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

Thursday, 6 November 2014

Dáil Éireann Debate
Vol. 857 No. 1

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(Speaker Continuing)

[Deputy Róisín Shortall: Information on Róisín Shortall Zoom on Róisín Shortall]  The UNICEF report to which I referred showed that children bore the brunt of the recession and identified what measures the Government should have taken to tackle the problem. It should have invested in family support services, which have been decimated in recent years, and properly funded preschool services. The provision of a year of free preschool education is all very well but it is seriously under-resourced, especially in the poorest areas. The report states the Government should also have invested in education. Rather than improving education services, however, it chose to implement more cuts. It failed to take the opportunity to reverse the forthcoming 1% cut to the capitation payment. Despite hitting the poorest and most vulnerable children in society, the Government believes it is all right to allow it to proceed.

The Government should also improve health services for children. At community level, primary health care services have been slashed and long waiting lists have developed for speech and language therapy and occupational therapy. Some 9,000 cases involving child welfare and protection have not been allocated a social worker. Moreover, 400,000 people are on waiting lists for hospital services and 60,000 are on waiting lists for primary care services, which are very important for children.

This legislation is a missed opportunity. The Government had a chance to show we live in a caring and decent society and have set the right priorities. It declined to take it, however, choosing instead to introduce a regressive budget and this regressive legislation which have widened the gap between rich and poor, further alienated many sections of society and increased cynicism about politics. It was for these reasons that 150,000 people took to the streets last week.

Deputy Martin Heydon: Information on Martin Heydon Zoom on Martin Heydon I welcome the opportunity to speak on the Finance Bill. To respond to Deputy Róisín Shortall's point on the fairness or otherwise of the budget, the measures provided for in the Bill further improve the progressiveness of the income tax and universal social charge systems.

Deputy Róisín Shortall: Information on Róisín Shortall Zoom on Róisín Shortall That is untrue.

Deputy Martin Heydon: Information on Martin Heydon Zoom on Martin Heydon As a result of these measures, the top 1% of earners will pay 21% of income tax and the universal social charge, while the bottom 76% of earners will pay only 20% of income tax and the universal social charge. That is progressive and fair.

Deputy Róisín Shortall: Information on Róisín Shortall Zoom on Róisín Shortall The budget reverses the progressivity of recent years.

Deputy Martin Heydon: Information on Martin Heydon Zoom on Martin Heydon I propose to focus on the agriculture measures in the budget, many of which were positive. As the chairman of the Fine Gael Party's internal agriculture committee, I commend the Minister and his officials, working with officials from the Department of Agriculture, Food and the Marine, on producing some highly progressive changes that will be of great assistance in the areas of land mobility and ensuring young farmers can access agriculture through long-term leasing and other measures.

I also welcome, albeit with a couple of caveats, the retention of 90% agriculture relief for active farmers and non-active farmers who lease out their land for six years or more. The date should be extended until 2016 to give those affected by the changes time to prepare.

The definition of an "active" farmer is a serious issue. The requirement that an active farmer must spend 50% of working time farming is unworkable, unfair and impossible to meet. Part-time farming has become an integral part of the agriculture industry, largely because commodity prices are low and farmers must go off farm to earn additional income. This does not mean such farmers are bad farmers or do not make a valuable contribution to the agriculture sector. A part-time farmer who holds down a 40 hour per week job may be also highly efficient and productive. Some part-time farmers use a contractor model, whereby they hire contractors to plough, till and sow. This does not make them lesser farmers or mean they make less of a contribution to agriculture than their neighbours who perform these tasks themselves. Agriculture needs part-time farmers because the alternative is ranch farming and land abandonment.

I ask the Minister to consider adopting the Irish Farmers Association proposal that an active farmer be defined as someone who farms and files a return under schedule D. This week, the Joint Committee on Agriculture, Food and the Marine agreed to write to the Minister highlighting its concerns in this regard. A couple of options are available, including the use of the green certificate. Given that not every older farmer has a green certificate, an alternative would be to use a percentage of the working week.

Long-term leasing is preferable for younger farmers who need to plan and wish to make a lifetime career in agriculture but do not have access to land. We must move from the conacre system. Statistics show that farmland here is sold on average once every 400 years, whereas in France a field will be sold every 80 years. Land mobility here is not good. We must ensure any measures taken in this area do not penalise the children of farmers who wish to inherit a family farm and possibly farm it in future. This is a key point.

On the application of consanguinity relief until 2017, a similar issue arises as in the case of the definition of an active farmer and similar changes need to be made as the measure is unworkable. One cannot require a farmer who works off-farm for 40 hours per week to prove that he or she is working 40 hours per week on the farm. To do so would penalise farmers other than those at whom the measure is directed.

The consanguinity measure provides an incentive to encourage earlier lifetime transfers of farms. The issue that arises is the proposal to implement the measure from 1 January 2015. The incentive of a lifetime transfer may be lost if we do not provide more time. A lead-in period should be provided for the relief, which would apply to all transfers. It should be similar to the lead-in period that applies before the capital gains tax retirement relief applies. As such, consanguinity relief would apply where the disposer transfers the asset before he or she reaches pension age. Children of farmers aged in their early 60s may be preparing to take over the farm. The time to consider such a change is in the period before the parent receives a pension. We should extend the threshold from 65 to 66 years to bring it into line with pension age. This would be a helpful change.

I welcome the changes to the income tax and universal social charge regimes to support employment and job creation, which are our primary objectives. Concern has been raised in recent weeks about the taxation levels that apply to the self-employed. I accept that the purpose of the increase to 11% in the universal social charge rate for those earning more than €100,000 per annum was to compensate for the reduction in the marginal tax rate. A full review of the entire taxation regime, as it applies to self-employed individuals, is required. It is possible to improve how the tax system applies to entrepreneurs and those starting out in business when compared to employees. Even small changes would assist those who have ideas. We must encourage start-ups given their key role in the economy. An overall review of the taxation system is warranted.

Prior to the budget, I met representatives of the Irish Association of Health Stores to discuss the issue of herbal teas. I am pleased that herbal teas and fruit infusions are included in the definition of "unprepared teas" and will be subject to a 0% VAT rate. This is a positive move which will come as a relief to the 101 members of the association and their 400 employees nationwide. They were keen to have the 0% VAT rate confirmed for a number of health supplements that maintain, protect and enhance health. I will continue to work with the association and highlight the case of other health enhancing products over which a question mark remains in respect of VAT.

I met a number of members of the Vintners Federation of Ireland in south County Kildare in the run-up to the budget. Deputies are aware of the pressure faced by small pubs, especially those in rural areas. Publicans launched a campaign on excise before the budget and I welcome the decision not to increase excise duty. In the longer term, it will be necessary to protect the pub trade, which provides an important social outlet and employment. In future budgets, it will be necessary to review excise duty and address the low cost sale of drink by multiples. This issue is now on the radar and needs to be tackled. It is much better to take a drink in the regulated environment of a pub than to pour one's own measures at home, which is the latest trend.

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