Learning Center
Plans & pricing Sign in
Sign Out



  • pg 1
									Vol. 727                                                                     Wednesday,
No. 4                                                                      26 January 2011


                       DÁIL ÉIREANN
          TUAIRISC OIFIGIÚIL—Neamhcheartaithe

                  (OFFICIAL REPORT—Unrevised)

                                     Wednesday, 26 January 2011.

Finance Bill 2011:
    Second Stage (resumed)   …   …     …     …      …      …       …   …    …   …   …    653
    Financial Resolutions    …   …     …     …      …      …       …   …    …   …   …    678
    Committee Stage …        …   …     …     …      …      …       …   …    …   …   …    683
Business of Dáil      …      …   …     …     …      …      …       …   …    …   …   …    753
Questions: Written Answers   …   …     …     …      …      …       …   …    …   …   …    755
                                   DÁIL ÉIREANN

                               Dé Céadaoin, 26 Eanáir 2011.
                               Wednesday, 26 January 2011.


                    Chuaigh an Ceann Comhairle i gceannas ar 10.30 a.m.





                         Finance Bill 2011: Second Stage (Resumed)

  The following motion was moved by the Minister for Finance, Deputy Brian Lenihan, on
Tuesday, 25 January 2011:
    That the Bill be now read a Second Time.
  Debate resumed on amendment No. 1:
    To delete all words after “That” and substitute the following:
      Dáil Éireann declines to give a Second Reading to the Finance Bill, having regard to the
    fact that the Bill contains virtually no proposals to encourage economic growth and job
    creation and the fact that certain provisions of the Bill have a very severe impact on the
    most vulnerable in society.
                                                                  —(Deputy Michael Noonan).
  An Ceann Comhairle: Deputy Jimmy Deenihan was in possession.

 Deputy Jimmy Deenihan: I wish to share my remaining time with Deputy Pádraic
McCormack, who is about to make his final speech in the House. He entertained Deputies on
many occasions over the years with his celebrated one-liners and his laconic statements.

  Deputy Charlie O’Connor: Hear, hear.

  Deputy Jimmy Deenihan: I would like to hand over to him now.

  An Ceann Comhairle: In the circumstances, it would be difficult to refuse.

 Deputy Jimmy Deenihan: I hope to get an opportunity to address the House again in a few
weeks time.

   Deputy Pádraic McCormack: I thank Deputy Deenihan for sharing his time with me. On my
second-last day in the Dáil, I would like to make a small contribution to the debate on the
Finance Bill 2011. This is the most unusual week I have experienced in the Oireachtas. We are
discussing a finance Bill at a time when the sword of a general election is hanging over those
who are contesting the election and those who are not for various reasons. It is a most unusual
situation. My party’s finance spokesman has outlined Fine Gael’s reservations about this legis-
                Finance Bill 2011:        26 January 2011.        Second Stage (Resumed)

  [Deputy Pádraic McCormack.]
lation. While we are determined to meet the objectives that have been agreed with the IMF
and the EU, we would go about it in a different way from the Government. Therefore, we will
oppose certain sections of the Bill.
   Fine Gael plans to make the necessary budget correction through a combination of capital
savings and incentives. We will make greater savings through reductions in expenditure than
through tax increases. Every budget adjustment should be scrutinised from a political and an
economic point of view. That is how Fine Gael has arrived at its current position. The only
reason we are debating this Bill so is that there has been such internal combustion in the
Government parties. If that had not happened, we would not have had this opportunity. It is
most unusual that we are dealing with this matter in advance of the election that is likely to be
held on 25 February. We are in a vacuum while we are waiting for it to take place. The sooner
it happens, the better.
  I thank my colleagues for giving me an opportunity to make a final contribution to this Dáil.
Perhaps I will have second thoughts. I hardly will.

  Deputy John Curran: The Deputy had second thoughts the last time.

  Deputy Bernard J. Durkan: It has been known to happen.

  Deputy Pádraic McCormack: When I had second thoughts the last time, I got the bonus of
a further three and a half years in the Dáil. I enjoyed that time, just as I enjoyed all 22 years I
spent in the Dáil and the two and a half years I spent in the Seanad before that. I have made
great friends here. I thank the Ceann Comhairle and his predecessors for the courtesy they
have extended to me. Most of my colleagues who are retiring have told me they felt a great
sense of relief after they made that decision. My circumstances are slightly different because I
am not a voluntary retiree. I have not experienced that sense of relief. I have a sense of sadness
as I leave the Dáil. That is the way politics is.
  I have tried to make a contribution over the years I have spent in this House. I hope I did
not insult too many people. The current Taoiseach and perhaps some of his predecessors often
had to answer me back in the Dáil. If I said anything to upset them, I apologise for that. That
was my style. People cannot change their style. I was true to what I felt as a representative. I
hope I have been of some use to the people of Galway West. My constituents stood by me by
returning me at the last five general elections. I was first elected in 1989. I leave this House
with the privilege of never having failed to be elected to any body to which I stood for election.
I am proud of my political contribution to this Dáil and the people of Galway West. I thank
my constituents for giving me the great privilege of representing them in the Dáil over the past
22 years. The team we have selected in Galway West will certainly bring back two seats and
has a great chance of three seats. It will take three people to replace me anyway.

  An Ceann Comhairle: I thank the Deputy. We wish him well. We have quite a number of
retirees. We may have an opportunity to say a few words about them at a later stage.

  Deputy Jimmy Deenihan: We will need a special session.

  Deputy Michael Ring: It will not be possible if the Taoiseach goes to the park on a Sunday
morning like the last Taoiseach did. I hope he will give those who are retiring the honour of
having an opportunity to speak in the Dáil for a final time.

  An Ceann Comhairle: All right.
                Finance Bill 2011:         26 January 2011.        Second Stage (Resumed)

  Deputy Michael Kennedy: I would like to share time with Deputy Edward O’Keeffe.

  An Ceann Comhairle: Is that agreed? Agreed.

  Deputy Michael Kennedy: Táim buíoch as ucht an deis seo labhairt ar an mBille tábhachtach
seo. I welcome the opportunity to speak during this important debate. I welcome the Minister’s
changes to the universal service charge for medical card holders. It was not just the Independent
Deputies who had representations; we all had them. I acknowledge that the Minister has dealt
with this in a satisfactory manner.
   I will make a brief reference to section 23 properties. Deputies will have received many
representations from ordinary people on this matter, and I believe a review is necessary. There
are those who say the section 23 provisions were for big builders and developers, and there
were certainly some of those, but I have been contacted by quite a number of ordinary people
who invested in such properties, including schoolteachers, doctors, gardaí and nurses. They saw
it as a means of providing a pension for themselves later in life.
  I would have liked the Minister to deal with approved retirement funds, ARFs. From this
year the assumed annual drawdown on which people will be liable for tax is 5%, rather than
3% as it was previously. Given the low level of investment returns at the moment, many people
have contacted me to suggest that a drawdown of 5% per year will effectively deplete their
funds in slightly over 20 years. I do not think it is in the national interest that people who have
provided for their own private pensions will effectively become dependent on the State after
20 years. I would like to see a review of that.
  I wish Deputy McCormack and all Deputies who are retiring well. I hope they will have the
opportunity to say a few words in this Chamber before they retire, but much will depend on
the actions of the Opposition. The last week has not been a good one for politics. We hear a
lot of talk about Oireachtas reform, and I agree with that, but the first reform I would like to
see is a bit of honesty in the House and less play-acting. Everybody outside the House agrees
that the passing of the budget is necessary not just because they believe the State should
provide for its finances but, more importantly, because our friends in Europe and the IMF
have told us we need to bring in a budget and implement the four year recovery plan which
has been agreed with them. They certainly want us, as a Parliament, to institute that.
   It is inevitable, and it is accepted on all sides of the House, that there will be a change of
Government and that Fine Gael and the Labour Party will form the next Government. The
onus is on them today to make sure the budget is passed. I do not think it is reasonable that
three Independents should be the fall guys if this budget fails. The leader of Fine Gael, Deputy
Kenny, who will possibly be the new Taoiseach, is here today. I am saying to him that if the
Opposition Deputies want to have any credibility and if they have any respect for the people
of Ireland, they will make sure the budget is passed today. It is ridiculous for them to say “Yes,
of course it should be passed”, and then not make sure it is passed. I suggest that the only
reason they want the Fianna Fáil minority Government to pass it is that they can go out on
the streets and blame Fianna Fáil for the budget provisions. Deputy Kenny would then be able
to come back in a month’s time as Taoiseach, say that Fine Gael is not to blame for the budget
provisions as it was not in government at the time, and then bring in supplementary budgets.
It is ridiculous to talk for years about guillotining debates and then write out of the script issues
such as bankers’ bonuses, which everybody in this Chamber has talked about, because we have
a deadline to complete our business by Friday. That is dishonest. I am asking Deputy Kenny,
the probable future Taoiseach——

  Deputy Bernard J. Durkan: Speaking about dishonesty, the way this country has been run
for the last ten years was dishonest. The Deputy should think about that.
               Finance Bill 2011:      26 January 2011.       Second Stage (Resumed)

  An Ceann Comhairle: I ask the Deputy to refrain from interrupting.

  Deputy Michael Kennedy: ——to be realistic——

  Deputy Bernard J. Durkan: Rubbish.

  Deputy Michael Kennedy: ——and to be honest with people and vote this budget through
because he knows it is necessary for this country——

  Deputy Pádraic McCormack: Not the way Fianna Fáil is doing it.

  Deputy Michael Kennedy: ——and to comply with IMF rules and regulations.

  Deputy Noel J. Coonan: They have had 20 years at it and they have made a mess of it.

  Deputy Michael Kennedy: If we had that type of reform, for starters, it would be a good day
for politics. The posturing that has gone on in the last couple of days——

  Deputy Bernard J. Durkan: What about the posturing that has gone on over there for the
last five years? They should be ashamed of it.

  An Ceann Comhairle: Deputy Durkan, please.

  Deputy Bernard J. Durkan: They are trying to cod the people again.

 Deputy Michael Kennedy: ——does not do the body politic any good. It will not do Fine
Gael any good either if it intends to be the responsible Government that this country needs.

  Deputy Bernard J. Durkan: Responsible?

  Deputy Noel J. Coonan: On a point of order, does the speaker realise the budget went
through last November?

  Deputy Pádraic McCormack: And that he voted for it.

  Deputy Noel J. Coonan: He voted for it——

  Deputy Bernard J. Durkan: What are we on about?

  Deputy Noel J. Coonan: ——and he was aided and abetted by the three Independents.

  Deputy Edward O’Keeffe: On a point of order——

  An Ceann Comhairle: Deputy Coonan, we have limited time.

  Deputy Michael Kennedy: A Cheann Comhairle, if that is a point of order, the Dáil certainly
needs reform.

  Deputy Edward O’Keeffe: On a point of order——

  An Ceann Comhairle: If we continue with the points of order and continue interrupting
the speaker——

  Deputy Pádraic McCormack: Is he for him or against him?

  An Ceann Comhairle: ——we will run out of time. We are due to finish at 12 p.m.
               Finance Bill 2011:       26 January 2011.       Second Stage (Resumed)

  Deputy Edward O’Keeffe: I advise Deputy Coonan to go back to north Tipperary and get
the principal of the school to send out the letter stating what Deputy Lowry has done for them.

  Deputy Pádraic McCormack: Is he for him?

  Deputy Noel J. Coonan: Deputy Lowry kept Fianna Fáil here for the last four years.

  An Ceann Comhairle: Deputy Coonan, please.

  Deputy Noel J. Coonan: He is as responsible for all the bad decisions as Fianna Fáil is.

  An Ceann Comhairle: Deputy Kennedy, just continue, please.

  Deputy Michael Kennedy: The people in this Chamber who have denigrated Ireland——

  Deputy Pádraic McCormack: Are on that side.

  Deputy Michael Kennedy: ——for naked political purposes are doing themselves a disservice.
They will probably be wearing the green jersey in a month’s time and, as far as I am concerned,
the green jersey——

  Deputy Pádraic McCormack: The Green Party is gone. Does the Deputy not know that?

   Deputy Michael Kennedy: ——will not be a paler shade of green next month. I suggest to
the people who want to make derogatory remarks coming up to the election, saying the country
is banjaxed and so on, that they reflect on this. They are the people who will represent us at
European level. They will meet with our European counterparts——

  Deputy Bernard J. Durkan: Yes?

  Deputy Michael Kennedy: ——and deal with colleagues from the IMF. The lads should
reflect on it, because all they are doing is letting themselves down.

  Deputy Bernard J. Durkan: Well, well.

  Deputy Michael Kennedy: We are a proud nation. No matter what has happened, we have
the resilience to come out of it if we think positively. I hope to be back in this Chamber this
year as an Opposition Deputy. This country needs budgets to be passed. It needs realistic four
year recovery plans——

  Deputy Bernard J. Durkan: It needs honesty.

  Deputy Michael Kennedy: ——to be implemented straight away. I would have no difficulty
in backing that.

  Deputy Bernard J. Durkan: A soft landing. Good fundamentals.

  Deputy Michael Kennedy: The dishonesty we are hearing now does nobody any good. It
does not do the reputation of the country any good. I say this in particular to the people who
will be assuming the role of Minister and representing us at European level.
  I must comment on the level of debate on economic matters in recent times, particularly by
Sinn Féin. Deputy Morgan is here; maybe it is as well that he is retiring, because the man he
hopes will replace him does not have a bull’s notion of what economics is about.
                Finance Bill 2011:       26 January 2011.       Second Stage (Resumed)

  Deputy Arthur Morgan: That is sweet coming from Fianna Fáil, considering the state it has
left the country in.

  Deputy Michael Kennedy: This perception that we should burn the bondholders——

  Deputy Arthur Morgan: That is sweet.

  Deputy Michael Kennedy: ——and use up the money left in the National Pensions Reserve

  Deputy Edward O’Keeffe: Can he add and subtract?

  Deputy Michael Kennedy: ——to pay the wages of teachers, nurses, gardaí and so on——

  Deputy Arthur Morgan: Can any of the Fianna Fáil Deputies add and subtract? Idiots.

  Deputy Edward O’Keeffe: The Deputy should calm himself.

  Deputy Michael Kennedy: If we want to have an honest debate, let us realise——

  Deputy Pádraic McCormack: Throw the ball in.

 Deputy Michael Kennedy: ——that burning the bondholders at the stake may sound great
— we all have our problems with certain bankers——

  Deputy Noel J. Coonan: They are all in America now anyway.

  Deputy Michael Kennedy: ——but the reality is that we need the bankers and we need
the ECB.

  Deputy John Perry: The bankers are bankrupt.

  Deputy Arthur Morgan: A bit of honesty from the beginning would have been better.

  Deputy Michael Kennedy: We have €140 billion on loan from them——

  An Ceann Comhairle: Could the Deputies please refrain from interrupting?

  Deputy Michael Kennedy: ——and for anyone to suggest that we literally tell them to get
lost is ridiculous. Am I out of time, a Cheann Comhairle?

  An Ceann Comhairle: Just about 44 seconds.

  Deputy Bernard J. Durkan: Enough to apologise to the Irish people.

  Deputy Michael Kennedy: If we are to have an honest debate for the election, Fine Gael
and the Labour Party must come clean and say what their plans are. Will they tell us where
they will make the €6 billion saving? If the saving is only €4.5 billion, where will they get the
rest of the money? I am asking them to give politics a decent start by having an honest debate.

  Deputy Bernard J. Durkan: That is right. Apologise to the Irish people for ruining the coun-
try. That is it.

  An Ceann Comhairle: Deputy Durkan.

  Deputy Michael Kennedy: Let us cut out all the shenanigans——
                Finance Bill 2011:        26 January 2011.       Second Stage (Resumed)

  Deputy John Perry: Bankrupting the country.

  Deputy Michael Kennedy: ——we have been carrying on with in recent times.

  Deputy John Perry: He had his Weetabix.

  Deputy Michael Kennedy: I will hand over to my colleague, Deputy Ned O’Keeffe. I wish
him well in his retirement. He can be proud of his contribution over a long time in Dáil Éireann.

  Deputy Edward O’Keeffe: I first entered the Dáil the same day as the Ceann Comhairle,
and that is a few days ago, now. I want, first, to pay tribute to all the good people in House
before the Ceann Comhairle cuts me short, as I might have too much to say. I worked under
four leaders including Taoiseach Charles J. Haughey, the brightest and best. I was at
Leopardstown races some weeks ago and there was a poster saying, “Bring back Haughey,
clean up the mess”. I served under taoisigh Albert Reynolds, Bertie Ahern and now Brian
Cowen and I enjoyed every day of my time here.
  I did not get high office because I did not behave myself, which is a tragic situation. Blind
loyalty is ruining every party and organisation in the country. I want to pay tribute to all my
good friends on the Opposition side, even Sinn Féin. Deputy Arthur Morgan served with me
on the Joint Committee for Enterprise, Trade and Innovation and we got on well. His contri-
butions were always worth listening to. I had good friends in the Labour Party as well.
   As regards Fine Gael, it is interesting to reflect that on the day I lost my job as Minister of
State in the Department of Agriculture I met Deputy Enda Kenny coming out the door of
Leinster House as I was coming in. He had lost a job on the Front Bench under Deputy Michael
Noonan who had taken over as leader of Fine Gael. Deputy Kenny said: “We’ve no more
business here. Come on away with me.” He came back and is bound for greener pastures and
I am going back to the hills and valleys of north Cork. I want to congratulate him on his efforts
on behalf of Fine Gael. He has done wonderful things for Fine Gael since he was made leader.
He has often been under pressure, and wrongly I would say. To our embarrassment and disad-
vantage he has done well for Fine Gael. I am confident that he will be Taoiseach, so I wish
him well, and regret I will not be here to question him from the Opposition side, because I
always loved being in opposition. I want to say “well done” to him and an overall majority
might be within his grasp.

  Deputy Enda Kenny: I thank the Deputy.

  Deputy Edward O’Keeffe: As it is, he has achieved a lot since that day at the front door.
  As far as the Press Gallery is concerned, I have to say that I have gotten on well with every
journalist here. If something happened on a Monday, it would appear in print the following
day, so that Tuesday’s newspaper mattered, not Monday’s. After a few arguments about this I
decided to accept the status quo , not try to correct matters and move on. I always got on well
with the staff of the House as well, and got to know them all on a personal basis. I say “well
done” to the Captain, the head usher and the Clerk of the Dáil. They have run a very efficient
and orderly operation here, and that is very important. These are my parting thoughts to the
House in my last few minutes here. As I have said, I am going back to the green fields and the
golden vale of north Cork, having served under four leaders.
  I have two e-mails to read out to the House before I conclude. These are very important
and I want to put them on the record. The first, dated 24 January 2011, is from Mr. John
Rafter, general secretary Garda Síochána Retired Members Association, and it states:
                Finance Bill 2011:       26 January 2011.       Second Stage (Resumed)

  [Deputy Edward O’Keeffe.]

     Please find attached copy of letter from the Garda Síochána Retired Members Association
  to Mr. Brian Lenihan, TD., Minister for Finance outlining the dissatisfaction of our associ-
  ation (with) the cuts to Garda pensions as a result of the changes made in Budget 2010.
    I would ask for your support in having the measures contained in Budget 2010 rescinded
  when the Finance Bill is before the Houses of the Oireachtas.

The next one, dated 21 January 2011, is from Mr. Jim Groarke, and reads:

    Can you explain to me what the universal social charge is, why it was introduced and where
  the money goes? Also, if you or your party form part or all of the next government, will you
  work towards removing this charge?

I will not be here, anyway. I wanted to put those on the record, and I have a bundle of e-mails.
The country is in very serious crisis. We will finish up with no private banks in the high street
and I beg the incoming Government to sort out the banking crisis and arrange for us to have
a private banking system again. We trade internationally and as a trading country we will be
very suspect if all our banks are State-owned. I hear the threat this morning as regards Bank
of Ireland coming under State ownership as well. That to me does not augur well.
   We had the regulators, Pat Neary and John Hurley. I worked as a member of the finance
committee and ultimately they did not have the legislation and wherewithal their office
required. Now we have a system of regulation, while there is no money available in the street.
We need to put the Finance Bill through because there is no money available to extend to
credit to businesses as working capital over a short period of time, because of over-regulation.
We cannot just go from having no regulation into a regime of high regulation. I beg whoever
is in government to immediately sort this out. I have no confidence in either Professor Patrick
Honohan or Mr. Matthew Elderfield.
  Mr. Elderfield is here to chastise us, I suspect, and he has brought a team with him. That I
resent very much and he probably believes the Irish are what Cromwell thought of us in the
1600s, and I say the same thing to him. Professor Honohan has said he would sell our banks. I
do not think he can sell any bank. He made a point to the effect that the Chinese might buy
them. I do not want to see the Chinese with a financial base in Ireland, neither do I want them
to have a military base here — because that is the one they are really interested in — from
which to take over the world. Ireland would be the ideal place for such a base, in the Atlantic.
Let us recognise that such threats are very real. Such things have happened before and history
can repeat itself. With that mentality one gets nowhere.
   Today Allied Irish Banks goes on the ESM, and that to me is a real tragedy. We should
manage our banks differently. We have too many theoretical economists telling us what to do
and they cannot manage their own business, never mind mine and the banking business. I very
much regret what has happened to our banking system. I come from the southern part of the
country, like Deputy Michael Noonan, the Fine Gael spokesman on finance. The Munster and
Leinster, in the old days, was the bank that kept the farming community in business. It gave
extended credit in the valley periods and this worked very well for farmers. Sometimes farming
is in great difficulty. The bank helped to develop our co-operative movement, which has been
the driver of jobs in rural towns and villages in County Cork, as well as in Limerick, and indeed
all of Munster, including parts of Kilkenny. That was the bank which served the rural com-
munity. It was generous and ran a good business.
 I understand that Deputy Morgan’s leader has suggested the two banks should be merged.
What a foolish thing to do — the stupid ass. I suggest that each of the two main banks demerge
                Finance Bill 2011:         26 January 2011.        Second Stage (Resumed)

and that we return to the Provincial Bank, the Royal Bank and the Munster and Leinster Bank
once more. On the Bank of Ireland side we should return to the Hibernian Bank and the
National Bank. It was the order of the day for them to merge, some 25 years ago or more, but
it is different today, and we need much smaller banks. That is the way forward for the banks.
I was in town last night, when I saw a pub that was formerly the Hibernian Bank, owned by
Bank of Ireland and I thought it would be lovely if that was reopened as a bank, since the
licensed premises was to close. Let us de-merge the banks. It can be done, and it has been,
before. I would urge the next Minister for Finance to consider this urgently. I appeal for a
renewal of the banking system because there is no confidence left in that regard. The system
is practically closing down because of the shortage of credit and the lack of overdraft facilities
to deal with valley periods. Any Deputy in this House who is not aware of this situation is
asleep, like Rip Van Winkle, because there is a crisis.
   We previously had State-owned banks with the one policy of Government. We have had
ACC and ICC and know how they worked. We have a few foreign banks and they are getting
out as fast as they can. I want to see business people in charge of the banking system, people
such as Denis O’Brien, Dermot Desmond or Martin Naughton of Glen Dimplex etc. There are
about five such people who could do what is needed. We neither want regulators nor econom-
ists such as Peter Bacon who put us where we are, with NAMA and all those things.
   It is interesting to hear the debate on the Finance Bill and what is being said in the national
interest. Fine Gael and Labour want to uphold the national interest while at the same time
wanting to vote down sections of the Bill. If I was thinking of the national interest, I would
                not vote against it, but rather let it through. It is in the Opposition’s interest to
11 o’clock      let it through because the Government side is doing the dirty work for Fine Gael
                and Labour. I read out those two e-mails for that reason. Then we have the three
musketeers, Deputies Jackie Healy-Rae, Michael Lowry and Mattie McGrath, whom I thank
for coming in to listen to me. However, I think he should go to Dunnes Stores to get better

  Deputy Mattie McGrath: The Deputy might get better value in Dunnes Stores himself.

  Deputy Edward O’Keeffe: His shopping list extended beyond my arm, so I do not believe
the economy can carry that; neither do I believe the people of Tipperary South expect it.
  Deputy Michael Lowry is concerned about schools and the principal of Templemore school
writes on his behalf. How interesting.

  An Ceann Comhairle: The Deputy’s time has expired.

  Deputy Edward O’Keeffe: I cannot hear the Ceann Comhairle. If the principal of a school
writes on behalf of a Deputy, he or she should be dismissed. Such a principal has no right to
do such a thing, and we have seen this being done in respect of a toilet or an extra room.
  In Kerry, Deputy Jackie Healy-Rae is rambling up and down the street telling us what to
do. This Government has been a victim of those Independents who try to tell us what to do. I
never want to see that again. I never want to see this Government or any Government held to
ransom by people like that for petty matters like footpaths, schools and bits of roads.

  Deputy Lucinda Creighton: Hear, hear.

  Deputy Edward O’Keeffe: That should be Government policy. If we have that kind of policy
in this country, we will have no banks because that is where the banks went wrong.
  My party was the party that built this country from 1932.
                Finance Bill 2011:       26 January 2011.       Second Stage (Resumed)

  An Ceann Comhairle: I am reluctant to interrupt but Deputy O’Keeffe is borrowing time
from the next slot.

  Deputy Edward O’Keeffe: Am I? The Ceann Comhairle can give me another minute.

  Deputy Pádraic McCormack: Deputy O’Keeffe should borrow it from the bank.

  Deputy Edward O’Keeffe: I can tell Members that Fianna Fáil went wrong when it became
the party of the racehorse owner. We have more racecourses in trouble than we have ghost
estates. They will soon be like ghost estates because there are too many racecourses and we
do not have the money to back horses, feed horses or train them. If Fianna Fáil came back
from the sport of kings to where it was founded, we would have a successful country and this
Government would win 50 or 60 seats at the general election.

  Deputy Pádraic McCormack: Did Deputy Edward O’Keeffe say 15 seats?

 Deputy Edward O’Keeffe: Deputy McCormack is in the same camp as me, he is retiring.
Are 15 Fine Gael Deputies retiring?

  An Ceann Comhairle: Deputy O’Keeffe, please.

  Deputy Edward O’Keeffe: I am delighted to make this last contribution. I thank the Ceann
Comhairle for his patience and I welcome Deputy Mattie McGrath going to Dunnes Stores. I
will go with him if he wants.

  Deputy John Deasy: Before he leaves the Chamber, I wish Deputy Edward O’Keeffe the
best in his retirement.
  I did not come into the Chamber to bounce heads with Deputy Kennedy.

  Deputy Michael Kennedy: I was just about to leave the Chamber but maybe I should stay
for Deputy Deasy’s words of wisdom.

  Deputy John Deasy: When Deputy Kennedy points the finger at people like me and talks
about self-respect and responsibility, he is confusing the self-interest of Fianna Fáil with the
national interest. It is not the same thing.

 Deputy Michael Kennedy: I am afraid not, I referred to the hypocrisy just in case Deputy
Deasy did not get the message the first time.

  Deputy John Deasy: People are sick of members of Fianna Fáil talking about themselves
on radio.

  Deputy Michael Kennedy: We are talking about people saying the budget should be passed
in the national interest, then voting against it.

  An Ceann Comhairle: I ask Members to refrain from engaging across the floor.

  Deputy John Deasy: I picked up an article over the weekend that caught my attention. The
headline is “Hundreds of poor Irish buried in mass graves in UK each year”. The article
concerns hundreds of impoverished Irish people, with no known family, who are buried in
unmarked mass graves in London by the local councils. In the case of Southwark Council, half
of the 50 people whose funerals are organised and funded by the borough are elderly Irish
men. Each borough has slightly different procedures but the majority of those buried in paup-
                Finance Bill 2011:        26 January 2011.       Second Stage (Resumed)

ers’ graves are laid to rest without anything to identify them and in graves with the remains of
up to 25 other people. That is shocking.
  I emigrated in 1986 and I witnessed the lives and hardship of people who, in many cases,
have not returned to Ireland. It is important to accept in this Chamber the net effect of what
has happened to our economy for many of the people who will not be returning. Some may
think this is a slightly dramatic way of portraying the issue. Some people go abroad, they thrive,
they learn new skills and they meet interesting people but many people do not do so well. One
of my most vivid memories is being in the Rye River pub, off Jerome Avenue in the Bronx in
1987. It was 40°C outside and a line of middle-aged men were reading newspapers three days
old and drinking pints of Guinness. Many told me they had not been back to Ireland in 20 years.
   Yesterday, I canvassed a rural part of Waterford, Stradbally, and it was the issue on every-
one’s tongue. They all talked about emigration, their children leaving and the safeguarding of
small businesses. In this Finance Bill, self-employed people are hit again. They will pay an
additional 3% surcharge on income over €100,000. I want to address the treatment of self-
employed people. I have just received the back to education allowance figures for Waterford.
In 2005 to 2006 there were 275 participants. In 2009 to 2010, there were 902 participants. How
many of those are self-employed people? Not as many as there should be. If a self-employed
person loses his or her job, he or she can apply for jobseeker’s allowance, which is means
tested. However, if the spouse earns more than €400 per week, he or she does not qualify for
the back to education allowance, work placements, retraining schemes or the back to work
allowance. These people are leaving the system completely. They have become statistics and
are completely disenfranchised. They are the ones emigrating.
   If the percentage contribution for self-employed people is to be raised, at the very least they
should be entitled to the basic facets of State retraining. They are the entrepreneurs and self-
starters, the ones who have created jobs in this country. In many cases, they have never asked
the State for assistance. If the rate of contribution increases for the self-employed, we must
ensure these skilled entrepreneurs can get adequate retraining. As a State, we need to examine
the question of self-employed workers generally.
  Many of these Irish men and women will not come back to Ireland unless we recognise their
value, their skills and, most importantly, their needs.

  Deputy Dan Neville: I welcome the opportunity to make a contribution. There are many
areas I would like to touch on but the brief time available means I must highlight the failure
of the Government in respect of, and the need for a new Government to respond to, those
suffering from mental illness, stress-related illnesses and those who are suicidal. We must recog-
nise the serious suicide situation resulting from the recession. We have seen this exposed by
the media in the past number of days. The reduction in the mental health services budget from
8% to 3.5% of the total health budget is a disgrace. It marginalises those with mental health
difficulties and does not give them an opportunity to recover.
   The treatment of mental health problems must become recovery orientated. We can compare
England’s 12% and Scotland’s 18% of the total health budget to our figure of 3.5%. We have
failed to introduce the Government’s policy and the recommendations of the A Vision for
Change report. The key aspect of that was to introduce multidisciplinary, community-based
psychiatric services so that we deal with people in the community. All disciplines should be
available and the team can decide the best type of treatment for the person at an early stage.
  People ask where we will get the money for this. My reply is that because of the lack of
community-based psychiatric services, people are in psychiatric hospitals who would not be
there if they were treated in the community at an early stage. If that policy was introduced, we
                Finance Bill 2011:         26 January 2011.        Second Stage (Resumed)

  [Deputy Dan Neville.]
could reduce the number of psychiatric hospital beds by 500. The Ceann Comhairle can make
the calculations, when it costs €1,000 a day for a psychiatric patient in hospital. Private hospitals
charge approximately €500, which is paid by the VHI. We can save up to €200 million if we
change the system, based on the €1,000 per day figure. We also have geriatrics, elderly, long-
term patients who do not need psychiatric treatment and who need nursing home treatment.
  We should bear in mind that it costs €7,000 a week for a patient to be cared for in a psychi-
atric hospital and if such a patient were moved to a nursing home, it would cost €1,000 a week
to care for him or her. The system itself can produce the finances to introduce proper com-
munity-based psychiatric beds.
  It is disheartening to read the report of the Inspector of Mental Health Services. As the
report states:

    [The inspector has constantly identified year after year] an unaccountable failure to
  implement policy which 20 years old and, as a result, prevailing conditions in Ireland’s mental
  health services remain a scandal. The inability to change policy in the past unfortunately
  raises concerns about the implementation of the new ‘Vision for Change’ policy [which I
  recommended] unless the Government approaches the issues with a real will to change along
  with the absolutely necessary recourses [ as I have pointed out]. There is no doubt that the
  neglect of the psychiatric services over the last 10 years has, at its root, the decision by the
  Government to slash . . . . the Health Budget [for psychiatric services, which is totally

We hope that Fine Gael will have an opportunity in government to examine this. It will take
time but it should be examined.

  Deputy Lucinda Creighton: In the current economic climate it is important that all legislation
that has come before the House now and that will come before it during the lifetime of the
next Dáil is judged on the basis of two criteria — first, does it address the gaping hole in our
public finances and, second, does it assist in some way in endeavouring to stimulate growth,
create jobs and get people back to work? On the basis of the first criterion on addressing the
public finances, I welcome the Finance Bill. It is well documented that the Fine Gael Party has
committed and signed up to the target of a €6 billion adjustment over the period of four years
in accordance with the four-year plan. However, I and my party disagree with some of the
mechanisms employed in some of the provisions of the Bill, which set out to achieve this target.
   The universal social charge has been much talked about in the media in recent weeks and it
is being raised on the doorsteps, with people having received their pay cheques in the past
week or two. The universal social charge is a very significant issue. I welcome the concept of
a universal social charge in the sense it tidies up the various levies which were introduced in
the previous two budgets. That is important as it adds clarity and streamlines the taxation
system, to some extent, and this is necessary. However, I do not believe that the blunt instru-
ment which has been used to introduce and implement it is correct. I acknowledge that the
Minister, Deputy Brian Lenihan, on foot of lobbying by certain Independents, who no doubt
will happily take credit for it, has made some changes in regard to medical card holders. This
goes some way towards addressing some of the problems with the charge. However, it needs
to be acknowledged, as referred to by Deputy Deasy, that the trade off is that the self-employed
will be further penalised under the Finance Bill and that is an extremely regrettable prospect.
Self-employed people will now reach a marginal rate of tax, that of 55% at a minimum. These
are by and large significant contributors to the Exchequer through a variety of means of tax-
ation, through their businesses as well their personal income tax.
                Finance Bill 2011:        26 January 2011.        Second Stage (Resumed)

  Under the second criterion on which legislation should be judged, that of whether it assists
growth and job stimulation, it is clear that this Bill, as with all the former legislation which has
come from this Government, is basically lacking. What we have seen time and again is the
complete dearth of ideas, of imagination and of a drive behind the Government and the Cabinet
to start injecting a stimulus to our economy and start prioritising job creation. I look forward
to the creation of a new Government under the mandate of the next Dáil. It is vital that we
see new young, vibrant, energetic Ministers with new ideas and new concepts who will bring a
new energy to Departments to drive forward our economy because it is clear that this tired
Government has entirely run out of ideas.

  Deputy John Perry: I would like to pay tribute to the outstanding service given to Fine Gael
by Deputy Pádraic McCormack, chairman of our parliamentary party. I wish him and his wife,
Eilish, the very best.
   I also pay tribute to the work of Deputy Jimmy Devins, my colleague from Sligo-North
Leitrim. I have worked very closely and effectively with him since he was elected to this House
in 2002. I found him at all times to be a man of immense integrity, having had the concerns of
the electorate close to his heart. Despite his best attempts, he was very much let down by the
Government when it came to the retention of critical services, those of cancer services, at Sligo
General Hospital. I wish him and his wife, Mary, and family the best of good health and good
luck. It was always a great pleasure to meet him and work with him as part of a team working
for the people of Sligo-North Leitrim.
  Turning to the Finance Bill, it has failed small companies in many ways. There are 86,000
small companies in Ireland, employing more than 700,000 people and generating €80 billion in
turnover annually. They contribute to the economy in that they account for 37% of income tax
receipts and 50% of VAT receipts.
   At a personal level, these hard-working individuals play a central role in their local communi-
ties. They take risks, create jobs and generate enterprise. Fine Gael in government will encour-
age entrepreneurs to explore new business ideas, to invest and to take risks. The Government
has a vital role to play in supporting new businesses and encouraging entrepreneurs to invest
in and grow existing businesses, and Fine Gael in government will do that. The Government’s
record in this area is a disgrace. It has put billions into banks and nothing into enterprise.
  Small and medium-sized enterprises represent 95% of all businesses. Of a total of more than
80,000 small businesses, 11,000 employ up to 50 staff. They incorporate the following critical
sectors — accommodation and food, financial, insurance, real estate, information and communi-
cations technology, film and digital media, health care, agriculture, construction, utilities,
wholesale and retail, administration and support services, and professional, scientific and tech-
nical services.
   Fine Gael in government will understand the need to create an environment beneficial to
the establishment of the growth of small companies and in government it will create this envir-
onment. Most important, Fine Gael will have concern for and will respect the role of entre-
preneurs and small businesses. Many problems face small businesses, including undercapitalis-
ation, weak financial structures, lack of funding from banks, difficulty in securing funding, lack
of Government support and a high level of bureaucracy and red tape.
  When one notes the stimulus that has been given to and the investment that has been made
in the banks, nothing has been given to those business people who are the backbone of this
economy. I have no doubt this economy will recover, but to kick start this economy, we need
to support small companies in the retention and the creation of jobs. Rather than have 50,000
people leave this country, we should be working with bright young people with business ideas
                Finance Bill 2011:        26 January 2011.        Second Stage (Resumed)

  [Deputy John Perry.]
and investing in and supporting their proposals. Instead of investing money in property, Fine
Gael will invest in people. It will invest in ideas, encourage people to stay in Ireland and invest
in research and development in which there has been little or no investment. We will reduce
the level of red tape. I heard these issues discussed on an RTE Radio 1 programme this
morning and the business spokesperson on that programme said that 400 businesses will close
this month. That is outrageous and it will have an adverse impact.
   Speaking for my last time in this Parliament, I very much look forward to receiving the
support of the electorate in Sligo-North Leitrim so that I will be re-elected with a strong
mandate for the region. I wish well to everybody who has decided to retire. I have made many
friends here and they are from every political party. I wish them well and continued health and
good luck. I do not regard leaving political life as retirement but as a change of lifestyle. I hope
those who make the change will enjoy it.

