or take flight. We are not saying anything about the 12.5% corporation tax, but we must have tax fairness. When Sinn Féin has argued for this measure in the past, the current Minister for Finance has argued that it would raise more money now but that would balance out in the long run. He has therefore suggested it is not worth doing. This is only true if things remain as they are today. We have no guarantees. The only way to guarantee this revenue is to begin collecting it now. Tax justice delayed is tax justice denied. Even if we had fully accepted the argument of the Minister for Finance, we in Sinn Féin feel that the longest waiting lists in Europe and the housing crisis were enough to justify accessing the money as soon as possible. If the money had been accessed our society, particularly our health services, could have been in a better position going into the Covid-19 pandemic. Now, in the midst of a global pandemic, there has never been a more pressing time to do this. In this regard, budget 2021 was another missed opportunity. The Government ignored our proposal yet again, leaving €720 million on the table that could have been used to pay student nurses, invest in hospitals and schools and support people who are out of work. The Government has again chosen not to avail of this measure, though this time it did not argue that it would only raise money upfront. I do not think it could wheel this excuse out during a global pandemic.
I do not know why the Government refuses to bring in these very sensible measures. Instead it is doing its best to retrospectively tax the emergency Covid-19 pandemic unemployment payment. This is why people feel the Government is absolutely disconnected from them and has no relevance in their lives. This is not some radical measure. It is a reform that has been recommended to the Government by the Irish Fiscal Advisory Council, an advisory body known for its fiscal conservatism. The Government should explain why it left this money on the table at a time when families are struggling to get by on the Covid-19 pandemic unemployment payment or by working on the front line for very low wages.
On top of that €720 million, Sinn Féin proposed a wealth tax on fortunes over €1 million, which would have generated more than €89 million. However, the Government could not equalise the jobseeker's allowance rates for under-25s. What kind of message does that send to young people throughout the country? A 3% solidarity tax on incomes over €140,000 and the removal of tax breaks on income over €100,000 would have brought in €388 million. That would have gone a long way towards covering the cost of a hugely necessary disability payment.
The tax breaks for banks that have been bailed out were also left in place. We are not proposing giveaways or attempting to opt out. This is about challenging the status quo and applying fairness to how the State works and who it works for. The changes we suggested would have been a step towards a fairer society. Carers have been given a miserable increase of 41 cent per day. Our care assistants will receive an extra 10 cent an hour. These are the people we needed to prioritise in this Finance Bill.
I begin by welcoming the Government's decision to reverse the cuts to the Covid-19 pandemic unemployment payment and the employment wage subsidy scheme. I am delighted that the Government listened to me and my Sinn Féin colleagues. We had been calling for these reversals.
It goes to show how out of touch the Government was and is that it brought the cuts in in the first place but finally had to concede that they were wrong. It was good to hear a Fianna Fáil Deputy state that a wrong was righted, but when the cuts came in, Sinn Féin told the Government they were wrong. We welcome the U-turn by the Government. It shows that sometimes Sinn Féin can be right, as were the parties that supported us.