Seanad Éireann debate -
Wednesday, 6 Nov 2024

I welcome the Minister to the House and thank him for being here. It is the first time for him to bring a Finance Bill to the Seanad. So a céad míle fáilte and I thank him for that.

The Minister has ten minutes to make his opening remarks, group spokespersons have 12 minutes, all other Senators have five minutes, and the Minister will be called to reply no later than 6.20 p.m. and given no less than ten minutes to reply to the debate.

I thank the Cathaoirleach and appreciate the opportunity to present the Finance Bill to the Seanad. I am pleased to be here today to discuss the Bill. I understand that Senators have been sent a summary of the Bill which addresses each individual section. I will use the time available to highlight some of the key measures.

As we know, the Finance Bill gives legislative effect to the budget 2025 measures. It was important that budget 2025 demonstrated the Government's commitment to helping individuals and families, and to ensuring our indigenous businesses can grow and prosper and that Ireland remains a highly attractive and competitive place for international investment and business.

For example, the focus of the budget 2025 personal income tax package is to support low- and middle-income earners by building on the progress already made during this Government’s term, specifically in the context of tax credits and universal social charge reductions. The €1.6 billion personal income tax package includes raising the personal employee PAYE and earned income tax credits by €125 each, to €2,000. The standard rate cut-off point for income tax also increases by €2,000, to €44,000 for a single person, with commensurate increases in the bands applying to married persons and persons in civil partnerships. In addition, the Bill reduces the 4% rate of USC applicable to incomes between €27,383 and €70,044 per annum to 3%. These changes will benefit everyone who pays income tax. Further, the 2% rate band ceiling for the USC will increase to ensure that the 2% rate remains the highest rate of USC that is charged on the income of full-time minimum wage workers.

The Bill also provides for an increase to the home carer tax credit to €1,950. Additionally, the single person child carer credit increases to €1,900, the incapacitated child tax credit increases to €3,800, the dependant relative tax credit increases to €305 and the blind person tax credit increases to €1,950.

Innovative start-up and scaling businesses are of vital importance in our economy and provide significant employment nationwide. The Bill amends a number of existing measures, such as providing for an extension of the employment investment incentive, EII, the start-up capital incentive, SCI, and the start-up relief for entrepreneurs, SURE, until the end of 2026. It also doubles the limit on the amount of an investment that an investor can claim relief on under EII, from €500,000 up to €1 million, and increases the maximum qualifying investment in respect of which an investor may claim relief under SURE over a seven-year period to €980,000, that is, €140,000 per annum. Building on the significant enhancements made to the research and development tax credit in the previous two budgets, the Bill also provides for an increase in the amount of the claim that is payable in the first year, from €50,000 to €75,000.

In terms of new measures intended to provide a simplified method of double tax relief, the Bill introduces a participation exemption for foreign dividends. This measure will provide an exemption from corporation tax for qualifying dividend payments, subject to certain rules, and delivers on a Government commitment. It is expected to significantly lower the administrative burden faced by taxpayers with foreign subsidiaries.

The Bill provides for an uplift for small- to medium-sized feature film productions under the section 481 film tax relief.

The Scéal uplift will be granted at an additional rate of 8% for film productions with a maximum qualifying expenditure of €20 million. This will provide for a total support of 40% for in-scope productions. This measure is subject to EU state aid approval. As I announced on budget day, and also subject to EU state aid approval, a new tax credit is being introduced to support the unscripted production sector. The relief will incentivise the making of unscripted productions by providing a refundable corporation tax credit at a rate of 20% on eligible expenditure of between €250,000 and €15 million per project. The introduction of this credit will support the continued growth of our audio-visual sector in Ireland. The angel investor relief was introduced in budget 2024 to provide for a reduced rate of CGT for investors in innovative start-ups when they dispose of a qualifying investment. The Bill provides that the lifetime limit on gains to which the reduced rate of CGT applies will be increased from €3 million to €10 million. I am also introducing a new relief for expenses incurred in connection with a first listing on an Irish or European stock exchange.

As I noted in my budget statement, Irish farmers make an important contribution to our economy. The Bill includes a number of measures to support farmers including the extension of the general, young trained farmer and registered farm partnerships stock reliefs for a further three years, to the end of 2027. The Bill also provides for further qualifying equipment types to be added to the farm safety equipment eligible for the accelerated capital allowances scheme for farm safety equipment.

The capital acquisitions tax agricultural relief promotes the transfer of farms from one generation to the next and is an important measure to allow our young people to pursue careers on the family farm. The Bill introduces a six-year active farmer requirement prior to the date of the gift or inheritance for the person who provides the gift or inheritance. This measure was developed in response to concerns raised by farming representative bodies and, to ensure that there are no cliff-edge impacts, the legislation allows for a six-year transitional period for implementation. I introduced an amendment in the Dáil to make the provisions subject to a commencement order. This will allow time for further engagement and consultation with stakeholders and will ensure that there are no unintended consequences in relation to this important measure.

The Government has invested unprecedented levels into housing delivery and it is our priority to continue to accelerate the supply of residential accommodation. To provide certainty to prospective home-buyers and the market, the help-to-buy scheme is being extended to the end of 2029 and a technical amendment is being introduced to ensure that approved affordable purchasers will not lose out on an affordable property under the local authority affordable purchase scheme or their eligibility for the help-to-buy scheme due to timing delays.

Other measures included in the Bill to address challenges in the housing market include an increase to the rent tax credit both for 2024 and 2025; an extension of the mortgage interest tax relief; the extension of the pre-letting expenses regime to assist landlords in preparing properties for the rental market; an increase in the rate of vacant homes tax; and changes to the residential zoned land tax.

The Bill also provides for changes to the rates of stamp duty applying on the acquisition of residential property. As approved on budget night, the higher rate of stamp duty on bulk acquisitions of houses is increased from 10% to 15%. In addition, the rate of stamp duty applicable to residential property valued above €1.5 million is being increased to 6%. The existing rate of 1% will continue to apply to values up to €1 million, and 2% on values above €1 million, with a third rate of 6% to apply to any value in excess of €1.5 million, except where three or more apartments in the same block are being acquired. Normal transitional arrangements will apply for transactions in process.

