Maria Byrne (Fine Gael)
Link to this: Individually | In context

I welcome the Minister of State, Deputy Kieran O'Donnell, to the House.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context

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.

Joe O'Reilly (Fine Gael)
Link to this: Individually | In context

I welcome the Minister of State, who has a lot of professional and personal expertise in this sphere. He is a very apt person to be with us for the debate.

It merits saying that the object of the Finance Bill is to give legislative effect to the budget, primarily the taxation changes, etc. The budget is set in the context of a strong economy. We have 2.8 million people in employment. We have had a 19% increase in employment since lockdown. Some 63,500 new jobs will be added in 2026. We have high living standards, long life expectancy and excellent educational outcomes. We have a good progressive social protection system. It is in that context that the budget and Finance Bill are set.

In the overall context, we are not without challenges. The major challenge, of course, is tariffs. They have been set at 15%, which is not as bad as anticipated but is still a significant increase compared to the status quo. Today, we have a lot of trade wars and geopolitical conflict. They are the challenges and the backdrop to the Bill. We have to build resilience into our economy to deal with those challenges. We are doing that very effectively in the budget.

In next year's budget, there will be a Vote of €19.1 billion for infrastructure across the board, including water, roads, transport, energy, the grid and all of that. That is an important bit of resilience and economic activity for the country.Over the coming five years, we will be devoting 5% of GDP to infrastructure development. We have put €4.5 billion this year into the Future Ireland Fund, which will cope with ageing, climate change and digital transition. We will have a budget surplus of €5.1 billion, which is a very healthy situation. We have an improving debt-to-GDP ratio. We are at 61% now and we will be going down to 58%, which is significant. We will have an annual growth rate into the future of 2.19%. That is an encouraging situation as we deal with the whirlwinds that are out there, which we cannot fully anticipate the impact of.

As I said, the Finance Bill creates and enhances a progressive and caring Ireland, which is important. There is a big attack on child poverty in the Bill. There is an increase in the weekly rate for a child over 12 of €16, to €78, and an increase of €8 for a child under 12. The issue of carers is very important. Both in cold, clinical economic terms and in human terms, it is important that carers are supported in their homes. The income disregard for carers is up by €375 for a single person and by €750 for a couple. The fuel allowance, which is important in the context of fuel poverty, has seen a €5 increase from €33 to €38. There has been a flat rate increase of €10 in social welfare payments in general. We wish it was more than that, but in the budgetary context, with the other measures in the budget, such as the increase in the fuel allowance and so on, it is not inconsiderable. However, we would aspire to more in the future.

Importantly, the budget makes provision for auto-enrolment, which is effectively a retirement savings scheme. The State will invest €154 million in that next year as a contribution for 2026. It is a hugely important initiative, one of the most important initiatives in a long time. I must acknowledge that it was my constituency colleague, who has been in the news a lot lately, Heather Humphreys, who piloted that through initially. It is a significant social reform, irrespective of the politics of it.

The extension of the rent tax credit is important in the housing context, as is the VAT reduction on apartments. I have heard anecdotal evidence, and we have colleagues here from Dublin city, and seen from walking around that there would seem to be a lot of activity on the apartment complex front, which would suggest this is working. I mentioned the €9.4 billion infrastructural fund in the context of building in resilience, but it is also important in the context of housing.

Agriculture is our core industry, and it gives rise to food processing and so on. In the region I come from, everything is based on agriculture and food processing. The measure for young farmers is important in the context of succession planning in farming. The young trained farmer stamp duty relief is being maintained and extended, the farm consolidation relief is being extended and the farm restructuring relief is being extended.

In the climate area, the extension of the VRT relief on electric vehicles is important, as is the extension of the €400 tax disregard for people selling electricity into the grid.

The purpose of tonight's Second Stage is that we broadly approve the Finance Bill and, in so doing, I commend the Finance Bill to the House. I would ask everyone in the House to support it on the grounds that it deals with economic whirlwinds and is a prudent response to the international difficulties that we face around the tariffs and geopolitical conflict. It is a prudent response, is socially progressive and is a very important response to the housing crisis through putting the infrastructure in place. It is also a response to the issues of climate change and agriculture. It attempts to keep the stimulus in all sectors of the economy. The Finance Bill, in giving effect to the taxation measures in the budget, is an important piece of legislation. I hope that we will have a good debate, that it will go through Second Stage and that we have a good discussion on Committee Stage, where we will discuss the recommendations. I will leave it at that. I again welcome the Minister of State. I welcome the Finance Bill and support it.

Michael McDowell (Independent)
Link to this: Individually | In context

I welcome the Minister of State. I echo what Senator O'Reilly has said about the Minister of State and his approach to debates of this kind.

