Pearse Doherty
Ceist:136. Deputy Pearse Doherty asked the Tánaiste and Minister for Finance if he will bring forward an emergency budget to help people deal with the cost of living. [39713/26]
Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
Cost of Living Issues
I ask the Tánaiste again to review the decision not to have an emergency budget. It is absolutely crucial. What was announced last October in the budget left people worse off. It is not just Sinn Féin saying this - we saw in the Economic and Social Research Institute, ESRI, analysis of the budget that families were left worse off and those on lower incomes were worse off. Added to that, inflation is running at nearly double what was projected on budget day. People cannot wait until next year until the Government brings forward the budget. They need support right now with the cost-of-living crisis.
As the Deputy will be aware, the Government has already intervened to help absorb the impact of rising energy prices for households and businesses with two packages of measures worth over €750 million. The first package of measures introduced in March reduced excise on fuel, cut the National Oil Reserves Agency, NORA, levy to a nominal amount and enhanced the diesel rebate scheme. We also extended the fuel allowance season by an additional four weeks. This meant that 470,000 households received additional financial support, an extra €152 in total. A further package of measures was introduced in April. Excise on fuel was cut further, bringing the total reduction in diesel to 32 cent per litre, 27 cent per litre for petrol and 7.4 cent per litre for green diesel. We are also delaying the scheduled increase in carbon tax and introducing a support subsidy schemes aimed at key productive sectors of our economy, both haulage and agriculture. We have shown we are not afraid to act when the circumstances demand action but we have also been clear that the best way to manage the State's finances is as part of a carefully considered annual budget process. I emphasise that the Government’s response has been made possible because of the resources we have thanks to the careful management of our public finances. We have run surpluses for consecutive years. Running surpluses has not always been popular, but it has given us the flexibility and agility to respond swiftly and forcefully to this shock.
The resources of the State are not infinite. There are still vulnerabilities in our public finances. Around €1 in every €6 paid in tax comes from about ten firms in the country. The vulnerability around what we refer to as windfall tax receipts is real. We are highly exposed to any deterioration in the global economy and there are structural changes on the horizon that must be prepared for. That is why it is important that we get into that annual budget cycle.
I accept the Deputy’s point. People are feeling the pressure and, as a result of the war in Iran, inflation is higher this year than it was expected to be. The focus in the budget will be to see what measures we can take in a rounded way to try to assist people, including in a structural way, with the charges that families and businesses face.
Many people would love to be in the Minister's shoes and have the luxury to wait this out until next year until budget 2027 but they are not in that position. We have 320,000 families across this State who cannot pay their electricity bills. One in four households cannot pay their gas bills. Tens, if not hundreds, of thousands of other families are paying those bills but are really struggling, finding it difficult to make ends meet at the end of the week, working every hour God sends them and doing everything right, yet still they find it tough because groceries, insurance and rent have gone up. All the pressures of life are bearing down on them and they are looking at a Minister who has a surplus that is now twice what was projected just a couple of weeks ago but who tells them to hang in there, to tighten their belts, to hold tight and that the Government will come to them maybe in October or might have something for them in January. People need support right here, right now. The Minister needs to understand that there is serious pressure on families at this point in time and they are looking for a Government that will listen and respond to them. The way the Minister needs to respond is to bring forward measures that recognise the pressures families are under right now.
I am not sure that the Deputy's take on the Irish people is where they are at. The Irish people get the fact that this Government responded with one of the largest packages of support in the European Union, so nobody has been asked to wait at all. We reduced excise on diesel and petrol and put in place measures for key sectors. All of that benefits every citizen in this State in terms of trying to put some downward pressure on what the Deputy rightly said was rising inflation. The Department of Finance estimates that the overall package will reduce inflation by about 0.5% on what it otherwise would have been. We are taking proactive measures but I have to be honest with the Irish people - the winter could be very challenging. We have to try to make sure we can have a well-considered package for how we assist people, families and business not in a temporary way, but in a way that looks at structural change. I am open to positive and constructive engagement. We had a discussion about this in the budgetary oversight committee today.
