Alice-Mary Higgins (Independent) | Oireachtas source

I welcome the Minister to the House and thank him for presenting the Bill. I will highlight a couple of areas which are very positive. I recognise the home carer tax credit is a positive move. I echo the comments on the Living City initiative. It is important and could with merit be expanded to towns in the country because a number of towns could benefit from a similar initiative.

To pull back to the bigger picture, I would appreciate if, in his reply on Second Stage, the Minister would comment on equality and gender proofing of the measures put forward in the Finance Bill because it is a commitment in the programme for Government to have equality and gender proofing. I feel there is an absence of it. We spoke about a balance, but in the end there is still an imbalance in the budget.

Questions were asked about the USC. The primary concern about how the USC has been handled in the budget is the way it was done ensures those on higher incomes benefit more. When we speak about middle incomes, and I have made this point in the House previously and it is important, the middle income in Ireland is €28,500. Half of the population who are working earn €28,500 or less. This is the middle income.

The way the USC cuts have been designed means somebody on €60,000 gets much more from it than someone on €30,000. There is a problem in that those on €60,000 get much more than the half of the population on approximately €30,000. I know the answer will be this is a percentage parity but, as we all know, if we go into the shops to try to buy the stuff of life or pay for rent and food we cannot claim a percentage parity. It goes nowhere. In the end, cash is what matters and it matters more and more the lower down the income scale we go. Somebody on a higher income gets more from the way the USC was designed than somebody on a medium income. This is a fact. I say this because I believe it is a priority, and it has been recognised by the OECD that Ireland has extraordinarily high levels of income inequality. I recognise the work done in the Department of Social Protection to address it, but I do not believe it should entirely rest on the Department of Social Protection to address it. We need to look to ways in the finance area to address this unusually wide income inequality, rather than simply covering over the gap through social protection.

IMF research from 2014, which was conducted in more than 100 countries over a 30-year period, showed income gained for the top decile led to a loss in overall national growth whereas income gains for the lower decile led to a gain in national growth. It is very important to remember always this IMF research was unequivocal in stating trickle-down economics does not work. This is now a fact of contemporary economics. We need to remember it because we can fall back into it because it was prevalent for so long.

There are concerns about inequality in some of the tax relief measures. We discussed the private pension tax relief measure previously in the House. There is no defence for a marginal rate private pension tax relief which continues to benefit higher earners massively and fills neither of the stated goals of our national pension policy, which are to increase pension protection for women and for lower earners. It works directly against this and takes hundreds of millions of euro out of our economy. These hundreds of millions of euro could be used to address either a first or second tier of protection for all of our citizens. The Minister will be in dialogue with the Department of Social Protection on this, but if we are to address the pension gap, and we have been speaking about it and have had passionate debates about the pension gaps for self-employed people and women, we need to fundamentally look at this anomaly. It was identified in the memorandum of understanding with the troika as an area where Ireland promised to take action, but meaningful action was not taken. It was one of the very few provisions in the original memorandum not implemented.

With due respect to my colleague, Senator Horkan, I recognise the situation for people who want to pass on family homes but we need to look at cost and benefit. We were told when we discussed the Social Welfare Bill that this is other people's money. That point was underscored to us. In fact it is all of our money. While I absolutely understand a situation where families may wish to pass on a family home, and it is important, it must be looked at and examined with the same cost benefit scrutiny we would apply to all other measures. I urge that we look to this. We speak about those who have worked hard all their lives. There are people who work hard all their lives and do not have a house or houses to pass to anybody at the end of it. In fact, there are people who work hard all their lives and can barely survive into their pension years. This is a reality in Ireland.

Another point, which we can address more on Committee Stage, is that a sleight of hand tends to happen at budget time, when we have a huge focus on our pockets, which directs our attention away from portfolios. It is not in the area of income but in the area of wealth the Finance Bill is most important, and it is the area of wealth we are most in danger of not addressing. This is not simply to speak about a wealth tax, although it has its merits. I am concerned about many of the investment portfolios we have seen. Cerberus paid €1,900 in tax on the €77 million Project Eagle profits. According to the Comptroller and Auditor General, we know more than €200 million was lost to the taxpayer in the sale. Again, this is other people's money.Now we know it is not even paying tax into the system in any meaningful way. These are huge and systematic loopholes that have developed. Since 2010, there have been changes to the code relating to those who call themselves investment funds. We will address this further. The changes in section 21 are completely inadequate. When we talk about unintended consequences, they were signalled by groups such as Social Justice Ireland. This is why we need a respectful economic dialogue. We cannot name call on either side of this House. We need to listen when there are alarm bells, even if they come from the Opposition or civil society. Similarly, there have been alarm bells on the capital gains tax waiver which so inflated our property market. That was signalled by Social Justice Ireland even at a time when the Irish Tax Institute was cheerleading that measure. We saw its consequences. I urge a wider openness to economic ideas which can give us an early alarm system so we do not repeat it. I have a very technical question that the Minister might address. I am very concerned about section 26 and the proposals relating to a reduction of 10% for those selling their companies. I feel it is not supportive of entrepreneurship. It encourages speculation. If we are investing in companies and pumping money into research and ideas, as we should be, why are we then encouraging the owners to sell those companies to the only purchasers available, which tend to be large Chinese or US companies? The companies we have nurtured and put money into then leave. It is an incentive to owners to sell their companies and start again. We are sending our innovators back to the starting block again and again and turning them from innovators who could generate strong indigenous businesses that would grow in Ireland into speculators. That is what is happening in that area. When we talk about companies, investment and job creation, we need to make the case for job creation. Job creation comes from companies that get to the next stage here in Ireland.