Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

We are here to discuss Second Stage of the Finance Bill 2021. I understand that Senators have been sent a summary of the Bill addressing its individual sections. I do not intend to go into that level of detail now. Instead I will consider the overall Bill and the principles behind it. As we know, the Finance Bill gives legislative support for the budget measures introduced by the Government in October. The Bill makes a number of other important changes to tax legislation. The 2022 budget addressed the major issues facing Ireland, that is, Covid-19, climate change and housing. In the 2022 budget the Government continues to support households, families, individuals and businesses to deal with these challenges and to look to the future with optimism.

The Government has brought in an income tax package for next year that will have a value of €520 million. As the Minister announced on budget day, the standard rate income tax band will increase by €1,500 and the personal tax credit, employee tax credit and earned income credit will all increase by €50. These changes will benefit everyone who pays income tax. The Finance Bill also contains changes to the universal social charge, USC, which will ensure that a full-time worker on the minimum wage will remain outside the top rates of the USC and that medical card holders will continue to pay reduced rates of the USC in 2022.

Since the onset of the Covid-19 pandemic, the Government has provided unprecedented supports for businesses and workers. Some of this support, including the temporary wage subsidy scheme, the employment wage subsidy scheme, EWSS, the Covid restrictions support scheme, CRSS, and the business resumption support scheme, has come under the aegis of the Department of Finance. This demonstrates a swift and effective response from the Government to provide timely and ongoing support under these schemes to those whose livelihoods have been impacted by Covid-19. This support has been as important to individual employees as it has been to businesses. As of 2 December, a total of 694,000 employees were supported by payments under the employment wage subsidy scheme, with €5.7 billion now paid out by the Revenue Commissioners in addition to the €893 million in PRSI forgone.

The Government has always emphasised that there would be no cliff edge to business supports, and the Finance Bill provides for the extension of the employment wage subsidy scheme. The scheme will remain in place in a graduated form until 30 April 2022. No change was made to the scheme for October and November. Businesses availing of the scheme at end of the year will continue to be supported until the end of April. For the three months from December to February, a two-rate structure of €151.50 and €203 will apply. For the last two months of the scheme, March and April 2022, a flat rate of €100 will be put in place and the reduced rate of employer's PRSI will no longer apply. The scheme will close to new employers from 1 January 2022.

The Government is bringing in new measures, with effect from today, which will impact the hospitality sector at a time of the year when the sector would be gearing up for its busiest period. The EWSS, as an economy-wide scheme, will continue on the path laid out on budget day and provided for in the Finance Bill as passed by the Dáil. Taking account of the impact of the new measures on the hospitality sector, the Government is introducing a revised Covid restrictions support scheme for businesses in the hospitality sector that are subject to restrictions on operating. The revised scheme will provide targeted and timely support to the hospitality sector to supplement the support it is receiving under the employment wage subsidy scheme. The revised scheme will adjust the CRSS to support businesses whose trade is significantly impacted and which are subject to regulatory restrictions on operations. This will involve a weekly payment of 12% of turnover for qualifying businesses. Officials in the Department of Finance and the Revenue Commissioners are working on this at present and further details will be available later this week.

There will also be a further extension of the current targeted commercial rates waiver for the first quarter of 2022. This will be put in place at an additional cost of approximately €62.3 million. The Government is also making available additional funding of €25 million, in addition to the allocation of €25 million already provided for in budget 2022, to support the live entertainment sector. The Government has also agreed to a limited reopening of the pandemic unemployment payment, PUP, for workers who are temporarily laid off due to the impact of these public health restrictions.

The Government made significant changes to vehicle registration tax, VRT, last year in line with Government commitments to reduce emissions radically. The Finance Bill 2021 will continue this important work. The Bill makes further changes to the upper bands of the VRT table and extends the €5,000 relief for battery electric vehicles to the end of 2023. It also extends for three years the accelerated capital allowance scheme, ACA, for gas vehicles and refuelling equipment, and extends the scheme to include hydrogen-powered vehicles and refuelling equipment. The Government is committed to reducing radically emissions from road transport. Part of that involves providing incentives for motorists to purchase cleaner, lower emitting vehicles. The policy changes introduced in respect of VRT in the Finance Act 2020 are working. This year's statistics to date show a clear trend towards the uptake of cleaner vehicles following the change to VRT rates. A significant increase in the number of electric vehicle, EV, registrations has been mirrored by a decrease in the number of high-emission vehicle registrations. The middle emissions bands have also experienced a shift towards lower emission vehicles.

The Bill exempts from tax the first €200 of income arising from the domestic generation of electricity supplied to the national grid. This is intended to remove a barrier to entry for those who engage with the clean energy guarantee scheme.

The Government is committed, through Housing for All, to achieving progress on housing as a matter of utmost priority in the interests of the people of Ireland. A key element of this strategy is the need to release land for construction of housing. The Bill addresses that objective by introducing a zoned land tax.This seeks to facilitate public policy requirements that, when suitable land is zoned and serviced for housing, it should be made available for residential development at the earliest opportunity. The Bill provides a rate of 3% to be applied to the market value of such land.

Finally, it will extend the help-to-buy scheme in its current, enhanced form for a further year to the end of 2022. The scheme will be comprehensively reviewed in the course of the next year. In addition, the Bill will extend the relief for pre-letting expenses for landlords for a further three years. This measure is aimed at increasing the supply of rental property and is consistent with the Housing for All strategy.

The Government continues to support industry and innovation and the Bill will introduce a new tax credit for the digital gaming sector. The relief will support digital game development companies by providing a refundable corporation tax credit for qualifying expenditure incurred on the design, production and testing of a new game. The relief will be available at the rate of 32% on eligible expenditure up to a maximum limit of €25 million per individual project. As European state aid approval is required for this credit, it will be introduced subject to a commencement order as soon as possible. To assist new and recently established start-up companies in the aftermath of the pandemic, the relief from corporation tax for start-up companies in their first three years of trading relief will be extended for five years.

The Bill provides the legislative basis for the budget and makes a number of other changes to tax legislation. I look forward to discussing its details on Committee Stage and I commend it to the House.