Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Sometimes we are so focused on individual measures we do not take the time to step back and look at the big picture in terms of the economy, the amount of wealth that exists in the economy, who gets the benefit of that wealth, how it is distributed, and whether it is distributed fairly. The only opportunity to do that is during the Finance Bill, which is why I have tabled a series of amendments asking that the Government produce reports to get the information we need to examine these issues. Even with the sources available to me as the finance spokesperson for a small party with limited resources, I find the situation shocking.

When we discussed this yesterday, I noted that most people would be shocked to know that the net worth of Irish households currently stands at €740 billion. That is the net figure, after liabilities. If that was shared out equally, everyone would have €150,000 each. Of course, the truth is the vast majority of people have no savings at all and often owe more than they own.

That enormous wealth, which has been generated and increased dramatically over the past seven or eight years, is concentrated in the hands of a tiny group of people. It is not me saying this; the information is from the Central Bank's quarterly statistics, which show that 53% of the €740 billion of wealth I described is concentrated in the hands of 10% of the population. The top 5%, comprising 85,000 households, have roughly €3.26 million each, on average, which is incredible. Vast amounts of wealth are concentrated in the hands of an absolutely tiny group of people while the vast majority either owe more than they own or have no savings and struggle just to pay bills relating to childcare, mortgages or rent. They survive on meagre earnings.

Other figures that I do not have to hand - I do not believe the Minister of State disputes these because I spoke to him earlier as he has examined them - show the share of national income that goes to profits versus that which goes to wages. That has dramatically shifted in favour of profits over the past 20 or 30 years, more so in Ireland than in any other country in the western world. Far from there being a trickle-down of wealth as Ireland records some of the highest levels of economic growth anywhere in the western world, it is gushing upwards into the hands of a tiny group of people.

By means of these amendments, I am arguing that we need to address this and see it as a problem. Of course, it is a social problem. In the early 1970s, people in average jobs, if they had jobs, could hope to be able to afford a mortgage. Now, well-qualified people with jobs cannot do that. It is a real and tangible expression of this growing inequality in the distribution of wealth. People work really hard in jobs and qualify for skilled work but their earnings are not enough to be able to put an affordable roof over their heads. This arises because much of the real wealth in the economy is invested in property assets and these are rented back to the people who cannot afford them at an extortionate price. People are sitting on money and it is making more money for them; they are getting richer while, in real terms, ordinary workers are getting poorer.

It is in this context that we argue that there should be wealth taxes. This would help redistribute the fruits of large economic growth, and specifically the growth in household wealth, in a fairer way to the benefit of the majority and not just a super-wealthy minority.

Michael D'Arcy (Wexford, Fine Gael)
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Ireland already has a variety of taxes on wealth, including capital gains and capital acquisitions taxes that levied on individuals or companies on the disposal of assets, in the case of capital gains tax, or the acquisition of an asset through gift or inheritance, in the case of capital acquisitions tax. The local property tax introduced in 2013 is based on the market value of residential properties and can also be categorised as a tax on wealth.

It is important to understand where Ireland stands in the context of the distribution of wealth. Officials examine all items relating to taxation, including wealth taxation, on an ongoing basis. For example, in 2016 and 2018, Department officials conducted two research projects in conjunction with the ESRI on the distribution of wealth in Ireland and the potential implications of a wealth tax. The resulting research papers, Scenarios and Distributional Implications of a Household Wealth Tax in Ireland, are available on the ESRI website. Both presented results on the composition of net wealth - assets less liabilities - across both wealth and income distribution in Ireland. A number of wealth tax scenarios, including regimes from other jurisdictions and hypothetical scenarios, were applied to the Irish data. In each case, the associated tax bases and revenue yields, the number of liable households across income distribution and the characteristics of the household affected were outlined.

Looking at the composition of households under the different tax scenarios, the studies found that even with a narrow base and high threshold, some households in low income deciles were affected. This is because of the imperfect correlation between income and wealth. Furthermore, if a wealth tax were applied in addition to the related forms of wealth taxation, it could have the disincentive effect of causing large changes in the level and type of assets held by Irish households. Households could be expected to respond to high effective rates of tax and capital income, for example, by reducing holdings of assets in Ireland or relocating wealth holdings to asset types facing a lower wealth tax charge. Additionally, the distribution implications of a wealth tax across different types of households should be taken into account. A larger proportion of a wealth tax burden would fall on older households than the share of net wealth might indicate.

With regard to increases to taxes on high-income earners, in 2020 it is projected that the top 1.5% of taxpayer units - those with annual income in excess of €200,000 - will pay 26.5% of the total income tax and universal social charge, USC. This is a very large proportion of the total income tax and USC take for such a small cohort of taxpayers. In comparison, 72% of taxpayers - those with annual income of less than €50,000 - will pay 15% of income tax and USC. To further demonstrate the high amount of tax being paid by high earners under the current income tax and USC system, figures indicate that in 2020 it is expected that there will be approximately 2.78 million taxpayer units, including married couples under joint assessment, bringing a yield from income tax and USC of just over €24 billion. There will be 2.3 million taxpayer units with incomes of less than €70,000 per annum and the remaining yield of over €17 billion will be paid by fewer than 440,000 taxpayer units earning over €70,000 per annum.

A broad-based progressive income tax system whereby the majority of income earners make some contribution but according to their means is the fairest and most sustainable income tax system in the long term. The Department of Finance will continue to monitor and consider any additional information or data that comes to its attention. It will continue to examine existing and alternative potential taxation sources. The Minister does not have any plans to introduce tax measures along the lines indicated in the report sought by the Deputy. As a result, I do not propose to accept the amendment.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The vast majority of the increase in household wealth is in the value of property assets, as the Minister of State has acknowledged. Financial assets are significant at €374 billion but there is €534 billion in housing assets. The Minister of State argues that if we impose a wealth tax, these people might move out of the country and take their assets with them. They could not take housing with them and one cannot carry land and property assets from the country. It might not be bad if these people moved their money from property because it could lead to the extortionate price of property assets falling. That would not be bad at all. I do not really see the downside.

We could put just a 2% annual tax on the top 5%, comprising 85,000 people, who have an average of €3.26 million each in assets.

If we were to allow them €1 million each, excluded from that, for their own families, we would raise €3.85 billion. They would not feel the loss of a 2% tax on that level of income. In fact, they would probably be richer the next year than they were the previous year given the current level of inflation on property assets. However, the revenue that would accrue from such a tax would amount to a great deal of money that could be spent on health, education and dealing with poverty and all the infrastructural crises - the desperate needs of our society expressed in here day after day. Does the Minister of State not consider that would be fair and reasonable?

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Is the Deputy pressing or withdrawing the amendment?

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I will press it.

Denis Naughten (Roscommon-Galway, Independent)
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I move amendment No. 14:

In page 48, between lines 25 and 26, to insert the following:

“27. The Minister for Finance shall, within 90 days of the passage of this Act, publish a report on the extension of the relief under Chapter 1 of Part 9 of the Taxes Consolidation Act 1997 to the industry which has the potential for significant job creation in Clonifeen Townland, Co. Offaly, Aghamore Townland, Co. Longford and Lanesborough Townland, Co. Longford.”.

I have been at a committee meeting dealing with the same issue and apologise that I inadvertently did not get the opportunity to move amendment No. 12. That amendment and amendment No. 14 deal with the same issue. Amendment No. 14 refers to the townlands in which the two peat-fired powered stations in Lanesborough and Shannonbridge are located. Amendment No. 12 references the 20 sites across the midlands where there are Bord na Móna workshops, which are directly relevant to the cessation of peat harvesting across the midlands. I seek a specific tax incentive be put in place in respect of these 20 sites to encourage replacement employment for the significant job losses we are facing in the ESB in 13 months and in Bord na Móna in the coming weeks. As many people from the midlands would know, because there is already a stockpile of peat on our bogs, there will not be any peat harvesting next year. That means all the seasonal jobs in Bord na Móna are now gone. On top of that, that is a significant threat to the permanent jobs. As I said to the Minister, Deputy Bruton, and as I said on Committee Stage to the Minister for Finance, this is effectively the equivalent of Google deciding to pull out of the city of Dublin. That is the impact and the scale of this decision across the midlands that will impact on people between now and the end of next year.

While the action by Government is welcome and any progress in this area is very welcome, and the appointment, in particular, of Mr. Kieran Mulvey, is a very positive one, the reality is we need to encourage private sector investment in our region. When I discussed this issue with the Minister on Committee Stage, he said I was defining a tax incentive for all of the midland countries, that it was far too broad and that I needed to have something that is focused and targeted. That is why I have specifically identified 22 sites across our bogs at the sites of our two peat-fired power stations for this particular incentive. I cannot be any tighter or more specific than that.

I seek to ensure the provision of an additional incentive for business that would create jobs and decide to invest on those sites in Tipperary, Kildare, Longford, Westmeath, Offaly, Laois and Galway, right across the midland counties. The difficulty is those sites are competing with Dublin, Galway and the other cities to attract business investment and those cities are far more attractive for investment. We note the challenges IDA Ireland has in bringing foreign direct investment into our region. By providing a specific tax incentive very much focused on creating employment in those locations, it would act as an incentive for companies to come and at least look at these sites, which are located in rural communities across the midlands that have been so dependent on peat harvesting and employment in Bord na Móna and the ESB until now.

I agree we need to leverage EU funding. The coal regions in transition platform will help to provide us with EU funding, but there is also the opportunity of European Investment Bank funding for our region. However, to do that we need to engage the private sector and get it involved in our region. That is not forthcoming. This is a dispersed and diverse region that has found it very difficult to attract foreign direct investment. Until now, it has not come by preference or by choice to our region. I believe there is a responsibility now on Government to look specifically at these sites across the midland counties and acknowledge these are the specific identified sites where more than 2,000 staff were employed and where an additional 2,000 jobs were indirectly dependent on those and to provide an incentive to bring new employment into the region, whether it is in light manufacturing, the energy or horticulture areas or whatever area. It should bring employment back into those communities that are about to be decimated by the decision of An Bord Pleanála and the ESB not to submit a new planning application.

I was disappointed that the ESB did not decide to submit a new planning application. The decision in respect of An Bord Pleanála is very tight and the ability to appeal that is very limited. However, the decision by the ESB not to submit a new planning application is potentially the death knell in respect of the development of a biomass sector in this country. The development of a biomass sector was key to the creation of jobs across the midlands and key to maintaining jobs in Bord na Móna across this transition over the next decade. If, in putting a particular tax incentive in place, we can get the ESB, Bord na Móna or another company to re-examine the development of the biomass sector here, it is warranted and important. Every 15,000 ha of willow that would be grown across our region would create 470 long-term jobs in the harvesting of that particular crop.

Barry Cowen (Offaly, Fianna Fail)
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I welcome the opportunity to speak on this amendment. I take it, having missed the opportunity to move a previous amendment, Deputy Naughten is only able to move this amendment that refers to Lanesborough and Shannonbridge, which would not be fair to the many other parts of the region throughout the various counties he mentioned.

Denis Naughten (Roscommon-Galway, Independent)
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Yes.

Barry Cowen (Offaly, Fianna Fail)
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That being the case, it offers an opportunity for me , like Deputy Naughten, to speak to this issue again and use every opportunity we have, within the availability of time and instances that provide such opportunities within the House, to highlight again the position in the region as a result of a recent decision by the ESB and, I might add, the Government.

I negotiated on behalf of our party with my colleague, Deputy Michael McGrath, many aspects of the budget that was put before the Dáil and agreed by the House. One aspect of that related to the carbon tax revenue. We sought a direction whereby a portion of that would be directed to those regions most affected by transition as it occurs. The midlands is one of those greatly affected and hence the reason for €32 million out of the €80 million to be specifically targeted to that region. I refer to €6 million in a transition fund, €20 million in a retrofit programme for social housing, €6 million towards rehab, and a few more million towards pilot projects for alternative farming to assess the new methods of reducing carbon and so forth. That would have been sufficient in the event of the commitments made by Government, the ESB and Bord na Móna a year ago when they said that transition would take place over the next nine to ten years.

That is not now the case as a result of the decision of the ESB not to appeal An Bord Pleanála's decision, which went against the grain of the Government's own policy. As Deputy Naughten said, we have made that point on many occasions, most recently to the ESB itself at the Joint Committee on Climate Action within the past hour. I would have thought there is ample reason for Government to insist that the ESB seek a judicial review on a point of law to address the failure by An Bord Pleanála to acknowledge Government policy as laid down in this House and to the European Union.

This failure to do so means that Shannonbridge and Lanesborough power stations will now close next year, although peat will be burnt at those plants for a further year. The response of the Government and the ESB, which is not to pursue the Government's policy, will have repercussions. It will have repercussions for the ESB, which believes it has answered up to its responsibilities by placing another €500 million in the transition fund. I do not believe that is enough. It is not appropriate and it does not acknowledge the significance of its decision, especially in light of the commitment it made to Government last year. There will also be repercussions for the Government, including increased responsibilities, both financial and otherwise. For example, we expected that €6 million to be increased annually. We also anticipated the Government of the day insisting that not only increases in carbon tax but existing carbon tax revenue be geared in that direction. This revenue is currently €400 million, not including this year's increase. I am not saying that this should have been done in one fell swoop, but it should have been done in conjunction with, and parallel to, the transition we had been anticipating and expecting and that we had been promised. That promise is no longer to be fulfilled.

There will also be other repercussions. The public will have its say and will adjudicate on what those repercussions should be. I will definitely be at the doors telling people that I was very surprised that those in Government with responsibility for this area did not at least ensure that a new application was made or a judicial review sought. This application could have been cognisant of the conditions associated with the planning decision.

It seems the likes of An Taisce are given a lot of weight. An Taisce does good, reputable and commendable work as an advisory body, but it is not a democratically elected body. It does not have representatives in this House representing the public. We fulfil that role. We are here to ensure that the offices of the State adhere to the democratic process, which includes following Government policy as laid out by this House and in legislation. The Government failed to ensure that was the case. That is very regrettable and very unfortunate.

While I acknowledge and commend the thrust of this amendment, as I have said, I do not think it appropriate or fair that one is accepted and another not. That being the case, I am not in a position to support it. I am conscious of what the Minister said previously and I await his response to this matter, having not been present for his reply the previous day.

I take the opportunity to further enlighten the representatives of Government here today. There are increased responsibilities on them as a repercussion of the decision of the ESB, which means we are now playing a different ball game. The €6 million, increasing annually, available to the midlands or Offaly is no longer sufficient. This decision will have a knock-on impact on Bord na Móna and the revenue resource for Offaly County Council. In the same period in which we expected it to receive €60 million, it will lose €40 million in lost rates revenue. That is a swing of €100 million in the space of a few weeks. Our county can hardly afford a swing of €1 million, let alone €100 million. Deputy Naughten is right in saying that the decimation now taking place in our region is equivalent to the Dublin region losing a company like Google.

Back in the 1930s and 1940s, Government charged Bord na Móna with a remit. It was to create jobs in a desolate region. It did that. It reached its peak of 8,000 jobs in the 1980s. The Minister cannot be at the wheel and allow the region to become desolate again while we sit on our hands.

Michael Lowry (Tipperary, Independent)
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I support the sentiment of Deputy Naughten's amendment. There is a lot of focus on, and discussion of, the traumatic effects of the closures in the midlands and what is likely to happen to those communities. We have a living example in Tipperary. The facility in Littleton was closed with the loss of 120 jobs, including seasonal jobs, and an associated loss of work for contractors, local suppliers and those who assisted and supported that industry. The Littleton plant was part of the fabric of the local community. In fact, the community was built around it. When Littleton first came into operation in the 1950s, schools and shops were built. The local community built houses around the facility. It mushroomed and became an industry that sustained a local community for a lifetime. People reared and educated their families and the local economy thrived. I shudder to think about what will happen in the midlands because we have seen an example in what has already taken place in Littleton. It has had a devastating impact on the local economy. People feel forlorn and desolate. There is no future and there are no alternative jobs.

It is disappointing to see Bord na Móna making these decisions without any forward planning. There is no semblance of a plan in place to replace the jobs lost or to assist the local communities. I agree that we should have a targeted programme and dedicated plan. That will obviously involve some form of tax incentive to encourage people who are prepared to invest or who have innovative ideas to establish in the area to give work and opportunities to local people.

The plant in Littleton and the examples to which Deputies Naughten and Cowen referred cover vast areas. They have huge workshops and all of the services that industry requires, including electricity, water, sewage and sanitation. Everything is of a very high standard and quality. These centres will be left and forgotten unless there is some kind of dedicated plan and co-ordinated approach. That will require additional incentives to attract people out of the cities down to local areas such as Littleton. I appeal to the Minister. A lot of money is available as a result of the carbon tax. Some of these funds should be diverted to support and assist industry in getting up and running in these areas. I ask that Littleton be one of the areas considered and that it be covered by the Bord na Móna transition fund.

The harsh reality has set in for us. The jobs are gone and the factories are closed. We have 10,000 acres of bogland stretching from Littleton up to the Laois border. What is to be done with it? There are obviously opportunities there. Bord na Móna has no plan to utilise that bog or to create opportunities and new alternative jobs. We need an approach from Government. Bord na Móna needs to be told that it has a responsibility and an obligation to these areas and to the families who relied on it for sustenance down through the years.

Paschal Donohoe (Dublin Central, Fine Gael)
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I thank Deputies for their contributions. I acknowledge that in much of the engagement leading up to the budget, Deputy Cowen had raised this issue consistently on behalf of his constituents and that, on Committee Stage, Deputy Denis Naughten also raised it on many occasions. I have also heard Deputy Lowry's remarks about his constituents who have been affected.

