Dáil Éireann debate -
Thursday, 27 Jun 2024

I move:

That Dáil Éireann shall take note of the Report of the Select Committee on Budgetary Oversight entitled "Examination of the Commission on Taxation and Welfare Report", copies of which were laid before Dáil Éireann on 20th September, 2023.

I am happy to introduce the Examination of the Commission on Taxation and Welfare Report produced by the Select Committee on Budgetary Oversight. As Members know, the committee was established by the Minister for Finance in April 2021 and was driven by one purpose, which was to chart a path forward for our taxation and welfare systems that would that effectively support economic activity and income redistribution while fostering employment and prosperity in a manner that is not only resilient but also inclusive and sustainable. The importance of this task is difficult to overstate, especially considering the formidable challenges facing our taxation and welfare systems. These challenges extend from our fiscal sustainability, which is marked by an ageing demographic profile, to the pressing need to address climate demands and navigate the transition towards a low-carbon economy.

The process undertaken by the commission was, without a doubt, difficult, particularly as it examined sensitive and sometimes controversial policy areas. Nevertheless, its dedication culminated in the publication of a comprehensive and detailed report. This has proven to be an invaluable resource, providing the committee and the Government with substantial food for thought as the State confronts the multifaceted challenges of the present and future. In the committee's role of examining the commission's report we are grateful for its hard work and that of its secretariat. Their dedication to the task is apparent throughout the report. I thank them for their significant efforts.

As a committee, we held ten sessions, dedicated to examining the commission's findings and recommendations and discussing possible solutions to address the issues raised within. It is through these deliberations that the committee has arrived at a series of recommendations we hope might help tackle the complex issues raised in the commission's report. I note that the committee has not commented on each individual recommendation made by the commission but has sought to add value to some of the general issues discussed, and to some of the recommendations made by the commission. In examining the report, the committee discussed a significant portion of it, ranging, among other issues, from tax equity and base broadening and taxes on capital and wealth, through promoting employment and inclusive social protection, land and property, and promoting good public health.

In doing so, the committee met a variety of stakeholders, including representatives from the Economic and Social Research Institute, Social Justice Ireland, Nevin Economic Research Institute, OECD, Irish Tax Institute, Irish Farmers Association, Irish Property Owners Association, Irish Hotels Federation, Restaurants Association of Ireland, IBEC, ICTU and several other organisations, including representatives from the commission itself. On behalf of the committee, I thank all these stakeholders, who lent their insights, appeared before the committee and contributed invaluable submissions. Their input was instrumental in aiding the committee's consideration of the commission's report and shaping the conclusions. I hope the committee's report stemming from these deliberations will serve as a launch pad for continued discussions on what has become an increasingly important area influencing policy formation.

Although the committee made a total of 40 recommendations, I will not comment on each one. The committee also made a number of recommendations that seek to add to the proposals made by the commission. In doing so, the committee took a considered approach to several of the commission's proposals by recommending that greater research, modelling, data and analysis of the potential impact of the proposal be carried out prior to such proposals being considered for implementation. This extends to proposals surrounding VAT increases, changes to the existing capital tax framework and the property market, the cost and distribution of tax expenditures, finance and barriers for SMEs, and the introduction of a site value tax, among others.

I again thank all those who contributed to the report, as well as the committee members, for their engagement. I hope both the commission's report and the report of the Committee on Budgetary Oversight will provide ample scope for deliberation and discussion as we, as a State, seek to navigate our future challenges.

I welcome the opportunity to speak on the motion and thank Deputy Ryan, in particular, for proposing it and providing context for this very important debate. I thank the members of the budgetary oversight committee, especially those who are present for this debate on a Thursday evening, for compiling the report following their examination of the report of the Commission on Taxation and Welfare. I also thank the former Chairperson, Deputy Hourigan, and Deputy Cowen, who remains the Chairperson for now, and acknowledge their work. On a personal note, given that Deputy Harkin is sitting in the Chair, I offer Deputy Cowen bonne chance in Europe. His work as an MEP, regardless of any political affiliation, will be vital to our country, much as Deputy Harkin's distinguished term in the European Parliament was. I know he is already a member of her political family and I look forward to seeing him continue, at a European level, some of the work this committee undertook. I also acknowledge all the stakeholders and representatives who appeared before the committee and made submissions during the process of examining the report of the commission.