I have a number of points to make in relation to this Bill that the Minister of State might not like to hear. First, whereas Senator O'Reilly calls it a prudent Bill and suggests it is a conservative measure in times of economic turbulence, I think there are aspects of the Finance Bill and the budgetary strategy of the Government that need to be fundamentally challenged. The average industrial wage in Ireland is roughly €49,000, and workers hit the top rate of tax at around €44,000. The effect of the budget put forward by the former Minister, Paschal Donohoe, was to increase the number of workers who, because of wage inflation and the like, are being pushed from the lower rate of taxation to the higher rate. His failure to index the lower tax band at the 20% rate is, in my view, inexcusable. I cannot see why somebody earning below the average industrial wage should be paying more tax as a result of so-called prudence on the part of the Government. I do not think that follows in the present circumstances. The excuse given, that there were other things the Government had decided to do, such as reducing the VAT rate in specific areas, does not excuse the increased incidence of taxation on workers earning below the average.

I look around my own part of Dublin. You can hardly move without Deliveroo people going in this direction and that. You can hardly get into a restaurant to eat. You can hardly book a restaurant to eat. The big thing, though, is that many restaurants are closing for more days in the week, not because of the VAT rate - the more money they get, the better off they are - but because there are problems recruiting catering staff and people to work in their businesses. What I find strange is that, in a thriving industry, so many premises are closed for so much of the time.

It is not just a Dublin 6 problem. I was in Sligo recently and I noticed that almost every pub in Sligo is closed until 5 o'clock in the afternoon. What is happening? Why can they not keep open? I just wanted to get lunch during a court case I was doing there and I could not get a bowl of soup in a pub in Sligo at lunchtime. It suddenly struck me that things are not healthy in the catering trade in this country. That was not to do with whether I would be charged VAT on the soup and sandwich at lunch. It was all to do with getting people to work and making it profitable to open.

I will move on to my next point. I believe that, yet again, the Government has left CAT and CGT rates at 33%.When Charlie McCreevy, way back in 2002, reduced the CAT rate from 40% to 20%, the yield went up 500% the following year. Do people understand that? Five times as much money came in when he halved the rate from 40% to 20%. That is an extraordinary figure. I believe an awful lot of transactions are held up by the 33.3% rate, which was introduced for good reason at the time of the financial crisis in 2009, but there is no reason to do it now. A reduction in those two rates of tax would free up transactions dramatically and stop all sorts of measures to avoid paying those taxes. There are so many transactions where people say to themselves that if they realise the capital gain, the State takes 33.3% immediately, so they decide not to do that.

The third point I want to make is this-----

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context

It is the fourth, I think.

Michael McDowell (Independent)
Link to this: Individually | In context

It is my fourth, is it? Well, good.

Pat Casey (Fianna Fail)
Link to this: Individually | In context

I am glad somebody is counting.

Michael McDowell (Independent)
Link to this: Individually | In context

I am glad I am being productive. My fourth point then is this, and it may surprise some people. The time has come to deal comprehensively with non-doms in Ireland. It is not right or fair that factory workers pay fairly hefty tax rates but other people can just skip off to Malta, Portugal or wherever else and pay no tax to the State on their income. Believe it or not, when the Progressive Democrats were in office, Mary Harney and I came to the Government with a proposal for a minimum tax rate to apply to all Irish citizens regardless of where they were. I suggest it would be fair, or the Government should at least consider, a 20% tax rate for non-doms who are Irish citizens, have been Irish taxpayers, have assets and income-earning assets in Ireland, and cannot prove they are giving that amount of money up to any other country anywhere in the world. I do not believe in a society or a world order in which the super-rich can escape all taxation and come back to Ireland and start lecturing us on how we should run this country. It is fascinating that people who opt out of our economy in terms of paying anything into it can just flit off abroad and then come back for their 180 days of the year and give us lectures about what the rest of us should be doing with the State. It is an extraordinary thing. It would be so simple. By the way, the British are going to eventually deal with non-doms and the WTO world order is changing. The super-rich, whether they are in America, Portugal, Malta or wherever else, expect somehow that they have the right to own assets and employ people who pay huge taxation, at 20% and 40%, along with PRSI and USC, but they do not owe a cent to the country that has made them wealthy. I do not accept that at all.

The last point I want to make, the fifth or the sixth point or whatever it is, is this. There is provision in the legislation in respect of rent and allowances and the like, as Senator Joe O’Reilly said. The big problem is that the private rental sector is collapsing and the measures that will take effect in March are driving people out of the sector. Landlords are selling up. I know that because one person with whom I have a close economic relationship has been served with an eviction notice twice in the last 18 months by landlords who say – and it is the only way out of it – that they intend to give the property to a family member or put it up for sale. If the Government does not tackle that, it is going to have a major crisis on its hands. There is no point in the Department of Finance fiddling around with rent allowances and the like if people are being evicted as a result of what is being laid down as the law in the Custom House.

Pat Casey (Fianna Fail)
Link to this: Individually | In context

I will share my time with Senator Daly, if that is agreed.

Maria Byrne (Fine Gael)
Link to this: Individually | In context

Is that agreed? Agreed.