   Deputy Billy Timmins: The way things are going, it appears as if the Ceann Comhairle’s seat
is the only safe one in the House. I wish him well in the new Dáil.
  For over a decade, the Government, in various shades, spent the public’s money in a wanton
fashion. It never consulted or sought the advice of this side of the House. It never took on
board the very many positive measures put forward by this side of the House. Now in the
Government’s hour of need, it seeks our help for the good of the State. This is a Pauline
conversion on its deathbed.
  Fine Gael believes the fiscal adjustment should be achieved through expenditure savings as
opposed to tax increases. There is great scope for savings in the public service. People talk
about fixing the political system. While there are steps to be taken in respect of the political
system, its main fault is the practitioners therein. The system has worked in the past and can
work in the future. We could spend another decade navel-gazing and return with the same
system. The biggest weakness of this House is the failure to recognise the implications of
measures we take on business and the business environment.
  Whatever Government is formed in the next few weeks will have to introduce a new finance
Bill with measures to facilitate growth and the creation of jobs. To date, there have been
cutbacks. We must address bureaucracy in the form of the Health and Safety Authority, NERA
and all the bodies set up during the Celtic tiger years.
   There are measures we can take outside our economic remit that will have implications.
Over the years during which I have been a Member, I have been harping on the issue of early
intervention in education. Our education system is going down the Swanee because of the
failure in respect of numeracy and literacy in the primary curriculum. A report published in
recent weeks identifies this problem. People ask me how this has happened and state we need
another report to establish the facts. It happened because we have a curriculum that does not
facilitate development.
   It is essential that the new Government introduce a finance Bill that will create hope, a
stimulus and jobs. The difficulty in Britain in recent days will have an impact on our exports.
Interest rates will probably increase in the coming year or so, thus affecting mortgage holders.
There are many negatives on the horizon and this is why we need to instil confidence. Let us
renegotiate and conclude the interest rate deal with the IMF as soon as we can in order to run
our own affairs.
  I pay tribute to all those who are retiring. I am sorry I was not present for the speech of
Deputy Edward O’Keeffe, who is a very outspoken man. I wish him, his colleagues, my col-
leagues on this side of the House and others well in the weeks ahead.
                Finance Bill 2011:        26 January 2011.        Second Stage (Resumed)

  Deputy Mattie McGrath: I compliment Deputy Edward O’Keeffe, who is from a neighbour-
ing constituency, and all Members who are taking the opportunity to retire. I thank them for
their public service.
   The legislation being discussed is most important. I believe from the bottom of my heart that
it is being rushed through the Houses with indecent haste. I have sat through so many debates
in recent months and years in which the Opposition frequently criticised the Government for
the use of the guillotine, thereby rushing legislation. Now that the prize is in sight, there is no
time for due diligence and proper debate.
  Leaders of the Opposition and others have been publicising with great gusto the view that
they are the custodians of the national interest. Only now, when this coincides with their own
interests, are they throwing caution to the wind.
  The Green Party was a partner in Government. It destabilised the Government in a major
way in November, at which time it wanted to be in and out of Government. It is now appealing
to the Opposition to carry the Bill. It has great responsibility and is answerable to the public
for its actions.
  I welcome the effective deferral into next year of the curtailment of the tax reliefs on section
33 properties. There is now a tendency to consider property as a dirty word. Anyone who
speculated on or invested in property is now regarded as a rogue or crony. The reality is that
section 33 provisions were availed of increasingly by some very ordinary people. The provisions
were promoted by the Government and people were advised by solicitors and accountants that
the section 33 scheme was wonderful. It was regarded as one of the safest schemes one could
opt for because it was State backed and one entered into a contract with the State.
   In many cases, people leveraged their own properties, affecting their future and that of their
children, to engage in small-scale property investment. They rejuvenated many derelict areas
in small towns in the process. They were not major developers. They were ordinary people in
ordinary positions. They included self-employed people, teachers, doctors and others who are
valued in the community. They are not connected in any way to the property moguls or the
high-level speculators involved with NAMA or who engaged in reckless borrowing and lending,
from Anglo Irish Bank and other banks.
  These small-time investors entered into a contract and were advised by legal and financial
experts to do so. They paid dearly for that advice. The section 33 scheme was regarded as
guaranteed. When we enter into contracts by mutual agreement, that is fine; when one enters
into a contract with the State, one believes the contract will be honoured by it. People who
now wish to revisit their contract with the State are not allowed to do so. Some have taken the
tax reliefs but many have not.
   What is occurring is unconstitutional and it will be proven to be such. I welcome the 12-
month deferral and acknowledge the serious effect the removal of the scheme will have on the
trust of the people. The trust of the people has been shattered in so many ways. The people in
question were willing to make an investment, enter into a contract, put their money where
their mouths were to better their communities, and build for themselves and their families
without trying to get rich quickly. Their plight is sad. The section 33 scheme is to be abolished
in the interest of resolving the national crisis brought about by the banks and light-touch
regulation, as a consequence of which nobody in the Government shouted “Stop”.
  I am appalled that no banker has been brought to justice to date. Everybody is innocent
until proven guilty and I respect due process, which must never be questioned. I was surprised
and heartened last year when the then Garda Commissioner stated he expected people to be
brought before the courts before the end of the year. He has now retired and I wish him well.
We are now one month into the new year and there is no sign of anyone being charged.
                Finance Bill 2011:        26 January 2011.       Second Stage (Resumed)

  [Deputy Mattie McGrath.]
That those responsible have not been brought to book constitutes an appalling vista for the
Government, bearing in mind that we cannot interfere with investigations.
   As a small businessman, I know the legalities involved. When one does one’s accounts every
year, one’s accountant or auditor signs off on them based on the information supplied. Huge
tranches of money were moved out of banks into other banks and this was basic, naked, unadul-
terated fraud. There is to be a huge, lengthy trawl to ensure everything is right but that is only
a cop-out and excuse. People are hiding behind this trawl. They need to be charged for their
wrongdoing in the courts and must pay the price.
  Budget after budget, it was promised that so many quangos would be disbanded. They are a
drain on the resources of the country and comprise a wasteful exercise. We have handed over
power from this Parliament, to which I and every other Member was elected. I wish every
candidate well in the forthcoming election. I hope the next Government will be able to sort
out the issues that the people want addressed.
  With regard to the property market, rent dried up for investors. There are human tragedies
involved. Families with children who have mortgages will be affected and small business owners
with mortgages on their properties will be forced out of business. I hope the new Government
— we all have an idea of the complexion it will have — will put its money where its mouth is.
After the review next year, it will have the time to ensure the measure is constitutional and
revisit it.
  I welcome the amendment to the universal social charge and make no apologies for lobbying
the Minister for Finance to reduce from 7% to 4% the rate for medical cardholders. That
section of the community cannot afford 7% and needs to be supported. However, I do not
welcome the quick decision made by the mandarins in the Department of Finance and with
the obvious agreement of the Minister. I am glad that my colleague, the Minister of State, is
present, as he has listened to me at many meetings around our county in recent months. While
€100,000 is a good income, foisting the shortfall onto the self-employed on the grounds that
they can take it is wrong. They cannot take a further scintilla of tax because they already have
been taxed and regulated out of existence. At a time when there was no regulation of bankers,
the self-employed endured health and safety regulations, hazard analysis and critical control
point, HACCP, regulations, insurance, courses and so on.
   Regulating our best and brightest, those who have the courage to invest in business and
create money to pay their own wages, provide for their families and create employment, has
become an industry. These people are our future, but they are not receiving help from
Enterprise Ireland or the IDA. Nor do they ask for it. In some cases, they get good support
from local authorities and county enterprise boards. This has been acknowledged on prog-
rammes like “The Frontline”. These are the people Ireland needs to get out of this mire, not
us. They have ideas and the courage and initiative to run with them. They are our brightest
and best. Some might not be our brightest and best, but they are hard workers. Sheer hard
work has got them to where they are and kept them there for many years. Crucifying them by
regulation must stop. I welcome Deputy Timmins’s comments to this effect.
   An army of officialdom has crippled our State and grown up around the political system. My
former party has been in government for the longest time. I lobbied my party to call a halt to
matters, but no one wanted them to stop as they were going well. Instead, people wanted to
make money. Rightly or wrongly, we became associated with big developers and builders. This
is our taint and we must pay the price. We need to rebuild and revert to the ideals of de Valera
and Lemass by setting up a country in which people can be proud to be in business and to
have property. Without such people, we will not have a country.
                Finance Bill 2011:        26 January 2011.       Second Stage (Resumed)

  I will address the bringing forward of the deadline for self-assessment tax returns from 31
October to 30 September. This is another dream by some bright spark — there are many good
officials in the Department — who has never been self-employed, needed to file accounts or
understood the difficulties involved. It is a nonsensical proposal for a number of reasons. First,
cash flow has dried up. Traditionally, people are paid quarterly or at the end of year. One
needs money to pay one’s self-assessment, but many businesses do not have it. Banks have
been of no help, seeing as how they have removed overdraft facilities and refused to provide
loans despite the fact that some of the businesses in question have track records of 30 or 40
years. They are a safe bet for the banks, but their lifeblood is being drained away.
  August and September are holiday months for the House and others, so we know that finding
an accountant in that period can be difficult. Accountants would tell one of how their staff are
on holidays, meaning there is no one to do the books. As such, the new deadline is a nonsensi-
cal, ill-conceived and ill-judged idea. Those who dreamed it up have never created a job.
Instead, they will put people out of business. The new deadline must be reconsidered, as the
people who will be affected promote enterprise and are those to whom we must turn.
  Although we are attracting some multinationals and I compliment all involved in Intel’s
announcement last week, we are not attracting enough. Small indigenous businesses must be
encouraged and supported. Banks are not helping them despite last year’s budget promise that
they would each lend €3 billion. The Minister told us the banks would submit plans in this
respect, but we never saw any plan or money. The only money we saw was what they took off
business people.
  I welcome the review of the curtailment of tax relief on student fees. PAYE workers had
legitimate complaints in this respect. The idea that the self-employed could do what they liked
led to mistrust, so we must tread with caution. No tax relief will be afforded on the first
€2,000 in charges for full-time students or on the first €1,000 for part-time students. Among
the unemployed of all ages, there is a considerable need to up-skill or retrain to meet the needs
of industry and to create growth. We must support them because they are our brightest and
best. From the figures, we can see how many people have been forced to emigrate. We want
to keep them at home. To do so, they must be up-skilled and reskilled if they are to be
able and willing to create jobs, get work and attract companies to Ireland. This measure must
be examined.
   I am disappointed about the tax on the bankers’ bonuses. I negotiated with the Minister,
Deputy Brian Lenihan, on making changes to the cuts in allowances for the disabled, blind
people and carers. He decided to introduce the 90% tax on bonuses, but it has been forgotten.
I do not want to penalise those people, but “bonus” is a dirty word. Why has it been forgotten?
Departmental officials were allowed their bonuses two weeks later, yet there was not a word
about that. There is no fairness.
   This Bill ignores an area that has been crying out for reform. I have consistently argued that,
in the interests of fairness and accountability, a maximum wage needs to be introduced. I was
with the Minister until he walked into the Chamber with the budget. He told me he was
introducing a €250,000 cap. For many years, I had lobbied for €200,000, which would be a fine
sum for anyone. He introduced the measure, but we have not heard a word about it since. It
was tokenism to get the likes of me on side. The situation is unfair. A couple of days later, we
decreased the minimum wage. No questions were asked; it was just slashed. The ordinary
people who want to work are being leaned on again. Worse still, the message being sent is that
working is not viable. One must always have a system in which it is rewarding to work. It cannot
be more rewarding to stay at home. This is the problem with our lengthening dole queues.
                Finance Bill 2011:         26 January 2011.        Second Stage (Resumed)

  [Deputy Mattie McGrath.]

   The reduction in the minimum wage was an attack on the weakest. I am an employer and
99% of the employers I know were not troubled by the minimum wage. They were willing to
pay it. If one has good employees, they are entitled to good pay. In smaller businesses in
particular, there are good relationships between employers and employees. It is quid pro quo,
in that one cannot work without the other.
   Ordinary people, be they business people or workers, who want to get on with their lives
without looking for handouts are being crucified while the rich are getting away with it. This
is the saddest indictment of our outgoing Government and it is something on which I, as
someone who was a part of it, must face the public. However, I reject out of hand an accusation
levelled against me. The Opposition has a responsibility. If it so wishes, it is ready to do some
governance by passing this Bill.
  I voted against the so-called EU-IMF bailout. It was a clean out.

  Deputy Damien English: The Deputy made sure it was passed first, though.

   Deputy Mattie McGrath: The amount involved was not €85 billion. By my simple arithmetic,
we will need to invest €17.5 billion of our National Pensions Reserve Fund, NPRF, in the
bottomless pit that is the banks. It is a bad deal. It was negotiated by the mandarins and the
Minister, not a business person. Had a business person advised them, for example, had Albert
Reynolds back when he was a Deputy or someone with business ideas gone out there, our
friends from Europe and the IMF would have come to us the next morning and offered us a
better deal.
  I welcome the Opposition’s positive promise to renegotiate. The deal must be renegotiated
because we can never repay it. I believe it was set up for default, either mischievously by the
Government or by the Europeans. I hate the word “default”. Anyone who is in business knows
that, if one defaults even once, one is listed in Stubbs Gazette, one’s record is damaged and
one’s business and credibility diminishes. We should have rejected the deal and brought back
the EU and IMF, as doing so would have suited the national interest better.
  I will not put local politics ahead of national politics. I never got into deals with our Ministers
for Finance, but I will stand up for the basic rights of ordinary people who cannot understand
what is occurring and were appalled by events in the Oireachtas last week when the Govern-
ment put party interests ahead of the public interest. This can never be allowed in politics and
the public will deal with it at the ballot box. It was a fundamentally flawed miscalculation. I
wish the retiring Taoiseach and Ministers the best, but they misread the situation and brought
rancour from all over the world down on top of us.
  Although I am proud to represent my constituents, I am not speaking for them now. I do
not see the wisdom in rushing the Finance Bill through the Dáil. Last year, it took us until
April to pass it. While we should not continue until next April, we should continue until next
week to discuss the Bill properly paragraph by paragraph. It is a large document. In recent
weeks, we have all been treating it like a Bible and saying it needed to be passed, yet issues
have now arisen. I could not believe it when we adjourned at 8.30 p.m. last night. I was looking
for speaking time and I thank the Chief Whip, Deputy Curran, and his staff for affording me
some. However, I could not believe that we did not sit until midnight or whatever to have
some discussion——

 Deputy Damien English: Fianna Fáil allowed the Deputy. The Deputy will vote with the
                Finance Bill 2011:        26 January 2011.       Second Stage (Resumed)

  Deputy Mattie McGrath: I did not say I would.

  Deputy Damien English: The Government gave him this slot.

  Deputy Mattie McGrath: And I am glad it did.

  Deputy Damien English: It is a set-up. Why did the Government give the Deputy a slot?

  An Ceann Comhairle: Deputy English, please.

  Deputy Mattie McGrath: Deputy English can make up his own mind, but we will see what
he does when he gets into government.

  An Ceann Comhairle: Deputy McGrath, please.

  Deputy Mattie McGrath: I was watching the clock and did not believe my time had

  Deputy Damien English: The Deputy will still vote for the Bill.

   Deputy Mattie McGrath: The eyes of the world are on us, yet we walked away from the
Chamber at 8.30 p.m. last night. I expect we will be here until midnight tonight and I expect
the House will give due diligence to this Finance Bill. The complaints I heard about the guillo-
tine being imposed by the Government of which I was a part, ring hollow now. I respect the
fact that the Opposition wants an election, we all want it and the country wants it but we have
to give due diligence and due respect to this Bill, and not cherry-pick it.
  The Opposition has stated it will table amendments on the civil partnership provisions and
this is another issue with significant consequences and costs for the taxpayer in the future. That
was rushed legislation and the Greens are pronouncing that they achieved it. Good riddance
to bad rubbish in Government, so far as I am concerned. I have said many times that they
were a dangerous party in Government. Ideology is fine and they can talk about policies but
look at the price of petrol at the pumps. Thankfully, our coursing festival is being held in
Clonmel next week. I invite each and every Member, if they have an hour to spare on Sunday
or Monday to come down to enjoy that festival of rural pursuits at their best and an important
industry which attracts foreign investment.
  I thank the Ceann Comhairle for his co-operation and I thank all colleagues, staff and
officials for being nice to me while I served in this Dáil.

  An Ceann Comhairle: I will be calling the Minister to reply at 11.45 p.m. so Deputies Costello
and Rabbitte have about five minutes.

  Deputy Joe Costello: I will share my time evenly with Deputy Pat Rabbitte. Is there any
extra time available to us?

  Deputy Damien English: Perhaps they could have five more minutes.

  An Ceann Comhairle: I will allow that.

   Deputy Joe Costello: I thank the Ceann Comhairle and we will each speak for five minutes.
I thank the Minister of State for agreeing to give us a few more minutes.
  I wish all Members well, a number of whom will be retiring from the House and it is unlikely
that very many or certainly that all of us will be here in this Chamber again. I have appreciated
                Finance Bill 2011:        26 January 2011.       Second Stage (Resumed)

  [Deputy Joe Costello.]
being here for the past three and a half years and I have always been treated with courtesy
and friendship by Members on all sides of the House.
  We are now in the dying days of this Government but it has been in free fall for many weeks.
This free fall started with the bank guarantee which destroyed the economy and the nation’s
sovereignty. The IMF and the EU entered the country unopposed and dictated savage financial
conditions for the banks’ bail-out on the taxpayers. The Government went AWOL, so to speak,
Fianna Fáil fiddled and the Greens went chasing the stag-hunters of Meath.
  Today, as the House debates the Finance Bill 2011, there is a very serious aviation dispute
taking place between Aer Lingus and the IMPACT trade union. The former Minister for
Transport, Deputy Noel Dempsey, has indicated he plans to retire and has therefore resigned
as Minister. The new Minister for Transport, Deputy Pat Carey, is overwhelmed by multiple
responsibilities. I wish to make a plea that we would not lose sight of what is happening. This
dispute is escalating at a fast rate and more than 180 cabin crew staff, mostly women, have
been taken off the payroll and another 21, at least, will be taken off today which means that
20% of the entire cabin crew staff are gone. Aer Lingus has stated it will be reducing its
operations by 10%. The company is hiring in carriers such as Ryanair and others and it is
spending significant sums in an effort to break this dispute. This is not the way forward. Any
Government and Minister worth their salt would be intervening at this stage.
  This is a long-running dispute which has escalated over the past two weeks and has gone out
of control. I ask that the new Minister for Transport, Deputy Pat Carey, would use his good
offices to intervene to speak to both parties, to Aer Lingus management and to IMPACT. This
State has a 25% shareholding in Aer Lingus. If necessary, the Minister should arrange for third
party mediation, binding arbitration, as this will resolve the dispute. If the Minister for Trans-
port is not listening in the House today I ask the Minister of State to relay that request. We
are dealing with Fianna Fáil elections, a Finance Bill and a budget ——

  An Ceann Comhairle: I know the Deputy is hoping to accommodate Deputy Rabbitte.

  Deputy Joe Costello: With regard to the Finance Bill, I would have thought there exists an
opportunity to improve on the budget but instead the property taxes have been done away
with. The Minister also promised to deal with the bonus payments paid in bodies now under
the State guarantee but he did not do so. A job creation scheme is essential but nothing has
been put in place to support job creation. The opportunity to improve the budget and to put
together a proper Finance Bill has been lost. A new Government will need to intervene. I hope
a new, fresh Labour-led Government will be in control to try to improve the situation and to
give some hope to the country in the future.

  Deputy Pat Rabbitte: This is no way to enact a Finance Bill but then, this is no way to govern
a country, with a half of a Cabinet, and with a Taoiseach driving through a truncated Finance
Bill that has been dictated from Frankfurt, Brussels and Washington. This is a Finance Bill to
legislate for a budget that had a majority in the House on budget night but now the Minister
for Finance is bartering with Independents to conclude the process. The reckless mismanage-
ment of our country’s affairs has made a severe budget unavoidable and this is the most severe
budget of modern times.
   However, severe or not, this House is entitled to demand that the measures being enshrined
in law are fair. The manner in which the universal social charge is being introduced is not fair.
It is not credible in the circumstances in which we find ourselves, to argue that 45% of what
the Minister calls, “tax units”, pay no tax. However, to bring in a new universal charge that
kicks in at an annual income of €4,000 is manifestly unfair. Workers on low incomes are hit by
                Finance Bill 2011:       26 January 2011.       Second Stage (Resumed)

a double whammy. This Government has cut the minimum wage and introduced the universal
social charge.
  I welcome the minor change for medical card-holders announced yesterday by the Minister,
the cost of which will be sourced from high earners. However, he could hardly have persisted
with the universal social charge that had an employee on €35,000 per annum losing €12 per
week while the self-employed person earning more than €200,000 per annum was gaining €11
per week.
  In view of the brief time available I will summarise my contribution. The cumulative tax
changes brought in by the present Minister for Finance are so severe that there is no further
scope for increases in personal taxation for anyone earning less than €100,000 per annum. The
Labour Party alternative budget before Christmas would have raised some €870 million in
personal taxes. The actual increases imposed by Fianna Fáil in this budget increase personal
income taxes by €1.2 billion. We cannot further tax people on low and middle incomes.
   The challenge facing whoever comprises the new Government is to wriggle out of the strait-
jacket that is the legacy of the outgoing Government. We have no choice but to get our public
finances under control but we cannot bear the burden imposed on us by the IMF-EU bail-out.
Our sovereign wealth fund, the National Pensions Reserve Fund, has been thrown into the pot
by the Government in the bailout negotiations. The National Pensions Reserve Fund will be
cleaned out before the end of the current year. Our freedom of movement to stimulate growth
is severely restricted. Everyone knows that unless our economy can be returned to growth, the
kind of growth that produces employment, that begins to put people back to work, we will be
unable to pay our way.
  Finally, I must mention the huge bitterness among the public about what the banks have
done to our country. Ordinary people are convinced that no banker will be required to hang
his Armani suit on the back of a door in Mountjoy Prison. The circumstances and the damage
done to our standing in the Councils of the European Union, where we used to punch above
our weight, where our networking was professional and effective, has been damaged in recent
years. As a result, the ECB kicked around this country when it came to agreeing the terms of
the bailout.
  If it is true — as it undoubtedly is — that our banks behaved recklessly, it is also true that
those who loaned to them behaved recklessly and the terms of that IMF-ECB bailout was as
much to protect the eurozone and to protect German and French banks as it was to aid Ireland.
The first challenge for whoever comprises the new Government will be to revisit that bailout
and take advantage of developments happening in the wider eurozone to negotiate a eurozone-
wide debt relief programme which would give some freedom to move in this country and some
capacity to lift the restrictions to stimulate growth and to get people back to work again.

  Acting Chairman (Deputy Charlie O’Connor): I thank Deputy Rabbitte and on a personal
level I wish him well. I hope that does not get me into any trouble.

  Deputy Pat Rabbitte: Likewise.

  Acting Chairman (Deputy Charlie O’Connor): I thank Deputy Rabbitte. I call on the Mini-
ster for Finance, Deputy Brian Lenihan, to reply to the debate. He will be interrupted for the
vote at noon.

  Minister for Finance (Deputy Brian Lenihan): As I stressed at the beginning of the debate,
the discussion on the Finance Bill takes place in unprecedented circumstances. The Govern-
ment finds itself in a minority position and the House finds itself in a position where it must
face its national responsibilities without recourse to cheap and easy rhetoric. The House must
                Finance Bill 2011:       26 January 2011.       Second Stage (Resumed)

  [Deputy Brian Lenihan.]
decide what is in the best interests of the country in terms of the Finance Bill. The enactment
of this legislation is vital to our international credibility and this has been made clear by the
European Commission and in all of the international commentary about which there has been
comment during the debate.
   There has been much attention in media reports regarding the possibility of reduced interest
charges being agreed for the EU loan assistance to Ireland. Many Deputies have raised this
issue, including Deputy Rabbitte near the conclusion of the debate. I assure the House that I
have been as vigorous on this subject in practice as the Members of the Opposition have been
in talk. I will attend the relevant European meetings in February irrespective of the fact that a
general election is taking place to ensure that Ireland’s vital interests are fully protected in
this matter.

  Deputy Kathleen Lynch: I hope you will be more successful than you have been in the past.

  Deputy Brian Lenihan: I am allowed to proceed without interruption.

  Acting Chairman (Deputy Charlie O’Connor): I will protect the Minister.

  Deputy Brian Lenihan: I will do everything in my power as Minister for Finance in the
remaining weeks available to the Government to work on this subject.
   Let us be under no illusions. These are difficult complex negotiations involving many member
states and the interest rates were set and determined well in advance of any application by
Ireland. This is the factual position. Following the agreement with Ireland, Greece sought the
same terms so it is not correct to state our arrangement was less favourable. It was in accord-
ance with precedent.

  Deputy Kathleen Lynch: There was no precedent.

  Deputy Brian Lenihan: We need to build on the international discussions, which will not be
concluded in an instant. Talk about renegotiation is entirely fallacious. What is needed is hard
determined negotiation, building up relationships where we have them and ensuring these
changes take place. I assure the House that in so far as the negotiations take place prior to
polling day I will participate in them——

  Deputy Kathleen Lynch: God help us.

  Deputy Brian Lenihan: ——while other Members canvass and spread hot air throughout the
nation. I state this particularly to the Labour Party which would have let the banking system
in the country collapse with mass unemployment several months ago.

  Deputy Joe Costello: The time to negotiate was prior to the deal being signed.

  Deputy Brian Lenihan: I will now turn to the banking system and the serious challenges
facing the State in this regard. Deputies Noonan, O’Donnell and Maureen O’Sullivan raised
the question of burden sharing. This is provided for in the Credit Institutions (Stabilisation)
Act 2010. We know senior bondholders rank equally with depositors in having claims in Irish
banks. We know the long debate in Ireland on the mere possibility of default has caused
immense problems for the Irish banking system. If one insists that one will torch a house does
one expect to leave the house next door alone and leave one’s deposit in it? This has been the
quality of debate on this subject in this country for the past two years and we have paid a
                Finance Bill 2011:       26 January 2011.       Second Stage (Resumed)

heavy price for it. Again, these issues will be determined in co-operation with our European

  Deputy Joe Costello: Blame everybody else except the Government which should be in

  Deputy Brian Lenihan: ——because we are in an arrangement whereby our funding comes
from the European Central Bank and any progress in this area will have to be made in co-
operation with it. It will not be possible to take unilateral measures in this respect and any
party which in the course of the campaign promises unilateral default measures is misleading
and deceiving the people.
  Deputy Noonan raised the question of Spanish banks. The Spanish Government announced
that its banks will have to raise more capital. This is the same as what is happening here under
the EU support programme.
   Deputies raised the issue of the universal social charge. I will consider the issue Deputy
Noonan raised on the threshold but it is necessary to have an exemption threshold at the lower
end of the charge to avoid very low levels of income attaching to a tax liability. I am pleased
that the Deputy Noonan has welcomed my proposed Committee Stage amendments. He has,
however, questioned the surcharge on self-employed income being applied at income levels of
€100,000 rather than at income levels of €200,000 where the gain first appears. I must inform
the Deputy that the gain only occurs at €200,000 and above but first shows itself as a dimin-
ishing loss on earnings from €100,000. If the surcharge were placed at income levels of €200,000,
those above that level would still gain from the budget. I can provide the Deputy with a table
that demonstrates this effect.
  Deputy Noel Ahern queried why the 3% surcharge would apply only to self-employed
income earners. This is because an unintended effect of introducing the social charge was that
self-employed income earners above certain high levels of income actually made a gain from
the original budget measures. The surcharge rectifies the position. Deputy Burton stated the
highest income earners actually benefited as a result of the budget. This is simply not the case.
All PAYE workers regardless of their income levels are worse off after the budget. It gives me
no joy to state this but it is the factual position.
  With regard to Deputy Burton’s confusion over the nature of the universal social charge, let
me make clear that the charge is a tax. All revenue goes to the central fund and is then used
to fund services and other expenditure. It is certainly correct that the revenue from the health
levy went directly to fund health services but this accounted for only 13% of what the HSE
required in 2010.
  With regard to the changes to self assessment, I refer to the points made by Deputies, in
particular Deputy O’Donnell. It is true that implementation of the proposals would reduce the
over-concentration of tax receipts in late October and mid-November and thus enhance the
accuracy of next-year budget forecasting. It would also help facilitate an earlier budget and
lengthen the period available for the development of policy and legislation for the Finance Bill.
As many Deputies, including Deputies Roche and O’Connor have noted, the Finance Bill is
one of the key pieces of legislation which goes through the Oireachtas and needs an appropriate
level of commitment from all parties. However, bringing forward the pay and file deadline to
30 September would have a huge negative impact this year on small businesses and the self
employed. Deputy Lowry advised me the harsh treatment of the self-employed is unfair. Like-
wise, Deputy Healy-Rae made a strong case in this regard. This measure would also have
serious consequences for farmers because the single farm payment will not have been paid by
30 September, leaving farmers with no financial resources to make this payment prior to the
                Finance Bill 2011:        26 January 2011.      Second Stage (Resumed)

  [Deputy Brian Lenihan.]
deadline. In all these circumstances I am prepared not to proceed with the proposal to bring
forward the pay and file deadline to 30 September. It was a worthy proposal and would have
improved our budgetary process. It would have removed the criticism that we are constrained
to introduce a budget in early December but one must weigh up this against the real difficulties
which the self-employed and farmers face in the Irish economy and this is not the year for such
a fundamental reform. Hence, I will not proceed with this particular element of the Finance
Bill. It was not part of the original budgetary measures and therefore I am free to not proceed
with the matter and I do not propose to do so.
   It is appalling and unacceptable that the proposed taxation measures on bankers’ bonuses
were not dealt with because of the time restrictions placed on the passage of the Bill by the
Labour Party and Fine Gael. I noted what Deputy Mattie McGrath stated a few moments ago
in this regard that the constraint in the discussion on the Finance Bill to one week rather than
two constrained the Department in what we could do. Nevertheless, having discussed the
matter with my officials and having regard to what Deputy Mattie McGrath raised with me I
will be in a position to bring forward an amendment on bankers’ bonuses on Committee Stage.
However, I will need all-party co-operation on this amendment because it has not been pub-
lished with the other Committee Stage amendments. I know it is an issue about which all sides
of the House are concerned.
  A number of other tax issues were raised in the course of the debate.

  Deputy Pat Rabbitte: Does all of this mean the lads are on side?

  Deputy Brian Lenihan: No, it is a matter for the House to determine whether it wishes to
vote for the Finance Bill. This has been a tremendous week in one sense in that political parties
on all sides have had to face up to their responsibilities for once. I hope we can face up to our
              responsibilities in the course of the national debate that is now beginning. One
12 o’clock    thing about the Finance Bill which has become very clear to me, and which
              applies in a wider sense to the management of our finances and expenditure, is
that one cannot make a concession without providing for how the concession can be paid for
elsewhere. This is how our public finances will be managed in the future irrespective of what
Government is in office.
   If one wants a concession on a particular tax matter, one will need to show how it will be
paid for on the other side of the account. If one wants an increased expenditure somewhere,
one will need to explain what additional taxation or what reduced expenditure will fund it.
That is basic public finance and it will apply in this House form now on. We have begun to see
signs of it in this debate, which is very welcome.

  Question put: “That the words proposed to be deleted stand.”

  The Dáil divided by electronic means.

  Deputy Paul Kehoe: As we are near the termination of this Dáil, under Standing Order 69,
I propose that the vote be taken by other than electronic means.

  An Ceann Comhairle: As Deputy Paul Kehoe is a Whip, under Standing Order 69 he is
entitled to call a vote through the lobby.

  Question again put: “That the words proposed to be deleted stand.”

  Question again put:
            Finance Bill 2011:             26 January 2011.          Second Stage (Resumed)

                                 The Dáil divided: Tá, 80; Níl, 77.

Ahern, Bertie.                                                Kelly, Peter.
Ahern, Michael.                                               Kenneally, Brendan.
Ahern, Noel.                                                  Kennedy, Michael.
Andrews, Barry.                                               Killeen, Tony.
Andrews, Chris.                                               Kitt, Michael P.
Ardagh, Seán.                                                 Kitt, Tom.
Aylward, Bobby.                                               Lenihan, Brian.
Behan, Joe.                                                   Lenihan, Conor.
Blaney, Niall.                                                Lowry, Michael.
Brady, Áine.                                                  McEllistrim, Thomas.
Brady, Cyprian.                                               McGrath, Michael.
Brady, Johnny.                                                McGuinness, John.
Browne, John.                                                 Mansergh, Martin.
Byrne, Thomas.                                                Martin, Micheál.
Calleary, Dara.                                               Moloney, John.
Carey, Pat.                                                   Moynihan, Michael.
                                                              Mulcahy, Michael.
Collins, Niall.
                                                              Nolan, M. J..
Conlon, Margaret.
                                                              Ó Cuív, Éamon.
Connick, Seán.                                                Ó Fearghaíl, Seán.
Coughlan, Mary.                                               O’Brien, Darragh.
Cowen, Brian.                                                 O’Connor, Charlie.
Cregan, John.                                                 O’Dea, Willie.
Cuffe, Ciarán.                                                O’Donoghue, John.
Curran, John.                                                 O’Flynn, Noel.
Dempsey, Noel.                                                O’Hanlon, Rory.
Devins, Jimmy.                                                O’Keeffe, Batt.
Dooley, Timmy.                                                O’Keeffe, Edward.
Fahey, Frank.                                                 O’Rourke, Mary.
Finneran, Michael.                                            O’Sullivan, Christy.
Fitzpatrick, Michael.                                         Power, Peter.
Fleming, Seán.                                                Power, Seán.
Flynn, Beverley.                                              Roche, Dick.
Gogarty, Paul.                                                Ryan, Eamon.
Gormley, John.                                                Sargent, Trevor.
Hanafin, Mary.                                                Scanlon, Eamon.
Harney, Mary.                                                 Smith, Brendan.
Haughey, Seán.                                                Wallace, Mary.
Healy-Rae, Jackie.                                            White, Mary Alexandra.
Hoctor, Máire.                                                Woods, Michael.
Kelleher, Billy.


Allen, Bernard.                                               Doherty, Pearse.
Bannon, James.                                                Doyle, Andrew.
Barrett, Seán.                                                Durkan, Bernard J.
Breen, Pat.                                                   English, Damien.
Broughan, Thomas P.                                           Feighan, Frank.
Bruton, Richard.                                              Ferris, Martin.
Burke, Ulick.                                                 Flanagan, Charles.
Burton, Joan.                                                 Flanagan, Terence.
Byrne, Catherine.                                             Gilmore, Eamon.
Carey, Joe.                                                   Grealish, Noel.
Clune, Deirdre.                                               Hayes, Brian.
Connaughton, Paul.                                            Hayes, Tom.
Coonan, Noel J.                                               Higgins, Michael D.
Costello, Joe.                                                Hogan, Phil.
Coveney, Simon.                                               Howlin, Brendan.
Crawford, Seymour.                                            Kehoe, Paul.
Creighton, Lucinda.                                           Kenny, Enda.
D’Arcy, Michael.                                              Lynch, Ciarán.
Deasy, John.                                                  Lynch, Kathleen.
Deenihan, Jimmy.                                              McCormack, Pádraic.
               Finance Bill 2011:          26 January 2011.             Financial Resolutions


     McEntee, Shane.                                          Penrose, Willie.
     McGinley, Dinny.                                         Perry, John.
     McGrath, Finian.                                         Quinn, Ruairí.
     McHugh, Joe.                                             Rabbitte, Pat.
     McManus, Liz.                                            Reilly, James.
     Mitchell, Olivia.                                        Ring, Michael.
     Morgan, Arthur.                                          Shatter, Alan.
     Naughten, Denis.                                         Sheahan, Tom.
     Neville, Dan.                                            Sheehan, P. J..
     Noonan, Michael.                                         Sherlock, Seán.
     Ó Caoláin, Caoimhghín.                                   Shortall, Róisín.
     Ó Snodaigh, Aengus.                                      Stagg, Emmet.
     O’Donnell, Kieran.                                       Stanton, David.
     O’Dowd, Fergus.                                          Timmins, Billy.
     O’Keeffe, Jim.                                           Tuffy, Joanna.
     O’Mahony, John.                                          Upton, Mary.
     O’Shea, Brian.                                           Varadkar, Leo.
     O’Sullivan, Jan.                                         Wall, Jack.
     O’Sullivan, Maureen.