I will respond to the report and some of the comments Deputy Ryan made, and my colleague the Minister of State, Deputy Noonan, will respond later to the points that will, I imagine, be raised by Deputies Nash and Boyd Barrett. I have no doubt film tax credits will form part of them, and I hope they do. Deputy Boyd Barrett has been such a consistent advocate on that issue and it is always a welcome debate when we exchange views on it, even if we do not always agree.

The Commission on Taxation and Welfare, as Deputy Ryan laid out, was established in April 2021 as a result of a commitment in the programme for Government. The commission was asked to independently consider how best the taxation and welfare systems can support economic activity and promote increased employment and prosperity while ensuring sufficient resources are available to meet the costs of public services and supports in the medium and longer term. The commission’s final report, entitled Foundations for the Future, was published in September 2022. It is a wide-ranging report that contains 116 recommendations relating to the future of our taxation and welfare systems. It is a sizeable tome, a copy of which is resting on my desk, and I pay credit to all those who went through it in such detail. It is an exhaustive work, but that is why it merits exhaustive scrutiny at both parliamentary and public service level.

The commission’s report presents a balanced package of reform proposals aimed at addressing, in the medium to longer term, the challenges and, crucially, the opportunities identified in the report. Many of the recommendations are challenging and, as is acknowledged in the report, came at a time of global uncertainty, uncertainty that continues today, albeit through a different lens. It is clearly set out in the commission’s report that the recommendations are not all intended to be implemented at once but, rather, they provide a clear direction of travel for this and future Governments about how the sustainability of the taxation and welfare systems may be improved in a fair and equitable manner.

The Committee on Budgetary Oversight has undertaken a detailed examination of the commission’s report and, by doing so, has sought to add value to some of the general issues dealt with in the commission's report. While the recommendations are aimed at the medium to long term, the Department of Finance has taken a number of actions. I will speak on the matters raised in the committee’s report that fall within the remit of that Department, beginning with tax equity and base broadening.

The committee broadly agrees with the commission’s proposals to broaden the tax base. It focused its recommendations on value-added tax and, in particular, on reviewing the VAT treatment of goods and services and the use of temporary rates. Any changes to VAT rates applied in Ireland are considered as part of the normal budgetary process, with options set out in the VAT tax strategy group paper every year. It should be noted that changes to what the zero rate of VAT applies to, such as food, could have a significant impact on cost-of-living issues. Concerning the VAT treatment of goods and services, where any change is made to how VAT is applied, the Department of Finance and the Revenue Commissioners ensure that the change is in line with the EU VAT directive. Where changes to domestic law are required by EU law arising both from amendments to the VAT directive and from judgments of the Court of Justice of the European Union, such changes are made as part of the finance Bill. In respect of limiting the use of temporary VAT measures, the 13.5% rate has been reapplied to the majority of goods and services that temporarily attracted the 9 % rate. Gas and electricity rates are due to remain at 9% until 31 October of this year. The temporary use of the 9% VAT rate for gas and electricity is part of the Government’s response to the increased energy costs facing consumers at this time.

In regard to the committee’s recommendations on taxes on capital and wealth, I note its views on the capital acquisitions tax, CAT, group A threshold and the need for thorough analyses where proposals to alter the existing capital tax framework are made. The level of the capital acquisitions tax group A threshold, which applies to gifts and inheritances taken by children from their parents and which currently stands at €335,000, is aligned with the general approach to inheritance tax and its associated thresholds, that is, the closer one’s relationship is to the beneficiary, the higher the threshold. The rationale for this is to facilitate intergenerational family transfers. For example, the group A threshold may provide valuable relief to those who are inheriting the family home or who are the beneficiaries of a family farm or business. In the absence of such a threshold, even if the beneficiary is availing of another CAT relief such as the agricultural relief or the business relief, the group A threshold can be the difference between the beneficiary retaining the asset or being forced to sell it to pay the CAT. The Department remains cognisant of the potential impact of any proposed capital tax measures on the property market, including any possible distortionary effects on the market’s function.