Pat Casey (Fianna Fail)
Link to this: Individually | In context

I welcome the Minister of State to the House. I had the opportunity on budget day to speak on the broader aspects of the budget. I now wish to focus on one specific aspect of this Bill, the help-to-buy scheme. I acknowledge the huge role of the scheme, which has helped over 50,000 families to own their own homes. There is also the first home scheme, which came into operation lately. I want to address two technical issues with the help-to-buy scheme. The first is the loan-to-value ratio of 70%. I raised this with the previous Ministers, Paschal Donohoe and Michael McGrath, and I was gaining traction with both but one decided to go to Europe and the other decided to go to Washington. I must acknowledge the huge role they played in stabilising our economy and providing a stable economy for everybody.

With the loan-to-value ratio, I am not talking about the deadweight. I am not talking about the people who can afford to go into the bank tomorrow morning and get a 70% loan straight away. I am talking about the people who on the margins and need both the help-to-buy scheme and the first home scheme. They cannot get a mortgage of 70% but they can get one of 65% and with another 20% from the first home scheme, they could buy. If they could access the help-to-buy scheme, they would have the deposit but because they are ruled out, they do not have the money to get the deposit. I will give an example of how clinical this is. A lovely couple had all the transactions done to buy a new house in Newtownmountkennedy. The first home scheme was in place, as was the help-to-buy scheme, and then the bank rang to say it had done a miscalculation on the mortgage and had not taken into account the couple’s car loan. Their loan-to-value ratio went down from 72% to 69.2%. They lost the help-to-buy scheme payment of €30,000, they did not have the money for the deposit and they lost the purchase of their home. Three years later, they are still living in a rental property. Another example is a single mother who was buying a duplex house in Wicklow town for €280,000. She could only get a mortgage of 65% and she was topped up with both the first home scheme and some money from her mother.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context

She must have had loans.

Pat Casey (Fianna Fail)
Link to this: Individually | In context

Yes. On her income, she could not get a mortgage higher than 65%. Her mother was helping her out and she was getting the first home scheme as well, but she could not get the help-to-buy scheme. Again, she could not get it across the line. They are two examples.

I am not talking about the deadweight in this scheme, which we all know about. There is a genuine need to have a review of the 70% threshold for people who are taking on additional debt. We call it equity, not debt, but it is debt because that equity has to be paid back. If the first home scheme and help-to-buy scheme were combined, the rate would be much higher than 70%. I would like the Minister of State to look at that.

The second issue, which is easier, relates to the fresh start principle. I can also give examples of this. It does not happen very often but some people - widows and widowers - are ruled out of the fresh start principle. These are people who lose their house because they have lost their husband or wife and do not have the correct insurance or whatever else in place and have to sell the family home. They are no different from people who have separated, divorced or become insolvent. I do not think it is the intention of the law to rule them out, but because they were not put into it in the first place, they are currently ruled out.We are not talking about a huge cohort of people in that regard. There are not many people who look for a new home when they lose a husband or wife. It is a very small, insignificant percentage of people but we should not rule them out.

I will not get into the issue of the hospitality industry with Senator McDowell, but I could provide a lot more reasons why the pubs are only open in the evening time, other than a shortage of staff. We will do that another day.

Paul Daly (Fianna Fail)
Link to this: Individually | In context

I thank Senator Casey for allowing me to share time with him. I want to raise two points with the Minister of State. In fact, it is one issue that has two anomalies on the back of the budget. I refer to the changes to the flat-rate VAT for farmers. I will not get into trying to explain the flat-rate VAT. It is a figure agreed between the Minister and Revenue based on macroeconomic data from the CSO. It changes and is reviewed. In the budget it was reduced from 5.1% to 4.5%. The anomaly is that there is also a flat rate for livestock of 4.8%, and it did not change.

In basic terms, using €1,000 as the figure, if you now sell an animal in the mart for that amount, you will bring home €997.14 or 0.03% less than if the animal was sold to an abattoir or factory where the person would get €1,000. This is going to put serious pressure on the marts of Ireland. They employ a lot of people in rural areas. Previously, farmers had the opportunity to shop around – if that is the correct term to use when you are selling. They had the option of telling the man in the factory they would go to the mart or vice versa. If they are going to take a hit of even 0.03%, it adds up over the entirety of the stock. It is an anomaly and it must be looked at before the Finance Bill is signed, sealed and delivered over the line.

The second point also relates to the flat-rate VAT for farmers. It relates to the poultry sector. The previous Minister, Paschal Donohoe, gave us very good briefings as to why the poultry sector was taken out of the flat-rate VAT and would have to register. I respect the bona fides in that regard. I am not reneging on that because I agreed with him at the time. There were directives from the Commission on the back of a whistleblower, but I will not go into the whole story.

