Finance Bill 2020 Second Stage Opening Speech

4th November, 2020

A Cheann Comhairle, I move that this Bill be read a second time.    


When the Budget was announced three weeks ago, I said that there was no such thing as certainty in the current circumstances and that we must recognise the risks and ongoing challenges.


I think that it is fair to say that events in those three weeks have shown that pandemic-related uncertainty will be with us for some time to come.


The pandemic has proven to be enduring and we will be living with its effects for some time to come.


That is not to say that we should give up hope.


We have the power to effect change, in relation to Covid-19 and in relation to the economy.


Neither will be easy but if we all pull together we can overcome the challenges facing us.


We confront the pandemic from a position of strength, based on the solid fiscal and economic foundation we have built in recent years.


We are in a position to borrow today and into the future to fund the unprecedented support being provided to the economy.


We are in this position because of the prudent actions taken in the past.


Ireland has rightly earned credibility, respect and support globally for our economic performance over recent years and the management of our public finances.


Where are we now

We are now two weeks into the level 5 restrictions of the Government’s Living with Covid-19 Plan.


It has not been easy for anyone but again we are pulling together and adhering to the public health advice to protect lives and livelihoods.


The Government is providing support in many ways; through its policies in relation to business, through changes to our taxation system and through the key schemes to protect households, businesses and jobs, namely the Pandemic Unemployment Payment (PUP), the Covid Restrictions Support Scheme (CRSS) and the Employment Wage Subsidy Scheme (EWSS).


It is helpful to put numbers on the support being provided.


As of 3 November 40,800 employers have registered for the EWSS. 330,000 individuals were in receipt of the Pandemic Unemployment Payments in the week beginning 2 November.


At end September, some 70,000 businesses had availed of tax debt warehousing, with €2.1 billion warehoused.


Furthermore, there were 2,200 registrations for the CRSS as at lunchtime today.


These policies have been an essential lifeline for businesses, families and individuals to mitigate the effects of the pandemic on the livelihoods of our citizens.


As I said in my Budget speech, the health of the country and the health of the economy are interdependent and the better our public health, the stronger our economic health.


We need to continue to strike that balance for now between jobs, income and enterprise on one hand and keeping our people healthy and safe on the other.


Therefore, there are many provisions in the Finance Bill which will result in increases in what are commonly referred to as tax expenditures. 


If anything, the pandemic responses have broadened this public policy response into novel areas previously unheard of.


Employment Wage Subsidy Scheme

One such response, the Employment Wage Subsidy Scheme, or EWSS, continues to play a vital and unprecedented role in supporting businesses through the current crisis. 


As I mentioned in my Budget speech, it is currently set to continue until 31st March 2021 but I have been clear that there will be no cliff edge.


It will continue during 2021 and the Government will decide on the form of its extension when economic conditions are clearer, guided by what the economy requires at that time to support the expected economic recovery.


Deputies will be aware that, in anticipation of the move to Level 5 restrictions, in mid-October the Government decided to align the rates of subsidy available under EWSS with those provided under the PUP scheme up to €350 per week.  

This will apply out to end-January 2021.


The objective is to minimise the risk of migration from EWSS to PUP during enhanced level restrictions.  


The aim is to have as many employees as possible retain their link with their employer rather than become unemployed. 


The intention is to legislate for the EWSS rate enhancements in the Finance Bill and I will bring forward the necessary legislative text as a Committee Stage amendment.


Other taxation measures

In my Budget speech, I reaffirmed this Government’s commitment to the 12.5% rate of corporation tax and our continuing commitment to a corporate tax regime that supports economic activity; one that is transparent, sustainable and legitimate. 


Tax measures announced on Budget Day include an expansion of the tax warehousing provisions to include the balance of 2019 income tax and 2020 preliminary tax obligations for the self-assessed taxpayers whose income has been adversely affected by Covid restrictions, as well as the excess Temporary Wage Subsidy Scheme (TWSS) payments received by an employer, which are due to be repaid to Revenue.


A range of other vital measures are included in the Bill to support businesses across the economy targeted at the agriculture, tourism, film, housing, and start-up sectors.


The Bill also provides for the temporarily reduced VAT rate announced for the hospitality and tourism sector from 13 ½ per cent to 9 per cent with effect from 1st November 2020.


This applies to catering and restaurant services, tourist accommodation, cinemas, theatres, museums, historic houses, open farms, amusement parks, certain printed matter and hairdressing.


Covid Restrictions Support Scheme

One of the key new measures announced on Budget day was the Covid Restrictions Support Scheme (CRSS), which is designed to assist those businesses whose trade has been significantly impacted or temporarily closed as a result of the restrictions as set out in the Government’s ‘Living with Covid-19’ Plan.