I had a very small taste of the issues the Deputy's refer to when I visited Lanesboro last week upon the announcement of the change in the licence. I met many of the people who had been working with Bord na Móna and the ESB and who have been significantly affected by this decision. Many of them explained that their grandparents had worked for ESB or Bord na Móna and that they themselves had been anticipating jobs and careers that stretched well into the future. In fairness, while there was a sense that their jobs were changing and that they would come to an end at some point in the future, they were not expecting and they were not prepared for it happening on the basis of the current timeline. This underscored for me a point I made previously to the effect that when we talk about the different effects a change in our economy will bring, we tend to think about it in terms of a change in income for people, for example, as a result of increases in the price of fuel or changes in the price of carbon. Although a change in a person's income is significant, it is far more fundamental when a citizen loses a job or believes that a job he or she was going to have into the future will no longer be available.

Each of the Deputies expressed their concerns on this issue. While I do not represent those constituencies, I am aware of the real anxiety, especially as we approach Christmas, regarding to what will happen. I appreciate that the key issue is not just about the loss of the jobs, it is also the indirect effects of this in the local community, the other employment that was dependent on these jobs, and the effect it will have on the rates base of Offaly County Council and other county councils in the areas mentioned. In the context of what we are going to do, it is my very strong view that the need for a transition - be it the so-called just transition or the simple need and imperative to come up with new work and new jobs for people who will be affected - will claim one third of the revenue raised by the change in carbon pricing. I will play a role in ensuring that the communities mentioned this evening are at the forefront of the planning in this regard. This is why we have looked to put in place a just transition structure within the communities referred to by the Deputies. Mr. Kieran Mulvey will lead this on behalf of the Government. I have had extensive, personal experience of Mr. Mulvey in the work he does, and he is especially strong in working with local communities to address these kinds of issues. I have a lot of faith in his ability to do this.

There are two main reasons I am not accepting this amendment and for asking the Deputy to consider withdrawing it. From an EU regional aid guideline perspective, we are not able to provide geographically targeted tax incentives. If we were to do this, and if we were to go down the route with a move such as proposed in the amendment, there is no doubt that Deputies Lowry, Kenny and others who may have communities affected by the changes, would want their communities' and their towns' names in the tax code. Legally we cannot do that. Even if we could do it, I hope the Deputies will appreciate that if we begin to single out specific communities or towns we would run the risk of the likelihood of every Deputy wanting the same. I have no doubt that in the ensuing debate on the issue in the Dáil and in the relevant Oireachtas committees, our ability to respond back to the changing jobs - as referred to here - will be the key way in which the Government is evaluated in the context of how we use the money that will be raised by means of the change in carbon pricing. I am very committed to playing my part in ensuring that we work hard to find sustainable employment for those who have been affected by the changes relating to Bord na Móna and in the ESB. I know why these semi-State bodies were first set up in these parts of the country in which they are located. I know the needs that exist. Through the change we make in carbon pricing and by means of other policies at the disposal of the Government, we will play our part in trying to come up with a different future for those citizens who have been affected by this licence change.

Denis Naughten (Roscommon-Galway, Independent)
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I want to make two points. I am not looking for whole swathes of the State to be designated. We are talking about 22 specific sites in the area stretching from Tipperary in the south up to Westmeath, over to Kildare and back to east Galway. The Minister made the point that EU regional aid guidelines would not enable the Government to do that but he will be aware that this area is now accepted by the European Union as being unique. It is part of the EU designated coal region in transition. As a result, there is an opportunity to look at unique and targeted supports for these communities. I do not believe we can have it any tighter than 22 specific sites across the State. This is the equivalent of Google leaving Dublin.

We need to put some type of incentive in place for private sector investment. Yes, we will have some public sector investment, but it is important to encourage private sector investment also. In that context, if we had a designation in place I believe the ESB may consider submitting a new planning application. I believe the ESB should have submitted a new planning application for 100% domestically-sourced biomass facilities in Lanesboro and in Shannonbridge. That the ESB has not done this will create, I believe, a very dangerous precedent in the development of a biomass sector, which is fundamentally important to us in reaching our climate change targets and providing sustainable, long-term and green employment across the midlands.

Barry Cowen (Offaly, Fianna Fail)
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I acknowledge the Minister's response. I note the difficulty he attested to in naming and designating specific areas at the expense of others, and that might be recognised later. I also acknowledge that the earlier, more expansive amendment was not moved. Let us deal with the facts.

Denis Naughten (Roscommon-Galway, Independent)
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One cannot be in two places at once.

Barry Cowen (Offaly, Fianna Fail)
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Neither can I. Be that as it may, the rules of engagement are such that we are debating an amendment that only contains two named areas, Lanesboro and Shannonbridge, and the parishes therein.

On those areas specifically, I am fearful that the conditions associated with their permission - which expires next year - would oblige the ESB to dismantle those plants and to turn them back into desolate fields in the middle of those regions. The plants cost the State €450 million 15 years ago. There was an understanding, a belief and a contention at the time that they were constructed in such a way that there would be capacity to transfer from peat to biomass, either exclusively or with co-fuelling.

As I said earlier, Government policy reflected this. Unfortunately, An Bord Pleanála in its wisdom decided against a permission that would have acknowledged Government policy. As has been said repeatedly, the decision not to submit a new application, which would have been cognisant of other aspects of the decision, notwithstanding the fact that Government policy was ignored, was made by the ESB following consultation with the relevant Minister. I acknowledge, insofar as I can, having negotiated and discussed this at length with the Minister prior to the budget, as he alluded to, that the funding in the carbon tax revenue package was provided on the understanding that transition would take place in the region over the next eight or nine years. This is not now the case and we are in a new space. There needs to be a new and improved commitment that recognises this and gains our support and, association, that of the people.

Paschal Donohoe (Dublin Central, Fine Gael)
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I thank the Deputies for their contributions. The very specific references being made to these particular locations do not help with the issue in terms of the clear advice I have that we cannot do this. We cannot make tax support available to locations that are smaller than our country. In particular, I hope Deputy Naughten can appreciate the practical difficulties we would have in making it available to particular towns and areas that are even smaller than county level. The Deputy is correct with regard to the new designation afforded to parts of the country with regard to post-coal status but I have checked and it does not change the advice I have on this matter.

With regard to what Deputy Cowen said, it is the case that while it is fair to say we knew there was a risk of the licence not being available in future, that was not known at that point in time because the decision had not been made by the semi-State company on whether it would reapply for a licence. Of course, neither the workers nor their representatives were aware of what was going to unfold two weeks ago.

I ask Deputies not to ask for a report in the Finance Bill because I do not believe the Bill is the place for a commitment to reports or measures that I have told the House that I, the Government or a future Government cannot produce or take. Given the importance of this matter, I will commit to coming back to the finance committee or the Committee on Budgetary Oversight, perhaps at the end of the first 12 weeks of next year, to give an account of how the carbon pricing money is being used, where it is going and the degree to which planning is under way to respond to the issues being raised by the two Deputies.

Denis Naughten (Roscommon-Galway, Independent)
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The reason I picked the 22 sites was that when I listed the counties on Committee Stage the Minister told me I was being far too broad. Now he is using the argument that this is too defined. In the interests of trying to progress the issue, and in light of the comments the Minister has made, I am prepared to withdraw the amendment. We will hear what the Minister has to say in the new year. This can be revisited by whoever our successors are this time next year.

Paschal Donohoe (Dublin Central, Fine Gael)
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Can I make a comment?

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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No.

Paschal Donohoe (Dublin Central, Fine Gael)
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It could be of help to the House.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Perhaps when we come to amendment No. 15 the Minister can add it on if he wishes. I invite the Minister to move the amendment and say whatever it is that he wanted to say.

Paschal Donohoe (Dublin Central, Fine Gael)
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I move amendment No. 15:

In page 62, to delete lines 11 to 15 and substitute the following: "(f) in section 739O(1), by substituting "person, or connected persons within the meaning of section 10," for "person", and".

I was about to say that regardless of whether the locations are too broad or too narrow, the principle remains the same. The Deputy has withdrawn the amendment and I thank him for that.

Amendment No. 15 is a technical amendment to correct a drafting error in a Committee Stage amendment to the Irish real estate fund, IREF, provisions in section 29 of the Bill as published. An amendment was brought forward on Committee Stage to remove a proposed amendment to the holder of excessive rights provision in the Taxes Consolidation Act due to unintended consequences identified following the publication of the Bill. However, a drafting error has been identified in the Committee Stage amendment and this amendment, therefore, is required to fully remove the provision from the Bill. This will ensure the existing holder of excessive rights provision, as currently contained in the Taxes Consolidation Act, remains in force. I commend the amendment to the House.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I move amendment No. 16:

In page 92, between lines 14 and 15, to insert the following: "Report on minimum effective corporate tax rate

34.Within 6 months of the passing of this Act, the Minister shall produce a report on establishing a minimum effective corporate tax rate of 12.5 per cent.".

When people go to the Revenue website to look at corporate tax reliefs they get a table in a small font. I have been straining my eyes. A few years ago, I would have been able to see these figures.

Martin Kenny (Sligo-Leitrim, Sinn Fein)
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The Deputy is getting older.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I seriously challenge anybody to read the figures in this table. This is with regard to access to important information. This is public money that is every bit as real as money that is announced in every budget to great fanfare, much public attention and scrutinised heavily with regard to the amount spent directly on health or education and allocated to various Departments. Depending on how it is calculated, and there is an interesting debate on what is in the base and not the base, the budget scrutiny committee estimates there is approximately €15 billion worth of tax expenditure every year and most of this rolls over from year to year. This is a lot of money. I emphasise that the Minister has had meaningful engagement with me on this matter. I also acknowledge that in the area of film relief he has genuinely listened and that he has also made some positive moves on IREFs and so on in the budget. However, as I have said to him many times, there is a whole lot more that needs to be looked at. Frankly, I still believe this is a massive scandal. To emphasise the point, in 2012, at the bottom of the crash, €74 billion of pre-tax profits were recorded. The figure for 2017 was €159 billion, which means profits have doubled more or less. The problem is that even the very modest 12.5% corporate tax rate is not paid on these enormous profits, which have doubled. When all of the loopholes in the interesting table that people cannot read are applied, the taxable income, as opposed to the pre-tax profit, drops from €159 billion to €79 billion. We have €80 billion worth of loopholes, expenditures and reliefs that write down the taxable profit so that the effective rate of pre-tax profits is not 12.5% but 5%. If the Minister imposed a minimum effective rate on pre-tax profits, he would generate approximately €9 billion extra in revenue a year and these companies would still be very profitable.

There are lot of areas to look at but the one I really want to stress this year in the short time I have is intra-group transactions. I had to really look closely at the table to see this one. Intra-group transactions are mostly transactions between subsidiaries of the same company lending each other money. One company sets up a lot of subsidiaries and lends itself money and charges itself interest.

6 o’clock

The interest it has to pay back to itself is tax deductible, thereby writing down its profits and allowing it to pay less tax. We discovered this with, for example, Larry Goodman's companies in Luxembourg and so on, but they are all at it.

It is amazing that the figure on this fascinating list for tax forgone due to intra-group transactions, which amounted to €9 billion in 2016, saw a massive jump from the previous year. I do not have the exact figure, but it was approximately €2 billion or €3 billion then. Guess what it was in 2017. It was €16 billion. It went from €9 billion to €16 billion between 2016 to 2017. God knows what it will be in 2018 and 2019. This is the major mechanism through which some of the most profitable companies owned by some of the richest people avoid paying their proper share of tax. They are lending themselves money and charging themselves interest, paying which reduces their profits.

An interesting provision is that of losses forward whereby the banks that brought this country to its knees can use previous losses to write down their tax liabilities, meaning that Bank of Ireland, AIB and so on pay virtually no tax on the enormous profits they are now generating. Another interesting provision is the category called "Certain company reconstructions and amalgamations". It was in place last year but I am not sure as to whether it was in place the year before. This tax expenditure increased from €189 million in 2016 to €425 million in 2017. This is tax avoidance on a massive scale and is robbing the taxpayer of significant amounts of money that could go into health, education, public transport or a just transition in terms of climate change. One could go through the list of possibilities.

I appeal to the Minister. A report on this is important. The Committee on Budgetary Oversight has started some of that work, but the next issue we need to examine closely is intra-group transactions. That the figure mushroomed from €9 billion to €16 billion in one year shows that it has become the major loophole through which many of these companies are writing down their tax liabilities. We need to examine what is going on, who is benefitting from the loophole and how to shut it down.

Joan Burton (Dublin West, Labour)
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I have proposed a minimum effective corporation tax rate many times. The recent publication by the OECD that recommended a minimum effective tax rate in parallel to the BEPS process is a warning note to the Government to the effect that this particular regime will not last forever. Assuming that Ireland will continue to be an attractive destination in the EU post Brexit, the Minister will have a problem on his hands. If we have significant transfers of financial companies from the City of London to Ireland, I assume that they will be accompanied by significant transfers of intellectual property rights, which were the basis of Deputy Boyd Barrett's contribution. Those rights are moving from certain jurisdictions to Ireland, but not just because of taxes. We are probably a more attractive destination for a variety of reasons, including our location and the fact that there are many people in Ireland or who are prepared to come to work in Ireland who have the skills that the companies require. However, it is foolish in the extreme to allow very profitable companies to pay reduced rates of taxation. A minimum rate could be identified.

The Minister spoke about the consequences for the midlands of the recent decisions on decarbonisation and proposed an oversight and commentary role for the Committee on Budgetary Oversight. One way of addressing the issue would be to make more detailed information available on the figures behind the figures. The Department should be able to provide that fairly easily. Perhaps it could be provided via the work of the officials who are working with the committee. We could then have a discussion and see whether there is a pathway through this.

Via President Macron and others in Europe, we are still facing the likelihood of digital taxation. It is not a perfect mechanism of tax, but many countries will be frustrated with the approaches taken by a number of states, including Ireland, where their nationals are buying significant amounts of services or products that are effectively taxed at close to zero, leaving no flow of money to national exchequers. That is profoundly unfair and the Minister would be well advised to reconsider it. If the Committee on Budgetary Oversight were to be an acceptable mechanism to him, that work could be done through it.

I doubt that there are many in this country who want to sell Ireland as an international tax haven. We want to sell Ireland as a location for international investment and employment. I imagine that there is mostly agreement on that in the House. Given the country's focus on education, we are well placed to take advantage of that, but we must be prepared to address the tax issue. When I was in government, we went into the BEPS process in great detail. The latest iteration of that is the OECD's proposal to move towards a minimum effective tax rate. The alternative is a digital tax. Maybe the Minister has undertaken studies on the likely impact of digital taxes. I have asked him detailed finance questions on the increasing amounts that have been claimed back by countries like Italy. Having introduced their own taxation measures, they are claiming back payments that Ireland will consequently find are due to them. All of this could be the subject of detailed reports. Since I regularly get answers on this matter from the Department of Finance and the Revenue Commissioners, the data are available even if they are not complete.

We have discussed how the Minister is locked into the problem of the banks' enormous losses forward, the basis for which I am unaware. Is there a country that allows this kind of continuous losses forward over a very long period? We are in year 11 since the bank crash. Those losses started to be built up from 2007. We are talking about 12 year old losses and banks that in some cases have profits in the realm of €500 million to more than €1 billion. It is silly that they can continue doing this. The most valuable aspect of the banks is possibly these losses forward. We are in a situation where there are all sorts of demand on the Exchequer, ordinary workers have not got any tax relief even though incomes for many will rise by 3% per year and people in receipt of social welfare have got no increases. It seems profoundly unjust in terms of the principle of taxation that very profitable organisations should continue to get major tax breaks while ordinary workers, people on social welfare and pensioners get little or nothing out of the budget.

In the case of this amendment, if the Minister is prepared to put forward a format for reporting and discussion which meets his requirements, that would be a positive development.

Mattie McGrath (Tipperary, Independent)
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I do not support the amendment. I have to be honest and fair in this matter. I was arguing with the Minister last night about a land tax, which could have brought in a lot of money, and the situation where executives earning huge money get certain preferable tax allowances. The Minister tried to make the case that he had reduced such allowances greatly, which may be true. There are nearly 5,000 good FDI jobs in my own town of Clonmel. Merck Sharp & Dohme, MSD, is there nearly 50 years and we also have Boston Scientific, Abbott Laboratories and others. Those companies provide valuable employment and also offer spin-off benefits for the service and other industries which meet the needs of people coming to live in the area.

I am a big supporter of retaining the corporation tax regime as it is. The Minister alluded last night to the amount these companies pay in PRSI and other taxes, which is never mentioned. I completely support the retention of the 12.5% rate. It is a useful tool to have at our disposal. Other countries have different creative measures which they use to attract industry to their jurisdictions. What we have is an upfront and straightforward tax and we need to keep it, especially in these times when we must deal with President Trump's various opinions, ideas and schemes.

Martin Kenny (Sligo-Leitrim, Sinn Fein)
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I support the amendment. Many people, including the types of workers referred to by Deputy Mattie McGrath, who are in good jobs in high-tech businesses, pay a lot of tax and sometimes feel aggrieved that they can hardly afford their rent or mortgage. They perceive themselves as being in the squeezed middle while large corporations pay very little tax. Moreover, it seems that the larger the company, the lower the rate of tax it pays. That has an impact on our hospitals, schools, roads and, indeed, on every part of our society. It means that more and more ordinary working people, who go out and do their best every day, are finding they cannot afford to live, get a mortgage and provide for their families.