There is an anomaly in that it is reduced in a situation where farmers do not exclusively have poultry but have a mixed farm. They could have a poultry section but also do beef, dairy, sheep, tillage or whatever. Now it is becoming a very onerous task for them to return their accounts at the end of the year without having to register the entire enterprise. That was never the ambition of the change. They need to register the poultry sector but it was envisaged that they would have been able to accept or work under the flat-rate VAT for the other sections. It is an unintended consequence. It is an anomaly that will cost a lot of money when it comes to accounting for those farmers who have to register. Some of them might not even reach the threshold of expenditure to register for VAT but by virtue of the fact that the poultry part of their enterprise now has to be registered, they cannot work under the flat rate and they are caught in that situation. They are the two anomalies relating to the flat-rate VAT.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context

What does Senator Daly suggest should be done?

Paul Daly (Fianna Fail)
Link to this: Individually | In context

That Revenue could make it as easy as possible to facilitate them in those circumstances.

The livestock VAT rate of 4.8% has to become equal to the 4.5% flat-rate VAT, because that is a serious anomaly.

Conor Murphy (Sinn Fein)
Link to this: Individually | In context

My colleagues and I will be opposing the Bill before us. It seems the Government has been determined from the outset to steamroll the Bill and the measures contained within it through the Houses. Not one Opposition amendment was accepted.

We can only conclude that the budget, which the Bill before us enacts, is for the wealthy, the developers and the bankers. It turns its face away from ordinary citizens of this State who have struggled for years with the cost-of-living crisis that continues to turn the screw on workers and families. It is a budget that refused to acknowledge the hardship that would be felt by hundreds of thousands of households as vital cost-of-living measures were ruthlessly scrapped. The budget contains a hard message from the Government parties: that the pre-election courtship of voters is over and the promises made then are now abandoned until the next election campaign.

This Finance Bill spends big. We are surrounded by millions and billions of euro, which the Government would say is evidence of an economy that is firing at full throttle. Who benefits from the roaring economy? It is certainly not workers, since the Government failed to introduce any income tax cuts to benefit them, never mind measures to support struggling families with the cost-of-living crisis. There were tax cuts for some. In fact, the Finance Bill will herald a total of €2.5 billion in tax cuts for landlords, developers, investors and others. The Government says these are choices that will support industry and infrastructure across the State, but budget after budget, homelessness continues to rise, public services are reduced and the Government can never explain that. It never takes responsibility for the tens of thousands of working people for whom home ownership is a pipe dream.

We in Sinn Féin asked the Government to deliver a fairer tax package by abolishing the USC on the first €40,000 every worker earns. This would have put €746 in the pocket of workers. We were ignored and, as a result, workers will be worse off next year.

Renters have also been thrown to the wolves by the Government, which committed to increasing the renters' tax credit in the programme for Government. It is another pledge that was not honoured, which means that in 2026 landlords will see their tax credit increase but renters will not. Are we not right to say this is a landlords' budget? When we add to that the VAT reduction on the sale of apartments, it will result in a direct transfer of millions of euro from the State to the pockets of developers for apartments that would have been built regardless. The list of dig-outs to developers is extensive. The Bill makes provision for: extensions to the rent tax credit and the deduction for retrofitting expenses by landlords; a corporation tax exemption in respect of certain cost-rental income; an enhanced corporation tax deduction for certain apartment construction costs; the extension and amendment of the residential development stamp duty refund scheme; and amendments to the residential zoned land tax. Developers have been handsomely looked after in this Finance Bill.

The banks will also look forward to a good year too on the backs of the people of the State who bailed them out when they almost wrecked the economy in 2008. These are the same banks who essentially pay no corporation tax. They do this because the Government permits them to carry forward historical losses from the bailout to offset against profits today. That means the banks are avoiding paying about half a billion euro each year. The bank levy itself is woefully inadequate too. Sinn Féin would have doubled it.

The burden of Government policies is reserved for the poor, the sick and the hard-working people of the State who are running to stand still. Is it any wonder that emigration is soaring? We are again hearing stories of three and four rural GAA clubs being forced to amalgamate due to falling underage numbers. On a recent visit to Australia I met scores of recent emigrants who were bemused by the Government's come-home-to-build-Ireland campaign. Come home to live where, they asked me.

This Finance Bill and the budget it enables will do precious little to tackle the inequalities in society. It will keep the rich rich and the poor poorer. It lacks any real ambition for the country – a fact proven by the failure of the Government to make planning for constitutional change an integral part of the budget.

We must harness the potential of our island-wide economy. That is the best way to provide housing, health and other services for all the people who live on the island. It is long past time that the Government began planning in earnest for the constitutional changes that are on the horizon. I welcome and commend all of the work of the shared island initiative. It is excellent work. We have heard a lot of success stories in the Good Friday Agreement committee. However, an all-island funding pot is not a substitute for the structural reform necessary to unify the country. The Government parties must live up to their manifesto commitments and begin active preparation to plot the course to reunification.

Sinn Féin rejects the Finance Bill before us. It will do nothing to ease the burden on hard-pressed citizens. It benefits the elite, the developers and bankers. It is the wrong focus from the Government. Sinn Féin will vote against the Bill.

