Jennifer Carroll MacNeill (Dún Laoghaire, Fine Gael) | Oireachtas source

If I may, I will take 30 seconds to put the pages back in order, as I have been asked loads of questions during Senators' contributions, and I want to try and keep the right order. Forgive me but this is a genuine effort to respond to what Senators have said.

I thank those Senators who made a contribution. I have taken a note of their points and I will try to respond specifically and directly to the points they have raised. Senator Casey raised the issue of loan-to-value in the first home scheme. The first home scheme special purpose vehicle, which is jointly funded by the State and participating mortgage lenders, offers equity to first-time purchasers. The maximum equity stake is 30%, unless the purchaser is availing of the help-to-buy scheme, in which case, under the terms of the first home scheme, it is 20%.

Under the Central Bank's macroprudential rules, equity funding is not classified as a loan. I note that the first home scheme and the local authority affordable purchase schemes operate differently. The first home scheme already has a built-in mechanism that allows it to work in tandem with help-to-buy by reducing the equity stake available to purchasers to 20% in cases where help-to-buy is claimed. In other words, the maximum one can receive under the first home scheme, or the first home scheme and help-to-buy, is 30%. I know that is a matter that the Senator has raised separately, and we have discussed that. I will provide the Senator with a more detailed note on that, if that is okay.

As I said, the schemes operate differently. The latter, the affordable purchase scheme, is a statutory scheme, whereas the first home scheme is a joint venture with private sector mortgage lenders. The issue with the local authority affordable purchase scheme is that it allows buyers to purchase houses at a discounted price and in some cases buyers who avail of the local authority affordable purchase scheme can receive equity finance as high as 40% of the original market value. That leaves them ineligible for the help-to-buy due to the 70% loan-to-value ratio requirement. The Department of Finance will continue to monitor the scheme. I am sure we will have the opportunity to speak about it again. As I said, I will get the Senator any more detailed information that I can provide.

On income tax, I know that Senator Kyne and others have voiced their support for the personal income tax package. As we know, on budget day, the Minister for Finance announced a personal income tax package to the value of €1.3 billion in 2024, and €1.5 billion in a full year. As incomes rise, it is vital that adjustments are made to our personal tax system. This is essential from competitiveness and cost-of-living perspectives, as people make decisions about returning to the workforce or not, and it is particularly essential in as tight a labour market as we face. I certainly have constituents, particularly women, who have raised families and are making decisions about whether to return to the workforce, and some of those decisions are predicated on the marginal balance of tax and how they will be impacted by that.There really are very broad and good reasons for continuing to look at the tax system and how it operates vis-à-visincomes.

As incomes rise, it is particularly important that adjustments are made to the personal tax system. In the absence of this, workers and pensioners would experience an increasing burden of tax in real terms, resulting in a drop in living standards. It is a key cost of living measure and I would highlight that to any person or party who chooses to vote against this Bill and comes into this House or the other House articulating a need for further cost of living supports. This is a cost of living support. This particular budget tax package is built around three key pillars, namely, changes to tax credits, the standard rate band and to USC, and the Government has sought to use each of these levers to spread the benefit of the available package as effectively as possible.

I want to make a particular point in regard to USC, which has been highlighted. We have a highly progressive income tax system, and it is one of the most progressive of EU or OECD countries. Of course, that means the burden of taxation falls most heavily on those with a higher ability to pay, and that is the system that we want to continue. For example, it is estimated that in 2024, the top 5% of income earners, that is, those earning over €140,000, will pay almost half of the projected income tax and USC receipts, while the lower 80% of income earners, that is, those earning less than €69,500, will pay only one fifth of the projected income tax and USC receipts. The position is that in budget 2024, personal income tax changes were designed to ensure that the monetary gain was capped at €70,044 per annum. Anyone earning in excess of this amount does not receive any additional benefit from the personal tax package. Furthermore, the gain as a percentage of net income is actually greater and more progressive for many taxpayers earning below this income level. To take Senator Gavan’s example of an individual earning €35,000 per annum, that person will see a 1.1% change in net income whereas an individual earning €200,000 will see a much lower 0.8% change in net income. We cannot just look at cash as an example and we also have to look at percentages to show that it is proportionate.

It is inaccurate and unfair to only look at tax measures as a response in this budget and we have to look at the entirety of this budget, as many Senators have said. Senator Craughwell said it is important to look at the budget in the round and the suite of measures provided. The tax measures and the expenditure measures are a part of this, as are the one-off measures, for example, energy credits, increases to social welfare payments, increases in rent tax credit, retention of the 9% VAT rate on gas and electricity and the postponing of excise duty restoration. Again, voting against this Bill strikes a blow against those cost of living measures in the round.