What can we do structurally on energy? What can we do to make it easier for people to make their own homes warmer? Are there measures we can take there? However, getting into that annual budget cycle is to the benefit of citizens in this country.
There the Minister goes again saying the winter could be very challenging. People are telling me that it is very challenging right now. How more challenging does it need to be when you cannot pay to keep the lights on in your home? That is the pressure that people are under. The Minister is saying that we need to keep the power dry until the winter and budget 2027 and I am telling him that there are large numbers of people who are really under pressure. They are under pressure because of the budget that the Government brought forward.
The Government brought forward a budget of €9.4 billion last year and the Government left workers and families worse off. That is what the ESRI says. The ESRI is very clear on what the Government has done. They are worse off this year than they were last year. That is the Government's conscious decision. On top of that now, we have inflation. We have so much pressure bearing down on people.
Can the Minister not understand that people's lives are really challenging now? What they are seeing is a Government that thought it would have a surplus of over €4 billion, now it is twice that amount and the Minister is still not willing to alleviate the pressures on those families right now.
The Deputy is doing it again. The Deputy is speaking for the people of Ireland. We both went to Galway and we put our cases to the people. The Deputy said, "Send a message to the Government on the cost-of-living crisis - vote Sinn Féin", and the people of Galway West said, "Now, hang on a second here. We can see through this." The Deputy should have a little humility in terms of coming in here speaking for the people of Ireland and that the Deputy is in touch with everyone and I am out of touch. We just had an election. That is the first point.
The second point is, we need to be very careful we do not chase inflation. The Deputy's budget proposals last year would have put up inflation. The Deputy knows that too. We have to get this balance right. We had a good conversation of Government and Opposition at the oversight committee on this today. We have to be very careful that anything we do does not chase inflation because things that we do that could in the temporary moment seem like we are trying to assist people could end up pushing up prices for them and nobody in this House, I presume, wants to achieve that situation too.
We have taken measures. The people of Ireland get this. It is one of the largest packages of support in the European Union to help people. We will work in the annual budget cycle but if we get into this situation of mini-budget here and mini-budget there, it is a dangerous spiral that will not serve the people of this country well.
Regeneration Projects
Ged Nash
Ceist:137. Deputy Ged Nash asked the Tánaiste and Minister for Finance if any applications have been made to date to the Revenue Commissioners from property owners in Drogheda and Dundalk for access to the living cities initiative; and if he will make a statement on the matter. [39890/26]
I am seeking an update on the number of applications or inquiries that have been made with the Revenue Commissioners in relation to the living cities scheme since its expansion to cover Drogheda and Dundalk. I appreciate that it was only a month ago that this happened but this is a critical scheme for the area to address vacancy and dereliction. If the Minister has an update, I would it if he put it on the record of the House.
I appreciate the Deputy's support for the initiative.
The living city initiative is provided for in Chapter 13 of Part 10 of the Taxes Consolidation Act 1997. It offers income or corporation tax relief for qualifying expenditure incurred in the refurbishment and conversion of qualifying residential and commercial buildings located within special regeneration areas. Often these are inner city or central town areas where there is above-average unemployment and which demonstrate clear evidence of dereliction, perhaps neglect and under-use.
There are four types of relief available under the initiative: owner-occupier residential relief, rented residential relief, commercial relief and living-over-the-shop relief.
As the Deputy will be aware, we introduced this in 2015. We took a decision in the last budget to expand that as well and the Deputy was eager that that would happen. Indeed, it was expanded to five more areas, namely, Athlone, Drogheda, Dundalk, Letterkenny and Sligo.
I appreciate the speed at which the local authorities worked. I acknowledge Louth County Council in getting in the maps that my Department was then able to get independently assessed.
The scheme, as the Deputy says, now has opened. I am advised by Revenue that it has recently received information from Louth County Council in respect of the number of requests for letters of certification received by the local authority. Revenue understands that Louth County Council has received fewer than ten requests between 8 April 2026, when the scheme was opened, and 20 May 2026. As the Deputy says, it is a short window. For reasons of taxpayer confidentiality, Revenue will never give the exact number but just under ten is an indication. In only a month of the scheme, I see that as somewhat encouraging.
