Paul Gavan (Sinn Fein) | Oireachtas source

It is nice to see the Minister of State who is welcome to the House. The budget came at a time of great challenge for our country, economy and people. Budget 2021 was primarily a response to that challenge. Since this pandemic began Sinn Féin has committed to constructively engage with the previous and current Governments in the best interests of our people while holding the Government to account, as is the job of any Opposition. Sinn Féin argued for greater levels of wage subsidy for low income workers in order to protect incomes and enhance the take up of the scheme and argued that administrative changes could be made by Revenue to ensure that women returning from maternity leave would be eligible for the scheme. These changes came to pass and were welcome.

In terms of income supports, the employment wage subsidy scheme, in its original iteration, reduced wage supports by up to 50% and excluded a cohort of the lowest paid workers. It was clear form its announcement in July that it would be insufficient to protect jobs and support businesses when the threat of the virus remained in our communities. Sinn Féin was relentless, as the Minister of State will know, in calling for the scheme to be amended with higher levels of wage support for workers and their employers in order to avoid a jobs crisis as public health restrictions inevitably increased. The same was true regarding the pandemic unemployment payments with the Government having cut the level of payments in previous months for thousands of workers who had lost their jobs as a result of public health restrictions.

On 19 October, as the Government announced its decision to move to level 5, these cuts to the pandemic unemployment payment and wage subsidy schemes were reversed, reintroducing a top rate of €350 per week. This was common sense, a recognition that the previous cuts were ill-judged while the treat of the virus and further restrictions remained. It was also a vindication of Sinn Féin with the Government implementing policy decisions that we had been calling for in the previous weeks and months. We welcomed those policy decisions made by Government. They were necessary.

While many of the workers faced the pandemic unemployment payment, we hear that the banks, one of which the State owns and another which it partly owns, are now refusing a further mortgage moratorium. I take this opportunity to ask the Minister of State to urgently intervene on this topic.Banks across Europe, as the Minister of State will know, will be allowed to offer payment breaks on mortgage and personal business loans again after the European Banking Authority revised its stance on the issue. The Banking and Payments Federation Ireland, however, said last month that Irish banks did not intend to avail of the relaxed rules. The Minister has the power. We own one of the banks and we have a stake in another to make that change. I commend a number of Senator Casey’s points in terms of business supports. In the same way, mortgage holders need those supports. The simplest way would be to ensure they get a further break from mortgages. As the Minister of State will acknowledge, many families are still suffering.

This issue of taxing the pandemic unemployment payment, PUP, is bizarre. While the PUP was put on a statutory footing on 5 August for the five months from its introduction in March, it was not subject to tax as an urgent needs payment. Section 3 of the Finance Bill 2020 seeks to retrospectively tax a payment which was exempt from tax by law. Regardless of the amount of tax this would incur, this is an unprecedented move that the Government has failed to justify. I am unconvinced by any argument the Government has put forward to retrospectively tax a payment that was, by law, exempt from tax for a period of five months. If the Minister wants to start a retrospective tax system, I can suggest many more areas in which to start rather than taxing the pay of ordinary workers.

I acknowledge there are measures to be welcomed in this Bill, some which are long over due. Section 9 increases the earned income credit to €1,650, equalising the tax credit for self-employed with that of PAYE workers. This is a welcome change and long over due, with this commitment having been made more than four years ago by the previous Fine Gael Government. Section 4 provides for an exemption from income tax for payments made by the HSE to those in receipt of the mobility allowance. This is a positive move which Sinn Féin welcomes. Similarly, the increase in the dependent relative tax credit, provided by section 5, is a welcome development.

The carbon tax provisions in this Bill will, however, have a negative impact on workers and families, with a disproportionate impact on low income, lone parents and rural households. Sections 26 to 28, inclusive, provide for locked-in increases in the carbon tax every year until 2030. These provisions will result in a 39% hike in carbon tax next year alone, followed by further increases year on year. Without affordable alternatives, a carbon tax will not reduce emissions. At present, alternatives, be they electric vehicles or home retrofitting, are least accessible to low income households. If households are not able to afford these alternatives, they will simply spend more heating their homes, cooking their food or running their car. That is the reality. We have had a carbon tax for more than a decade and our emissions have gone up, not down. It is a burden because the alternatives to fossil fuels are not realistic for the majority people in terms of affordability. The fuel allowance is often quoted. It is a means tested payment. The accessible income limit for a couple where the qualified adult is aged under 66 is just €513.70. What this means in reality is that many low paid workers, and as Senator Bacik pointed out one in four workers in this economy is a low paid worker, have no means of affording these carbon tax increases and they have no supports available under this budget. Thousands of households that do not qualify for the fuel allowance are struggling to get by at this great time of financial insecurity. The increase in carbon tax is permanent. The Bill seeks to lock-in year on year increases in the carbon tax until 2030, increases that the Department of Finance has itself classified as regressive. There is no such provision in the Social Welfare Bill to lock-in year on year increases in social welfare payments until 2030. The fact remains that now in the midst of an unemployment crisis that has disproportionately impacted low income households, this was the wrong time to increase carbon tax. It was right time to put a pause on the increase. Sinn Féin will express these concerns on Committee Stage.

I move on to motor and VRT tax changes. These measures are compounded by sections 33 and 34, which provide for changes to motor tax and reliefs given to certain electric vehicles. These changes, as the Minister of State will know, will disproportionately benefit wealthy drivers while penalising those unable to afford an upgrade to low emission or electric vehicles. A just transition must be based on prioritising access to alternatives for those most vulnerable to an increase in these taxes.

The State is in a good position at present to support incomes, jobs, businesses and our economy. The cost of borrowing remains low. The European Central Bank, ECB, policy remains in place and certain tax receipts remain robust, but a spectre hangs over the future course of our public finances.A spectre hangs over the future course of our public finances. Overperforming corporation tax receipts have aided the ability of the State to fund its response, but they cannot be relied on forever. While our deficit has increased substantially, it is manageable and was necessary. However, questions remain over the intentions of this Government to reduce it. The programme for Government explicitly ruled progressive taxation measures and committed to deficit reduction. The Government must at some stage set out how it plans to square that circle. I can commit that Sinn Féin will oppose any attempt to reduce the deficit through funding freezes for our public services, cuts to social protection or aggressive tax hikes. Sinn Féin will demand a just recovery.

I wish to highlight something that happened at a meeting of the Joint Committee on Enterprise, Trade and Employment last week. Both IBEC and the Irish Congress of Trade Unions, ICTU, urgently called for a specialised short-time work scheme for companies that will be affected by Brexit. It was striking to see IBEC and ICTU on the same page but it was disappointing to hear that they both acknowledged they had not had a positive response from a number of Departments. This is something that is urgent. We all know that Brexit is going to be hard, and it is a question of how hard, yet we have not seen a response to this urgent call. I would like to use this occasion to call on the Minister of State to make an intervention now to ensure that a German-style short-time work scheme is in place for the beginning of the new year.