The scheme applies to businesses where Government restrictions prohibit or reduce access to premises by customers as is currently the case throughout the country.


Qualifying businesses can apply to the Revenue Commissioners for a cash payment to assist them and provide targeted support during their time of need. 

Revenue has now opened registrations for the CRSS to affected businesses and first payments will issue by the middle of this month.


Climate change

While Covid-19 is the most urgent and immediate threat we confront, we must not let the urgent and immediate distract from our need to address this other key challenge of our generation, namely climate change.


The Bill contains important changes to taxation to deal with the issue of climate change. It implements the Programme for Government commitment to increase carbon tax by €7.50 from €26 to €33.50 per tonne/CO2 and to provide for a trajectory of increases out to 2030.


The Budget 2021 increase applied to auto fuels from Budget night and will apply to all other fuels from 1 May 2021. The additional revenue raised will be used to fund public expenditure measures to meet the goals set out in the Programme for Government, while also ensuring the impact on those who can least afford it is minimised.


The Bill also makes provision for the transition of our CO2-based vehicle registration and motor tax regimes to the new more robust Worldwide Harmonised Light Vehicle Test Procedure (WLTP) emissions test from January 2021.


As a result, our VRT regime will be based on emissions performance levels which are much closer to real world performance levels than is currently the case.


Further measures include the extension the NOx emission regime and the accelerated scheme of capital allowances for Energy Efficient equipment.


Finance Bill section by section

I will now take you through the Finance Bill from the beginning.


However, Deputies will appreciate that it is not possible to cover every single section in detail in the time available to me.


There is further detail set out in the Explanatory Memorandum published with the Bill.  


Section 1 is one of a number of interpretation sections.


Section 2 increases the Universal Social Charge (USC) thresholds in line with the increases in the national minimum wage applicable in 2020 and 2021 and will ensure that the 2% rate remains the highest rate of USC that is charged on the income of full-time minimum wage workers.


It also extends the reduced rate of USC for full medical card holders under 70 years of age whose individual annual income does not exceed €60,000 until the end of the 2021 tax year.


Section 3 provides that the pandemic unemployment payments are to be treated as an emolument to which Chapter 4 of Part 42 of the Principal Act applies.


Section 4 provides an exemption from income tax for certain payments made by or on behalf of the Health Service Executive to a carer in respect of what is generally referred to and commonly known as a Home Sharing Host Allowance.


Section 5 gives effect to the budget announcement to increase the dependent relative tax credit from €70 to €245.


Section 6 provides an exemption from income tax for certain payments made by or on behalf of the Health Service Executive in respect of Mobility Allowances.


Section 7 extends the enhanced Help to Buy relief to 31 December 2021.


Section 9 increases the Earned Income Credit for the self-employed from €1,500 to €1,650 with effect from 1 January 2020.


Section 10 extends the Sea-going Naval Personnel Credit to 2021 and increases the credit available from €1,270 to €1,500 with effect from 1 January 2021.


Section 11 provides for the Covid Restrictions Support Scheme (“CRSS”), the targeted support for businesses significantly impacted by restrictions that I mentioned earlier.


Section 12 provides for the extension up to 31 December 2023 of the scheme under which accelerated wear and tear allowances are available for capital expenditure incurred on the provision of certain energy efficient equipment.


Section 13 provides for the modernisation of the Professional Services Withholding Tax scheme, an underlying feature of which is the use of electronic means for the transfer of information, data and returns etc. and other small technical amendments. The commencement of the provision will be subject to Ministerial Commencement Order.


Section 14 provides for an amendment to the emissions-based capital allowances regime for expenditure incurred on business cars. This provision will generally apply to expenditure incurred from 1 January 2021.


Section 16 makes a number of changes in relation to encashment tax, including exempting companies who pay corporation tax and increasing it from 20% to 25%.

Section 17 provides that all intangible assets acquired from Budget night are fully within the scope of balancing charge rules.


Section 18 extends the period that the Regional Film Development Uplift will be available at the highest rate of 5% by one year. 


Section 21 provides for the extension of the Knowledge Development Box Relief for a further two years until 1 January 2023.


Section 22 makes amendments to address the situation whereby the same foreign currency transferred between bank accounts held by the same person has the potential to crystallise a chargeable gain or an allowable loss without an accompanying economic capital gain or loss.


Section 23 makes a change that provides that the requirement for an individual to have owned a holding of at least 5% of the ordinary share capital for a continuous period of 3 years in the 5 years immediately prior to the disposal is being changed so that the shares can qualify for relief if they were held for a continuous period of 3 years at any time prior to the disposal of those shares.


Section 25 confirms the Budget increases in the rates of Tobacco Products Tax and Minimum Excise Duty for cigarettes by 50 cent on a pack of 20 cigarettes.


