Kieran O'Donnell (Limerick City, Fine Gael)

Senator Cosgrove raised the 9% VAT rate. This was a commitment in the programme for Government. It is important that we can look at what is in the programme and try to deal with it. Senator McDowell is not here, but he spoke about the same issue. A lot of small restaurants, small coffee shops and hairdressers are struggling. This is a measure. One issue that is often missed is that VAT comes off the top for restaurants and hairdressers. Hairdressers do not give someone a haircut and charge €20 plus VAT. They have to take it out of the rate they charge. It is the same with restaurants. That is missed. For someone taking in €10, a 9% rate versus 13.5% rate can make a huge difference in terms of viability. There are 150,000 people employed in that sector and we feel strongly about that.

Senator Noonan raised vacancy and dereliction and referred to Revenue taking over in that area. That is a measure we brought in. We also brought in the living city initiative. There are significant changes in that scheme, with newer buildings brought into it. People can also qualify for vacancy home grants, which the Senator will know from his time in the Department.

Senator Cathal Byrne made reference to the tax relief or conditional gift relief. Perhaps he can raise that with the Minister on Committee Stage. The Senator also made a valid point on youth employment. I will take up the point he made on film tax relief.

Senator Kyne acknowledged the work done by the former Minister, Paschal Donohoe. He made three relevant points. The measure we have taken on VAT is a viability measure and we will see the fruits of it. We must get more apartments built. The hospitality sector is a huge employer and we always look at it in a progressive way. We have kept the VAT rate on electricity and gas at 9%. That also shows our purpose.

Senator Maria Byrne made valid points on hospitality. She will know, even from our own area, the situation.

I will respond to the points Senator McDowell raised. The first was on income tax. We have acted in the past in terms of reducing exposure, more in terms of tax credits and income tax bands. The Tánaiste and Minister for Finance said we will do it again in the future under the programme for Government if the economy is strong. I disagree with the Senator on the 9% VAT rate, which I have spoken about. It is about the small coffee shop, restaurant or hairdresser that is under severe pressure.

Senator McDowell also spoke about the capital gains tax rate going from 40% to 20%. If we were to reduce the rate on capital gains tax from 33% to 28%, it would cost the Exchequer €415 million alone. In many cases, it might only bring forward the sale of particular properties. I note the point the Senator made on the remittance bases of tax. It is fair to say we want to see more in terms of building properties. We want to see more rental properties coming on stream. In another viability measure in the budget, we exempted corporation tax on cost-rental properties. We want to increase that supply into the market.

I thank all the contributors for their perseverance. It is a late hour. I will bring the points raised back to the Tánaiste and Minister for Finance, Deputy Simon Harris. I have no doubt that these are matters the Senators will debate at length on Committee and Report Stages.