Aideen Hayden (Labour) | Oireachtas source

It is important to remember that this Government is not presiding over a giveaway budget in the way previous Governments were fortunate enough to do. Indeed, it is also fair to recognise there has been criticism of this budget, in particular criticism around the taxing of maternity benefit, extending the universal social charge and so forth. It would be wrong of us to sit here in a self-congratulatory way and not acknowledge there is discontent out there in regard to some of the provisions of the budget. At the same time, it is also important, particularly during a Second Stage debate, to highlight some of the important things that are contained in this budget. I believe quite strongly that this budget does pave the way for improvement in our economy. In particular, I believe it is a pro-business budget designed to stimulate job creation. Some of the measures in this Bill will be of particular benefit to Ireland's SME sector, which is a welcome departure given the SME sector is responsible for 70% of all of the jobs in this country. While we will be discussing this in more detail tomorrow, the Bill does set out quite clearly the details of the ten-point tax reform plan and the two additional measures in the Bill which the Minister of State outlined and which have been particularly welcomed by SME sector representatives. It can be said that this budget is positive for business. It clearly shows this Government is willing to take innovative measures to stimulate business and encourage job creation.

As I said, there are aspects of this budget that people do not like. This is not unusual when a Government has to make savings in the way this Government does. However, I believe the measures that have been imposed in the budget have been fair and the measures that have been included in the Bill are, as a result, also fair. This is evidenced by the breadth of the attacks that have been made by the Opposition on the Bill, particularly in the focus among some of the Opposition groups on the so-called tax on childbirth. As a woman and a mother myself, I would like to make a brief comment on this. The current arrangement gives - I want to emphasise this - additional benefit to working women. There is no denying that having a child is an expensive time and that people incur additional costs, but those costs are no extra on a working woman than they are on an unemployed woman or on a woman who stays at home and whose husband is at work. The situation is that we have an anomaly in our tax code and what we are doing in this Bill is removing that anomaly. I would like to see benefits extended to all women in some form in recognition of the additional costs that are incurred on the birth of a child. I would ask that this be made a priority when this country is put back on its feet. At the same time, I will not stand over an anomaly just because it benefits one particular group of women when other women are excluded from a similar benefit.

It is important that, irrespective of the financial condition a country is in, budgets have to be about reform, and as a corollary, therefore, Finance Bills also have to be about reform. I believe there are positive steps in this budget. In particular, I would like to highlight, as I did last year, the increases in capital taxes. I believe it is fair to say this country has for too long been dependent on personal income tax as the chief form of personal taxation. We have had the local property tax as a way to remedy this, although I must say it would have been better if the current Opposition had introduced this at a time when we had the money to replace the tax on earnings from work at the same time, so it would have had a neutral effect on its introduction.

However, we are not fortunate enough to be in that position.

Aside from taxes on property, there are other forms of taxation that are also very important in spreading the tax burden. The measures contained in this Bill, which raise capital gains tax and capital acquisitions tax by 3% and continue the trend of last year's budget of bringing taxes on unearned income into line with taxes on earned income, are to be welcomed for a number of reasons. It is important to restate this because there seems to be a level of amnesia about what went on in this country. The halving of capital taxes by a previous Fianna Fáil Government played a significant part in the promotion of a "get rich quick" culture which dogged the Celtic tiger economy and encouraged speculation in property over investment in real job creation. Why would anyone spend years developing a patent when one could buy an apartment off the plans and sell the benefit of the contract without ever doing a day's work?

More importantly, it is important that the tax system be fair. A tax system that requires those who have the resources to earn through investment by purchasing shares or who inherit wealth to pay less than those who earn their living through employment is not a fair system. This Government must continue to equalise the manner in which tax is levied on income, regardless of whether that income is gained through investment, inheritance or employment. It is not right to tax someone who works an extra hour in a factory or in a front-line job such as a garda more for every extra hour worked than someone who makes money trading in shares.

The Minister has indicated in respect of the property tax and the Finance Bill that he is willing to take on board the comments made. I congratulate Senator Zappone because I know from previous debates on this matter that she has fought and campaigned long and hard on the issue of the tax status of same-sex couples and has worked extremely hard to promote through every available opportunity the constitutional rights of same-sex couples. I very much support her and congratulate her on her achievements.

I also welcome measures in this Bill that are very progressive. I wish to highlight the introduction of real estate investment trusts, REITs. Effectively, REITs allow investment in property to be owned collectively in a company structure. Individual shareholders are liable for income tax on income distributions from the REIT and must pay capital gains tax on share disposals. This is a very welcome development in which I have been very interested for many years. There is no doubt that the Irish property market has taken a severe hit in the past few years. There is little or no appetite at the moment among individuals to invest even at a time when values are very good. REITs have worked well in other countries, particularly in the US and the UK, because there is capacity to invest collectively in property which spreads the risk over a portfolio and arguably - the evidence supports this - improves property management. While most of the commentary on REITs since the budget has focused on them in the context of commercial properties, there is even larger potential in the residential area.

As we know, the Governor of the Central Bank and the Minister have indicated that there should be repossessions in the buy-to-let market given the levels of arrears in this sector. I have raised concerns on many occasions in this Chamber as to what impact repossessions will have on tenants living in these repossessed properties, bearing in mind that one in every five families now lives in a rented property and risks severe disruption if these repossessions are not handled properly. There is incredible opportunity for the buy-to-let properties to be bought by a REIT which would bring professional property management to bear on these situations, providing a clear benefit to the country. REITs should be encouraged in this context.

I also welcome the living city initiative which makes provision for new urban renewal schemes for the refurbishment of Georgian buildings in our cities. These schemes are to be introduced on a pilot basis in Limerick and Waterford, but I agree with Senator Michael D'Arcy that they should be expanded into the wider construction sector. The position in that sector is extremely difficult. The sector is running at a figure of approximately 3%, but in any normal developed economy, it should be in the region of 10%. I accept that urban renewal schemes attracted a bad name during the 1980s and I am well aware that some of the buildings constructed in Dublin, for example, are the slums of tomorrow, if not today. On previous occasions I referred to the plight of town centres. It is truly shocking and depressing to witness their degradation. In the context of the willingness to enter into further consideration of schemes such as those to which I refer, I ask the Minister of State to examine the possibility of including town centres. Perhaps we might establish a living town initiative before the level of degradation becomes so severe it cannot be countered.

I am a great believer in the tax code being used for community gain. Rents are rising and those on low incomes are finding it very difficult to access certain properties. In the same way that we use tax incentives - I refer, for example, to section 50 initiatives - to provide student accommodation, I strongly request that consideration be given to using similar incentives to make rental properties available to those on very low incomes. A great deal could be done if tax incentives were used for the benefit of society. There are many legitimate ways in which the tax code can be used.

I will end on a somewhat negative note. The Minister for Finance, Deputy Michael Noonan, indicated in the Dáil that he could not consider poverty-proofing budgetary measures on an extensive scale because of the number of staff that would be required to achieve this. It is extremely important that we work to poverty-proof the measures that will be contained in future budgets. If it proves necessary to redeploy staff in this regard, that should be done.