Sean Barrett (Independent) | Oireachtas source

-----on trying to improve on Postman Pat, who is doing well?

In many other ways, we are going in the right direction. The 9% VAT rate for tourism and the abolition of the air travel tax gave rise to proven results but there are concerns about some hotels, particularly in Dublin. I do not know whether the 9% VAT rate can be geographically differentiated but many Senators have told me that the cost of staying in Dublin has increased in the past year, which is not quite what the Minister and the House had in mind when we introduced the lower rate.

The Minister stated that debt-to-GDP ratio would fall below 100%. He also mentioned the USC. While I welcome the reductions, a peculiar feature of the USC is that the allowance does not apply once one exceeds it. If one earns more than €12,012, the entire €12,012 below the exemption limit becomes taxable. I have never seen this with any other Irish tax. I hope that there will be genuine attempts to take people out of the net. Similarly, no full-time worker on the minimum wage should be liable to tax. The Minister stated that the third rate of USC had been reduced to 5.5%. That is what "minimum wage" means, namely, the amount that people need to live. We should remove it from the tax net if possible.

In conversations with the Minister's distinguished predecessor, Mr. Brian Lenihan, I detected that there was a view within the Department of Finance that low-income earners did not pay enough tax. That might be true but it is because they are low-income earners. Going after them did not strike me as being a progressive way of running the tax code. Some of that thinking was reflected in tax measures in recent years.

Turning to section 9, the banking commission would have serious reservations about all of the tax breaks for housing. They are difficult to get away from once we start. They begin as a Keynesian mechanism and continue even when the economy is growing at 6%. I am wary of such measures. Another of the Minister's predecessors, Mr. Alan Dukes, stated in his evidence to the banking inquiry that a prosperous economy made for a prosperous construction sector, but that it was not necessarily the other way around. We might bear that in mind as a principle.

Section 11 on vouchers from employers for rewarding staff is interesting.

Senator Hayden referred to housing issues. On the Order Paper is the National Mortgage and Housing Corporation Bill 2015. We introduced it when the Minister and the Minister of State, Deputy Harris, were away, so three of their ministerial colleagues from other Departments sat in for it. There is some potential to emulate the Canada Mortgage and Housing Corporation experience in order to borrow money at low interest rates on the condition that it is channelled into houses at below-average prices. I have misgivings about the ability of the construction industry and financial sector to solve our housing problem. According to evidence given by Mr. Michael O'Flynn to the banking inquiry, housing in Ireland has priced itself out of the market. We used to be able to provide houses at 2.5 times the average income but that increased to 12 times before falling to approximately six times now. Pressure must be applied to re-orient it to address our serious housing problem.

Section 17 on the film tax credit will cap qualifying expenditure to €70 million per production. My inclination is to put a €70 million cap on the whole lot. I have different priorities than allowing movies to be made for €70 million each for a tax credit but I have discussed this matter with the Minister in the Seanad in previous years.

I note the fuel tax provisions under sections 81 to 83, inclusive. Between the authorities in Northern Ireland and the Republic, there must be a clampdown on fuel laundering and smuggling in Border areas in order to address criminality as well as the loss of revenues.

Section 35 relates to entrepreneurs. The problem is that, as proposed, it gives the tax break when one becomes an ex-entrepreneur and sells the business. One might buy another business but are there other ways of channelling assistance to entrepreneurs than requiring them to sell their businesses?

I note the Minister's interest in the knowledge box. I wish that project every success. We must get away from inversion and the type of adverse publicity that we get, in particular in the US, for being seen as a place where companies buy small subsidiaries in order to avoid their corporate tax responsibilities in the US. The US is our great partner in economic development. The fact that the Minister is implementing the OECD rules by setting up the first OECD-compliant knowledge box in the world is to his credit. I wish him well in that endeavour.We are supposed to be espousing technology. The ATM is a form of technology. It makes no sense to charge people a tax every time they use an ATM, particularly if their finances are not looking well. It seems a puny thing to do to annoy people. The measure is contained in section 64.

As the other speakers have said, the Minister for Finance has brought the finances to a far better place than they were in. We must keep vigilant on expenditure programmes. There are far more Ministers, aside from the Minister in the House now and the Minister for Public Expenditure and Reform, Deputy Howlin, who are working on new ways to spend money. The Irish Fiscal Advisory Council has a role in advising and debating with the Minister on tax. We need something similar on the expenditure side rather than waiting until the Comptroller and Auditor General turns up after the event to tell us that €38 million was spent on the seven-digit address code. It makes no sense but we know that already. A better appraisal of projects on the expenditure side would help to complete the journey that we have undertaken remarkably well in recent years.