A number of climate-related tax measures are included in the Bill to incentivise the purchase of low-emission vehicles and retrofitting. The Bill amends the weight ratio for commercial battery electric vehicles, to enable them to qualify for the reduced €200 rate of vehicle registration tax. A new exemption from benefit in kind for the installation of a home charging facility in respect of employer-provided electric vehicles is included in the Bill to support the transition to electric fleets. In addition, the Bill also provides for downward adjustments of the maximum emission thresholds for claiming capital allowances on company cars, with effect from 1 January 2027, allowing sufficient advance notice for the sector. It is hoped that this measure should, over time, incentivise the purchase of electric vehicles and help to create a more vibrant second-hand electric vehicle market. I am also introducing an emissions-based approach to vehicle registration tax for category B vehicles such that, with effect from 1 July 2025, there will be a lower, 8% rate for category B vehicles with CO2 emissions of less than 120 g/km. Furthermore, to reduce the cost where heat pumps are an integral part of retrofits, the Bill provides for a reduction in the VAT rate for heat pumps to 9% with effect from 1 January 2025.

There are also a number of enhancements to the current tax arrangements for charities. The Bill removes the two-year waiting period under the charitable donation scheme, so that approved bodies can obtain tax relief on donations immediately. To further support charities and their work and the implementation of the national philanthropy policy, the Bill will also allow charities five years to apply tax relieved funds to their charitable purpose, rather than the current two-year period that is operated on an administrative basis.

The Bill contains a range of measures to support national governing bodies for sports in investing for long-term projects. Certain approved governing bodies will be allowed an exemption from tax for funds which it invests for a period of up to ten years. The exemption will apply so long as the income is ultimately applied for specified qualifying purposes, which include capital projects; the promotion of participation in sports by women and by people with disabilities; the purchase of certain sports equipment; and supporting high-performance athletes.

Other measures in the Bill include exemptions from tax in respect of payments made under the CervicalCheck and Stardust ex gratia payments schemes. The tax treatment of the auto-enrolment retirement savings scheme is also being provided for within the Bill. The 9% rate of VAT for gas and electricity is being extended to 30 April 2025. The Bill introduces a domestic tax on e-cigarettes which will apply at a rate of €0.50 per ml of e-liquid. It is expected that this measure will be commenced by the middle of next year. The budget night increase of €1 on a pack of 20 cigarettes, with a pro rata increase on other tobacco products, is included in the Bill. A series of amendments to the Finance Act 2002 is set out in the Bill to ensure that the recently enacted Gambling Regulation Act 2024 can operate effectively. The Bill applies the revised bank levy that was introduced last year on the same basis for 2025. In the miscellaneous provisions part of the Bill, a number of sections give effect to the announcement earlier this year of the reduction in the interest rate applying to debts in the tax debt warehousing scheme.

To conclude, the Bill provides a legislative basis for the budget announcements and makes a number of other necessary changes to tax legislation. I look forward to further discussion on the provisions within it. I commend the Bill to the House.

I welcome the Minister, Deputy Chambers. Budget 2025 is a testament to our commitment to fostering economic growth and stability. Fianna Fáil welcomes and supports this Bill which gives effect to key taxation measures in budget 2025. Through successive budgets, Fianna Fáil in government has supported individuals, families and businesses that have played an integral part in ensuring our economy is in a strong position today. The Finance Bill 2024 continues this positive trajectory by setting out the legislative provisions required to implement the range of tax measures announced in budget 2025. The Bill includes a number of tax changes intended to provide additional supports nationwide while also maintaining the long-term stability of our public finances.

One of the cornerstone elements of this Bill is the provision for income tax changes. These changes are designed to ease the financial burden on our people, ensuring that more money remains in the pockets of hard-working individuals and families. Additionally, the introduction of the participation exemption for foreign dividends aims to attract more international business, fostering a more competitive and dynamic economic environment. The Bill also addresses amendments arising out of the Gambling Regulation Bill and introduces measures related to the automatic enrolment retirement savings schemes. These initiatives are crucial for protecting our citizens and ensuring their financial security in the long term.

In the creative sector, a very strong industry in Wicklow, we see the introduction of new film measures including a tax credit for unscripted production and the uplift for small feature films. These incentives are designed to bolster our film industry, encouraging creativity and innovation while providing significant economic benefits. Furthermore, the Bill provides for changes to existing measures to support enterprise and farming individuals and households, as well as property-related measures. These include rent tax credits, the help-to-buy scheme, the vacant homes tax, the residential zoned land tax, benefit in kind on motor vehicles and the research and development tax credit. Each of these measures is perfectly crafted to address specific needs in our economy, ensuring that we continue to support growth and development across all sectors.

In conclusion, budget 2025 is a comprehensive plan that reflects our commitment to economic stability and growth. By implementing these tax measures, we are not only supporting our current economic strength but also laying the groundwork for a prosperous future.

Fianna Fáil remains committed to working tirelessly for the betterment of our nation and ensuring that every citizen can share the benefits of a thriving economy.

I welcome the Minister. This is the first time I have addressed him since he became Minister for Finance and I offer my congratulations. I am not here to give the Bill a hammering but there are a couple of points I would like to make.

First and foremost, I want to raise the issue of the USC, on which Senator Boyhan made a speech this morning. It came in as a short-term tax to help with a specific issue but it has hung around and it really needs to go. Perhaps it could not have gone in one fell swoop, but it would have been better if we had removed those on the bottom level of income completely from it. I hope that when the Minister is back here next year as Minister for Finance, he will address me, having been elected as well, and tell me he has totally written off the USC.

One of the things I would like to have taken care of is the philanthropy issue. I am looking to the future to an extent. We have a number of highly efficient incubation centres throughout the country, similar to the PorterShed in Galway. We need to give serious tax incentives to philanthropists to come in and spend their money on building these small indigenous industries, so I ask that something is done in this area. I believe the Minister and his partners in government would be committed to it.

The Minister of State, Deputy Ossian Smyth, is in the Visitors Gallery. There is an issue I have been on about for some time, namely, funding for cyber awareness and cybersecurity education and training. Cyber Ireland took up the mantra from me in regard to ring-fencing €1 billion of multi-annual funding for the whole area of cyber training, cybersecurity and the setting up of security centres. I know it is slightly outside the Bill but the money will come from the Department of Finance to do that.