Tellers: Tá, Deputies John Curran and John Cregan; Níl, Deputies Paul Kehoe and Emmett

 Question again declared lost.

  An Ceann Comhairle: I declare the Bill to be read a Second Time in accordance with Stand-
ing Order 121(2)(i).

                              Finance Bill 2011: Financial Resolutions
 Minister for Finance (Deputy Brian Lenihan): I move the following Resolutions:

    THAT the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended in the manner and
 to the extent specified in the Act giving effect to this Resolution to provide for the introduc-
 tion of universal social charge.

   THAT section 470B of the Taxes Consolidation Act 1997 (No. 39 of 1997), which provides
 for an age-related tax credit in respect of private health insurance premiums, be amended in
 the manner and to the extent specified in the Act giving effect to this Resolution.

   THAT section 473A of the Taxes Consolidation Act 1997 (No. 39 of 1997), which provides
 for relief for fees paid for third level education, etc., be amended in the manner and to the
 extent specified in the Act giving effect to this Resolution.

   THAT provision be made in the Act giving effect to this Resolution to insert into the
 Taxes Consolidation Act 1997 (No. 39 of 1997) a section to impose a charge to income
 tax in respect of employees who exercise their employment aboard an aircraft operated in
 international traffic and where the aircraft is so operated by an enterprise that has its place
 of effective management in the State.

   THAT Schedule 13 to the Taxes Consolidation Act 1997 (No. 39 of 1997), which contains
 a list of the bodies that are required to operate professional services withholding tax, be
 amended in the manner and to the extent specified in the Act giving effect to this Resolution.

   THAT sections 950(1) and 958(2) of the Taxes Consolidation Act 1997 (No. 39 of 1997),
 which relate to self assessment, sections 531AF(1) and 531AH(1)(a) of that Act, which relate
 to the charge to domicile levy, and sections 894(1) and 895(1) of that Act, which relate to
              Finance Bill 2011:        26 January 2011.         Financial Resolutions

certain returns of information, be amended in order to require returns due under those
sections, for the years of assessment 2010 and subsequent years of assessment, and related
tax payments to be made on 30 September each year as specified in the Act giving effect to
this Resolution.

  THAT sections 520 and 525 of the Taxes Consolidation Act 1997 (No. 39 of 1997), which
relate to payments in respect of professional services by certain persons, Chapter 2 of Part
18 of that Act, which relates to payments to subcontractors in certain industries, section 904
of that Act, which relates to power of inspection, section 960O of that Act, which relates to
priority for taxes in the event of winding up of companies, section 960P of that Act, which
relates to priority for taxes in the event of bankruptcy, section 980 of that Act, which relates
to deduction from consideration on disposal of certain assets, section 1077E of and Schedule
29 to that Act, which relate to penalties, section 1078 of that Act, which relates to Revenue
offences, section 1089 of that Act, which relates to the status of interest on certain unpaid
taxes and duties and section 16 of the Value-Added Tax Consolidation Act 2010 (No. 31 of
2010), which relates to reverse charge for certain supplies, be amended in the manner and to
the extent specified in the Act giving effect to this Resolution.

  THAT the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended in the manner and
to the extent specified in the Act giving effect to this Resolution to provide for measures
relating to false claims.

  THAT sections 677(1) and 678(2) of the Taxes Consolidation Act 1997 (No. 39 of 1997),
which provide for investment allowances for the purposes of a trade of working a qualifying
mine, be amended in the manner and to the extent specified in the Act giving effect to
this Resolution.

  THAT the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended in the manner and
to the extent specified in the Act giving effect to this Resolution so as to provide that amounts
settled by close companies on or after 21 January 2011 in connection with certain settlements
will be treated as a distribution to the trustees of the settlement and that amounts received
by certain individuals on or after that date from such settlements will be chargeable to
income tax.

  THAT section 20 of the Taxes Consolidation Act 1997 (No. 39 of 1997), which relates to
charging to income tax under Schedule F dividends and distributions of a company resident
in the State, be amended in the manner and to the extent specified in the Act giving effect
to this Resolution.

  THAT section 817 of the Taxes Consolidation Act 1997 (No. 39 of 1997), which relates to
schemes to avoid liability to tax under Schedule F, be amended in the manner and to the
extent specified in the Act giving effect to this Resolution.

  THAT Part 16 of the Taxes Consolidation Act 1997 (No. 39 of 1997), which provides for
income tax relief for investment in corporate trades under the Business Expansion Scheme
and the Seed Capital Scheme, be amended in the manner and to the extent specified in the
Act giving effect to this Resolution.

  THAT section 486C of the Taxes Consolidation Act 1997 (No. 39 of 1997), which provides
for relief from tax for certain start-up companies, be amended in the manner and to the
extent specified in the Act giving effect to this Resolution.
              Finance Bill 2011:         26 January 2011.         Financial Resolutions

[Deputy Brian Lenihan.]

  THAT the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended in the manner and
to the extent specified in the Act giving rise to this Resolution to provide for the amendment
of the tax treatment of interest on loans applied for certain purposes.

   THAT sections 243 and 247 of the Taxes Consolidation Act 1997 (No. 39 of 1997), which
provide for allowances of charges on income and relief to companies on loans applied in
acquiring interest in other companies, be amended in the manner and to the extent specified
in the Act giving rise to this Resolution.

  THAT section 221 of the Taxes Consolidation Act 1997 (No. 39 of 1997), which provides
an exemption from corporation tax for certain payments for farm relief services made by the
Minister for Agriculture, Fisheries and Food to National Co-operative Farm Relief Services
Limited be amended in the manner and to the extent specified in the Act giving effect to
this Resolution.

  THAT section 110 of the Taxes Consolidation Act 1997 (No. 39 of 1997), which provides
rules for the taxation of securitisation transactions, be amended in the manner and to the
extent specified in the Act giving effect to this Resolution.

   THAT section 766 of the Taxes Consolidation Act 1997 (No. 39 of 1997), which provides
for a tax credit on certain expenditure on research and development activities, be amended
in the manner and to the extent specified in the Act giving effect to this Resolution.

  THAT Chapter 3 of Part 3 of the Finance Act 2010 (No. 5 of 2010), which provides for
solid fuel carbon tax, be amended, in respect of the liability to pay that tax, in the manner
and to the extent specified in the Act giving effect to this Resolution.

  THAT provision be made in the Act giving effect to this Resolution for—

    (a) imposing a duty of excise, to be known as remote bookmaker’s licence duty, on the
  granting and renewal of remote bookmakers’ licences,

    (b) imposing a duty of excise, to be known as remote betting intermediary’s licence duty,
  on the granting and renewal of remote betting intermediaries’ licences,

    (c) applying betting duty under section 67 of the Finance Act 2002 (No. 5 of 2002) to
  bets made, laid or otherwise entered into with persons in the State by remote bookmakers,

    (d) imposing a duty of excise, to be known as betting intermediary duty, on betting
  intermediaries’ commission charges, in accordance with the provisions of that Act.

   THAT section 132 of the Finance Act 1992 (No. 9 of 1992), which provides for the charging
of excise duty (vehicle registration tax), be amended in the manner and to the extent specified
in the Act giving effect to this Resolution.

  THAT section 135C of the Finance Act 1992 (No. 9 of 1992), which provides for the
remission or repayment in respect of vehicle registration tax on the registration of certain
hybrid electric vehicles, certain flexible fuel vehicles, certain plug-in hybrid electric vehicles,
certain electric vehicles or certain electric motorcycles, be amended in the manner and to
the extent specified in the Act giving effect to this Resolution.

  THAT section 125A of the Stamp Duties Consolidation Act 1999 (No. 31 of 1999), which
provides for a stamp duty in the form of a levy on authorised insurers, be amended in the
manner and to the extent specified in the Act giving effect to this Resolution.
              Finance Bill 2011:       26 January 2011.         Financial Resolutions

  THAT section 106B of the Stamp Duties Consolidation Act 1999 (No. 31 of 1999) which
exempts from stamp duty any instrument giving effect to the conveyance, transfer or lease
of a house, building or land by a housing authority, as specified in Schedule 1 to that Act, be
amended in the manner and to the extent specified in the Act giving effect to this Resolution.

  THAT, as respects a gift or an inheritance taken on or after 21 January 2011—

    (a) section 89(4) of the Capital Acquisitions Tax Consolidation Act 2003 (No. 1 of 2003),
  which provides for a clawback of agricultural relief,

    (b) section 102A(2) of the Capital Acquisitions Tax Consolidation Act 2003, which pro-
  vides for a clawback of agricultural and business relief granted in respect of the develop-
  ment value of development land, and

     (c) section 104(3) of the Capital Acquisitions Tax Consolidation Act 2003, which pro-
  vides for a clawback where a credit has been granted for any capital gains tax paid against
  gift tax or inheritance tax chargeable, be amended in the manner and to the extent specified
  in the Act giving effect to this Resolution.

  THAT, as respects a gift or an inheritance taken on or after 21 January 2011, section
76(1)(b) of the Capital Acquisitions Tax Consolidation Act 2003 (No. 1 of 2003), which
relates to the threshold that applies to a gift or an inheritance which is taken for public or
charitable purposes, and the definition of “threshold amount” in paragraph 1 of Part 1 of
Schedule 2 to that Act, which relates to the indexation of the capital acquisitions tax thres-
holds, be amended in the manner and to the extent specified in the Act giving effect to
this Resolution.

  THAT, as respects returns delivered and tax paid on or after 21 January 2011 -

    (a) section 46(2A) of the Capital Acquisitions Tax Consolidation Act 2003 (No. 1 of
  2003), which relates to the delivery of returns and the payment of tax,

    (b) section 51(2)(a) of the Capital Acquisitions Tax Consolidation Act 2003, which
  relates to charging interest on tax which is overdue, and

    (c) section 53A(1) of the Capital Acquisitions Tax Consolidation Act 2003, which relates
  to the surcharge for late returns, be amended in the manner and to the extent specified in
  the Act giving effect to this Resolution.

  THAT section 76 of the Taxes Consolidation Act 1997 (No. 39 of 1997), which provides
for the application of income tax principles to the computation of income for corporation
tax purposes, be amended in the manner and to the extent specified in the Act giving effect
to this Resolution.

  THAT sections 118, 120A and 122 of the Taxes Consolidation Act 1997 (No. 39 of 1997),
which deal with the taxation of benefit-in-kind, be amended in the manner and to the extent
specified in the Act giving effect to this Resolution.

  THAT section 16 of the Value-Added Tax Consolidation Act 2010 (No. 31 of 2010), which
relates to persons accountable for value-added tax, be amended in the manner and to the
extent specified in the Act giving effect to this Resolution, to provide that a taxable person
carrying on a business in the State, who receives a supply of scrap metal in the course of that
business from another taxable person carrying on a business in the State, be made account-
able and liable to pay the tax chargeable on such supply.
               Finance Bill 2011:             26 January 2011.            Financial Resolutions

Question put:

                                    The Dáil divided: Tá, 81; Níl, 76.

   Ahern, Bertie.                                                Kenneally, Brendan.
   Ahern, Michael.                                               Kennedy, Michael.
   Ahern, Noel.                                                  Killeen, Tony.
   Andrews, Barry.                                               Kitt, Michael P.
   Andrews, Chris.                                               Kitt, Tom.
   Ardagh, Seán.                                                 Lenihan, Brian.
   Aylward, Bobby.                                               Lenihan, Conor.
   Behan, Joe.                                                   Lowry, Michael.
   Blaney, Niall.                                                McEllistrim, Thomas.
   Brady, Áine.                                                  McGrath, Michael.
   Brady, Cyprian.                                               McGuinness, John.
   Brady, Johnny.                                                Mansergh, Martin.
   Browne, John.                                                 Martin, Micheál.
   Byrne, Thomas.                                                Moloney, John.
   Calleary, Dara.                                               Moynihan, Michael.
   Carey, Pat.                                                   Mulcahy, Michael.
   Collins, Niall.                                               Nolan, M.J..
   Conlon, Margaret.                                             Ó Cuív, Éamon.
   Connick, Seán.                                                Ó Fearghaíl, Seán.
   Coughlan, Mary.                                               O’Brien, Darragh.
   Cowen, Brian.                                                 O’Connor, Charlie.
   Cregan, John.                                                 O’Dea, Willie.
   Cuffe, Ciarán.                                                O’Donoghue, John.
   Curran, John.                                                 O’Flynn, Noel.
   Dempsey, Noel.                                                O’Hanlon, Rory.
   Devins, Jimmy.                                                O’Keeffe, Batt.
   Dooley, Timmy.                                                O’Keeffe, Edward.
   Fahey, Frank.                                                 O’Rourke, Mary.
   Finneran, Michael.                                            O’Sullivan, Christy.
   Fitzpatrick, Michael.                                         Power, Peter.
   Fleming, Seán.                                                Power, Seán.
   Flynn, Beverley.                                              Roche, Dick.
   Gogarty, Paul.                                                Ryan, Eamon.
   Gormley, John.                                                Sargent, Trevor.
   Hanafin, Mary.                                                Scanlon, Eamon.
   Harney, Mary.                                                 Smith, Brendan.
   Haughey, Seán.                                                Treacy, Noel.
   Healy-Rae, Jackie.                                            Wallace, Mary.
   Hoctor, Máire.                                                White, Mary Alexandra.
   Kelleher, Billy.                                              Woods, Michael.
   Kelly, Peter.


   Allen, Bernard.                                               Deasy, John.
   Bannon, James.                                                Deenihan, Jimmy.
   Barrett, Seán.                                                Doherty, Pearse.
   Breen, Pat.                                                   Doyle, Andrew.
   Broughan, Thomas P.                                           Durkan, Bernard J.
   Bruton, Richard.                                              English, Damien.
   Burke, Ulick.                                                 Enright, Olwyn.
   Burton, Joan.                                                 Feighan, Frank.
   Byrne, Catherine.                                             Ferris, Martin.
   Carey, Joe.                                                   Flanagan, Charles.
   Clune, Deirdre.                                               Flanagan, Terence.
   Connaughton, Paul.                                            Gilmore, Eamon.
   Coonan, Noel J..                                              Grealish, Noel.
   Costello, Joe.                                                Hayes, Brian.
   Coveney, Simon.                                               Hayes, Tom.
   Crawford, Seymour.                                            Higgins, Michael D.
   Creighton, Lucinda.                                           Hogan, Phil.
   D’Arcy, Michael.                                              Kehoe, Paul.
                 Finance Bill 2011:             26 January 2011.              Committee Stage


      Kenny, Enda.                                                 O’Shea, Brian.
      Lynch, Ciarán.                                               O’Sullivan, Jan.
      Lynch, Kathleen.                                             O’Sullivan, Maureen.
      McCormack, Pádraic.                                          Penrose, Willie.
      McEntee, Shane.                                              Quinn, Ruairí.
      McGinley, Dinny.                                             Rabbitte, Pat.
      McGrath, Finian.                                             Reilly, James.
                                                                   Ring, Michael.
      McHugh, Joe.
                                                                   Shatter, Alan.
      McManus, Liz.                                                Sheahan, Tom.
      Mitchell, Olivia.                                            Sheehan, P.J..
      Morgan, Arthur.                                              Sherlock, Seán.
      Naughten, Denis.                                             Shortall, Róisín.
      Neville, Dan.                                                Stagg, Emmet.
      Noonan, Michael.                                             Stanton, David.
      Ó Caoláin, Caoimhghín.                                       Timmins, Billy.
      Ó Snodaigh, Aengus.                                          Tuffy, Joanna.
      O’Donnell, Kieran.                                           Upton, Mary.
      O’Dowd, Fergus.                                              Varadkar, Leo.
      O’Keeffe, Jim.                                               Wall, Jack.
      O’Mahony, John.

Tellers: Tá, Deputies John Cregan and John Curran; Níl, Deputies Emmet Stagg and Paul

  Question declared carried.

                                      Finance Bill 2011: Committee Stage
                                              NEW SECTION
  Deputy Joan Burton: I move amendment No. 1:

    In page 7, before section 1, to insert the following new section:
                                                  “PART 1

  Cost Benefit Analysis of Tax Expenditures

      1.—The Minister shall within one month from the passing of this Act prepare and lay
    before Dáil Éireann a report on a cost-benefit analysis of tax expenditures provided for by
    this Act, setting out the costs of tax foregone, and the benefits in terms of job creation
    or otherwise.”.

The purpose of this amendment is to ask the Minister to do what he committed to do in the
debate on the Finance Bill last year and what he indicated to us would become a standard part
of the Finance Bill — that is, the presentation of a cost-benefit analysis of tax expenditures
provided for by the Act.
  Despite the suggestion, which has been strongly made by Fianna Fáil in recent times, that
tax expenditures and tax breaks for very wealthy people are in some ways being curtailed and
phased out, the reality is that while there is a promise of curtailment of some tax breaks in this
budget, the only tax expenditure which has been entirely removed is the tax relief on trade
union subscriptions. We do not have a particular difficulty with that but people who pay sub-
scriptions to professional associations, if their firms pay them, will continue to get full tax relief.
  I am concerned that we have a number of new schemes in this budget, yet have no idea what
their cost-benefit analysis is. I am disturbed that Fianna Fáil has decided to reject evidence-
based policy-making in extending a major new programme of tax breaks to different private
                Finance Bill 2011:        26 January 2011.           Committee Stage

  [Deputy Joan Burton.]
firms. We have already welcomed some of these breaks, such as those that amend investment
in research and development. However, we now have a major change to what was the business
expansion or BES scheme, which is now to be transformed into a new scheme. We were told
that in the 2006 survey of the BES scheme there was no cost-benefit analysis but a survey of
the beneficiaries of the survivors. We also got the names of the various companies. At that
point, however, the Government’s own advisers, Indecon, recommended that extensions to tax-
incentive schemes should only be considered after evaluation of the results in a formal cost-
benefit appraisal.
  The purpose of this amendment is to ensure that that analysis takes place and is published
within one month of the enactment of the Finance Bill. The new BITES scheme, which succeeds
the former BES scheme, is designed to support innovation and employment. Those are two
tax-support concepts which the Labour Party would support provided they are targeted and
costed. In addition, their timespan must be clearly planned and set out.
   We know that previous and current property-based tax breaks were a key part of the down-
fall of the Celtic tiger. The landmark Regling-Watson report on the cause of the Irish financial
crisis and banking collapse, clearly stated that the crash was home made. It also said that a
significant contributor to the crash was the extraordinary availability of tax breaks linked to
property development and construction. Despite all the rhetoric we still have tax breaks focused
on building private hospitals, even though the HSE has announced that the private hospital
initiative is at an end. We have all received a significant number of representations, both from
individuals who are using section 23 tax breaks, but more significantly from professional lobby-
ists for these breaks, including accounting and legal firms. In addition, charities have been
established for the purpose of availing of private hospital tax breaks. Essentially, however, we
have no costings. What we got from these organisations was a case as to why their commercial
activity of selling schemes, on which they charge very high fees to those investing in them,
should be continued.
   There is almost no solid information explaining who are the people who currently have and
would be affected by changes in section 23. The Minister gave us no such information. Individ-
uals who have invested in one property for a pension could be very easily dealt with, as opposed
to some of the schemes involved. Investors in these schemes got ripped off big time by some
of the firms selling such schemes because a large amount of their putative tax saving was taken
in fees they paid to professional advisers to set up and structure the financial deals. That is one
of the reasons this country’s economy, banks and construction boom crashed. If we want to
prevent that from recurring in future there is a role for targeted tax incentives which are subject
to a cost-benefit analysis. As well as having a specific timeframe, they should have a clear
consideration for employment and innovation content. The Labour Party would be happy to
support something like that, but this country simply cannot afford to extend tax breaks willy-
nilly without any idea of the cost-benefits involved.
  Last year, the Dáil voted to accept this amendment and the Minister produced an evaluation
of schemes a month afterwards. There were very few hard figures in it concerning the cost-
benefit analysis. There was just a summary of the lobbyists’ views of what the schemes would
do, together with some notes from the Revenue Commissioners and the Department of Fin-
ance. This country’s tax breaks industry expects to write the Finance Bill and to make amend-
ments to it which are favourable to the industry. Given my own background as a chartered
accountant, I understand that it is a legitimate part of the roles of accountants and lawyers to
provide taxation services but these schemes have brought the economy down. At this late stage,
we ask that they be subjected to a cost benefit analysis to be published within a month.
                Finance Bill 2011:       26 January 2011.          Committee Stage

  I wish to speak about the transfer of the business expansion scheme to the BITE scheme.
The Department of Finance and the Revenue Commissioners know that because it constitutes
a state aid, it must go to the EU for examination and evaluation. This big new scheme seems
extraordinary. It is very wide in its potential reach. While I agree with the objective of trans-
forming the business expansion scheme to concentrate on innovation and employment, I sug-
gest we should ensure it is ring-fenced to avoid a build-up of the abuses of the past, with which
we are all so familiar.
  I would say the Minister has known since early last autumn that he needed to change the
business expansion scheme. Although the scheme was responsible for a great deal of important
investment at certain stages, in its later days many clever accountants and tax lawyers were
able to convert it, like everything else, into a largely property-based scheme. Many hotels
availed of it. Such use of the scheme is among the reasons we ended up with a tragic over-
supply of hotels. Many owners of traditional family hotels, who had made a long-term business
commitment to the hotel and hospitality trade, became disadvantaged as a result and were
jumped into availing of tax breaks at the end of the property boom. Their firms have been left
with serious financial and structural difficulties.
  I wish to comment on the system of tax breaks for business that we would like to see develop.
We do not want tax breaks like those of recent years, which existed to boost the construction
industry and caused the bubble to rise to an extraordinary extent before it collapsed. Equally,
we do not want a system that serves as a corporate welfare scheme. We want a rigorous debate
on the various schemes. We want the employment, innovation and research benefits of schemes
to be clearly laid out for all to see. We want investment criteria to be in place. We want them
to be targeted at investment, employment, research and innovation. That has to happen. We
will need to do our business in such a way, which is implied in the memorandum of understand-
ing with the IMF and the EU, in the future. I recommend the Labour Party amendment to
the House.

  Deputy Seán Barrett: On a point of order, am I correct in my understanding that sections of
this Bill have been grouped?

  Acting Chairman (Deputy Charlie O’Connor): Yes.

  Deputy Seán Barrett: What is the first grouping?

  Acting Chairman (Deputy Charlie O’Connor): In accordance with an order of yesterday, if
a division is demanded on an amendment in this group, that will be put at 1.30 p.m. There will
be opportunities to vote on the other sections.

  Deputy Seán Barrett: What are we debating now?

  Acting Chairman (Deputy Charlie O’Connor): We are debating amendment No. 1, which
relates to section 1.

  Deputy Seán Barrett: No. What sections are we debating in this group?

  Acting Chairman (Deputy Charlie O’Connor): Sections 1 to 38, inclusive.

  Deputy Seán Barrett: It is a disgrace that some important sections in this group will not be
debated. We will be lucky to get through two or three amendments. There will be no debate
on the proposed changes to pension arrangements, for example. I am keen to draw the attention
of the House to this unsatisfactory situation.
                Finance Bill 2011:       26 January 2011.          Committee Stage

  Acting Chairman (Deputy Charlie O’Connor): The Deputy will understand that the Chair is
obliged to implement the order of the day, as agreed yesterday. I remind the House that the
composite questions on each group will be put at 1.30 p.m., 3 p.m., 4.30 p.m., 6 p.m. and 7.30
p.m. today.

  Deputy Michael Noonan: On a point of order, we are debating sections 1 to 38, inclusive.
Deputy Barrett has a particular interest in the sections that relate to the reform of the private
pensions regime. Is it in order for him to speak at this stage on one of the sections in this
group, rather than confining his remarks to the amendment before the House?

  Acting Chairman (Deputy Charlie O’Connor): Yes, I think so.

  Deputy Seán Barrett: As long as it is clear.

 Deputy Martin Mansergh: Would it be better for me to reply to the points made by Deputy
Burton before we move on to another subject?

  Deputy Seán Barrett: I have no problem with that

  Deputy Michael Noonan: I would like to comment on the same matter.

   Deputy Joan Burton: I am happy to facilitate the Deputies. It is important that we have a
brief debate on another one of my amendments, which relates to bank bonuses. I would also
like us to discuss this section as a whole because I have a number of questions on the Minister’s
amendment dealing with the universal social charge.

  Acting Chairman (Deputy Charlie O’Connor): I understand Deputies Noonan and Costello
are offering to speak on Deputy Burton’s amendment No. 1. I propose to take those contri-
butions before asking the Minister of State to respond to all three Deputies. Is that agreed?
Agreed. The Chair is seeking to facilitate Members as much as possible.

  Deputy Seán Barrett: I thank the Chair.

  Deputy Michael Noonan: I want to make a few remarks on Deputy Burton’s amendment.
The introduction of a tax break as a lever should be available to the makers of public policy.
When people get a tax break if they behave in a certain way, they are likely to behave in that
way. When that course of action is more expensive, they are likely not to pursue it. The first
time I heard about the use of tax breaks was in the context of efforts to encourage the redevel-
opment of port areas of certain American cities. Derelict parts of the port area of New York,
for example, were revitalised. A beautiful urban development was facilitated principally
through tax breaks. The redevelopment of old areas of infrastructure, such as railway yards,
which had become obsolete was driven in that way. I have seen the huge tax-driven devel-
opments that revitalised the city of St. Louis. That was imitated here.
  When I was in Government in the 1980s, the late John Boland introduced a raft of tax
incentives. He was the first Minister to legislate for urban development in Ireland to be driven
by tax breaks. He designated 39 acres of dereliction in my home city of Limerick. It was
revitalised and rebuilt over a period of seven or eight years. Such an approach works well.
  A social response is sometimes required. I recall a time when there was a huge shortage of
nursing homes and nursing home beds in this country. After discussing the issue with us, the
then Minister for Finance, Charlie McCreevy, introduced a tax break to encourage the supply
of nursing homes. The investors came in very quickly and, for a short period, we probably
reached a point at which there was a surplus of availability in nursing homes. That was driven
                Finance Bill 2011:        26 January 2011.          Committee Stage

by tax breaks. We should not dump on the concept of tax breaks as a lever of public policy
because they can encourage investors to meet economic and social needs. People respond to
the profit incentive.
   I agree with Deputy Burton that tax breaks were carried too far in Ireland. The stimulation
of building and development through tax breaks, regardless of the end product, became one of
the objectives of the tax break industry. Problems arose when it was decided to allow people
              to write off the rent of whatever they built against their rental income elsewhere
1 o’clock     in the State. That was fatal. There was no real analysis of whether the existence
              of 25 houses on the banks of the River Shannon in County Leitrim was of econ-
omic benefit to the local area. How could it have had any viability in itself, if its purpose was
to ensure one did not pay tax on property one rented in Dublin? That kind of cross-matching
destroyed the situation.
  I always thought it extraordinary that tax breaks were treated as farmers used to treat milk
quota, in that it could be bought and sold separately from the farm. It was a tradeable asset. I
could never understand how tax credits became a tradeable asset. In one case I know of, a
building was built with capital allowances and sold to an investor who took in the rent, while
the tax credits arising from its building were sold as a tradeable commodity——

  Deputy Joan Burton: Yes. Was that in Limerick?

  Deputy Michael Noonan: ——to somebody who had never had anything to do with building
or development. It was a deal purely to reduce the person’s income tax liability. It was the
extension of the tax break industry that destroyed it. This has resulted in a situation in which
the man and woman on the street are saying that tax breaks are a bad idea and they should all
be abolished. It was in view of this that the Minister, when introducing the budget, said that
all section 23 allowances and other capital allowances would be abolished immediately. I always
thought that had a doubtful legal basis, because people who had entered into arrangements
when investing in property were under contract, and the concept of legitimate expectation
applied. There was a legitimate expectation that the arrangement would run until the end of
the period for which the contract was signed.
   I always thought — and I suggested at the time — that it would be a better arrangement if
the Government had, because of the financial crisis and in the national interest, suspended the
benefits for four years, so that in 2015, when times were better and the Exchequer could afford
it, investors could again receive the benefit of the tax break. I think this would pass legal
muster, and many investors would not have objected to it because rents are currently so low
that they are not availing of the full tax credit anyway. Another major issue is that people have
made arrangements with their banks for schedules of repayment, and the removal of the tax
break would take the floor out from under these schedules. A deferral would not have done
that, and it would have allowed investors to renegotiate deals with the banks.
  Deputies Costello and Barrett are anxious to speak, so I will not continue. However, I ask
the Minister to consider this again, as he has said he will do, and take these views into account.

  Deputy Joe Costello: I am pleased to have an opportunity of speaking on this series of
amendments. It is quite a large group, covering amendments Nos. 1 to 38, but I will focus only
on one or two points.
  Deputy Burton referred to the tax break industry, and that is effectively what it is. At the
IBEC annual forum in Tralee last year, it was stated that approximately €11 billion worth of
tax reliefs are given to the private sector annually. That is an incredible amount. If we take out
of this mortgage relief and so on, we are left with the three major areas of property, landlord
                Finance Bill 2011:        26 January 2011.           Committee Stage

  [Deputy Joe Costello.]
and pension tax relief. All three of these are effectively out of control. Some people have
collected enormous pension pots. We have heard that Mr. Fingleton, for example, has a pension
pot of €28 million and that he may have organised tax relief on all of it. It is incredible that
the man was getting all his millions virtually scot free. It is unacceptable that this has not been
regulated until now.
   It boggles the imagination to read, in the Minister’s introductory speech on Second Stage,
his comments on property-related tax expenditure. What was announced in the budget was
that tax relief on such expenditure was to be abolished or substantially cut. Guess what the
Government has decided now, in the intervening six weeks? The Minister stated that the pro-
visions “will now be subject to a commencement provision which may only take effect in the
next tax year following the preparation and publication of an economic impact assessment on
the proposed changes”. Imagine that. One would have thought that before putting it into the
budget the Minister would have carried out an assessment of the proposal, which would be
properly researched and published.
  Having introduced the provision in the budget, the Minister now says he must do all the
ground work. Where are we going? What he said was code for saying that the property tax
relief industry got to him, and he has taken the provision out of the Finance Bill. What we
thought was a substantial measure in December has now disappeared. What will happen now?
The Minister, God help us, will not even be here another month, but he will do some research
and produce a paper which will appear some time in the future. What is being proposed is
  This is the kind of thing that gives the Finance Bill a bad name — when vested interests get
to the Minister in the period between the Budget Statement and the introduction of the Bill.
We should be considering all property-related tax exemptions. I am not saying they should be
abandoned, although by and large it is time to move away from them. Section 22 and section
23 property tax reliefs were part and parcel of the collapse of our economy and one of the
reasons for the state the country is in. We should seriously consider phasing out such reliefs.
A total of €11 billion is handed over by the taxpayer to various interests, largely in the form
of pension-, landlord- and property-related incentives. It is not good enough. Until this is dealt
with transparently, we are going nowhere. The proposed change by the Minister is a bad one,
and I welcome the proposal by Deputy Burton to ensure we assess all such measures in the
future so that if they do not provide decent value we can get rid of them.
   There is a valuable proposal in the Finance Bill to introduce tax reliefs for improving energy
efficiency in residential premises. That is very welcome. However, the total amount of relief
available in a year for this is €30 million, which compares badly with the €11 billion in existing
tax reliefs of various types. For a tax relief that will achieve something desirable and get some
economic activity going in the building industry we are providing a measly €30 million, while
we refrain from abolishing the reliefs that are going into the pockets of developers to make
obscene profits. I find the Finance Bill to be obscene in this regard.
  One issue that should be dealt with by the Bill is that of self-employed people who receive
nothing if they lose their jobs. They are not entitled to normal social welfare payments and
they have no pensions. For example, as spokesperson on transport, I am dealing with this
problem as it pertains to taxi drivers. There are 27,000 taxi drivers in the State and, in the old
days, they had the nest egg of the value of the taxi plate. That has disappeared. When they
cease to drive their taxis, they will not have a penny for their retirement. There is no lump
sum, there is nothing for them except what they might get from social welfare, which is difficult
enough at present.
                Finance Bill 2011:        26 January 2011.           Committee Stage

  Taxi drivers are not the only ones facing this situation, even in the transport area. Self-
employed hauliers also have no pensions. Is this not something that should be considered
seriously by the Minister? Surely we should be bringing self-employed people into some kind
of pension bond which would provide an incentive for them to contribute. We could use the
National Pensions Reserve Fund as a mechanism to encourage something of this nature, rather
than leaving such people high and dry.
   Finally, I will say a word about bonuses. I was speaking, I believe, on the last day of the Dáil
in December and the Minister for Finance was on the other side. The Minister for Finance said
that he was going to introduce a 90% tax on all bonuses being received by the financial insti-
tutions that were subject to the banking guarantee. Those are the institutions, effectively, the
State has bailed out and some of them are now nationalised. He further said, because we were
discussing the Credit Institutions (Stabilisation) Bill, that he could not introduce it in that
legislation, although that seemed the most relevant Bill to provide for it, as the notice was too
short, but by God he was going to have his 90% tax on those bonuses in the coming year in
the Finance Bill. Lo and behold, it has disappeared entirely, just like the snow we had in
December. It no longer exists.
  Deputies will recall we were discussing the €40 million in bonuses for AIB managers in
December, that had just been announced. I understand that is due to be paid out next month.
The Minister had his opportunity to act on that but he has not. Neither has he acted as regards
any future bonuses. Unless the Minister comes clean and says these areas, which have the
country driven mad, are rooted out then this Government and this legislation that have no
  Serious issues arise in sections 1 to 38, inclusive, that need to be addressed and which should
be amended in the opposite direction to that being proposed by the Minister. The Labour Party
believes strongly that the areas of property tax breaks and bonuses, which have corrupted the
banking sector, should be addressed in this Bill because they are live, demanding issues and
have brought the country to its knees.

  Acting Chairman (Deputy Charlie O’Connor): I remind the House that section amendments,
by order of yesterday, must be submitted to the House before 1.30 p.m. I am calling on Deputy
Seán Barrett, to be followed by Deputies Noel Ahern and Pearse Doherty.

