Finance Bill 2014

For any parent who spends a Sunday night on Skype to their child in Australia or watches their unemployed youngster fiddling with a television remote control watching inane television programmes, and despite the other debates occurring in which a fair bit of self-interest is involved, the only issue in this Finance Bill – the only show in town – is job creation. The great moral responsibility on us as legislators is to create conditions where people can get work. This is the basis on which the Finance Bill should be evaluated.

When Fine Gael came into government with the Labour Party, 7,000 jobs a month were being lost. Thankfully, 5,000 jobs are created per month now. Unemployment is now down to 11% but it is still too high. However, it is heading for single figures by the end of our term. We have created 70,000 jobs in the last year with 100,000 in the coming year.

Our duty is to parse the Finance Bill and establish in what way will it contribute to further job creation or otherwise.
If one looks at the personal taxation measures, taking 80,000 people out of the USC increases their spending power and increases consumer confidence. By virtue of their low income status, which is not their fault, they will tend to spend on domestic, locally produced goods. That will have a hugely beneficial effect on the economy by generating a multiplier.

The top rate of tax is reduced from 41% to 40% which incentivises work and increases consumer spending. There is a €1,000 increase in the entry point for the standard rate band to €33,800. That is good in that it provides more discretionary spend, consumer confidence and the money is spent on domestic goods. In addition, one makes work attractive and creates jobs. The budget passes on personal taxation measures.

One of the Government’s most successful budgetary measures is the 9% VAT rate on the tourism and hospitality sector, which has been maintained. It has proved to be effective and it is thus continuing. In addition, there will be 1,700 new jobs in education.

I will turn to the agriculture sector which is so relevant to the Cavan-Monaghan area that I represent. We have 5,279 farms in Cavan with approximately 15,000 people employed directly therein. The sector provides a farm income of €74 million a year to County Cavan. The agri-food sector in Cavan has always been strong and we have 20 large food and drink employers providing 1,860 local jobs. This is something we are proud of. It is my job, as a representative for Cavan, to do everything I can to support, protect and encourage this sector. That is why I am particularly pleased to see a range of measures in this legislation designed to enhance the agriculture sector and ensure that it evolves into a sector that is more efficient and productive.

Chapter 4, section 18, lists certain amendments to the tax treatment of farmers. I am particularly pleased to see the clause that deals with the income averaging tax regime and its extension to include farmers who generate income from other trades or professions. There is a provision that said income must come from on-farm diversification and I believe this to be incredibly important.

Chapter 6, section 44 deals with capital gains tax retirement relief for farmers. It states that land, which has been leased for up to 25 years, will now qualify for this relief. This will make it more attractive for older farmers to pass their land on to the next generation. This measure involves both job retention and creation.

The recent agri-tax review found that the number of farmers under 35 years of age fell by more than 50% between 2000 and 2010. Only 6.2% of all landowners were under the age of 35 years. That has job creation implications and it will change.

I also welcome the clause in this section which pertains to land-leasing to non-family members. Providing that this land is leased, under a conacre arrangement, for a minimum of five years or disposed of on or before 31 December 2016, the landowner can avail of capital gains tax retirement relief. That is all excellent news for farmers.

Deputy Seán Fleming was very selective in his understanding of the budget. He excluded all the personal taxation measures and the 80,000 people coming out of the USC. I think he is clever enough to read the budget properly, but he is reading it selectively. I agree with Deputy Fleming, however, about the amount of hours people work. I appeal to the Minister for Finance and my good friends the Minister of State, Deputy Simon Harris, to examine that issue. It is the case that farmers invariably work a lot outside the farm. In many instances they may give 35 hours both on and off the farm, thus working a 70 hour week. That situation needs to be examined.

The measures concerning capital gains tax exemption for farmers are all positive. In addition, the other agri-measures listed by the Minister all contribute to job creation. A comprehensive package of corporation tax measures will ensure a strengthened flow of multinational investment and jobs. These measures will also ensure we are on course to support up to 50,000 new jobs in 2015.

The Bill makes a range of changes to tax incentives for start-ups and SMEs. These incentives will make it easier for new businesses to commence, for established businesses to attract further investment, and will ensure that we achieve our main objective of creating more jobs.

Chapter 4, section 23 of the Bill deals with research and development tax credits. It legislates for the removal of the base year restriction, for accounting periods commencing on or after 1 January 2015. Research and Development is an incredibly important part of Ireland’s corporation tax regime and plays a large role in attracting foreign direct investment into the country. I applaud those developments.

I welcome the commitment to remove the base year restriction on this tax credit. It will allow companies to calculate and claim their research and development tax credits without restriction by reference to their research and development expenditure in 2003. This will be a favourable move for our more established foreign direct investors.

Chapter 4, section 24, deals with amendments to the employment and investment incentive. One amendment that I want to touch on briefly is the part of this section that deals with the rate of relief, under this scheme, becoming aligned with the revised income tax rates. This will start from 1 January 2015.

The employment and investment incentive allows individual investors to claim income tax relief on investments up to a maximum of €150,000 per year. This tax relief can be used for usual trading activities which, in turn, contributes to the creation and maintenance of employment. I note that nursing homes are now able to qualify for the scheme.

Commenting on the budget, IBEC said it was a budget for jobseekers and job creators. That is quite an endorsement. There are many more provisions which I do not have time to mention. While I have great respect for the ability and commitment of my colleague, Deputy John Deasy, I do not share his view that mandatory collective bargaining is such a disincentive to foreign direct investment. I personally think that employers with good HR policies and corporate structures will not necessarily be frightened by this. The prevailing economic considerations and European law will still predominate. I do not think mandatory collective bargaining is frightening or such a disincentive. That is my personal view of it. I think it might well work favourably, although that has yet to be tested.

The budget’s personal taxation measures and its research and development incentives mean the Finance Bill is completely targeted at creating the conditions for creating more jobs. That is how it should be. It is for that reason that I am an enthusiastic supporter of and advocate for the Finance Bill.

Some recent debates could provide a distraction from that but there is no greater mandate for this House than to focus on job creation every day. I know that as a teacher, a parent and a public representative.

Senator Joe O'Reilly representing Cavan & Monaghan 2010. | An ExSite website