Section 26 provides for ten annual increases to rates of the carbon component of mineral oil tax, including confirming the Budget increase in the rate of mineral oil tax on auto fuels from 14 October 2020.


The rate increases are based on charging an additional €7.50 per tonne of carbon dioxide emissions each year for nine years and an additional €6.50 per tonne in the tenth year.


From 1 May 2030 mineral oil tax rates are based on charging €100 per tonne of carbon dioxide emissions.


Section 27 and 28 provide for annual increases to the rate of natural gas carbon tax and solid fuel carbon tax commencing in 2021 and concluding in 2030.


Section 30 waives the excise duty due on the renewal of on-trade intoxicating liquor licences in the licensing year 2020/2021.


This arises from the Government’s decision of the 28 August to provide a €16 million support package for pubs, bars and nightclubs, having recognised the economic impact of COVID-19 on their businesses and to assist with the planning and adaptation for their reopening.


Section 32 provides for changes to the VRT charging structure for under the new WLTP European emissions measuring system. This section also adjusts the Nitrogen Oxide element of the VRT charge.


Section 33 amends Section 135C of the Finance Act 1992 by adjusting the amount of relief given to certain electric vehicles.  


Section 34 gives effect to the motor tax changes for cars that are taxed on the basis of carbon dioxide emissions (CO2), as announced in the Budget and mentioned earlier. A new table is included for new cars registered after 1 January 2021.


Value –added tax

Section 36 aligns the definition of immovable goods with the definition applied for the purposes of the VAT Directive (2006/112/EC).


Section 37 provides that the 9% rate of Value-Added Tax applies from 1 November 2020 to 31 December 2021 to which I referred earlier.


Section 38 amends the Value-Added Tax Consolidation Act 2010 to provide that the flat-rate addition for farmers is increased to 5.6%.


Section 42 amends the Value-Added Tax Consolidation Act 2010 to provide for the temporary zero rating of certain goods used in the delivery of COVID-19 related health care services. 


It provides that the zero rate applies to goods supplied to or acquired by the HSE, hospitals, nursing homes, care homes and GP practices for use in the delivery of COVID-19 related health care services to their patients.  These measures have been applied on an administrative basis by Revenue since April.


Stamp duties

Section 46 amends section 31C of the Stamp Duties Consolidation Act 1999 which imposes an additional charge on certain share transactions relating to land. 


Section 47 extends the relief for the consolidation of farm holdings for a further two years to 31 December 2022.


Section 48 extends the period allowed for a partial refund of stamp duty where land is developed for residential purposes to 30 months. Paragraph (c) extends the relief for a further year to construction operations commenced before 31 December 2022.


Section 50 amends section 126AA of the Stamp Duties Consolidation Act 1999 in relation to a fixed annual levy of €150 million imposed on certain financial institutions. In order to maintain the €150 million yield for the year 2021, the levy is increased from its current rate of 170% to 308 % of the DIRT paid in the 2019 base year.


Section 51 extends the termination date for consanguinity relief (which applies to sales and transfers of farmland between certain blood relatives) from 31 December 2020 to 31 December 2023.



Section 56 makes several amendments to the Taxes Consolidation Act 1997 to facilitate improvements to the tax appeals process.


Section 59 allows the Revenue Commissioners to make regulations which require debit and credit card issuers to make returns in respect of online credit or debit card payments to non-resident businesses.


Section 60 makes a number of amendments to the Taxes Consolidation Act 1997 and the Capital Acquisitions Tax Act 2003 arising from the post-Brexit migration of shares and securities in Irish registered companies from a central securities depository (CSD) in the United Kingdom to a CSD in Belgium and the future settlement of trades in those shares and securities in that CSD.


Section 61 provides for the inclusion of certain proprietary directors within the Employment Wage Subsidy Scheme from 1 September 2020.


Section 62 makes provision for warehousing of excess Temporary Wage Subsidy Scheme (TWSS) payments received by an employer which must be refunded to Revenue. 


Section 63 section provides for warehousing of income tax payable through self-assessment and includes the balance of income tax due for 2019 (IT 2019) and preliminary tax for 2020 (PT 2020).  


Section 67 provides that where a taxpayer appeals an assessment, and in connection with that appeal, makes a payment to Revenue and subsequently wins the appeal, the taxpayer will not be entitled to interest on the amount repaid.



As is customary with the Finance Bill, there are still a small number of matters under consideration that I may bring forward as amendments at Committee Stage.


I hope that the debate on the important provisions contained in the Bill can be conducted in a constructive way.


I will always listen to other viewpoints and will consider any suggestions put forward during our debate over the next couple of days in the context of additional Committee Stage amendments.


In conclusion, I commend the Bill to the House.