I will continue to monitor this. I am happy to provide the Deputy with further updates as they become available.
Vacancy and dereliction is an absolute scourge that is affecting every town, city and village across this country. For many years, I have sought the expansion of the scheme to areas such as Drogheda and Dundalk.
Drogheda, especially, as the Minister will understand, is a very ancient area with sensitive architecture. That being said, one of the main aspects of this scheme now is that it applies, at least from the point of view of commercial premises, to properties that were developed before 1975. It previously pertained to buildings built prior to 1915. The change to 1975 should capture quite a significant number of buildings that could be brought back on stream.
One thing I propose would be that the Revenue Commissioners proactively market this. If it is the case that in previous iterations of the scheme, the Revenue Commissioners went out and conducted workshops in communities trying to promote the scheme, can they be encouraged to do so?
That is a fair point. Truthfully, I do not know whether Revenue went out and marketed the scheme previously. From my recollection, it is generally the local authorities that promote the scheme and obviously the Revenue Commissioners that administer the scheme.
On the Deputy's broader point as to whether we should have roadshows or workshops, absolutely we should. On foot of the Deputy raising this here this evening, I will talk to the Minister, Deputy Browne, from the local authority perspective, and my own officials and Revenue, and see what can be organised here.
We set up these schemes because we want them to succeed. We set them up because we accept that the issue of dereliction is real. Dundalk and Drogheda won the argument in terms of the need for that scheme to be expanded and now we want it to be a success.
In the first instance, I would encourage at a local level the local authority and other stakeholders, who I am sure will, to get the word out there. Should that be happening, if we can supplement that with Revenue or the likes, I will certainly engage with the Deputy positively on that to try to make that happen. I will talk to the Minister, Deputy Browne, and we will both revert to the Deputy.
One important aspect is that this is user-friendly and accessible. The Revenue Commissioners and the Department have taken on board some of the critiques of the scheme over the past few years. Certainly, the enhancement of the scheme will make it more attractive. Clearly, it will become more attractive to enterprises that are engaging in redevelopment given the expansion of the value of the relief from €200,000 to €300,000. In reality, with some of the sensitive and large-scale buildings we are talking about in areas such as Drogheda and Dundalk, it may be only commercial enterprises that will have the deep pockets, ambition and wherewithal to undertake the work that would be needed on architecturally sensitive buildings to put them back into use.
I know from the maps - I acknowledge the Minister stated quite correctly that Louth County Council were quick out of the traps in terms of developing the proposed special area of regeneration - that close to 60 buildings in that area are considered to be derelict and this could be a game-changer, if it is taken up.
It is important that Revenue promotes it. I myself will contact them and make that case that they may very well need to conduct some workshops with the local authority and local businesses.
As I say, I am positively disposed to that. We passed a law in this House to make this living city initiative available to five more regional towns, including places such as Drogheda and Dundalk. We all want to see it succeed now.
We have tried to show flexibility as a Department and as a Government in terms of enhancing the scheme. In the previous Finance Act, there were a number of enhancements. First, the scheme was extended to the end of 2030. Second, it is now available to residential properties built before 1975 instead of 1915, as the Deputy said. Furthermore, if the work is carried out by an enterprise, the maximum relief has been increased from €200,000 to €300,000. Of course, the big announcement, from the Deputy's perspective, was it was extended to five regional centres, including Dundalk and Drogheda.
The new living-over-the-shop relief is an important step in terms of trying to bring life back onto our main streets, tackle dereliction, but also the whole safety and security issue that can create in a positive sense as well. Having no building age rule for the conversion of commercial into residential will facilitate greater access to the relief for living-over-the-shop or mixed-use developments.
I will follow up with the Deputy in relation to that workshop concept.
Insurance Industry
Pearse Doherty
Ceist:138. Deputy Pearse Doherty asked the Tánaiste and Minister for Finance the reason the motor insurance transparency code is voluntary and not subject to administrative sanctions procedure. [39714/26]
The Minister finally published his motor insurance transparency code, which was promised in the so-called insurance action plan. The action is completely powerless with no powers to sanction companies. Worse still, I understand it is voluntary. That was never mentioned in the original action plan. Why is the Government afraid to stand up to the insurance companies and hold them to account?