There is another issue that we need to look at. Some of the things that were brought in as a result of FEMPI in 2012 and 2013 were brought in without any serious thought. For example, class K PRSI, which, as Minister, Deputy Leo Varadkar removed for county councillors, still exists for Members of this House and members of the Judiciary. A case came to me the other day where a man paid class S for his spouse, who works part-time in his company, but it was credited as class K by the Department. We have to try to sort out these anomalies and see how they can be fixed.

The Minister and I spoke a long time ago about the issue of abatement of pensions. This is fine if someone is coming out of a public service job where they were earning €150,000 a year before retirement, but if someone is coming out as a private soldier, for example, it is outrageous that we would not allow such a person to keep the pension. I always believed it was theft of a property right. When the Minister is back here, I ask him to look into that and perhaps the next Finance Bill can sort it out for us.

Other than that, we are awash with money. It would be nice to see money put into serious infrastructure projects, and one of those is light rail for Galway city, which would be a tremendous investment on behalf of the State. I will not be going to Galway looking for votes for the Dáil.

I welcome the Finance Bill and congratulate the Minister. It is one of the first times that Deputy Chambers has addressed the House as Minister. I compliment him on bringing forward the Bill. In general, I welcome the Bill but there are one or two things the Minister might address. Hopefully, he will be back as Minister for Finance whenever the next Government is formed. I welcome the tax relief for film and writing, which is wonderful. In Limerick, where I am from, the old Dell site was formerly Troy Studios. There used to be a regional uplift that helped to bring people into the regions for film production. While it is wonderful that the tax relief is there, that regional uplift would put Limerick on a par with places like Dublin and Wicklow. The cost of moving everything to another site can be prohibitive and it makes production more expensive. For the future, this is something the Minister might look at.

With regard to young farmers, I welcome that succession planning is very much part of the Bill. It has been an ongoing issue for many years and the farming community was certainly looking for its inclusion.

On housing, where couples are availing of affordable housing and there is a delay between their application and local authority approval, it is important that they do not lose out. Many people are availing of the help-to-buy scheme and it is a good news story that it is now extended to 2029.

With regard to pensions, I agree with Senator Craughwell that some public servants fall into the category where the rate of PRSI they paid at the time does not give them an entitlement to things like glasses or hearing and eye tests. This needs to be looked at. Money was taken from public sector pensions at a time when Ireland was at an all-time low financially but the pensions of some of those people have not been restored. The Minister might look at this for the long run. I understand more than 37,000 people are affected, including those who worked in laboratories, hospitals, local authorities and across the different sectors. In this day and age, when we have the money, it could be looked at for the long term. I accept that changes will not be put in place today.

I welcome that the USC is coming down. Is it the aim that it will eventually be eliminated? There was a promise in the past that we would work towards that. Nonetheless, it is good news that it is being brought down. The personal tax credit has also been changed and from speaking to young families, I know many have benefited.

The relief for businesses is welcome, especially for start-ups. Many companies will benefit. While I know this is not dealt with in the Bill, some companies cannot avail of business grants or energy credits if they are behind with their payments or on a payment plan. This should be looked at. If people are making the effort to pay, they should be able to avail of the grant. I welcome that the 9% rate has been applied to gas and oil. In the long term, I would love to see the 9% rate being looked at again for hospitality because we have seen recently that many hospitality businesses are closing, and it also affects hairdressers. It is just a thought that I will leave with the Minister for the future.

Overall, this is a very welcome Finance Bill. It tries to help all sectors of society, including families, older people, farmers and businesspeople.

That is what the Government is about - working with people. Sometimes there are those little anomalies where one size does not fit all. Maybe it is something we could look at in the future, but overall, I commend the Bill to the House.

First, I welcome the Minister to the House. I look forward to engaging with him within the same period of time. It is always unfortunate when Bills are pushed through on all Stages, but hopefully we will get to Committee Stage this afternoon. I hope to have the opportunity to engage with the Minister on a number of amendments, one or two of which are recommendations regarding procurement. Unfortunately, the Minister of State with responsibility for that area has just left the Chamber. Some of my amendments have been ruled out of order, but there are others I will talk to. I want to cut across two or three key themes. They are significant and I would appreciate the Minister's thoughts in respect of them.

First, in respect of capital gains tax, I have an ongoing concern that an error or a miscalculation has taken place regarding how we have approached capital gains tax and start-ups in Ireland. I support the idea of enterprise and innovation grants, the IDA and all those other measures to support start-ups, innovation and indigenous business, something which will probably be even more important than ever in the changing international climate. However, we also then have these measures in capital gains tax that strongly reward and effectively, I believe, even perversely incentivise the sale of these companies, because we have capital gains tax policies which lower capital gains tax when a company or new start-up is sold on. Again, that has been complemented by the measures that were brought in last year and have been mentioned in the Minister's speech, including the angel investor reliefs, where there is a reduced rate of capital gains tax at the point when these innovative start-ups and the investments in them are being disposed of.

In our approach to innovation and nurturing indigenous business, we should consider the need for companies not just to start up but also to continue, given the considerable public investment that goes into each of them. If they fail, the public money is lost. If they succeed, they are very often sold on. They are not always sold on to become operational. Sometimes they are sold on to continue their operations in another jurisdiction or to simply stop them because they are competition. They are sold on and bought by those who wish to remove a competitor from the playing field. Yet, the sale of the new company is the point where we are giving this huge boost in terms of capital gains tax, rather than the levelling-up of the company within Ireland. I am concerned that we end up in a company farming mindset. The real innovation we have seen in satellite technology, for example, came from Irish businesspersons who have won European innovation awards and whose companies have been there for 20 years. Often, a lot of the best innovation, and certainly the best innovation attached to employment, can come from businesses that have reached level 2 or 3, rather than this culture of continuous start-ups without a translation into actual business. From a pure business perspective, this needs to be examined. Are we creating a somewhat perverse incentive that is not, in fact, nurturing our indigenous industries and businesses at a time when we really need them to grow and not simply flower and be removed?