  Deputy Seán Barrett: Following on from what Deputy Costello had to say as regards people
having some type of pension, I believe a system should be introduced whereby everybody
contributes towards an old age pension. It is the easy to arrange. Again, we have been fiddling
around with private pension funds to satisfy the failure to deal with this issue. I shall expand
on that in a moment.
   Everybody should have to make a PRSI payment, including the self-employed. An unem-
ployed person should get credits, in the event, until he or she can get employment to retain his
or her benefit. It is crazy that in the case of those who do not contribute the only thing they
can apply for is a non-contributary old age pension. As a result of this stupid changes are being
introduced here to the present approved retirement fund, ARF, system — where people cannot
avail of an ARF unless they have an income of €18,000. They then have to put a lump sum
into an approved minimum retirement fund, ARMF, and leave it there until they are 75. This
is a crazy way of interfering with people’s personal rights. None of it was mentioned in the
Budget Statement. It came out of the blue and was leaked to some people in the industry.
  I received this Bill on Monday, today is Wednesday and we are being asked to make major
changes in respect of an ARF scheme within two days. There is no reason why this section
should not be taken out and re-introduced in the finance Bill (No. 2), which I understand is
                Finance Bill 2011:         26 January 2011.           Committee Stage

  [Deputy Seán Barrett.]
under preparation within the Department of Finance. There is no loss of revenue involved,
other than what was announced on budget day, so it is simple to do. I appeal to the Minister
to stop messing around with these.
   The then Minister for Finance, Deputy Charlie McCreevy introduced this in 1999, because
the only option somebody had on retirement — given the amount of money in the fund — was
either to take the benefit, if he or she was in a scheme or, if self-employed, to purchase an
annuity. Annuities, by and large, die with the person, however, which means that the State gets
less income tax as a result of somebody dying after the guaranteed period of five years. The
funds then go back to the insurance company and no tax is paid on them. It was discovered in
1999 when this was introduced that the annuity rates were based on a male living until 81,
which was totally out of order. It was a rip-off. For the first time we loosened this up and
people did not like it, particularly those in the annuity market, because they were losing a great
deal of revenue.
  The introduction of the ARF scheme meant that the State got tax on every penny in the
fund, irrespective of when a person died, because the fund would pass into his or her estate
and tax would be collected. From the State’s viewpoint it is far better to have people in an
ARF, therefore, than in an annuity, yet the Government is now introducing changes that push
people out of ARFs, and making them less attractive. Who wants to leave money in a fund
until he or she is 75? Either one has a State pension or one does not.
  For those who are not drawing down, the amount that they must take is increased from 3%
to 5%. What is the reason for that? Very little extra tax will be collected but for those on small
pensions the funds will run out quicker than normal. The whole idea of the ARF system was
to make it flexible for people because, for example, people who retire sometimes might have
children in full-time education or children getting married and therefore need more money in
the early years of retirement as against what is required in the latter years. This gave flexibility,
so that somebody could take more in the first couple of years than in the last couple of years
of retirement. That flexibility is not available in annuities. I do not understand why these
changes are being rushed in when there is no need for them, with the effect of upsetting this
whole market.
  On the question of pension funds, it is far more important to encourage people to save. We
should be trying to make certain, as far as possible, within the restrictions being imposed by
Ireland’s membership of the European Union, to make it attractive for those funds to be
invested in this country, and not outside. To do this a small levy should be imposed on such
funds on an annual basis. Fine Gael, in its budget submission, recommended that 0.5% of a
fund should be taken by the State. These are changes that could be made, while at the same
time protecting the whole pensions industry.
   In case anybody believes I have a vested interest, I was an insurance broker, but am no
longer involved in that area although I happen to have a knowledge of it. What is being
displayed here shows that those who are imposing these changes do not have a clue what they
are doing. I ask that members of the pensions industry be into a committee of the Oireachtas
where we can debate all these issues. It is for these reasons I am upset this will not get proper
attention during our consideration of this Bill. I appeal to the Minister to remove this measure
from the Bill and leave it until the finance (No. 2) Bill.
   A large volume of money could be used for investment to create jobs. The Minister can tax
it but he should not start fiddling with what people can put into their pension fund. In any
case, they will pay tax when money is coming out. The idea of pensions is that one receives tax
relief when putting money in and one pays tax when it is taken out. The only thing the State
                Finance Bill 2011:       26 January 2011.          Committee Stage

must worry about is the amount of money that can be taken in a lump sum. This section
contains that point. I do not have great difficulty with it. I have a slight difficulty with the
amounts chosen because there can be a conflict between a pension fund that is part of a pension
scheme where the employee can take 1.5 times the final salary and how this compares with the
lump sum under an approved retirement fund.
  The Department of Social Protection was charging PRSI on payments from approved retire-
ment funds and insists these are investment funds. That is incorrect; they are the same as an
annuity and one should not pay PRSI on them. Those who are retired should not pay PRSI.
The Department has now come round to the idea that one should not pay PRSI beyond the
age of 66. There is no reason why they were charging PRSI because no benefit is given to the
person paying PRSI.
  As a result of changes in the budget, those receiving the approved retirement funds are being
taxed at the January 2011 rates and are also being charged the universal social charge when
the payment is from the 2010 fund. I ask the Minister of State to contact his officials to find
out why one can tax someone from payments in 2010 at rates included in the Finance Bill 2011.
Insurance companies tell me they are obliged to do so by the Revenue Commissioners. I fail
to understand why we should have to pay tax at the new rate when the tax did not apply to
the moneys earned in the previous year. This should be checked out. I appeal to the Minister
of State to leave this section until the finance (No. 2) Bill.

  Deputy Noel Ahern: I was going to comment on amendment No. 1 but there is nothing wrong
with it and perhaps I should not interfere when there is an obvious disagreement between the
Labour Party and Fine Gael. I am on the side of Deputy Noonan. The report of Regling and
Watson is being misquoted by Deputy Burton. It was made clear by Mr. Regling that every
country in the world, and certainly in the EU, has tax breaks and arrangements such as this.
The point concerns the extent and the level——

  Deputy Joan Burton: On a point of order——

  Deputy Noel Ahern: I am being brief and Deputy Burton spoke at some length. The report
by Mr. Regling and Mr. Watson concerns the extent, duration and level of some of the property
tax breaks. I agree with Deputy Noonan that they are an important stimulus tool for a Govern-
ment. Deputy Costello made the same point. The Minister of State has more or less agreed
with the amendment by deferring the changes to section 23 until after the assessment. It was
always the intention to carry out an assessment during the year. He has deferred the implemen-
tation until the assessment is done.
  The Minister announced changes to the universal social charge. After the budget, an issue
was highlighted concerning the theoretical self-employed person on €300,000. This person
might have benefited from the budget. The change recommended by the Minister puts an extra
charge on people over €100,000 whereas the original anomaly concerned those earning over
€300,000. Self-employed people earning between €100,000 and €150,000 feel the change has
overcompensated. In his closing contribution on Second Stage, the Minister for Finance
referred to a document showing the different levels. I would appreciate a copy of such a docu-
ment. The suggestion is that in regard to company directors or employees, the self-employed
person on a salary of over €100,000 has been jumped on. A correction was needed for those
earning €300,000 but the compensation has been overdone.

  Acting Chairman (Deputy Charlie O’Connor): I call Deputy Pearse Doherty.

                Finance Bill 2011:        26 January 2011.          Committee Stage

  Deputy Joan Burton: On a point of order, an amendment of mine has been accepted by the
Ceann Comhairle in respect of the publication of bankers’ bonuses. My other amendments were
not accepted and I ask Deputy Doherty to allow me a moment to point out that amendment No.
4 reads:

    In page 7, before section 1, to insert the following new section:
                                            “PART 1
                            PUBLICATION OF CERTAIN BONUSES

    1.—Each credit institution that is participating in the eligible liabilities guarantee scheme
  shall be required, within 30 days of the passing of this Act, to submit to Dáil Éireann details
  of the names of all of its officers, employees or contractors to whom bonuses have been paid
  between 30 September 2008 and the date of passing of this Act, and the amount of the
  bonuses in each case.”.

  Deputy Pearse Doherty: I refer to the amendments in my name that have not been ruled out
of order. This is an act of political codology. A number of speakers referred to the truncation of
this Bill and the inadequate time allocated to it. In reality, the party finance spokespersons
have facilitated this Bill in truncated form. None of the arguments I have heard were raised at
the meeting with the Minister for Finance.
  We must be honest. It is extremely unlikely any of the amendments tabled will be accepted.
We are trying to make our position again and again to the Minister and pointing out that when
this blows up in the Government’s face, the record will show that we believed this to be a
damaging Finance Bill for the people of the country. It will not get us out of the economic
difficulties we are in.
   Amendment No. 4 deals with the bankers’ bonuses and it is important that we deal with it.
When the budget resolutions were passed in December 2010, what priority did the Minister for
Finance give to his officials? Did he tell them that bankers’ bonuses were an issue? I have
already pledged to introduce a scheme to tax bankers’ bonuses at 90%. Did the Minister tell
his officials to prioritise bankers’ bonuses in view of the fact that a couple of months remained
to get the Bill through? Did he tell them to prioritise the universal social charge, which takes
people earning as little as €80 into the tax net?
  I listened to members of Fine Gael say yesterday that they would accept the universal social
charge if the threshold was increased by €1,000, which would mean people earning less than
€100 would come under the application of the universal social charge.
  The first amendment deals with the economic impact assessment——

  An Ceann Comhairle: I advise the Deputy that I am obliged to put a question to the House
at 1.30 p.m.

  Deputy Pearse Doherty: I will conclude on this point. The first amendment deals with the
economic impact of provisions of this Bill and how they will impact on the job creation. We
have read in the newspapers of massive job losses in the retail sector. We know that they are
happening already because the Minister has reduced the spending power of every citizen. I
refer to the people who spend all the money they have day in, day out. The Minister has taken
primarily €2 billion out of their pockets through a range of measures, brought them deeper
into the tax net through the tax bands, made changes to tax reliefs, introduced the universal
social charge and abolished reliefs such as the reliefs on university charges. These measures
will blow up in the Government’s face when the time comes.
                Finance Bill 2011:             26 January 2011.               Committee Stage

  An Ceann Comhairle: I ask the Deputy to co-operate with the Chair.

  Deputy Pearse Doherty: It is a disgrace and I am sure the Minister of State will acknowledge
that. These are such important issues——

  An Ceann Comhairle: Please, Deputy.

 Deputy Pearse Doherty: ——and an opportunity is not even being given to discuss them.
We will have a finance (No. 2) Bill——

  An Ceann Comhairle: We are obliged to implement the order of the House and I am obliged
to do so.

  Deputy Pearse Doherty: ——and more than likely we will have to have a finance (No. 3)
Bill to deal with this mess.

  An Ceann Comhairle: I call Deputy Barrett and ask him to be brief.

  Deputy Seán Barrett: I just want to formally move the amendments in Deputy Noonan’s

  An Ceann Comhairle: As it is now 1.30 p.m. I am required to put the following question in
accordance with an order of the Dail of 25 January: “That the amendments set down by the
Minister for Finance to sections 1 to 38 and not disposed of are hereby made to the Bill and
in respect of each of the said sections undisposed of, that that section or, as appropriate, the
section, as amended, is hereby agreed to.” Is that agreed.

  Deputies: It is not agreed.

  Question put:

                                     The Dáil divided: Tá, 80; Níl, 78.

      Ahern, Bertie.                                              Dooley, Timmy.
      Ahern, Michael.                                             Fahey, Frank.
      Ahern, Noel.                                                Finneran, Michael.
      Andrews, Barry.                                             Fitzpatrick, Michael.
      Andrews, Chris.                                             Fleming, Seán.
      Ardagh, Seán.                                               Flynn, Beverley.
      Aylward, Bobby.                                             Gogarty, Paul.
      Behan, Joe.                                                 Gormley, John.
      Blaney, Niall.                                              Hanafin, Mary.
      Brady, Áine.                                                Harney, Mary.
      Brady, Cyprian.                                             Haughey, Seán.
      Brady, Johnny.                                              Healy-Rae, Jackie.
      Browne, John.                                               Hoctor, Máire.
      Byrne, Thomas.                                              Kelleher, Billy.
      Calleary, Dara.                                             Kelly, Peter.
      Carey, Pat.                                                 Kenneally, Brendan.
      Collins, Niall.                                             Kennedy, Michael.
      Conlon, Margaret.                                           Killeen, Tony.
      Connick, Seán.                                              Kitt, Michael P.
      Coughlan, Mary.                                             Kitt, Tom.
      Cowen, Brian.                                               Lenihan, Brian.
      Cregan, John.                                               Lenihan, Conor.
      Cuffe, Ciarán.                                              Lowry, Michael.
      Curran, John.                                               McEllistrim, Thomas.
      Dempsey, Noel.                                              McGrath, Michael.
      Devins, Jimmy.                                              McGuinness, John.
               Finance Bill 2011:    26 January 2011.              Committee Stage


     Mansergh, Martin.                                  O’Keeffe, Edward.
     Martin, Micheál.                                   O’Rourke, Mary.
     Moloney, John.                                     O’Sullivan, Christy.
     Moynihan, Michael.                                 Power, Peter.
     Mulcahy, Michael.                                  Power, Seán.
                                                        Roche, Dick.
     Nolan, M. J.
                                                        Ryan, Eamon.
     Ó Cuív, Éamon.                                     Sargent, Trevor.
     Ó Fearghaíl, Seán.                                 Scanlon, Eamon.
     O’Brien, Darragh.                                  Smith, Brendan.
     O’Connor, Charlie.                                 Treacy, Noel.
     O’Donoghue, John.                                  Wallace, Mary.
     O’Flynn, Noel.                                     White, Mary Alexandra.
     O’Hanlon, Rory.                                    Woods, Michael.
     O’Keeffe, Batt.


     Allen, Bernard.                                    Lynch, Kathleen.
     Bannon, James.                                     McCormack, Pádraic.
     Barrett, Seán.                                     McEntee, Shane.
     Breen, Pat.                                        McGinley, Dinny.
     Broughan, Thomas P.                                McGrath, Finian.
     Bruton, Richard.                                   McGrath, Mattie.
     Burke, Ulick.                                      McManus, Liz.
     Burton, Joan.                                      Mitchell, Olivia.
     Byrne, Catherine.                                  Morgan, Arthur.
     Carey, Joe.                                        Naughten, Denis.
     Clune, Deirdre.                                    Neville, Dan.
     Connaughton, Paul.                                 Noonan, Michael.
     Coonan, Noel J.                                    Ó Caoláin, Caoimhghín.
     Costello, Joe.                                     Ó Snodaigh, Aengus.
     Coveney, Simon.                                    O’Donnell, Kieran.
                                                        O’Dowd, Fergus.
     Crawford, Seymour.
                                                        O’Keeffe, Jim.
     Creighton, Lucinda.
                                                        O’Mahony, John.
     D’Arcy, Michael.                                   O’Shea, Brian.
     Deasy, John.                                       O’Sullivan, Jan.
     Deenihan, Jimmy.                                   O’Sullivan, Maureen.
     Doherty, Pearse.                                   Penrose, Willie.
     Doyle, Andrew.                                     Perry, John.
     Durkan, Bernard J.                                 Quinn, Ruairí.
     English, Damien.                                   Rabbitte, Pat.
     Enright, Olwyn.                                    Reilly, James.
     Feighan, Frank.                                    Ring, Michael.
     Ferris, Martin.                                    Shatter, Alan.
     Flanagan, Charles.                                 Sheahan, Tom.
     Flanagan, Terence.                                 Sheehan, P. J.
     Gilmore, Eamon.                                    Sherlock, Seán.
     Grealish, Noel.                                    Shortall, Róisín.
     Hayes, Brian.                                      Stagg, Emmet.
     Hayes, Tom.                                        Stanton, David.
     Higgins, Michael D.                                Timmins, Billy.
     Hogan, Phil.                                       Tuffy, Joanna.
     Howlin, Brendan.                                   Upton, Mary.
     Kehoe, Paul.                                       Varadkar, Leo.
     Kenny, Enda.                                       Wall, Jack.
     Lynch, Ciarán.

Tellers: Tá, Deputies John Cregan and John Curran; Níl, Deputies Emmet Stagg and Paul

 Question declared carried.

 An Ceann Comhairle: We will now move to Part 2, sections 39 to 51.
                Finance Bill 2011:       26 January 2011.          Committee Stage

  Deputy Pearse Doherty: On a point of order, we have just voted on 88 amendments out of
101 in the Finance Bill. We were given one hour and 20 minutes in which to debate them. My
point concerns the ordering of business in the House. It is clear that the rush in dealing with
the amendments was to facilitate the Fianna Fáil leadership debate and election at 2 p.m.
Fianna Fáil has put its interests and the election of its leader above democratic debate in this
House. It is appalling. There are only 13 amendments remaining and six hours in which to deal
with them.

  An Ceann Comhairle: We will now deal with sections 39 to 51.

  Deputy Martin Mansergh: For the information of the House, section 18, which has been
agreed to, will be amended on Report Stage.

  Deputy Joan Burton: On a point of order, the Minister of State undertook to explain to us
what the amendments would be. Will he at least outline, for the information of the House, the
heading of the section to which he is referring? Does it pertain to bankers’ bonuses being taxed
at 90%, which we were promised? Will the Minister of State clarify what the amendment will
be about?

 An Ceann Comhairle: Did the Minister of State say the amendment would be introduced on
Report Stage?

  Deputy Martin Mansergh: That is correct.

  Deputy Joan Burton: Will the Minister of State clarify the heading?

  Deputy Martin Mansergh: It is “Self-assessment — due dates for preliminary tax and pay
and file”.

  Deputy Joan Burton: What has happened to the promise——

  An Ceann Comhairle: We cannot open a debate at this point.

  Deputy Joan Burton: ——that we understand the Independents extracted to have a tax of
90% on bankers’ bonuses?

  An Ceann Comhairle: We will have an opportunity on Report Stage.

  Deputy Martin Mansergh: That is coming later. The Minister signalled this morning that was
coming in, and the amendment will be introduced at a later Stage.

  An Ceann Comhairle: On Report Stage.

  Deputy Martin Mansergh: It will be done.

  An Ceann Comhairle: We are not going to have a debate on it now.

  Deputy Pearse Doherty: As a new Deputy, I seek clarification on whether the Minister of
State needs to announce to the House on Committee Stage that he intends to table an amend-
ment on Report Stage.

 An Ceann Comhairle: The Minister of State has just told the House he will be tabling the
amendment on Report Stage.
                Finance Bill 2011:       26 January 2011.          Committee Stage

  Deputy Pearse Doherty: Let me finish, with the indulgence of the Ceann Comhairle. The
section to which the Minister of State is referring has been agreed to and voted upon. It is now
concluded. The Opposition cannot refer to any amendments that it wants to table on a section
that has already been dealt with in the House.

 An Ceann Comhairle: The Minister of State advised the House he is bringing forward the

  Deputy Pearse Doherty: Did he advise the House at the proper time, namely, when we were
discussing the relevant sections, that he is to table the amendment?

  An Ceann Comhairle: He has advised the House that he will table the amendment.

  Deputy Martin Mansergh: I wish to be of assistance to the House. I am not the Minister for
Finance. Rather, I am the Minister of State at the Department of Finance and the message
came to me too late to handle the matter before the vote.

  Deputy Pearse Doherty: I am entitled to a clarification on the rules of the House.

 An Ceann Comhairle: The Deputy has been advised that the amendment will be tabled on
Report Stage.

  Deputy Arthur Morgan: We cannot amend the amendment.

  Deputy Michael Noonan: On a point of order, I always understood the position to be that a
Report Stage amendment was not in order unless the material to be contained therein had
been mentioned in the course of the Committee Stage debate, but not necessarily during the
debate on the section in question.

  Deputy Joan Burton: By the end of Committee Stage. It is a general rule.

  An Ceann Comhairle: As a long time Member of the House, Deputy Noonan is aware that
there is provision for a recommittal.

  Deputy Seán Barrett: He is being helpful.

  An Ceann Comhairle: We can facilitate the debate via a recommittal arrangement on Report
Stage when the amendment is introduced. We need to move on, as we are on a tight timeframe.

   Deputy Brian Lenihan: If I might assist the House on this matter, is this the pay and file
issue, a stand-alone section?

  An Ceann Comhairle: We are on Part 2, sections 39 to 51.

  Deputy Arthur Morgan: We have moved on.

  Deputy Brian Lenihan: We have moved past the pay and file issue.

  An Ceann Comhairle: Yes.

  Deputy Aengus Ó Snodaigh: It is being mentioned after the fact.

  Deputy Pearse Doherty: I do not mean to hold us up, since our debate time is limited. For
future reference, is it the case that, when one wants to propose an amendment on Report
Stage, one does not need to announce it during the Committee Stage debate on the sections in
                Finance Bill 2011:        26 January 2011.          Committee Stage

question? Instead, one can announce it after the sections have been voted on by the Dáil. Is it
in order with the rules of the House that an amendment can be announced at any time even
though the section to which it refers has been debated and voted upon?

  An Ceann Comhairle: The timing referred to is somewhat different.

  Deputy Michael Noonan: By the end of Committee Stage.

 Deputy Pearse Doherty: I need a clarification as to how the Ceann Comhairle is imple-
menting the rules.

  An Ceann Comhairle: There is a provision for a recommittal by which we can effectively
have a Committee Stage debate on Report Stage, with the agreement of the House.

                                         SECTION 39

  Question proposed: “That section 39 stand part of the Bill.”

   Deputy Michael Noonan: I understand these sections address excise rates and a number of
other matters. I am particularly interested in the provisions on excise rates in respect of hydro-
carbon products. The Green Party’s position was to seek to impose carbon taxes on various
items, but differentiating between carbon taxes, excises and VAT impositions is difficult, given
that all three apply to hydrocarbons. What are the proportions of excise, VAT and carbon tax
levied on, for example, a litre of petrol or diesel?
   I drive a diesel car and I find diesel to be more expensive now than it was last year. A barrel
of oil costs approximately $90 whereas it cost $140 just prior to this time last year, yet what we
pay at the pumps now is significantly more than what it was then. This despite the fact that the
price of the raw material has almost dropped by 50%. In Ireland, the higher prices must be
attributable to new taxes. Since the Government went easy on its excise increases, which would
kick on into VAT, the new carbon tax introduced on the proposal of the Green Party must be
causing the difficulty. The middle of a recession when jobs are being lost hourly is not a great
time to increase the costs to industry and to employment. Does the Minister of State possess a
breakdown, Schedule or other information that shows which elements of the price are excise,
VAT and carbon tax?

  Deputy Arthur Morgan: I am opposed to these sections, which will impose a significant
additional cost on businesses across the State. The consequence will be a significant drop in
competitiveness, which will cost us jobs. The increase in the excise on diesel is punitive.
   The Government constantly preached to us that it needed to cut the minimum wage to make
the economy more competitive and to help business, yet here it is doing the exact opposite,
namely, increasing the cost of doing business. Jobs will fall asunder as a result. We are con-
stantly told by the Government that it is doing something about jobs, but we never see anything
concrete being done to create or save jobs. This significant gap is one of the reasons the Bill
will be a disaster for the people of this island, never mind this State.
  The Government also expects people who live in rural areas to pay an additional cost for
fuel when they have no alternative. Large swathes of this land have no public transport, so
people have no option but to have motorised transport of their own. The Bill will apply a
considerable additional punishment on people in rural areas. It is unacceptable, but I will listen
to the Minister of State.

  Deputy Michael Ring: I agree with my colleague, Deputy Noonan, concerning this tax. The
price of diesel and petrol is having a terrible effect on rural Ireland. I have often put on the
                Finance Bill 2011:         26 January 2011.           Committee Stage

  [Deputy Michael Ring.]
record of the Dáil my belief that the Green Party’s carbon tax is simply a tax on rural Ireland.
It is not right. This winter, people needed to buy fuel to cope with the cold weather. Deputy
Noonan made a valid point. If oil is $90 per barrel, the Government and the country have not
dealt with the problem of the price we pay at the pumps. We are being ripped off again. It is
the old thing of rip-off Ireland at every opportunity. In the week prior to the heavy snow and
before we were promised bad weather, I bought two bags of salt for €7. The following week, I
went to the same place on behalf of a neighbour and found that the price had increased to €7
per bag. This is the reason our country is the way it is. At every opportunity, we rip one
another off.
  We all want to be environmentally friendly, but a carbon tax affects people’s pockets and
we in rural Ireland need our cars or other vehicles. We do not have Dublin Bus, the Luas or
other forms of public transport.

  Deputy Michael Kennedy: The Deputy should be sure to give me metro north when he is
in government.

   Deputy Michael Ring: Last Sunday, I canvassed at a house where a child was sick. The
woman needed to bring her child to Westdoc. She travelled approximately 50 miles from Carra-
tigue to Ballina to meet a doctor, not a consultant in a hospital. Her family is in receipt of
social welfare payments and cannot afford this type of cost. It is fine for the Green Party and
for the Fianna Fáil Ministers. For the past 13 years, the latter have not bought a gallon of
petrol or diesel, have not had a meal they needed to pay for and have not known what has
been occurring in the real world.

  An Ceann Comhairle: We are losing the focus of the debate.

 Deputy Michael Ring: This tax is wrong. I am glad Green Party Members walked out of
Government. It is just a pity they ever went in.

  Deputy Martin Mansergh: The first point to make about the rate of mineral oil taxes is that
the expected yield from the increases in 2011, inclusive of VAT, is approximately €106 million.
Were we not to proceed with these changes, we would need to find €106 million elsewhere.
While it is correct that people in rural areas are more dependent on car and motorised transport
generally, in principle the carbon tax affects everyone who drives regardless of the parts of the
country in which they live.
  I was asked for the details concerning the current percentage component of carbon tax.
   Anyone who crosses the Border will be aware that petrol and diesel prices are still signifi-
cantly higher in the North than in the South with an approximate difference of 10% to 15% in
price. The carbon tax element on a litre of petrol costing €1.19 is 4.2 cent, inclusive of VAT.
               In the case of diesel, it is 4.9 cent on a litre of diesel costing €1.10. Despite what
2 o’clock      Deputy Ring assumes, I buy diesel and if I knew anywhere it was being sold for
               €1.10 a litre, I would be around there pretty smartly. In my experience of recent
pricing, it is more likely to cost €1.36 or €1.38. I think the tabular information with which I
have been supplied is somewhat out of date.
  The total excise on petrol is 57.6 cent per litre, of which the carbon tax is 3 cent. The point
being made in the information is that carbon tax is a small additional element. I suspect that
the next international crisis could be an oil-related one. We have to try to be more efficient
and more economical in the use of petrol. A small level of carbon tax is a financial incentive
                Finance Bill 2011:        26 January 2011.           Committee Stage

to be economical. Irrespective of this one element, it is also a case that the State needs the

   Deputy Seán Barrett: I wish to raise a point relating to section 46 of the Bill which makes a
number of amendments to Chapter 1 of Part 2 of the Finance Act 2002, in connection with the
taxation of betting and related activities. Subsection (2) provides for the repeal of sections
17(2) and (3) of the Finance Act 2009, relating to the rate of betting duty. This provision was
made in 2009 which allowed the Minister to increase the betting tax from 1% to 2%. I am
aware of the changes being proposed here and to which I have no objection. However, I find
it extraordinary that the Minister sees it necessary to repeal this subsection. It is included as a
precaution. In the event of the new system not working, it would be easy for the Minister to
increase the rate from 1% to 2%.
   With regard to betting tax in general, one of the most important industries outside of the
cities and towns in this country is rural-based horse breeding and horse training. It supplies a
great number of jobs in areas where it is extremely difficult to get employment. Regardless of
whether we like it, the number of jobs is reducing. A total of 85% of foals born in this country
are exported so this is a valuable export industry in itself. People will not breed horses unless
there is a reasonable chance of a reasonable return in prize money when the horse is put to
race. Horse Racing Ireland does not have the money to give to prize money or to provide any
other grants for improving conditions at race tracks or at dog tracks in the case of the grey-
hound industry. Both industries are vitally important.
  When Fine Gael went into Government in 1982, betting tax was 20%. In his first budget,
Alan Dukes reduced the tax to 10%. Over the past number of months and years, we have
heard whingeing from bookmakers about a 1% or a 2% levy. We cannot expect the taxpayer
to fund racing and those involved in the industry do not want the taxpayer to have to fund it.
I enjoy a bet from time to time and I have no problem paying 2% tax on my bet. For every
€100 bet, I will pay €2 and 20 cent for every €10 bet. Kids will not pick up a 20 cent coin off
the street nowadays and yet we are allowing an industry to collapse. We are fussing around
with bookmakers who are complaining, the Paddy Powers and the Ladbrokes of this world.
They go on about the jobs they are creating but they forget about the jobs being lost.
  I appeal to the Minister not to include this provision as there is no reason to repeal that
subsection. It should be left in the Bill in the event that a future Minister may think it necessary
to increase the rate from 1% to 2%. I ask the Minister, not from a party political stand point
but in the event of helping the industry as a whole, to leave the tax alone. If the new provisions
do not work then there is a fall back to increase the rate from 1% to 2%. I ask the Minister
of State to ask the senior Minister to agree to delete this provision on Report Stage if not now
and to allow the rate stand. I welcome the efforts being made by all concerned, including those
in the Department of Finance, to deal with offshore betting and the attempt to deal with the
exchange betting. Great efforts have been made and I congratulate those involved.
  We must ensure that an important national industry does not fall by the wayside like it has
in other countries. It should be borne in mind that Ireland and Britain are among the few
countries with off-course bookmakers. All other countries depend on funding racing and the
greyhound industry through Tote betting. I have no vested interest other than to see an industry
thriving as it is a great flagship industry for the country. Ireland is renowned for its horses and
nothing should be done to damage that industry. This provision is completely unnecessary, in
my view.

  Deputy Joan Burton: I concur with much of what Deputy Barrett has said. Almost 30,000
people are employed on a full-time or part-time basis in various sectors of the horse and
                Finance Bill 2011:       26 January 2011.          Committee Stage

  [Deputy Joan Burton.]
greyhound industry. I regret the complete shambles made of the arrangements over the past
13 years by Fianna Fáil and its various Government partners. We saw a parade of different
vested interests all looking for an angle, all promising to deliver a high-quality product. One
of the reasons many people from other countries come to Ireland is because of their interest
in racing and horses. I refer to a regrettable result of the collapse of the boom which attracts
media coverage. At the edges of my constituency, in Dunsink, horses, mostly palominos, are
running wild. Many of them were starving during the cold spell. People may have bought a
couple of horses and had them in training or in a field or paddock and now that the construction
industry has collapsed some of these horses have been left almost to fend for themselves. It is
not good in a country with a long reputation in the horse industry. People who emigrated from
Ireland over the past century and a half and their descendants have been heavily involved in
horse racing and breeding in countries to which Irish people traditionally emigrated such as
the United States and Australia. The mess we have the moment is a reflection on the fact that
Fianna Fáil in government caved in to vested interests with no clear insight as to what was best
for the long-term future of the industry.
  My perspective is that the earlier model was more attractive, with a number of tracks for
horses and greyhounds throughout the country where people can go, as opposed to being bent
over a computer screen consumed by the type of gambling which has a very high risk of
addiction. There is potential for much money to be contributed to the national purse and
ploughed back into the industry if we can get this right.
   I have seen some of the Independent Deputies lobbying heavily for slot machine casinos in
Ireland. The last proposal for a slot machine casino was in my constituency on the edge of the
Phoenix Park, at the old Phoenix Park racecourse which had many deficiencies, as I am sure
Deputy Barrett would have known. However, it was a wonderful tourism amenity for the
Dublin area. The proposal collapsed and it never happened because it was for a casino with
1,600 slot machines. I want to say to people who are being persuaded that the best thing for
Ireland when we are on our knees is that we have Las Vegas style slot machine casinos, that
they would wipe out most of our horse racing industry and do the same to our greyhound
  I am probably one of the few Deputies in the House who worked in Atlantic City when I
was a student. Unfortunately, people who go to slot machines are not James Bond in a dickie
bow going to play blackjack or cards at a table in a casino. I have no problem with this type
of operation where most of the people have quite a lot of money. However, I certainly do not
want to see pensioners and people on social welfare incomes being shipped by bus to slot
machine venues where they are relieved of much of their meagre income. In the United States
a huge body of work is being done on the slot machine casino industry in areas of land and
reserves owned by Native Americans. In South Africa at the time of apartheid, bantustans and
areas such as Swaziland and Lesotho were used as venues for slot machine casinos. This is a
personal view of mine and I know other views are held in the House.
   In the Fingal County Council area in north County Dublin, where I was a local authority
member, and in Dublin city long campaigns were fought, certainly by Labour Party politicians,
to get rid of slot machines and slot machine arcades where much gambling was occurring, which
was very damaging, particularly to young people and those with an addiction to gambling.
People are holding up slot machine casinos as a way to save Ireland. This is a trap and we
would live to regret the social impact on society. A day out at the races or a night at the dogs
is a great and enjoyable experience and very attractive to visitors. We should think about how
best to encourage and promote this as part of an overall development of leisure amenities and
tourism in this country and leave the mega slot machine casinos. Anyone who has ever worked
                Finance Bill 2011:        26 January 2011.           Committee Stage

in a casino environment will realise that a casino with 1,500 slot machines is the size of three
very large supermarkets. It is a gigantic undertaking and one would need very large bus loads
of people who are very often on very low incomes to feed the machines. That is how it works.

  Deputy Aengus Ó Snodaigh: Ba mhaith liom labhairt ar an cháin bhreise atá á ghearradh ar
peitril agus díosail. Tá sé go huile agus hiomlán dírithe ar ghnáthdhaoine na tíre, ina measc an
lucht gnó atá ag brath ar iompar a gcuid stuif timpeall na tíre. Tá sé go huile agus hiomlán i
gcoinne aon rud a bheimid ag iarraidh a dhéanamh amach anseo chun an geilleagar a athógáil.
  The Minister of State accepted that he somewhat underestimated the cost of diesel and petrol
when he read out the figures. When he corrected the figure it showed the scale of the change
in the price of diesel and petrol in the past year alone. This has a specific consequence for
small businesses in particular and those living in rural Ireland. Those living in larger cities have
a public transport network and I will come back to this. However, in huge tracts of Ireland
people are totally dependent on motorised vehicles. Small businesses trying to export our goods
are also dependent on trucks and vans to shuttle their goods around the country to ports. The
biggest problem is that the public transport network and the train network have been reduced
and undermined in recent years by a lack of proper investment. An alternative is not there for
many small businesses dependent on motorised transport.
   This is a very penal tax increase and it should be resisted in every way. I am not one to
encourage more and more cars in the street. However, in this city the Government has reduced
the subvention to the public transport networks in recent times. So much for the Green Party
and its endorsement of public transport. Years of underfunding have meant that even in this
city where one would expect public transport to be the most effective and efficient for everyone
to use, it has not delivered and it has not been delivered upon by the Government.
  Small businesses have already been screwed by the Government because additional taxes
have made it more difficult for them, as have the lack of credit from the banks and the rates
increases from local authorities. I do not blame local authorities. The problem with local auth-
orities is that over the years the Government has underfunded local authorities so their only
recourse in many ways is to further tax local businesses and shops.
  I urge that this Bill be totally rejected. The only part of it which I support — but which
should not be there — is the reduction in the travel tax. If we are to build Ireland the travel
tax should be removed altogether. There should have been an opportunity to remove that
tax altogether.
  On a point of order, I ask that a quorum be called.

  Notice taken that 20 Members were not present; House counted and 20 Members being present,

  Deputy Seán Power: The seats feel okay over on this side.

  Deputy Seán Sherlock: I would be happy to get any seat at all, myself.
  I wish to speak to section 46 and in particular the betting duties. Section 46(2) provides for
the repeal of sections 17(2) and 17(3) of the Finance Act 2009 relating to the rate of betting
duty. I do not understand why the Minister is seeking to repeal these sections. The Labour
Party through its former spokesperson, Deputy Upton, published a very comprehensive paper
entitled Raising the Stakes, in which she established a formula that would allow for a greater
degree of online capture. Mr. Kavanagh from Horse Racing Ireland gave a comprehensive
overview on the state of play at today’s meeting of the Oireachtas Joint Committee on Agri-
culture, Fisheries and Food. His overview referred to a fourth consecutive cut to the horse and
                Finance Bill 2011:        26 January 2011.           Committee Stage

  [Deputy Seán Sherlock.]
greyhound racing fund which has fallen from €76 million in 2008 to €57.2 million in 2011 and
that this was not a sustainable position from which to develop a key industry.
  Across the political divide we have as a common cause the interests of the horseracing and
greyhound racing industries. However, we must ensure the provisions at paragraphs (f), (e),
(d) and (a) stand up to scrutiny. I do not understand why the Government is not going after
the online capture. I would like further clarification as to how these provisions will translate in
real terms. I do not understand why the taxpayer through the Exchequer should continue to
fund the industry directly through the provision of prize money. We all understand it is an
extensive industry and support the aims of Horse Racing Ireland, but we must ensure tax is
captured from the punter and anybody who makes a bet whether it is online or through bookies
offices on-street.
   I speak for people like Mrs. Bambury in Mallow, who is a second-generation bookmaker but
who does not have an online presence. The levy is being collected and yet there are bookmakers
in Mallow — which has its own racecourse — which have an on-street and online presence
also. There is a disparity between the collection from the on-street presence and the lack of a
collection from the online presence. We should go after the online betting and we need to go
after the exchanges. It is disingenuous for certain celebrities to push the exchanges as being
somehow very egalitarian in their outlook. Our interpretation is that, by their very nature, the
exchanges will pay out the prize money, which is fair enough. However, it will be the Exchequer
— the taxpayer — which pays the prize money at the racing stadia and so on. We need to
introduce a level playing pitch here. I am not clear as to the various paragraphs. We need a
proper analysis. Perhaps we should look at the French model in terms of collection. The sub-
mission by Mr. Kavanagh to the Joint Committee on Agriculture, Fisheries and Food was an
in-depth one and there was an actual willingness on the part of Horse Racing Ireland to engage
on the issue of capturing more revenue through more imaginative means. I ask for a response
to that point from the Minister of State.
  I am conscious of time. HRI made a presentation to the committee today. There are 9,530
registered breeders in Ireland, some 15% are overseas investors and 92% own fewer than five
mares. There were 416 stallions at stud in 2008, of which 362 stood for a fee of €7,000 or less.
We must support the industry but we must also ensure that such support does not militate
against the taxpayer. The industry must find more imaginative ways to fund the prize money

  Deputy Chris Andrews: I agree with the sentiments of Deputy Sherlock regarding Horse
Racing Ireland. I understand it has been proposed to set the licence for online betting at €5,000.
There is a danger this licence may facilitate cowboy online bookmakers from abroad who
would come to and register in this country and signal on their websites they were registered
and approved by the Irish system. There is a danger of fraud being committed by Internet
cowboy bookmakers who would do damage to Ireland’s reputation. Perhaps we should consider
increasing that fee to €30,000 or €40,000, which would deter such bookmakers. Those in the
country who work under the licence in good faith would not have any difficulty in paying that,
as I understand it. We should consider increasing the €5,000 licence fee which would discourage
the online cowboy bookmakers.

  Minister of State at the Department of Foreign Affairs (Deputy Dick Roche): As one who
does not engage in betting online or offline, I found this debate fascinating.