Mark Daly (Fianna Fail)
Link to this: Individually | In context

Senator Cosgrove is sharing time. Is that agreed? Agreed.

Laura Harmon (Labour)
Link to this: Individually | In context

The Labour Party was clear then and we are clear now that budget 2026 did little or nothing for citizens struggling to make ends meet, or communities across Ireland. After last year's pre-election giveaways, this was a budget that made it clear to ordinary families that this is a Government that has no vision when it comes to addressing the cost-of-living crisis and there is no light at the end of the tunnel for so many families and workers across the country. Amid spiralling grocery costs, energy price hikes that will leave many households choosing between heating or eating this winter, and the catastrophe of the housing disaster, the Government has made its choices. It is those choices that we see in this Bill today.

Ireland is a wealthy country, but we have one in five children living in poverty. Families struggle to pay the bills.Shamefully, there are thousands of children who will spend Christmas in homeless accommodation, but the Government chose to use the budget to put the interests of burger barons, big builders and developers first rather than using the budget to tackle those crises or to take the perhaps difficult but necessary steps to move our public finances onto a sustainable footing. The Government gave massive tax handouts to fast food companies and developers and our public services need urgent investment. The Labour Party has shown how we would pay for them, by raising revenue from restoring the bank levy to €500 million and other measures targeting wealth and assets. Nothing in this Bill shows a serious Government ready to bite the bullet and broaden the tax base that we need to face the many challenges of today and tomorrow. We know that once the veil of windfall corporation tax receipts is pulled back, Ireland is a country that is running a budget deficit. We have heard the stark warnings already from bodies like the ESRI. In that light, the Government's choices are all the more nonsensical.

Nessa Cosgrove (Labour)
Link to this: Individually | In context

We in the Labour Party, like my colleague said, will definitely not be supporting this Bill. There was talk here about a strong economy but one in five children are still living in homelessness. After this budget, households across Ireland will be 2% worse off. The worst part of this is that one in five people are on low pay in Ireland. We are lauded as one of the richest countries in Europe but one in five are on low pay, and this has been going on for two decades. That figure is from the European Commission. The tax changes in this Bill do very little for ordinary families. We see that there were no targeted measures to reduce energy costs or the cost of living. The only positive change we can see in the personal tax code is the raising of the 2% ceiling on the USC on account of the 65 cent increase to the hourly rate of the national minimum wage, as was proposed by the Low Pay Commission. The Labour Party brought that in. The lack of indexation means that there is nothing but effective tax rises next year for ordinary workers. This paltry tax rise for ordinary workers was at the expense of the cut in VAT to 9% that was given out to fast food restaurants.

Senator McDowell referred to Sligo, and said nowhere is open until after 5 o'clock. I would argue that the reason for that is that people have no money in their pockets to spend before 5 o'clock and that people in the hospitality services are among the lowest paid workers in our economy. The tax cut to 9% is scandalous and it will not be passed on to workers or consumers. It is an expensive tax break for a sector that is already adding jobs and where more openings than closures are taking place. That has been researched right across the country. It is a bad policy and no one seems to agree with it besides the Tánaiste and the restaurant lobby. The Minister could have done what we in the Labour Party suggested and established a specialist body to support the industry to become sustainable and consider reforming and modernising the commercial rates system. We have been raising this for years. Instead, this pre-election promise to restaurant lobbyists leaves us with this bizarre policy change which will take hundreds of millions that we can ill afford out of the Exchequer.

The tax cut to 9% on apartments is the same. There is no evidence that this will increase housing supply and there are no conditions attached to it that developers have to build affordable housing if they are going to avail of this tax cut. There is no evidence that it will actually boost housing supply and there was nothing in the budget that gave us any hope about a radical reset in housing policy. We got this 9% VAT cut. It can never be justified. It was like a gift to developers and big lobbyist groups.

This is a big, sprawling Bill. We could talk more about it and there will be much more to say, but the flagship policy in this Bill - the 9% VAT rate for big property developers and the restaurant industry - is somewhere where the Government has gone wrong, and we will definitely not be supporting it.

Malcolm Noonan (Green Party)
Link to this: Individually | In context

The Green Party will not be supporting this Bill either. On the point made by my comrade about the VAT rate for hospitality, there has been widespread criticism of this proposal. What the Green Party proposed in our pre-budget submission was a capped VAT and rates refund for small businesses. This is a blanket reduction from 13.5% to 9% that will support the big chains and do little to help the struggling high street. Our high streets are in trouble. I welcome some of the measures in this budget, especially a Bill that the cross-party group brought earlier this year around tackling vacancy and dereliction. Although the Bill was put on a timed amendment by the Government, the measures in the Bill were accepted in the sense of changing the vacant sites levy to a vacant sites tax to be collected by Revenue, which is welcomed, and the extension of the living cities initiative. Much broader brushstrokes are required to save our town centres. I certainly do not believe that the cut in the VAT rate for hospitality will do much for the smaller ones. Our proposal would have cost less than half of what Government has proposed here and been much more targeted to the businesses that actually need it.