Similarly, there needs to be a stronger, more robust and joined-up approach to research and development and our research and development grants. The Minister mentioned the tax reliefs. Considerable money goes into research and development tax relief, including through the knowledge development box. However, there still is not a joined-up approach that links that funding and the general research and development agenda for the State, because public money is foregone for tax reliefs for research and development to sometimes very large and very wealthy corporations. This is something for which I have tabled an amendment later. To what extent is the research and development that is taking place through the knowledge box and other tax relief measures linking with our higher education institutions given that, as we know, there is a huge shortfall in funding for research? There are very poor conditions for those working in research in our higher education institutions and other public research bodies. At the same time, a huge amount is foregone in tax relief in the form of research and development. At some point, there needs to be a better joining up.

I know there is commercial sensitivity and so forth, but measures can be taken to try to join the dots and ask someone getting tax relief for research and development if it is leading to manufacture and to further productive activity, what the employment gains from it are, and whether there are partnerships with institutions in Ireland. We should start looking for a little bit more information out of the knowledge box in order to ensure we are not just giving a short-term tax relief that will keep investors and companies happy. I know that it is often a very big focus for the Government, but we need to make sure we are getting benefit from it that will translate into our own indigenous industries and actual research and development. We must ensure that Ireland becomes not just a place that is good to do research and develop in because of tax reliefs, but also a place that is known for the quality and content of its research and development and for the companies that may spring from it or the institutions that may underpin it. I will touch on one or two of these areas in my amendments, but they are areas where an ambitious rethink might be needed to ensure we get a little bit more from what we are doing.

I want to focus on two other areas. I flagged the private pension tax relief with previous Ministers in the same position. I am concerned about the huge amount of money that goes into the private pension tax relief, of which there is more in this budget. It has increased. Yet, we see a huge shortfall in addressing the actual inequalities in our system. Again, I raise the question of gender and equality proofing our pension tax policies. This is urgent, particularly when we have the issue with the new auto-enrolment scheme. We should learn from the fact that we have gender inequality gaps within our public pension system and within the private pension tax relief, which research has shown predominantly benefits men on higher incomes. More than 70% of people who benefit from the current system, which will increase under this budget, are men. In the context of gender and equality proofing, I would like to know what steps have been taken in terms of gender inequality proofing the pension measures put forward in this budget, as well as the general policies in respect of pensions. Explicitly, there also seems to be a lack of a gender and equality proofing of the new auto-enrolment scheme.

I want to highlight an issue I highlighted when the legislation regarding the new auto-enrolment scheme was coming through. There is a worrying lack of ethical oversight in respect of the new auto-enrolment scheme and its investments, which becomes more crucial in the context of things such as the International Court of Justice's ruling. We have a situation where there were at least provisions in other funds such as the Future Ireland Fund in terms of divestment of the fossil fuel divestment legislation, anti-cluster munitions and so forth. These are issues I highlighted. I also highlighted the question of divestment from illegally occupied Palestinian territories. There are mechanisms within those Bills. Within the auto-enrolment scheme, there was a very clear washing of hands of any obligation, even though there is a committee in the body that is being established to oversee this new auto-enrolment scheme.

It has a committee on investment policy, but there is no reference to our obligations under the Fossil Fuel Divestment Act 2018, the Cluster Munitions and Anti-Personnel Mines Act 2008 or, indeed, to what ethical guidelines in terms of exclusions may be put in place. I am very concerned that we have a situation where large amounts of public money may be placed into an auto-enrolment scheme and into funds via the auto-enrolment fund without any choice for the State to exercise ethical oversight in the context of how that money is invested. That is a massive lacuna when it comes to this new scheme. At a time when pension funds around the world are trying to divest from unethical products, we should not set up brand-new pension funds that lack ethical safeguards and proper measures for ensuring compliance with domestic and international law and, for example, the ruling by the International Court of Justice.

As I said, those are key issues in terms of pensions. I hope the Minister can address-----

I apologise to the Senator for interrupting. The groups in the Gallery are about to leave us. I will stop the clock for the Senator. I welcome the guests of the Ministers of State, Deputies O'Donovan and Carroll MacNeill. I also welcome the Kilmacthomas Women's Group. We cannot give them homework off, but we hope they have a pleasant visit nonetheless. I thank Senator Higgins.

That is no problem. As I said, gender- and equality-proofing of pensions are particularly crucial when we consider the very worrying proposal on the social protection side to potentially extend the requirement from 20 years' worth of contributions to 40 years' worth will leave many people, particularly women, on reduced-rate pensions because they will not have 40 years of contributions in many cases. We know that many women are already on such pensions under the current regime. At the same time we are effectively forcing others to work for 40 years if they are going to have just the base-level State pension, we are increasing tax reliefs for wealthier men in Ireland in terms of private pensions. This has to be examined.

My time is coming to a close, so I will quickly address a number of issues. In terms of climate measures, I hope steps can be taken to really address the long overdue issue of tax relief on aviation fuel. There are a few small measures in place, and things I welcome in the budget in the context of the Stardust scheme and the CervicalCheck scheme. It is important that those schemes be treated as non-taxable. We have a few small measures to benefit and support climate action, but we also have a problem whereby we still have massive subsidies for the fossil fuel industry that are hidden in the budget. Unless we stop subsidising in terms of looking at a path towards ending the subsidies relating to aviation fuel, for example, we will not be able to deliver the kind of action we need to turn around the very worrying climate crisis we have.

The Minister is very welcome. I will go through a few points first. In Sinn Féin's view, the Bill before the House confirms the unfairness at the heart of the budget. This is the Government's final budget, and it is on course to deliver the same two-tier income tax package we have come to expect. The cost-of-living crisis is not over. Yet, this Government, through its unfair income tax package, has again chosen to short-change anyone earning the average wage or below and workers who have been hardest hit by the cost-of-living crisis.

Sinn Féin showed how the Government could deliver a fair tax package for all workers by abolishing the USC on the first €45,000 a person earns, starting with the first €30,000 this year. Under the Government's income tax package, someone on €180,000 would benefit by three times as much as someone earning €35,000. How is that fair? The workers at the sharp end of the cost-of-living crisis have been let down again by this Government. In addition, the Government has singled out some of the highest earners in our society for additional tax reliefs, including increased tax breaks for landlords.

Sinn Féin has long called for a renter's tax credit. The Government was dragged into this position, but the credit will be eaten up by rent increases in the absence of a cap on rents. The standardised average rent increased by 8.1% for new tenancies nationally and by 5.9% for existing tenancies between quarter 1 of 2023 and quarter 1 of 2024. Indeed, with regard to the escalating cost of rents, I point out to the Minister that for the lifetime of this Government, rents in Limerick have gone up by €10,000 per annum. That a truly shocking figure. That is as a direct result of the choices the Government has made.

