Alice-Mary Higgins (Independent) | Oireachtas source

I welcome the Minister to the House. There are many welcome measures in the Bill to which others have referred. Since they have already been spoken about, I will highlight a few of my concerns in respect of the Bill, particularly on taxation. Others have spoken at length about the fact that the measures introduced and choices made on tax relief in the Finance Bill afford larger benefits to those on higher incomes because such benefits as accrue to those on lower incomes are also received by those on higher incomes who also receive the additional benefit. I will not go through the figures, but I am aware that some have said those on €175,000, for example, might have almost €600 more in their pay every year, whereas a low income worker would not. There are two concerns in that respect. First, it goes against the spirit of the sustainable development goals and our commitments under them which are very specific. Measures to address income inequality and increase incomes should be targeted by the Government to ensure greater benefit. This is not to rule out benefits further up the line. I believe target 10 of the sustainable development goals - I am not certain, but I will have the correct target number on Committee Stage - implies that the bottom 40% of earners should benefit disproportionately. We will speak about the social welfare budget and address the question of whether this has been tackled in it, but when we seek to be true to the logic, we need to follow through for workers. There is concern that there is a rolling wave of benefit that increases as one moves further up the scale. That is a concern, including in the medium term.

Reference was made to not repeating the mistakes of the past. The last action taken by the outgoing Government during the period of austerity was to reduce the top rate of tax. One of the first actions of the incoming Government was to provide effectively for a reduction. It is important that we do not make these mistakes again and that we do not, in what is a very unstable international landscape, engage in hollowing out. The Minister knows how difficult it is to increase taxes. In that context, I am concerned about the measures suggested in terms of a movement towards a threshold of €50,000, for example. It is a genuine concern. Currently, two thirds of workers are below the threshold. Two thirds have an income below the level at which they would be required to pay tax at a rate of 40%. Effectively, one could end up with only one quarter or 20% of workers on the higher rate, which is a concern. It is a concern in terms of hollowing out but also because so much of the narrative tends to focus on the private pension tax relief which we have mentioned before. I am aware that there is consultation under way on this, but there is a considerable problem with marginal rate tax relief that has not been addressed. It was flagged as early as the memorandum of understanding with the troika was produced. Even then it was being flagged as a concern, even by those with an austerity mandate. We know that €2.6 billion is spent in providing private pension tax relief. There is a debate in the Department of Employment Affairs and Social Protection, but it is of great concern to the Minister, Deputy Donohoe, because, overall, the concern relates to equality and gender-proofing which fall within the remit of his Department. It is a question of equity within the contributory and non-contributory pension systems. There is a proposal that might seek to push out the number of contributions required towards 40 years, which would not work for most people and leave nearly everybody on a reduced rate of pension, rather than 30 years, as had been anticipated under a total contributions approach. I refer to a scenario which is far from a doubling of 20 years, which is the current requirement. I refer to a very severe change in the basic safety net for every citizen. In that context, we need to re-examine critically the €2.6 billion spent in providing the private pension tax relief. This is not a debate solely for the Department of Employment Affairs and Social Protection; it is also one for the Minister for Finance, as the Minister with responsibility for reform and overall responsibility for gender and equality-proofing of the budget. I would appreciate it if he could speak more about the gender and equality-proofing of the budget and how he sees it being rolled out. It is due and to be furthered.

I notice that it is proposed that Ireland engage with the OECD in a green budgeting process. I join others in expressing disappointment in that regard. Simply signing up to an iterative process to consider green budgeting proposals in the medium term is not satisfactory and will not be sufficient. Given the significant cost to the Exchequer in 2020, owing to fines of hundreds of millions of euro for not meeting our climate change targets, it would be good if the hundreds of millions of euro were reflected in this budget. It would surely be better to spend the money in making actual changes - for example, the retrofitting of public housing - rather than simply paying it through a fine, which is what we face in 2020. In that respect, I regret that a carbon tax has not been introduced and that more concrete measures have not been put in place. While we may be part of the OECD process, it will not be sufficient in honouring our EU obligations.

As I am sure others have done, I will be approaching the Minister’s Department on green-proofing not only budgets but also the procurement process, in which his Department is interested. We need to ensure any public money spent is delivering in every respect possible, including in meeting our environmental targets. While the cost may not be attached to a particular project, the cost of not environment-proofing public procurement will be felt by the Exchequer and the State.

In the limited time I have left I wish to target three or four specific areas of concern. The KEEP scheme has seen a very low take-up. The current thresholds are now so high that I am concerned people could be getting up to €100,000 a year in share options without paying something close to income tax, as they would have paid in the past, and that instead they are instead it off to a large extent. That is a very serious concern if we are considering having a lower rate of taxation. We do not want to have a perverse incentive.

I am concerned about the exit tax. A rate of 12.5% has been opted for, rather than 33% for individuals, which rate had been examined previously. This is a wider question and we have to ask why we, as a nation, reward those who exit.

The question of company farming has been spoken about before. There are tax incentives for those who sell their company early rather than build it and grow it in Ireland. Multiple start-ups receive considerable State investment. Some succeed and then sell, at a very low rate of return to the State, and those concerned go back to the drawing board and receive grants again. Alternatively, we could look towards genuine innovation and at schemes that have been in place here since the 1990s, for example. One of the companies that won an innovation award last year was SkyTec. It involves a long-term and dynamic ongoing process of innovation.

I am very concerned about section 23. There is a serious danger of creating a perverse incentive by giving tax relief to landlords for refurbishment. We already know that refurbishment is one of the main reasons people are affected. If we create a perverse incentive that will intensify the process, we need to address it. We need to consider the question of eviction and the rises in rent that might be incentivised indirectly by the tax relief.

I urge the Minister to reconsider introducing tax relief for union membership, as was the case in the past. Union membership is a public good. Just like cycling a bike or anything else, it has benefits. As a member of the Joint Committee on Employment Affairs and Social Protection, I am aware that union membership has benefits to the State through a reduction in family income supplement and other payments.

On exemptions for sports organisations, I ask the Minister to consider a cap and the intersection of cultural organisations with tourism in that regard.

Limiting the period in which banks can write off profits against past losses is long overdue. It is an issue that must be addressed urgently. It is a hostage to fortune and we must have a time limit. The Minister's own report from 2017 indicates that losses in the short term, in introducing a cap, would be offset by a benefit to the State.