Cathal Byrne (Fine Gael)
Link to this: Individually | In context

I want to make a number of points. I spoke on the recent statements on the budget in the broader context of budget 2026. I want to make a number of points about the Finance Bill, which is substantial legislation, running to 152 pages. I want to raise a number of issues. On the agricultural front, I recognise the extension of some of the young trained farmer reliefs. It is important that we promote the next generation of farmers. Without farmers, there is no food and it is important that we put in a taxation system and a framework around that that works.

In last year's budget, there was a removal of a specific type of agricultural relief, which is called the conditional gift relief. This was for farmers, in particular, who had saved money for many years to purchase a farm or piece of land that might come available only once in a generation. The idea was that if you were transferring the farm to the next generation or if a new farmer had inherited the farm from the previous generation, that sum of money and the savings that were built up over many years could be transferred and avail of agricultural relief for the next generation, provided that it was used to purchase land within the next two years. Last year's budget removed the tax relief as a measure, effective from 1 January 2025. I implore the Minister and the officials in the Department of Finance to review that measure and perhaps table an amendment to bring it back. It is not something that I imagine actually costs the Exchequer an enormous amount of funding, but I feel it is important, particularly given the unique context that land might only become available adjoining your farm once in a generation, and perhaps there are certain farmers to whom that opportunity never made its way. The strict measure that was there to ensure that the relief could only be used if it was actually used for acquiring land within two years certainly acted as a counterweight to the measure itself. That should be looked at again. Perhaps the Minister might be able to come back to us, when we move to the next Stage, to tell us what the actual cost to the Exchequer of such a measure was.

I want to speak about the increase in youth unemployment. We really need to assess this as a country. Some of the figures on this are quite surprising. At the moment, we have about 5% unemployment, almost a historic low, but it is up from last year's 4.2%, over the past 12 months. I want to speak about youth unemployment. The reality is that almost a third of all people who are unemployed at the moment are aged between 15 and 24. We need to look at this. There was an increase year on year from 10.9% to 13.4%, which is a 15% increase overall. Perhaps we need to look at the reason for that, why it has gone up so much, and why, of the age category who are claiming unemployment benefit, a full one in three are actually in that age cohort. Are there measures that can be brought forward as part of the Finance Bill or in other parts of the Government to look at this? I want to discuss the whole area of the film tax credit relief and its extension from 32% to 40%. We have a very successful track record in my county, Wexford, of using it to promote the area for films. The beach scenes and many others in the famous film "Saving Private Ryan" were shot in Wexford. Screen Wexford is very successful at promoting County Wexford as a destination for films. I welcome that there will be an increase in the tax credit up to 40%. It is important we get the word out that if the profit made by that film is not up to the value of the credit, the credit can go further and act as a grant and Revenue will give that money back. I recognise that measure in this Finance Bill. On the whole, I recognise the contributions by colleagues. I look forward perhaps to the opportunity to debate this further on the next Stage.

Anne Rabbitte (Fianna Fail)
Link to this: Individually | In context

I thank the Minister of State for being here this evening. I thank my colleague, Senator Casey, for previously raising an issue in relation to the Affordable Housing Act 2021. It generally excludes applicants who have previously owned a property from the first-time buyer allowances and grants. Perhaps we can look at that in the future. The Act recognises certain exemptions under the fresh start principle whereby an applicant may be treated as single for housing purposes if their marriage or civil partnership has legally ended. Specifically, the legislation recognises divorced individuals as single, as well as individuals who have obtained a judicial separation or divorce decree, but a person who becomes a widow or widower is not seen as single. It is an anomaly in the Act but it is also within the Equality Act. It is hard to believe that under the first home scheme, if a person becomes widowed and at the same time loses their property due to insolvency and has gone through that whole process, they cannot apply for the first home scheme. It is unfortunate but it is an anomaly. Cases have been sent forward to the first home scheme, but because of how the Act is constituted, they could not be approved. It is hard to believe people like that are excluded. The current interpretation of the fresh start principle does not extend to widowed applicants. This creates inequity. Where a marriage ends by divorce or dissolution, the applicant is deemed single and may qualify for supports. Where a marriage ends by death, the surviving spouse is de facto unmarried yet is excluded from the scheme because of their status. This exclusion is illogical and unfair and the person cannot legally remain married to a deceased spouse. The marriage has ended by operation of law. Widowed persons should not have to satisfy a statutory definition of the end of their marriage. Today is not the day for it but there is an anomaly. It needs to be addressed. The Minister of State it not the first I have raised it with. I have raised it with numerous people.

On the interpretation of insolvency exemptions, section 10(5) of the Act provides another exemption for those affected by insolvency, stating "as part of a personal insolvency or bankruptcy arrangement or proceedings or other legal process consequent upon insolvency". This provision has been interpreted narrowly so that only individuals who went through formal bankruptcy, divorce or dissolution are included. A person who has sold their property and gone through the court proceedings is excluded from it. I have no doubt the Minister of State will take this on board and bring it back to officials.