Many mortgage holders have again been left out in the cold. Households may have an outstanding balance of €80,000, locking many out of a scheme who have nevertheless seen their annual mortgage costs rise by thousands of euro. The Bill before us will also fail to tackle some of the biggest issues we face in terms of bulk-purchasing of homes by vulture funds. Banks will be allowed to keep their windfall profits, with no increase to the banking levy. Those profits have come not through innovation but at a direct cost to households. The €200 million in this regard is a continuation of the bank levy at its existing rate, meaning no increase to reflect the huge profits being made by the banks as a result of higher interest rates. Sinn Féin called for a €450 million tax on bank profits through the bank levy. It is further evidence that this Government is out of ideas. It is more of the same from two parties that have been too long in government.

I will deal with two or three issues in the time remaining. As the Minister can see, we have plenty of recommendations to work through later this afternoon. However, I will try to work through them as quickly as possible because I want to be fair to my colleagues, particularly Senator Higgins who has some very valuable recommendations of her own to work through.

On capital acquisitions tax thresholds, I guess this is just an ideological difference - a left-right difference - to be fair to the Minister. Sinn Féin believes that inheritance tax is an important tool to tackle inequality. As such, we do not support any increase to the capital acquisitions tax relief thresholds. We note that the Commission on Taxation and Welfare recommended substantially reducing the capital acquisitions tax relief thresholds. Therefore, it is extremely disappointing to see the Government ignore those recommendations. As I mentioned, we welcome the increase to the rent tax credit, but this will be eaten up by rent increases without a cap on rents. That is really the step that should have been taken by the Government.

I want to talk about the residential zoned land tax, RZLT. This was introduced in the Finance Act 2021 and seeks to increase housing supply by encouraging the activation of development on lands which are suitable zoned and appropriately serviced. RZLT is an annual tax to be calculated at 3% of the market value of the land in scope. Sinn Féin believes that residential zoning should be made on a use-it-or-lose-it basis. In Sinn Féin's view, where a landowner or developer has not either sought planning permission on land zoned residential or where planning permissions have not been activated, the land's residential zoning should not be automatically carried over in the development plan review. Rather, the landowner or developer should be required to justify why the land in question was not subject to development during the lifetime of the previous development plan. Where legitimate grounds can be provided, such as legal challenge, economic conditions, etc., then continued residential zoning can be considered. However, where landowners and developers cannot provide any legitimate grounds for not developing their sites, they must understand that this failure to develop land will result in the removal of the residential zoning. The Economic and Social Research Institute, ESRI, the Government's own think-tank, has warned the Government against delaying introduction of the RZLT.

The Bill provides for an increase to the rate at which the vacant homes tax is charged from five times to seven times a property's existing base local property tax liability. That increase will take effect from the next chargeable period, commencing on 1 November last. In our view, this is insufficient to tackle vacancy and dereliction. The tools in place, namely the local authority derelict sites tax and the recently introduced vacant property tax are poorly designed, badly implemented and do not work. In government, Sinn Féin would transfer responsibility for the derelict sites levy to Revenue. The new vacant sites tax would be set at 7% in the first year after the transfer and increased by 50% for each year a site was left vacant. Sinn Féin would also increase the vacant property tax to 1% of the market value of the property and increase it annually by 50%. Holiday homes and homes in the fair deal scheme and in probate would be exempt. The purpose of these two proposed taxes from our party is not to raise revenue but to incentivise owners of vacant or derelict properties to either use, rent or sell the properties.

I wish to mention the stamp duty on residential property as it relates to the bulk acquisition of homes.

The Bill provides for the higher stamp duty rate of 10% on bulk acquisitions to be increased to 15%. This measure applies where ten or more residential properties, excluding apartments, are acquired in any 12-month period. As the Minister of State knows, we initially called for stamp duty to be increased by at least 17%. However, this is about speed and intent. Since then, we have seen vulture funds continue to snap up homes. Sinn Féin has long supported a 100% stamp duty to stamp out this practice, most recently tabling amendments to the Government's financial resolution to that effect. Furthermore, we believe the criteria should be more restrictive and also apply to apartments.

I could make many more points, but I am conscious of time and allowing others to speak. I smiled when I heard my good colleague Senator Maria Byrne suggest to Minister for Finance that she hopes to see him back as Minister for Finance. That very much confirms the cemented relationship between Fianna Fáil and Fine Gael. I have long maintained that there is no difference between the two parties, and that is very clear from the debate we have had for some time in this Chamber. As long ago as five years, I believe, I was on the record as predicting a merger between the two conservative parties in this country.

I welcome one of our successful alumni, the Minister of State, back to the House. I want to address a few issues I would like the Minister of State to respond to in his concluding remarks.

The infrastructure fund is important. It has been brought into sharp focus by what has happened in Spain. There are particular climatic factors there, but it is predicted that in about 30 or 35 years' time in this country we can expect extraordinarily heavy rain to fall on the western section of the country and a lot of drought and dry weather in the east. That brings into question the need for irrigation in the east and flood defences, etc. in the west. I would like the Minister of State to comment on the current status of the infrastructure fund. Are we calculating the climate change element in it?

Since this Seanad term began, I have spoken regularly about the need to implement the Gambling Regulation Act. I note the Finance Bill gives financial effect to that Act. Can the Minister assure the House that the gambling regulator and the entire mechanism of that office will be well enough funded in order to be effective and operative?

The auto enrolment pension scheme is an initiative of my constituency colleague, the Minister, Deputy Humphreys. It is revolutionary, radical and relevant to many people. Many people reach old age without proper funds. People do not think in the long term in a lot of cases and end up in a very difficult financial position by virtue of not having adequate finances and pensions. The auto enrolment scheme for pensions is critical. I take the point made by my good friend, Senator Higgins, on the ethical investment of those funds, and I hope that is the case. That is an important point, but the real issue is that we will provide pensions for people who did not have them in the past. People, against their own lack of good judgment, will be automatically enrolled.

I agree with the tax exemption in the case of the Stardust scheme. I vividly recall that night myself. It was one of the huge tragedies of our time. I welcome the same policy in respect of CervicalCheck payments.

