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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 Seán Kenny: Information on Seán Kenny Zoom on Seán Kenny] Therefore, if €40,000 was in an account that was to be used to pay a deposit on a house and that account paid 3% interest, that would mean deposit interest retention tax, DIRT, of about €1,600 over four years. Under this refund scheme that €1,600 would be refunded by Revenue to the first-time house buyer.

A total of €808 million is allocated for housing programmes, which is a huge investment and the first step towards serious and significant investment over the next number of years in social housing. I welcome this aspect of the budget in particular - it is of great importance given the housing crisis that is so evident and about which I am approached every day. Local authorities are to provide 946 housing units through direct building and acquisition and 440 housing units will be provided through voluntary housing bodies and co-operatives. Up to 150 new homes will be provided in the community for people with disabilities who are leaving institutional care and 400 new housing units will be provided for people with specific needs. Some €40.4 million will be provided for approximately 7,600 housing adaptation grants for older people and people with disabilities.

Some 1,000 vacant housing units will be refurbished and brought back into use in 2015 and an extra €3 million will be provided for regeneration and remedial works in disadvantaged communities. It is expected that 8,000 households will transfer from rent supplements to the new housing assistance payment and up to 2,000 new transfers are expected under the rental accommodation scheme. I welcome the extension of the home renovation incentive to include rental properties as it will result in better accommodation and living standards in the private rented sector.

Much attention has been paid to the soon to be abolished double Irish tax scheme. I am glad to see that this scheme is being changed as I believe it did reputational damage to Ireland. It angered overseas governments because it allowed multinational companies to channel untaxed revenues to Irish subsidiary companies, which then paid the money to another company registered in Ireland that is tax resident elsewhere, usually a tax haven such as Bermuda. In short, it was a tax loophole and it needed to be closed.

The 12.5% corporation tax rate, which is a cornerstone of the Government's foreign direct investment strategy, will not change and I welcome this. I also welcome the social welfare improvements announced in budget 2015, such as the beginning of the restoration of the Christmas bonus paid to long-term social welfare recipients. They will receive a 25% bonus this Christmas. In 2015, some €1.97 billion will be paid out for the child benefit allowance with 613,000 families getting an extra €5 per child per month. The living alone allowance for 177,500 pensioners and people with disabilities will be increased to €9 per week.

I commend the Bill to the House. I see it as the beginning of the way forward for an Ireland in recovery.

Deputy Brendan Ryan: Information on Brendan Ryan Zoom on Brendan Ryan With every budget the old maxim applies that the devil is in the detail and the detail of the budget is usually in the Finance Bill. In examining this Bill, it is clear that it does include measures that will begin to ease some of the burden for ordinary people. In the past few years the difficult economic adjustments undertaken through the troika programme have taken billions of euro out of the economy through tax rises and spending cuts. This budget is the first without the troika's hands on it and we have, albeit in a modest and responsible way, been able to provide some relief to hard-pressed families. I am encouraged by the content of this Bill with regards to income tax and the universal social charge, USC. Every person in the State who pays these charges will benefit from the changes in this Bill.

One criticism of successive budgets is that they have widened the gap between rich and poor and that the tax system has been regressive. This budget has begun to move the burden of distribution back in a more progressive direction and I very much welcome this. For example, after the implementation of this budget, the 1% of all earners in the State on over €200,000 will account for 21% of all taxes paid in 2015 - this is up from 19% in 2014. The 6% of all earners on over €100,000 will account for 44% of all taxes paid in 2015 - this is up from 42% in 2014. The 76% of all earners on under €50,000 will account for 20% of all taxes paid in 2015 - this is down from 21% in 2014. Also, the benefit of decreasing income tax for high earners is capped at €70,000.

The pension levy will be phased out by the end of 2015 and I know this will be welcomed by a lot of people, particularly retired older people. The introduction of the pension levy helped fund a VAT reduction in the hospitality sector and this helped instil buoyancy into our tourism market which, in turn, helped with the retention and creation of jobs in the tourism sector. As we are returning to growth, I welcome the fact that this levy is being phased out as this measure will benefit up to 750,000 people. Allied to this, a further 80,000 of the lowest earners in our economy will be removed from the USC and this will help many low earners, including part-time workers. When this budget was announced I received a call from a Labour Party supporter in university who supplements her studies with part-time work. She was grateful for the changes in the USC as it will help her meet the costs of attending college.

I am also happy that there has been no increase in the old reliable taxes on petrol and diesel. The cost of putting fuel into a car is very high and is prohibitive for some. I believe these duties need to be examined in future budgets with a view to making commuting more affordable. We need to make it more affordable for people to travel to and from work, to leave their children at school and to go shopping in our local towns and villages. I represent a large rural area in north County Dublin and transport to urban centres is a key concern as people need their cars in order to engage with the local economy. I think we need to look at reducing these duties in future budgets. Before the economic crash we had some of the cheapest motor fuel costs in Europe and, while our entire taxation system has had to change after the neglect of Fianna Fáil, we are now in a situation where up to 60% of the money we pay for motor fuel goes to the Exchequer. As the economy improves, I believe this should be re-examined with a view to reducing this burden on people.

I wish to say a word on the plight of road hauliers who see themselves at a competitive disadvantage relative to their counterparts in Northern Ireland and in mainland Britain - I have several in my constituency. Although I understand from the Minister for Transport, Tourism and Sport, Deputy Paschal Donohoe, that a working group is in place to look at the issue, there is disappointment that the pace of progress is slow and that the matter was not dealt with in the context of budget 2015.

I wish to speak about the need for further assistance for people in paying water charges. I know we are awaiting further clarification from the Cabinet regarding the charges and I am conscious of speaking on this when we do not have full clarity yet. However, I ask the Minister to examine the possibility of the inclusion in this Bill of a refundable tax credit in respect of water charges, as proposed by SIPTU and the Nevin Economic Research Institute. Perhaps this could be done on Committee stage. We need to ensure water charges are clear and, most important, affordable. The Irish Water debate has dominated the airwaves in the past few weeks and I understand many of the concerns people have. I welcome the initial intention to provide a water support payment and I look forward to further clarification from the Cabinet in the coming days and weeks.

Deputy Joan Collins: Information on Joan Collins Zoom on Joan Collins This budget and Finance Bill, like the Government's three earlier budgets, yet again increases the regressive and unfair nature of the taxation system. Those who claim we have a progressive tax system do so on the basis of a sleight of hand - when they refer to the tax system they exclusively mean income tax, the universal social charge and pay related social insurance, PRSI. This allows them to claim that a small number of high earners pay the bulk of taxation and that working people on low incomes and people in receipt of social welfare benefits pay no taxes. This is completely untrue and those who consciously peddle such ideas are spreading an untruth.

Examination of indirect taxes and consumption taxes such as VAT which accounts for 20% of the State's total tax take, along with various charges and services that are actually taxes, shows that the wealthiest families in Ireland pay out some 28% of their incomes in taxes. Meanwhile, using the same measurement, the poorest families also pay out 28% of their total incomes in taxes. This Government continually uses false arguments and the deliberate distortion of figures to make the Irish tax system increasingly regressive and to justify tax cuts which, of course, means cuts in income tax.

If we examine the cuts in income tax made in the budget and how they affect people with different levels of income it is immediately apparent that they are regressive in nature. Total income tax cuts in the budget amounted to €688 million and if they had been evenly applied they would have meant a gain of €405 per year for working families. However, the cuts were not evenly applied. A single worker on the living wage of €23,247 per year gained €173 per week in the budget while a worker on €80,000 per year gained €747, five times as much, from the tax cut.

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