We see the evidence of this clearly in the north west. The Sunday Business Postmagazine last Sunday included a list of how much Enterprise Ireland has spent in every county. Nearly two thirds of the moneys were accounted for by Dublin and the counties in the Dublin circle, namely, Kildare, Wicklow, Louth and Meath. County Leitrim, on the other hand, received only some €350,000, and Sligo less than €700,000. I am not saying that this is the fault of the Government. The problem is that there are not enough businesses investing in those areas, and that is because the emphasis is not being placed on ensuring that the places which have the most potential are given the most help. All the money is flowing into the region where there is the most pressure, the highest rents and where people cannot afford to live. I am all too aware of this as the parent of college-going children. County Leitrim has the highest number of graduates per head of population but there are no jobs for graduates in my area. That is a scandal in a context where we have a 12.5% tax rate for corporations. Those companies absolutely should be paying that rate in full. There is an additional problem in that we currently have no ability to direct where that work should be going and where people should be getting a chance. I want to see my children do better than I have done, as do most people. However, people living in Leitrim, Sligo and Donegal see them doing better somewhere else, not at home. That is something the Government must address.

If we are going to make the changes that are needed, the emphasis on what the Government invests in must change. There used to be a saying in rural Ireland about rubbing more butter on the fat sow's back, which is applicable to the current situation. Everything is happening in the greater Dublin region and the pressure there is huge. Rents are through the roof for people looking for a home and students seeking accommodation. Meanwhile, the west and other areas are continually left behind, the most recent evidence for which was The Sunday Business Postreport to which I referred. These issues have an impact on people throughout the country. If this Government is about fair play, then it must ensure that corporations play fair. The types of breaks they currently receive should not be given. Deputy Burton referred to the banks, which are a typical example. Banks in this country that are owned or partly owned by the State are getting away with paying no tax and making billions in profits. By contrast, if a rural publican is a month late submitting his VAT return, Revenue will come down on him like a tonne of bricks.

I am not here to beat up on the Government. We all have a responsibility to address these issues, and Government has a particular responsibility to deliver for everyone. The problem we see - it is an acute problem for people in the north west, in particular - is that too many people feel they are not getting fair play, and there is anger and resentment because of that. This how the politics of fear evolves. People feel the Government has let them down and not delivered for them. Its promises are no longer believed, as we have seen in respect of the national broadband programme. The Minister has a huge job of work to do to change that. Problems we are seeing, such as those concerning direction provision facilities, are all part of this same problem that so many people in rural areas feel neglected and left behind and that Government is not in tune with their lives. If the Minister and his colleagues do not change that, there will be fertile ground for the far right to move in and instil a politics of fear. As we go into the next decade, we should be seeking to move past the politics of fear and towards a politics of hope and reform. The reform we need is to invest in the regions where there is most potential and where we can deliver for more people. That is the future we can have but it requires the Government to stand up and not just talk about taking action but actually deliver it.

Michael McGrath (Cork South Central, Fianna Fail)
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There is real value in having certainty around our corporation tax offering. As such, we must be careful in making changes that could undermine that offering and, as a consequence, our ability to continue to attract foreign direct investment. The system we have is statute-based, with the deductions that result in profits being reduced to a certain level before the tax rate is applied set out in legislation. They include research and development tax credits, capital allowances and losses forward. The headline profits are reduced to taxable profits and the rate is then applied. We have had reports comparing Ireland's effective rate of corporation tax favourably with that of other countries with a higher headline rate of tax. Different jurisdictions have very different systems in place.

Listening to the debate on these issues, one would be forgiven for thinking that corporation tax receipts were not booming, which they absolutely are. In fact, it is estimated that some €10.5 billion will be collected from this source by the end of the year. The issue we have had in terms of profits being shifted from one jurisdiction to another is principally in the area of transfer pricing and royalty payments. That system is the subject of significant international change through the OECD's base erosion and profit shifting, BEPS, process, which is right and proper.

It is not fair that companies would have an opportunity to shift profits, without any substance to that transaction, from one jurisdiction to another. In the round, we have to defend our offering and our corporation tax system. It is transparent and we have to continue to co-operate with the international reforms through the OECD in dealing with transfer pricing.

Paschal Donohoe (Dublin Central, Fine Gael)
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I thank all the Deputies for their contributions. It is important to open with some of the facts on this area that touch on some of the points Deputies Martin Kenny and Boyd Barrett made in their contributions. If one looks at the most recent information available, namely the estimates the Revenue Commissioners produced for 2017, it indicates that for those companies that pay corporation tax, the effective corporate tax rate they paid was 10.2%, an increase on the 10% figure in 2016. For the top ten companies the rate was 12.7% and for the top 100 companies it was 12.3%. The gap between the effective tax rate and the nominal tax rate is very small. In the debate that is under way on what level of taxation is paid by the largest companies, it is important to note the gap between the rate they are meant to pay and the effective tax rate they pay is minimal. That is a key point of difference with many other countries and jurisdictions we compete with that would have a nominal tax rate that would be far higher than Ireland's but then because of the very many deductions they would make available, they have an effective tax rate that is some way below that. That is not the case in Ireland.

Deputy Boyd Barrett made the point about the surge in profitability that has happened for large global companies. Consequent to that, there has been a huge increase in the amount of corporate tax profit that has been paid here in Ireland. The Deputy may be interested in the technical paper we published last week on the Department of Finance's website that looked to correlate the amount of corporate tax being paid with the share performance of very big corporate players. It found a real correlation between how much additional tax is being paid in Ireland and the business performance of many of the huge companies the Deputy has referred to.

On the different points made by Deputy Burton, the establishment of a principle of minimum global effective taxation would provide particular challenges for Ireland because if that principle was established the figure would at one point be below the 12.5% in Ireland but my expectation is that at another point in the future the figure would then move above that, which would have consequences for our ability to retain our tax rate as it is. That principle could yet emerge from the OECD. As Deputy Burton knows, within the OECD we do not have a veto. It is not like, for example, the European Union. It is an organisation that works on the basis of influence and negotiation. I am alive to what the consequences of a minimum effective tax rate being established through the OECD for the world would be for Ireland.

On the debate on digital taxation, the view I took 18 months ago is that if the European Union or individual countries went down the route of a digital services taxation outside of agreement with other global trading blocs, that would result in the risk of reaction from other countries that have been affected. I have been proven right in that assessment and that is what is now happening. For example, America is saying that if American companies are treated in a different way in other jurisdictions, America will respond to that. That has happened in the negotiations that have ensued between France and America, for example. I argued in front of the Committee on Budgetary Oversight that I did not believe it would be in our interest for Ireland to face such a scenario too. I was correct in my concern on what could happen if we went down the unilateral route in digital taxation. That is not a path Ireland should go down. Deputy Mattie McGrath supports the approach we are taking. Deputy Michael McGrath touched on the fact there has already been a big increase in corporate taxation receipts.

Deputy Boyd Barrett touched on the issue of intra-group transfers and how they are facilitated. In this Finance Bill, there are significant changes happening in transfer pricing that will have an effect on that issue. We are making those changes, mainly because we are part of the OECD approach on that work and also because we need to play our part in ensuring companies are paying a fair and effective tax rate and that there are no mismatches in transfer pricing rules that might allow the movement of revenue and profitability between different parts of companies in a way that is not sustainable. I emphasise that significant changes are happening in transfer pricing rules that are partly driven by the kind of issues the Deputy has raised.

I listened to what Deputy Martin Kenny said too. I make the point to him that for many different parts of our economy, the majority of jobs being created are outside of Dublin city. The main reason I supported the decision on the national broadband plan was to respond to the diagnosis the Deputy offered. I salute the approach the Deputy has taken to argue for a different political approach to the fears his constituents have. It is that kind of approach I want to play my part in. I also want to respond to the fears the Deputy has articulated. I strongly believe the approach we are taking with the roll-out of the national broadband plan will make a difference to the employment concerns in the many communities across the towns and villages of our country that the Deputy raised.

Pat Gallagher (Donegal, Fianna Fail)
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That exhausts the seven-minute slots. Does anyone want to come in?

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I will comment briefly. It is around the area of whether the effective rate of corporation tax in this country is as the Minister stated or whether it is not that the debate centres. I dispute it because the Minister is referring to taxable income after all the reliefs, exemptions and deductions in the list I referred to have been applied. To me, the essence of the problem is the total declared profits, which have mushroomed, are not what are taxed. About half of that is taxed. How €159 billion in profits suddenly turns into €79 billion in profits - with €80 billion in the difference - and how the 12.5% tax rate is only applied to that second lower figure is the problem. At the centre of that, as the Minister rightly says, are intra-group transactions. As I tried to stress, intra-group transactions and transfer pricing involve subsidiaries of the same company moving money around in order to avoid paying tax. That is wrong and we have to address it. I accept the Minister is looking at it and I accept there are some measures here, as part of the OECD process, that are moving to address some of these problems but we are not going anywhere near far enough. Equally, it is shameful the banks are not paying tax because of losses forward. I did not mention the research and development tax credit. Again, it is mostly going to this same group of companies when it could be better directed, in my opinion, into public universities for research and development that would benefit the domestic economy. We disagree but I have put the point and hopefully it has some impact on Government thinking.

Joan Burton (Dublin West, Labour)
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One area of taxation of the types of sectors about which we are talking is a financial transactions tax, which would have a massive impact on poorer countries around the world. One of the side effects, perhaps unsought, of the type of tax regime Ireland and Luxembourg have developed is that poorer countries are relieved of their tax earning capacity in respect of raw materials. The Minister will know this because a number of years ago, he arranged to meet representatives of Oxfam, for which I was grateful. I acknowledge he has provided for changes to transfer pricing in the legislation. It is not yet clear how they will play out but I acknowledge that he aims to make the system fairer.

On transfer pricing, there has to be some way, in a globalised, financialised world, of ensuring that people who earn a great deal of money will pay tax. Otherwise, people who have no money, who are at the bottom of the heap, will have no income, which means their basics in life will be unavailable and unaffordable to them. That is why the OECD-type approach is the best one, accompanied by good governance and high-quality taxation systems. The Minister is working on the Augustinian principle of, "O Lord, make me tax effective, but not yet." We will end up paying, as we already do, large amounts to countries such as Italy, which has located various types of digital taxation in the country. That means it can take into account, for instance, activities and taxes that companies have paid, such as on labour. Ultimately, such countries can come back and seek what we could call a refund from us, which they increasingly do.

It is a mug's game to stick our head in the sand and deny what I have outlined. The Government has to be able to show some progress on some areas.

Martin Kenny (Sligo-Leitrim, Sinn Fein)
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The Minister stated he concurred with my analysis that we need to change the politics and to invest more in rural areas and the regions where we have most potential, but that will require the finance to do so. The difficulty is that an awful lot of people find that the pressed middle, or the ordinary worker, provides all the finance for everything. The issue, as has been pointed out by Deputy Boyd Barrett, is that the Minister suggested that companies pay practically the same rate they are charged, but the truth is that is the rate after they have taken into account all the other breaks, which needs to be examined. I refer in particular to the research and design break. It is scandalous that large corporations get away with it time and again. They move large portions of their profit, which should be taxable, into a research and design account and the money sits there to be spent on measures the corporations should be taking in any event. That significant loophole needs to be examined.

If we are to change the politics, we have to act on it, not just talk about it. We have to see the results in rural Ireland. The Minister mentioned the broadband programme. We have been around the mill so many times with broadband that nobody in rural Ireland believes the Government anymore. Its problem is it has a considerable credibility deficit in that regard.

Paschal Donohoe (Dublin Central, Fine Gael)
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Ireland can only tax income that is taxable. We can only tax income declared in Ireland. Deputies Boyd Barrett and Martin Kenny are correct that reliefs are available. They are applied and the income thereafter is what is taxed, but that is a feature of tax codes, whether for an individual, an SME or a major multinational company. Indicating we will change that in the future is the very kind of unpredictability in our tax code that will affect jobs and investment in our country. Every time I make such a point, I am charged by some with creating a sense of fear and undue panic. All I can do is give my view of how competitive the international environment is for jobs and investment. It is not a path of uncertainty that Ireland should go down.

I again point to the fact that the gap between the effective tax rate and the nominal tax rate in respect of Ireland's corporation tax is small. That shows that an approach of having a wide tax base, with a small number of reliefs and a consistent rate applying to the entire tax base is the right way to go.

On what Deputy Kenny said about the deficit, since 2016, we have increased by €4 billion the amount of investment in our economy, with a significant focus of that sum being the investment in towns and villages throughout the country, an approach with which we will continue.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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There is a global move for such corporations to start paying their taxes, and we should not be the laggards on the matter, but we are. Even though we know the curtain is starting to come down on the corporations, we think we should try to get as much as we can out of it before it does. That is a mistake, however, because we could get more by getting ahead of the curve than by being the laggards. I do not believe the idea that if we introduce a minimum effective tax rate to apply to companies that make the scale of profits that such companies make in Ireland, which will ensure they do not benefit as much from the clear loopholes they exploit and that we will get a bit more as a minimum - a minimum of billions of euro - they will all run out of the country. There is nowhere left for them to run, particularly in the English-speaking world within the EU, which is where they want to be, even more so after Brexit.

The minimum effective rate would still be well below what the rest of Europe pays because, as the Minister rightly said, the nominal rates in Europe are considerably higher and probably average at more than 20%. Even with the reliefs they give, however, which might reduce the effective rate to 10%, 9% or whatever it is, the rates are still higher than what we pay on pre-tax profits. We could pitch it higher, get in a fair bit of money, and we would not risk them all running for cover because there is nowhere left for them to go. We should do it because it would give us a great deal of money for the infrastructure, housing and public transport on which they, as much as anyone else, rely, although they do not pay the fair share as a proportion of their profits that they should towards them.

Denis Naughten (Roscommon-Galway, Independent)
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I move amendment No. 17:

In page 97, after line 32, to insert the following:

“40.The Minister shall, prior to 1 May 2020, publish a report on reducing the impact of carbon tax on agricultural production in light of the fact that there are no viable low carbon alternatives available to farmers.”.

We discussed a similar amendment in detail on Committee Stage. Its focus is to consider the issue of carbon tax on agricultural diesel. Carbon tax is about bringing about change, not about bringing in more income to the Exchequer. The idea and pitch behind carbon tax is to drive change. The objective is that people will get out of the car and use public transport because it is more carbon efficient and they will pay less in fuel taxes.

The agricultural community does not have that choice because we do not yet have electric tractors and it will probably be a while before we have them in this country. As they do not have a choice, they should not be liable for the tax.

When we discussed this earlier, the Minister made the point that there is a double income tax relief for farmers. The difficulty is that a farmer has to be generating an income to avail of the income tax relief. As the Minister knows, very few beef farmers will pay tax this year because of the devastating year they have had. Only a handful of beef processors in the country will have a tax liability. Having a taxable income is the only way farmers can avail of relief for carbon tax paid on agricultural fuel. We need to consider another mechanism to ensure that people who do not have a choice, that is, farmers, have mechanisms whereby they can avoid paying the carbon tax on agricultural vehicles.

This leads us to a broader issue in terms of carbon taxes. The carbon tax structure in this country disproportionately impacts on people in rural Ireland. A typical commuting family in rural Ireland will pay an extra €6 per week in carbon tax, yet the equivalent family in Dublin will pay about 30 cent a week in additional carbon tax. The sum of €6 per week is a significant amount of money for a family, but alternative transport is not available to them. They have to absorb this as an additional cost. However, families in Dublin have alternatives, particularly the bus service, which is subsidised by the State, but 30 cent a week will not motivate any family to leave the car keys at home and get onto a bus. This tax disproportionately hits those who cannot avoid paying carbon tax.

Amendment No. 23 has been ruled out of order. It proposed that we try to restructure the motor tax system to drive the type of change that is needed, based on the fuel efficiency of a vehicle. A diesel car travelling through Dublin city is far less efficient than the same car travelling from rural Ireland to a job in Lucan or Leixlip. If the taxation system was restructured to take account of that, it would encourage people to leave their cars at home in Dublin without disproportionately penalising those living in rural Ireland who do not have a choice. We will not have the opportunity to discuss that amendment.

I want to flag this issue relating to agricultural fuel. The amendment would ensure that many farmers who do not have a taxable income would be able to avail of the relief.

Martin Kenny (Sligo-Leitrim, Sinn Fein)
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I support the amendment. As I live in rural Ireland, I am very conscious of the issues facing the farming community. Given that farmers make very little money, for quite some time there has been little opportunity to tax them, in particular farmers with smaller holdings on poorer land in the west. They are the very farmers who will be impacted the most by the carbon tax that has been spoken about and a carbon tax in general.

It is an issue that goes beyond farming. It will affect families living in rural areas or regional towns who do not have buses or other transport options in place. They are being pressed the hardest. The symbolism of accepting the amendment would show that the Government accepts that the agricultural sector, in particular, needs some understanding from the Government that farms are not profitable and farmers do not have alternative options. There is no such thing as electric tractors. Even if there were, they would be well beyond the means of the vast majority of farmers living in rural Ireland, as are electric cars. If the Minister accepted the amendment, it would show that the Government has some level of understanding of that.

Michael D'Arcy (Wexford, Fine Gael)
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It is important to note that the vast majority of greenhouse gas emissions from the agricultural sector, that is, methane, are not subject to carbon taxation. The main agricultural exposure to carbon taxes comes from fuel imports, primarily through the use of marked gas oil, MGO, or, as we know it, green diesel. It is subject to the lower excise rate of 10.2 cent per litre. The increase in carbon tax will increase this to 11.8 cent per litre. The increase to MGO will apply from 1 May 2020. The excise rate on MGO compares very favourably with the excise rate applied to auto diesel, which is 49.5 cent per litre. There is a difference in price of almost 40 cent per litre between road diesel and MGO. When the carbon tax was introduced in 2012, provision for a double income tax relief for farmers to compensate for this increase was introduced. This relief continues to apply. In light of the very limited exposure of the agricultural sector to carbon tax increases and the availability of other income tax reliefs for farmers that are directly related to increases in the carbon tax rate, I do not see the benefit in conducting a report on the impact of a carbon tax on the agricultural sector.