  Deputy Damien English: Is the leadership contest not a form of betting?
                Finance Bill 2011:        26 January 2011.          Committee Stage

  Deputy Dick Roche: No, it is not, at least not in our party. I was not present at the time but
Deputy Barrett asked about the 2% duty provision. As I understand it, this is regarded as not
required which is why it is being repealed. However, according to the answer provided to me,
the opportunity of reintroducing it remains.

  Deputy Seán Barrett: Nonsense. I have a point of order. I appreciate the Minister of State
was not present but my point was that this measure was introduced in 2009, giving the Minister
power, by order, to increase the duty if he or she wishes. It should be left there and left alone.
There is no reason to take it away or say it is not necessary. Who knows whether it may not
be necessary in a year’s time.

  An Leas-Cheann Comhairle: That was not quite a point of order.

  Deputy Dick Roche: That is a valid comment but my understanding——

  Deputy Seán Barrett: There is no need to do this.

  Deputy Dick Roche: ——is that it can be reintroduced. I shall make the Deputy’s point to
the Minister when I speak to him — in whatever capacity he may return to the Chamber.

  Deputy Damien English: There is no need to take it out.

  Deputy Dick Roche: The predominant part of the discussion since I came into the Chamber
has concerned how to capture the online sector. As all of us know there is no doubt this sector
has grown very dramatically in recent times. It is a very difficult area to capture. Obviously,
provisions and arrangements will be made by regulation. We all accept that a regulatory frame-
work must be put in place which will deal with betting exchanges and remote or online betting.
I did not entirely understand the point made by Deputy Burton. As her colleague, Deputy
Sherlock, pointed out, racing is a very important part of the economy, a point often lost sight
of in the debate. Even a non-punter like me can see it is a critically important industry.
  The proposal in the Bill aimed to create a balance by extending a modest rate of 1% to
online and telephone betting, thereby creating a levelling of the playing field notwithstanding
the point made by Deputy Barrett. That is the logic behind this section of the Bill.
  In reply to Deputy Andrews’ concerns, obviously any form of change is open to exploitation
by those who are willing to operate outside the law. Again that is a matter for regulation.
  Deputy Ó Snodaigh touched on remoter or wider parts of the Bill when he spoke of the
differences in the excise duties on petrol and diesel. It is an interesting point and I will reply
to the Deputy through his colleagues. Petrol is generally 7 cent cheaper per litre in the Republic
than it is in Northern Ireland while the differential for diesel is 20 cent. That is why there is
such purchase of fuels in the South by people registered in the North. The differential is so
handsome that it pays certain people to operate outside the law and become involved in illegal
activities, but I am sure no Member of the House has any such connection.

  An Leas-Cheann Comhairle: Very good. We will try to deal with section 39.

  Deputy Seán Barrett: No, the sections are all taken together.

  An Leas-Cheann Comhairle: We will take each section as I put it. Deputies may challenge a
section but the vote is——

  Deputy Damien English: That was not agreed.
                Finance Bill 2011:           26 January 2011.      Committee Stage

  An Leas-Cheann Comhairle: Section 39 is not agreed.

  Deputy Seán Barrett: Section 39——

  Deputy Damien English: No, we accept the Leas-Cheann Comhairle will bring it——

  Deputy Pearse Doherty: On a point of order——

  An Leas-Cheann Comhairle: Deputy Doherty has a point of order.

  Deputy Pearse Doherty: We raised this at the previous sitting where all sections were taken
in one vote. We understood that all sections were to be taken together. On that basis, in regard
to section 39, if the Leas-Cheann Comhairle is not following what was done in the previous——

  An Leas-Cheann Comhairle: I will tell the Deputy what the order of the House is. Each
section is put separately. If a section is challenged the vote is postponed in accordance with
the order of the House. In this case the group will be taken together at 3 p.m. but I must put
each section separately.

  Deputy Pearse Doherty: That did not happen at the earlier stages. Must we revisit the earl-
ier sections?

 An Leas-Cheann Comhairle: That is a matter the Deputy can take up with somebody else. I
am putting the section now.

  Deputy Pearse Doherty: There is confusion. I oppose section 39.

  An Leas-Cheann Comhairle: Very good. I shall put the question formally and if there is a
vote it will be deferred.

  Question put.

  An Leas-Cheann Comhairle: There will be a vote at 3.00 p.m. on that section.
  Section 40 agreed to.

                                         SECTION 41.

  An Leas-Cheann Comhairle: The question on this section will be put at 3.00 p.m.

  Sections 42 to 44, inclusive, agreed to.

                                         SECTION 45

  Deputy Damien English: I move amendment No. 89:

    In page 186, line 11, to delete “€3” and substitute “€2”.

This relates to the travel tax which my party proposed to scrap in its entirety in our alterna-
tive budget.
  The Minister has reduced the charge from €10 to €7 and we propose to reduce it further to
€2 or zero, if the Minister would accept that. The issue sends out the wrong message. We know
tourism figures are well down, with numbers down by a couple of hundred thousand in the
past year. That has a direct impact on many tourism providers, including those involved in
accommodation, retail and amenities. People are under serious pressure, having built up busi-
                Finance Bill 2011:        26 January 2011.           Committee Stage

nesses on established tourist numbers. They are falling away and nothing is being done to help
these people; the opposite is occurring, which brings a direct cost on jobs and will put more
people on dole queues.
  In our alternative budget we put it up to the airline industries, indicating that Michael
O’Leary, Aer Lingus bosses and anybody else involved should put their money into a marketing
campaign and match the resources of the State in this area in order to bring in clients. If they
can prove that the reduction of the tax will bring more people into this country, we will leave
the tax at zero. If they fail to do so the tax can be reinstated but they should be given the chance
to prove that the Government is wrong on the issue. These parties have been campaigning with
an argument that the tax should not be in place, and we agree, but we challenge them to
prove it.
   By keeping the tax, the wrong message will go out. A person booking a flight online will see
increased taxes, which will put him or her off and that person will go elsewhere. The Minister
seems to believe people do not choose where to fly based on price increases of €3 or €4 but
they do. When people pick a country to visit they can see the prices for flights so when taxes
start building up they soon become disinterested and go elsewhere. Tourists are voting with
their feet and not coming to this country for many reasons, one of which we know is the
travel tax.
   At this stage I ask the Government to consider reducing the figure. We would prefer to see
it gone altogether but we had to put down an amendment for the €2 figure. The issue should
be given some real thought as the message is wrong. We are suffering in this country because
of a lack of tourists and we can really grow the sector and create jobs.

  Deputy Pearse Doherty: Deputy English made a very coherent address outlining reasons for
not having an airport travel tax. I concur with everything he says because it sends out the
wrong signal. The amendment his party has put down relating to the tax sends out an equally
wrong signal as the party does not propose to scrap it; the amendment proposes to keep the
travel tax with a reduced rate of €2. In my opening contribution to Committee Stage I argued
that this is an act of political codology. The Deputy said the party would prefer to see the
tax scrapped.

  Deputy Damien English: That is in our budget proposal.

  Deputy Pearse Doherty: Yes but this is where we introduce aspects into law. The budget
proposals will not mean anything for Ryanair or Aer Lingus, and it will not change the signals
to those who want to come to this country. That will be affected by what we decide to introduce
into legislation. The amendment looks to put into legislation an airport travel tax of €2, which
Fine Gael would secure if the Government accepted the amendment.
   The Deputy is correct in that it would send out the wrong signals to the tourist. This is a
sector with the potential to reach significant numbers of people and create jobs. God above
has provided assets for this country that we have not exploited properly, including our scenery,
cultural tourism, language and the hospitality and good nature of Irish people. We must tap
into the goodwill within the Irish diaspora to help the country regain its position in the eyes of
the world. There is much potential in the tourism sector. I will not focus any more on Fine
Gael bar to say that if we are to have an election debate, we must be honest with people. There
is no point saying that the airport tax will be scrapped while at the same time introducing an
amendment fixing a €2 rate.
                Finance Bill 2011:        26 January 2011.           Committee Stage

  [Deputy Pearse Doherty.]

  The Minister’s reduction of the rate to €3 does not go far enough. We should be clear that
the airport travel tax should be scrapped, as this would not just be revenue neutral but would
benefit the Exchequer because of an increased tourist flow to the State. It must be acknow-
ledged that the amendment presented by the Government is an acknowledgement that introd-
ucing a travel tax of €10 was wrong. This is acknowledged through the amendment put before
the House.
  The Government may not be in a position next year to introduce a budget to correct the
wrongs of this budget. Just as it was wrong to introduce a €10 charge, which is being acknow-
ledged in the amendment, it is equally wrong to introduce the €3 charge. I know, coming from
the north west, the impact of the downturn of the numbers of tourists coming to the region.
Other measures in the Finance Bill relate to increases in petrol and diesel, which were dealt
with in section 39, but we must look at the Finance Bill as a unified piece of legislation. All
these measures have an impact on tourists.

  An Leas-Cheann Comhairle: Go raibh maith agat.

 Deputy Pearse Doherty: I will conclude very shortly. I understand there is no time limit on
Committee Stage as long as I speak to the amendment.

  An Leas-Cheann Comhairle: I am indicating that I would like to facilitate others. The Deputy
can monopolise the time, as is his right.

  Deputy Pearse Doherty: I would not wish to do that. One could reasonably ask what differ-
ence €3 will make. People travelling from Boston, New York, Australia, Shanghai or New York
would pay an extra €3 but their holiday will cost hundreds of euro at the very least. The cost
may be in the thousands of euro if families come along. One can add the costs of increased
excise and taxes. A person coming to Donegal cannot jump on the train so a car must be hired
and filled at the petrol station. That person must pay the excise duties, with the rates being
increased by the Government in this budget. The person will also pay the additional airport
tax. The signal is that this place is closed for tourism purposes.
   The reduction of the rate does not go far enough as we must put a stop to the signal that
this place penalises tourists. This may have more to do with supporting the 100,000 people who
will leave our shores in the next two years; they will have to pay €7 less. It is the wrong decision
and the tax should be repealed. The section should be replaced with a section deleting the
airport tax in its totality.

   Deputy Seán Barrett: I am surprised at the outburst from Deputy Doherty. I appreciate he
is a new Deputy but he is probably not aware that sometimes with a finance Bill an amendment
is tabled in order to facilitate debate. At least Fine Gael tabled an amendment, as I do not see
any amendment on the list from Sinn Féin.

  Deputy Pearse Doherty: Fine Gael has facilitated the issue.

  An Leas-Cheann Comhairle: We do not shout Members down in the House.

  Deputy Seán Barrett: He is probably used to shouting down people but I like to do business
in an orderly fashion. I listened to him and am now replying. Sinn Féin has no amendment
dealing with the imposition of a travel tax and Fine Gael has tabled an amendment reducing
the tax. We would prefer if the tax was at zero but we are also realists in so far as the State
                Finance Bill 2011:        26 January 2011.          Committee Stage

must collect revenue. We have produced a budget based on the fact that the Government is
retaining a €3 travel tax. To show our disdain for the idea of a travel tax in the first place we
put down an amendment in order to debate the issue, which is more than Sinn Féin has done.
   Sinn Féin should stop at every possible opportunity looking to introduce party politics into
every amendment. It is criticising either the Labour Party or Fine Gael on every occasion. It
has made the point that it does not believe in increasing taxes but it wants to increase expendi-
ture. It has not indicated how everything will balance so we accept that the party lives in a
fairyland. It should not spend its time criticising a party putting down an amendment to reduce
the proposed tax when it has nothing to contribute.
   As my colleague, Deputy English, has said, as an island nation it is crazy to impose any
travel tax. We must encourage people into and out of this country. If they are travelling here
on holiday, they must return home. It is beyond belief that we would impose a tax on travel
when we want to create jobs and the tourism industry is crumbling. Any hotelier, publican or
guesthouse owner will tell one what is happening in the tourism sector. We should do every-
thing possible to boost tourism and create jobs. We should not have taxes which discourage
people from visiting this country.
  I ask Deputies to support the Fine Gael Party amendment and ensure the air travel tax is
progressively abolished. While the composition of any new Government is a matter for the
electorate, I hope the new Administration will abolish the tax at the first opportunity. In the
meantime, the amendment reinforces the argument that Ireland does not need a travel tax
when tourism numbers are in decline, the tourism sector is on its knees and hotels are closing. It
makes sense to avail of every opportunity to use tourism to ensure there are better days ahead.

  Deputy Pearse Doherty: On a point of order, while I take on board the problems outlined
by the previous speaker——

  An Leas-Cheann Comhairle: That is not a point of order.

  Deputy Pearse Doherty: My point of order relates to the rules of the House, on which I seek
clarification. Having discussed the air travel tax with my party team, I was of the view that if
one tabled an amendment, for example, to delete the figure of “€3” and replace it with €0, it
would be ruled out of order, as has been the case with many of my amendments.

  Deputy Damien English: That is the reason the Fine Gael Party amendment refers to a figure
of €2.

 Deputy Seán Barrett: Why did the Deputy not table an amendment? He should not criticise
my party for doing so.

 An Leas-Cheann Comhairle: I do not propose to explain the procedure governing amend-
ments as it is a matter for the officers of the House to explain.

  Deputy Seán Barrett: The Deputy is making excuses and engaging in another attempt to
attack Fine Gael and the Labour Party.

  An Leas-Cheann Comhairle: We must discuss the amendment before the House.

  Deputy Pearse Doherty: I did not have a chance to complete my point of order.
                Finance Bill 2011:        26 January 2011.          Committee Stage

 An Leas-Cheann Comhairle: The procedure of the House is that when the Chair stands other
Deputies must take their seats.
  In the few minutes remaining, I am anxious to allow the Labour Party speaker to contribute
and the Minister of State to reply. I advise the Deputy to raise the procedure for tabling of
amendments with the Office of the Ceann Comhairle.

  Deputy Damien English: May I clarify my amendment?

  An Leas-Cheann Comhairle: No, we do not need further clarification.

   Deputy Joan Burton: On the air travel tax, I welcome the Government’s decision to reduce
the air travel tax to €3. At a time of great economic crisis and high unemployment Governments
must be careful about the taxes they introduce. Unfortunately, the air travel tax was exactly
the type of tax we did not need at an extraordinarily sensitive time for the tourism industry.
While the reduction is welcome, the Government could have gone a little further. The challenge
for the various operators in the tourism industry is to show that the reduction will produce a
flow of visitors.
   One factor which would help Ireland to recover would be a return to traditional and basic
industries such as tourism, rather than construction and property development. Despite the
many reductions in wages and salaries, Ireland remains an expensive country in which to live.
Its high cost of living was the cause of upward pressure on wages. Hotels and other elements
of the tourism industry are trying to give good value for money. This is a welcome development
because we must bear in mind that other countries are competing strongly. For instance, for a
considerable part of last year’s off-season, Spain offered extremely attractive packages to tour-
ists aged 55 years and over. Reports indicate that the attractive hotel rates that were made
available in regional and tourist resort hotels in Spain last year were very popular with retired
Irish people.
   A new Government will have to focus on developing a policy to show that Ireland as a
tourist destination is not only attractive but very good value for money. We do not want visitors
from continental Europe, the United Kingdom or the United States being shocked at the costs
they encounter when they arrive. We need to develop package programmes which ensure
tourists, particularly those of average means, are well advised of what will be the likely cost of
a good holiday, whether long or short. An all-in package approach would, I hope, help reinvig-
orate our traditional markets, namely, the United Kingdom and United States.

  Minister of State at the Department of Health and Children (Deputy John Moloney): States
must generate revenue and Ireland is not alone in imposing a tax on air travel. It is noteworthy
that the United Kingdom applies a rate of £12 or €14.20, while Germany, France, the United
States and Austria apply rates of €8, €4, $14 and €8, respectively.

  Deputy Damien English: Unlike Ireland, those countries are not broke.

  Deputy John Moloney: We do not know the extent of their solvency. In any case, Ireland is
not unique as air travel taxes are common across Europe. A number of countries in the Euro-
pean Union, including the United Kingdom and France, apply similar taxes, as do Australia
and New Zealand. The United States has also introduced a tax on tourists travelling to the
country by air.

  Deputy Seán Barrett: The countries the Minister of State cites are not islands in the Atlantic.
                 Finance Bill 2011:             26 January 2011.               Committee Stage

   Deputy John Moloney: The rates of tax applied by the countries to which I refer are higher
than the Irish rate, in some cases substantially so. The trend in Europe is towards applying a
tax on air travel. Calls have been made to abolish the tax on the basis that it adversely affects
              the number of people travelling to Ireland. The Minister has difficulty accepting
3 o’clock     this proposition and considers that the impact of the air travel tax has been over-
              stated. The numbers travelling appear to be more closely related to other factors,
including the level of economic activity. Notwithstanding these reservations, the Minister
decided that a single, revised rate of air travel tax of €3 will come into effect on 1 March. He
indicated that the reduction announced in the budget should only apply on a temporary basis
and that the rate would be increased unless there is clear and decisive evidence of an appro-
priate response from the airlines to increasing capacity and numbers travelling to Ireland by
air. He was pleased his budget announcement was supplemented by an incentive scheme intro-
duced by the Dublin Airport Authority for a full rebate of airport charges for additional traffic
delivered above a certain threshold based on 2010 passenger numbers.
   A modest air tax of €3 will yield close to €35 million in a full year. The case for reducing
the tax further does not stand up, particularly as we are undergoing fiscal pressures and there
is a requirement that the tax system be viewed as fair. The reduction in the air travel tax was
a significant concession. The correct approach is to wait to see whether passenger numbers
increase on foot of the change. In that regard, the cost of enhancing the concession further
would be more than €10 million. In that context, the amendment is not accepted.

  An Leas-Cheann Comhairle: As it is now 3 p.m., I must deal with the deferred divisions. On
section 39, a division has been challenged. The division will now proceed.

  Question put:

                                      The Dáil divided: Tá, 81; Níl, 79.

      Ahern, Bertie.                                               Fitzpatrick, Michael.
      Ahern, Michael.                                              Fleming, Seán.
      Ahern, Noel.                                                 Flynn, Beverley.
      Andrews, Barry.                                              Gogarty, Paul.
      Andrews, Chris.                                              Gormley, John.
      Ardagh, Seán.                                                Hanafin, Mary.
      Aylward, Bobby.                                              Harney, Mary.
      Behan, Joe.                                                  Haughey, Seán.
      Blaney, Niall.                                               Healy-Rae, Jackie.
      Brady, Áine.                                                 Hoctor, Máire.
      Brady, Cyprian.                                              Kelleher, Billy.
      Brady, Johnny.                                               Kelly, Peter.
      Browne, John.                                                Kenneally, Brendan.
      Byrne, Thomas.                                               Kennedy, Michael.
      Calleary, Dara.                                              Killeen, Tony.
      Carey, Pat.                                                  Kitt, Michael P.
      Collins, Niall.                                              Kitt, Tom.
      Conlon, Margaret.                                            Lenihan, Brian.
      Connick, Seán.                                               Lenihan, Conor.
      Coughlan, Mary.                                              Lowry, Michael.
      Cowen, Brian.                                                McEllistrim, Thomas.
      Cregan, John.                                                McGrath, Michael.
      Cuffe, Ciarán.                                               McGuinness, John.
      Curran, John.                                                Mansergh, Martin.
      Dempsey, Noel.                                               Martin, Micheál.
      Devins, Jimmy.                                               Moloney, John.
      Dooley, Timmy.                                               Moynihan, Michael.
      Fahey, Frank.                                                Mulcahy, Michael.
      Finneran, Michael.                                           Nolan, M. J.
                Finance Bill 2011:   26 January 2011.              Committee Stage


     Ó Cuív, Éamon.                                     Power, Peter.
     Ó Fearghaíl, Seán.                                 Power, Seán.
     O’Brien, Darragh.                                  Roche, Dick.
     O’Connor, Charlie.                                 Ryan, Eamon.
     O’Dea, Willie.                                     Sargent, Trevor.
     O’Donoghue, John.                                  Scanlon, Eamon.
     O’Flynn, Noel.                                     Smith, Brendan.
     O’Hanlon, Rory.                                    Treacy, Noel.
     O’Keeffe, Batt.                                    Wallace, Mary.
     O’Keeffe, Edward.                                  White, Mary Alexandra.
     O’Rourke, Mary.                                    Woods, Michael.
     O’Sullivan, Christy.


     Allen, Bernard.                                    McCormack, Pádraic.
     Bannon, James.                                     McEntee, Shane.
     Barrett, Seán.                                     McGinley, Dinny.
     Breen, Pat.                                        McGrath, Finian.
     Broughan, Thomas P.                                McGrath, Mattie.
     Bruton, Richard.                                   McHugh, Joe.
     Burke, Ulick.                                      McManus, Liz.
     Burton, Joan.                                      Mitchell, Olivia.
     Byrne, Catherine.                                  Morgan, Arthur.
     Carey, Joe.                                        Naughten, Denis.
     Clune, Deirdre.                                    Neville, Dan.
     Connaughton, Paul.                                 Noonan, Michael.
     Coonan, Noel J.                                    Ó Caoláin, Caoimhghín.
     Costello, Joe.                                     Ó Snodaigh, Aengus.
     Coveney, Simon.                                    O’Donnell, Kieran.
     Crawford, Seymour.                                 O’Dowd, Fergus.
     Creighton, Lucinda.                                O’Keeffe, Jim.
     D’Arcy, Michael.                                   O’Mahony, John.
     Deasy, John.                                       O’Shea, Brian.
     Deenihan, Jimmy.                                   O’Sullivan, Jan.
     Doherty, Pearse.                                   O’Sullivan, Maureen.
     Doyle, Andrew.                                     Penrose, Willie.
     Durkan, Bernard J.                                 Perry, John.
     English, Damien.                                   Quinn, Ruairí.
     Enright, Olwyn.                                    Rabbitte, Pat.
     Feighan, Frank.                                    Reilly, James.
     Ferris, Martin.                                    Ring, Michael.
     Flanagan, Charles.                                 Shatter, Alan.
     Flanagan, Terence.                                 Sheahan, Tom.
     Gilmore, Eamon.                                    Sheehan, P. J.
     Grealish, Noel.                                    Sherlock, Seán.
     Hayes, Brian.                                      Shortall, Róisín.
     Hayes, Tom.                                        Stagg, Emmet.
     Higgins, Michael D.                                Stanton, David.
     Hogan, Phil.                                       Timmins, Billy.
     Howlin, Brendan.                                   Tuffy, Joanna.
     Kehoe, Paul.                                       Upton, Mary.
     Kenny, Enda.                                       Varadkar, Leo.
     Lynch, Ciarán.                                     Wall, Jack.
     Lynch, Kathleen.

Tellers: Tá, Deputies John Cregan and John Curran; Níl, Deputies Emmet Stagg and Paul

 Question declared carried.

  An Ceann Comhairle: The next deferred division relates to section 41. Is the section
agreed? Agreed.

                  Finance Bill 2011:             26 January 2011.              Committee Stage

  An Ceann Comhairle: As we have passed 3 p.m., I am required to put the following question
in accordance with an order of the Dáil of 25 January 2010: “That the amendment set down
by the Minister for Finance to Part 2 of the Bill and not disposed of is hereby made to the Bill
and in respect of each of the sections undisposed of in the said Part, that the section or, as
appropriate, the section as amended, is hereby agreed to.”

  Question put:

                                       The Dáil divided: Tá, 81; Níl, 79.

      Ahern, Bertie.                                                Kenneally, Brendan.
      Ahern, Michael.                                               Kennedy, Michael.
      Ahern, Noel.                                                  Killeen, Tony.
      Andrews, Barry.                                               Kitt, Michael P..
      Andrews, Chris.                                               Kitt, Tom.
      Ardagh, Seán.                                                 Lenihan, Brian.
      Aylward, Bobby.                                               Lenihan, Conor.
      Behan, Joe.                                                   Lowry, Michael.
      Blaney, Niall.                                                Mansergh, Martin.
      Brady, Áine.                                                  Martin, Micheál.
      Brady, Cyprian.                                               McEllistrim, Thomas.
      Brady, Johnny.                                                McGrath, Michael.
      Browne, John.                                                 McGuinness, John.
      Byrne, Thomas.                                                Moloney, John.
      Calleary, Dara.                                               Moynihan, Michael.
      Carey, Pat.                                                   Mulcahy, Michael.
      Collins, Niall.                                               Nolan, M.J..
      Conlon, Margaret.                                             Ó Cuív, Éamon.
      Connick, Seán.                                                Ó Fearghaíl, Seán.
      Coughlan, Mary.                                               O’Brien, Darragh.
      Cowen, Brian.                                                 O’Connor, Charlie.
      Cregan, John.                                                 O’Dea, Willie.
      Cuffe, Ciarán.                                                O’Donoghue, John.
      Curran, John.                                                 O’Flynn, Noel.
      Dempsey, Noel.                                                O’Hanlon, Rory.
      Devins, Jimmy.                                                O’Keeffe, Batt.
      Dooley, Timmy.                                                O’Keeffe, Edward.
      Fahey, Frank.                                                 O’Rourke, Mary.
      Finneran, Michael.                                            O’Sullivan, Christy.
      Fitzpatrick, Michael.                                         Power, Peter.
      Fleming, Seán.                                                Power, Seán.
      Flynn, Beverley.                                              Roche, Dick.
      Gogarty, Paul.                                                Ryan, Eamon.
      Gormley, John.                                                Sargent, Trevor.
      Hanafin, Mary.                                                Scanlon, Eamon.
      Harney, Mary.                                                 Smith, Brendan.
      Haughey, Seán.                                                Treacy, Noel.
      Healy-Rae, Jackie.                                            Wallace, Mary.
      Hoctor, Máire.                                                White, Mary Alexandra.
      Kelleher, Billy.                                              Woods, Michael.
      Kelly, Peter.


      Allen, Bernard.                                               Clune, Deirdre.
      Bannon, James.                                                Connaughton, Paul.
      Barrett, Seán.                                                Coonan, Noel J..
      Breen, Pat.                                                   Costello, Joe.
      Broughan, Thomas P..                                          Coveney, Simon.
      Bruton, Richard.                                              Crawford, Seymour.
      Burke, Ulick.                                                 Creighton, Lucinda.
      Burton, Joan.                                                 D’Arcy, Michael.
      Byrne, Catherine.                                             Deasy, John.
      Carey, Joe.                                                   Deenihan, Jimmy.
                Finance Bill 2011:       26 January 2011.              Committee Stage


      Doherty, Pearse.                                      Neville, Dan.
      Doyle, Andrew.                                        Noonan, Michael.
      Durkan, Bernard J..                                   Ó Caoláin, Caoimhghín.
      English, Damien.                                      Ó Snodaigh, Aengus.
      Enright, Olwyn.                                       O’Donnell, Kieran.
      Feighan, Frank.                                       O’Dowd, Fergus.
      Ferris, Martin.                                       O’Keeffe, Jim.
      Flanagan, Charles.                                    O’Mahony, John.
      Flanagan, Terence.                                    O’Shea, Brian.
      Gilmore, Eamon.                                       O’Sullivan, Jan.
      Grealish, Noel.                                       O’Sullivan, Maureen.
      Hayes, Brian.                                         Penrose, Willie.
      Hayes, Tom.                                           Perry, John.
      Higgins, Michael D..                                  Quinn, Ruairí.
      Hogan, Phil.                                          Rabbitte, Pat.
      Howlin, Brendan.                                      Reilly, James.
      Kehoe, Paul.                                          Ring, Michael.
      Kenny, Enda.                                          Shatter, Alan.
      Lynch, Ciarán.                                        Sheahan, Tom.
      Lynch, Kathleen.                                      Sheehan, P.J..
      McCormack, Pádraic.                                   Sherlock, Seán.
      McEntee, Shane.                                       Shortall, Róisín.
      McGinley, Dinny.                                      Stagg, Emmet.
      McGrath, Finian.                                      Stanton, David.
      McGrath, Mattie.                                      Timmins, Billy.
      McHugh, Joe.                                          Tuffy, Joanna.
      McManus, Liz.                                         Upton, Mary.
      Mitchell, Olivia.                                     Varadkar, Leo.
      Morgan, Arthur.                                       Wall, Jack.
      Naughten, Denis.

Tellers: Tá, Deputies John Curran and John Cregan; Níl, Deputies Paul Kehoe and Emmet

  Question declared carried.

                                       NEW SECTION

  Deputy Joan Burton: I move amendment No. 90a:

    In page 196, before section 52, to insert the following new section:
                                           “PART 3
                                     Information on Tax Exiles

      52.—The Minister shall within one month from the passing of this Act prepare and lay
    before Dáil Éireann a report on the contribution made to the Exchequer and in particular
    the contribution in that regard as a result of the measures introduced by the Finance
    Act 2010.”.

The purpose of this amendment is to restate the position of the Labour Party on this issue.
Significant numbers of people — the Revenue Commissioners suggest the figure is between
2,000 and 3,000 — are tax exiles from this country but, although technically not resident for
tax purposes, they have the ability to come in and out of the country at frequent intervals, have
homes here and, to all intents and purposes, live large parts of their lives here. Such people
should make a contribution in this time of national economic emergency.
  When the Minister presented the 2010 budget in December 2009, he announced that he
would ensure a contribution was made to the country’s coffers by non-resident tax exiles.
                Finance Bill 2011:       26 January 2011.          Committee Stage

However, while people in the PAYE sector and in business ended up paying their increased
taxes almost immediately, nothing has happened yet in this regard. The Minister introduced
the universal social charge in his budget speech early in December of last year, and those with
private and public pensions were shocked when they opened their pension cheques this year
and found that even those with medical cards, who had previously been exempt from such
charges, and those with pensions of less than €26,000 — that is, most public service and private
pensioners — were paying the new universal social charge at the top rate of 7% on their
relatively small pensions.
   On big days in this 30th Dáil, as more and more emergency measures were introduced and
as the coffers of the State were being plundered for money to hand over to the banks, there
was a phrase that Fianna Fáil Deputies were particularly fond of using, namely, “We are all in
this together”. Surprise, surprise: we are not all in it together. The people who have the use of
clever tax advisers and accountants and who have offshore and onshore residences have been
able, during the boom years, to be resident in the country but not resident for tax purposes.
Following a campaign by the Labour Party, which I spoke about many times on the floor of
the House, it was agreed that tax exiles should contribute to the Exchequer. The Minister said
in his Budget Statement in December 2009 that he would make provision for this in 2010.
When I asked questions about it, I was told that no information would be available until
October 2010, and when October 2010 came, I was told “Sorry — we actually meant October
2011”. This is in contrast to the people who opened cheques this month to find they were
paying the new tax, the universal social charge, at fairly hefty levels from 1 January, having
heard about it only in December of last year.
   I ask the Minister for Finance and Fianna Fáil to agree to this modest amendment, which is
phrased the way it is in order to be acceptable under the rules of a money Bill, under which it
is impossible for the Opposition to table amendments that result in changes upwards or down-
wards in the taxation system. It is impossible for the Opposition to table motions that result in
changes upwards or downwards in the taxation system. We want to have the report one month
after this Act, because it is important, particularly for people in the PAYE sector, to know
what the Fianna Fáil mantra, “we’re all in this together”, actually means.
   One thing that has been most striking for Deputies on all sides of the House was the position
of the self-employed in the construction industry, whether contractors, sub-contractors or ordi-
nary workers, when the boom collapsed. Although they had been paying PRSI contributions
and relevant contracts tax, RCT, where tax was being deducted at source in the case of contrac-
tors, once they lost their jobs and money, they could not claim unemployment benefit. Think
of all the sub-contractors on the Pierse contract for the building of schools who found they
could not be paid except by the liquidator, who had no money, even though this was a State-
initiated PPP. They might have had a claim to job seeker’s allowance but not to job seeker’s
benefit. However, if a spouse was working and earning a relatively modest amount, because
the job seeker’s allowance is means tested, this meant in many cases that the unemployed
partner had no claim to that either. Very hard working self-employed people around the coun-
try, who, despite their businesses failing, made contributions, but have no entitlement to any
type of State support. This is a major social issue all over Ireland. Remember that many tax
exiles who have made fortunes in development and construction moved themselves and their
wives offshore to facilitate tax planning and then came back to Ireland. Now look at the small
people who are self-employed and how badly many of them have fared.
  I recommend the Minister accepts that this report should be put before the House. The cost
would be minimal, but it would give us the numbers of non-resident tax exiles and the par-
ameters regarding the contributions the Minister for Finance believes it is reasonable they
should make. I commend the amendment to the House on behalf of the Labour Party.
                Finance Bill 2011:        26 January 2011.           Committee Stage

   Deputy Brian Hayes: I welcome this amendment tabled by Deputy Burton and the Labour
Party. As she rightly says, a Finance Bill, while it deals with income and expenditure and sets
out a tax code for the full administrative year, is probably the only vehicle through which
Members of the House can seek from the Minister and the Department of Finance a report on
issues of concern that arise from time to time within the tax code.
   No doubt the Minister of State, Deputy Martin Mansergh, is aware from his constituents in
Tipperary South that the matter Deputy Burton raised is an issue of genuine concern. Despite
the minimal changes that have occurred in recent years, there is a necessity for a comprehensive
report, as Deputy Burton has said, to be able to reassure compliant taxpayers, the PAYE sector
in particular, that there is fairness in terms of how these individuals are treated, what their
status is, the length of time they stay in this country and the parameters around that. It is
inherently right to insert this amendment in the context of this Bill to allow for that report.
Even if the Minister was to assure the House that while it might not be possible in the context
of this Bill but at some time in the near future a report would be issued by his Department
along the lines suggested by Deputy Burton, some good could come from that.
   The changes announced by the Minister for Finance on 7 December, the changes on budget
night and those being enacted in this legislation have a dramatic effect on ordinary people,
particularly those on low means. We know the consequences of the new social charge in respect
of taxpayers on incomes of €4,000 or more now in the net, despite the amendments announced
yesterday. The most obvious unfairness, irrespective of the failure to index tax credits, is that
there is now a marginal rate for taxpayers on an income of €32,000. Once an income reaches
€32,000, a person is paying the top rate of tax, along with the 7% and 4% social charge,
effectively bringing the top marginal rate to 52%. Having had a period over many years when
tax was relatively low, we are rapidly moving to a very high marginal rate. It is a difficult
situation, where incomes are being slashed and in many instances where people are on part-
time or no longer able to access overtime. They are also being affected by a very high new
marginal rate of tax of the order of 52%. It is within that context that this debate is being
   People know the scale of the adjustment that has to occur in this country over the next few
years to bring Ireland back to some form of economic stability. People are prepared, albeit in
difficult circumstances, to make the adjustments in terms of their household income and in
terms of the income that exists within this society. However, what they want to see throughout
is a fundamental principle of fairness. People will do the heavy lifting in respect of the adjust-
ments that have to occur if they believe that those at the top, in particular, are shouldering the
burden and are prepared to make a contribution over and above ordinary and lower income
taxpayers. We have an unusual situation, a type of “flight of the earls” in which people enter
and leave this country, being treated as some type of high-bred class in terms of their tax status.
That we allow such a situation to exist within the tax code adds to sense of unfairness that has
to be tackled, so I very much support the amendment.
  I am all ears to hear from the Minister of State, in the event that it cannot be done in the
context of the Bill, why this might be the case. However, we have to be aware of this issue if
we are asking people on relatively small means to do much of the heavy lifting in this economy
over the course of the next few years. The tax code has got to be and must be seen to be fair
to all.

  Deputy Arthur Morgan: I support the sentiment behind the amendment. It is interesting that
an amendment must be tabled in this way, asking for a report to be laid before the House, in
order to deal with the issue of tax exiles. A practical amendment could be lifted and accepted
by the Government. In saying that, I magnify two aspects that are wrong with this House. One
                Finance Bill 2011:        26 January 2011.           Committee Stage

must invoke ingenuity in order to get around the rules of the House. If one manages to do so,
the Government will not accept the amendment because of a convention in the House. In the
time I have been here, the Government has accepted two or three amendments from the
Opposition. This is telling. It says it all about how this place operates. It is crazy.
  Millionaires and billionaires are avoiding paying tax while those on the new minimum wage
are caught to some degree by the universal social charge. People are swanning around, not
paying their fair share. The Government ignored suggestions in the Sinn Féin pre-budget sub-
mission, which sought a fair taxation system and a new tax band of 48% on those earning in
excess of €100,000. This only covered that portion of individuals’ income but was ignored by
the Government. The other important element of the submission was to introduce a wealth
tax. This amounts only to 1% and concerns wealth in excess of €1 million. There was an
income-related context so that a pensioner living in a little cottage in Ballsbridge, which could
be worth substantially in excess of €1 million——

  Deputy Joan Burton: Not any more.

  Deputy Arthur Morgan: Perhaps some are still in that category, albeit reduced in value.

 Deputy Joan Burton: It would need to be a cottage orné like in the constituency of the
Minister of State.

  Deputy Brian Hayes: There are a few of them.

  Deputy Martin Mansergh: That is in State control.

