Budget 2017 set to target offshore tax avoidance

Divisions remain over start date of proposed €5 a week increase in old-age pension

Fianna Fáil spokesman on finance Michael McGrath and its spokesman on public expenditure and reform, Dara Calleary TD. Photograph: Alan Betson/The Irish Times

Fianna Fáil spokesman on finance Michael McGrath and its spokesman on public expenditure and reform, Dara Calleary TD. Photograph: Alan Betson/The Irish Times

 

The Government is expected to announce a clampdown on offshore tax avoidance, yielding about €40 million a year, in next Tuesday’s budget. While some sources said this would allow the Revenue Commissioners to chase retrospective tax bills, others pointed out this would be difficult, but not impossible.

It is one of the few revenue-raising measures in the budget, along with increases in the price of tobacco .

As the Government finalised the details, it emerged there will be an increase in the home carer’s tax credit of €100. Other tax measures include an increase in the threshold for the rent-a-room tax relief, which currently stands at €12,000.

Negotiations over some budget spending decisions are likely to “go to the wire”, with the possibility of final agreement being struck only within 24 hours of details being announced in the Dáil.

As the Government’s White Paper on Receipts and Expenditure was published last night, deadlock remained on a number of key issues between Fine Gael and the political groupings on which it will rely for support in the Dáil.

The crux has been divisions over the proposed increase of €5 a week in the old-age pension. Both the Independent Alliance members and Minister for Social Protection Leo Varadkar have insisted that the increase be extended to carers, deaf people and those with disabilities. That would necessitate an extra spending commitment of €170 million a year.

“The Independent Alliance is pushing to extend the €5 increase to carers, the disabled and the blind and for that to be done as soon as possible,” said one of its members, Minister of State for Disabilities Finian McGrath last night. Mr Varadkar is understood to have argued the extension should occur on the basis of fairness.

One formula that has been suggested is that the payments could be made available to the wider cohort if the start date was delayed. The initial date suggested by the Department of Public Expenditure was next June but that has been rejected by Fianna Fáil and the Independent Alliance.

Fianna Fáil’s finance spokesman Michael McGrath said it was a budget for 2017 and not for “half of 2017”. Pensioners who had waited years for an increase should not be expected to wait another 10 months before receiving it.

Fianna Fáil’s spokesman on public expenditure and reform Dara Calleary also criticised what he described as the Damascene conversion of Fine Gael towards an image of being a caring party. “I am not convinced of the sudden caring-sharing-cuddly Leo Varadkar,” he said “In relation to older people, the notion they are on the pig’s back is wrong. There is considerable old-age poverty in this country and fuel poverty is more of an issue for old people.”

Sources said Fianna Fáil was not wedded to a January start date and might be willing to accept a compromise, perhaps in the spring. “There is skin and hair flying,” another source close to the process said. “I reckon that it is going to go to the wire.”

Talks with Minister for Public Expenditure Paschal Donohoe will continue today, with a view to agreeing that the increases will kick in some time in the second quarter of 2017.

The Labour Party has criticised the reported emergence of an extra €200 million in the so-called fiscal space available for budget adjustments after the Opposition parties published their pre-budget submissions. Its public expenditure spokesman Seán Sherlock called for clarity on how this situation had arisen and asked why the budgetary oversight committee had not been made aware of it.

He criticised the lack of transparency and argued that the extra funding could best be served by reinstating the social welfare Christmas bonus.