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 Header Item Financial Resolution No. 9: Income Tax (Continued)
 Header Item Financial Resolution No. 10: Income Tax
 Header Item Financial Resolution No. 11: Life Assurance Policies and Investment Funds
 Header Item Financial Resolution No. 12: Capital Gains Tax
 Header Item Financial Resolution No. 13: Capital Acquisitions Tax
 Header Item Financial Resolution No. 14: Capital Acquisitions Tax

Wednesday, 5 December 2012

Dáil Éireann Debate
Vol. 785 No. 2

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  10 o’clock

(Speaker Continuing)

[The Tánaiste: Information on Frances Fitzgerald Zoom on Frances Fitzgerald] Multinationals are bad. They are big, bad capitalist entities and if one could only get more tax from them, it would solve all our problems. Such analysis is without any regard to what would be the impact on investment and on job creation in this country. It is daft. I acknowledge that some Members, including Deputies Sean Fleming and Deputy Catherine Murphy at an earlier point, made reasonable contributions, as did Deputy Ó Cuív.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett The establishment closes ranks.

Deputy Michael McCarthy: Information on Michael McCarthy Zoom on Michael McCarthy Is Deputy Catherine Murphy now a member of the establishment?

The Tánaiste: Information on Eamon Gilmore Zoom on Eamon Gilmore While some reasonable proposals have been heard, Members also have heard commentary in this Chamber, passing for critique of this budget, which has been positively ridiculous. To be frank, colleagues should treat their membership of this House a bit more seriously. They were sent here, as were all Members, by the people who elected them to take seriously what they must do here. They were sent here to do some homework and research and if they have budget proposals about which they are serious, to at least have them tested and examined by the Department responsible for them.

Deputy Stephen S. Donnelly: Information on Stephen Donnelly Zoom on Stephen Donnelly Where is the Government's poverty impact assessment?

The Tánaiste: Information on Eamon Gilmore Zoom on Eamon Gilmore They should not come into this Chamber with half-baked proposals half-worked out on the back of an envelope-----

Deputy Pádraig Mac Lochlainn: Information on Pádraig MacLochlainn Zoom on Pádraig MacLochlainn What an absolute bluffer.

Deputy Stephen S. Donnelly: Information on Stephen Donnelly Zoom on Stephen Donnelly The Tánaiste has nothing. Where is the Government's poverty impact assessment?

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt Please.

Deputy Pádraig Mac Lochlainn: Information on Pádraig MacLochlainn Zoom on Pádraig MacLochlainn Why is the Tánaiste raising his voice?

Deputy Stephen S. Donnelly: Information on Stephen Donnelly Zoom on Stephen Donnelly The Government does not have one, does it?

The Tánaiste: Information on Eamon Gilmore Zoom on Eamon Gilmore -----where they cannot even be consistent from one year to the next.

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt Please now, we are almost out of time.

The Tánaiste: Information on Eamon Gilmore Zoom on Eamon Gilmore I must reply to the questions on the particular resolutions. On the issue of the universal social charge, USC, and in response to Deputy Sean Fleming, the Government is eliminating a relief established by Fianna Fáil in government. When it introduced the social charge, it put the 4% USC on incomes of more than €60,000 in respect of certain pensioners. The Government is eliminating that relief and it will apply at the 7% rate.

As for risk equalisation, the purpose of the risk equalisation scheme is to implement the Government's commitment to community rating, the purpose of which is to ensure that the permanent health insurance system is fair to older and more ill members of the health insurance schemes. In that respect, I might also note the preferential loan rate is not a benefit. It is a benefit-in-kind tax imposed on employees who get cheap loans from their employers. Deputy Boyd Barrett may misunderstand its purpose but it is a tax to prevent employees from getting beneficial loans and will generate some revenue for the State.

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt As the time allowed for the debate has expired, I must put the question in accordance with the order of the Dáil of this day.

  Question, "That Financial Resolutions Nos. 7 to 9, inclusive, be agreed to", put and declared carried.

