Seanad debates

Wednesday, 11 December 2013

Finance (No. 2) Bill 2013: Second Stage

 

3:35 pm

Photo of Feargal QuinnFeargal Quinn (Independent) | Oireachtas source

It will include a two-year exemption from income tax for qualifying unemployed people. I am a great believer in not spending time looking for new customers but, rather, spending time with existing good customers. I suggest that if people have been running or working in a business and they decide to set up their own business, the scheme should also apply to them. Will the Minister of State examine that possibility? To say that a person must be unemployed before being able to avail of the scheme does not seem right.

The Bill includes entrepreneur relief, which will allow a capital gains tax credit for entrepreneurs who reinvest the proceeds from the disposal of assets. I propose the idea that new businesses be allowed to convert tax credits into much-needed cash. Everybody agrees that start-up businesses need cash, especially during the early stages. The proposal would be that if a start-up company hired an employee, the tax credit could be converted directly into cash. This exact initiative took place in the US and the cash incentive worked. On the day President Obama took office, the US had less than 2% of the world market in manufacturing high-powered batteries for hybrid or all-electric cars, but on the day of the congressional elections in 2010, thanks in large part to the cash incentive policy, the US had 20% of global capacity, with 30 new battery plants built or under construction. It would be a super idea to try this out in a finance Bill in order to help small and medium-sized enterprises. Will the Minister of State consider this idea of allowing start-ups to convert tax credits to cash?

There is the issue of access to pensions. There was a Government promise to end the pensions levy, but the Government will be taking even more from private pension funds, which has a big effect on such funds. Why is the Government not touching public sector pensions, and why is the Government not allowing people who need cash to access their pensions to fuller degree, especially when it is okay for the Government to do so? This relates to businesses getting access to cash, and I have advocated for the release of some pension funds to allow citizens some relief and get cash flowing into the economy. I have welcomed the move in the past year to allow people access to 30% of their additional voluntary contributions, AVCs. However, this should have been extended again, perhaps to allow people more access to tax-free cash, which is especially important for businesses.

I was recently talking with a man who was able to access part of his AVC, and he told me that meant he was able to buy his daughter a new secondary school uniform and books, although she is not attending a fee-paying school. He could also pay a host of bills, including credit card bills, and he may have a holiday for the first time in a long while. He indicated that many of his friends had availed of the deal too and that it had lifted their morale and mood. It is life-changing but it also gives a monetary boost to the retail sector. This has a positive effect on the country and the economy. The big message is that being able to access AVCs can lift the mood of gloom that hangs over people, many of whom have been cashless for years; now they can access some cash and alleviate worry and anxiety. These people will spend money and provide the boost we are seeking. The man to whom I was speaking described having access to some cash as a big weight lifted off his shoulders, and it also puts money into circulation when the banks are all but closed. A move to extend this would help thousands of people in trouble and would be a very forward-thinking. It would help people, and we should be able to do something in that area. The Government must realise that people are being crippled by household debt. We should consider extending the initiative I have mentioned. If a person or small or medium-sized enterprise could access several thousand euro tax-free from their pensions tomorrow, they could pay off a credit card debt and maybe several overdue bills. They could simply get back on their feet or even start their own businesses. It would also stimulate the economy as it would help to pay for house renovations, holidays or even changing a car. It would simply get cash flowing back into the economy. The possibilities for a person who can start over by accessing some cash are very exciting. If people can do this, then we will have set the conditions for them to do something like starting a business. This is what government should be all about; rather than simply giving people a job it should help them access the cash that is so vital in setting up a new business. Is the Government open to the possibility of freeing more cash through private pensions?

People should be treated like adults and if it is their money they should be allowed access to it. Iceland has just announced it is encouraging people to access their pensions and get back on their feet. I know there is a problem with people accessing pensions and damaging something that has been saved, but if somebody has saved money in a pension fund we should not say they cannot take it out until a certain age. They should be able to take some of that money out, particularly if it is to start a new business or to develop, but even if it is just to spend money in the economy. It will boost the economy and that is what we all want. There is much in the Bill that others have covered but in this case we can still do a number of things and I hope it is possible to at least prime the minds of the Minister of State, Deputy Brian Hayes and the Minister, Deputy Noonan for some of the changes we can make and which could benefit the economy.

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