Paul Gavan (Sinn Fein) | Oireachtas source

I know that the Cathaoirleach will give me some extra time, for which I thank him. On this Bill, we welcome the warehousing of tax liabilities, the reduction of interest rates applying to tax debt, and corporate tax loss relief in these circumstances, but I will highlight a few concerns we have around the Bill.

The temporary VAT rate reduction from 23% to 21% is of course supported by us. More needs to be done. Echoing some of the comments of Senator Casey, the issue of a VAT reduction for hospitality and tourism should have been addressed at this time. The stay-and-spend initiative or tax credit will exclude one third of earners in the State. As the Minister of State will know, we proposed a voucher scheme on this. I will have more to say on this as I go through this speech.

The enhancement of the help-to-buy scheme and the increase of the quantum of claims is a measure that we will oppose on the grounds that it will drive up house prices and exclude the majority of first-time buyers. Again, I will expand on that particular point later.

On the introduction of the employment wage subsidy scheme which will replace the temporary wage subsidy scheme from 1 September, with both schemes running parallel from the 31 July to 31 August, we are saying that the temporary wage subsidy scheme needs to be extended further because we know that the new scheme is not worth as much. I will give a concrete example of this. Ballyliffen Golf Club up in the Inishowen Peninsula is a community-led club. It employs 25 to 40 people and brings a significant amount of tourism into that area. The club has said that because it is a sports business, it will only be eligible for a €4,000 grant under the restart grant scheme despite paying more than €10,000 in rates. As the Minister of State will be aware, we have advocated larger grants.

The wage subsidy scheme is ending at the end of August and we are arguing that it should be extended to the end of October for the highly impacted sectors like hospitality and tourism. This golf club has made it clear to us that the end of the wage subsidy scheme will make its business unviable. This is a very concrete example of where this particular Bill does not go far enough. This does not make any sense. We have all been speaking to people in the hospitality sector and know how bad things are. Reducing these subsidies this early is a mistake. I make no apologies for saying that.

We are also concerned about the subsidy for workers earning less than €151 per week, namely, the fact that there is not one. We have submitted an amendment on this which, unfortunately, has been ruled out of order and which proposed the continuing of the 85% subsidy for these low-paid workers. We are concerned that this would provide a perverse incentive for employers to increase hours artificially to avail of the €151 payments to cover all wage costs.

I will spend a number of minutes discussing the stay-and-spend initiative. The purpose of this scheme is to incentivise taxpayers to support registered accredited providers of accommodation or food or both during the off-season. There are several flaws in this initiative. The Government basically adopted Sinn Féin policy and then made it as regressive as possible. There is a pattern there, as we know from what has happened with the airports over recent days. The Minister of State said that 2.8 million people will be able to avail of the stay-and-spend initiative. I ask him to address this point in his response because he is wrong in this claim. According to the Department of Finance’s own ready reckoner for budget 2021, 715,600 people are taxpayer units who pay neither income tax nor USC. Some 29% of taxpayer units then will be ineligible for the stay-and-spend tax rebate. Considering individuals who are not taxpayers, which also includes couples, and the increased level of unemployment resulting from Covid-19, this figure is actually likely to be higher. The rebate will be received in 2021 for 2020 claims and in 2022 for 2021 claims, providing a reduced incentive for claimants. The rebate will only be available for spending from October, which will miss the summer months. There are a whole series of issues there where the Government could have made the scheme much more effective and we need to hear why the Government is choosing to exclude so many people in this way. It would have been much better to go with a voucher scheme

I also want to address section 8 on the enhanced help-to-buy scheme. We will be opposing this section on the following grounds. No impact assessment has been conducted on the effect of this policy change on house prices, as confirmed by Department officials. This is policy on the hoof and a cash cow for investors. Lorcan Sirr, senior lecturer in housing policy at Technological University Dublin, questioned the timing of the move. He said: "The timing of this, which will stimulate demand when supply is being reduced, will likely lead to rising prices for the homes that do come on the market." Instead of reducing house prices, this will cement the pricing behaviours of developers who have no incentive to reduce house prices. It seems like the old relationship between Fianna Fáil, in particular, and developers is alive and well.

In 2019 the Parliamentary Budget Office published a stinging report on the help-to-buy scheme. The report found that the scheme had been disproportionately availed of by higher income earners. It has been largely out of reach for the vast majority of first-time buyers. The majority of help-to-buy purchases have been above the average price. Given the mortgage lending rules, this means that the scheme has largely benefited high-income earners rather than low and middle-income earners. Only 13% of sales through the scheme were for properties costing less than €225,000. That is not an affordable housing scheme. Furthermore, over 40% who use the scheme already had a 10% deposit and did not need it, while it failed to help the majority people trying to get on the property ladder. These changes to the help-to buy-scheme, which will cost €18 million, are likely to increase property prices and damage the majority of first-time buyers who will not be eligible for this scheme. This is all being conducted without the carrying out of an impact assessment. This is just poor.

I have spoken briefly about the reduction in VAT which we welcome, but we know that it is just not going to be enough for the hospitality sector. The argument that Senator D’Arcy seems to be making is that this is something that could be addressed in the upcoming budget. That is too late because it should have been addressed now.

A further point on VAT, where the Minister of State will see an amendment from us, is that we are calling for a report on the impact of the VAT cuts on issues like the sale of motor cars and the cuts to fuels and heavy oils. It is surprising to see a Green Party signing up to these type of cuts to VAT. I always thought that this party was against the use of these fuels, yet it seems to have signed up to this without at the very least asking for a report on what the impact will be. The good news is that we have an amendment here which we hope all the Members will support and which simply asks for a report on this in five months to see what the actual impact will be of the reduction of those rates.

Basically, we are going to support this Bill but will oppose section 8. In the context of the crisis that our country is facing, particularly in the hospitality sector and small and in medium-sized businesses, I agree with my party leader that the Bill is miserly and is clearly not enough. We will find in the months to come that much more will be needed to be done that could have been done today.