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Budget Statement 2019 (Continued)

Tuesday, 9 October 2018

Dáil Éireann Debate
Vol. 973 No. 2

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(Speaker Continuing)

[Deputy Paschal Donohoe: Information on Paschal Donohoe Zoom on Paschal Donohoe] That is why I am setting aside some of this revenue for the rainy day fund. This means the risk of permanent expenditure on the basis of transient receipts is reduced.

  Ireland's corporation tax roadmap, which I published in September, takes stock and recognises the changing international tax environment, outlines what Ireland has done and further actions we will take. This is a time of significant global change for business and my focus is on maintaining a competitive, outward-facing business environment while ensuring our tax regime is transparent, sustainable and legitimate.

  I will introduce new controlled foreign company rules, in line with the Anti-Tax Avoidance Directive, ATAD, in the finance Bill 2018. This will apply for accounting periods beginning on or after 1 January 2019. I am also moving to introduce a new ATAD compliant exit tax regime to come into effect from midnight tonight. The exit tax will apply at a rate of 12.5% on any unrealised gains arising where a company migrates or transfers assets offshore, such that they leave the scope of Irish taxation.

  The process of global tax reform is ongoing, and in addition to last year's measures, the corporation tax roadmap sets out a comprehensive plan of future actions on corporate tax reform. I have also committed to a review and update of Ireland’s transfer pricing provisions in 2019 to ensure our tax system is in line with international best practice.


  In budget 2018, I allocated an additional €1.26 billion in capital investment from 2018 to 2021 to the Department of Transport, Tourism and Sport. Today, I am announcing that €286 million of this will be made available next year and will facilitate investment in new transport infrastructure such as the N4 Collooney to Castlebaldwin and the Dunkettle interchange; completion of the runway overlay project at Knock Airport; and design, planning and implementation of cycling and walking projects around the country.

  We are also improving and expanding our public transport infrastructure through the provision of projects such as BusConnects, extended trams on the Luas and by increasing the funding available to retrofit older parts of our public transport infrastructure. I am also providing additional moneys to maintain and renew existing infrastructure, including an additional €40 million for pavement repair and rehabilitation works on regional and local roads. These changes are needed and will support the continued growth in our economy in the years to come.


  The tourism and hospitality sector also plays a key role in our economy, providing balanced regional growth and supporting nearly 240,000 jobs. This Government has played its part in supporting the sector when it most needed it and since the introduction of the reduced VAT rate in 2011, overseas visitor numbers have increased by more than 3.4 million and tourism employment has increased significantly. The tens of thousands of additional jobs created means the sector has never supported more employment than it does today.

  A Government's decision to provide stimulus to the economy is often an easy one to make and in the case of the tourism sector in 2011, the application of a reduced 9% VAT rate was justified. Judging when it is appropriate to withdraw stimulus measures is always more challenging.

  I gave a commitment in last year's Finance Bill to undertake an economic analysis of the rate. The review found that the reduced rate had done its job. I believe that, in a new economic reality where the economy is strong, growth is broadly balanced and full employment is within sight, it is appropriate to increase the rate of VAT in the tourism sector to 13.5% from January 2019.

  This measure will raise €466 million next year and allows me to achieve a number of priorities. First, it allows me to reduce our reliance on increases in other tax heads, such as corporation tax. This is something I have consistently said that I would do. In addition, it underlines my commitment to responsibly manage our finances and maintain a broad tax base. Second, the additional revenues raised through this measure will allow reprioritisation and new expenditure in a number of key areas. It will allow us to provide more housing, invest in education and childcare and contribute to the balancing of our books at a moment of national risk. This is responsible policy-making. It is appropriate for our economy and will overall benefit our society.

  I am conscious, of course, that these changes will present a challenge to the tourism and hospitality sector. This is why I am allocating €35 million to the Department of Transport, Tourism and Sport to provide more targeted supports for the sector, including €4.5 million for regional initiatives such as Ireland’s Hidden Heartlands and the Wild Atlantic Way, and almost €10 million for the further development of our greenways.


  I am also introducing a number of other tax measures today.

  Capital Acquisitions Tax

  I recognise that there are concerns about the potential tax burden, in particular on the inheritance of the family home. I have, therefore, decided to increase the lifetime group A tax-free threshold that broadly applies to transfers between parents-----

Deputy Mattie McGrath: Information on Mattie McGrath Zoom on Mattie McGrath What happened to grannies?

Deputy Niall Collins: Information on Niall Collins Zoom on Niall Collins And grandads.

Deputy Mick Barry: Information on Mick Barry Zoom on Mick Barry The landlords are getting all excited.

An Ceann Comhairle: Information on Seán Ó Fearghaíl Zoom on Seán Ó Fearghaíl I ask Members to behave. Have some respect for the Minister addressing the House.

Deputy Paschal Donohoe: Information on Paschal Donohoe Zoom on Paschal Donohoe -----and their children from €310,000 to €320,000.

Film Corporation Tax Credit

  To support the continued growth of the film industry in Ireland, I am legislating to extend the film corporation tax credit beyond the current end date of 2020 until December 2024. To ensure all areas of our country can benefit from the film industry, I am also introducing a new, time-limited regional uplift of up to an additional 5% that will taper out over four years. Full details of the relief will be set out in the finance Bill next week.

Tax Appeals Commission

  Today I am publishing an independent review of the operations and resources of the Tax Appeals Commission, which I commissioned earlier this year. I fully support the recommendations of the review, which include the sanctioning of additional staffing resources at all levels and additional funding for improved IT systems, so that the commission can adequately address its caseload and remit.

  Tax Relief for Start-up Companies

  This Government recognises the value of SMEs to the economy and to job creation. In light of this, I am legislating to extend the three-year tax relief for certain start-up companies until the end of 2021.

  Availability of credit is a key consideration for all businesses, and I am aware of the growth of crowdfunding. With appropriate regulation, I believe that crowdfunding can play an important role in broadening competition in the SME finance market. My Department will begin work, in conjunction with the Central Bank, on the regulation of crowdfunding in Ireland.

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