The motor insurance transparency code was launched as a priority measure under the Government action plan for insurance reform from 2025 to 2029 to enhance transparency, clarity and consumer understanding in the motor insurance market. The code was developed by a working group comprising insurers and intermediaries with the support of the Department of Finance and the Central Bank.
The code is designed to complement, rather than duplicate, existing regulatory requirements. It sits under the legislative umbrella of the Central Bank of Ireland's consumer protection code, CPC, and aligns with relevant disclosure requirements and requirements to inform customers effectively. The revised CPC came into effect on 24 March this year and is legally binding on insurance companies and intermediaries. The Central Bank's administrative sanctions procedure will be applicable in respect of non-compliance with the revised CPC.
The voluntary nature of the code allows for an appropriate balance between transparency and the protection of commercially sensitive information. The code has been carefully designed to provide meaningful insight to consumers into how premiums are calculated, while ensuring that firms are not required to disclose information that could undermine competition or market functioning. While the code is not subject to the administrative sanctions procedure, there remains a clear framework for oversight and monitoring. The Central Bank will provide a report to the Minister for Finance in advance of the first review of the code, which will take place within 18 months of implementation. This report will be on the Central Bank's observations on firms' adherence to the code and the effect the code is having in achieving its objectives. If it fails to achieve the objectives, we are, of course, open to putting it on a legislative footing.
The cost of car insurance is going up and up. This is the fourth consecutive year of price rises and every motorist knows it. Irish people already pay almost double what the European motorist pays for car insurance. When one adds soaring fuel costs, too many people are being pushed to the brink in trying to keep a car on the road. We know from the Central Bank that the cost of car insurance is going up while costs for insurance companies are going down. The simple fact is that companies are pocketing the difference with the tacit support of Government. The answer of the Government is a voluntary code designed by the insurance industry. It is difficult to overstate how weak an approach this is. How is the public supposed to have any faith this will work when it is optional and completely toothless? We need a Government that is standing up to insurance companies and ensuring that the benefits of the reforms that have been passed in this House over the past number of years are not going into the pockets of the companies but, rather, are passed on to consumers in the form of reduced premiums.
As the Deputy will be aware, we are implementing the second action plan on insurance reform. Reforms are working. The latest CSO data of April 2026 shows that in the year to date insurance premiums are 2.2% lower this year than in April 2025. The Deputy may want to dispute that figure. Premiums are still 35.8% lower than they were at the peak of 2016. I acknowledge that we need to keep a close focus on this to ensure we continue to see a downward move. This transparency code will help to achieve that. Some 2.2 million policyholders will see the benefit of this code in their quotations and renewal documents from quarter 3 of this year. Despite the fact that it is a voluntary code, 97.5% of insurers and intermediaries selling insurance in this State have already signed up to it. This will enable consumers to see exactly how their policy is charged and to shop around to ensure they get the best value for money in their policy.
Does the Minister of State not accept the average cost for motor insurance in this State is now €655? Does he accept that insurance companies are paying out less than half of that in claims? Does he accept that insurance companies are taking more in profits and inflated costs that they are paying out? They are all facts. Insurance companies are squeezing people dry to appease their shareholders. The Government wants to blame drivers. This Government is going along with that. The transparency code refers to risk mitigation and driver behaviour more than profit or inflated costs.
I tabled proposed legislation four years ago in the House to set out how a Government could mandate insurance companies to show how they are actually passing on the benefits of these reforms to customers and not profiteering from those same reforms. Instead, we get a voluntary code with no audits or enforcement. Fianna Fáil and Fine Gael and the Independents that support them are blocking my Bill. The public deserves to have full transparency. They deserve not just transparency and accountability, but also reduced premiums, as was promised by these reforms. Unfortunately, if we do not have a Government that stands up to the industry, the industry will of course deepen its pockets with profits.
