Neale Richmond (Dublin Rathdown, Fine Gael) | Oireachtas source

I thank all the Senators who contributed to the debate. In the time available, I will try to touch on as many of the points that have been raised as possible. On Committee Stage the Minister Deputy Chambers or I will be able to go into a bit more detail, particularly on some of the issues raised on the Opposition side of the House.

I will begin with Senator Maria Byrne's comments on the regional uplift. There are no plans to reintroduce the regional uplift or to introduce alternative regional specific changes to the film tax credit. I note that the scaled uplift introduced in the Bill provides an enhanced credit of 8% under section 481 for feature film projects with the qualifying expenditure of less than €20 million. This will enhance the viability of smaller projects that may be more likely to film in regional locations.

Regarding the comments of Senator Higgins, the primary policy objective behind the research and development corporation tax credit is to increase business research and development in Ireland, which helps to build an innovation-driven domestic enterprise sector and enables Ireland to remain competitive when it comes to attracting quality employment and investment in research and development. Prior to taking on this role, I was very lucky to be the Minister of State at the Department of Enterprise, Trade and Employment, where I led no less than nine trade missions. On every one, the Department and IDA Ireland were asked about the research and development tax credit and the opportunities that exist. Every time we saw increased activity due to the research and development tax credit. It should not be underestimated in any situation. Links with the third level sector are very important as part of that. An €80 million investment has been announced today in our third level sector. This will go towards additional research.

Senator Higgins also referred to the angel investor relief, which is intended to help address the challenges faced by new early stage innovative companies seeking funding, by encouraging investors to acquire significant minority shareholdings in these innovative companies which are less than seven years old. The relief aims to address the funding gap that new innovative companies often encounter. It is designed to comply with the rules of the EU state aid general block exemption regulation. The angel investor relief is being put in place in response to a recommendation of the Commission on Taxation and Welfare. It forms part of a suite of enterprise measures that support businesses which are starting up and scaling up. For example, the employment investment incentive allows for early stage and follow-on investment for companies seeking to grow and expand.

I must inform Senator Higgins that the Government is committed to tackling climate change and decarbonising the economy by 2050. It is very much aware of the challenges that subsidies pose for our collective effort to disincentivise fossil fuels. Ireland is subject to energy taxation rules set out in the EU energy taxation directive with regard to aviation kerosene. Potential changes to taxation of aviation fuel in the EU are being discussed under the negotiation of the EU ETD recast proposal. Ireland is engaging in this process as, I know, is Senator Higgins.

In response to Senator Gavan's comments on the personal income tax package, a key objective for the Government has been to continue to support low- and middle-income earners, particularly as incomes rise. This has informed the tax package implemented by the Government in recent years. The tax package contained in the budget is built around three key pillars. These are changes to tax credits, the standard rate band and USC. These levers have been used to spread the benefit of the available package as effectively as possible. As Ireland's income tax system is one of the most progressive in all advanced economies, any reduction in income tax may be somewhat regressive. This is because those outside the tax net cannot benefit from tax reductions. However, they will benefit from the wider suite of supports and cost-of-living measures announced by the Government. For example, married one-earner couples who are on lower incomes and have children will benefit from significant enhancements to the working family payment. When considering the impact of the budget, it is necessary therefore to consider the budget package in the round, looking at tax and welfare changes together as well as other budget measures that aim to improve the living standards of our citizens. With regard to USC and an exemption for those earning up to €45,000 as proposed by Senator Gavan, or the abolition of the USC, as proposed by Senators Craughwell and Boyhan, this would have a significant impact on the make up of Ireland's tax base and alternative revenue streams would have to be found.

Senator Boyhan made reference to the 2016 general election campaign and posters calling for the abolition of the USC. The difficulty with the reference is that the party proposing it lost 50% of its seats. There needs to be a mandate. When we go into election season, be it a Dáil or Seanad election, we need to make pledges and promises but we must also be responsible. From his previous days in party politics Senator Boyhan knows that coalition is all about compromise. A coalition requires responsibility.