The committee made three recommendations regarding retirement savings. Two relate to the tax treatment of the automatic enrolment retirement savings system, known as auto-enrolment. Auto-enrolment is, of course, within the remit of the Minister for Social Protection, who published the Automatic Enrolment Retirement Savings System Bill 2024 in April this year. A key part of the design of the auto-enrolment scheme is that matching contributions will be made by both workers and employers and that the State will top up contributions at a rate of €1 for every €3 contributed by the participant.

The Government has agreed that, in principle, the tax treatment of participants’ savings, other than for employee contributions, should, insofar as possible, be in line with that provided to personal retirement savings accounts, PRSAs. PRSAs operate in the exempt exempt tax, EET, system, where contributions to such pensions are exempt from income tax, subject to age-related percentage and income limitations; where pension fund gains are exempt from income tax; and where income from pension drawdown is liable for tax. The key distinction from a taxation perspective for auto-enrolment savings is that these contributions will benefit from the State top-up, rather than from tax relief for an individual’s contributions. The Department and Revenue are working with the Department of Social Protection to prepare legislative provisions governing the taxation treatment of auto-enrolment savings and the committee’s recommendations will feed into that work. The Department will, of course, carefully consider tax relief for auto-enrolment and its impacts on the wider pension system. It is intended to include the legislative provisions in the finance Bill 2024, subject to the enactment of the Automatic Enrolment Retirement Savings System Bill 2024.

The third recommendation of the committee regarding retirement savings relates to the availability of appropriate and adequate data on the cost and distribution of pension tax expenditures. The committee supports the commission’s recommendation in this area and proposes that Revenue’s statutory role be amended to include the collection and provision of policy-relevant data on taxes and the taxation system, in particular in respect of tax expenditures. The issue of data relating to pension tax expenditure was also raised by the interdepartmental pension reform and taxation group in its 2020 report.

In common with other countries operating an EET system, the exact cost of pensions tax expenditures is difficult to quantify due to the general nature of tax expenditures and also specific pension-related challenges, such as limited data availability on some features of the pension regime in Ireland.

Work is under way to seek to improve the data available for pensions. Considerable work has been done to identify what data is available, and to identify the data constraints in this area. There is data available and published by Revenue relating to pension contributions, however, the same level of information is not available to Revenue i relating to the cost of tax relief provided. Consideration is now being given to options as to how these data constraints could be addressed.

With regard to promoting enterprise, the committee focused on the research and development tax credit and supporting small and medium enterprises, SMEs. The Government recognises that SMEs are quite simply the backbone of the Irish economy. The research and development tax credit is available to all firms within the charge to Irish tax, including SMEs, that undertake qualifying research and development activities and recent Finance Acts have introduced some general measures to the research and development tax credit which will be of particular benefit to SME claimant companies. For example, from 1 January 2024, the rate of the credit has increased from 25% to 30%, maintaining the net benefit of the credit for large corporates in scope of pillar two and providing a real increase in support for SME companies.

In terms of supporting SMEs, the Finance (No. 2) Act 2023 implemented a number of enhancements to the employment investment incentive, EII. A review of this incentive is currently under way. That Act also provided for a new capital gains tax relief for angel investors.

My Department continues to be proactive in the use of roadmaps and feedback statements. It is noted that a roadmap for the introduction of a participation exemption to the Irish corporate tax system was published in September 2023, and a feedback statement on the development of a participation exemption for foreign dividends was published in April 2024.

I note that the committee has reiterated its own recommendations as set out in its previous reports regarding tax expenditures. I also note that the committee welcomes the views of the Commission regarding the tax expenditure review process. My Department is focused on, and committed to, improving how tax expenditures are reported and evaluated. Officials have been working closely with Revenue to implement the Commission’s recommendations in this area.

