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Finance Bill 2014: Second Stage (Resumed) (Continued)

Wednesday, 5 November 2014

Dáil Éireann Debate
Vol. 856 No. 2

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(Speaker Continuing)

[Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty] This provision simply should not exist in the tax code. The section dealing with the dual abode allowance was put there by the Fianna Fáil Party in government and it is time for the Minister to take it out. Ministers' expenses should be available on exactly the same basis as any other expenses and the details thereof should be published. Ministers should be able to recoup the cost where they are genuinely required to stay in Dublin or elsewhere as part of their duties. However, having laundry expenses deducted from their tax bill in a private way is not acceptable.

In the short time remaining to me, I will comment briefly on a number of issues. We must have an overhaul of the VAT system. I cannot understand why the provision of lessons in Irish dancing, set dancing and brush dancing, which are part of Irish culture, are VAT-liable, while ballet lessons are not liable. We must closely examine these areas. There has been a great deal of talk about the money that has been allocated for the centenary celebration of the Easter Rising, with a range of groups bringing forward proposals to commemorate the events of 1916. Those proposals should be VAT exempt.

The Minister provides in this Bill for the elimination of the windfall tax, whereas we called in our alternative budget for its reduction to 41%. The Minister is saying the normal rates will apply in terms of capital gains tax and so on. Our view is that the tax should be charged at 41% and, crucially, rezonings should apply for only two years. There are two reasons for this approach. First, it tells landowners to release their land now in order to deal with the housing crisis, particularly in the capital. Second, it is an anti-corruption measure. Members of the Minister's own party were deeply involved in rezoning land for corrupt purposes in the past. The windfall tax was a way of discouraging that by greatly reducing the benefit to landowners of the massive increase in the value of their land. The Minister seems to think that type of corruption is a thing of the past. I hope he is right, but I remain of the view that the windfall tax should go back to where it was or at least be retained at an appropriate level after the two-year period.

In regard to the Living City initiative, it seems the "living" part has been dropped, with the Minister indicating that it is now applicable to a single-storey house. That is the effect of the deletion of subsection (3); it is saying there is no longer a requirement to live in the premises and it simply can be an upfront commercial business. Before this, there was a requirement to live upstairs in the Georgian house. Now the Minister is saying it does not matter - even where it is a single-storey premises being refurbished, one can have expenditure up to €400,000 for an individual and €1.4 million for a company written off over a ten-year period. There is no longer any requirement in terms of residing in the property. People in my constituency would love that, including those living on islands which are being depopulated. It is deeply unfair and the amount of tax forgone is simply not acceptable. The purpose of the initiative was to get people back living in city centres. That there is no longer a requirement for those availing of this benefit to live on the commercial premises to which the benefit applies drives a horse and carriage through the provision. I urge the Minister to reconsider it.

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt Deputies Paul Murphy, Michael Fitzmaurice, Richard Boyd Barrett and Seamus Healy propose to share time. Is that agreed? Agreed.

Deputy Paul Murphy: Information on Paul Murphy Zoom on Paul Murphy The Finance Bill tells a tale of two different budgets. One of these budgets is for working class people, the most vulnerable and unemployed people. It is a budget which, in effect, ensures the continuance of austerity for them. The other budget is a recovery budget for the rich, high earners, developers and corporations. The weekend before the budget was announced, the headline on the front page of The Sunday Business Post  referred to the end of austerity and gains for top earners, builders and farmers. The article was correct in so far as the budget did signal the end of austerity for those groups as well as for private landlords. However, alongside this recovery for the 1%, the budget continues the logic of austerity for the 99%.

  This continuation of austerity for ordinary people is clear in the cut of €179 million in the budget of the Department of Social Protection, which is the largest cut for any Department in this budget. We have a continuation of the incredibly cruel cut of 20% in the respite care grant, which has had a huge impact on people with disabilities and their families. Many of them depended on this money to pay bills and to cover the extra costs of having a disability. Even at this late stage, I urge the Minister to reverse that cut at a time when recovery has supposedly arrived.

  Under this budget, an unemployed single person will benefit by 90 cent per week. A single person earning €75,000 per year will benefit by €14.30 per week. For those on low incomes, the scraps given in this budget will be more than wiped out by the water charges. The latter are central to the continuation of this austerity agenda but the reality is that people simply cannot afford to pay them. The water charges may start at the €200 the Minister for Social Protection, Deputy Joan Burton, promised yesterday, but will quickly rise once the caps are lifted. The propaganda by the Government on water charges has undergone a significant shift. Originally it was all about conservation and asking everybody to pay their way to facilitate the investment in infrastructure that is needed. Now the Government is arguing that this was all a trick on the European Commission and troika, a way of fiddling the numbers that would cost us very little and save us money in the long run. That is the latest propaganda from the Government.

  The reality is that whether the money is off balance sheet or on balance sheet, it is money that has to be found and the question remains as to how it will be raised. There is a great deal of talk about the fact that taking it off balance sheet will meet the market conditions test. However, a requirement of the market conditions test is that the seller acts to maximise its profit. The Government accuses us of scaremongering about privatisation and rising costs. However, the Government's argument for water charges is built on the foundation of a test that says the seller must act to maximise its profit. Irish Water will have to negotiate with the Commission for Energy Regulation to eliminate the allowances. It will have to make the argument that the price, which is already double what corporations pay, should go up over time. That commodification of the water supply points ultimately to privatisation.

  Looking at the other side of the budget, the benefit for high earners on €70,000 or more will be four times that of the gain for those on minimum wage. The budget includes a specific measure, the elimination of the cap on the special assignee relief programme, SARP, which is targeted at a very particular class of people, namely, CEOs and similar earning more than €500,000. It is incredible that the Government would take time to allocate a special tax relief for those earning €500,000 or more. This is a developers' budget. The elimination of the windfall tax, in particular, is simply incredible. The Government has dressed it up as somehow being intended to ensure more homes are built. It will not lead to any more homes being built, but it will give more profits to developers. There is a deficient level of house building not because of the existence of this tax but because of the absence of investment by the State in this area. Such investment is at an all-time low. We are going back to allowing these people to speculate on land and make huge profits while ordinary people who are simply looking for somewhere to live pay the price.

  This is also a budget for private landlords, who benefit from the extension of the home renovation incentive to rental properties. It seems the explosion in rental costs being paid by ordinary people has not been sufficient to enable landlords to shell out for some new furniture. We must incentivise them with a tax break. In his Budget Statement the Minister expressed his expectation that these tax savings would be reflected in rent levels. That is a joke. If the Minister lived in the real world and interacted with landlords, he would know they will take whatever they can and raise rents as high as they possibly can.


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