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Finance Bill 2014

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Deputy Lucinda Creighton

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Snippet Contents:

I am pleased to have an opportunity to speak to the Finance Bill, but I have a sense that it is a futile process. It is extremely disappointing that, after more than three and half years into the lifetime of the Government, the promised changes to the budgetary process have still not been implemented. These were changes that the Minister for Finance and almost everyone in the Fine Gael Parliamentary Party endorsed wholeheartedly. It was a key element of the pre-election platform and the manifestos of both Government parties, yet we still have no transparency in the budgetary process. We all know how it works. We stand up and contribute to the budget debate and contribute again to the debate on the Finance Bill, yet nothing will be taken on board and the Government will essentially do what it wants and there will no be accountability to this Chamber. The open budgetary process promised has not been delivered and yet another element of the so-called democratic revolution is absent.
I wish to reiterate what I said in the debate on the budget. It is welcome that some individuals and families will have a little more money in their pockets at the end of every week owing to the changes in taxation introduced. However, there are others - Deputy Stephen S. Donnelly has already pointed this out - many of whom are at the lower end of the pay bracket and, in particular, the self-employed, who, once again, have been targeted by the Government as easy pickings. That is unfortunate, but it is also indefensible.
This week we have witnessed the great achievement that is the Web Summit. Everyone is celebrating and giving plaudits to the organisers. However, there is something incredibly depressing and ironic about the fact that today we are debating a Bill which is telling every Irish technological entrepreneur to go off and start the business somewhere else, not in this jurisdiction, not in Ireland but probably or preferably in London, and to do business and invest money there. Even the founder of the Web Summit, Mr. Paddy Cosgrave, who should be given considerable credit for what he has achieved has said he is thinking of holding the summit elsewhere. That would be a great shame and a great loss to the city.
Ireland must be more than simply a nice place for Facebook, Google, LinkedIn or the other major global technological companies of the world in which to set up headquarters and avoid large tax bills elsewhere. There is no question that without these companies Mr. Cosgrave would not have been able to turn the Web Summit into the major success that it is. Equally, it is true that we are missing a major opportunity to harness the entrepreneurial spirit and talent already in the country. A self-employed person in Ireland who has started and built her own business, who is creating and has created jobs, is paying 3% more in income tax than someone employed in a multinational company on the same salary. That is simply wrong. In 2011 the self-employed were obliged to pay a 10% rate of universal social charge, while their counterparts on exactly the same salary paid 7%. These figures have been increased to 11% and 8%, respectively, in the budget.
There is a deep suspicion of the self-employed that permeates the mentality in government and particularly the Department of Finance. This suspicion leads to the belief the self-employed are tax dodgers and that they should somehow be singled out and targeted. This is entirely the wrong signal to send to people who are working, generally, night and day to make a success of their enterprise, to grow it and to offer job opportunities to others in society and throughout the economy. In the United Kingdom if an entrepreneur creates a small company that generates revenue of up to £250,000, the company can provide its employees with share ownership that is subsequently subject to a reduced capital gains tax of 10%. There is no such scheme in this country. This tax incentive encourages employers and people starting a business to give employees a real stake in the future of the company in which they are working. It motivates the employer and the employee. It gives them a genuine feeling of ownership and a sense of taking control of their future and destiny. For some unknown reason, the Government has decided against this policy in Ireland without giving any reason, despite the fact that this was Fine Gael policy before the general election, when Deputy Leo Varadkar was the Front Bench spokesperson on enterprise. A clear position was adopted, but it has not been heard of since and not implemented by the Government.
When the Government entered office in March 2011, there were 92,000 self-employed persons in Ireland who had paid employees on their books. Believe it or not, this figure had fallen to 89,000 by the end of June this year. The number who are self-employed with no employees had increased from 202,000 in March 2011 to 226,000 by the end of June this year. These are Central Statistics Office figures; they are independently verified and extremely concerning. While general employment has grown in the meantime, self-employed small business people have not contributed to this job creation because the Government has made it so expensive to do so. Similarly, although almost 25,000 entrepreneurs have decided to go it alone and start up a business, none of them has been in a position to take on other employees.
Ireland may well be the best small country in the world to have a company, but it is most certainly not the best small country in the world in which to start, grow and upscale a business. Unless we change these fundamentals, our over-reliance on foreign direct investment will walk us back down the road of economic ruin which we have already experienced. Nothing has changed. The same fundamentals, as former Deputy Brian Cowen used to say, are in place and nothing has changed in terms of the attitude and priorities of the Government. It is still all about putting our eggs in one basket, that is, foreign direct investment, and the property sector. We have seen a 25% increase in house prices in Dublin in the past year, which is good news for the banks and the builders. Arguably, it is also good news for the Government. However, it is not good news for the economy or a sustainable economic vision for the country and it is certainly not good news for citizens.
Let us compare the treatment of the self-employed, whom the budget has clearly targeted, with the way in which those involved in the property sector, particularly developers and our friends in the Construction Industry Federation, have been treated. By removing the 80% windfall tax on rezoned land the Government is once again creating a toxic link between developers and the political process. It is wrong and no one in government or on the Government benches is expressing even the slightest degree of concern about it. During the good times of the last Fianna Fáil Government we know exactly what went on. We know about the way in which considerable pressure was applied to councillors to rezone land. Vast profits were made by flipping that land, rezoning it from residential to commercial or from agricultural to residential. Areas entirely inappropriate for development were rezoned on a haphazard basis and we are doing the same again. We have no national spatial strategy and no national development plan of meaningful worth, yet we are going down exactly the same road as before. There is a lovely plan entitled, Construction 2020. It seems the idea is to get everyone involved in a scramble to get onto the property ladder. That is precisely what our friends in the Construction Industry Federation want and the Government is obliging them. There is a promise to underwrite unsustainable bank loans for first-time buyers, pitch them against each other and control the supply issue and so on and so forth. There is no lateral thinking and nothing new. It is the same old, same old philosophy that led the country to economic ruin.
I can only sum up my feelings and concerns about budget 2015 as seriously disappointing. It is a missed opportunity.