My Department engaged directly with Revenue on the creation of a list of tax expenditures. The Department now holds a master list of tax expenditures which is used by the Department for budgetary planning and by Revenue for statistical reporting and transparency purposes. The Department’s annual report on tax expenditures identifies a complete list of all tax expenditures in the Irish tax system. The most recent report was published alongside the budget 2024 papers. Progress is being made in my Department on evaluating and reviewing tax expenditures and updated guidelines on tax expenditures will be published by my Department in the coming months.

I note the committee’s observations on a site value tax on land not currently taxed under the local property tax, LPT, regime. There are a number of factors to be considered and as noted by both the committee and the Commission report, the introduction of such a regime will be complex and challenging. The yield from LPT has grown moderately in recent years and compliance continues to be very high. Department officials will take into account the views of both the Commission and the committee as part of the next LPT revaluation, which will cover the period 2026 to 2029.

Regarding tackling vacancy, a new vacant homes tax was announced in budget 2023, and legislated for in the Finance Act 2022. While not an LPT surcharge, the vacant homes tax is charged at a multiple of a property’s LPT charge, and is also payable in addition to LPT. Concerning the residential zoned land tax, RZLT, the introduction of this tax represents the output from action 15.2 of the Housing for All strategy published by the Department of Housing, Local Government and Heritage in September 2021. This strategy announced the introduction of a new tax to activate vacant land for residential purposes and to replace the current vacant site levy. The RZLT is an annual tax, to be calculated at 3% of the market value of the land in scope, and is in effect a tax on the value of sites residentially zoned which, quite simply, are undeveloped. Agricultural land falls within the scope of RZLT where it is residentially zoned and serviced. Officials from my Department and the Department of Housing, Local Government and Heritage continue to engage with various representative bodies, including those representing the agricultural community, and would continue to do so regarding any proposed site value tax. My Department supports the recommendation to create a land price register - to include development land - operating similarly to the existing property price register.

With regard to the recommendations on carbon tax as set out in the programme for Government, the current policy approach to carbon tax involves a long-term multi-annual trajectory of increases leading to a rate of €100 per tonne of carbon dioxide emitted in 2030. The Finance Act 2020 is the legislation underpinning this policy and clearly sets out the effective rates and dates of implementation for each affected fuel. On an annual basis, rate changes are clearly signposted via the annual budgetary process with the publication of TSG papers months in advance of the budget outlining upcoming rate changes and VAT inclusive impacts for commonly used fuels. Budgetary publications also clearly signpost the carbon tax rate changes and related impacts such as estimated yields and the specific allocation of funds arising from the increase for expenditure measures such as the just transition. Current and historical carbon tax rates for each affected fuel are also published on the Revenue website.

The committee noted the Commission’s recommendations on fossil fuel subsidies and excise duty. Fossil fuel subsidies include direct and indirect subsidies. Reduced rates of, or reliefs from, standard rates of tax are considered indirect fossil fuel subsidies.

Rates of tax are considered as part of the annual budgetary process with budget options examined as part of the TSG prior to the budget. The policy rationale for the removal of the diesel excise gap and policy options for the equalisation of excise rates applying to auto diesel and petrol were examined in the budget 2024 TSG paper on climate action and tax. This included options for a removal over a period of three, four, five or ten years setting out price impacts for consumers as well as additional revenue yield arising. Last year’s TSG paper also examined phased removal of other tax-related fossil fuel subsidies, setting out the policy rationale for their initial introduction as well as the environmental and public health basis for their removal.

As a member of the EU, Ireland is subject to EU law and the taxation of energy products is governed by the EU energy tax directive which sets out minimum rates of excise applicable to fuels used for heating and propellant purposes. Some exemptions are mandatory, such as the current exemption from fuel used for commercial aviation and maritime navigation, and therefore removal of these subsidies is subject to changes to the directive which is currently under negotiation as part of the Fit for 55 package.