Seán Kyne (Fine Gael)
Link to this: Individually | In context

I welcome the Minister of State. I acknowledge the former Minister, Paschal Donohoe, who has set sail for pastures new and his role in stewarding the finances over nearly a decade as Minister for Finance and Minister for public expenditure. He has left the State in a better way than it was when he came in in terms of balanced budgets, surpluses and money set aside for rainy days. The definition of rainy days is another matter. There are always challenges, issues and things we can spend money on but we also have to prepare for those we do not know, like pandemics. Who had heard of Covid five, seven or ten years ago? There are unknowns.

The Minister of State said "we will stand by our programme for Government commitment to make progressive changes to income tax, if the economy remains strong". That is hugely important. I have said often, if tax thresholds are not increased every year, every second year or where possible, it will mean people on lower wages end up paying higher rates of tax. To stand still, you need to increase the thresholds as wages rise. I know that was not possible on this occasion but it is important that, over the lifetime of the Government, the commitment in the programme for Government is maintained, as the Minister of State said, as long as the economy remains strong. There are challenges and outside threats such as tariffs and other things. It is important we ensure tax thresholds increase and the burden of tax is reduced over time. I welcome the commitments on the USC to ensure those on the national minimum wage do not pay in excess due to the increase in the wage.

On VAT on apartments, from engagement with the people actually building houses, and developers are not nasty people, it is not a nasty word, and by God do we need them, they say this has been positive and will encourage more construction of apartments. We know there are thousands of outstanding apartments with planning permissions which we all want to see built. We want people to get the opportunity to own and rent over the next number of years. Anything that can spur on construction and increase the supply of all types of homes, whether they be private, affordable, social, student accommodation or cost rental, is to be welcomed. I also welcome the changes in relation to student accommodation. More is needed over the lifetime of the Government and the rolling out of the new housing plan.

We have had debates in this House for years about the 9% VAT rate since it was introduced by Fine Gael and the Labour Party back in 2011. It was used to spur the hospitality and tourism sector to encourage job growth. That worked as part of the Action Plan for Jobs. Those were some of the initiatives. Since then, we have had proposals and it has been repeatedly pushed back up and brought back down. We have annual debates in both Houses and I am sure within our own parliamentary party and others. This has now been settled. It is a settled tax policy for the lifetime of this Government and we will not revisit it over the lifetime of this Government. We need to focus on other areas rather than expending a lot of energy and time on that. The hospitality sector is a huge employer of students, young people and those with full-time jobs. They also get up early in the morning, go to work and make a living. We need to protect those jobs. That is what those incentives and that VAT change are about. It is not to benefit any major subset; it is about ensuring jobs are protected in the economy, and I welcome that. I also welcome the VAT retention on gas and electricity bills, which was extended. When you do something, it has to be continued if the benefit is going to continue. People perhaps do not appreciate it is there because it is built in, but unless the Finance Bill reflects Government intention to continue something like that, it would be lost. I welcome those initiatives.

There are a lot of other positives in this Bill which we may refer to on Committee Stage.

Maria Byrne (Fine Gael)
Link to this: Individually | In context

I, too, support the Finance Bill. There has been much debate in the Chamber, both for and against. The VAT rate is not just about the hospitality industry, it also affects hairdressers. Many hairdressers have been lobbying on the VAT rate which closed some of them down.It is certainly most welcome that this reduction is to be extended not only to the hospitality industry, and especially to the smaller businesses because they are suffering, but also to hairdressers. With regard to the VAT rate and tax relief for apartments, many of us who have been around here for a while have dealt with people who are living in very difficult situations. Their apartments are not up to standard and there are many issues with them. I recently stood in an apartment with a young couple. There was dampness and the whole lot. The fact that there is now a tax relief for landlords to renovate such apartments will encourage them to do so. They can claim the tax back in the same year.

Many companies are involved in research and development, and this leads to job creation. We are losing sight of this in the Finance Bill in the context of tax relief. It is about supporting companies in their research and development. Many of them are expanding based on what they find.

On the tax relief relating to film, Senator Malcolm Byrne referred to Wexford. Limerick has a big film industry, with the old Dell factory having become Troy Studios. Film Limerick has won many awards locally, nationally and internationally. It covers the mid-west. Film is a growing industry. With regard to third level education, different Ministers for higher education have invested in the film industry. Many people study film through the ETBs and the technological universities, the former institutes of technology. A number of jobs are created in that way. That has to be welcomed. I have highlighted a few of the different initiatives in this Finance Bill that I believe we lead to the creation of sustainable jobs, providing an uplift for all areas of Ireland.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context

There were 12 contributions in total. I have no doubt that many of these matters will be discussed with the Tánaiste and Minister for Finance on Committee and Report Stages. I will go through the points that were made in the time available. How much time do I have?

