Government comes under pressure over Finance Bill

 

The Government faces renewed problems as several Independent TDs have warned their backing for the Finance Bill, which is being debated in the Dáil this afternoon, is not guaranteed.

Tipperary North TD Michael Lowry said today his support and the backing of Kerry South TD Jackie Healy-Rae should not be taken for granted. Tipperary South TD Mattie McGrath, who confirmed today he has left Fianna Fáil and would be running as an Independent in the general election, also said he would not be supporting the Bill.

Fine Gael communications spokesman Leo Varadkar said today his party would not be supporting the Bill as it disagreed with plans to introduce a universal social charge and reduce tax credits. He said any issues with the Bill could be revisited after the election.

Labour and Sinn Féin have also indicated they will be voting against the Bill. Wicklow Independent TD Joe Behan has previously signalled said he will back the bill.

As the debate got under way, Taoiseach Brian Cowen stressed the importance of passing the Bill.

“That is a matter for the House to consider, taking up its responsibilities,” he added. “Those supporting the Government will be voting in favour of the Finance Bill. I understand the Green Party will do likewise and others will consider the situation as we progress.”

Opening the debate, Minister for Finance Brian Lenihan said that the general Exchequer deficit was expected to decline to 9.4 per cent this year.

He said the Government plans to introduce amendments to the Bill on the universal social charge. The charge, introduced in Budget 2011, replaces the health and income levies. He said the maximum rate for medical card holders would be reduced from 7 per cent to 4 per cent and the move would cost the Exchequer about €80 million. The difference would be made up by increasing the rate paid by self-employed taxpayers from 7 per cent to 10 per cent on incomes above €100,000, said Mr Lenihan.

This evening, referring to Ireland’s EU-IMF bailout, Fine Gael finance spokesman Michael Noonan asked if Mr Lenihan was aware that an IMF team was in Spain a fortnight ago to negotiate a low-line of credit, which was in its remit.

Mr Noonan said it was a principle of capitalism that the rules of moral hazard applied to both borrowers and lenders.

“Those who lent recklessly, and those who borrowed recklessly, should share the burden,’’ he added.

“At present, the only person sharing the burden is the Irish taxpayer.’’

Labour spokeswoman Joan Burton said the Bill’s weakness was its inherent imbalance and unfairness at its heart.

There was no target, she added, for what those fortunately wealthy people should contribute to the tax basis in Ireland’s hour of need.

“If we all make a contribution, we can keep the contributions and tax rates moderate and modest,’’ she added.

Sinn Fein spokesman Pearse Doherty said the House was not discussing a Finance Bill.

“It is a depressing end-product of a Government whose political career spans some of the most disastrous economic policies ever witnessed, not only in this State but throughout the world,’’ he added.

Earlier, Mr Lowry who supported the Budget said this afternoon it was unlikely he or Mr Healy-Rae would support the Bill in its current form and insisted he had “no obligation or responsibility to support a dysfunctional government” or “half-government”.

Mr McGrath said he would be meeting Mr Lenihan tonight to discuss his concerns. “I am meeting the Minister for Finance about these issues, but at this point in time the Government can't rely on my support for the Finance Bill,” said Mr McGrath.

The Cabinet met at Government Buildings this morning ahead of the start of the Dáil debate. In an interview on RTÉ Radio after the meeting, Mr Lenihan said eight or nine other issues had also been discussed, among them the tax relief for the film industry. He said this would now be extended to 2015 because it had created a lot of employment in Ireland.

"The Government has had very little time to prepare official amendments to the Budget because of the very limited timescale available. So as soon as there was agreement on the timescale of the Finance Bill last night, we met as a Government this morning and dealt with as many issues as we could," Mr Lenihan told RTÉ's News at One.

He said there were "difficulties" in relation to the surcharge on bankers' bonuses that was proposed before the Budget. “We would like to do it, but there are immense legal difficulties associated with it. The Government have given me authority to deal with it but, again, it may be difficult to do it in the very limited time scale available."

Earlier, Government Chief Whip John Curran said Mr Lenihan told Opposition finance spokespersons yesterday a second Finance Bill would be needed later this year to deal with the tax implications of civil partnership.

The way was cleared yesterday for a general election on February 25th after agreement was agreed between Mr Lenihan and main Opposition parties to get the Finance Bill through the Dáil and Seanad by the end of this week.

The deal involves the Bill passing all stages in the Dáil by Thursday evening. All other business, including questions to the Taoiseach, have been set aside. The Seanad will meet on Friday and Saturday to approve the legislation. The parties have agreed that if necessary the Dáil can meet again on Saturday evening if flaws in the legislation are identified.