I note the committee’s recommendations on the sugar-sweetened drinks tax, SSDT. The SSDT came into effect on 1 May 2018 and was included in the suite of commitments under the obesity policy and action plan. The aim of the SSDT is to reduce rates of childhood and adult obesity in Ireland by reducing the consumption of sugar sweetened drinks. The Department of Health has commissioned an external evaluation of the SSDT with the objective of measuring the effectiveness of the tax in Ireland. Any future changes to the tax will be informed by the outcome of the review.

Once again, I commend the work of the committee on its examination of this important report. While considerable progress has been made on some areas of the Commission's work I have no doubt that the report will continue to provide a clear direction of travel for this and future Governments around how the sustainability of the taxation and welfare systems may be improved in a fair and equitable manner.

This Government clearly recognises that many of the recommendations contained in the report are challenging, particularly in this current environment. However, that should not take away from this important work which is focused on the longer term and will contribute to debates on the optimal balance of taxation for many years to come. It is in all our interests that where decisions on increased taxation are required that they are taken in a fair and equitable way and in a manner that has the least distorting impact on the economy. I believe this debate is particularly timely as we start to enter the pre-budgetary season where we discuss and analyse papers. With regard to Deputy Patricia Ryan's particular points the Government will take the committee's report into full and due consideration as part of this budget and potentially any future budget should the Government still be in office.

I will probably take less than ten minutes. The Commission on Taxation and Welfare deserves great credit for the extensive work it did in producing its own report, which is a huge piece of work. Similarly, the Committee on Budgetary Oversight put in a fair bit of work and thought into producing its own report. Given the volume of recommendations involved I do not support many of the recommendations on the Commission on Taxation and Welfare's own report. Similarly, I do not agree with some of the recommendations the committee has made but it is a cross-party committee and there are lots of different points of view. Nonetheless it is very important to thrash these things out and to have suggestions made because we have to have a long-term strategic view about how we finance our country.

Although some people would accuse People Before Profit of being flathiúlach, or populist, I ague we are very prudent in that every year when we produce our budget, we have far-reaching proposals for additional expenditure in public services, pensions, health and housing.

We always balance these measures with ways to pay for them, in our case usually focusing on the concentrations of wealth in the hands of the corporate sector and the very wealthy in our society. I welcome the fact that our report and the commission focus on the need for tax equity and a taxation system that looks at capital and wealth taxes. There is a lot of controversy. In fact if we even mentioned wealth taxes to some on our committee they had near conniptions. We strongly advocate that there should be wealth taxes.

One of the things I am very keen on in our recommendations, to which the Minister alluded, is to examine tax expenditures. They are in effect a shadow budget. It is the budget that does not really get discussed. When we get to budget day, we hear about any new tax or expenditure measures. We do not hear about tax breaks of one sort or another that have rolled on for years. Sometimes they benefit very good things in society, like the tax-free allowance that ordinary workers might get. Other of these tax expenditures, though, are given to particular sectors where there needs to be ongoing scrutiny of whether these very large volumes of money are actually doing anything beneficial for our society or, as I might feel in some cases, are just lining the pockets of particular sectoral interests. That is why, for example, our committee undertook a serious examination of the film tax credit, to see if this large amount, about €100 million a year, is the best way to fund the production of film, to guarantee we have decent quality employment with training and conditions of employment for workers, and to contribute to the film culture of the country. We examined that in detail. I will not go into it now other than to say some of us feel there is a very serious question as to whether the way the tax credit is structured is actually guaranteeing the sort of quality employment and training for the people who work in that industry, and whether it is even creating an industry or just a series of pop-up shops for individual films where workers have no real recognition of their service in the industry, do not have conditions of employment and so on. We need to evaluate these things. Of course we all want to fund the film industry, but might it be better to do it through direct expenditure? It is topical when we think about RTÉ at the moment. RTÉ is a form of direct expenditure in the cultural and audiovisual sectors. The jobs are decent jobs. Some people were paid way too much at the top and there was malgovernance and all the rest of it. However, it is a particular way of funding cultural output and the audiovisual sector. If RTÉ was gone, these things would be done through tax expenditures, through measures like the film tax credit, where we would have less control over them and where employment would be characterised by high levels of insecurity. It is debatable whether it is actually building up an industry of scale over the long term.