On mortgage interest tax relief, I thank Senators Kyne and Casey for their contributions and I know they have raised this issue before. I assure the Senators that the Government is acutely conscious of the impact of rising interest rates and mortgage costs on many taxpayers. It is for that reason that the Minister introduced a temporary, one-year targeted form of mortgage interest relief as part of budget 2024. I should say that this measure is deliberately targeted so we are not benefiting better-off earners or people with much larger mortgages. There is a reason that it is capped at €500,000 and it is designed to try to help those people who are most under pressure. Similarly, people with mortgages of less than €80,000 are likely - I say “likely” - to be less under pressure than those with more. The Government has attempted to target this as best it can because we know this measure typically and statistically benefits higher earners, which is not what we want to do. Again, I urge Senators to reflect on that in terms of their contributions for the future.

On film relief, I thank Senator Lombard for raising this issue. I will look into the question of geographic distribution more broadly. I assume that excellent films are made in Cork South-West and that it should not necessarily be excluded. I will look into that for him and I thank him for raising the point. I thank Senators more broadly for their comments in regard to the increase in expenditure under the section 481 tax credit. It is a change that has long been supported by the sector. The increase is something that we should think about as we look at the continued development and, even more so, the resilience of the creative film sector. We want Ireland to remain an attractive location for this sector. We want to produce high-quality films and we want to be known for that. However, we also want to develop a stream of talent that can work within Ireland in a predictable secure way, which is already the case in most cases, but who can travel internationally and come back and develop a resilience in this sector.One of the things we have managed to do very well is develop resilience in our economy by having pharma, medtech, financial services and technology. The film sector is one that can add real resilience and reduce the single points of failure so if a downturn comes, not everybody is impacted by it. This a sector where we can do well and there is more we can do on it.

The residential premises rental income relief was raised by Senators McDowell and Gavan. I note Senator McDowell’s concerns in respect of tenant rights and the new refusal measure. It is a policy matter for the Minister for housing, which the Senator will appreciate, so I might not step across the Minister, Deputy O’Brien, in that respect. However, landlords are an essential feature of a functioning housing market. Rising rents are driven by a shortage of supply, so stabilising and increasing the supply of rental properties is essential in trying to ease the upward pressure on rental prices, as is of course new supply and the cost rental scheme being developed by the Land Development Agency. You cannot have a tenant without a landlord, which is why the relief has been introduced. It is a very small relief, but is some measure to try to encourage them to remain in the rental market and provide certainty and stability for them. It is such a small credit.

What has been more damaging for landlords than the financial piece – because income is income and must be taxed appropriately – and helped so many of them leave, is the dialogue around landlords in this State, which Senator Gavan’s party has contributed to in large part. Between quarter 1 of 2023 and quarter 3 of 2023 we have had 15,000 notices of termination issued to tenants and of those, 9,000 were because the landlord intends to sell the property. For the past year notices of termination were received 14,500 were stated as the landlord selling the property, so 60% in general is because landlords are selling the property. Up and down my constituency I hear landlords have been demonised. Most landlords are owners of one or two properties. They have been demonised. They feel they cannot say publicly they are a landlord. I do not understand how we have got in this State to a point where somebody who has one or two properties and has been renting that for a very long period, in many cases, to a family is demonised in that way and why we have enabled people to leave the market to the extent that we have the rental crisis we do. It is very difficult to hear that this is a crisis - and it is of course increasing homelessness and especially lone parent homelessness, so it is essential for the protection of lone parents and their children that we retain as many landlords as landlords as possible - but the dialogue and the terrorising, really, in language, of landlords and their position in this State has helped move landlords away from this and to sell properties. That is not so in all cases, but it is certainly something Senators will have heard again and again.

I have listened to Senator Gavan and to what he said on housing. He is actively opposing this tax break for landlords but his rhetoric is a much bigger problem. He has suggested nothing that increases the supply of private tenancies, which are an essential part of the housing system. There is nothing to increase the building of new homes and nothing for anybody who is looking to buy a home or have homeownership. Pursuing Sinn Féin’s budget proposals instead of the measures in this Bill would make housing in this State less affordable and make homeownership less, rather than more, likely. That party is looking to abolish help to buy. I hope the 42,000 first-time buyers who have used the scheme hear that loud and clear. Sinn Féin would abolish it for the future. The party is going to double stamp duty and abolish the first home scheme we discussed earlier, which has helped make it more affordable to buy homes where the gap has been too great by means of an equity share. Some 600 people have been helped. That is 600 families, or 600 home-buying units, to the extent we can use such a cold phrase. A further 2,500 more are approved. I hope every single one of those 3,100 households hears Sinn Féin’s opposition to the scheme that is helping them buy their first home, among other challenges to the housing system. The Senator can criticise all he likes, but there is nothing-----