I live in the countryside, down a country lane. I am very strongly supportive of rural planning. We had a conversation earlier about the fact that An Bord Pleanála has turned down applications for one-off developments in rural areas. The Irish rural housing stock is dispersed throughout the country, which I support. People should be able to look for planning permission to build houses in rural areas. However, we cannot expect the State to subsidise those living in rural areas. The State does not subsidise wastewater. People have to install their own septic tanks and provide their own water. Where there is a market failure, the State will step in in the form of initiatives such as the national broadband plan we have launched.

People cannot expect the State to do everything for rural Ireland. It is wrong of people to keep talking about Ireland being desolate and dying because it is not. Many areas are thriving and doing exceptionally well. Not everywhere is like that and that is why we are spending billions of euro on the national broadband plan, the national rural regeneration plan, and town and village renewal schemes. People would think none of this happening and the money is being spent in Dublin city and nowhere else. That is not the case and it is disingenuous of some Deputies to say everything is wrong in rural Ireland because it is not.

Denis Naughten (Roscommon-Galway, Independent)
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I will not dwell on the point I made on Committee Stage. I want to pick up on two things the Minister of State said. He said rural Ireland is not desolate. The competitive funds provided by the rural and urban regeneration schemes encourage communities to come forward with innovative ideas, and they are very positive. The difficulty is that the vast majority of people living in rural Ireland have to commute long distances to get to work, something about which Deputy Kenny spoke earlier. People in my constituency have to travel long distances to get to work.

If we are going to deal with the challenges of congestion and housing in Dublin city, we must recognise that we can never build enough houses to meet demand. We need to bring about balance. The Government is doing that through the incentives it is providing and so forth, and that needs to continue.

I am glad the Minister of State brought up the issue of methane. It is not subject to carbon tax, despite the Citizens' Assembly recommending that it should be. I do not believe it should be. We need to examine seriously the issue of carbon leakage because of the European accounting structure for carbon.

We are penalising agricultural production in Ireland. What is produced in the agricultural sector here feeds the European Union. We are trying to shut down the sector and import products from an alternative source in South America, where people are being moved off the land. That is bringing about a devastating impact on the climate and destroying the lungs of the globe in the Amazon basin. We need to look again at how we calculate and treat methane emissions.

Martin Kenny (Sligo-Leitrim, Sinn Fein)
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I want to respond to the comments about rural housing and people who live in rural areas. We need people to live in rural Ireland and we need to grant planning permission for people to do so. Those people are not some kind of a pollutant to be stamped out. Some people would think that was the case. In fact, the vast majority of people living in rural Ireland are much more efficient ecologically than people living in many other areas. I agree that rural Ireland is not dying and that there is vibrancy and energy there. The problem, however, is the lack of investment necessary to allow those communities to flourish in the way that they might. That is certainly the case in many places.

I frequently come across people in my constituency who cannot get work in the areas in which they live. They have to travel long distances to work. When those people get there, they discover they could do their work from anywhere if they had broadband. Broadband was mentioned earlier and we are putting in hubs in some areas where work is under way. What we really need to do, however, is recognise that while there has been great investment, and reference was made to corporation tax and investment in large corporations and foreign direct investment, there has not been as much emphasis on growing our domestic economy and developing the entrepreneurs and enterprises needed in rural areas, small towns and villages. That is a big job of work and it will require a new emphasis in politics over the next decade.

We are not in different places in the context of our views on this subject. We should be coming at it with a unified approach to developing solutions that will serve everyone. To do that, we have to recognise that there are major deficits. Those deficits are real, not imagined. People know they exist because of their life experience.

Pat Gallagher (Donegal, Fianna Fail)
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I call Deputy Danny Healy-Rae, but I ask him to say everything he has to say in two minutes.

Danny Healy-Rae (Kerry, Independent)
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That is fine. I am just glad to get the opportunity to say a few words on this matter. I got annoyed when I heard the Minister of State saying that people in rural Ireland should not expect to be paid to live there.

Michael D'Arcy (Wexford, Fine Gael)
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I did not say that.

Danny Healy-Rae (Kerry, Independent)
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I am just asking him to leave the people of rural Ireland alone and that is also all those people are asking for. He will not leave them alone, however. He was talking about the rebate scheme, but that does not apply to green diesel. The cost of fuel is going up and many people cannot get a rebate on white diesel either. It is not possible to go anywhere in rural Ireland without a car. I cannot understand Deputies in this Government, as well as others in the House, complaining about the carbon tax after talking about climate change. That is giving me bother as well. Deputies are complaining about the carbon tax, while at the same time supporting the notion of climate change. The climate will always change, but we will differ on what is causing that to happen.

I am only asking the Minister of State to leave people in rural Ireland alone. Those people are footing the bill for this Government's notion of closing down the bogs and power stations in the midlands. That is what is happening now and that is the honest truth. That is where the carbon tax is going and it will not even cover the cost involved because the closing down date was brought forward by six or seven years. The Minister of State said that people in rural Ireland should not expect to be paid to live there. All I am asking the Government to do is leave those people alone.

Pat Gallagher (Donegal, Fianna Fail)
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This amendment relates to publishing a report on reducing the impact of carbon tax before 2020.

Michael D'Arcy (Wexford, Fine Gael)
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I want to correct Deputy Danny Healy-Rae. I did not say that the people of rural Ireland should be paid. I ask him not to say that I said something I did not say. I am very clear on that.

Danny Healy-Rae (Kerry, Independent)
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I heard him saying that. He said that he supported-----

Pat Gallagher (Donegal, Fianna Fail)
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Please Deputies-----

Paschal Donohoe (Dublin Central, Fine Gael)
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He did not say that, though.

Michael D'Arcy (Wexford, Fine Gael)
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I very clearly did not say that. The Deputy said I said it and he was wrong to say that about me.

Danny Healy-Rae (Kerry, Independent)
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I heard the Minister of State saying it.

Michael D'Arcy (Wexford, Fine Gael)
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The Deputy did not.

Pat Gallagher (Donegal, Fianna Fail)
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Let us have some order, please.

Michael D'Arcy (Wexford, Fine Gael)
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We will not leave the people of rural Ireland alone. We will invest in rural Ireland-----

Mattie McGrath (Tipperary, Independent)
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Oh.

Michael D'Arcy (Wexford, Fine Gael)
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-----and we will continue to invest in rural Ireland. Deputy Danny Healy-Rae does not want to hear that. He does not want to hear about the town and village renewal scheme, the rural regeneration scheme or the national broadband scheme. My county of Wexford-----

Pat Gallagher (Donegal, Fianna Fail)
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The Deputies might not agree but they must listen to others. Nobody in this House has a divine right to keep interrupting.

Michael D'Arcy (Wexford, Fine Gael)
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My county of Wexford will receive some €88 million to bring broadband connectivity, by fibre, to 22,000 homes. Deputy Healy-Rae does not want to hear that because it does not fit into his narrative that rural Ireland is dead, desolate and finished. It is not finished, it is vibrant in many places and areas.

Turning back to the item we are actually discussing, the introduction of carbon tax for marked green diesel, it will be €16 per 1,000 litre fill. Most average to small farmers might do three or four fills of diesel.

Michael D'Arcy (Wexford, Fine Gael)
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It is €50 in the year and that is the full amount. It is important for people to not overstate this. The impact of the carbon tax will be about €50 a year for the average small farmer in respect of marked gas oil. We brought this in at a low rate and it is not coming into force until next May and that is about as reasonable as it is possible to get.

Pat Gallagher (Donegal, Fianna Fail)
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Is Deputy Denis Naughten pressing the amendment?

Denis Naughten (Roscommon-Galway, Independent)
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Yes.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I move amendment No. 18:

In page 97, after line 32, to insert the following: “Report on carbon tax

40.Within 6 months of the passing of this Act, the Minister shall produce a report on the carbon tax, fuel poverty and income inequality.”.

Our opposition to the carbon tax is well known. It is not necessary when opposing an unjust, regressive and counterproductive tax to suggest that climate change is not a serious and urgent problem.

7 o’clock

It is an urgent problem. It is an emergency. We have a short timeframe to address that emergency before we do irreversible damage to climate, to biodiversity and to the conditions which sustain human existence on this planet. There is no question but that we need to address it.

The problem is the carbon tax will not address it. First, we have a carbon tax and it has done nothing - less than nothing - to reduce CO2 emissions. CO2 emissions continue to rise. Ireland is failing spectacularly in meeting its targets, is facing hundreds of millions of euro of fines as a result and is trying to buy its way out of its emission reduction targets through the carbon trading system. The carbon trading system itself is another example of how trying to put a price on pollution is not the way to address it. The big idea ten years ago was that with carbon trading one can buy one's way out of the problem. Of course, that became an area for speculation and for the big polluters to buy the right to pollute more from poorer countries which emitted less. It is completely counterproductive.

It is also counterproductive from the point of view of trying to win over the majority of ordinary people to support the fight for radical climate action and I ask the Government to consider this. If we are to make this change we need to have everybody on board. They must feel they have a stake in taking radical climate action and that they will not be punished for the crimes of polluting corporations and Government failure to address CO2 emissions. We know 70% of global emissions come from a few hundred companies. In fact, governments resist efforts to tax those corporations and use some of the enormous profits they generate from polluting industries, such as the fossil fuel industries, to redirect revenues into making the necessary transition. Instead of doing that, we punish the people who are not responsible and potentially alienate them from the battle to address the climate emergency.

This amendment I have put forward particularly asks the Government to look at the issue of fuel poverty. It is estimated that 400,000 households or 28% of the population in this country are living in fuel poverty. The majority of those people are living in G-rated homes, in other words, poorly insulated homes, and are already suffering from poor insulation. They do not want to have to spend large sums heating their homes. They must do so because their homes are badly insulated. A very significant portion of them can do nothing about it because they live in private rented accommodation. They cannot do it. The landlord has to do it. Alternatively, they live in public rented accommodation - local authority homes - and they cannot do it. In fact, I spend quite a lot of my time making representations to the local authority asking on behalf of local authority tenants if it will insulate their homes and the local authority says it has not got the money to do it. By the way, and here is an interesting twist, in Dún Laoghaire-Rathdown County Council, in the budget recently passed by the new coalition of Fianna Fáil, the Greens, the Social Democrats, the Labour Party and Independents, they have cut the retrofit budget. They totally slashed it in their first budget. What already was a snail's pace of retrofitting of local authority homes will be slashed entirely. It is shocking. It is disgraceful that they would do it. It is unbelievable that the Greens would do it. It is also shocking that the Government would allow them to do it given that we need to ramp up dramatically the retrofit of homes.

We need to dramatically ramp up the grants to address the fact that 760,000 of the people in this country - one in six - live in poverty. How the hell are they supposed to retrofit their homes to insulate them, which would be of benefit to them? They would not be against the idea. They would be very much in favour of it because it would reduce their energy bills and would make their homes warmer. However, they are not being given the resources to do it. Now we will punish them for that fact with a carbon tax. We will punish them for that fact by taking public service obligation bus routes out of their areas in many cases with the BusConnects plans, by the reduction in subsidies, for example the public service obligation subsidies, to Dublin Bus from €87 million a decade ago to €50 million, and by us having fewer buses in the Dublin Bus fleet than we had ten years ago. Already, people who depend on public transport who do not use private cars will now be doubly punished. They have already got poorer public transport service and now they will be punished again with a carbon tax and possibly with higher fares. Public transport fares in this country are some of the highest in Europe and they have gone up by 80% in the past ten years. We continue to allow bus fares to go up when we should be reducing or abolishing fares and increasing the subsidies. There are many more areas I could go into.

For rural Ireland, what is necessary is to give a sustainable living and payments to our farmers to enable them to move to forms of agriculture that are sustainable and do not emit so much CO2. Our rural colleagues are correct to be concerned about these matters because they have to be guaranteed investment and schemes that will make it possible, and not be punished for making a necessary transition.

Pat Gallagher (Donegal, Fianna Fail)
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I remind the House that we are not on Second Stage. We are talking about producing a report.

Brendan Ryan (Dublin Fingal, Labour)
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The amendment seeks a report on the carbon tax, but I will approach it from a different perspective. My party supports carbon tax changes generally. In fact, we might have gone a little higher. The matter I wish to raise, and this appears to be the appropriate time to raise it, relates to how carbon tax is being applied, particularly by utility companies. My question is whether it is being applied correctly and, if so, how that can be the case. To give an example, I have some figures from a gas bill from a utility gas provider. The total gas charge is €75.03. The standing charge is €14.18. Carbon tax is €5.17 based on an application figure of 0.00370 kWh. That brings the total to €94.38. This customer gets a discount of €3.75 because of a direct debit. The total is then €90.63. VAT is applied on the total figure. We are applying VAT on a tax. How can that be? Is this the way it should be applied? Perhaps it is an error on the part of this utility company but, if not, it is applied across the board by other utility companies. I probably should have seen it in my utility bills, but I did not. It was brought to my attention by a constituent. This matter is becoming more important as the carbon tax increases over time. It is grossly unacceptable that there should be a tax on a tax. I will be interested in the Minister's response on this.

Paschal Donohoe (Dublin Central, Fine Gael)
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I will comment on each of the contributions. Deputy Boyd Barrett knows that I have great respect for the different points he makes and the views he brings to Dáil Éireann but this will be one of my contributions in which the differences between us are more apparent than what we have in common. I continue to be reminded of the near uniqueness of the Irish left. On the one hand, it warns Governments of their over-reliance on corporation tax yet, on the other, it fiercely resists any efforts that are made to widen the tax base to use increased taxes to pay for better public services. Deputy Boyd Barrett is against the local property tax, water charges, carbon taxation and the different forms of taxes that have either been introduced or that we attempted to introduce in order to try to raise revenue to pay for the public services he wants more of. When he responds to me he will likely argue that the wealthy should pay more, but he will not give any credence or recognition to the fact that we have such a progressive income tax system that the more income people have, the more taxes they pay. If he does not make that argument, he will argue that large companies should pay more. If he makes that point, he should also be cognisant of the fact that large companies in Ireland have paid significantly more in terms of the corporation tax receipts in recent years.

I ask Deputy Boyd Barrett to name any credible expert who is arguing that we can respond to the approaching climate change crisis without changing the price of carbon. His commitment to tackling climate change is hollow when he does not acknowledge that if we are not willing to change the price of carbon, we are not going to change the incentives around it. The honesty and commitment the Deputy has in other areas of endeavour are lessened if he is not willing to acknowledge that if we are asking people to use less carbon, there is a case to be made for the price of that carbon going up. That is the argument here. If we want less carbon to be used, a case can be made for changing and increasing the price of carbon as the way of doing that and for the additional revenue from the higher price of carbon to be used for reinvestment in our economy. That is what this Bill seeks to do.

Regarding the arguments made by Deputy Fitzmaurice, I understand the effect of carbon pricing for families that do not have access to the forms of public transport that are available in our large cities. However, this is an argument about taxation. Deputy Fitzmaurice is aware of the income reliefs that are already in place for carbon taxation in the agriculture sector. The double tax relief is available for the agriculture sector to offer mitigation against the effects he mentioned of higher carbon pricing. There is a wide array of tax reliefs and supports available through the tax code to offer support for the families the Deputy spoke about. The Deputy might make the point that it does not affect those who are involved in farming who are not getting enough income to be entitled to the relief. One of the reasons they are not paying tax is that the thresholds on income are set at a particular level. If one is a farmer or a worker in other parts of our economy, we want to set the threshold at a particular level to ensure that if the person's income does not cross that threshold, he or she will keep that income. That is in recognition of the fact that up to a certain level of income the person is not earning enough to be paying higher rates of tax. The reason we have these thresholds in place is to protect low income farmers and workers and to ensure they are only paying tax on higher levels of income. However, I again emphasise that there is an array of reliefs across the tax code because of the value that is placed on the contribution that farming makes to our economy and society.

What Deputy Brendan Ryan described is correct. The VAT is levied on the total bill and part of that bill includes the carbon tax. He is also correct that over time as the bill goes up and if a contributor to the bill is a higher level of carbon pricing, the VAT will be charged on the total amount. What he read to the House is correct. I welcome the fact that the Labour Party supports higher levels of carbon pricing. Its view is that we should have made a larger move in carbon pricing in this budget. It was arguing for a multiple of the move we made, but it is in recognition of the issues raised by Deputy Fitzmaurice that I believe a larger change in carbon pricing in this budget would not have been appropriate.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I assure the Minister that I am very sincere about addressing climate change. Our policy is very detailed. We have just produced an extensive document on it and our budget submission, which we produce every year, also shows precisely how we will pay for it in a whole range of areas. I will not deal with them all now, but it includes aviation fuel charges, for example. That would raise a lot of money from the people who actually make profit from polluting. That is the difference. What about the big agrifood barons who are making profit out of one of the big polluting areas, not the small beef farmer who is struggling to survive? Do not punish him or her, punish the guys who are declaring their profits in Luxembourg and who are making a fortune out of this sector and who then use the money raised to ensure a just transition for the small farmer.

I must question the Government's bona fideson this. In the first instance, it is not addressing the main problem, namely, that putting a price on pollution has failed. We have been doing it for several decades with carbon trading and with carbon taxes and it has not worked. I defy anyone to show me any evidence that would allow us to meet the targets in the eleven years available to us. We need much more radical actions. That means focusing on the main areas. In the context of energy, the Government should stop issuing fossil fuel licences now. Do not lock us into liquid natural gas infrastructure that will lock us into fossil fuel use for decades.