Another example is the research and development tax credit. That is worth about €750 million to €800 million a year and is going up every year. We all want to put money into research and development, obviously; it is critically important. The question is whether the particular structure of that credit is the best way to finance and fund the sort of research and development that would actually be beneficial for our society. Is it benefiting the small and medium enterprises or just the very big and already very profitable and wealthy IT companies, the Googles and Facebooks of this world? I would argue it is the latter at the moment. More money should be going in direct expenditure to our universities and educational institutions, and to support small and medium enterprises that we think might be beneficial to our society rather than just the super-wealthy corporations. These things need to be examined. They are just two examples, we could go through the list.

An area that we probably should examine is tax breaks for forestry. We have not looked at the detail and I will not promise I know a load about it but one thing we can say is that we are not doing very well on afforestation. We are talking about climate measures. We are not doing well. We have never hit our targets. Our forestry model is over-focused on a type of forestry that is damaging to the environment, not very good for climate and not very good for local communities. Have we examined in detail the tax credits for forestry to see if they are the best way to develop a sustainable model of forestry to the benefit of our society and local communities? These things need to be seriously examined on an ongoing basis. That is one of the most important recommendations we have to look at. Tax expenditures need to be in full view when we are looking at budgets. Otherwise, about €20 billion to €30 billion, maybe more, each year of expenditure of public money in the form of tax expenditure is not being properly scrutinised and may just be handy money for certain sectors to which nobody wants to call any attention. This is important stuff to discuss and these reports are at least helping to kick-start a discussion.

I welcome the opportunity to have a debate, if we can describe it as such, in this Chamber on a highly significant report from the Commission on Taxation and Welfare. Quite frankly, if the Committee on Budgetary Oversight had not decided to examine the recommendations of the report, which was published in September 2022, I do not believe we would be having a debate in this Chamber at all. Government parties, Fine Gael and Fianna Fáil representatives especially - with all due respect to colleagues in the Green Party I am not certain of the position in respect of their overall analysis of the report - entirely dismissed the report when it was published. I thought that was an absolute insult to the members of the commission who gave of their time to do this important work, and to the civil servants who gave of their time very diligently to manage the process. Given its importance, this report deserves greater scrutiny from the Chamber and from Government Ministers.

I was taken aback by the response of the Taoiseach at the time, Deputy Varadkar, who utterly dismissed the report. He referred to it as something you might see in a Sinn Féin manifesto. I disagreed with the Taoiseach's very casual analysis of the report. It is not and many of the measures are not things we would see in a Sinn Féin manifesto because it argues for wealth taxes such as those on property or land. They are taxes that socialists such as myself and the Labour Party and, to his credit, Deputy Boyd Barrett agree with. Property is the principal form of wealth that Irish people have. We know that. All of the analysis suggests it. If you do not believe in progressive taxation on property and wealth, you do not get to call yourself a socialist, a social democrat, a democratic socialist or whatever label you wish to ascribe to yourself. That may be another day's work.

It is a really important report. The thing I like about it is that it is honest about the challenges we have as a society in funding public services. It is honest and frank and does not put a tooth in it in terms of the requirement we have to broaden, not narrow, our tax base to ensure we can fund the public services on which we all depend to the level that people in this rich Republic ought to expect.

There are difficult decisions to make. Those decisions have not been taken by this Government, and I do not expect they will be in the few short months it has left. The Labour Party broadly supports the bulk of the key recommendations and observations made in the Commission on Taxation and Welfare report. If I am to summarise it on the tax side, it makes the case for increases, as are required to bring us up to European norms, on taxes on social insurance contributions, especially from those who are not paying anything close to what certain sectors of society in analogous European countries pay, especially on the social insurance side. It is very descriptive as to how we meet the long-term budget challenges and how we maintain and develop our living standards. It refers to regular reviews, as Deputy Boyd Barrett said, of tax expenditures and expensive and often untargeted and ineffective tax reliefs. In fact, a lot of the tax reliefs that have been available for many years are infrequently reviewed. The effectiveness of some of them, in terms of the job they were originally designed to do, may have moved on. They may no longer be effective at all in achieving the original outcome they were designed to achieve.