Minister for Education and Skills (Deputy Ruairí Quinn): Information on Ruairí Quinn Zoom on Ruairí Quinn I move the following Financial Resolutions:

Financial Resolution No. 10: Income Tax

(1) THAT, as respects any payment or crediting of relevant interest (within the meaning of Chapter 4 of Part 8 of the Taxes Consolidation Act 1997 (No. 39 of 1997)) made on or after 1 January 2013, the definition of “appropriate tax” in section 256(1) of the Taxes Consolidation Act 1997 be amended—
(a) in paragraph (a) by substituting “33 per cent” for “30 per cent”,

(b) in paragraph (b) by substituting “33 per cent” for “30 per cent”, and

(c) in paragraph (c) by substituting “36 per cent” for “33 per cent”.
(2) THAT, as respects any dividend paid or credited to a special share account or a special term share account (within the meaning of Chapter 5 of Part 8 of the Taxes Consolidation Act 1997) section 267B of the Taxes Consolidation Act 1997 be amended in respect of dividends paid or credited on or after 1 January 2013—
(a) in subsection (2)(b) by substituting “33 per cent” for “30 per cent”, and

(b) in subsection (3)(b) by substituting “33 per cent” for “30 per cent”.
  (3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 11: Life Assurance Policies and Investment Funds

(1) THAT Chapter 5 of Part 26 of the Taxes Consolidation Act 1997 (No. 39 of 1997), as respects the happening of a chargeable event in relation to a life policy (within the meaning of Chapter 5 of that Part) on or after 1 January 2013, be amended –   
(a) in section 730F(1) –
(i) in paragraph (a)(ii) by substituting “36 per cent” for “33 per cent”, and

(ii) in paragraph (b) by substituting “(S+36) per cent” for “(S+33) per cent”.
(2) THAT Chapter 6 of Part 26 of the Taxes Consolidation Act 1997, as respects the receipt by any person of a payment in respect of a foreign life policy (within the meaning of Chapter 6 of that Part) or the disposal in whole or in part of a foreign life policy (within that meaning) on or after 1 January 2013, be amended –

(a) in section 730J (a) –
(i) in subparagraph (i)(I) by substituting “33 per cent” for “30 per cent”,

(ii) in subparagraph (i)(II)(A) by substituting “(S+36) per cent” for “(S+33) per cent”,

(iii) in subparagraph (i)(II)(B) by substituting “36 per cent” for “33 per cent”, and

(iv) in subparagraph (ii)(I) by substituting “(H+33) per cent” for
“(H+30) per cent”,
 and

(b) in section 730K(1) –
(i) in paragraph (a) by substituting “(S+36) per cent” for “(S+33) per cent”, and

(ii) in paragraph (b) by substituting “36 per cent” for “33 per cent”.
(3) THAT Chapter 1A of Part 27 of the Taxes Consolidation Act 1997, as respects ­the happening of a chargeable event in relation to an investment undertaking (within the meaning of section 739B(1) of that Act) on or after 1 January 2013, be amended –
(a) in the formula in section 739D(5A)(b) by substituting “(G x 36)” for “(G x 33)”, and

(b) in section 739E(1) –
(i) in paragraph (a)(ii) by substituting “33 per cent” for “30 per cent”,

(ii) in paragraph (b)(ii) by substituting “36 per cent” for “33 per cent”, and

(iii) in paragraph (ba) by substituting “(S+36) per cent” for “(S+33) per cent”.
(4) THAT Chapter 4 of Part 27 of the Taxes Consolidation Act 1997, as respects –

(a) the receipt by any person of a payment in respect of a material interest in an offshore fund (within the meaning of Chapter 4 of that Part), or

(b) the disposal in whole or in part of a material interest in an offshore fund (within that meaning),

on or after 1 January 2013, be amended –

(i) in section 747D –
(I) in paragraph (a)(i)(I) –
(A) in subclause (A) by substituting “(S+36) per cent” for “(S+33) per cent”, and

(B) in subclause (B) by substituting “33 per cent” for “30 per cent”,
(II) in paragraph (a)(i)(II) –
(A) in subclause (A) by substituting “(S+36) per cent” for “(S+33) per cent”, and

(B) in subclause (B) by substituting “36 per cent” for “33 per cent,”,
 and

(III) in paragraph (a)(ii)(I) by substituting “(H+33) per cent” for “(H+30) per cent”,
and

(ii) in section 747E(1) –
(I) in paragraph (b)(i) by substituting “(S+36) per cent” for “(S+33) per cent”, and
(II) in paragraph (b)(ii) by substituting “36 per cent” for “33 per cent”.
(5) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 12: Capital Gains Tax

(1) THAT section 28(3) of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended by substituting “33 per cent” for “30 per cent” in respect of the disposal of assets made on or after 6 December 2012.

(2) THAT section 649A(1) of the Taxes Consolidation Act 1997 be amended by substituting the following for paragraph (b):

“(b) in the case of a relevant disposal made on or after 6 December 2012, 33 per cent.”.

(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 13: Capital Acquisitions Tax

(1) THAT, as respects a gift or an inheritance taken on or after 6 December 2012, the Table in Part 2 of Schedule 2 to the Capital Acquisitions Tax Consolidation Act 2003 (No. 1 of 2003) be amended by substituting “33” for “30”.