Housing is another big sector. We need to retrofit approximately 120,000 homes a year every year for 20 years, which means the State is going to have to do it. No one else can afford the cost, it must be done by the State. Transport must be made cheaper and the subsidies have to increase. People will not get out of cars unless the Government provides better public transport. During my time in this House, more than anyone else I have raised the issue of afforestation. Since the first year I arrived here, I have spoken of the need to increase the pathetic levels of forest cover in this country. Our targets are pathetic but our delivery is about 50% of those targets. That has been consistent since I entered the Dáil. Furthermore, the forestry we do plant is often worse for the environment than no forestry at all. We need to dramatically change the forestry model, increase the level of planting and invest in renewable energy and in research and development around producing renewable energy sources. That means funding our universities which we are not doing either.

Brendan Ryan (Dublin Fingal, Labour)
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I return briefly to the Minister's response to my points. He made no attempt to justify it other than to say that is the way it is. I cannot understand how it is justifiable. How can one tax a tax? Will he at least try to justify it? If one is to tax a tax and describe that as value added, I ask where is the value added to a tax?

Paschal Donohoe (Dublin Central, Fine Gael)
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I will come back to the Deputy with a note on that. VAT does apply to the value of the total bill.

On Deputy Boyd Barrett's remarks, the reason we are continuing with liquid natural gas for a time is because it is a transitional fuel that we believe is necessary to ensure we are able to meet the State's energy needs. In order to proceed with an ambitious retrofitting programme for local authority housing stock, we need levels of taxation that can be used to pay for that. One of the three pillars for how the additional tax revenue for the higher carbon pricing will be used is paying for the retrofitting of homes, and particularly local authority housing, and also to ensure that the relevant grant scheme needed from Sustainable Energy Ireland has additional revenue going into it.

On public transport, the Government recently decided to go ahead with the order for additional train carriages to ensure that the rail network will be able to increase its capacity in the future. There are longer Luas carriages in place to ensure the additional public transport capacity that is needed is in place as Dublin becomes increasingly busier. However, I return to the core point which is the fundamental area of difference between myself and Deputy Boyd Barrett. I acknowledge that increasing carbon pricing does have significant and difficult effects for some of our citizens but that is why we have increased the energy allowance and is also the reason why many on low incomes who are in receipt of social welfare payments will be protected from the effects of this change in carbon pricing.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I do not see how the Minister can say that they will be protected when they clearly are not protected as it stands and I cannot see any measures here to protect the 400,000 households living in fuel poverty. Many or most of them cannot afford to do the retrofit they would like to do, which would improve their quality of life. They just cannot afford it and in some cases they would not be allowed to do it by their landlord, private or public. How can the Minister say it is fair to impose additional costs on people already suffering fuel poverty? I cannot see how he can possibly justify it. Nor do I see how the Minister can justify allowing bus and train fares to go up and the subsidies to public transport to go down. I do not see how he can justify that and say that the Government is serious about climate change.

On gas as a transitional fuel, in the past week the European Investment Bank has made a decision that, as of 2021, it will not lend any more money for fossil fuel projects. That includes gas. The gas industry is going ballistic about that because it was looking for special exceptions for gas on the basis that it is a transitional fuel but the European Investment Bank said no to that. As a result, fossil fuel lending will come to an end as of 2021. We, on the other hand, have put into the European Union as a priority project of common interest a liquid natural gas infrastructure to import fracked gas from the United States that will lock us into importing one of the most toxic CO2 emitting forms of fossil fuel for decades, long after we are supposed to have reached carbon neutrality and long after the environment needs us to reach carbon neutrality. The Government needs to take a long hard look at whether its policies are serious in addressing this emergency.

Pat Gallagher (Donegal, Fianna Fail)
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The amendment concerns the purchase of diesel being a claimable expense for a haulier.

Mattie McGrath (Tipperary, Independent)
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I am well aware of that and my name is on the amendment. The haulage industry is so vital that one of the Fine Gael candidates in Wexford is part of it. The party must be getting around to understanding how vital it is. As Deputy Fitzmaurice has said, we have so little rail, canal or other type of transport, the road haulage industry is vital to our survival in terms of both imports and exports. Very little of our farm produce goes by air and any other goods we export internationally go via a haulier.

I salute the hauliers. Many of them started very small but now have gone to five or ten trucks and some have dozens or more. They have gone through hell in the past number of years because of many issues. The Government has done nothing about insurance and although a diesel rebate scheme was introduced, it is difficult to reclaim any money. Why will the Government not do anything tangible? Goodness knows diesel is dear as it is for a car or a van, never mind the big trucks where it might cost €600, €700, €800 or perhaps €1,000 to fill them. This rebate scheme is not doing what it says on the tin. The hauliers will have an annual night of lobbying here next week or the week after and they come every year. We know the issues and the Government must know them as well. The Ministers of State, Deputies Moran and D'Arcy, should certainly know as they are from rural Ireland, where many of the haulage companies are based. There are some in Dublin as well. These companies are struggling.

The Road Safety Authority, RSA, is certainly needed but there are certain roads, including one in Deputy O'Keeffe's native county from Mitchelstown to Mallow, where lorries are being checked regularly by the authority. There are bushes hanging over roads and road inclines that do some shocking damage to those trucks but the RSA personnel are waiting at the other end to penalise the hauliers. The hauliers must operate to a very high standard now and it is right that trucks and trailers have tachographs and are tested twice a year. One journey on a road and the equipment, including suspension and mirrors, can be knocked out of kilter. It can cost up to €500 for a mirror. These hauliers need support with tangible measures. They do not need to be victimised and the RSA must understand that the laden weight on axles and their calibration can easily be shifted or distorted. I understand a bit of this. If a lorry comes upon a joint checkpoint with the traffic corps and RSA, the calibration could be out when it is checked. The trucks might then be brought to a weighing station that could be a large distance away. The drivers would get penalty points if there are issues. We should be fair to the people who have their trucks tested. Motorways are fine, thank God, but we do not have a great road network. The Acting Chairman will know this is the case in parts of Galway and around the country. The Irish Road Haulage Association has produced many videos demonstrating how drivers must keep to the middle of the road to avoid overhanging trees or otherwise they break the mirrors.

The rebate scheme introduced two years ago is not easy to navigate. That is what hauliers have told me. I am an agricultural contractor, not a road haulier, but I certainly understand the issues and we have no rebate scheme. One might say a bird in the hand is worth two in the bush.

Kevin Moran (Longford-Westmeath, Independent)
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How many bushes?

Mattie McGrath (Tipperary, Independent)
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There are many bushes. That is the problem. The Minister, Deputy Madigan, will not allow us to cut bushes. We debated that for two years but we finally passed legislation allowing people to cut bushes under supervision in March and August. The Minister just drove a coach and four through it. The Minister of State, Deputy Moran, knows hauliers and can speak to them. The truck mirrors are being broken. These people are doing their best but there are onerous restrictions with respect to tachographs, insurance and driver issues. I salute the drivers but we must consider what they face in Calais. We are talking about migrants and stowaways and these people are trying to protect their trucks. These are innocent or unsuspecting drivers and there are all kinds of sophisticated methods to get access into a truck with a sealed container by cutting off the hinges. As the hauliers must live with this as well, they need some tangible support.

The industry is vital to our economy. The Minister of State might laugh if he likes about the bushes but this industry provides massive employment and a dedicated service to rural Ireland. The bulk tankers go in and out boreens to collect milk and that is much more difficult to transport because it moves and sways. The drivers must be very careful and respectful. The RSA must be pulled back and the benefit of the doubt given to drivers. I am sure Deputy O'Keeffe agrees that the road I mentioned is desperate and needs improvement. When drivers travel that road, the RSA is waiting at the other end. The trucks might have been perfect before hitting that stretch of road. There are many other stretches of road like that but I have been lobbied about this by a big haulage company from Cahir. When the lorries are pulled in, people in white overalls lie under the trucks with equipment to check the calibration. That is grossly unfair. These are decent people providing much employment and ensuring that our imports and exports in particular get to ports on time. They ensure the products get to their destinations on time. We know many of those products have a limited shelf life. The hauliers must be supported.

This scheme is too cumbersome. Why is there a rebate rather than something across the board? Diesel prices have increased enormously in the past year. Why not give these people something up-front rather than having them paying now before getting something back a couple of months from now? I know how difficult it is to get rebates. This is not working and I appeal to the Minister, on my behalf and that of Deputy Fitzmaurice, to show some solidarity with hauliers. They are worried about Brexit and everything else.

Fine Gael has an election candidate in Wexford who is a good friend of mine, Ms Verona Murphy, so the party should show her that it means business and will not silence her on any issues. It should support her and ní neart go chur le chéile. She is a good lady who understands the pressures of the haulage industry intimately. One would think I am canvassing for her.

Kevin Moran (Longford-Westmeath, Independent)
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Fair play to Deputy McGrath for canvassing for her.

Mattie McGrath (Tipperary, Independent)
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Fair is fair. I praise the bridges I go over. She knows her stuff and she is very capable.

Kevin Moran (Longford-Westmeath, Independent)
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I did not know we were having a discussion on the by-elections.

Paschal Donohoe (Dublin Central, Fine Gael)
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I thank the Deputies for their contributions. Deputy Fitzmaurice has already gone through these issues and I will not repeat the views we exchanged earlier. I take a different view to the Deputy on the matters he is referring to but I respect all he knows about these issues and the way he is putting them forward. I do not believe Deputy McGrath understands the haulage sector at all and he has no knowledge of it. He admitted he was not a haulier and although I am not one either, I have had significant engagement with the haulage sector. The support through the rebate scheme and the different changes we have made are appreciated or understood by the sector. They have made a very big difference to the various issues they have put to us over recent years.

I support road safety and the Road Safety Authority. The work it does is very valuable in keeping our roads safe, as well those who drive our trucks and other road users.

The Deputy does not appear to place such a value on those matters but I do. The type of work that is happening and that the Road Safety Authority is doing is critical in ensuring road users, including those who drive trucks, are kept safe.

The diesel rebate scheme was put in place to recognise the importance of the haulage sector to our economy. When this Finance Bill brought in a different level of carbon pricing, we made the changes that were needed in the diesel rebate scheme to ensure the haulage sector would receive a degree of enhanced protection from the higher level of carbon pricing precisely because I recognise the important role that sector plays in transporting goods around our country and the critical role it plays in our export sector.

I understand the sector but Deputy Mattie McGrath does not. We have put in place significant supports for the sector that are understood, appreciated and recognised by it. I will continue that approach but I must get the balance right between ensuring that incentives are in place for those road users who use diesel to make us more energy efficient and to make the types of changes needed over time and having in place the type of support the haulage sector needs, which is what the Government and I have done.

Michael McGrath (Cork South Central, Fianna Fail)
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As amendments Nos. 19 to 21, inclusive, are being discussed together, may I speak to amendments Nos. 20 and 21, which are in my name?

Catherine Connolly (Galway West, Independent)
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Yes. Amendments Nos. 19 to 21, inclusive, are being discussed together.

Michael McGrath (Cork South Central, Fianna Fail)
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I heard most of the Minister’s response. We discussed these issues on Committee Stage. These amendments relate to both the diesel rebate scheme and the call for a similar scheme for agricultural contractors. Regarding the diesel rebate scheme, I understand the objective of what was provided for in the budget and set out in the Finance Bill was to provide some additional relief to the haulage industry, taking account of the increased burden of the carbon tax. However, there are concerns within the industry that it will not meet that objective and that it will not provide further relief. As the Minister will know, the request that was made, which we discussed earlier in the process, was that the threshold be reduced to €1, above which the rebate would kick in and that the rebate would be increased to over 9 cent. I am interested to know whether the Department has done an assessment of what has been proposed. Is the Minister satisfied it will provide extra relief? Those who operate this scheme and who have benefited from it so far have raised serious questions about that. It is a technical calculation in the way that it depends on the price of fuel and so on.

Amendment No. 21 pertains to the request for a similar rebate scheme for agricultural contractors. The point that can be made, which we discussed on Committee Stage, is that the most efficient way for many farmers to carry out many of the high-volume usage of marked gas oil tasks is through agricultural contractors who have the best and most efficient machinery. They are able to make the necessary investment to stay up to date with the most environmentally friendly and the most operationally efficient equipment but there is not a similar rebate scheme for them. If they have to pay additional carbon tax, then, as night follows day, that will be passed on to the farmer and it will increase the cost of the various services provided by those contractors for the farmers. That is the concern. The argument being made is that the same issues and principles apply for those contractors as apply for the haulage industry. If the Minister is not prepared to move on it in this Finance Bill, it is an issue he should examine and perhaps commit to preparing a paper or report to examine the feasibility of introducing such a scheme for contractors working in this space.

Kevin O'Keeffe (Cork East, Fianna Fail)
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I would like to lend my voice to that of previous speakers in support of amendments Nos. 19 and 20 on the issues concerning road hauliers. We must acknowledge they are engaged in a competitive business. I know that from what happens in my own backyard. With the co-operatives tendering for routes for lorries to collect milk and the cut in prices, I do not know how some of them keep going. Deputy Mattie McGrath was right in what he said. They have extraordinary costs and due to the state of our road infrastructure, hauliers return to their depots day in, day out with broken mirrors and so on. They cannot claim for those costs and must carry them.

Amendment No. 21 was tabled by my party colleague, Deputy Michael McGrath, and I thank him for that. Agricultural contractors could be compared to the meat in a sandwich, in that they are not eligible for a carbon tax write-off even though all the work activities are for farmers. The contractors' association requested that agriculture, farm and forestry contractors who are registered with the Revenue Commissioners and employ a minimum of four full-time machine operators should be allowed a similar annual carbon tax deduction against business profits. In other words, having regard to the previous amendments, agricultural contractors should be treated the same as ordinary farmers in terms of the use of diesel. We much remember that with the change in farming methods, increasingly more farmers depend on contractors to do their work. Farms are becoming bigger and more intensive and the margins are very tight. The cost of carrying machinery on a farm is astronomical. Like any business, farmers subcontract. Some of the major co-operatives at one time owned their milk lorries. Farmers have contracted their work to agricultural contractors. Contractors are subject to the provisions of the Road Traffic Acts in the same way as other vehicle users or lorry drivers. They have to comply with stringent standards for road safety purposes. More importantly, their staff are well trained in health and safety in the operation of farm activities. When we hear of farm fatalities, it mostly involves farmers who were doing work in their farmyard which perhaps contractors could have been doing. We should be encouraging contractors to be more competitive to do this work for farmers, as it is becoming a problem.

In terms of climate change, I noted the document entitled 'Ag-Climatise' - A Draft National Climate & Air Roadmap for the Agricultural Sector to 2030 and Beyond. It refers to changing farming practices and what will be required down the road. It will mean more carbon-neutral management of the land and more control in the spreading of slurry and reseeding. That will involve massive intensification of work for farmers in reseeding and doing all that work. They need to get contractors on site but at a reasonable cost. That is why we are seeking this reduction. A question was asked about this area in Seanad today. The Minister of State, Deputy D'Arcy will be aware of the low emissions slurry spreading regulations and that 12 months ago, there was a requirement to have new slurry equipment for the correct spreading of slurry. Contractors had to buy this equipment. The farmer could buy the equipment and apply for a targeted agricultural modernisation scheme, TAMS, grant and be up and running and have a tank that he used a few days a week in a year, while contractors who follow health and safety regulations and buy the machinery are not given any relief. I ask that some consideration be given to provide rebates for agricultural contractors. They are in the middle, as it were, between the lorry driver and the farmer who uses a tractor and they do not seem to be given any consideration. Whatever about climate change, they do not have alternatives in terms of fuels they can use to reduce their carbon emissions.

They will still have to rely on diesel products until new innovations come on stream. I ask the Minister to reconsider his position on this tax on contractors.

Paschal Donohoe (Dublin Central, Fine Gael)
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I thank the Deputy for the points he has made. Much of this has focused on where we are in respect of the agricultural contractor. The Deputies will be aware such contractors are excluded from this particular scheme because reliefs under section 664A of the Taxes Consolidation Act 1997 require a person to occupy farmland, which agricultural contractors do not. That is why they are not entitled to this particular relief. I accept the point made by Deputy Mattie McGrath. As we look at the future position in respect of carbon pricing, which will increase over time, we should assess this issue in the context of next year's budget and the preparatory work for next year's finance Bill. The reason contractors cannot avail of this particular relief is that their occupation is not included in the definition of "farming".

With regard to the point in respect of the rebate scheme, I supplied to the committee a note that explains how the scheme protects those involved in haulage from most of the effects of the change in carbon pricing. There have been many cases made to broaden or review the relief scheme we have in place. I do not believe we should do that. The rebate scheme currently in place is proportionate. The change in the pricing of carbon is being used as a lever to broaden the rebate scheme beyond its current design. I do not believe that is appropriate. The scheme in place is proportionate.

As I have said, the Department can have a look at the role of agricultural contractors and whether any changes need to be made in that regard in the run-up to next year's finance Bill. I do not believe they are merited in this Bill or in this year's budget but I am sure it will need to be assessed as the price of carbon increases over time.

Mattie McGrath (Tipperary, Independent)
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I resent the Minister's tone, attitude and patronising statement suggesting that I do not understand the haulage industry. I have worked in it. I have loaded lorries and been a passenger in lorries, although I have never driven them. I have repaired lorries. I understand the axles, the calibration and the suspensions now used. How dare the Minister make such a statement? He has probably never been in a haulier's yard in his life, let alone in a truck. He should take a spin in a truck along the road from Mallow to Mitchelstown to see for himself. It just goes to show the Dublin-centric carry-on of the Minister.

I am a member of Farm Contractors Ireland, FCI. I am a contractor and I declare that here and now. I know plenty about them. Deputy O'Keeffe mentioned the fatalities. Farmers are under pressure. They are getting grants for bigger slurry tanks while the contractor cannot. The Government is encouraging dangerous practices. No one has the tractors to run them. The FCI maintains a high standard. It continuously educates its members. It requires proper brakes, proper tyres and safety measures.