Mark Daly (Fianna Fail)
Link to this: Individually | In context

The Minister of State has ten minutes.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context

I will go through a number of the points that were raised. I welcome the fact that Senator Joe O'Reilly made reference to auto-enrolment and the benefits relating to it and to his former colleague Heather Humphreys, who brought it forward. He mentioned that we are running a budget surplus and that everything done in the budget is to ensure that we can deal with the hard times internationally.

Senator McDowell is not here. I will leave responding to his points until the end in case he happens to come back.

I will deal with the help to buy scheme, which was raised by Senators Casey and Rabbitte. As the House is probably aware, people making use of the local authority affordable purchase scheme can claim help to buy support where they are availing of a discount of more than 20%. The Senators spoke about the help to buy scheme, which requires the loan to equal at least 70% of the home's value. Therefore, in reality, if the equity stake is above 22%, you will not qualify for the help to buy scheme. When I was a backbencher, I got the then Minister for Finance, Michael McGrath, to change the legislation to allow people who qualified for the local authority affordable purchase scheme, a scheme whereby the local authorities build houses, starter homes, for affordable purchase, and who were getting a discount of up to 40% to still qualify for a refund of 10% of the value under the help to buy scheme. There are particular areas within that. It is something we need to look at a bit more but the Senators' points are well made. I will bring the principle of the fresh start back to the Minister.

Pat Casey (Fianna Fail)
Link to this: Individually | In context

It is an anomaly.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context

I would like to go into a bit more detail on that specific point. Those were the two points Senator Casey raised. They were also raised by Senator Rabbitte.

Senator Paul Daly spoke about the flat rate relating to farmers. I have a note from the officials. The Senator probably already knows this information but I will give it to him anyway. The rate is reviewed every year in the run-up to the budget in accordance with the criteria set down in the EU VAT directive. This is based on the macroeconomic data relating to agriculture inputs and production and the prevailing VAT rate structures averaged over the preceding three years. Revenue's calculation is based on data from 2023 to 2025 and indicates that full compensation can be achieved by reducing the rate to 4.5%. Overcompensation is not permitted under EU law. The change must be introduced in line with the relevant macroeconomic data. It is an empirical-----

Paul Daly (Fianna Fail)
Link to this: Individually | In context

The rate for livestock is separate. That is the problem.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context

That is the figure I have. Perhaps we can do a bit of follow-up on that.

Senator Conor Murphy raised a couple of points. He obviously disagrees with what we are doing. I will put forward a couple of counterarguments and outline the logic of what we are doing. Planning permission has been granted for 40,000 apartments in Dublin, but those projects have not commenced. We are reducing the VAT rate for apartments to 9%. That applies to the sale of apartments and, from 26 November, to the inputs to build apartments. It also applies to student accommodation from 26 November. It is a viability measure. We have to increase supply. As Senator Joe O'Reilly said, we are seeing activity in that area. Ultimately, we believe that the key element in dealing with the housing crisis is supply. We must get an increase in supply.

The Senator said this is a budget for landlords and developers. I disagree. We are bringing in measures for tenants from 1 March next year. We are giving six years of cover. If you are an existing tenant in a house or an apartment, nothing changes. There are now rent pressure zones the length and breadth of Ireland, although obviously not in the North. Within the Republic, everywhere is a rent pressure zone.

In recent budgets, we have increased credits and tax band thresholds for workers. Furthermore, in every single budget, we have increased the threshold for USC to match the minimum wage. Those on minimum wage are the low paid. In that sense, we have always been progressive. The Tánaiste and Minister for Finance has said that the programme for Government commits to continuing what we have done up to this current budget. This budget was about consolidation, which is important in terms of the international markets. We will look to continue with measures to reduce the income tax burden on workers if the economy is strong. Once again, the fundamental point is that governments have to make choices. They are never easy and we may not agree but we have to make choices.

Senator Harmon spoke in a similar vein about the housing situation. We are building 30,000 units a year. Are we building enough? We absolutely are not.We must get more commencements going. As I have said on many occasions, the State cannot do it all. The volume of money involved is too high. It costs about €20 billion a year to build 50,000 homes. We are putting in about €9 billion a year. The private sector has a role to play. Builders and developers all have a role to play in ensuring we have the necessary supply. Do I have much time left?

Mark Daly (Fianna Fail)
Link to this: Individually | In context

We are giving you injury time because we have until 11 o'clock.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context

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.

Mark Daly (Fianna Fail)
Link to this: Individually | In context

When is it proposed to take Committee Stage?

Seán Kyne (Fine Gael)
Link to this: Individually | In context

Next Tuesday.

Mark Daly (Fianna Fail)
Link to this: Individually | In context

Is that agreed? Agreed.

Mark Daly (Fianna Fail)
Link to this: Individually | In context

When is it proposed to sit again?

Seán Kyne (Fine Gael)
Link to this: Individually | In context

Tomorrow morning at 10.30.

Mark Daly (Fianna Fail)
Link to this: Individually | In context

Is that agreed? Agreed.