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 14: Capital Acquisitions Tax

(1) THAT, as respects a gift or an inheritance taken on or after 6 December 2012, the definition of “group threshold” in paragraph 1 of Part 1 of Schedule 2 to the Capital Acquisitions Tax Consolidation Act 2003 (No. 1 of 2003) be amended -
(a) in subparagraph (a) by substituting “€225,000” for “€250,000”,

(b) in subparagraph (b) by substituting “€30,150” for “€33,500”,
and
(c) in subparagraph (c) by substituting “€15,075 for “€16,750”.
(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 10 gives legislative effect to the budget announcement that the rates of deposit interest retention tax, DIRT, will increase by three percentage points with effect from 1 January 2013. The resolution amends section 256(1) of the Taxes Consolidation Act 1997 to give statutory effect to the new rates of DIRT applicable to deposits held in banks and other financial institutions. The changes in rates are as follows. The general 30% rate, which applies to deposit interest, including deposit interest arising on special savings accounts and special term accounts, is being increased by three percentage points to 33%. In addition, the 33% rate also is being increased by three percentage points to 36%. This rate applies in the case of interest which is not payable annually or at more frequent intervals or where the interest cannot be calculated until maturity of the investment. This includes investments such as tracker bonds where the amount of interest payable depends on the changes in a financial or other index over a number of years.

The resolution also amends section 267B of the Taxes Consolidation Act 1997 to increase the 30% rate, which applies to special share accounts and special term accounts held in credit unions, to a rate of 33%. The measures relating to DIRT in this budget build upon measures undertaken in budget 2012, when the standard DIRT rate increased from 27% to 30%. The increase in the DIRT rate is expected to yield the Exchequer approximately €47 million in 2013 and a full €60 million in the following year, 2014.

Deputy Sean Fleming: Information on Seán Fleming Zoom on Seán Fleming I welcome the opportunity to speak on this group of motions. While the Minister spoke to one of them, there are four individual motions pertaining to Financial Resolutions Nos. 10 to 14, inclusive. While I gather the Minister has given the speaking note in respect of one of the resolutions only, I will proceed in any event.

Deputy Ruairí Quinn: Information on Ruairí Quinn Zoom on Ruairí Quinn I apologise to Members. Was I expected to move all four together?

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt Yes, the Minister has moved them all.

Deputy Sean Fleming: Information on Seán Fleming Zoom on Seán Fleming Yes, they are grouped for voting.

Deputy Ruairí Quinn: Information on Ruairí Quinn Zoom on Ruairí Quinn Does the Deputy want me to speak to them all now?

Deputy Sean Fleming: Information on Seán Fleming Zoom on Seán Fleming No, Members understand them.

Deputy Ruairí Quinn: Information on Ruairí Quinn Zoom on Ruairí Quinn I have moved all four together but will speak seriatim on them.

Deputy Sean Fleming: Information on Seán Fleming Zoom on Seán Fleming Yes, and the Minister can reply. I am satisfied with that and note the proposals are significant but quite straightforward. I will speak to them in sequence. Resolution No. 10, on which the Minister spoke in detail, in layman's English is about increasing the rate of deposit interest retention tax, DIRT, which currently is at 30%, by 3% to 33%. Based on the Minister's statement today and the schedule on page A11 of the summary of the budget measures regarding deposit interest retention tax and exit tax on life assurance policies and investment funds recovered here, it proposes an increase in the rate of retention tax that applies to deposit interest, as the Minister already mentioned. It also will apply to life assurance policies and investment funds and the rates are being increased by three percentage points from 30% to 33% for payments made annually or more frequently and 36%, as the Minister already has mentioned, for more complicated cases in which the rate is only calculable at different intervals. Moreover, these increased rates will apply from 1 January 2013 and are expected to yield €50 million in the first year and €64 million in the second year.

These changes are broadly in line with the budget proposals put forward by Fianna Fáil. Another reason I consider this measure to be a good idea is that in the first instance, it constitutes taxation on people with large amounts of money sitting in the bank. It might actually encourage them to withdraw some of it and spend or invest it, thereby helping the economy. While I acknowledge the interest rate is quite low at present, increasing the DIRT rate might encourage people to get better use from their funds by putting them to use in the economy. This was one reason Fianna Fáil proposed an increase in the rate of DIRT. This point also essentially covers Financial Resolution No. 11 on the same basis.

Financial Resolution No. 12 proposes a change in the rate of capital gains tax, whereby the current rate of 30% also is to be increased by 3% to 33% and this increase will apply in respect of disposals made after tonight. If someone can get the documentation signed between now and midnight, the old rate will apply but otherwise, they will be caught with the new rate. I may not be technically correct in saying that but I understand this measure will come in from midnight tonight.


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