I will take no lecture from the Minister or his cabal in this Dublin-centric Cabinet that knows nothing about rural Ireland. Deputy Danny Healy-Rae asked the Minister to leave it alone, and he should. I am in favour of road safety. I have no issue with road safety. I was referring to cases where a lorry, which was tested and found to be in perfect condition, enters a bad stretch of road and leaves out of calibration. It is like shooting fish in a barrel. That is what I totally resent. I support the drivers and the hauliers. I know plenty about lorries.

Was the Minister ever in a cattle truck? Was he ever in Mullinahone? He was not. A man who has never been to Mullinahone has never travelled at all. He probably has not been outside the Pale. I had enough of his arrogance when I saw him fire out the 300 pages of the programme for Government and ask that people read it in an hour. He is getting away with it but there are people waiting in the long grass for him including the contractors, the farmers including those who have experience of fatalities, and many other people. How dare the Minister suggest what he suggested? I know plenty about road haulage. I support the hauliers and they know that I do. They know that the Minister knows sweet ... I could say another word but I will not. I was not going to say the F-word but I could because it applies to most things about the Ministers, Deputies Murphy and Harris, and the Taoiseach. They know nothing about rural Ireland and care about it even less. The Minister for Finance adopted a patronising attitude to tell me that I am not in favour of road safety and that I know nothing about the Irish Road Haulage Association. How dare he?

Kevin O'Keeffe (Cork East, Fianna Fail)
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I acknowledge the Minister's response. He referred to a 1997 Act. I am sure we could get that amended or introduce changes to the definition of agricultural contractors' activities. Would he be in favour of that? Can that be done? Farmers in many sectors are under fierce pressure. The overheads for beef and tillage farmers are colossal. The changes in the Bill will come at a phenomenal cost to many farmers in the coming 12 months. Contractors will have to increase their charges by 5% at a minimum. Some are in debt because they have already agreed credit terms with farmers. This only makes the situation worse. I ask the Minister to reconsider.

Paschal Donohoe (Dublin Central, Fine Gael)
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I will respond to those who engaged in constructive discussion, namely Deputies O'Keeffe and Fitzmaurice. Alas, Deputy Mattie McGrath is not here to be excluded from that definition. Deputy Fitzmaurice makes a fair point. I am not at all blind to the point he is making. I accept that much work on farms is not carried out by individuals who fall inside the definition of "farmer" used in the tax code. This has not been an issue in the past but will be in the future as the price of carbon increases. I respect the Deputy's opposition to carbon pricing. As the Department of Finance prepares for next year's budget and finance Bill, we will have to take a look at the definition of "contracting" and see if a register can be compiled or work carried out to better understand who is involved in this work. We do have a rebate scheme in place to recognise the effect of carbon pricing on those who are involved in haulage. We will have to assess whether other changes need to be made as the price of carbon increases.

Deputy O'Keeffe asked whether this change can be made in this year's Finance Bill. The truthful answer is that it cannot but, as I said to Deputy Fitzmaurice a moment ago, we will consider this matter as we get ready for next year's work and as we see the price of carbon increase, which I believe it will.

Michael McGrath (Cork South Central, Fianna Fail)
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8 o’clock

I move amendment No. 22:

In page 103, between lines 34 and 35, to insert the following:

“Report on betting duty relief 47. The Minister shall, within 3 months of the passing of this Act, prepare and lay before the Oireachtas a report on the betting duty relief and its impact on the bookmaking industry.”.

The amendment relates to the changes to betting duty relief as introduced in the budget and in this Bill. It is important to recap on the background to this. One year ago, the betting duty doubled from 1% to 2%, which had an impact. Has the Department carried out an assessment on the impact on the independent bookmaker sector in respect of the numbers of outlet that have closed and the number of jobs that have been lost?

The Minister offers de minimisrelief in this legislation. He undertook, as he committed to do last year, a review in the tax strategy group papers of the betting tax duty and of the proposals made by the sector for a gross profits tax. The group reached the conclusion that it was not possible to introduce the tax the sector had proposed, and that it was not possible to differentiate between profits achieved as a result of online betting and profits achieved in the outlets. That proposal was deemed not to be possible. De minimisrelief was outlined, and what the Minister has brought forward in the legislation is a variation of that. It is provided for in section 46. Will the Minister indicate whether the likely impact of this has been assessed? Will it save jobs in the sector? Will it stem the tide of closures of small, independent bookmaker outlets? The maximum relief is €50,000. Even if a firm has two, three, four or five outlets, it is limited to a once-off relief of €50,000. Will the Minister confirm whether this proposal has cleared the hurdle of state aid approval? De minimisrelief was outlined in the tax strategy group papers, and he had indicated that it would get through. Will he confirm that what is proposed in the Bill has been approved and will come into effect on 1 January 2020?

Kevin O'Keeffe (Cork East, Fianna Fail)
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I support my colleague. It is 12 months since we initiated this tax increase. As the Department will be aware, bookmakers are closing office in small towns and so on in rural Ireland. It is hard enough to lose post offices and other facilities in our towns and villages but it is also hard when one sees towns being hit with the closure of other businesses and premises. These businesses create employment and it has a knock-on effect for the other establishments. As Deputy McGrath said, we need a review of this tax. The Minister has initiated a procedure with the €50,000 cap, but nowadays one must ask how many bets that would take? It does not do any good for the larger outlets who have shops in our towns and major villages. Perhaps the €50,000 cap could take into account that some businesses operate across different units. This is the only way we can keep the bookmakers' shops open.

Paschal Donohoe (Dublin Central, Fine Gael)
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I appreciate the issues raised by the Deputies. The first issue is the impact that the increase in betting duty had on the sector over the year. It is difficult for us to assess what the effect is of the change in betting duty in isolation, given all the other factors that affect smaller and independent bookmakers currently. The move to betting via mobile devices and phones has been a big factor in the consolidation that is happening in the betting sector. It is tough to be able to provide an exact impact on the betting sector of last year's budget move.

I will give two sets of figures for bookmakers and the number of registered premises. In November 2018, there were 277 bookmakers and 847 registered premises. In October 2019, there were 280 bookmakers and 863 registered premises. Those figures do not indicate that there has been significant contraction in the numbers of bookmakers or registered premises. Within that figure consolidation could have occurred. Smaller independent bookmakers might have moved into groups of larger owners but, on the face of it, the figures indicate that the numbers of bookmakers and licensed premises are broadly stable, which is different from the expectations that were created when we brought in the duty increase in last year's budget.

Deputy McGrath asked specifically if the relief would need further consent from the European Commission. This must conform to the Commission regulation on de minimis aid. This is why some time is being made available. The measure is subject to commencement to allow the Revenue Commissioners to put in place the administrative measures that will be needed. While I want to respect the independence of the European Commission, I am confident that this measure will comply with the different arrangements we will be required to have in place.

Michael McGrath (Cork South Central, Fianna Fail)
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A number of factors at play here. There are different moving parts. There is no doubt that the move to online betting is pretty incessant. The high street outlets are more labour intensive and more employment rich than online betting. The relief provided here by the Minister will be of benefit to small independent bookmakers who might have one or two shops. Because the relief is capped at €50,000, it will be of limited value to the more mid-range bookmakers.

The Minister quoted overall numbers as evidence that there has not been a significant number of closures. It could well be the case that there is a time lag involved. On the basis of the feedback I have received, many of the smaller bookmakers are hanging on. They are certainly suffering from behavioural change and the move online. The fixed costs for the outlets are of a different nature. Albeit a limited relief, it is important that it is put into effect as quickly as possible. I understood from reading the tax strategy group papers that the relief as set out, which I believe was a maximum of €66,000, was pretty much approved by the European Commission. I assume, as the Minister has indicated, that approval from the Commission for this relief, which is capped at €50,000, should not be problematic. It is, however, important that the relief comes into effect as quickly as possible.

Kevin O'Keeffe (Cork East, Fianna Fail)
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With regard to the closure of bookmakers and not seeing an immediate effect, the Minister will be aware that when a business is going down, it does not just shut overnight. It tries to pull through the storm and perhaps can leave it too late to close down and end up in a worse position. Hopefully, that is not happening.

Mention has been made here about behavioural change, behavioural attitudes and rural Ireland. We have gone through serious issues with the recent Road Traffic Act whereby we have seen pubs closing down and now there are very few pubs open during the day in many towns and villages. People have turned towards their local bookmaker's office to sit down and watch the racing or to have a chat with their friends and so on. I have come across this. I have seen people who I believed had no interest in horses using the bookmaker's office as a place of communication. More important, I would rather see people betting in the bookies than going home to the armchair, having a few bottles and betting online. It is unknown what is happening behind closed doors in many houses because of the change in attitude towards rural Ireland and how we acknowledge its traditions. Will the Minister conduct the review?

Paschal Donohoe (Dublin Central, Fine Gael)
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Yes, we are going to try to implement this measure as soon as possible. We are confident we will be able to do it. I take the point made by Deputy O'Keeffe. I know that bookies are also places to socialise. I agree with the Deputy and I would prefer to see bets being placed in an atmosphere in which they can be better regulated and it is just simply the case this can be done if there is a person at the counter as opposed to by use of a phone.

I also take the point that there is sometimes a lag between a change in taxation and the effect it has on the number of people within a sector. That is a fair point but I still make the point, and I think it is worth recognition in the debate, that the number of bookmakers is pretty stable versus where we were this time a year ago, as is the number of registered premises. Perhaps this shows the ability of the sector to respond to a change in tax.

I reiterate what I said a year ago, that a 1% betting duty was too low a level of tax for any sector to pay. The change that we are making is needed. All parts of our economy must make a contribution to the public services that are very important to our country and a 1% levy was too low and needed to increase. I am introducing a very targeted change for independent and, likely, very small bookmakers. I believe it will have an effect. I notice some are already complaining that it could allow small bookmakers to become too competitive. This shows it is a targeted measure that I hope will have an effect on very small operators.

Catherine Connolly (Galway West, Independent)
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Amendment No. 23 has been ruled out of order.

Catherine Connolly (Galway West, Independent)
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Amendments Nos. 24 and 25 arise out of committee proceedings. They are related and will be taken together.

Michael McGrath (Cork South Central, Fianna Fail)
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I move amendment No. 24:

In page 106, line 16, after "where" to insert ", on or after 1 February 2020,".

We had a good discussion on this issue on Committee Stage. It relates to the extension of VRT relief on certain hybrid vehicles in 2020. This has been restricted from the level of relief available hitherto. The Minister is not moving to the full worldwide harmonised light vehicle testing procedure, WLTP, system until 2021, and this is the right decision under the circumstances because it could have had quite a significant effect on the motor industry if the Minister had done so in one fell swoop in 2020.

The central point I made on Committee Stage was that restricting the VRT relief on hybrids will have the effect of making certain hybrid vehicles more expensive relative to diesel vehicles for one year only. What the Minister could actually see in practice is an increase in the sale of diesel vehicles in 2020 which, I am sure, is not what the Minister has intended. This would be because of the threshold he has set for vehicles to qualify for the extension of the relief in 2020. From looking at the data I have been able to see that hybrid vehicles are still far more environmentally friendly than the vast majority of diesel and petrol vehicles. For many people, hybrid vehicles are a stepping stone to full electric vehicles but I understand that in 2020 the majority of hybrid vehicles will be more expensive because the relief will have been removed from them. The purpose of the amendments I tabled on Committee Stage and these amendments was to allow at least the vehicles that have been ordered to wash through the system in the early part of the year. I am flagging and forewarning the Minister that the effect of what has been done could well be that sales of more environmentally damaging vehicles could increase in 2020 vis-à-vishybrids which, in the round, are less damaging.

Paschal Donohoe (Dublin Central, Fine Gael)
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Deputy McGrath raised this issue on Committee Stage. The proposed change to the WLTP was something with which elements in the motor industry had many concerns, particularly if it was going to be combined with the changes we are now making in carbon pricing. It is fair to say there is a possibility of a mismatch for a period of time but, of course, for diesel vehicles people will also pay the higher level of carbon price with regard to the diesel to be purchased for those vehicles.

With regard to why I will not accept the amendment, and I appreciate why the Deputy has tabled it, the key reason is this change was so well flagged. Anybody who had followed the debates that took place, in particular on Committee Stage on the previous Finance Bill, would have been aware this change was coming. Last year, I indicated I would give very serious consideration to this change. They were due to expire and we had much debate regarding the changes that were due to take place at that point. The tax strategy group paper after that debate set out very clearly the environmental rationale as to why a further extension was not merited. If I were to defer this change to 1 February it would ensure that one third of new cars sold in a particular year were not covered by the change. In good conscience that could not be a change we make. I accept the point made by Deputy McGrath but in light of how well flagged and ventilated the debate on this issue was, I ask the Deputy to consider withdrawing it.

Michael McGrath (Cork South Central, Fianna Fail)
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It was well flagged but it was well flagged that it would happen in tandem with full implementation of WLTP and that that would happen at the same time. It was widely understood that there would be a full step change to WLTP in 2020 that would coincide with the removal of VRT relief on hybrids. In that context the hybrid vehicles would live or die by virtue of the emissions measures and they would be relatively better than petrol or diesel vehicles. It was all meant to happen together and being well flagged was in this context, whereas the WLTP has been pushed out for a year, and for one year only we have the partial restriction of this relief. It could create an anomaly throughout 2020. We will just have to see how it plays out. The wider point I make is the work done by the tax strategy group on this issue was helpful and it should update the assessment in 2020 because decisions will have to be made in 2021 to put into effect in full the move to the new emissions system. I expect the tax strategy group will revisit the issue in the summer of 2020.

Paschal Donohoe (Dublin Central, Fine Gael)
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I thank the Deputy for his constructive approach to this. There will be significant changes in very important areas in motor taxation. The WLTP system in particular and the need to implement it in Ireland is a very important and complex move. There are other moves with regard to car taxation that I believe will need to be made. The tax strategy group papers will provide a very valuable way in which those who work in the motor industry and those planning to purchase cars will gain a very clear sense about the type of changes coming. I look forward to seeing those changes happen. Beginning the journey with higher levels of carbon pricing and making a group of other changes in the taxation of vehicles would have been a complex debate to win but with the tax strategy group process approaching for next year it will provide a clear way to signpost the type of change that is approaching.

Michael McGrath (Cork South Central, Fianna Fail)
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I move amendment No. 25:

In page 106, line 36, after "where" to insert ", on or after 1 February 2020,".

Michael McGrath (Cork South Central, Fianna Fail)
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I move amendment No. 26:

In page 108, between lines 30 and 31, to insert the following: “Report on VAT on food supplements

55. The Minister shall, within 3 months of the passing of this Act, prepare and lay before the Oireachtas a report on the treatment of food supplements in terms of VAT and whether they can be zero rated.”.

We went through this issue in some detail on Second and Committee Stages. The Government has made the decision that food supplements will be subject to VAT at the rate of 13.5%. My understanding, which is worth putting on the record, is that the key reason for the Government saying that it cannot zero rate food supplements is that, under the transposition of the EU VAT directive, the legislative provision for food and drink that was in place on 1 January 1991 made no provision for food supplement products. The Government's view is that, therefore, it cannot legally zero rate them now. There is going to be a court challenge on this issue, and we will see how that plays out in the coming months, but a number of points need to be clarified. Do we now have a clear definition of what a food supplement is or are we going to have ongoing disputes between operators in the sector and Revenue as to what constitutes food and what constitutes food supplements? The position of Revenue and the Government is that food supplements are not food. That is the bottom line. I do not want a situation where this is a rolling debate, with new products being introduced in the market and the sector saying they are food while Revenue says they are food supplements. Do we have absolute clarity as to what constitutes a food supplement and what constitutes food? From now on, they will have a different treatment in law in terms of the application of VAT.

Now that we will hopefully have clarity on the VAT treatment of food supplements, do we have an assurance that no retrospective issues will be raised and that outlets that have been selling food supplements will not be subject to revised assessments by Revenue of their VAT liabilities for previous years on the back of this legislation? This is an important point and people want that reassurance.

The bottom line is that consumers will be paying more for these products from now on because of this change in the taxation code. There will be a court challenge and we will see what the outcome of that will be, but I am concerned that this will be a rolling debate, given that new products will constantly be introduced. I do not see a categoric definition of what a food supplement is. Perhaps that will remain a matter of interpretation by Revenue as the issue evolves over time.

Joan Burton (Dublin West, Labour)
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I made my views on this matter clear on Committee Stage. I understand that food supplements are recognised as food under Irish and EU law. Specifically, EU Directive 2002/46/EC on food supplements was enacted in Ireland under statutory instruments in 2007. The health food industry is required to adhere to all food regulations to ensure quality and consumer safety.

I understand this is a money-raising measure by the Revenue Commissioners on behalf of the Minister for Finance, but it is short-sighted. Many people visit health food shops to buy food supplements to supplement their efforts to address well-being issues and improve their health, perhaps after a bout of illness. For instance, they might take probiotics in the context of having been prescribed antibiotics. Such a duality is common in a large number of European countries through the prescription of what one might call formal and therapeutic medicines administered by the medical system, including chemists, and the taking of food supplements, which are sold to supplement something that the person feels he or she needs. Many elderly people use supplements. Many parents give them to their children whose recovery they are seeking to promote after a bout of illness. The purpose of these supplements is well-being.

Most of the shops that sell health food supplements are small-scale owner-operated shops. That may be changing in some of our larger towns and cities, but they remain owner-operated for the most part and make an important contribution to small shopping centres.

The Minister moved the applicable VAT rate from the 23% he proposed last year to 13.5%, but even that is excessive. The 13.5% rate should be examined anyway. While in government, we applied the 9% rate to certain areas of activity, such as labour cost activities in hotels and catering. The Minister should rethink this matter. At a time when many small shops, be they in cities or towns, are being tightly squeezed, food supplement shops and health food shops are doing fairly well.