  Deputy Arthur Morgan: Did the Government want to deal with a fair taxation system,
whether concerning tax exiles or the wealth I have described? The Government patently
ignored it and went after the usual suspects, those on low incomes across the board. That is
grossly unfair. People said that Sinn Féin is not prepared to increase taxation but of course we
are. We are prepared to introduce cuts in the public sector. We have outlined that in terms of
capping salaries of €100,000 and dealing with the pay of Ministers and Oireachtas Members.
People ignored what we were proposing. Let us call the adjustments cuts.
  It would be interesting if the Government accepts this amendment. Perhaps the Leas-Cheann
Comhairle can advise on the following matter. Will this be invoked one month after the passing
of the Bill? Does that mean that the Dáil will not be sitting by then? I am sure there is provision
for this somewhere.

  An Leas-Cheann Comhairle: The Chair cannot make any presumption on this point.

  Deputy Arthur Morgan: It is the prerogative of the Taoiseach. I look forward to hearing
from the Minister of State.

  An Leas-Cheann Comhairle: The amendment concerns information on tax exiles and section
52 concerns VAT.

  Deputy Martin Mansergh: Unless requested, I will only address what has been discussed.
  I accept it is a fraught question and there are genuine concerns on this matter on all sides of
the House. The difficulty about it is that, in this sense, we are not an island and the greater the
wealth, the greater the mobility. One only has to read the press across the water for debates
that reach into politics, where treasurers of parties are involved in non-domiciled rules. I do
not propose to accept the amendments but for the following reasons. The report proposed by
Deputy Burton is clearly a report on the contribution to the Exchequer made by so-called tax
                Finance Bill 2011:        26 January 2011.           Committee Stage

  [Deputy Martin Mansergh.]
exiles. The Minister has stated on previous occasions that he is informed by the Revenue
Commissioners that there is no one register or list of so-called tax exiles and nothing in Irish
law thus far makes reference to tax exile status.
   The taxation of individuals in the State is in line with that prevailing in most OECD juris-
dictions. Individuals who are not resident for tax purposes pay tax here only on income arising
in this State. They pay tax on income arising in the State and from income derived from
working here. Many individuals — I am not saying most or all — who declare on tax returns
that they are non-resident in this State do not have an Irish address. Many of these non-
residents are foreign nationals or have a foreign domicile and many non-resident Irish citizens
or Irish domiciliaries included in this figure may have become non-resident for reasons unre-
lated to taxation but may have retained Irish investments such as rental property. Individuals
leaving the State are not required to give reasons for leaving. In other words, it is not true to
say that 6,000 individuals, or whatever number is suggested, are tax exiles. Some non-residents
have an Irish tax liability but it is not true to say that all or most of them are Irish domiciled
individuals who have moved out of Ireland for tax reasons. As there is no definition of tax
exile in Irish law, nor any way of determining how many non-resident taxpayers are non-
resident for tax reasons, it is difficult to prepare a report on the subject.
  In referring to the measures introduced in their Finance Act 2010, the Deputy is presumably
referring to the domicile levy charged on an individual Irish domiciled and an Irish citizen
whose worldwide income exceeds €1 million, whose Irish located property is greater than €5
million and whose liability to Irish income tax is less than €200,000.
  Incidentally, in the previous year’s Finance Act, the Minister abolished the Cinderella rule.
This was originally introduced when the Labour Party was part of the Government. Before the
abolition, an individual could be present in the State for most or practically all of the day,
provided he or she left just before midnight. Hence the name Cinderella.

  Deputy Joan Burton: I think I created that name.

  Deputy Brian Hayes: Cinderella only had one shoe.

  Deputy Martin Mansergh: Most of these folks might have a bit more than that. The current
rules state that an individual can be present in the State for 182 days or less and still be non-
resident. As it is difficult to estimate the number of individuals who satisfy this criteria, it is
not possible to predict the number of individuals subject to the levy or the likely yield from
the measure. This is the reason for regarding the amendment as premature. The first payment
date for the domicile levy, as Deputy Burton correctly pointed out, is 31 October 2011 in
respect of the 2010 tax year. Once there is a yield from the levy, it would be more sensible to
prepare a report on the subject. Whether I am in the House, I shall look forward to it with
interest and anticipation. This point has been much discussed in the House and in the relevant
committee. I look forward to how the next Government will deal with this subject.

  An Leas-Cheann Comhairle: Deputy Burton, how stands the amendment?

  Deputy Joan Burton: May I reply briefly?

  An Leas-Cheann Comhairle: Yes.

  Deputy Joan Burton: The Minister of State said it all there. I wish him the best of good
fortune in returning to the House but, obviously, that will come down to the voters of south
                 Finance Bill 2011:        26 January 2011.            Committee Stage

Tipperary. The Labour Party has an excellent candidate there in my Seanad colleague, Senator
Phil Prendergast, who I hope will also be returned to this House.

  Deputy Brian Hayes: She is no Cinderella.

  Deputy Joan Burton: She is not a Cinderella, rather she comes from a background of having
been a very experienced professional midwife. It she is elected to this House, it will be a first
for this House to have a Member who was a professional midwife of long standing and who
would have such experience of the health services.
   The Minister of State said it all in one, namely, that if the first contributions from the arrange-
ments entered into in last year’s Finance Act and announced in 2009 produce a contribution,
it will only come in, as it were, in October 2011. For the many people absolutely astonished by
the rigour and level of the universal social charge, they basically got about three weeks’ notice
of it and bearing in mind that notice period included Christmas and all the bad weather at that
time, it is no wonder people did not necessarily spot it in the budget coverage.
   I was involved in a debate here on budget night with the former Minister, Deputy Harney,
and I raised with her the issue of medical card holders having to pay the new universal social
charge. If I recall correctly, she stressed that it was the policy of the Government to decouple
the whole issue of taxation and medical cards. People who were setting out the policy did not
have regard to the level of contribution required by people in quite poor economic circum-
stances and they were going to proceed with the measure, partly because of the IMF. This is
one of the problems with the Irish taxation system. The former Taoiseach, Garret FitzGerald,
has spoken about it on a number of occasions. The Labour Party, Fine Gael and Fianna Fáil
would disagree on many tax issues and on the effectiveness and fairness of taxation.
   We have a hollowed out tax system in respect of which use is made of an enormous variety
of loopholes and contrivances and tax advisers are used across a wide range of taxes. There
are people with significant wealth, influence and power whose view of taxation in terms of a
contribution is “We will not pay a cent”. We do not have, as there is in other countries, an
ethos whereby one makes a contribution, even if one is very wealthy and such a person does
not use his or her wealth status to avoid making a contribution. It is not enough for somebody
who has become very wealthy and who is very successful in business to say that his or her
success in business — which is celebrated — involves him or her providing employment for
people, even though that is welcome. Many multimillionaires and billionaires are to congratu-
lated on their success and good fortune. In some cases some of them inherited their wealth.
They just happened to be born in the right spot with the right name, but in many cases people
are substantially self-made or have made fortunes built on more modest amounts of money
that their parents may have left them.

  An Leas-Cheann Comhairle: It would be good if we could make some progress.

  Deputy Joan Burton: Such people cannot simply avoid making their fair contribution. If
reform in this area is to be introduced by the next Government, it will be difficult because
these are very powerful people, with vested interests and they employ the best lawyers in the
world. We have to get everyone in this country contributing at an effective rate. That is the
only way we will keep taxes low and moderate, which is what we need. We must get everyone
to contribute.
  It is regrettable that for seven or eight years Fianna Fáil — going back to the time of Charlie
McCreevy, moving on to the then Minister for Finance, Deputy Brian Cowen, and now the
current Minister, Deputy Brian Lenihan — has ducked and dived on this issue. I think it was
I who coined the term the Cinderella clause in terms of midnight, which has become part of
                Finance Bill 2011:        26 January 2011.          Committee Stage

  [Deputy Joan Burton.]
taxation language. When the Cinderella clause came in approximately 18 years ago, based on
a British clause, most very wealthy people in Ireland then did not have personal helicopters to
take a little ride out over Lambay island or Howth Head out of the jurisdiction for a couple of
hours and then hop back again. What we need, and I hope it may emerge in the coming
election, is a consensus from all the parties that even people of great power, wealth and influ-
ence — who are widely and correctly admired by many and many of whom I know are very
charitable — must contribute their fair share. I ask the House to support the Labour Party

  An Leas-Cheann Comhairle: The Deputy is pressing the amendment.

  Deputy Joan Burton: Yes.

  An Leas-Cheann Comhairle: The vote will be deferred until 4.30 p.m. in accordance with the
order of the House.

  Section 52 agreed to.

                                         SECTION 53

  Question proposed: “That section 53 stand part of the Bill.”

  An Leas-Cheann Comhairle: This section is opposed by Deputy Noonan.

  Deputy Brian Hayes: We oppose this section. I am interested in hearing from the Minister
of State the rationale on the question of consecutive days. This section which is an amendment
to the principal Act substitutes 28 consecutive days for seven consecutive days and I want
to hear from the Minister of State the purpose of that in respect of this amendment of the
principal Act.

  Deputy Martin Mansergh: I do not propose to accept this amendment. Section 53 of the Bill
amends section 17 of the VAT Consolidation Act 2010 to extend the notification requirements
on foreign-based mobile traders, namely persons not established in the State supplying goods
for consideration in the State.
  Section 17 provides that where a premises provider allows a foreign-based mobile trader to
supply goods for consideration on his or her land for a period of less than seven consecutive
days, the premises provider must notify Revenue of the mobile trader, and this notification
must be made 14 days in advance of when the trading takes place. This arrangement informs
Revenue that the mobile traders are trading in the State and Revenue can then visit these
premises to ensure tax possibly due by these foreign-based traders is returned and paid to the
Exchequer. Currently, there is no obligation on premises providers to make such advance
notification to Revenue if the mobile trader trades in goods for periods in excess of seven days.
  The stipulation on seven days is now considered to be too restrictive, particularly in reference
to the types of events, now more commonplace and occurring nationwide, but lasting for
periods in excess of seven days, such as boat races, fairs, Christmas markets etc. Some of these
events have up to 70 stalls and many traders are from mainland Europe, but not established
  Section 53 amends section 17 to provide that the period of trading by a foreign mobile trader,
which would require a premises provider to make advance notification to Revenue, is being
extended from seven days to 28 days. I would just clarify that the period provided for notifi-
cation by premises providers, currently 14 days, is not being amended by section 53.
                Finance Bill 2011:       26 January 2011.          Committee Stage

  This amendment is an anti-evasion measure to ensure that Revenue is aware of various
different events happening countrywide, lasting up to 28 days. The information is received in
the various Revenue districts and compliance officers are then sent out to visit these premises
to ensure tax properly due by these foreign-based mobile traders is returned and paid to the
  I repeat, this amendment will assist in combating tax evasion by foreign-based mobile traders.
Perhaps in the light of that explanation, the Deputy opposite might consider withdrawing the

  Deputy Brian Hayes: Will the Minister of State give some examples to the House of foreign-
based mobile traders? Is the notification period to be extended? That would seem sensible
enough as a means of making it clear to the authorities that a certain trader is coming such
that they could ensure they have the wherewithal to deal with the matter. However, in doing
that, would conditions be made more restrictive for traders entering the country?

  Deputy Martin Mansergh: I gave some examples and referred to boat races, fairs and
Christmas markets. We can all imagine events around the country that have many stalls. Such
events occur fairly frequently in towns and parts of cities. I do not know what examples are
required beyond those I have listed.

   Deputy Brian Hayes: Section 53 is effectively an amendment of the principal Act. Where did
it come from? Was it flagged to the Department by the Revenue Commissioners? Who lobbied
for a change to the principal Act?

 Deputy Martin Mansergh: The Revenue Commissioners. As the Deputy would expect, the
Revenue Commissioners have a part to play in respect of most anti-tax-evasion measures.
There are also traders entering the country through Northern Ireland.

  Question put and agreed to.

                                         SECTION 54

  Question proposed: “That section 54 stand part of the Bill.”

  Deputy Brian Hayes: Is this section an amendment to the principal Act in respect of the
application of VAT to immovable goods provided by public bodies? I presume the measure
extends VAT to local authorities’ goods and services in respect of which no VAT applied
heretofore. The Minister of State may correct me if I am wrong. It is an important issue.
   The section deals with the capital goods scheme. In amending the principal Act, have the
Revenue Commissioners and the Department assessed the likely financial imposition of the
proposal on public bodies? I am aware of a case in my local authority area in respect of which
              VAT is deemed to apply based on decisions of the European courts. I am not
4 o’clock     exactly certain that the legislation applies in this instance. I am interested in
              hearing the rationale for the change the Minister of State is proposing to make
to the principal Act.

  Deputy Martin Mansergh: This section amends section 95 of the Value-Added Tax Consoli-
dation Act, which deals with transitional arrangements relating to deductibility for housing and
burial plots sold by public bodies that have been subject to VAT from 1 July 2010. The amend-
ment provides for a deductibility adjustment, which is to be no greater than the amount of
VAT due on the sale, for housing and burial plots sold by public bodies on or after 1 July 2010
                Finance Bill 2011:        26 January 2011.           Committee Stage

  [Deputy Martin Mansergh.]
which were required or developed by them before that date and where there is otherwise no
entitlement to VAT input credit.
   Since 1 July 2010, the deductibility adjustment has been provided administratively pending
the necessary amending legislation. If I understand the section correctly, it is less an imposition
and more a relief for public bodies. Sometimes, if one does not have one side, one cannot claim
it on the other.

  Deputy Brian Hayes: Is the measure only implementing a decision taken last year in respect
of the change?

  Deputy Martin Mansergh: It is a logical conclusion of that.

  Deputy Brian Hayes: That is fine.

  Question put and agreed to.

  Sections 55 and 56 agreed to.

                                          SECTION 57

  Question proposed: “That section 57 stand part of the Bill.”

  Deputy Joan Burton: The first part of section 57 deals with the exemption from VAT of
public postal services provided as part of the universal service set out in the EU postal
directives. It extends this both to An Post and any other designated provider of that service. I
presume this means postage stamps will remain free of VAT, in addition to postal services, be
they the traditional services provided by An Post or those provided by new providers that may
be competing in the deregulated market.
  As we come to the end of the life of the 30th Dáil, it is appropriate to state on the record
that very many postal workers, bus drivers and other drivers in various public services did a
lot to help those who would otherwise have been very isolated and alone during the recent
cold spell. In the rush to deregulate postal services and amend or lose the universal postal
service, this assistance should be noted. In a country like Ireland, which has a large number of
roads and some very isolated housing, the services of postmen and postwomen are really
valued. Their services comprise an important part of the fabric of the State, particularly in
rural areas.
  Now that there are many changes and a collapse in banking, it may well be that instead of
having large numbers of banks in Ireland, particularly in smaller towns and some villages, there
will be but one large Irish bank. A bank comprises a very important part of community services,
particularly for those in isolated areas and those on low incomes.
   I welcome the confirmation that cultural services are to remain exempt from VAT. I am sure
the Minister of State must have been influential in that regard. The exemption is to apply to
charges such as those to enter museums and stately homes. It is helpful that there is confir-
mation in this regard. The measure helps to keep prices competitive, both for the Irish and
tourists from abroad. Last year, following an EU court case, local authorities had to charge
VAT on services provided. I welcome the recognition of organisations such as museums. It
allows them to continue to apply the VAT exemption to their services.

  Deputy Martin Mansergh: I endorse everything Deputy Burton said, especially on the value
of the postal service. As she pointed out, the service is particularly valuable in rural areas,
                Finance Bill 2011:        26 January 2011.          Committee Stage

where on weekdays one can predict within an hour the time of arrival of a postman. Despite
the discussions, debates and rationalisation attempts of the past 20 years, the service to the
door continues in the majority of cases. Long may it do so.
   I will confirm explicitly that stamps are free from VAT. I take a certain interest in stamps,
having been for many years a member of the philatelic advisory committee. I welcome that the
standard internal post rate of 55 cent has been maintained for many years.

  Deputy Brian Hayes: We were wondering why Mr. Haughey was going to be on the next
range of stamps.

  Deputy Martin Mansergh: If Fine Gael is in Government in 2026, perhaps it will approve a
centenary stamp.

  Deputy Brian Hayes: We will definitely keep the Minister of State on that body.

  Deputy Martin Mansergh: It is normal for a Taoiseach on the centenary of his birth. No
exception would or should be made for Mr. Haughey.

  Deputy Brian Hayes: The Minister of State should remain on that committee.

  Deputy Martin Mansergh: I needed to resign when I became a Minister of State.
  Like Deputy Burton, I welcome the clarification regarding cultural services. As we know, all
of the principal cultural institutions and many of the buildings run by the Office of Public
Works are free of entry charges. Some places have an entry charge where it acts as a rationing
mechanism or there is a high level of foreign visits. Even in museums and galleries, there tends
to be a charge on special exhibitions to make them financially viable. Our existing policy, which
has lasted for many years, is essentially a good one.

  Deputy Ulick Burke: I ask for the Chair’s indulgence while I stray slightly as others have

  Acting Chairman (Deputy Brian O’Shea): The Deputy does not do so often.

  Deputy Ulick Burke: Will the Minister of State ask the Government to reconsider its recent
decision to abolish the patent royalty relief? During the past four or five years, various Mini-
sters have often referred to our smart economy and the importance of its continued develop-
ment. One imagines we would be encouraging the people in question to be innovative and to
develop their entrepreneurial endeavours. As such, the abolition of this relief is a serious
retrograde step in respect of the many small people who have tried to develop indigenous
industries, particularly in the current climate. I fully accept that many of the big people, as it
were, abused the system to some degree.

  Deputy Martin Mansergh: On a point of order, to which section is the Deputy referring?

  Deputy Brian Hayes: It is a general point on VAT.

  Deputy Ulick Burke: I beg the Minister of State’s indulgence in straying slightly from the

  Deputy Martin Mansergh: It relates to no section of the Bill.

   Deputy Ulick Burke: No, but the situation is serious and I ask the Minister of State to redress
it. Many people have been innovative because of the incentives provided up to a maximum of
                Finance Bill 2011:        26 January 2011.           Committee Stage

  [Deputy Ulick Burke.]
€5 million. Most of our small industries, particularly outside the major urban areas and indus-
trial centres, benefited from the support provided through these incentives.
  The Government repeatedly discussed the smart economy, but how can we reconcile the
abolition of the relief with the considerable support that the Government is providing to
research and development at third level? People who are trying to develop enterprises outside
third level institutions and on their own initiative are being penalised. Will the Minister of
State re-examine this issue and reduce the relief in such a way as to eliminate those who were
abusing it? Instead of a complete abolition, the relief could be reduced by half or even 33%.
There is no point in throwing the baby out with the bath water. It would be an iron-fisted
response. I would appreciate it if the Minister of State could inform the House about the saving
that will accrue from the abolition of the relief and about whether a cost benefit analysis has
been carried out.
  We sell ourselves as trying to encourage foreign companies to come to Ireland and the
consequential research and development, particularly in University College Galway, where
outstanding and innovative work has been done. Galway has become a hub for medical devices.
Despite the fact that money is being pumped into research and development at third level, will
such work now be de-incentivised? Reconciling the abolition of the relief with where we want
to go is difficult.
  This might be my last opportunity to contribute in the House. I would like to offer a sincere
word of thanks to my colleagues, first and foremost those in Galway East, and to wish those
who are retiring well, those being, Deputies Connaughton and Treacy. In particular, I wish
Deputy Treacy, who stated yesterday that he will not be going forward for re-election, a speedy
return to health. I also thank the Minister of State, Deputy Mansergh, for his outstanding work
and the support he gave to the people severely affected by the recent flooding in east County
Galway, be they in the Ballinasloe or Gort area. Some doubted him, but he followed through
on his assertion that he would take the lead role in driving relief forward. I compliment him in
this regard and hope that the work will continue to provide relief for the many people whose
incomes and households suffered.
  It is regrettable that we cannot get many insurance companies to respond to the needs of
people. They have taken a heavy-handed approach by refusing people home insurance. Those
people will live in constant fear until such time as full remedial works have been carried out
to prevent further flooding.
   I wish all candidates, particularly my colleagues, well in the forthcoming election. Deputy
Brian Hayes is a former student of mine, one of whom I am proud. I wish him well, not only
in this——

  Deputy Brian Hayes: Now the Minister of State knows who to blame.

  Deputy Ulick Burke: I wish him well for the future.
  We must examine issues throughout the country, in particular those that arise frequently.
The question of special needs is important. When legislation was introduced in the House, the
only missing element related to the rights of people with special needs. Sure enough, it turned
out to be an important element. It is regrettable that the rights to which they were entitled
were seriously qualified by the availability of resources. Many of the people we as public
representatives encountered ten or 20 years ago have grown old. Their greatest fear is the
future facing themselves and their siblings. It is a difficult future. They campaigned to achieve
even the basic entitlements and it was a long and difficult struggle. It is regrettable that special
                Finance Bill 2011:       26 January 2011.          Committee Stage

needs children have to go without. They are being put back into mainstream education and
they will lose out substantially and their future lives will be restricted as a result.
   There are many other issues I would like to have seen addressed. I greatly appreciate the
Acting Chairman’s flexibility with regard to time. We must accept there are so many fine
people in the public service and in the Civil Service who are never recognised for their true
worth and the work they do for the community and for the services provided by Departments.
Their positive response on all occasions to our representations has been wonderful. I pay
tribute to them all.

  Deputy Martin Mansergh: The immediate matter raised by Deputy Burke relates to income
tax and corporation tax in sections of the Bill which were dealt with this morning. However, I
will convey the Deputy’s comments to the Minister. I thank him for his camaraderie in the
Seanad and the Dáil. I deeply appreciate his recognition of the work we are doing on flood
relief in Galway and which will continue under the next Government. More than 62 minor
relief works were carried out in 2010 in south and east Galway, and major schemes, including
those in Claregalway. We are tidying up the Ballinasloe area. Intensive discussions are being
carried on with the insurance industry to ensure that they recognise where works are being
done that this alters the risk factor. A very small handful of properties cannot be economically
managed by works and practically all of them are in the Deputy’s part of County Galway. The
Minister, Deputy Éamon Ó Cuív and myself are trying to address this with the very small
number of people involved.
  I wish Deputy Burke the very best in the years ahead and I thank him for his long public

  Deputy Brian Hayes: I wish to ask a question on section 57.

  Acting Chairman (Deputy Brian O’Shea): We have five minutes in which to finish with two
sections but I will allow the Deputy.

  Deputy Brian Hayes: I did not have an opportunity to refer to the betting tax issue when it
was being discussed in an earlier section. I am dealing now with section 57 but I am aware that
the House dealt with the betting tax issue earlier.

  Acting Chairman (Deputy Brian O’Shea): I ask Deputy Hayes to deal with section 57 as
these sections must be finished with by 4.30 p.m. and another section awaits.

  Deputy Brian Hayes: I just want to ask a question. The third section of this new section
refers to the VAT on betting. The first section deals with the question of postal services and
the second section on cultural institutions. If I can have the indulgence of the Chair, I wish to
ask one question which I was unable to ask at the time because I was not in the Chamber. I
refer to the 1% turnover tax and the annual renewal fee which will now be charged to all the
operators who provide Internet gambling, seven out of ten of whom are outside the State,
effectively offshore. Did the Minister consider the question of increasing the annual renewal
fee for all operators? I understand from the previous section that this fee ranges from €5,000
up to €100,000. Has the Minister considered imposing a higher starting point which would
ensure that the fly-by-night operators would be persuaded not to come into our market? It will
be very difficult to collect the 1% turnover tax from operators who are not based in the State
on the basis that we do not have a particularly good record in chasing down turnover in oper-
ations not based here unless we have armies of people in the Revenue who will be able to
chase after these issues.
                Finance Bill 2011:         26 January 2011.             Committee Stage

  [Deputy Brian Hayes.]

  In the context of this section, has the Minister looked at an enhanced annual renewal fee
which is proposed in the Bill to ensure that the revenue will be larger than just 1% and those
who are not based here and who might attempt to hide the turnover tax will, at the very least,
have to make some significant contribution by way of looking for a licence to operate here? I
ask this in the context of section 57(1)(c). This subsection will come into operation on such
day or days as the Minister for Finance might appoint by order and different days as may be
appointed for different provisions for different purposes. Why is the operation of the subsection
subject to ministerial order, as opposed to other sections where an operating date is clearly

  Deputy Martin Mansergh: I will explain the purpose of the section. Paragraph (c) replaces
paragraph 10(1) of the schedule relating to VAT exemption for certain types of gambling by
inserting a new subparagraph (1A). This new provision includes within the current VAT
exemption bets and commissions that have been made subject to excise duty by a separate
provision of this Bill in section 46. The bets and commissions in question are bets entered into
remotely by bookmakers with persons in the State and the commissions of betting exchanges
earned from bets entered into on the exchange by persons in the State. The reason the amend-
ment is subject to a ministerial commencement order is because the application of Internet
betting duty is itself subject to a ministerial order.

  Question put and agreed to.

  Section 58 agreed to.

 Acting Chairman (Deputy Brian O’Shea): Now that the House has dealt with section 58, we
must take the deferred division on amendment No. 90a in the name of Deputy Burton.

  Amendment put:

                               The Committee divided: Tá, 77; Níl, 80.

      Allen, Bernard.                                         Feighan, Frank.
      Bannon, James.                                          Ferris, Martin.
      Barrett, Seán.                                          Flanagan, Charles.
      Breen, Pat.                                             Flanagan, Terence.
      Broughan, Thomas P.                                     Gilmore, Eamon.
      Bruton, Richard.                                        Hayes, Brian.
      Burke, Ulick.                                           Hayes, Tom.
      Burton, Joan.                                           Higgins, Michael D.
      Byrne, Catherine.                                       Hogan, Phil.
      Carey, Joe.                                             Howlin, Brendan.
      Clune, Deirdre.                                         Kehoe, Paul.
      Connaughton, Paul.                                      Kenny, Enda.
      Coonan, Noel J.                                         Lynch, Ciarán.
      Costello, Joe.                                          Lynch, Kathleen.
      Coveney, Simon.                                         McCormack, Pádraic.
      Crawford, Seymour.                                      McEntee, Shane.
      Creighton, Lucinda.                                     McGinley, Dinny.
      D’Arcy, Michael.                                        McGrath, Finian.
      Deasy, John.                                            McGrath, Mattie.
      Deenihan, Jimmy.                                        McHugh, Joe.
      Doherty, Pearse.                                        McManus, Liz.
      Doyle, Andrew.                                          Mitchell, Olivia.
      Durkan, Bernard J.                                      Morgan, Arthur.
      English, Damien.                                        Naughten, Denis.
      Enright, Olwyn.                                         Neville, Dan.
                 Finance Bill 2011:   26 January 2011.                Committee Stage


     Noonan, Michael.                                    Reilly, James.
     Ó Caoláin, Caoimhghín.                              Ring, Michael.
     Ó Snodaigh, Aengus.                                 Shatter, Alan.
     O’Donnell, Kieran.                                  Sheahan, Tom.
     O’Dowd, Fergus.                                     Sherlock, Seán.
     O’Keeffe, Jim.                                      Shortall, Róisín.
     O’Mahony, John.                                     Stagg, Emmet.
     O’Shea, Brian.                                      Stanton, David.
     O’Sullivan, Jan.                                    Timmins, Billy.
     O’Sullivan, Maureen.                                Tuffy, Joanna.
     Penrose, Willie.                                    Upton, Mary.
     Perry, John.                                        Varadkar, Leo.
     Quinn, Ruairí.                                      Wall, Jack.
     Rabbitte, Pat.


     Ahern, Bertie.                                      Kelly, Peter.
     Ahern, Dermot.                                      Kenneally, Brendan.
     Ahern, Michael.                                     Kennedy, Michael.
     Ahern, Noel.                                        Killeen, Tony.
     Andrews, Barry.                                     Kitt, Michael P.
     Andrews, Chris.                                     Kitt, Tom.
     Ardagh, Seán.                                       Lenihan, Brian.
     Aylward, Bobby.                                     Lenihan, Conor.
     Behan, Joe.                                         Lowry, Michael.
     Blaney, Niall.                                      McEllistrim, Thomas.
     Brady, Áine.                                        McGrath, Michael.
     Brady, Cyprian.                                     McGuinness, John.
     Brady, Johnny.                                      Mansergh, Martin.
     Browne, John.                                       Moloney, John.
     Byrne, Thomas.                                      Moynihan, Michael.
     Calleary, Dara.                                     Mulcahy, Michael.
                                                         Nolan, M.J.
     Carey, Pat.
                                                         Ó Cuív, Éamon.
     Collins, Niall.
                                                         Ó Fearghaíl, Seán.
     Conlon, Margaret.                                   O’Brien, Darragh.
     Connick, Seán.                                      O’Connor, Charlie.
     Coughlan, Mary.                                     O’Dea, Willie.
     Cowen, Brian.                                       O’Donoghue, John.
     Cregan, John.                                       O’Flynn, Noel.
     Cuffe, Ciarán.                                      O’Hanlon, Rory.
     Curran, John.                                       O’Keeffe, Batt.
     Devins, Jimmy.                                      O’Keeffe, Edward.
     Dooley, Timmy.                                      O’Rourke, Mary.
     Fahey, Frank.                                       O’Sullivan, Christy.
     Finneran, Michael.                                  Power, Peter.
     Fitzpatrick, Michael.                               Power, Seán.
     Fleming, Seán.                                      Roche, Dick.
     Flynn, Beverley.                                    Ryan, Eamon.
     Gogarty, Paul.                                      Sargent, Trevor.
     Gormley, John.                                      Scanlon, Eamon.
     Hanafin, Mary.                                      Smith, Brendan.
     Harney, Mary.                                       Treacy, Noel.
     Haughey, Seán.                                      Wallace, Mary.
     Healy-Rae, Jackie.                                  White, Mary Alexandra.
     Hoctor, Máire.                                      Woods, Michael.
     Kelleher, Billy.

Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies John Cregan and John

 Amendment declared lost.

                Finance Bill 2011:        26 January 2011.          Committee Stage

                                         SECTION 59

  Question proposed: “That section 59 stand part of the Bill.”

   Deputy Liz McManus: Regarding the health insurance levy, it is very hard for people to
understand how the Supreme Court made a landmark decision on risk equalisation in 2008 and
yet the Government has stated that legislation to deal with the issue will not be ready until
2013. This levy is an imposition on people who, in many cases, are finding it difficult to manage
already. It also raises fundamental issues of health policy. We have a health service with major
difficulties; we have extraordinary inefficiencies and at the same time extraordinary stresses
and strains on our hospital service. We have an undermanned general practice primary care
service and are not investing enough in general practitioners’ training. People are being charged
for a visit to a GP in a way that would be unacceptable in any other European country. Why
is the Government perpetuating inequalities at a time when there should have been a funda-
mental reappraisal of health policy and how the health service operates?
  This is my last time speaking in this House. I hope one of my legacies will be in regard to
producing in 2001 the Labour Party policy document “Our Good Health”, which was the first
policy document of any party that developed a worked-out health insurance model to provide
equal access for all while also providing for an efficient health service. I regret very much that
the Labour Party was not in a position to promote that in Government but it has been gratifying
that even though at the time it was considered too radical — Fianna Fáil of course bashed it
and Fine Gael kept silent — as time has gone on Fine Gael has accepted the merit of our
position and has made its own proposals. Even on the Fianna Fáil side there has been grudging
acceptance that it is the way forward. I would hope that whatever vicissitudes and difficulties
the next Government will need to endure — it will undoubtedly endure many — providing and
developing a universal health service with equal access for all would be its legacy.
  We should consider how major progressive reforming policies were initiated in the past. I
can think of two developed by Fianna Fáil Ministers, one was the access to second level edu-
cation and the other was reform of general practice to provide medical cards on the basis of
equal access so that it is against the law for a general practitioner to discriminate in any way
between his or her private and public patients. Why were these considerations not brought into
play when introducing fiscal policy that would underpin a decent health service and give us what
the people are entitled to have as members of the European Union? Most of the population
automatically presume that they can rely on such a health service where people are treated
   We will not oppose the provision on stamp duty. It was my honour to serve in the rainbow
Government as Minister of State with responsibility for housing and urban renewal. Again, it
would have been helpful had both this Government and the previous one given an honest
statement or assessment of how things went so wrong. When we left Government I was con-
scious, because of information that came to me, of an increase in house prices in the private
market — it was quite evident. I was satisfied, and the evidence is there on an absolutely
factual basis, that we had managed to keep within the income and mortgage ratio required for
a manageable market. We could stand over that record. Unfortunately, when the new Govern-
ment came in the system and the market spiralled out of control. Some people made very large
amounts of money while others have been very badly shackled with negative equity and very
large mortgages at exactly the wrong time of their lives. Many are young people hoping to set
out and have families at an expensive time of their lives or perhaps they already have young
families and now have this crippling burden.
                Finance Bill 2011:        26 January 2011.           Committee Stage

   The Minister of State, Deputy Mansergh, is an intelligent and, I believe, an honest man. Why
has a good, hard, concise assessment not been carried out? This Government is coming to the
end of its days but we have a Civil Service which has provided information, analysis and very
good advice through the years. We now have a situation from which none of us can take any
heart because the hole dug for us by Fianna Fáil in particular is so deep it is very hard to see
a way out of it. I believe the new government will provide the road to recovery and a fresh
start which, even in itself, will be helpful. The one thing we must not do is repeat the mistakes
of the past.
   We already discussed tax breaks. When I was Minister of State one of the first things I did
was to commission a review on urban renewal designation, what worked, what did not, what
worked aesthetically, environmentally, socially and, most important, what worked economically
and financially. That was a useful piece of work that at least tried to provide an honest appraisal
of what had happened. We made mistakes. I would be the first to say the seaside renewal
scheme was not a success and anybody who looks at the effects it had cannot take much heart
from it. Ultimately, none of us is infallible. It is the lack of honesty and responsibility on the
part of this Government which I find unnerving. I had to smile when I heard the Minister for
Finance, Deputy Lenihan, talk about the Opposition being in denial. Wow.

  Deputy Bernard J. Durkan: Whoa.

  Deputy Liz McManus: We are only in the halfpenny place.
  I do not wish to create any difficulties because this is the last time I shall speak but I must
say some words of thanks — to the Ceann Comhairle, the Leas-Cheann Comhairle, the Acting
Chairmen and those who preceded them. I have been a chairperson and I know it can be a
boring job as much as anything else but it requires diligence and fairness and I am very grateful
for that.
  I wish to thank my colleagues. As Members of this House we rely on a solidarity but it must
be one based on principle and integrity. I am very comfortable in being able to say that has
always been the case in the Labour Party since I came into this House and I am extremely
grateful for that.
   I wish to thank the Ministers I had to shadow; in health, the Minister, Deputy Harney, and
the Minister for Energy, Communications and Natural Resources, Deputy Ryan. I mention
one particular thing the Minister, Deputy Ryan, did which was very helpful. He ensured that
civil servants in his Department were very open to providing members of the Opposition with
briefings and ensuring we were well informed and able to access their expertise. Not all Mini-
sters are as generous. From our point of view this has led to a more informed debate.
  There is a final point I wish to make. When I came into this House in 1992 it seemed as if a
new dawn had broken. Women had, in effect, been absent from this House. In the 1950s they
were known as the “silent sisters” because they were the relations of Deputies — no other
women were elected. In the Dáil prior to 1992 there had been women pioneers such as Nuala
Fennell and others who had led the way. Coming into the House with a new cohort of women
Deputies I thought something new was beginning. It is my great regret we have stalled in that
progress. I have no idea whether there will be more women in the next Dáil; I hope there will
but I will not be overly expectant in that regard. I hope we can achieve some kind of parity in
the future. I urge the two parties, Fianna Fáil and Fine Gael, to look to their own in this regard.
The Labour Party worked very hard to ensure we achieved the election of a critical mass of
women but we are only one party. There is a terrible gap or lacuna in both those big traditional
parties in terms of female representation. The responsibility lies with those parties to make the
break through and change.
                Finance Bill 2011:        26 January 2011.           Committee Stage

  [Deputy Liz McManus.]

   The only time I felt afraid in this Chamber was when we began the debate on the abortion
referendum and I realised there were so few women in this House. There were six or seven
men for every woman so there was only a handful of us who could ever know or imagine what
it was like to have a crisis pregnancy. That was a lesson that made me more determined to
defeat that referendum and I am very glad the Irish people chose to do that. However, it
certainly brought home to me that it is not a fully functional Parliament unless we can have
that kind of balance in the future.
   I do not wish to speak much longer other than to thank those who assisted me. I also wish all
those other Members who are retiring from this House all the very best and, more particularly, I
wish those who are going forward well. It is a hard station to stand for election. Representing
the people is a great honour but it is not easy and is not getting any easier. In my view it
is getting harder. Some of the personalised attacks on the Taoiseach, Deputy Cowen, were
unacceptable. It is neither right nor fair that anybody should have to put up with those kinds
of attacks and in particular it is not right or fair that his family should have to put up with
them. I do not say that people in this House have been guilty of that; I do not believe they have.
However, when one looks at the public space this is unacceptable. That should be recorded. I
thank the House.