Significantly, the report refers to taxes on capital and a shift away from taxes on labour. Of course, we need taxes on labour, but we do not tax capital, that is, wealth and assets, in the way a rich republic would be expected to. There is scope in the years to come to make adjustments to taxation and the income of workers and to rebalance our taxation system, notwithstanding the fact that we have a disproportionate focus and reliance on corporation tax take from a very small handful of very successful foreign direct investment firms, which we wish to retain and which have been important to the success of the Irish economy. However, we also have a disproportionate reliance on them for good jobs.

That is why, while we are reviewing tax expenditures, including those that, for example, are targeted at our enterprise base, we need to be careful in doing so and to be honest when we look at the way in which we use tax expenditures to support our indigenous SME sector. It should be our ambition in this House, if we are truly interested in jobs, to ensure that we no longer rely in a disproportionate way on very large foreign direct investment firms, which are agile, which can move and which respond to global developments all the time, but that we enhance and develop our indigenous enterprise base, make sure that successful Irish firms can scale up and go global from here and provide the good jobs and tax revenues we will require to resource our State and to ensure that our tax base is as broad as possible, because we have a vulnerability.

I take issue with some of the recommendations and the observations and conduct of the discussion at the budgetary oversight committee when we were examining the Commission on Taxation and Welfare report around, for example, carbon taxes, subsidies for fossil fuels, local property tax and site value tax. It will be noticed, to be fair to the committee and all its members, that where there may have been dissent - and I certainly dissented on a number of questions - the committee simply notes some of the perspectives that were given at the committee. That is fair. Sometimes you lose arguments; sometimes you win them. We have to be realistic about the requirement for carbon taxes if we are to move away from fossil fuels and to decarbonise our society and our economy. It is absolutely fundamental, it is existential and we need to be honest with ourselves about the gap that will be created in our revenue stream and the gap that will be in our Exchequer in respect of the taxes on fossil fuels when we move more swiftly, as we all hope, to decarbonisation. Difficult decisions will have to be taken about how we replace those taxes that are important to running our services.

There is always a focus on the taxation side. There are some very important recommendations and observations in the Commission on Taxation and Welfare report as to how our social protection system operates. If I am to summarise them, what we are talking about and what we need to do - and I think this supports the view of the commission - is talk, when we speak about social protection, about income adequacy. It should not be a case of pulling a rabbit out of a hat every budget and saying there is an extra fiver a week on the pension, an extra €2 a week on disability payments and so on. People who rely on the State for their income need the assurance that the State is on their side and that we look at our social protection system through income adequacy and benchmark that against appropriate metrics to make sure that our social protection system is adequate to support people and that employment is at the heart of our social protection system, encouraging people to move into work when that work is available and when appropriate. The report also refers to looking at what I might describe as poverty traps and those disincentives that may be there at the moment, inadvertently in some cases, that might dissuade people from taking up opportunities. We all believe and should believe not only in the dignity of work but also in the idea that we make work pay.

I appreciate I have gone a little over my time. One of the important themes running through the report and one of the recommendations is around an additional child benefit payment on top of the universal child benefit payment. If we are serious - and we should be in this rich Republic - about ending, eliminating, child poverty, that is what we need to. On top of the existing universal child benefit system, we need targeted additional payments for those families who are less well-off and who need our support because every child in this country deserves the best possible start.

I thank the Deputies who contributed. I apologise on behalf of the Minister of State, Deputy Richmond. He had to go to another event. I will try to sum up the contributions I have listened to, if that is okay, before I give a closing statement.

Deputy Richard Boyd Barrett raised the issue of tax breaks for forestry as I came into the Chamber. These are issues in respect of which corporates want to play their part in nature restoration and biodiversity. There is a business for biodiversity platform, something the NPWS is considering very strongly in investment in forestry and how that might be shaped. There is a lot of really important work ongoing there, probably not reflected in this particular report.