We are not talking about items that clearly fall outside what the discussion has been about. Rather, we are talking about specific supplements that people find to be serious additions to their attempts to achieve well-being and recovery or to help with chronic conditions, for example, arthritis. The Minister is wrong and his colleague in the Department of Health will not thank him, given that this decision will affect people who are addressing their issues on their own. Take fish oil as an example. Many supplements in health food shops contain fish oil, which is a traditional remedy that goes back eons, in various forms and with different levels of omega-3 and so on. If eaten as part of a fish, fish oil would definitely be considered a food. If it is extracted from the fish and sold as a health food supplement, why is it suddenly not a food? The Minister must explain himself. I am sure that he has taken various remedies that people have recommended, possibly including cod liver oil for a bout of flu.

Kevin Moran (Longford-Westmeath, Independent)
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To make himself younger looking.

Joan Burton (Dublin West, Labour)
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People remember in their childhood being force-fed various kinds of fish oils and, particularly among people on the west coast, seaweed products-----

Kevin Moran (Longford-Westmeath, Independent)
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Bread and milk were all we had.

Joan Burton (Dublin West, Labour)
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----for coughs and other ailments. They work for many people. If they were being sold in their original food form as generated, they would not be subject to VAT. As such, I fail to see why the Minister would want to do this other than it being a money-raising measure. In a certain sense, he is hiding behind the Revenue Commissioners and getting them to do the work of raising more taxes.

Catherine Connolly (Galway West, Independent)
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Does Deputy Boyd Barrett wish to contribute?

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I will wait for the Minister. I want to hear what he has to say.

Kevin Moran (Longford-Westmeath, Independent)
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We all do.

Michael D'Arcy (Wexford, Fine Gael)
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Whatever he says, Deputy Boyd Barrett will disagree with him.

Joan Burton (Dublin West, Labour)
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We want to know whether the Minister is taking or has ever taken a food supplement. Answer "Yes" or "No".

Paschal Donohoe (Dublin Central, Fine Gael)
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A number of issues were raised. I am not hiding behind anyone in respect of this matter. It has been the subject of a great deal of debate on Committee Stage and in the Chamber. I answer questions relating to it, not the Revenue Commissioners. That is my job. I am not hiding behind them, but I listen to their advice. The advice they have given me, which has persuaded me, is that the way in which this concession was being interpreted and its parameters were continually being pushed was not consistent with how we believed tax policy should be applied in this area and that there were issues of fairness for companies in the sector.

I was persuaded by these arguments. This measure is not being introduced to raise revenue, as Deputy Burton suggested. I am bringing it forward because I accept the advice given to me on this matter by the Revenue Commissioners. The issue has been well aired in the debate both on this Bill and last year's Finance Bill.

I will set aside the question about which supplements I consume, the answer to which it would not be helpful to share at this point in the debate.

Joan Burton (Dublin West, Labour)
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Go on.

Paschal Donohoe (Dublin Central, Fine Gael)
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Deputy Michael McGrath's question about definitions will be dealt with by guidance that will be issued by the Revenue Commissioners. That is the appropriate way to deal with it. If we were to look to define either a food or a food supplement by way of a legal definition, it would be a catalyst for this issue to continue to cause problems into the future. We can be certain that shortly after making any such definition in law, something would happen to raise issues or unintended problems. One of the many things I have learned in the drafting and implementation of law is that there can be a temptation to put too much into primary legislation. In this instance, it should and will be dealt with by way of the guidance that will issue from Revenue.

Deputy Michael McGrath asked whether there would be retrospective application in this matter. That will not be the case; instead, it will be dealt with on a going forward basis. I hope to provide further clarity as the provision is dealt with and changed within the legislation.

In response to Deputy Burton's questions, I emphasise that the key issue is the question of what is a food and what is a food supplement. The EU VAT directive that is relevant to the sector is very clear that a different rate needs to apply to food supplements. We have consulted the European Commission in the course of the debate we have had since this issue was first raised in the aftermath of last year's Finance Bill and it has affirmed our view that food supplements are not foods and that a different rate of taxation should, therefore, apply to this sector. That tax rate would have been 23%, but I have sought to get the balance right and reflect the importance of the sector for many citizens by setting it at the lower rate of 13.5%.

Joan Burton (Dublin West, Labour)
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The Minister and his advisers know that a 0% rate is still a rate of tax. If he wants to persist in the argument that food supplements are different from foods and that fish in oil form, for example, is no longer a food, that is fine. I strongly advise him that if he does proceed with imposing this tax, he should do so at a rate of 0%.

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Minister for his response. Will he give an indication as to when the guidance from Revenue will be available? I assume it will have the force of law behind it. The Revenue Commissioners provide guidance on a wide range of matters and it would be helpful to have it as soon as possible in order that we will have full clarity. We went through this issue in detail on Committee Stage, including looking at older Revenue documentation which referred to food supplements as being foods. It is important to note that some products, including those which are medicinal in nature, will continue to be zero rated. Equally, some products sold in these types of shop are subject to VAT at a rate of 23%. We do not want to have a rolling debate on this issue, but, as the Minister noted, we should avoid being too prescriptive in legislation. We need clear guidance from Revenue as quickly as possible and that guidance should have the full force of law.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I was late to the debate as I was speaking to the protestors outside Leinster House who work in this sector and are very concerned about these proposals. My Irish Solidarity-People Before Profit colleague Deputy Gino Kenny has worked on this issue in more depth than I have. I am interested in hearing the Minister's response to the points we have raised, particularly in respect of those cases where doctors have said certain supplements may be of benefit on an ongoing basis to maintain people's health against certain conditions from which they suffer or are recovering. To impose this additional cost on the persons concerns does not seem to be a good idea. Surely we want to encourage people to look after their health and well-being? It is difficult to see how we can demarcate the line between food supplements and foods without ending up on the wrong side of it in many cases and unfairly taxing products that should be treated as foods.

On a lighter note, I am big fan of Bob Marley whose biography details how he visited Ireland many years ago in great anticipation of enjoying huge helpings of his favourite food - a type of seaweed called Irish moss - only to discover that it was not for sale in shops here. I am almost certain that one can get it these days in precisely the types of shop we are discussing. This is something that for Bob Marley and many others in Jamaica was a food, indeed a very healthy food. However, one is likely to find it for sale here only as a food supplement which will be treated differently from food for VAT purposes. The same taxation regime will apply to many other products, such as fish oil which may be described as supplements. That is a mistake. It will be detrimental to people's health in some cases if they can no longer afford the products, as well as being damaging to the small businesses that produce and sell them. I am very sympathetic to the amendment.

Paschal Donohoe (Dublin Central, Fine Gael)
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To take a step back, what is at issue is that we have a part of the economy which is arguing that no tax should be levied on the products it sells. I am faced with such claims every day as Minister for Finance. There are many politicians in the Chamber today who are very experienced in these matters and often suspicious of such claims when they are put forward for other parts of the economy. To reiterate, arguments have been laid in front of me by those involved in a particular part of the economy who are of the view that the products they sell should not be subject to VAT.

I had to take the investigation of that issue very seriously, something I have done and I am confident that this is the right measure to take. I am confident that a rate of 13.5% is getting the balance right between a tax being paid and having a tax that is sensitive to the different issues raised with me about the ability of people to afford these products and the effect they have on their well-being.

On the earlier issue raised with me by Deputy Michael McGrath about the retrospectivity of this measure, I would like to make some further material available on it. I emphasise that pursuit for non-compliance is always a matter for the Revenue Commissioners, but they will not pursue traders that applied the zero rate in accordance with accepted practice. However, those that were advised that specific products were liable to VAT at the 23% rate are and were expected to comply with that advice, but that is a matter for the Revenue Commissioners.

On the points made by Deputy Boyd Barrett, given that he has read the biography of Bob Marley, he will know that when he performed his concerts in Ireland, they were performed in Dalymount Park in Dublin Central. Perhaps, therefore, he had the experience outlined in the shops of Cabra and Phibsborough.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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He had to eat fish and chips because he could not buy any Irish moss and felt pretty ill because of it.

Denis Naughten (Roscommon-Galway, Independent)
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I am impressed that Deputies Danny and Micheal Healy-Rae are rubbing off on the Minister for Finance and Public Expenditure and Reform. They regularly mention their constituency. The Minister is even mentioning his constituency in debating the Finance Bill 2019. I say, "Well done," to him.

Denis Naughten (Roscommon-Galway, Independent)
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I move amendment No. 27:

In page 109, between lines 27 and 28, to insert the following: “(5) The Minister shall, within 90 days of the passage of this Act, publish a report on options for the extension of the stamp duty relief for young trained farmers to all farmers who hold a relevant agricultural qualification.”.

We discussed this amendment on Committee Stage. It is about the definition of the exemption from stamp duty for a young trained farmer. It is a historical definition that dates back to a predecessor of mine in Galway East, former Deputy Paul Connaughton Snr., who was involved at the time the installation aid scheme worth £5,000 was brought forward. Deputy D'Arcy's father, former Deputy Michael D'Arcy, was probably also involved when it was brought forward. It is now defunct, which is disappointing. At the time, eligibility for the scheme was confined to someone under the age of 35 years who had a green certificate. Stamp duty relief and agricultural relief were both defined in the Finance Acts as being confined to a young trained farmer. As the Minister knows, his predecessor, Deputy Noonan, altered the definition of agricultural relief a number of years ago and it is now confined to a trained farmer, regardless of age. I am looking for the same definition to be applied to stamp duty relief in order that if a farmer is trained, he or she would be eligible to avail of it.

It would make sense because if one looks at the initiative developed between the Environmental Protection Agency, the Irish Farmers Association and the Department of Communications, Climate Action and Environment called smart farming, the idea behind it is to get farmers to come up with innovative ways of production to reduce overall emissions. The smart farming initiative has led to reduced agricultural emissions by 10% on average. We want to try to encourage farmers to acquire the skills they need to do this. We also want them to become far more efficient to be able to expand their business and consolidate their operations. In the part of the country from which I come and represent, on the idea behind consolidation being the disposal of an out farm to buy a home farm, when one is talking about small holdings, there is not an awful lot of which to dispose. The objective is to try to facilitate the small cohort of farmers over the age of 35 years who are trying to make their operations more efficient. If they have the required qualification, they should be eligible to avail of stamp duty relief.

Paschal Donohoe (Dublin Central, Fine Gael)
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The young trained farmer stamp duty relief provides for full exemption from stamp duty on transfers of farm land to certain young trained farmers. To qualify, the farmer receiving the transfer must be less than 35 years of age on the date of execution of the deed of transfer; must have attained a minimum agricultural education from a list set out in legislation; must for a period of five years spend not less than 50% of his or her working life farming the land; must retain the ownership of the land; and must submit a business plan to Teagasc before the execution of the deed transferring the land. The exemption granted will be withdrawn if the land is disposed of within a five-year period and not replaced within one year of disposal.

The primary policy objectives of the Government in agri-taxation are to support and encourage the increased mobility of farm land to a new generation of farmers with relevant qualifications. The 35 year old age limit is long established for young trained farmer stamp duty relief and has applied since 1994. It is the only stamp duty relief in the agriculture sector to which an age limit applies. The Deputy is seeking the removal of the age limit for the young trained farmer relief in order that it might be available to all farmers who hold a relevant agricultural qualification. The stamp duty relief for young trained farmers, together with stock relief for young trained farmers and succession under partnership schemes, is granted under the EU's agricultural block exemption regulation. It allows the granting of certain categories of state aid to the agriculture and forestry sectors and in rural areas without prior notification being given to the Commission. If the age limit was removed, allowing the relief would no longer be eligible for state aid approval under the scheme. That is the reason I cannot agree to it.

It is also important to note that the young trained farmer stamp duty relief is just one of a series of tax measures, including consanguinity stamp duty relief, designed to encourage the intergenerational transfer of farms. In 2017, for example, the succession farm partnership scheme was launched, which provides for a €25,000 tax credit over five years to further assist with the transfer of farms within the partnership structure, and promote and support the earlier intergenerational transfer of family farms. Of course, stamp duty consanguinity relief on non-residential transfers at 1% still applies to those who do not meet the criteria for the stamp duty exemption and transfers of land to young trained farmers, and this will continue to assist in succession in such cases. Support of the farming sector through taxation measures is a priority of mine. The agricultural-specific tax measures in place were valued at €188.7 million in 2016, while the sector as a whole benefited from €830 million in respect of a broader range of tax expenditures and just under €1.8 billion in direct expenditures for 2016. Such reliefs are made available because of the support the farming sector needs and to incentivise young trained farmers to be active in the sector. They also place the right kind of measure to support farming consolidation and the passage of land through generations of farmers.

Denis Naughten (Roscommon-Galway, Independent)
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The Minister is correct that there is a block exemption, but as he will know, it is possible for him to go to the European Commission with a proposal if he so wishes. It is not, therefore, a viable argument for not removing the age threshold, which has been done in the case of agricultural relief. The objective, particularly in an era of climate action when the focus is on trying to reduce overall emissions, must be to encourage farmers to train and to deal with the issue of trying to reduce overall carbon emissions. The definition for the exemption should be altered to remove the age limit, and to ensure that farmers are trained and encouraged to train. For someone over the age of 35 who does not have the agricultural training, there is no incentive for him or her to get it. Given the challenges the agricultural sector will have to deal with over the next decade, however, such as issues with agricultural emissions including methane, there is an inbuilt incentive for the sector, the individual farmer and the economy as a whole to have the training and to drive the change on farm. We have seen evidence of that in the smart farming initiative, where clear measures taken by farmers on suckler, beef and dairy herds, as well as in the sheep sector, have led to an average reduction of 10% in emissions, which is significant.

We should try to encourage farmers to get the training and education. I ask the Minister to reconsider the age limit.

Paschal Donohoe (Dublin Central, Fine Gael)
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I take the Deputy's point that in the context of climate change, there is much change we will need to make to incentivise the sector through the kinds of reliefs we are discussing and the greater role of training, and to ensure that those involved in running farms have the best knowledge and support available to them.

Perhaps to move the issue forward and address the issue Deputies Fitzmaurice and Naughten raised, as part of the work that will begin following the passage of the Bill, the next set of stamp duty reliefs due to be reviewed comprises the young trained farmer relief scheme and the farm consolidation relief. They will be reviewed as part of the normal cycle of review in place for tax relief schemes such as this. The process may well provide a way in which the issue both Deputies raised can be examined.

Michael McGrath (Cork South Central, Fianna Fail)
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I move amendment No. 28:

In page 111, between lines 20 and 21, to insert the following:

“Report on stamp duty residential refund scheme

61.The Minister shall, within 3 months of the passing of this Act, prepare and lay before the Oireachtas a report on the operation and effectiveness of section 61 of the Finance Act 2017. ”.

The amendment relates to the stamp duty residential refund scheme, which was introduced in 2017, when the rate of stamp duty on commercial property and land increased from 2% to 6%. The idea behind the refund was to avoid deterring the purchase of land for the purpose of building homes, given the obvious need for them. The way it worked, and continues to work, is that two thirds of the stamp duty paid can be sought by way of a refund. In effect, the net rate for the purchase of land used, subject to certain conditions, for the construction of homes was 2%. Given that stamp duty has increased to 7.5%, will the refund still be two thirds of the duty paid, or in effect a 5% rebate? Will the net stamp duty on the purchase of land be 2.5%? The Minister might explain that.

Is he satisfied with the operation of the scheme in respect of the different rules that apply? Of the gross floor area, there is a 75% rule for the use of the overall site, or it can be used for apartment developments, for example. Is he satisfied that the scheme captures developments built on land purchased at the higher rate of stamp duty and that it does not deter the building of homes? Will he outline the time limit within which developments must be completed in order for the refund to be processed?

Paschal Donohoe (Dublin Central, Fine Gael)
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The refundable rate will continue to be 2%. The stamp duty rate will increase from 6% to 7.5% but the refundable rate of 2% will remain unchanged. That is dealt with in section 55.

On the question about the impact of the scheme, early indications are that it is working well and as expected. Of the applications thus far received, 911 have been successful, of which 839 related to the construction of one-off homes and housing, which I expected and acknowledged when I introduced the change in the Bill. The remainder of the applications - 72, or 8% of the total - were for multiple housing units. Revenue records confirm that a total of 2,478 individual units were planned and have been claimed for and refunded as of 4 November 2019.

Some concerns have been raised by developers about the criteria, which they claim are onerous. Any criteria with which I am ever associated always seem to be onerous for those seeking to claim them but these conditions are needed.

9 o’clock

I am aware of these concerns and the Revenue Commissioners continues to monitor developments. However, given that the scheme applies to instruments transferring land that were executed from 11 October 2017 and construction work does not have to commence until 13 months after the date of execution, it is probably too early to be able to assess whether the efficiency criteria are overly onerous.

Michael McGrath (Cork South Central, Fianna Fail)
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My only interest in this area is to ensure that there is no deterrent to land being purchased with a view to building on it and delivering homes. The two-thirds criterion has been replaced with eleven fifteenths in section 56. That, in effect, reduces the net stamp duty to 2% for a qualifying development. I welcome that there is no deterioration in terms of the purchase of land for development. The conditions need to be kept under review. I am sure the same issues are being raised with the Minister as have been raised with me, and they always have to be examined. Any changes have to be evidence-led and it is important to ensure that we are not putting in place any barriers that would prevent purchased land or a land about to be purchased from being built on to deliver the homes we all agree are needed.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I move amendment No. 29:

In page 130, between lines 6 and 7, to insert the following: “Report on local property tax

74.Within 6 months of the passing of this Act, the Minister shall produce a report on the local property tax and its implications for funding for local authorities.”.