The Minister might outline what is in the Finance Bill in respect of electric vehicles. When chatting to people, I constantly hear that there are issues with electric vehicles. They are prohibitively expensive to buy; people find them too costly to purchase. There is then the question of charging points. There is also the question of the life and cost of batteries, charging at home and whatever else. I would like the Minister of State to elaborate on that.

I welcome the income tax provisions and many other aspects of the Finance Bill. We will support this progressive and excellent Bill. It is important that when the Minister of State is here with us to discuss the Bill, we get some clarification on some of the points raised. All in all, the Bill is a very satisfactory culmination of successful management of the economy over a number of years and a very good deployment of that success. On that basis, I will leave it there.

I welcome the Minister of State to the House and thank him for coming here to engage with us on Second Stage of the Finance Bill 2024. I thank the officials. This is the first time I have seen the anteroom very full with officials and advisers. I thank the official behind the Minister of State, in particular. Clearly there is massive co-ordination, which I respect and understand.

We live in a society, environment and economy, and we cannot forget that. Ultimately, the Government has to use its resources and channel them based on the programme for Government and priorities. The Bill will be passed. The Taoiseach has clearly said this is the last piece of important legislative work before he goes to the park. There may or may not be other pieces of legislation tomorrow; we do not know. That is his prerogative and his only, as Taoiseach of this country.

We have an opportunity to speak on the Bill. I am conscious that this is the final budget of this Government. It is important to make a few points. In the third paragraph of the Minister's statement he referred to USC. I mentioned this in the Seanad earlier today. One only has to look at old election literature or Google the term "abolition of USC" to see an array of colour photographs of Ministers, some gone and some still in office, some of whom are still in the Houses, with coloured banners at our central train station stating that there was a commitment to abolish the USC.

Public life and politics is about honour and delivering on promises. We are now going into a general election with many promises. Quite frankly, I could understand if something was deferred. There was a blatant statement and commitment to tell the people of this country that the USC would be scrapped, and that did not happen. That is an important narrative to talk about as we go into an election. The parties will have the opportunity, through their manifestos and, ultimately, the programme for Government, to communicate their positions.

On the RTÉ news player and bulletins last night, USC was mentioned extensively. Suddenly, a lot of people are interested in it, both in and outside of these Houses. I have no doubt that a debate about honour, commitment and delivery on a promise in respect of the USC will be very significant in the general election.

I listened to my colleague, Senator Paul Gavan, speak about Sinn Féin's commitment to a figure of €45,000. It is a practical measure and a start. We have to have a reduction in the USC. It is an unfair tax and everyone is paying it, in particular low paid workers, despite a commitment from political parties to abolish it. That is a fact. I am disappointed by that. I ask that it be the focus of the Minister of State's party, and those of other parties and none, to address and give absolute clarity in their manifestos to how they will reduce the USC over a given period.

That is the prerogative of the Minister of State's party and I respect that. I think the public will demand concrete commitments in Fine Gael's manifesto that ultimately may come into the programme for Government, which is an important point and worth making because it is substantial.

I am, of course, disappointed by the matter of the 9% hospitality VAT rate. There was much debate about what segments in government were going to deliver. I can say that members of the hospitality sector nominate people in this House. I have talked to a number of them. They are critically conscious that they feel they got a raw deal. They feel they got a raw deal, including the vintners, restaurateurs and hoteliers, and we need to look at that at some point. I acknowledge the research and development tax credit in the last two budgets, which is very positive. I am not here to knock everything. Far from it, I want to genuinely acknowledge that because I think it is important.

We need to look at farm relief and inheritance of agricultural land. We need to look at inheritance for single people. Our tax code is very much based on the institution of marriage, although many circumstances of people in these Houses, life and society are excluded in how they pass on their inheritance. Let us look again at imaginative tax breaks for forestry. We cannot get enough people into forestry and we do not see it as a tax incentive.

I raise the residential zoned land tax as it relates to 2025. We need greater certainty about it. Having spoken to city and county managers, we now have a situation where most city and county managers and councils have to pay the government this tax. They are not excluded from this tax, yet they were encouraged, and rightly so, by many governments to develop land banks for housing and industrial development. They now find themselves doing a tot up and asking councillors to approve funding to pay the residential zoned land tax. Surely that is a crazy situation. I thank the Minister of State for coming to the House. I thank the Cathaoirleach for his indulgence.

Senator Boyhan is revving up. I welcome the students from CBC Cork Preparatory School. Céad míle fáilte. I welcome Mr. Steven Lynch, their múinteoir, who is a great person in Cork and is involved in many different organisations. As has become the custom here, and given that it could be our second last day and that they are just back from mid-term break, we will give the students two nights of homework off if that is okay.

We are considering Second Stage of the Finance Bill in this House, which is subordinate to Dáil Éireann. We are progressing it through all Stages today and guillotining it in order to make way for a general election. We are allocating five minutes to Members of this House to speak on a Bill which deals with a variety of different subjects. Rather than attempt to skim over those subjects, I want to make one or two points.

I believe the time has come to look at the 33% capital gains tax and capital acquisitions tax rate in its entirety. When Charlie McCreevy was Minister for Finance in 1997, he reduced the rate of capital gains tax from 40% to 20%. The result of that single change was that the yield from capital gains tax increased by 500%. There was five times more money from capital gains in the year that followed 1997 than was obtained from capital gains tax rate of twice that rate, 40% rather than 20%. The point I am making is that it is easy to be ideological about this and say that if people become wealthier by the sweat of their brow, their hard work or whatever else it may be, their contribution to society should be seen in exactly the same way as a capital gain, but the alternative view is this. It has long been stated that the art of being a finance minister is to be able to pluck the goose without it squawking too much. If you can increase the yield from a tax by 500% by halving its rate, you have to ask yourself, with regard to social justice, where that money goes, what it is available to do, and what social welfare and redistribution that money can fund if that kind of increase takes place. It was 40%, it went down to 20% and the yield went up by 500%. I do not believe that 33% down to 20% would yield a fivefold increase, but I am absolutely confident that it would yield a twofold or threefold increase.

