Kieran O'Donnell (Limerick City, Fine Gael)

I appreciate the opportunity to present the Finance Bill to the Seanad and participate in this debate on behalf of the Tánaiste and Minister for Finance, Simon Harris, who is participating in the proceedings of today’s state visit by President Zelenskyy but who will of course be engaging with Senators as the Bill completes its passage through the Seanad.

As Senators are aware, the annual Finance Bill provides a legislative basis for the provisions introduced in the budget as well as some further changes to the tax code. I understand that Senators have been provided with an updated summary of the Bill as passed by the Dáil, which summary addresses each section. I will use the time available to consider the broad themes in the Bill and how the Bill will provide the legislative basis for budget decisions already taken.

The measures announced in budget 2026 seek to protect our economic stability, support our citizens and prepare Ireland for the challenges and opportunities of the future. The Finance Bill implements a range of targeted tax changes, including specific measures to support households, jobs and businesses and to encourage and promote investment. The changes provided for in the Bill seek to address the many challenges facing our society, including those of housing and climate. The Bill also contains a number of administrative changes to the tax code, reflects recent international developments and seeks to protect and enhance the integrity of our tax system. I look forward to finalising this important legislation over the coming weeks.

The measures announced in the budget, such as the enhancements to the research and development tax credit, the participation exemption and audiovisual incentives, will protect jobs and build on our progress, enhancing our offering as a country to do business with and in. Looking ahead, we expect to add a further 63,500 jobs by the end of next year, with the economy remaining at full employment over the coming period. In terms of income tax, I want to address the fact that the scope for significant personal tax changes was limited in budget 2026. Budgetary parameters of €9.4 billion were set out in the summer economic statement. In line with this, budget 2026 allocated €8.1 billion for public spending and €1.3 billion for taxation measures. Budgets are about choices and, in making decisions for this one, the Government committed to measures that would improve the overall standard of living, with a focus on affordable, permanent changes. However, over the lifetime of this Government, we will stand by our programme for Government commitment to make progressive changes to income tax, if the economy remains strong.

The Finance Bill increases the 2% universal social charge, USC, ceiling by €1,318 to €28,700 for the 2026 year of assessment onwards. This change is made in line with the national minimum wage applicable in 2026 and will ensure that 2% remains the highest rate of USC that is charged on the income of full-time workers on the national minimum wage. It also provides for a two-year extension to the reduced rate of USC for medical card holders.

The Bill extends the rent tax credit in its current form for a further three years until 31 December 2028. It also extends the mortgage interest tax relief for the 2025 and 2026 years of assessment. For claims relating to 2025, the maximum value of the credit will remain at €1,250 with a 50% reduction applying for claims relative to 2026.

The foreign earnings deduction, FED, scheme is being extended until 31 December 2030. From 1 January 2026, the level of relief will be increased to €50,000 and the Philippines and Türkiye are included as relevant states for the purpose of the scheme. Following discussion on Committee Stage in the Dáil, I brought an amendment on Report Stage that removed Russia from the list of relevant states for the purpose of this scheme.

The special assignee relief programme, SARP, is also being extended until 31 December 2030. From 1 January 2026, the minimum salary requirement will be increased to €125,000. Additional amendments are also being introduced to make the relief more practical.

As housing continues to be one of the biggest challenges facing the country, a whole-of-government approach is being taken to address it. The Finance Bill provides for a range of measures that seek to complement direct spending initiatives to enhance viability and boost the supply of housing. One of the key measures in this Bill is a reduction in the rate of VAT from 13.5% to 9% applying to the supply and construction of apartments and apartment blocks. Following amendments on Committee and Report Stages in the Dail, this section now includes construction services and student accommodation within the scope of the 9% rate in line with the original policy intention. This viability measure will apply until 31 December 2030.

Regarding residential zoned land tax, the Bill provides another opportunity for landowners to seek to have their land rezoned to reflect the genuine economic activity being carried out and for those who do so to apply for an exemption from residential zoned land tax in 2026.

In line with Government’s commitment to accelerate the delivery of affordable homes, the rental profits arising from homes that fall within the cost rental scheme will be exempt from corporation tax. This exemption will apply to developments that are designated as falling within the cost rental scheme by the Minister for Housing, Local Government and Heritage on or after 8 October 2025.

The Bill also introduces an enhanced corporation tax deduction for certain costs incurred on the construction of apartment developments and for the conversion of non-residential buildings into apartments. This measure should improve the viability of these developments. The Bill makes substantial changes to strengthen the living city initiative, which supports the enhancement of older housing and commercial properties in the designated special regeneration areas in Cork, Dublin, Galway Kilkenny, Limerick and Waterford.

In terms of VAT, in line with the programme for Government commitment, the rate of VAT that applies to hairdressing services as well as the sale of food and certain drinks in the hospitality sector is being reduced from 13.5% to 9% from 1 July 2026. This will help to protect the jobs of the many people employed in our small coffee shops, restaurants and hairdressers nationally. The 9% rate of VAT on gas and electricity bills is also being extended. This measure will support households across the country as energy prices remain high. This was introduced by way of a financial resolution on budget night and the Bill gives effect to it until 31 December 2030. The Finance Bill confirms the budget night increase in tobacco products tax. Smoking remains Ireland’s leading cause of preventable death, and the Government is committed to reducing smoking prevalence.

The Bill introduces a number of changes that are designed to support business, investment and jobs. Changes are being made to the research and development tax credit, including increasing the rate of the credit from 30% to 35% and the first year payment threshold from €75,000 to €87,500.

The film corporation tax credit is being amended to introduce an enhanced credit of 40% for qualifying visual effects projects, subject to certain conditions. The digital games corporation tax credit is being extended for a period of six years until 31 December 2031. The scope of this credit is also being extended to include the development of post-release digital content.

The lifetime limit on gains that qualify for the capital gains tax revised entrepreneur relief is being increased from €1 million to €1.5 million for disposals made from 1 January 2026. A dividend withholding tax exemption for investment-limited partnerships and equivalent EU-EEA partnerships is being introduced in this Bill. This seeks to support opportunities for growth in the funds industry.

This year’s Finance Bill introduces a new market cap exemption stamp duty threshold of €1 billion for Irish SMEs and start-ups trading on regulated markets. For companies below this threshold, the 1% stamp duty charge paid on share transactions will not apply. The Bill also extends the bank levy for a further year.

Finally, as has always been the case, the Bill makes a number of technical changes to tax legislation to ensure it functions as intended, to give sufficient powers to the Revenue Commissioners to ensure they can enforce tax legislation and to correct technical errors arising from previous Bills.

The Finance Bill sets out legislative provisions to bring effect to the tax measures announced in the budget. These measures seek to support households, businesses, jobs and investment to protect our economy. As always, I look forward to a constructive debate in the House on its provisions. I commend the Bill to the House.