The property tax is still a live issue and nobody should fool themselves politically about that fact. The feeling is that once the general election is out of the way, the property tax will only go in one direction and that is up, and that the Government has been holding off on the revaluation and increases that will follow because it knows how politically damaging it would be to increase it, as would have had to be the case if the original plan for the tax had been followed through. The Government has backed away from that because it knows how regressive people feel it is. It may dispute this, but it is a fact.

The property tax replaced a progressive model of funding for local government with a regressive form of funding. When it was introduced, it was suggested that was not what was happening, and that the introduction of a property tax would lead to better local services and more funding for local government. Those of us who opposed it always felt that was a nonsense, but what we said has turned out to the case. There has not been an extra cent for local government. Far from there being more money for some local authority budgets, in Dublin, notably Dún Laoghaire-Rathdown County Council and Dublin City Council, budgets are being cut.

The Fianna Fáil, Green Party, Labour Party and Social Democrats alliance now controlling Dún Laoghaire-Rathdown County Council cut the budget for retrofitting, which we should be doing more of, as well as the environmental awareness and community grants budgets, while increasing rates for small businesses and parking charges. One would have thought the council had more money given the property tax, but it has less because for every cent it collected in property tax was offset against central government funding.

The Government replaced a progressive tax, which was centrally funded through income-related tax, with a tax on the family home that has nothing to do with a person's income and ability to pay. We get nothing for that additional burden. I do not always agree with Owen Keegan by any stretch of the imagination, but he made that point in respect of Dublin City Council's budget. The rationale put forward was bogus and the evidence now is that is the case. This will get worse on the other side of a general election at whatever point some sort of revaluation or reconfiguration of the property tax takes place. That would be unfair and totally unjustifiable.

I am sure that in many parts of the country, as in my area, the value of people's houses has absolutely nothing to do with their wealth or income. It may be that the two correlate and some people have houses that are worth a lot while also earning a lot of money, but there is no automatic or necessary connection between the two. Many council houses in my area that people bought are now, through no fault of theirs, worth a fortune because no other council houses have been built since. Any kind of house is now worth a fortune, but that bears no relationship to the income of those in them and their ability to pay. People living in such houses are often on very low incomes. The system is not fair and has not done anything to improve funding for local government and the services that flow from it.

The evidence from some of the council budgets I have mentioned is that the situation is getting worse in terms of local government funding. That is my case for saying that we need a more progressive form of funding for local government, which is not based on the value of a property over which people have absolutely no control and bears no relation to their ability to pay.

Paschal Donohoe (Dublin Central, Fine Gael)
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Deputy Boyd Barrett and I have debated this issue on many occasions and he is correct that I have deferred the revaluation date for the local property tax to 1 November 2020. Significant work needs to be delivered next year. It can be delivered, but it will require consensus in the House for that to happen.

I differ with the Deputy in that I believe that the local property tax is an important part of how we fund local government now and into the future. I listened to what Dublin City Council had to say and the charges it made about me. There is no doubt they will make charges about me in the future regarding the revenue available to it. A city council of the scale of Dublin City Council should be able to manage its budget in such a way that the kind of charges and mooted increases it argues are needed do not happen. A governing alliance is in place on the council and I expect it to deliver a budget that meets the needs of Dubliners without the kind of charges it has alleged need to be introduced. It is possible for Governments to do that and, therefore, it should be possible for the council to do the same.

The Deputy might clarify his comments on the relationship between house values and people's incomes. I sensed he began to do so as his contribution concluded. I wrote down what he said. He said that the value of a person's house has nothing to do with his or her wealth. That is not correct. It is the case, as he went on to say, that the value of a person's home does not correlate to the income within that home. The Deputy is fully correct in that. For the Deputy to say that the value of a person's house has nothing to do with his her wealth is not the case and perhaps he might elaborate on that.

The value of people's homes is a significant part of their wealth. I appreciate that the local property tax is a big bill for people to pay and I am aware of the effect it has on people's take home pay and income. It is because I am sensitive to that fact that I am trying to avoid significant unplanned changes and that is why I believe a valuation date on 1 November is more appropriate. I believe local property taxes have an important part to play, now and in the future, in ensuring that the needs of local communities can be met.

From the different parts of the country in which I have opportunities to work in, I have been able to see how changes have been made in local property taxes. Decisions have been made to increase the tax and the revenue raised has been used to fund important work undertaken by local authorities. I have seen that work myself. I refer to where elected councillors decided they would have a lower rate of increase in the local property tax or increase it. The revenue generated was then used to fund important work within the communities those councillors represent. That is the way I believe local government should happen and, over time, I would like to increase the ability for those kinds of decisions to happen.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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We fundamentally disagree. I do not think people's family homes can be considered wealth in the same way as people who have two, three or four houses - besides their family home - and rent those out to make money. For me, those rented houses are wealth-generating assets. People putting a roof over their head is surely just doing a basic thing needed to exist in society. I do not see that as wealth, but as something that society should be able to provide for people. Our society does not provide that, but people do manage to get to the point of at least having a roof over their heads through immense struggle, hardship and hard work. They are then, however, going to be charged for having that home even when it is not a wealth-producing asset.

In any event, the value of a home is not dictated by the owner. There is a relationship between the bricks and mortar required to build a house in Roscommon and the similar materials required in Ballybrack, but the value of the resulting houses will be completely different. That has nothing to do with the intrinsic quality of the buildings, but with the fact that the market, which is completely out of the control of the homeowner, has driven up the price to a certain level in one area compared with another. Those two properties, however, will be taxed on that differential. That is fundamentally unjust. We excluded the family home in our proposed wealth tax, even for the 85,000 richest people in the country who are worth €3.5 million. We think a wealth tax should be imposed on those people, but we removed the family home from consideration because we think it is different from a wealth-producing asset. That is a sustainable and reasonable position.

Turning to local authorities, would the Minister give them the power to tax the profits of property developers and land speculators and allow them to generate extra revenue that way? That might give the local authorities a few options.

Paschal Donohoe (Dublin Central, Fine Gael)
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Local authorities have development levies and those levies are there to try to ensure that development activity is taxed. I do not think Deputy Boyd Barrett's argument holds up. He has drawn a distinction between a wealth asset and a wealth-producing asset. Somebody's house is their home, for nearly all people, and I respect that. I am very sensitive to how people feel about the local property tax, how large a bill comes in each year and the difficulty many people face in paying it. To have a definition of wealth that excludes that value of a home is extraordinary, however. It is an asset and if all of that wealth is carried forward, via the exclusion of the homes of millionaires and very wealthy people from tax, I am afraid that proves to me further the uniqueness of the Irish left. Saying that does not get in the way of the respect I have for the work Deputy Boyd Barrett does.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Not drawing a distinction between these two things is the problem. There clearly is a difference between a home in which people live and worked hard to pay for because they needed it to live in. There are only a few ways for people to get an affordable roof over their heads in our society. There is a major difference, however, when we then consider people who own second, third, fourth, fifth, tenth or even 100th properties, and which they can rent out to generate revenue. Those are two very different things, but the Minister does not treat them differently in the property tax. That is the problem. To me that is an injustice and that is the reason we will continue to oppose a family home tax. Perhaps that is a better way to put it and that is the way we termed the tax when we campaigned on this issue. We are opposed to a family home tax and that is what his tax is.

Pat Gallagher (Donegal, Fianna Fail)
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Is Deputy Boyd Barrett pressing the amendment?

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Yes, I am.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I move amendment No. 30:

In page 130, between lines 6 and 7, to insert the following: “Report on relief for investment in film

74.Within 6 months of the passing of this Act, the Minister shall produce a report on section 481 of the Principal Act and its relation to developing quality employment in the film industry.”.

My brain is addled at this stage.

Kevin Moran (Longford-Westmeath, Independent)
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Deputy Boyd Barrett should take it easy.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The Deputies will be glad to hear that this is my last amendment and this is one where we have a bit more common ground. I genuinely thank the Minister for engaging with me on the issue of the 481 tax relief for the film industry. I refer to the extent to which it needs, should and is required to contribute to quality employment and training in the film industry and the development of that industry. I thank the Minister's officials for engaging with us as well. They have responded to some of the points I made, largely on behalf of those who have worked in the industry for decades. They believe that investment in creating employment and training in a film industry in this country is a good thing and that we should do more of that. They do not believe, however, that the current incentive has had the desired effect. The employment and training provided has not been of sufficient quality, even though that is the intent of the tax relief .

I refer to particular parts of the industry. As the Minister and his officials know, I have distinguished between the film industry and areas such as the animation sector, where the relief has had a major impact. In that sector, there are companies of scale, people have secure jobs and income and, as a result, Irish animation is boxing at the very highest level on the international scene. That area is really going from strength to strength. That has not, sadly, been the outcome to the same extent in the film industry. There have been many successful productions, but the provision of quality employment and training has not been the same in that sector. As a result, there is a quite a debate or controversy, to put it mildly, going on in the industry.

I will not recapitulate the whole debate. As I said to the Minister when we met earlier to discuss this issue - I hope it is okay to mention that - the problem is that film production companies which apply for the relief are then subsequently denying that they are the employers. The way they do that is, for each film production, the Irish production company sets up a special purpose vehicle, SPV, or designated activity company, DAC.

It is not really a company. It is merely a financial instrument. It is an accounting tool for that particular production. However, when workers attempt to assert their rights as employees, the Irish producer company which applied for the relief which is conditional on the provision of employment and training, says to the employee that it is not his or her employer and that the SPV is his or her employer. The SPV only exists for the film and then it is gone. Then the same producer company makes another film, sets up another SPV but it is a different employer, even though it is the same employer. Then it makes another film, sets up another SPV but it is a different employer, but actually it is the same employer. This is the problem.

It means that people who have worked on film after film for the same producer and the same recipient of section 481 relief are not accumulating the rights that they have under law, particularly under the Protection of Employees (Fixed-Term Work) Act 2003 which was precisely designed by the European Union and enshrined in Irish law to ensure that this kind of thing does not happen. To concretise it, it means that those workers are completely vulnerable. There is nothing to stop the film producer saying to a worker that he or she has worked for the film producer on three or four films previously and has received awards and credits, as many of these workers have, but the film producer will not take him or her on the next film because the worker asked for the application of the Organisation of Working Time Act 1997, in terms of hours of work, breaks or whatever. The producer company thinks the worker is asking for too much and is a troublemaker and it will not employ him or her on the next production.

As we speak, that is what is happening. On RTÉ News tonight, one will see, if one looks at the entertainment section, reference to the sequel for "Vikings" being produced in Ashford, County Wicklow. I refer to people who worked for that producer company, Metropolitan and World 2000, which produced "Vikings" before it, "Into the Badlands" before that, "Penny Dreadful" - I can go through the list. If one went to those previous productions, looked at the credits at the end and looked at who were the stage hands, the construction-grade staff, the drivers etc. to see how many of them are on this new one when those credits role, at present the answer is "very few". They have already contacted this film company and said that they worked on its last few productions and they are hoping they will be working on these ones and they are being told that they will not. Co-incidentally, some of those people or their associates are people who went to the Joint Oireachtas Committee on Culture, Heritage and the Gaeltacht discussing this issue nearly two years ago where they made allegations about the failure of the producer companies to vindicate the rights of workers and fully apply the law on bogus self-employment, the Protection of Employees (Fixed-Term Work) Act 2003 and other employment requirements. It is many of those people or people associated with them who now will not be allowed onto that production that is in the news tonight. That is not acceptable.

I have had a sympathetic ear from the Minister in this regard and from his officials. I hope that we will design the public support which we need in this industry in such a way that what I refer to cannot happen and that workers who ask for their legal rights will not be displaced.

Paschal Donohoe (Dublin Central, Fine Gael)
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I thank Deputy Boyd Barrett. I want to acknowledge the significant interest that Deputy Boyd Barrett has in this sector and the work that he is doing.

I listened over a number of years to the different debates and contributions that were raised in this sector by Deputy Boyd Barrett. In the aftermath of the debate that happened here two years ago, my Department did work on last year's Finance Bill that led to an important change being made in terms of the qualifications and criteria that need to be met to access the section 481 relief for particular projects.

I want to indicate to the House the continued interest that the Department of Finance will have in this matter. As Deputies may be aware, the Workplace Relations Commission is conducting an audit of this sector at present to look at the kind of employment practices that are in place and the kind of standards that need to be met. I will be interested in the outcome from this process and in the recommendations that come out of it.

Where I differ with Deputy Boyd Barrett is that, given the nature of the industry, there will be ways in which it organises itself via projects that are different to other forms of employment.

That said, section 481 is a valuable relief. It is a particularly valuable relief when one looks at the amount which has been claimed against this relief as a percentage of the total value of this sector within our economy currently. It uses the taxpayers' money to try to deliver particular objectives. I want to indicate to the House that I will be taking a particular interest in this issue where a tax relief is made available to a particular entity and this entity then claims it is not the employer. I want to understand how widespread this is and why this is happening. There may well be good reasons why it is happening.

Martin Kenny (Sligo-Leitrim, Sinn Fein)
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Unlikely.

Paschal Donohoe (Dublin Central, Fine Gael)
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If there are, I want to understand them. In the run-up to next year's Finance Bill, the Department of Finance and I are looking forward to understanding why this is happening and how and why tax credits are being drawn down.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I thank the Minister and his team for their genuine interest and engagement and for some of the very significant improvements they have made on foot of the debates and discussions that have gone on on this front.

No doubt it is a project to project issue. Having said that, well in excess of €1 billion has gone into the film industry through this relief over the past ten or 15 years. By any definition, that is a lot of money.

It is an indisputable fact that people who have worked in that industry for ten, 15, 20 or 25 years do not know when the next film production financed with that relief happens whether they have any chance of a job. In fact, there is nothing to prevent the recipient of that relief or one of its agents saying they are sorry, the worker worked there for the past 20 years, but he or she is not coming in on the current one. They do not have to give any reason because they are not the employer: the employer is a different entity. That is a real problem and it is current.

People will not have an income coming into this Christmas as a result. That is what we are talking about. I refer to people who have credits and awards to their name and who were part of award-winning films. That cannot persist.

In the short time available, I repeat my welcome for the engagement of the Government. I hope we can move this forward so that we create an industry of scale and with a more secure pool of employees with skills, trainees etc. that will help all of this industry and help arts and culture in this country develop and expand.

Pat Gallagher (Donegal, Fianna Fail)
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The Minister has exhausted his time but in the interests of harmony, he can make a brief intervention.

Paschal Donohoe (Dublin Central, Fine Gael)
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I will make two points. It may well be the case that the uncertain and transitory nature of the industry is beyond the ability of tax policy to influence.

However, the Government will soon produce an action plan on the further development of the audiovisual sector in Ireland. As I said, we make a valuable tax credit available. There are certain criteria for that tax credit and we expect them to be met. The Department will be seeking to understand the circumstances in which a relief is accessed but the entity that is claiming the relief claims that it is not the employer.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I will withdraw the amendment. The Minister said he will look into it.

Michael McGrath (Cork South Central, Fianna Fail)
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I move amendment No. 31:

In page 130, between lines 6 and 7, to insert the following: “Report on incentives for landlords to retain tenants

74. The Minister shall, within 3 months of the passing of this Act, prepare and lay before the Oireachtas a report on the possibility of implementing tax measures to offer incentives for landlords to retain tenants through the sale of residential property.”.

This is an issue Focus Ireland asked me to raise. It relates to landlords seeking to end tenancies in order to sell properties. We discussed this during the budget process last year and the Minister examined a number of options but concluded they were not workable at the time. Focus Ireland in its pre-budget submission called for a fund to take into ownership buy-to-let units that are being repossessed due to landlord arrears and where the tenant is in receipt of the housing assistance payment, HAP, and is at risk of homelessness. It sought to link this fund to reform of the tax treatment of such transfers to create an incentive for landlords to sell without evicting tenants. There is nothing to be done on the issue in this Finance Bill, but it warrants examination. Perhaps the Minister will ask the tax strategy group to examine this issue to see if anything can be done in the tax code to deter the ending of tenancies, effectively, the eviction of tenants, in order to sell the property.

Paschal Donohoe (Dublin Central, Fine Gael)
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The tax division of my Department provided the Select Committee on Finance, Public Expenditure and Reform, and Taoiseach with an estimate of costs in respect of this measure that was based on specific assumptions. The report provided also noted that the capital taxes route was not the only means of providing an incentive to landlords to retain tenants and that it might also be possible to do so using the income tax system. It suggested that in the interest of completeness the Department might carry out further work on this aspect, which could be shared with Members in due course. This work would encompass an estimate of the possible cost based on specific assumptions and the potential benefits and disadvantages of possible changes. The work is under way and we hope to have it completed by the first quarter of next year.

Deputy Michael McGrath has raised this and it has featured in many of the issues raised by various NGOs, including Focus Ireland. While this measure was looked at in the report of the working group on the tax and fiscal treatment of landlords, which was published as part of the budget documentation for 2017, a particular option in that, which the Deputy has referred to, has persisted in the public debate since then. My Department wants to form a fuller view than that report allowed it to do in respect of the benefits and potential costs and whether it could play a role in future budgetary and fiscal policy. We are aiming to have a broader piece of work done on that by the first quarter of next year. That might then inform the Government and the Oireachtas on whether such a measure could play a role. At the time the Deputy and I discussed this I was very concerned about the unintended consequences of that change. That is the reason we must take a more in-depth look at it. The work will be done early next year.

Michael McGrath (Cork South Central, Fianna Fail)
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I welcome the Minister's comments and the fact that the work is ongoing in the Department. I look forward to seeing its completion and the output from that process in due course. It is important to examine all options to address the issue of tenancies being ended with a view to the sale of the property because the property is deemed to be of higher value when there is vacant possession. We must examine all the options so we will engage constructively when that report is published early next year.