Because of the immense efforts of the accountancy profession, God bless them, to avoid capital gains tax and the loopholes we have provided in respect of it, people who know they are about to make a capital gain go and live in Portugal. This is what happens. I have seen it. I have never been tempted and have never had a capital gain of that kind but I have seen it in people I have come across in life. They just emigrate to avoid capital gains tax. That is wrong. They would not do it if it was 20%.

The second point is more philosophical. Movement of property from A to B is not the same as an annual income. In our Constitution, one of the directive principles of social policy under Article 45 is, "That there may be established on the land in economic security as many families as in the circumstances shall be practicable." It is the duty of the Oireachtas - not the courts, but the Oireachtas - under the Constitution to give security to as many families as possible on the land in family farms to carry out agriculture. I am happy with that and I am happy with the arrangements that are made for genuine farming families to ensure that a death does not have calamitous results, but I agree completely with what Senator Boyhan said. The idea that you look at taxation from the point of view of married people is wrong. Single people are entitled to social justice with relation to their family farm too. The second point I want to make is that if we really believe in family farms, as I do, the time has come to look at the taxation, through some kind of land tax, of the vast holdings that very wealthy people are now accumulating. Some of them have 20,000 or 30,000 acres, simply because they regard it as a clever long-term investment.

We spent a century up to the abolition of the Land Commission trying to stop great landlords from becoming the economic masters of people in agriculture in Ireland. Now, having abolished the Land Commission, we are reinstating a situation where the very wealthy who make their money abroad come back to Ireland, buy land and make tenant farmers their servants, effectively, a century after this country put so much effort into achieving economic justice in this area. In relation to capital acquisitions tax and capital gains tax, let us not be ideological but let us be practical and look at the 33% rate, because if people are really emigrating to avoid it and are succeeding in doing so, it shows that the goose is not being plucked in the delicate way that would yield much more money, but that the tax is structured in a way that wealthy people can avoid in its entirety.

That is not socially just either.

I thank all the Senators who contributed to the debate. In the time available, I will try to touch on as many of the points that have been raised as possible. On Committee Stage the Minister Deputy Chambers or I will be able to go into a bit more detail, particularly on some of the issues raised on the Opposition side of the House.

I will begin with Senator Maria Byrne's comments on the regional uplift. There are no plans to reintroduce the regional uplift or to introduce alternative regional specific changes to the film tax credit. I note that the scaled uplift introduced in the Bill provides an enhanced credit of 8% under section 481 for feature film projects with the qualifying expenditure of less than €20 million. This will enhance the viability of smaller projects that may be more likely to film in regional locations.

Regarding the comments of Senator Higgins, the primary policy objective behind the research and development corporation tax credit is to increase business research and development in Ireland, which helps to build an innovation-driven domestic enterprise sector and enables Ireland to remain competitive when it comes to attracting quality employment and investment in research and development. Prior to taking on this role, I was very lucky to be the Minister of State at the Department of Enterprise, Trade and Employment, where I led no less than nine trade missions. On every one, the Department and IDA Ireland were asked about the research and development tax credit and the opportunities that exist. Every time we saw increased activity due to the research and development tax credit. It should not be underestimated in any situation. Links with the third level sector are very important as part of that. An €80 million investment has been announced today in our third level sector. This will go towards additional research.

Senator Higgins also referred to the angel investor relief, which is intended to help address the challenges faced by new early stage innovative companies seeking funding, by encouraging investors to acquire significant minority shareholdings in these innovative companies which are less than seven years old. The relief aims to address the funding gap that new innovative companies often encounter. It is designed to comply with the rules of the EU state aid general block exemption regulation. The angel investor relief is being put in place in response to a recommendation of the Commission on Taxation and Welfare. It forms part of a suite of enterprise measures that support businesses which are starting up and scaling up. For example, the employment investment incentive allows for early stage and follow-on investment for companies seeking to grow and expand.

I must inform Senator Higgins that the Government is committed to tackling climate change and decarbonising the economy by 2050. It is very much aware of the challenges that subsidies pose for our collective effort to disincentivise fossil fuels. Ireland is subject to energy taxation rules set out in the EU energy taxation directive with regard to aviation kerosene. Potential changes to taxation of aviation fuel in the EU are being discussed under the negotiation of the EU ETD recast proposal. Ireland is engaging in this process as, I know, is Senator Higgins.

In response to Senator Gavan's comments on the personal income tax package, a key objective for the Government has been to continue to support low- and middle-income earners, particularly as incomes rise. This has informed the tax package implemented by the Government in recent years. The tax package contained in the budget is built around three key pillars. These are changes to tax credits, the standard rate band and USC. These levers have been used to spread the benefit of the available package as effectively as possible. As Ireland's income tax system is one of the most progressive in all advanced economies, any reduction in income tax may be somewhat regressive. This is because those outside the tax net cannot benefit from tax reductions. However, they will benefit from the wider suite of supports and cost-of-living measures announced by the Government. For example, married one-earner couples who are on lower incomes and have children will benefit from significant enhancements to the working family payment. When considering the impact of the budget, it is necessary therefore to consider the budget package in the round, looking at tax and welfare changes together as well as other budget measures that aim to improve the living standards of our citizens. With regard to USC and an exemption for those earning up to €45,000 as proposed by Senator Gavan, or the abolition of the USC, as proposed by Senators Craughwell and Boyhan, this would have a significant impact on the make up of Ireland's tax base and alternative revenue streams would have to be found.

Senator Boyhan made reference to the 2016 general election campaign and posters calling for the abolition of the USC. The difficulty with the reference is that the party proposing it lost 50% of its seats. There needs to be a mandate. When we go into election season, be it a Dáil or Seanad election, we need to make pledges and promises but we must also be responsible. From his previous days in party politics Senator Boyhan knows that coalition is all about compromise. A coalition requires responsibility.

-----be that in county council format, the Seanad, the Dáil or the Government.

A number of Senators mentioned income tax and welcomed the change in the threshold for the second time in a year and advocated for greater change. I will say that Ireland's progressive personal income tax system plays a crucial role in the process of income redistribution. Our redistributive tax system has been acknowledged by the IMF, the OECD and the ESRI. The Government is of the view that a broad-based progressive income tax system where the majority of income earners make some contribution according to means is the most fair and sustainable income tax system in the long term. Crucially, at a time of economic plenty people who are hard-pressed deserve to get a little of their money back. This is recognised particularly when other costs are increasing.