  Question put and agreed to.

                                          SECTION 60

  Question proposed: “”That section 60 stand part of the Bill.”

  Acting Chairman (Deputy Brian O’Shea): To clarify, we have agreed section 59 and are now
on section 60. Deputies Pearse Doherty and Seymour Crawford indicated they wish to contrib-
ute on this section.

  Deputy Pearse Doherty: Given the ticking clock and the limited time we have to deal with
these matters I will try to keep my comments very brief.
  I enjoyed the final statement from the previous speaker and I wish her well in whatever
course of action she takes in the future, as I do all retiring Deputies after the dissolution of the
Dáil in the coming days.
  Perhaps the Minister of State can shine some light on aspects of section 60. It is obviously
very technical and refers to previous sections of enacted Bills.
   I welcome the section dealing with first-time buyers with regard to those who are incapaci-
tated in terms of a dwelling house or part of such a house. That is welcome.
   I have a question on the abolition of the relief for the transfer of a site from a parent to son
              or daughter. Will the Minister of State provide information on the cost of that
5 o’clock     relief in the first instance? We all know how the Irish people have an affinity
              with the land, arising from the history of landlordism and evictions of the past.
We are talking about a modest transfer within a family to a son or daughter, with the State
taking money as part of that land transfer. The value of the pieces of land in rural Ireland
would not be excessive and I am not referring to those who are trying to abuse the system, as
we have seen with bankers who transfer property to spouses in order to evade the grip of
NAMA. We are talking about genuine people who have worked hard for the wee piece of land
with two or three family members and where there was always an intention to pass the land
on in order for sons or daughters to build properties.
                Finance Bill 2011:        26 January 2011.           Committee Stage

  Perhaps it is not the case that they will come under the revision and there will still be an
exemption but will the Minister of State clarify the issue? I am not sure if it is a practical step
and I do not see the value or benefit. I am open to suggestion from the Minister.
  One of the big problems with the section is that when the Minister of State dealt with section
60, he spoke about the revision and simplification of the stamp duty mechanism. He spoke
about the abolition of reliefs and those who wish to live alone and take advantage of the
exemption relating to first-time buyers. Parents or a trust would buy the house on the behalf
of these people and although they would not previously have been classed as first-time buyers,
they will now be classed as such as the act is on behalf of another person. I disagree with the
assertion that this will stimulate the property market and commence the necessary infrastruc-
ture for the commitment in the national recovery plan for a site value tax. I am fundamentally
opposed to the intention behind this.
  The details and effect of the measure with regard to taxation is separate. This is being used
to bring in a property charge, which is the fundamental problem for me and my party. I outlined
in my Second Stage contribution how indirect taxation is relied on heavily by the State, with
42% of taxes collected in 2008 in the form of indirect taxation. This is another form of such
taxation, which as we all know is not progressive. Although a property tax may be somewhat
progressive, it does not deal with ability to pay because it should be income-linked in the first
instance. The best way to ask those who have the ability to pay to give their fair share is
through direct taxation, so there is a fundamental opposition to the intention behind this
   As the Minister indicated, this commences the necessary infrastructure for the commitment
in the national recovery plan for a site value tax. This plan should be abandoned. As I men-
tioned in discussing the transfer of land from father to son or mother to daughter, the relief
will be extinguished. We are missing a paragraph in this legislation which would deal with the
scandal that was the transfer of assets from those who have liabilities to this State through the
banks and NAMA and who are transferring assets willy-nilly to spouses.
   This takes me back to the priorities of the Minister for Finance and his officials — although
I do not blame the officials — in the construction of the Finance Bill. Why is there no amend-
ment dealing with banking bonuses two months after the publication of the budget? I men-
tioned on Second Stage that the Finance Bill is very technical. It is very difficult for a new
Deputy who is not a chartered accountant and who does not have an economics degree to deal
with it. If I were Minister for Finance I would have told officials to include the amendment
dealing with bank bonuses at an early stage. If we had to wait for a finance (No. 2) Bill in
order to introduce a charge on those earning as little as €80 per week in the guise of the
universal social charge, so be it.
   The same logic would apply to stamp duty, an area in which those with liabilities are transfer-
ring assets in a fashion that appears completely legal now. That is the information I have been
led to believe. There is no taxation measure to get to grips with what is in my view a morally
wrong and corrupt practice. It is our responsibility as legislators to address such issues in every
finance Bill. When we see people using tax avoidance measures we must close the loopholes
immediately. Such loopholes may be legal because they have not been identified or were pur-
posefully left in previous Bills. This section of the Bill could deal with the transfer of assets.
  The Minister has indicated that a 90% rate of tax on bank bonuses will be applied and in a
similar fashion we could consider a stamp duty or transfer rate on assets flowing from one
spouse to another if we know the process is to avoid liabilities to NAMA, for example. It is
pity the Bill is not being used in such fashion. I seek clarification on the first issue I raised.
                Finance Bill 2011:        26 January 2011.           Committee Stage

   Deputy Seymour Crawford: I welcome the opportunity to raise a few questions relating to
the section and get some clarification. As somebody living in a rural area I know of cases where
sites are transferred from parents to sons or daughter. It is an extremely important process
which has encouraged young people to live in rural Ireland who may not have been able to
afford to live there otherwise. A cost placed on this will have a major effect. The former
Minister for the Environment, Heritage and Local Government, Deputy John Gormley, has
introduced regulations to such an extent that it will be almost impossible for young people to
get planning permission in rural Ireland and this further impediment will not help. It is
important to remember that sons or daughters living adjacent to family homes in rural Ireland
can be extremely helpful in looking after parents or handicapped siblings. There should be
clarification on the issue as the Bill as published would be a major step backwards in this regard.
   Stamp duty at high levels has done much damage in the past. The transfer of land from
father to son or daughter, if it is not done before the son or daughter is 35, can bring about
significant costs. For different reasons some transfers may not be done before the son or
daughter reaches 35; for example, a son or daughter may have had to leave home because of
insufficient income in the home for two families. We need to consider these types of issues
  I am annoyed that the Bill will require first-time buyers to pay stamp duty, albeit at a rate
of 1%. Young people are finding it impossible to get onto the housing ladder. Recently, I
encountered a case of a young couple, both of whom are in reasonable jobs, who were refused
a mortgage to buy a house which cost one third of what a similar house would have cost five
years ago. We must not impede efforts to utilise the current stock of empty houses. We need
to encourage young people to move into empty houses.
  I listened to Deputy McManus’s comments on the need for greater gender balance in the
Oireachtas. I have an interest in this matter because I encouraged a young woman to accept
the nomination to follow me into the Dáil. The lady in question will face all sorts of difficulties
because the political system is structured in a manner that does not encourage female partici-
pation in politics. Deputy McManus and other Deputies who are about to retire have been
extremely able contributors to Dáil proceedings. I hope she and other colleagues who are
conscious of the difficulties experienced by politicians and their families will seek to ensure
they are replaced by female colleagues and encourage greater female participation in politics.
While I fully appreciate the issue is not related to the Finance Bill, I wanted to respond to the
Deputy’s contribution on this issue, with which I concur.
  On a separate matter, we have recently been dealing with the Neary affair in Drogheda, a
highly delicate matter. When the issue first arose the presence on our team of former Deputy
Nora Owen and Senator Francis Fitzgerald, also a former Deputy, was invaluable.

  Deputy Ciarán Lynch: Last week, I spoke at a debate organised by the Historical Society of
University College Cork entitled, “The Recession Then and Now”. The debate compared our
current economic difficulties to the economic problems of the 1980s, focusing specifically on
personal circumstances and how individuals are faring now and how they fared then. It became
apparent in the course of the evening that the circumstances leading up to the current recession
are similar to those leading up to the economic problems of the 1980s. In both cases, Govern-
ments pursued reckless policies, we had poor governance and the political system failed
members of the public, not because of its structure and processes but because of the type of
leadership shown by those who had responsibility to govern.
  On the evening of the debate, as I headed across the UCC quad, two young lads of about
13 or 14 years who happened across my path on their bicycles recognised me and said “Hello”.
As one approaches a general election, it is always nice for a candidate to have one’s face or
                Finance Bill 2011:        26 January 2011.          Committee Stage

name recognised. Given that one does not normally see 13 or 14 year old children cycling on
the grounds of University College Cork, I jokingly asked the two boys which subject they were
studying. They replied that they were studying economics and were currently dealing with the
bond markets. I was struck by this response because it highlights the level of discourse among
members of the public about the current economic crisis. Financial terminology such as “bond
markets”, “subordinated debt”, the “International Monetary Fund” and other technical
vocabulary have become everyday language, as reflected in my conversation with two 13 or 14
year old children. However, while members of the public may have a better grasp of the
discourse of national and international economics, do they understand our current problems
better than people understood the problems of the 1980s? The big question being asked of the
Finance Bill is whether we are recreating the past or building something new. It appears the
Government is essentially seeking to recreate the conditions that led to the problem.
  When discussing the property market commentators frequently refer to taxation and
measures that would lead to a recovery in the market. The last thing the country needs is for
the property market to recover to the levels we saw in the past decade. Taxation policies and
measures created the current crisis. In 1999, when Deputy Eamon Gilmore was the Labour
Party spokesperson on housing, my party published the Drudy report. The report warned of a
future crisis if national policy on housing was not adjusted and identified a number of key
future problems. Its warning that the employment sector would become over-reliant on the
building and construction industry was proved correct when 20% of the economy subsequently
became tied into the construction bubble and pyramid scheme.
   The Drudy report also argued that the property market would overheat. This proved to be
the case when so-called affordable homes — subsidised homes to enable people to enter the
housing market — were placed on the market at €250,000. The cost of affordable housing has
since fallen by half as prices start to reflect the real economy. During the years from the late
1990s to 2007, house prices and house price inflation reflected a parallel universe.
  These developments were the result of the Fianna Fáil Party’s policy of incentivising property
investment through taxation measures. Homes became commodities to be bought and sold for
investment purposes, at the expense of families, communities and the model of sustainable
development. Individuals bought property using loans on which they repaid the interest for
two years before selling it on in the knowledge that the price would have increased. Tax relief
on interest repayments, capital gains tax changes and the stamp duty regime were used to
incentivise and facilitate these types of investment.
  The cost of the Government’s approach was that it drove the price of housing up and put it
out of reach for ordinary working people. Calculating the value of a house is a simple equation.
In normal times, a typical three bedroom, semi-detached house costs three to four times the
average household income.
  At the height of the property madness we saw house prices for first-time buyers reaching
eight to 12 times a household income depending on the region. In rural areas the cost could
be six, seven or eight times a household income, while in Dublin — particularly in suburban
areas of high demand — the figure could be between ten and 12 times.
   Another way of measuring house values is to determine the annual rent a property will
accrue and then multiply that figure by ten or 12. Nonetheless, property values at that time
were well in excess of the multiple based on annual rental income. All the alarm bells were
ringing to tell us that a serious difficulty would arise in this respect, but Fianna Fáil — in its
different manifestations over those years — continued to introduce further taxation measures
to create what in essence was a pyramid scheme. People were led to believe that if they joined
the scheme it would deliver in six, 12 or 18 months’ time. They were encouraged to grab the
                Finance Bill 2011:        26 January 2011.           Committee Stage

  [Deputy Ciarán Lynch.]
money and reinvest it. The inference was that the pyramid scheme would continue forever on
the simple premise that house prices would increase infinitely. That could not be logical,
however, if the housing market did not reflect the real economy, and it has not done so for a
long time.
   The term “normalisation” must be used loosely regarding property sector taxation. The
Government must choose one area of the property sector over another. The Government can
either promote the concept of the principal residence and its ownership, which comprises home
owners, or, as we have had to date, it can give preference to a taxation regime which incentivises
investors to speculate by buying and accumulating properties, thus driving prices up.
  In order to have a normalised housing market, the Labour Party believes a policy is required
which reflects and promotes the concept of home ownership and principal residence, although
that has not existed in this country for over ten years. For that to occur, we must have a taxation
system that is neutral at least and positive at best in favour of principal residence occupation.
   Over the past 12 months, we have seen suggestions emanating from the Central Bank and
the Financial Regulator to the effect that such an approach would be taken. In July 2010, the
Governor of the Central Bank and the Financial Regulator published new recommendations
on mortgage lending. Those recommendations referred to getting back to the ratios I men-
tioned, as well as having more robust measures to examine people’s incomes and other steps
to ensure that such a crisis cannot recur.
  For those of us who first entered the Dáil in May 2007, that date now seems like a century
ago. In terms of perception, Ireland was an entirely different country to what it is now, although
the writing was already on the wall. An examination of the books showed that the difficulties
we are in currently were well and truly under way.
   The 31st Dáil, to be elected shortly, will face an entirely different climate to the one that
existed when I first entered this House in 2007. The next Dáil will have to realise that we are
not in the business of recreating or revitalising a type of housing market through various tax-
ation measures. Research shows that the more tax incentivisation is given to property, the more
it drives prices upwards. As surely as night follows day, if one incentivises property investment
through significant tax relief, the price of property rises. While those gaining tax relief may be
beneficiaries to some extent, those who are trying to buy property, either as a retail or manufac-
turing business investment, or simply as home owners, will not benefit from that taxation
  In moving towards a normalised taxation system and housing market, we will have to begin
picking up the pieces left by the current Government’s policies. Some 300,000 home owners
are currently in negative equity as a direct result of the Government’s taxation policy which
drove up house prices to unsustainable levels. In addition, 30,000 to 40,000 householders are
in mortgage arrears to the extent that it is becoming a registered problem with their lending
institution. Even if they are employed and can complete robust assessment criteria to obtain
loans, first-time buyers will find it difficult to get money because banks are not lending and the
price of borrowing will increase significantly.
   I will revert to the two young lads on bicycles whom I met in UCC on Monday night. We
may have a different type of language to describe our current economic difficulties compared
to the 1980s. We may now have a broader discourse involving subordinated debt, sub-prime
lending and other terminology, but are we any wiser than we were 25 or 30 years ago? Are we
again in between recessions and, if so, will we be having debates in UCC and other universities
in ten years’ time on future recessions and the periods in between? In order to have economic
stability, the type of governance we have witnessed in the House for 17 of the past 20 years
                Finance Bill 2011:       26 January 2011.          Committee Stage

needs to come to an end. Political tampering and tinkering with a taxation system that benefits
very few, and for which most of us must pick up the pieces, is no longer acceptable. We need
not just a new Dáil in March or April with new Deputies, but also a new governance and
structure for politics. Thus, when we debate taxation policies, it will be for the benefit of the
economy and society as a whole, not just the select few who have benefited from this Govern-
ment over the past 20 years.

   Deputy Kieran O’Donnell: I wish to refer to something that has arisen in practice in the
context of section 60. The residential housing market is not moving at the moment, but many
young couples have bought homes. They took a risk, although people said the market was still
falling. In many such cases, people were advised to close and pay stamp duty at 1% prior to
the budget, whereas they are now paying 4% or more. The people in this group need some
relief. In some cases, they will have to pay additional stamp duty of between €10,000 and
€15,000 or €16,000. The reference to “on or after 8 December 2010” is a penal provision. There
is merit in the argument that it should be amended to read “on or after 30 November 2010”.
That would give people a week’s latitude. We need to consider cases in which sales had not
been closed, or were still conditional, on 8 December last. I have contacted the Department
of Finance on many occasions to raise this real issue, which affects young couples buying
residential homes.
  I intend to introduce an amendment to deal with this matter on Report Stage and I look
forward to doing so. I ask the Minister to address it during the Committee Stage debate on
section 60. Perhaps he can give favourable consideration to the introduction of a transitional
arrangement to assist people who bought a family home — as opposed to a property — “on
or after 30 November 2010”. If he moves the cut-off date back a week, he will give them some
relief. We are not talking about property speculators. We are talking about those who are
paying for the mistaken policies of the banks and the Government. They are buying homes, in
many cases on the basis of advice, and thereby bringing stamp duty to the Exchequer. I do not
think the level of stamp duty should be penal.
   I would like to hear the Minister’s views on the amendment I intend to introduce on Report
Stage. I am aware that people have been making representations to the Department of Finance
on this issue. It is fair and reasonable that we should assist young married couples and partners
who are under enormous pressure at the moment. Some of them have young children. Their
pay packets have been decimated in the last month. Rates of child benefit have been cut. The
mortgage repayments of some young people have increased. Many young people do not have
job security. Some of them are facing the prospect of unemployment. They see stamp duty as
dead money because it is going to the Exchequer. I would like to hear the Minister’s comments.
I know he is aware of it. I hope to introduce an amendment on Report Stage to address it.

  Deputy Brian Hayes: I would like to pick up on the issue raised by Deputy O’Donnell. I am
sure the Minister agrees that difficulties will exist regardless of the deadline one sets in this
regard. Deputy O’Donnell made the point that there is a fundamental difference between 1%
and 4%. It could be worth many thousands of euro to young couples who are finding it difficult
to get 10% from the banks to furnish their homes. It could ultimately make a huge difference.
There is some merit in the idea that the Minister should consider the matter. I suspect the
number of people affected by this measure is not huge. Perhaps the Revenue Commissioners
have given the Minister some indication of the total number involved. It is a small group of
people. A fair change, if not a substantial one, is required.
  Section 60 provides for transitional arrangements whereby purchasers who entered into bind-
ing contracts before budget day, and execute the relevant instrument before 1 July 2011, will
not have to pay an increased amount of stamp duty. Some degree of fairness is built into the
                Finance Bill 2011:        26 January 2011.           Committee Stage

  [Deputy Brian Hayes.]
system and will last six months. If one draws down one’s contract within six months of the date
of budget day, one will pay the lesser amount. I assume that is the 1% rate. I can understand
that. Can the Minister explain the rationale for the six-month timeframe that has been provided
for after budget day? Why was a 12-month timeframe not provided for? We are not talking in
every case about people who will initiate the relevant instrument within six months. It will
depend on conveyancing and agreements between purchasers and vendors, for example. What
is the rationale for the six-month period that applies to the transitional arrangement? Is it
based on the fact that such a period applied when stamp duty changes were made in the past?
   We are discussing the general issue of Part 4, which relates to stamp duty, but I would like
to refer specifically to section 60. There is considerable anger in society, particularly among
those in their late 20s, 30s and early 40s who paid substantial amounts of stamp duty over the
last ten years. In many cases, they had to borrow between €40,000 and €60,000 to meet their
stamp duty requirements. They have been lumbered with significant debts. They may be among
the 350,000 people in negative equity, to whom we often refer. Ultimately, some form of release
will be needed to resolve the difficulties of those who are paying enormous mortgages and are
hugely in debt. As a society, we have a responsibility to develop some means of releasing them
from their debt. A societal benefit would be associated with establishing such a means. In the
absence of such a mechanism, many people will be unable to spend, consume and contribute
to society as we may wish. I do not under-estimate the depth of the anger that exists across
society, including parts of my constituency, about the sizable amounts of stamp duty people
had to pay over the last decade or so.
   I remind the House that not a million years ago, the then leader of a certain party lectured
us that we did not need the revenue that was being generated from stamp duty. That says a
great deal about the political judgment of the former Deputy, who represented the constituency
of Dublin South-East when he was proposing these radical changes in the stamp duty regime.
It goes to the heart of the collapse in the Irish economy that such a large amount of the tax that
was raised each year in our society depended on stamp duty. It was completely unsustainable to
rely on such a transaction tax. It was out of character with European norms. This society and
this economy has to rectify that. I ask the Minister to examine the transitional arrangements
in section 60. Can he give some indication of the number of people involved? I suspect it is
quite small. Can he deal with Deputy O’Donnell’s point before he initiates his amendment for
the purposes of Report Stage?

  Deputy Michael D’Arcy: In the context of section 60, which provides for the termination of
property reliefs, I wish to raise the transfer of a portion of land from a parent to a child. It is
primarily a rural issue. It is particularly unfair and unreasonable to remove this property-based
tax relief at a time when the banks are closed, the rate of stamp duty is being increased in
some cases and we are trying to get some people back to work. Those who are not lumbered
with the cost of purchasing a site are among the few who can currently proceed with the
construction of a property. The Government is proposing to remove the tax-based relief they
currently enjoy. It is particularly unfair that such people will now have to pay stamp duty. If
we are serious about encouraging some movement in the property market, we need to look at
this. While this problem applies mainly to rural Ireland, it can also have an effect on urban
Ireland. If somebody has an urban dwelling on a large site, he or she may be fortunate enough
to have enough space to build another property. The Leas-Cheann Comhairle will be familiar
with such cases in Wexford town. In such circumstances, the proposed extinguishing of this tax-
based relief will kick in. I ask the Minister to consider this, taking into account that we must
get people back to work. I would like to hear from the Minister how much income this is likely
to generate for the State.
                Finance Bill 2011:        26 January 2011.          Committee Stage

  Deputy Martin Mansergh: I did not have an opportunity to speak after Deputy Liz McManus,
who made a rather valedictory speech on the previous section. I pay tribute to her service to
the House——

  Deputy Brian Hayes: Hear, hear.

  Deputy Martin Mansergh: ——and to Irish politics. She made a particular contribution to
the development of Labour Party health policy. One of the things I will be interested to observe
in the future — Fine Gael has a similar policy — is how such a system can be successfully
superimposed on the present structure and what sort of vested interests will be encountered
along the way.
   While I am on the subject, I believe Deputy Crawford will also retire from the House, and
I pay tribute to the service he has given to an electorate that lives along the Border, including
during troubled times. I have had quite a bit of contact with the Deputy on different issues and
I have always found him an exceptionally honourable and decent parliamentarian, speaking
from the heart about his community.
   The issue raised by Deputies Doherty and D’Arcy relates to tax relief on sites transferred
between a parent and his or her child. The cost of this relief is €6 million in a year. Offspring
are still eligible for the half-rate applicable to transfers between family members. It should be
pointed out that the average price of an acre of agricultural land is now less than €10,000, and
if such a site were transferred, no tax would be payable. That price is considerably less than it
was a couple of years ago. On a piece of land suitable for residential development, which would
cost more than average, the rate of duty would still be low, at 1% between €10,000 and €20,000,
and so on.
  We should recall that Ireland is one of the only OECD countries that does not have an
annual tax on property. We need to broaden the tax base, and a tax on property is one way to
do this. This has been recommended not only by the Commission on Taxation but by nearly
every independent body. I find it surprising that all parties in the House, including Sinn Féin,
are on the conservative side of the Government on this issue.
  The capital gains tax relief on the transfer of sites to children for the purpose of building a
principal private residence remains in place. However, as many of us know from planning
decisions, we need to be aware of the potential for abuse. For example, in a family with five
children, sites may be released to each of the five children and then sold on after a little while
to people outside the family. This has happened in the past. The system as it is at present
confers a considerable benefit. I will be interested to see whether the parties opposite, if they
come to this side, will still make the same arguments in a few months’ time.
   Deputy O’Donnell raised the issue of stamp duty relief on certain dates. The possibility of
stamp duty changes in the budget was generally recognised, and the problem — as mentioned
by Deputy Hayes — is that no matter what date is fixed, some people will unfortunately be
just on the wrong side. To fix a date of 30 November would perhaps increase the sense of
injustice felt by those who bought on 29 November.

  Deputy Kieran O’Donnell: Will the Minister of State yield?

  An Leas-Cheann Comhairle: I will call the Deputy again.

 Deputy Martin Mansergh: I will not go on too long. The Leas-Cheann Comhairle need not

  Deputy Brian Hayes: He is doing all right.
                Finance Bill 2011:        26 January 2011.          Committee Stage

  Deputy Martin Mansergh: Six months should be adequate to enable any instrument to be
executed. By reference to experience when stamp duty was changed in the past, the six-month
period may be considered generous. Six months is an adequate period in which to formalise
  Deputy Ciarán Lynch talked about the affordable homes initiative and the rise in house
prices. There were efforts in the late 1990s, including the two Bacon reports, to damp down
the growth of prices in the property market, and I had some regrets at the time that the fight
was abandoned. There were considerable pressures. It was always easy to make the argument
that building more and more houses would create jobs in construction and give people homes.
As I have said before, there were not many voices telling us in the boom years that we ought
to go more slowly. One of them was the former European Commissioner Pedro Solbes, who
said this in 2001 to Charlie McCreevy——

  Deputy Brian Hayes: And Deputy Bruton.

  Deputy Martin Mansergh: ——and nearly all of us were highly indignant at his interference
in our sovereign affairs. This may have contributed to the loss of the first Nice referendum.
However, I am afraid the Commissioner was right and the Minister and most of the rest of us
were wrong.
   Deputy Hayes made an oblique reference to a former Deputy, and Minister, Mr. Michael
McDowell, on the subject of stamp duty. It must be said that Fine Gael was very active on the
stamp duty issue not long after that time.

  Deputy Brian Hayes: On the right side of it.

  Deputy Martin Mansergh: To return to the practical point, the problem is that if one makes
a radical change to stamp duty — in this case, reducing the rate to 1%, or 2% above a high
threshold — one can always say that it creates some inequities, looking back. Is that an argu-
ment that one can never change anything? Any reduction in tax will feel inequitable to those
who paid more previously. It is a difficult issue, and I am sceptical as to whether a new Govern-
ment will find the financial scope, however desirable it may be, to provide some compensation
for those who were unfortunately caught by the change.

  Deputy Kieran O’Donnell: On the practical issue, I know that many calls have been made
to the Department of Finance — although not a huge number — from people who are upset
because, when they were purchasing their homes, the stamping instrument went through prior
to 8 December. Similarly, there are cases of people who bought their homes on the same date.
Some would have effectively put through the statutory instrument prior to 8 December, and
some might have done this afterwards, even though the sale might have gone through at the
same time, because, I believe, they have to put it through, I believe, within 30 days.
  Has the Department quantified the number of people this new provision would affect? I
agree with the Minister of State’s sentiments to the effect that the situation cannot be so
inflexible as to preclude the Department looking at change. Has the cost to the Exchequer
been quantified — because I would say the Department of Finance has received a reasonable
number of calls in this regard — by amending the date from 8 December to 30 November? I
am putting this purely in respect of the family home. I ask the Minister to look at it, as it is a
relatively small measure. Does the Minister know how many people it would impact on if the
date was to be changed from 8 December to 30 November and what effect would this have on
the Exchequer? Some €3,000 or €4,000 or even €10,.000 to an ordinary hard-pressed family is
                Finance Bill 2011:        26 January 2011.          Committee Stage

an infinitely higher proportion to that family than the cost to the State. I ask the Minister of
State to deal with these practicalities.

  Deputy Martin Mansergh: The imposition of taxation is always prospective. Likewise, reliefs
and concessions should be prospective as special circumstances dictate. Otherwise, if a con-
cession were to be granted, it would serve as a precedent every time stamp duty or any other
event or transaction tax such as capital gains tax or capital acquisitions tax were to be changed.
That is the reason why there would be considerable hesitation.
  I am aware, of course, that in various parts of the tax code some transitional relief has been
granted from time to time. That, in any event, is the situation at the moment. There has been
a good deal of talk today about a finance Bill (No. 2) later in the year and if the Deputy’s
party is in office, it is very welcome to look at the matter again.

  Deputy Kieran O’Donnell: The Government is giving transitional arrangements where some-
one who enters an agreement after 8 December ends up paying a higher amount that he or
she would have paid if going through before this date. In the interests of fairness the reverse
should apply. The dates are arbitrary but I am focusing on the week before, from 1 December.
I should like if for Report Stage the Minister could ask his officials to quantify the number of
people this would affect, based on representations, and the cost to the Exchequer.

  Deputy Martin Mansergh: We do not have any information on that at the moment.

  Question put and agreed to.

                                        NEW SECTION

  Deputy Martin Mansergh: I move amendment No. 91:

    In page 201, before section 61, to insert the following new section:

      61.—(1) The Principal Act is amended by substituting the following for section 106B:

        “106B.—(1) In this section ‘housing authority’ means—

          (a) a housing authority, within the meaning of the Housing Acts 1966 to 2009, in
        connection with any of its functions under those Acts,


           (b) the Affordable Homes Partnership established under article 4(1) of the Afford-
        able Homes Partnership (Establishment) Order 2005 (S.I. No. 383 of 2005) in connec-
        tion with the services specified in article 4(2) of that Order, as amended by the Afford-
        able Homes Partnership (Establishment) Order 2005 (Amendment) Order 2007 (S.I.
        No. 293 of 2007).

        (2) Stamp duty shall not be chargeable on any instrument giving effect to the convey-
      ance, transfer or lease of a house, building or land to a housing authority.

        (3) Stamp duty on any instrument giving effect to the conveyance, transfer or lease of
      a house, building or land by a housing authority chargeable, as specified in Schedule 1,
      shall not exceed €100.”.

    (2) This section applies to an instrument executed on or after 1 April 2011.”.
                Finance Bill 2011:        26 January 2011.          Committee Stage

  [Deputy Martin Mansergh.]

This amendment inserts a new section 61 and substitutes a new section 106B in the Stamp
Duties Consolidation Act. Section 106B implies a stamp duty exemption on a conveyance of
property by or to a housing authority or the Affordable Homes Partnership. There is no
requirement to present the instrument to the Revenue Commissioners and as such there is no
record of the transaction in Revenue’s e-stamping system.
  This would affect the collection of data for compiling house valuations both for the purposes
of publishing a valuation database, to bring greater transparency to the housing market, and
for the introduction of a site value tax, as proposed in the national recovery plan. On the other
hand, applying a full stamp duty charge to such transfers could reduce the take-up of the
enhanced tenant purchase scheme for local authority tenants which the Minister announced in
the budget.
  To meet these competing concerns, this amendment removes the stamp duty exemption in
so far as this relates to a conveyance of property by the local authority or the Affordable Homes
Partnership. Accordingly, such transfers will have to be presented to Revenue for stamping and
details of the consideration will be recorded. However, the stamp duty payable will be limited
to a maximum amount of €100 and such a low level of duty is unlikely to deter take-up of the
tenant purchase scheme. The amendment will take effect for conveyances executed on or after
1 April 2011, and I commend this amendment to the Committee.

  Deputy Brian Hayes: This was flagged by the statement made by the Minister on the night
of the budget, I believe. It was welcomed at the time, in respect of removing stamp duty. In
general, this amendment is welcome. On the question of valuation of social housing, given that
there is such a reduction in the price of property generally across the economy, what is the
mechanism for doing that, and what is market value now? As regards social housing, affordable
housing or shared ownership, how is market value arrived at given the difficulties involved in
establishing what it is?

   Deputy Ciarán Lynch: The former Minister of State, Deputy Finneran, made an announce-
ment that the tenant purchase scheme would now be adapted and that there would be a 45%
discount for people who had been social housing tenants for 15 years and over. I believe that
is what is being referred to in the section there. The former Minister of State also gave the
impression that this would be enacted on 1 January and that local authorities would be able to
roll that out. Given that we are debating it in the House this evening, it is clear that local
authorities are not in a position to do that currently. Could the Minister of State indicate as to
when social housing tenants will be able to avail of the 45% discount?
   With regard to something the Labour Party has been consistently calling for over a number
of years, the housing price database, this is necessary because it is the only way that accurate
housing information and prices can be given. It would give confidence to people buying homes
               to ensure that the prices they pay are reflective of true market value in their
6 o’clock      estates, and this resonates into social housing situations, as Deputy Hayes has
               indicated. The core principle, if we are to introduce normalisation into the hous-
ing market, is to have an accurate house register database. I welcome the fact that the Minister
of State indicated this in his speech this evening. Once again, is there a timeline as to when
this will be in place?

  Deputy Pearse Doherty: With regard to section 62 and the different rates of stamp duty, the
reduction as regards lower valued properties is to be welcomed, since people on low incomes
were being penalised. I know the Government is getting rid of the exemption from stamp duty
                  Finance Bill 2011:             26 January 2011.              Committee Stage

for properties under €127,000, so people who buy a very small house worth, say, €80,000 to
€100,000 or whatever will now be subject to stamp duty. However, the Minister of State
referred to the fact that properties valued at more than €1 million will be subject to the 2%
rate as distinct from the existing 9% rate. There are still trophy houses on the market in the
region of €5 million. Based on what the Minister of State has said, the reduction we are introd-
ucing in this Finance Bill is in the region of 7%, which would mean a total saving for somebody
buying such a trophy house of, say, €350,000. How can this be reconciled with charging stamp
duty on modest housing worth in the region of €120,000? There is a major saving to be made
for those buying at the very high end of the market. The intention here is to stimulate the
property market, which is not moving currently, but we have had situations before where all
types of reliefs were introduced in Finance Bills and so called “section 23 reliefs” to stimulate
the market.
   We know where that got us. We need to be careful and to ensure those who have the ability
to pay do so. This includes anyone buying at the high end of the market. Even if the direct
saving from 9% to 2% does not amount to €350,000, and I understood it was tiered, the public
could not countenance that type of saving as a result of the Finance Bill given that the State is
trying to make savings. I would appreciate it if the Minister of State could subsequently reply.

  An Leas-Cheann Comhairle: As it is now 6 p.m. I am required to put the following question
in accordance with an order of the Dáil of 25 January: “That the amendments set down by the
Minister for Finance to Part 4 of the Bill and not disposed of are hereby made to the Bill and
in respect of each of the sections undisposed of in the said part, that the section or, as appro-
priate, the section, as amended, is hereby agreed to.”

  Question put:

                                       The Dáil divided: Tá, 79; Níl, 78.

      Ahern, Bertie.                                                Flynn, Beverley.
      Ahern, Michael.                                               Gogarty, Paul.
      Ahern, Noel.                                                  Gormley, John.
      Andrews, Barry.                                               Hanafin, Mary.
      Andrews, Chris.                                               Harney, Mary.
      Ardagh, Seán.                                                 Haughey, Seán.
      Aylward, Bobby.                                               Healy-Rae, Jackie.
      Behan, Joe.                                                   Hoctor, Máire.
      Blaney, Niall.                                                Kelleher, Billy.
      Brady, Áine.                                                  Kelly, Peter.
      Brady, Cyprian.                                               Kenneally, Brendan.
      Brady, Johnny.                                                Kennedy, Michael.
      Browne, John.                                                 Killeen, Tony.
      Byrne, Thomas.                                                Kitt, Michael P.
      Calleary, Dara.                                               Kitt, Tom.
      Carey, Pat.                                                   Lenihan, Brian.
      Collins, Niall.                                               Lenihan, Conor.
      Conlon, Margaret.                                             Lowry, Michael.
      Connick, Seán.                                                McEllistrim, Thomas.
      Coughlan, Mary.                                               McGrath, Michael.
      Cowen, Brian.                                                 McGuinness, John.
      Cregan, John.                                                 Mansergh, Martin.
      Cuffe, Ciarán.                                                Moloney, John.
      Curran, John.                                                 Moynihan, Michael.
      Dempsey, Noel.                                                Mulcahy, Michael.
      Devins, Jimmy.                                                Nolan, M.J.
      Fahey, Frank.                                                 Ó Cuív, Éamon.
      Finneran, Michael.                                            Ó Fearghaíl, Seán.
      Fitzpatrick, Michael.                                         O’Brien, Darragh.
      Fleming, Seán.                                                O’Connor, Charlie.
                 Finance Bill 2011:   26 January 2011.              Committee Stage


      O’Dea, Willie.                                     Roche, Dick.
      O’Donoghue, John.                                  Ryan, Eamon.
      O’Flynn, Noel.                                     Sargent, Trevor.
      O’Hanlon, Rory.                                    Scanlon, Eamon.
      O’Keeffe, Batt.                                    Smith, Brendan.
      O’Keeffe, Edward.                                  Treacy, Noel.
      O’Rourke, Mary.                                    Wallace, Mary.
      O’Sullivan, Christy.                               White, Mary Alexandra.
      Power, Peter.                                      Woods, Michael.
      Power, Seán.


      Allen, Bernard.                                    McCormack, Pádraic.
      Barrett, Seán.                                     McEntee, Shane.
      Breen, Pat.                                        McGinley, Dinny.
      Broughan, Thomas P.                                McGrath, Finian.
      Bruton, Richard.                                   McGrath, Mattie.
      Burke, Ulick.                                      McHugh, Joe.
      Burton, Joan.                                      McManus, Liz.
      Byrne, Catherine.                                  Mitchell, Olivia.
      Carey, Joe.                                        Morgan, Arthur.
      Clune, Deirdre.                                    Naughten, Denis.
      Connaughton, Paul.                                 Neville, Dan.
      Coonan, Noel J.                                    Noonan, Michael.
      Costello, Joe.                                     Ó Caoláin, Caoimhghín.
      Coveney, Simon.                                    Ó Snodaigh, Aengus.
      Crawford, Seymour.                                 O’Donnell, Kieran.
                                                         O’Dowd, Fergus.
      Creighton, Lucinda.
                                                         O’Keeffe, Jim.
      D’Arcy, Michael.
                                                         O’Mahony, John.
      Deasy, John.                                       O’Shea, Brian.
      Deenihan, Jimmy.                                   O’Sullivan, Jan.
      Doherty, Pearse.                                   O’Sullivan, Maureen.
      Doyle, Andrew.                                     Penrose, Willie.
      Durkan, Bernard J.                                 Perry, John.
      English, Damien.                                   Quinn, Ruairí.
      Enright, Olwyn.                                    Rabbitte, Pat.
      Feighan, Frank.                                    Reilly, James.
      Ferris, Martin.                                    Ring, Michael.
      Flanagan, Charles.                                 Shatter, Alan.
      Flanagan, Terence.                                 Sheahan, Tom.
      Gilmore, Eamon.                                    Sheehan, P.J.
      Grealish, Noel.                                    Sherlock, Seán.
      Hayes, Brian.                                      Shortall, Róisín.
      Hayes, Tom.                                        Stagg, Emmet.
      Higgins, Michael D.                                Stanton, David.
      Hogan, Phil.                                       Timmins, Billy.
      Howlin, Brendan.                                   Tuffy, Joanna.
      Kehoe, Paul.                                       Upton, Mary.
      Kenny, Enda.                                       Varadkar, Leo.
      Lynch, Ciarán.                                     Wall, Jack.
      Lynch, Kathleen.

