Paschal Mooney (Fianna Fail) | Oireachtas source

I welcome the Minister of State to the House.

Will the Government’s fiscal policy prime-pump the economy, generate more spending and increase revenues? That is what the Minister for Finance must ask himself. All the indications from the Government are that we are over the worst in austerity with just a little further to go to hit the 3% deficit mark. However, €2 billion cuts are looming in the next budget.

Apart from the money this budget is taking out of the economy, in 2014 there will be the new water charges and the full impact of the property tax on top of all the other tax increases. The question remains where the Government will go from here. I await with great interest, as I am sure the Minister does, the economic indicators going into next year. All sorts of different growth figures are being put forward. Some suggest growth will be as high as 2.5%. I hope that is true considering we are expected to hit approximately 0.01% at the end of this year or 1% in total, and those figures have yet to be calculated.

I am curious to know the policy behind the decision to increase the DIRT rate. Single pensioners earning over €18,000 or couples earning over €36,000 will be liable for DIRT at the full rate of 41% even if they are subject to income tax at only 20%. It is suggested that the Department believes engineering an environment of low returns on savings will prompt consumers to increase spending. The only reason I can see for it is to unlock people's savings and put them into the general economy. The Minister of State might have a view on the reasons behind this decision. The strategy severely penalises people who are putting money aside for expected future expenses. In light of the continuing reduction in interest rates it is a negative to consider putting money into the bank, even without DIRT. Some of the rates on offer are most unattractive, and now there is the extra whammy of the increase in DIRT to 45%, including PRSI. From next January savers will receive only just over half the interest earned on cash deposits.

Another aspect of the budget relates to farm leases. Our side will table an amendment to this on Committee Stage. It relates to the problem with section 5, which states that a qualifying lessee is an individual. The word "individual" rules out a farming company from being a qualifying lessee. As the Minister of State is aware, an increasing number of farmers are converting their businesses into farming companies, particularly dairy farmers who are undertaking expansion. The current exclusion of a company is restricting the transfer of land through leasing. The Minister for Agriculture, Food and the Marine has stated that he is anxious to promote long-term leasing of land to younger farmers. There seems no justifiable reason for excluding a farming company from being an eligible lessee. If the restriction were removed it would facilitate land transfers in many cases. Perhaps the Minister might respond to that.

Senator Jim D'Arcy and others have raised the one-parent tax credit. In many cases the primary carer may not have sufficient income to fully avail of the tax credit and it could result in a loss of €48 per week, an estimated €2,500 per year. This move is obviously causing considerable anxiety and distress to many lone parents already struggling to meet the costs of supporting their children. The proposal will be very hard on separated and divorced fathers in particular. Research from Trinity College points to the fact that in 97% of separation cases in the State the courts deem the child's mother to be the primary carer, even in the case of 50:50 access. The proposed measure, even though gender-neutral in wording, will have a grossly disproportionate adverse effect in operation on one social group by reason of gender. Many fathers rely on the value of the tax credit to assist them in supporting their children. To take this away will inevitably led more child poverty.