Second Stage of the Finance (No.2) Bill 2011

May 25th, 2011 - Pat Breen

Deputy Pat Breen: I welcome the opportunity to speak on Second Stage of the Finance (No. 2) Bill 2011.

I grew in confidence with every word the Minister for Finance spoke yesterday evening. He stated the economy is expected to return to growth this year following three years of recession. This is partly due to our strong export performance. Gross domestic product is forecast to grow by 0.75% in 2011 and 2.5% in 2012. I welcome the increase in exports and it is significant that many multinational companies are performing well. They must be nurtured and minded because they provide solid, stable employment.

The jobs initiative programme was designed to be cost neutral. Over the period from 2011 to 2014, the total cost of the package of measures in terms of revenue foregone and expenditure amounts to €1.8 billion. The programme will be funded on a cost neutral basis to fulfil the commitments of the joint EU-IMF programme of financial support. Funding will be generated from the application of a temporary levy on funded pension schemes, an issue on which many speakers have contributed.

I concur with the Minister’s statement last night that we are moving in the right direction. The jobs initiative will add to public confidence. It received a broad welcome from many interest groups when it was announced some weeks ago. The programme for Government promised a jobs initiative programme in the first 100 days of government and we have lived up to that commitment.

The visits of Queen Elizabeth and President Obama in the past week have created a feel-good factor and, above all, placed Ireland at the centre of the global stage following several years in which our international reputation has been tarnished. The feel-good factor evident in Dubli performing well. They must be nurtured and minded because they provide solid, stable employment.

The jobs initiative programme was designed to be cost neutral. Over the period from 2011 to 2014, the total cost of the package of measures in terms of revenue foregone and expenditure amounts to €1.8 billion. The programme will be funded on a cost neutral basis to fulfil the commitments of the joint EU-IMF programme of financial support. Funding will be generated from the application of a temporary levy on funded pension schemes, an issue on which many speakers have contributed.

I concur with the Minister’s statement last night that we are moving in the right direction. The jobs initiative will add to public confidence. It received a broad welcome from many interest groups when it was announced some weeks ago. The programme for Government promised a jobs initiative programme in the first 100 days of government and we have lived up to that commitment.

The visits of Queen Elizabeth and President Obama in the past week have created a feel-good factor and, above all, placed Ireland at the centre of the global stage following several years in which our international reputation has been tarnished. The feel-good factor evident in Dublin and elsewhere, including Ennis and other parts of my constituency, will prove to be a major boost. Tourist numbers will increase, especially the number of tourists from the United States, which it seems will be relatively good for July and August, and Britain. Some of the measures included in the jobs programme will further boost tourism and jobs. I commend the Minister on introducing these measures because tourism will play an important role in creating the environment in which economic recovery takes place.

Unlike some of the finance Bills that are produced following budgets, this is a short Bill of only six sections. It contains four key measures, namely, the research and development tax credit, suspension of the air travel tax, introduction of a second lower rate of VAT and imposition of a temporary pension levy.

The Government has affirmed its commitment to maintain the 12.5% rate of corporation tax. As the Taoiseach, Tánaiste and Minister for Finance have stated, the corporation tax rate is not up for negotiation. The Minister for Finance will meet the French Minister for Finance, Ms Christine Lagarde, today to discuss a number of issues, specifically a reduction in the interest rate for the EU-IMF bailout. However, we will seek much more than a cut in the interest rate and I am sure the corporation tax rate will also be at the forefront of his mind.

The Taoiseach’s statement today that the Government is not seeking further time to repay its debts is a sign of confidence.
I propose to discuss the details of the Bill. Section 1 deals with the research and development tax credit. This credit is important for industry and complements the corporation tax rate. It has influenced the decisions of many international companies to locate in Ireland. As I noted, multinational companies are making major strides in increasing exports and profits. Many of them have been established in my own region of the mid-west, including Intel which has an outstanding research and development facility at its Shannon plant. Intel will be developing products there for the next ten years. It is a specific area but a very important R&D plant nonetheless.

Section 2 deals with the travel tax, which has been a contentious issue for the travelling public as well as the airlines since its introduction in 2009. While airlines have more important issues on their mind at the moment with the ash cloud moving towards mainland Europe, they should take this matter seriously because they have been campaigning for its abolition for over two years. They should work with the Minister for Transport, Tourism and Sport to create a plan to boost passenger numbers coming here, thus stimulating the tourism industry and creating jobs.

Tourism has been hit badly in recent years but Ryanair, in particular, is well based to boost those figures. The company’s end-of-year accounts were published last week, showing that the airline carried 72 million passengers in Europe and made a massive profit of €401 million last year. As a successful Irish businessman, Michael O’Leary should take the national interest on board and play his part in our economic recovery as he did during the Lisbon treaty campaign. We all remember that famous debate he had with Declan Ganley on “The Frontline” programme when he was campaigning for a “Yes” vote. Mr. O’Leary said then that Ireland’s future success depended on being at the heart of Europe as a member of the EU. It is important for him to think of Ireland’s future now also. Ireland is his base and Ryanair is an Irish airline, so there is an onus on him to boost tourism figures here. Aer Lingus has a commitment in this respect as well.

Section 3 is an important part of the Bill which amends the VAT Consolidation Act 2010 to reduce VAT from 13.5% to 9% in respect of certain goods and services mainly associated with the tourism industry to stimulate employment. I hope that hotels, restaurants and other providers will take this great initiative on board and reduce costs accordingly. Unfortunately, Ireland had a reputation of being an expensive holiday destination, but this is a golden opportunity for us to sell the country as a destination of better value.
This week in Dublin over 3,000 delegates are attending a world telecoms conference at the National Convention Centre, which will generate huge revenues for the capital city. All hotels in the capital are booked out and this is happening straight after two State visits. I am worried, however, that our rip-off culture still exists in hotels. This week and last, hotels doubled the