I take on board also the points about the film industry and the animation sector, which is quite a burgeoning sector in my part of the country, down in the south east. The relief is section 481. I am not sure exactly the tax breaks there. The animation sector, in particular, is growing very strongly, and the incentivisation is there through the tax code to support the film and animation industry in Ireland. Anything we can do there is important.

The Deputy also raised issues about the wealth tax. It is addressed in the report through the capital acquisitions tax.

Deputy Nash raised issues around the property tax and the local property tax as a measure to tax property as wealth or as an asset. It was actually discussed this morning at a session on the future of local government, particularly in the context of funding local government. It was a measure that replaced a shortfall in government funding. There is a bigger challenge there in terms of the revenue base for local authorities as well.

I agree with the issues raised about environmental taxes and broadening the tax base and taxes on wealth and assets. Those are important points. The Deputy raised issues around the carbon tax. It is a progressive tax. Parties in the House are opposed to it but the fact is that it is a ring-fenced tax measure that is there for the retrofit of homes under the warmer homes scheme and other progressive measures relating to climate action.

We do not stress that point enough. It is critically important that the public is aware of how progressive a tax measure it is.

Issues were raised regarding subsidies on fossil fuels. Deputy Nash made a critical point in this regard. It absolutely is the case that as we reduce our dependency on fossil fuels, it will leave a massive gap in revenue. It is something for which we must plan. Pollution is sometimes seen as an externality of our fossil fuel industry but it is important that we plan ahead. We need to rapidly decarbonise our transport sector and be mindful of a cliff edge that could arise in terms of the loss of an income base.

I take on board the points raised about child benefit payments and addressing child poverty. The Government has been conscious of that in the previous four budgets. We are deeply committed to reducing child poverty in this country. As part of the package that will be considered in budget 2025, it is important to give consideration to every measure that can impact positively on child poverty rates.

While the recommendations in the report of the Commission on Taxation and Welfare and the committee's report take a medium- to long-term view, as the Minister of State, Deputy Richmond, noted, work in this area is well under way in the Department of Finance. In addition to work previously outlined, the Department of Finance has conducted a review of Ireland's personal tax system, which was published with budget 2024. As recommended by the commission, the Department is conducting a wide-ranging review of the funds sector under the broad and interlinked themes of open markets, resilient markets and developing markets. A public consultation has been completed and a wide range of research, analysis and stakeholder engagement has been undertaken.

Both the commission's report and the committee's report stress the need to plan for the future challenges facing Ireland. In addition to the annual budgetary cycle, EU member states will, as we move forward, be required to prepare and submit medium-term structural-fiscal plans to the European Commission under a new economic governance framework. Ireland will publish its first medium-term structural-fiscal plan in the autumn.

While the fundamentals of the Irish economy are strong, there are still vulnerabilities in our public finances, particularly given the windfall nature of corporation tax receipts, as referred to by Deputy Nash. Cognisant of theses vulnerabilities and consistent with the recommendations of the Commission on Taxation and Welfare, work is under way to establish the future Ireland fund and the infrastructure, climate and nature fund, which are hugely significant and forward-thinking measures by the Government. The new funds will enable us to invest their receipts to ensure we have the resources necessary to address future structural challenges while, at the same time, minimising the risk of using volatile windfall taxes to fund permanent spending. This Government is taking action now to prepare for the future, while also continuing to invest in our housing sector, our infrastructure and the productive capacity of the economy and tackling the twin challenges of climate change and biodiversity loss.

I thank Deputy Patricia Ryan for bringing forward this motion and the Select Committee on Budgetary Oversight for its invaluable work. A huge amount of work has gone into this valuable and useful report, to which the Government will give careful consideration. I thank the Deputies for their contributions to the debate.

I assure the Acting Chair that I will not take the ten minutes allocated to me. On behalf of the committee, I thank all the stakeholders. Their work was invaluable to us. The amount of work the civil servants have put in has been invaluable. I like to think that, down the road, the report will not be left gathering dust on a shelf but will be implemented and will be a launching pad for a continued discussion on what is becoming an increasingly important area of influence on policy formation.