Capital acquisition tax and capital gains tax were raised by Senators Gavan, Boyhan and McDowell. I take Senator Gavan's point in the spirit it was offered, recognising the ideological differences between us. They are sincerely held and we will not fall out over them. His differences with Senators Boyhan and McDowell on the issue are well noted. I will take on board Senator Boyhan's point on the treatment of single persons in capital acquisitions tax. I agree with him. This is why the increase in the threshold this year for capital acquisitions tax to €400,000 was significant. It is the first change we have had in five years and many of us would argue it is very welcome. Proportionately the changes to the other thresholds have been far greater. It is still a big difference, and I acknowledge that. I underline there is a lot more to do.

Senator McDowell's point on the taxation rate was well made. It is one I have heard him make at various forums many a time. I understand the decision was made to focus on the threshold point exactly because it is easier to reflect it on rising property prices and what it actually impacts. Senator McDowell's point was well made. The reduction from 40% to 20% and then the increase to 33% after the financial crash are well documented and everyone knows this. I fundamentally believe that more changes need to be made to the thresholds and I am very proud to be in a party and a Government that has made these changes.

With regard to Senator Gavan's comments on mortgage interest tax relief, it is the Government's continued view that taxpayers with mortgage balances of less than €80,000 on 31 December 2022 are, in general, more likely to be in a relatively stronger financial position in comparison to those with larger mortgage balances. In addition, such individuals are likely to have significant amounts of equity built up and have relatively low loan-to-value ratios. This means such individuals should have better opportunities to switch their mortgages and obtain more favourable interest rates, which would ultimately reduce their interest liability without the need for Government intervention. As Senators will appreciate, it is not possible or desirable for the Government to alleviate the full impact of higher interest rates for all mortgage holders.

A number of Senators raised the issue of the VAT rate in the hospitality sector, in particular Senator Casey of Fianna Fáil, with great informed knowledge and eloquence, and others such as Senator Byrne who are practitioners in this area and have been for many years as well as being public representatives. This received a lot of attention in advance of the budget. It was subject to a Private Members' motion in the Dáil in advance of the budget, which was tabled by the Rural Independent Group. Following the budget statement, there was another Private Members' motion tabled by the Independent Group. The points were made quite sincerely. I must say they are acknowledged by the Government. I have said previously that when I was in the Department of enterprise we commissioned the research that went into the detail of the impact of changes, not only in terms of interest rates and energy rates but policy changes that I hope we would all support, in terms of increasing the minimum wage, sick pay and various workers' rights. We stand by the fact they are the right thing to do but they do have a cost and they do need to be paid for. It is not the Government that pays for them as it is generally the employers. The sectors most acutely impacted by this are, of course, the retail and hospitality sectors, particularly the food-based hospitality sector which has made its point very clearly. This is why we introduced the €4,000 Power Up grant. This is why we increased the level of the VAT threshold and why we have consistently made sure the cost-of-living payments may give people the opportunity to patronise these businesses more than they intended to, particularly in the busy Christmas months. I see the argument for changing the VAT rate. I made that argument myself when I was in the Department of enterprise and when I first moved to the Department of Finance.

If we were to make the changes to the VAT rate, and I see the argument - I made it myself when I was in the Department of enterprise and now in the Department of Finance - we all have to accept that it comes with a massive cost of up to €740 million to make the change to the VAT 9, as it was known before. That comes out of a tax package of €1.6 billion. That is close to 45% of the tax package gone with one measure for one year. Even if it was just to be about the food-based aspects of hospitality, it would still be in the region of €400 million. This is a substantial amount of money that is taken from other sectors of the economy and does not necessarily allow for a balanced one. That is not to say they are not without their merits, but it is not necessarily a decision the Government was prepared to take at this time based on the overall needs of the economy more widely,

I want to conclude on two or three additional points before the Minister, Deputy Chambers, comes back in to discuss the Committee Stage recommendations. In terms of gender analysis, as per the points with regard to pensions raised by Senator Higgins, the Department is incorporating equality budgeting into the budgetary process. In terms of pensions specifically, the interdepartmental pensions reform and taxation group report published in November 2020 considered the issue of gender. The report noted the key drivers of pension coverage and adequacy for women relate to labour market factors. The combination of reduced working hours and breaks in employment due to caring duties can have significant implications for the duration of women's working lives and lifetime earnings. Therefore, this limits the capacity to maximise the size of the final pension fund for women who contribute to a supplementary pension. The Commission on Taxation and Welfare also noted that it took equality impacts, including gender, into account in its considerations and recommendations, which are being considered by the Department of Finance. I am cognisant of gender pensions equality and it forms part of the consideration of new pensions measures. I note that recent standard fund threshold, SFT, examinations, while also recommending an increased SFT, also recommend revision into interaction with the pension adjustment orders under family law.

In respect of auto-enrolment, as Senator Higgins, is aware, this is primarily a provision for the Minister for Social Protection. I can, however, give some brief information in response to the points. It needs to be emphasised that auto-enrolment funds will be personal property of participants of the scheme, rather than a new national fund. Therefore, we need to treat auto-enrolment participants' money on a par with those invested in occupational schemes.

Briefly, as to the points on electric vehicles, as raised primarily by Senator O'Reilly but also by others, from 1 January of next year, a benefit-in-kind exemption would apply to the installation of a battery electric vehicle home charger by an employer at a director's or an employee's private residence. This means that a director or employee will not pay BIK on the installation of a home charger which is required for work purposes and aims to support the roll-out of EVs in the commercial feet. The Bill also amends the weight ratio required for commercial electric vehicles, from 130% to 125%, to qualify for the €200 VRT rate.

I appreciate I have not covered all the points, particularly those I was not in the Chamber for, but there are 47 recommendations to be discussed on Committee Stage which cover a lot of the points raised where we will be able to get in. I thank all the Senators for their contributions, which varied in scale and in area. I fundamentally believe we will have a good ability to discuss these further during the final Stages of the Bill's legislative journey. I repeat the gratitude expressed by Senator Boyhan and others to the officials in the Department of Finance who have put a Trojan amount of work into preparing what is first and foremost a good budget but also a really good Finance Bill. Hours and hours of preparation throughout the working week and into the weekend have been put into this to get it through the Dáil and the Seanad, and their contribution should not be underestimated in this process. I look forward to the next stage of the Bill.