Tellers: Tá, Deputies John Cregan and John Curran; Níl, Deputies Emmet Stagg and Paul

Question declared carried.

  An Ceann Comhairle: We will now commence the debate on Part 5, sections 63 to 66.

  Section 63 agreed to.
                Finance Bill 2011:        26 January 2011.           Committee Stage

                                          SECTION 64

    Question proposed: “That section 64 stand part of the Bill.”

  Deputy Michael Noonan: Will the Minister of State read his briefing note on this section?

  Deputy Martin Mansergh: This section corrects unintentional drafting errors in sections
89(4), 102A(2) and 104(3) of the Capital Acquisitions Tax Consolidation Act 2003. Section
89(4) of the Act provides for a clawback of agricultural relief where agricultural property is
disposed of within six years of acquiring a gift or an inheritance and is not replaced within one
year of the disposal by other agricultural property.
   Section 102A(2) provides for a clawback of agricultural and business relief in respect of the
development value of development land where that land is disposed of after six years of acquir-
ing a gift or an inheritance and within ten years of that date. Section 104(3) provides for a
clawback of the CGT credit allowed against CAT where the property in respect of which the
credit was given is disposed of within two years of acquiring a gift or an inheritance.
  The section ensures that the clawback in sections 89(4) and 104(3) will apply where a disposal
takes place on the date of the gift or inheritance. The section also ensures that the clawback
of agricultural and business relief in respect of the development value of development land
provided for in section 102A(2) will apply where such land is disposed of on the sixth anniver-
sary of the date of the gift or the inheritance. The section applies to gifts and inheritances
taken on or after 21 January 2011.

  Deputy Michael Noonan: This area of taxation is complex. I understand the Minister of State
to mean that, up to now, a farmer who sold his farm to the NRA, for example, and used all
the proceeds to buy more agricultural land was exempt from capital acquisitions tax. Will the
Minister of State outline the implications for a farmer who gives a site to a son or daughter?
What is the position if a farmer’s daughter has planning permission for a site, thus making it
development land, but disposes of the site without building thereon because she is nursing,
then marries a man from Dundalk and moves on? If one has built on a site, is its value taken
into account if it is disposed of within the six-year period? Is that governed by different sections
of the Act?

  Deputy Martin Mansergh: This is only correcting very minor points. It is crossing t’s and
dotting i’s so a particular date will not be taken from a pedantic legal point of view as not
being covered by the legislation. There are no implications except those that apply at precedent.
  This section is required because the Revenue Commissioners received counsel’s opinion in
a case involving a clawback of the capital gains tax credit allowed against capital acquisitions
tax. In that case, counsel advised that, because the clawback provision referred to a period
within two years after a gift or inheritance, the clawback did not apply where the disposal arose
on the date of the gift. This is the way folks seem to interpret the law. I have always had a bit
of an objection to that type of pedantic interpretation. However, that is the position and,
therefore, provisions must be absolutely explicit or our learned brethren will find a way
around them.
  Related difficulties arise with the provisions for clawing back agricultural relief or business
relief on gifts and the inheritance of development land. Section 64 amends the relevant sections
to ensure that a disposal of the gifted inherited property, on the date of a gift in the case of
CGT credit and agricultural relief or on the sixth anniversary of a gift or inheritance in the
case of agricultural or business relief on development land, triggers a clawback of the relief in
question. In other words, the measure is combating a pedantic interpretation of the clause. It
                Finance Bill 2011:        26 January 2011.          Committee Stage

  [Deputy Martin Mansergh.]
is not contrary to the spirit of the measure. It is only aimed at those who might exploit a legal
loophole. As we know, loopholes sometimes appear in law after the enactment of legislation
without their having been in any sense the intent of the legislator. Anybody who operated the
relief as intended would be unaffected by this measure. It has no particular implications for
roll-over relief in the case of the NRA or in any other case.

  Deputy Michael Noonan: The Minister of State has answered my question. There is no policy
change and the measure is closing a minor loophole.

  Question put and agreed to.

                                         SECTION 65

  Deputy Martin Mansergh: I move amendment No. 92:

    In page 205, subsection (1), lines 26 to 29, to delete paragraph (c) and substitute the

       “(c) as if, in the definition of “threshold amount” in paragraph 1 of Part 1 of Schedule
    2, the consumer price index number for the year 2009 applied to gifts and inheritances
    taken in the year 2011.”.

This amendment corrects a drafting error in section 65(1)(c) of the Bill. The effect of that
paragraph would be to disapply indexation entirely for gifts and inheritances taken in 2011.
The intention is that the annual change in the CAT-free group thresholds from 1 January by
reference to the consumer price index number for the previous year will not apply to gifts and
inheritances taken in 2011. This amendment will achieve this result so the tax-free thresholds
after indexation, which were reduced by approximately 20% in budget 2011 for gifts and
inheritances taken on or after 8 December 2011, will also apply to gifts and inheritances taken
in 2011.
   I will outline the relevant tax-free thresholds that will apply to gifts and inheritances taken
in 2011. The group A tax-free threshold, which broadly covers transfers from parent to child,
is €332,084. The group B tax-free threshold, which broadly covers transfers between siblings,
from children to parents, from grandparents to grandchildren, and from uncles and aunts to
nephews and nieces, is €33,208. The group C tax-free threshold, which covers all cases not
covered in groups A and B, is €16,604.

  Amendment agreed to.

  Section 65, as amended, agreed to.

                                         SECTION 66

  An Leas-Cheann Comhairle: Amendments Nos. 94 and 95 are related to amendment No. 93
and they are to be discussed together.

  Deputy Michael Noonan: I move amendment No. 93:

    In page 205, subsection (1)(a), lines 35 and 36, to delete “ “30 September” for “31 October”
  “ and substitute ““30 June” for “31 August””.

                Finance Bill 2011:       26 January 2011.          Committee Stage

This arose from the decision by the Minister in the draft finance Bill to bring forward the date
of filing of tax returns on the part of certain taxpayers from 31 October to 30 September. I
understand the Minister has agreed with Deputies Lowry and Healy-Rae——

  Deputy Martin Mansergh: We are talking about income tax.

  Deputy Michael Noonan: In that case, will the Minister of State read his note?

   Deputy Martin Mansergh: These amendments relate to section 66, which brings forward the
pay and file date in respect of gifts and inheritances from 31 October to 30 September. Section
46(2)(a) of the Capital Acquisitions Tax Consolidation Act 2003 provides that where the valua-
tion date in respect of a gift or inheritance arises in the period from 1 January to 31 August in
a year, tax must be paid and a return must be delivered on or before 31 October in that year.
  Where the valuation date arises between 1 September and 31 December, tax must be paid
and a return must be delivered on or before 31 October in the following year. Interest on
outstanding tax runs from 1 November in the relevant year. In addition, there is a surcharge
where a return is delivered after 31 October in the relevant year.
  The effect of amendment No. 95, tabled by Deputy Noonan, would be to move the relevant
date referred to in section 46(2)(a) of the Capital Acquisitions Tax Consolidation Act 2003
forward from 31 August to 30 June. In addition, the Deputy seeks consequential changes in
regard to the provisions dealing with the date when interest on overdue tax becomes chargeable
and the date when the surcharge for late returns arises.
  As the amendments proposed by Deputy Noonan would reduce the yield from gift tax and
inheritance tax by €30 million in 2011 because of the shortening of the relevant period referred
to in section 46(2)(a) of the Capital Acquisitions Tax Consolidation Act 2003, I am not in a
position to accept them, especially given the current state of the public finances.

  Amendment, by leave, withdrawn.

  Amendments Nos. 94 and 95 not moved.

  Section 66 agreed to.

                                       NEW SECTION

  An Leas-Cheann Comhairle: We have reached the end of section 66, our consideration of
which was to conclude at 7.30 p.m. As we are ahead of schedule, I propose that we move
directly on to section 67 and amendment No. 95a in the name of Deputy Noonan, which is on
the additional list of amendments circulated today and proposes the insertion of a new section.

  Deputy Michael Noonan: I move amendment No. 95a:

    In page 206, before section 67, but in Part 6, to insert the following new section:

     “67.—In respect of Section 14 (Annual Returns) of the Industrial and Provident Societies
    Acts 1893 (the 1893 Act):

        (a) to delete “March” and substitute “August”, and

        (b) to delete “one month” and substitute “four months”.”.

 Deputy Martin Mansergh: This amendment substitutes dates in the 1893 Act. The Depart-
ment of Enterprise, Trade and Innovation has no objection in principle to the amendment.
                Finance Bill 2011:        26 January 2011.          Committee Stage

  [Deputy Martin Mansergh.]
However, it should be made in the context of amendments to the relevant Department of
Enterprise, Trade and Innovation legislation after proper consideration. I am not able to accept
the amendment to the Finance Bill, but it should be possible to have it enacted in the appro-
priate legislation.

  Deputy Michael Noonan: Has the appropriate Department any planned legislation that could
serve as a vehicle for this amendment in the near future?

  Deputy Martin Mansergh: I am afraid that is beyond my knowledge. Naturally, a new
Government will order legislation. I do not doubt there will be an opportunity in the reasonably
near future to make the change.

 Deputy Michael Noonan: In view of the Minister of State’s reply, I will withdraw the

  Amendment, by leave, withdrawn.

  Section 67 agreed to.

                                         SECTION 68

  Question proposed: “That section 68 stand part of the Bill.”

  Deputy Joan Burton: I understand this section refers to the mandatory disclosure of infor-
mation regarding people who are arranging particular tax transactions and may be involved in
fairly aggressive tax planning. Will the Minister of State read out his note on this section so
that we might have a sense of what is intended?

  Deputy Martin Mansergh: Section 68 amends section 817M of the Taxes Consolidation Act
1997, which is concerned with the provision by promoters to the Revenue Commissioners of
details of clients to whom certain disclosable transactions were made available for implemen-
tation. This provision forms part of the legislation governing the mandatory disclosure of cer-
tain transactions regime, which was introduced in the Finance Act 2010 and was followed by
regulations on 17 January 2011.
  During a consultation process on the proposed regulations last summer, concerns were raised
regarding taxpayers being identified to the Revenue Commissioners in circumstances where
those taxpayers may not have undertaken the transactions concerned. This section modifies
the original provision to remove the disclosure obligation on promoters where they are satisfied
the client did not undertake the transaction at the time in question. If the transaction is under-
taken at a later time, the client’s details must be disclosed in a normal way. The regulations
will be amended in due course to take account of this change.

  Deputy Joan Burton: Is the section designed to deal with people involved in aggressive tax
planning so that the people who might be the beneficiaries of said planning can be identified
to Revenue? As I might not understand the section correctly, perhaps the Minister of State
will clarify the situation.

 Deputy Martin Mansergh: That is my understanding. The transaction needs to have been
made. If it is merely discussed and not acted upon, the situation is different.

  Deputy Joan Burton: Do the Minister of State’s officials have a view on how much income
has been lost to Revenue through these aggressive forms of tax planning?
                Finance Bill 2011:        26 January 2011.          Committee Stage

  During the past year or more, a great deal of information has emanated about people with
deposit accounts in Switzerland in particular that have been used to avoid tax. In well publicised
cases, whistleblowers there have identified people from various jurisdictions who have been
salting money away from the prying eyes of tax collectors. I would not be surprised if some of
those people were from Ireland.
  In the interests of ensuring aggressive tax planning does not occur, perhaps the Minister of
State could inform the House about the situation pertaining to people with non-resident
deposits in tax havens like Switzerland and Austria where banking regulations are extraordi-
narily secretive. For example, we know from The FitzPatrick Tapes of a strange transaction
involving Anglo Irish Bank, which took the Taoiseach out golfing and so on at various intervals
prior to the State’s guarantee of the bank. He was telephoned in Singapore and attended a
dinner hosted by Anglo Irish Bank in Heritage House just before he became Taoiseach. In
July 2008 before the bank guarantee there was the famous round of golf and dinner afterwards
with various Anglo notables. It has always intrigued me that the purpose of these contacts
made by Mr. FitzPatrick was, presumably, to plead with the Taoiseach that the bank needed
deposits from the National Treasury Management Agency. At or around the time of the
guarantee, this bank had a subsidiary in Austria where banking secrecy is extreme. Lo and
behold, shortly after the guarantee, this bank which desperately needed deposits, sold the
Austrian subsidiary with about €600 million in deposits. What has always intrigued me is how
did a bank, which was begging for deposits, sell a subsidiary bank with deposits of €600 million.
Was this connected to tax avoidance transactions?

  An Leas-Cheann Comhairle: We need to deal with section 68.

 Deputy Joan Burton: I have written to the Minister for Finance on several occasions on this
matter. Was this connected to tax avoidance? Were the depositors in that bank——

  An Leas-Cheann Comhairle: I do not think the Minister of State is in a position to answer
particular questions relating to correspondence the Deputy has had with the Minister. They
cannot be answered on the floor of the House now. I ask the Deputy to deal with the specific
details of section 68.

  Deputy Joan Burton: The section describes transactions and persons and contains a reference
to promoters. The transfer of large deposits of money from the Irish jurisdiction to tax havens
by means of promoters or to places where there is a practice of banking secrecy, is the highest
form of aggressive tax avoidance management that I am aware of. The Minister will remain a
Minister for the duration of the general election and until the new Government is formed. I
have written to the Minister for Finance about this on a previous occasion. I understand the
Minister of State does not have an answer to hand but this is a very murky area of aggressive
tax planning. Will the Minister of State arrange——

  An Leas-Cheann Comhairle: This is not the occasion to question the Minister of State on
those positions.

  Deputy Joan Burton: ——for the officials to write to me?
   With regard to what is described as the mandatory disclosure regime, can the officials advise
the Minister of State why this amendment was introduced unless they were certain that certain
promoters of schemes were able to avoid examination of the schemes by the Revenue Commis-
sioners? I ask the Minister of State to give the background to the amendment.
                Finance Bill 2011:       26 January 2011.          Committee Stage

  Deputy Martin Mansergh: I am unable to give the background details but it is an ongoing if
not an eternal battle between Revenue and governments against tax evasion and either aggress-
ive forms of avoidance or tax evasion. The Deputy is a member of the Joint Committee on
Finance and the Public Service and will be aware that a great deal of progress has been made
in extending double taxation agreements, taxation information, exchange schemes and nar-
rowing the space in which jurisdictions which have been very happy to welcome deposits in the
utmost secrecy, without inquiring too much into their legality in terms of the law of the country
from which they come, can operate. More work remains to be done and disclosures were made
with regard to Liechtenstein. The United States in particular, has been very strong on this. The
German Social Democrat Minister for Finance, Peer Steinbruck, was exceptionally strong. He
and his French counterpart organised some meetings to deal with this matter and Ireland has
always been supportive. In one respect, Ireland has a law on tax evasion that is without counter-
part in any other country, which allows for the quarterly publication of lists of defaulters and
penalties. I have been informed by both German and British delegations that although they
are quite impressed, they did not think this would work in their jurisdictions. Ireland is ahead
of the posse in that respect.
  This provision only applies where no scheme has been implemented. Revenue does not want
to know who might have looked at a scheme so long as they did not bite.

  Question put and agreed to.

  Section 69 agreed to.

                                         SECTION 70

  Deputy Michael Noonan: I move amendment No. 96:

    In page 206, to delete lines 27 to 35 and substitute the following:

      ““(c) Where the Revenue Commissioners issue a notice of attachment in respect of any
    amount of money due by the relevant person to the taxpayer as emoluments under a
    contract of service, and where the relevant person is controlled by the taxpayer within the
    meaning of Section 10, the notice may provide for the payment by the relevant person of
    the amount of the default out of the emoluments, after taking account of statutory
    deductions, over a period specified in the notice.”,”.

Section 70 amends section 1002 of the Taxes Consolidation Act 1997 which is concerned with
Revenue’s power of attachment in respect of outstanding debt. Revenue will now be able to
issue a notice of attachment in respect of emoluments and may provide for the attachment of
such emoluments to be spread over a period of time. The amendment is drafted to modify
this provision and to focus it more acutely where the Revenue Commissioners issue notice of
attachment in respect of any amount of money due by the relevant person to the taxpayer as
emoluments under a contract of service and where the relevant person is controlled by the
taxpayer within the meaning of section 10, the notice may provide for the payment by the
relevant person of the amount of the default out of the emoluments after taking account of
statutory deductions over a period specified in the notice.

  Deputy Martin Mansergh: Before I reply to Deputy Noonan’s amendment, I need to mention
some matters before the conclusion of Committee Stage.
  Before continuing with today’s proceedings, I would be obliged if, in accordance with Stand-
ing Order 136, the Ceann Comhairle would direct the Clerk of the Dáil to make the following
                Finance Bill 2011:       26 January 2011.          Committee Stage

minor drafting correction to the text of the Bill. The correction is as follows: in paragraph (d)
at the end of page 41, the reference to section 784(3) should read, section 784C(3).
   I also wish to give notice that the Minister will be moving two amendments on Report Stage.
First, an amendment to a section of the Bill, as amended on Committee Stage, to deal with the
taxation of excess remuneration paid to persons employed in an institution that has received
financial support under either the Credit Institutions (Financial Support) Act 2008 or the
National Pensions Reserve Fund Act 2000. Second, an amendment deleting section 18 of the
Bill, as amended in its entirety on Committee Stage. This section deals with self-assessment
pay and file.

  An Leas-Cheann Comhairle: Notice will be taken for report of the Minister’s announcements.
Is the instruction to the Ceann Comhairle acceptable?

  Deputy Michael Noonan: It is acceptable.

  An Leas-Cheann Comhairle: That is agreed.

  Deputy Martin Mansergh: I will deal with amendment No. 96 regarding the attachment of
debt. Attachment is an enforcement option available to the Revenue Commissioners to recover
unpaid tax, unpaid interest or unpaid penalty due by taxpayers who have ignored the normal
collection approaches and notification procedures taken by Revenue. Attachment is used
judiciously by Revenue in accordance with strict guidelines which require that any decision to
use attachment must be approved at principal officer or nominated assistant principal officer
level. A number of amendments to the attachment provisions are being made in the light of
the experience of the Revenue Commissioners to make them more effective in the pursuit of
tax defaulters who have ignored all reasonable attempts by Revenue to collect taxes in default
and to improve efficiencies in certain situations.
   When attachment was introduced in 1988, attachment of emoluments was not regarded as
necessary by reference to the circumstances that prevailed at the time. However, circumstances
have since changed and many persons now carrying on trades and professions also derive
emoluments from directorships and employments. In addition, certain persons carrying on
trades and professions have ceased those activities leaving undisputed tax liabilities unpaid.
Where these people have directorships or employments, it is appropriate that they should meet
their tax debts of previous and current years whatever the source of their resources. Where
this is not done on a voluntary basis, it is appropriate that the Revenue Commissioners have
the use of the attachment procedure where necessary to recover these debts. I emphasise that
attachment is used by the Revenue Commissioners only where all normal collection attempts
have been ignored by the taxpayer.
   If the amendment was accepted, it would seriously restrict the Revenue Commissioners’
ability to recover outstanding debts in circumstances where the individual had ceased trading
leaving substantial unpaid tax liabilities and was now in employment where due to the level of
net income it was deemed appropriate to use the attachment procedure. In these circumstances,
I cannot accept the amendment.

  Amendment, by leave, withdrawn.

  Section 70 agreed to.

  Sections 71 and 72 agreed to.
                Finance Bill 2011:       26 January 2011.          Committee Stage

                                         SECTION 73

  Question proposed: “That section 73 stand part of the Bill.”

  Deputy Michael Noonan: I wish to hear the comments of the Minister of State on this section.

  Deputy Martin Mansergh: Section 73 formalises taxpayer confidentiality. The need for such
provision arises because of the volume and comprehensiveness of personal and commercial
information concerning taxpayers which Revenue acquires. At present, there is no specific tax-
related provision other than the statutory declaration made by inspectors in respect of Schedule
D tax and corporation tax governing confidentiality requirements. Reliance is placed on the
absolute ban imposed by the Official Secrets Act on civil servants revealing any information
acquired in an official capacity. This section provides a specific tax-related provision which
will reassure taxpayers that personal and commercial information revealed for tax purposes is
protected against unauthorised disclosure. In other words, this strengthens by being specific
the rights of the taxpayer.

  Question put and agreed to.

  Section 74 agreed to.

                                         SECTION 75

  Question proposed: “That section 75 stand part of the Bill.”

  Deputy Michael Noonan: I wish to hear the comments of the Minister of State on this section.

  Deputy Martin Mansergh: This concerns payment of tax by relevant payment methods. This
section provides that tax can be paid to Revenue by credit card, debit card or any other method
or methods of payment which is or are approved by the Revenue Commissioners. The section
enables the Revenue Commissioners to make regulations relating to these payment methods.
This measure is a customer service initiative to provide taxpayers with additional options for
the payment of taxes and duties and will give them greater flexibility for making payments
while also facilitating voluntary compliance.

  Deputy Michael Noonan: I presume the Revenue Commissioners accept payment in cash.

  Deputy Martin Mansergh: I think so, yes.

  Deputy Michael Noonan: Will they accept payment in cash other than in euro?

  Deputy Martin Mansergh: Cash other than in euro?

  Deputy Michael Noonan: Yes. Many people have sterling around, as we know.

  Deputy Martin Mansergh: Any currency that is not euro must be converted to euro prior
to payment.
  Question put and agreed to.

                                       NEW SECTION

  Deputy Martin Mansergh: I move amendment No. 97:

    In page 213, before section 76, to insert the following new section:
        Finance Bill 2011:        26 January 2011.          Committee Stage

76.—(1) Schedule 24A to the Principal Act is amended—

 (a) in Part 1 by inserting the following before paragraph 1:

     “1A. The Double Taxation Relief (Taxes on Income) (Republic of Albania) Order
   2011 (S.I. No. 16 of 2011).”,

 (b) in Part 1 by substituting the following for paragraph 2:

      “2. The Double Taxation Relief (Taxes on Income) (Republic of Austria) Order
   1967 (S.I. No. 250 of 1967), the Double Taxation Relief (Taxes on Income and Capi-
   tal Gains) (Republic of Austria) Order 1988 (S.I. No. 29 of 1988) and the Double
   Taxation Relief (Taxes on Income and Capital Gains) (Republic of Austria) Order
   2011 (S.I. No. 30 of 2011).”,

 (c) in Part 1 by substituting the following for paragraph 14:

     “14. The Double Taxation Relief (Taxes on Income and Capital and Gewerbeste-
   uer (Trade Tax)) (Federal Republic of Germany) Order 1962 (S.I. No. 212 of 1962)
   and the Double Taxation Relief (Taxes on Income and on Capital) (Federal
   Republic of Germany) Order 2011 (S.I. No. 31 of 2011).”,

 (d) in Part 1 by inserting the following after paragraph 15:

    “15A. The Double Taxation Relief (Taxes on Income) (Hong Kong Special
   Administrative Region) Order 2011 (S.I. No. 17 of 2011).”,

 (e) in Part 1 by inserting the following after paragraph 22:

     “22A. The Double Taxation Relief (Taxes on Income) (State of Kuwait) Order
   2011 (S.I. No. 21 of 2011).”,

 (f) in Part 1 by substituting the following for paragraph 26:

    “26. The Double Taxation Relief (Taxes on Income) (Malaysia) Order 1998 (S.I.
   No. 495 of 1998) and the Double Taxation Relief (Taxes on Income) (Malaysia)
   Order 2011 (S.I. No. 32 of 2011).”,

 (g) in Part 1 by inserting the following after paragraph 27A:

     “27B. The Double Taxation Relief (Taxes on Income) (Montenegro) Order 2011
   (S.I. No. 18 of 2011).

   27C. The Double Taxation Relief (Taxes on Income) (Kingdom of Morocco) Order
 2011 (S.I. No. 19 of 2011).”,

 (h) in Part 1 by inserting the following after paragraph 35A:

    “35B. The Double Taxation Relief (Taxes on Income) (Republic of Singapore)
   Order 2011 (S.I. No. 34 of 2011).”,

 (i) in Part 1 by substituting the following for paragraph 38:

     “38. The Double Taxation Relief (Taxes on Income and Capital Gains) (Republic
   of South Africa) Order 1997 (S.I. No. 478 of 1997) and the Double Taxation Relief
   (Taxes on Income and Capital Gains) (Republic of South Africa) Order 2011 (S.I.
   No. 33 of 2011).”,
                Finance Bill 2011:        26 January 2011.            Committee Stage

  [Deputy Martin Mansergh.]

        (j) in Part 1 by inserting the following after paragraph 41A:

           “41B. The Double Taxation Relief (Taxes on Income and Capital Gains) (United
          Arab Emirates) Order 2011 (S.I. No. 20 of 2011).”,

        (k) in Part 3 by inserting the following after paragraph 1:

            “1A. The Exchange of Information Relating to Tax Matters (Antigua and
          Barbuda) Order 2011 (S.I. No. 22 of 2011).

         1B. The Exchange of Information Relating to Tax Matters (Belize) Order 2011 (S.I.
        No. 23 of 2011).”,

        (l) in Part 3 by inserting the following after paragraph 2:

           “2A. The Exchange of Information Relating to Taxes (British Virgin Islands)
          Order 2011 (S.I. No. 24 of 2011).”,

        (m) in Part 3 by inserting the following after paragraph 3:

            “3A. The Exchange of Information Relating to Tax Matters (Cook Islands) Order
          2011 (S.I. No. 25 of 2011).”,


        (n) in Part 3 by inserting the following after paragraph 8:

            “8A. The Exchange of Information Relating to Tax Matters (Republic of the Mar-
          shall Islands) Order 2011 (S.I. No. 26 of 2011).

            8B. The Exchange of Information Relating to Tax Matters (Saint Lucia) Order
          2011 (S.I. No. 27 of 2011).

           8C. The Exchange of Information Relating to Tax Matters (Saint Vincent and the
          Grenadines) Order 2011 (S.I. No. 28 of 2011).

            8D. The Exchange of Information Relating to Tax Matters (Samoa) Order 2011
          (S.I. No. 29 of 2011).”.

      (2) This section applies as on and from the date of the passing of this Act.”.

The purpose of this amendment is to amend Part 1 and Part 3 of Schedule 24A of the Taxes
Consolidation Act 1997. This schedule lists all international tax agreements entered into by
Ireland. Part 1 lists all the existing double taxation agreements and Part 3 lists all the tax
information exchange agreements. As I stated earlier, many Members of the House will be
familiar with these from meetings of the Committee on Finance and Public Service. The amend-
ment adds seven countries to the list of countries in Part 1 with which the State has entered
into a double taxation agreement, DTA, and eight countries or territories to the list of countries
or territories in Part 3 with which the State has entered into a tax information exchange agree-
ment, TIEA. It also adds four protocols to update the provisions of four existing double tax-
ation agreements.
  Double taxation treaties are widely regarded as critical pieces of fiscal infrastructure for
developing substantial bilateral trading and investment opportunities by reducing tax impedi-
ments that might otherwise deter cross-border activity. To ensure that Irish business remains
                Finance Bill 2011:       26 January 2011.          Committee Stage

competitive and that Ireland remains an attractive destination for foreign direct investment we
have been rapidly expanding our double tax treaty network. The six new double taxation
agreements are with Albania, Hong Kong, Kuwait, Montenegro, Morocco, Singapore and the
United Arab Emirates. The addition of these six agreements — I am sorry, as I may have
misled the House; I count seven rather than six. The addition of these seven agreements will
bring to 62 — or possibly 63 — the number of double taxation agreements that Ireland will
have ratified.
   The four protocols are under the existing double taxation agreements with Austria,
Germany, Malaysia and South Africa. These protocols provide for the updating of the exchange
of information articles in the Malaysian, Austrian and South African agreements. The protocol
to the German double taxation convention updates the convention to reflect the current tax-
ation laws of both countries. The protocol to the South African agreement as well as updating
the exchange of information article also reflects the change in the taxation laws of South Africa
with regards to taxation on dividends.
   Tax information exchange agreements are also important international agreements which
strengthen the ability of the revenue authorities in both countries to enforce their tax laws and
thereby encourage the development of closer economic relations between both countries. The
eight TIEAs are with Antigua and Barbuda, Belize, the British Virgin Islands, the Cook Islands,
the Marshall Islands, St. Lucia, St. Vincent and the Grenadines and Samoa. These will bring
to 17 the number of tax information exchange agreements that Ireland will have ratified.
  All of these agreements have been considered and approved by the Committee on Finance
and the Public Service on 15 December 2010 as part of their ratification process. The addition
of these 19 countries or territories to schedule 24A is the final step in the legislative and
ratification procedure that will ensure that these agreements will have the force of law.

  Deputy Michael Noonan: The proposed section 76(1)(d) is on the double taxation relief on
taxes on income with Hong Kong. The Minister of State will recall that we had a discussion——

  Deputy Martin Mansergh: We had an exchange.

  Deputy Michael Noonan: ——about this at a committee meeting. I am not fully convinced
that the withholding tax on transfers from Hong Kong is appropriate and may continue to be
a disincentive for investment in the Irish Financial Services Centre.
  Has the Minister of State or his officials had any second thoughts on the matter?

  Deputy Martin Mansergh: No. If the Deputy recalls I gave him a note on that.

  Deputy Michael Noonan: The Minister of State said he was doing it because he thought there
7 o’clock
might bea vehicle for evasion; one could say that about anything.

  Deputy Martin Mansergh: I will give the House the gist of it. Hong Kong has a territorial
taxation system under which foreign-sourced income including interest will not be sourced in
Hong Kong. Furthermore Hong Kong does not have a withholding tax on interest payments
paid to non-residents. These features of its tax system could open up possibilities of aggressive
tax planning involving the Ireland-Hong Kong double taxation agreement. Ireland’s usual
treaty policy is to seek nil withholding rates for interest payments. However, to avoid double
non-taxation a 10% rate was agreed to be included in the treaty. I am afraid there has been
no consideration of this, but like everything else the next Government will be free to have a
look at it if it wishes.

  Deputy Michael Noonan: The Minister of State should not be giving up too soon.
                Finance Bill 2011:           26 January 2011.         Committee Stage

  Deputy Martin Mansergh: I did not say who would form the next Government.

  Deputy Joan Burton: Fine Gael has not closed off the Fianna Fáil option and Deputy Martin
has already suggested it.

  An Ceann Comhairle: Let us not get off on a tangent from the real issue here.

  Deputy Martin Mansergh: I do follow developments.

  Deputy Joan Burton: Tallaght in reverse.

  Deputy Bernard J. Durkan: Are there any specific investment locations with which Ireland
has not had a double taxation agreement or with which we propose to have a double taxation
agreement? Are there any obvious places which might have been a location for investors in
this jurisdiction?

   Deputy Martin Mansergh: The principal one with which we are working at the moment is
Brazil, which is a very large economy. The Deputy will have heard of the phrase, the BRIC
countries, which are major countries in the developing world. He can do the arithmetic for
himself; if we have approximately 70 double taxation agreements and there are more than 200
countries in the world, we have some way to go. We prioritise those with which we have either
trading or commercial relations. This is an area that has been expanding very rapidly. While I
do not know if it is true today, it was certainly true four or five years ago that with the exception
of Singapore, Ireland is practically the most globalised economy in the world and so obviously
we need these agreements because we are trading with many different countries. The nego-
tiations with Brazil are slow, but we are continuing to negotiate. We are also negotiating with
Saudi Arabia, Qatar and the Philippines.

  Amendment agreed to.

  Section 76, as amended, agreed to.

  Sections 77 to 79, inclusive, agreed to.

  Schedule 1 agreed to.

                                          SCHEDULE 2

  Deputy Martin Mansergh: I move amendment No. 98:

    In page 217, line 4, to delete “2011” and substitute “2010”.

  Amendment agreed to.

  Deputy Martin Mansergh: I move amendment No. 99:

    In page 217, line 14, to delete “2011” and substitute “2010”.

  Amendment agreed to.

  Deputy Martin Mansergh: I move amendment No. 100:

    In page 217, line 22, to delete “2011” and substitute “2010”.

  Amendment agreed to.
                     Business             26 January 2011.              of Dáil

  Schedule 2, as amended, agreed to.

                                         SCHEDULE 3

  Deputy Martin Mansergh: I move amendment No. 101:

    In page 219, lines 32 and 33, to delete paragraph 13 and substitute the following:

      “13. Section 88(5) of the Principal Act is amended by substituting “paragraph (a) or (c)
    of section 3” for “section 2(1)(a)”.”.

  Amendment agreed to.

  Schedule 3, as amended, agreed to.

  Schedule 4 agreed to.

  Title agreed to.

  Bill reported with amendments.

  Report Stage ordered for Thursday, 27 January 2011.

                                        Business of Dáil
  An Ceann Comhairle: As the next business ordered is the Report Stage of the Finance Bill
to be preceded by a number of financial resolutions and as it is not possible to proceed to that
business at this time, there being no further business before the House, I ask the Minister of
State to move the adjournment.

  Deputy Michael Noonan: Before the Minister of State moves the adjournment, may I ask
what is the schedule for Report Stage tomorrow and whether a voting schedule has been drawn
up. We seem to have moved very rapidly this evening and there are not many matters of
substance that need much time on Report Stage. I do not want to agree any schedule that ties
us into a lengthy sitting that may not be necessary.

  Minister of State at the Department of Finance (Deputy Martin Mansergh): Looking back
on the day, perhaps the House did not allow enough time for the early sections, but I feel the
later sections have been dealt with adequately in the time allotted. It was originally planned
that completion of Committee Stage would be at 11 a.m. tomorrow but as it has now been
completed Report Stage will start at 10.30 a.m. tomorrow instead of 11 o’clock and will proceed
for six hours. I gather a meeting has been arranged between party representatives and officials
before 10.30 a.m. tomorrow to prepare for Report Stage.

  Deputy Joan Burton: Sections 1 to 38 at the beginning of the Bill are of most interest to
Members and include the changes to pension provisions, the universal social charge and section
23 tax breaks. Today’s schedule allowed very little time for that part and considerable time for
areas including giving Revenue extra powers in combating tax evasion and so on. We should
devote most of the time to sections 1 to 38 because many Members want to contribute on those
and, as the Minister of State knows, the debate on Report Stage is truncated anyway. If three
or four hours are being allocated to Report Stage, on behalf of the Labour Party I ask the
Minister of State to consider, together with the Whips, devoting the bulk of that time to sections
1 to 38 because there was not enough time for Members to raise any queries or make any
point today.
                     The                26 January 2011.           Adjournment

  Deputy Martin Mansergh: There will be six hours tomorrow.

  Deputy Joan Burton: I suggest the bulk of that time be devoted to sections 1 to 38 because
the later sections have been adequately addressed and I believe that is the feeling of most

  Deputy Martin Mansergh: I believe the answer to that is “Yes”, with three to four hours on
sections 1 to 38.

  Deputy Joan Burton: I believe an hour would be adequate for the others.

  Deputy Arthur Morgan: Could we have approximately five hours for sections 1 to 38?

  Deputy Martin Mansergh: That can be discussed between the Whips.

  An Ceann Comhairle: The order specifies conclusion at 5 p.m. tomorrow.

  Deputy Arthur Morgan: We need not box the various sections in the way we did on Commit-
tee Stage and can have it open on Report Stage. Is that the case?

  An Ceann Comhairle: The Whips will be meeting.

  Deputy Michael Noonan: I agree to that suggestion.

  Deputy Joan Burton: It was very frustrating today that the major budget provisions were all
packed into an hour with very little opportunity to discuss them.

  Deputy Martin Mansergh: I did not have any time to reply.

  Deputy Arthur Morgan: Many sections were not reached in those earlier stages.

 Deputy Martin Mansergh: I am in agreement with the other side of the House on this matter.
That was the part of the discussion that was truncated.

  Deputy Joan Burton: I am satisfied with the last section because I believe there is unanimous
agreement that unless the Minister has Report Stage amendments, we do not need more than
ten or 15 minutes on that.

  The Dáil adjourned at 7.10 p.m. until 10.30 a.m. on Thursday, 27 January 2011.


To top