Insurance premiums have fallen in the past couple of months, according to the CSO.
Not according to the Central Bank.
That is a welcome development. There were a couple of years where there were increases. We are still 35% lower than we were at the peak. That is a success. The reason we re-established the action plan on insurance reform was that we acknowledged there was more work to be done. We are doing that. The transparency code has been published in a timely and efficient manner. Consumers will see the benefit of that code in their renewals come quarter 3 of this year. The last time the Deputy raised the question with me regarding his insurance premium he spoke about how it has increased, but when he shopped around he got a lower one. The simple fact of the matter is that not enough people are shopping around. We now have ten insurance companies providing insurance cover in the motor insurance sector in Ireland. There have been three new players in the past number of years. That is success. There is more competition in the market. Only one in four people shops around and of those, 76% achieve savings. This will enable people to get better premiums on their insurance policies. We will keep the matter under review. It is a success. The Deputy can never acknowledge any progress.
Tax Code
Pearse Doherty
Ceist:139. Deputy Pearse Doherty asked the Tánaiste and Minister for Finance if he will reconsider his position and introduce a windfall tax on energy companies in order to fund support for workers and families with the rising cost of bills. [39715/26]
Will the Minister reconsider his position and introduce a windfall tax on energy companies in order to fund support for workers and families in the cost-of-living crisis? The Minister has stated he will not introduce a windfall energy tax on energy companies unless his hand is effectively forced by action at the European level. His performance during the last energy shock was abysmal. He allowed companies to enrich themselves. I urge him not to repeat the same mistakes, reconsider his position and prepare windfall tax measures in the State.
The European Union does not work in the manner in which the Deputy described. It is not about forcing anybody's hand. We are members of the European Union. The Deputy's party did not support joining the European Union, but we are members of it and sit round the table and make decisions together. It clearly makes sense in a single market that if you are introducing a taxation system around energy, you would endeavour to examine the measures available at European level and try to move in concert. That is the position of the Government. We certainly have not ruled out acting on a windfall tax. We have said it would make sense that we do that at a European level.
As the Deputy is aware, the European Commission's AccelerateEU communication addresses the EU's rising energy costs and volatile fossil fuel markets and aims to accelerate the clean energy transition and strengthen EU energy resilience. While the communication notes member states may take domestic measures, no EU-wide approach has yet been agreed. The temporary solidarity contribution, TSC, was introduced in line with Council Regulation 2022/1854 of 6 October 2022 to tackle windfall gains being made in the energy sector at the time, following the commencement of war in Ukraine. The TSC formed part of a co-ordinated European response, reflecting the highly interconnected nature of EU energy markets - when we acted, we did so at an EU level - and a view that an emergency intervention to mitigate the effects of high energy prices at the time could not be sufficiently achieved by member states individually.
It continues to be the Government's view that tackling the energy crisis in a co-ordinated way between EU member states is preferable, given the interconnectedness of EU energy markets. We will continue to engage constructively with EU partners on these matters and aim to ensure that any joint European response to these challenges is co-ordinated and effective. In this context, potential solidarity measures and broader energy market developments continue to be a central focus and Ireland continues to engage with our EU partners, in colluding during our forthcoming EU Presidency.
The Government is conscious of the increased financial pressures on households and businesses, which we have discussed in terms of the temporary and targeted measures we have introduced, one of the largest packages in the European Union. Alongside this, work is ongoing through the national energy affordability task force to identify further measures to enhance energy affordability. The ongoing conflict shows the need to accelerate the deployment of renewables at domestic and EU level.
It is the same old playbook. We see the same playbook being used by the Government on the occupied territories Bill. When it does not want to do something, it reaches for the EU and uses it as an excuse. The EU has given member states the green light to act on this. The ball is in the Government's court, yet it is still finding excuses as to why it will not or cannot act. It is trying not to rewrite history. The Government opposed action at EU level during the last energy shock. Electricity companies were never hit with a windfall tax in the State. The TSC the Minister mentioned did not apply to electricity companies, but the European Commission has been crystal-clear this time that member states can act. The Minister can act. Does he accept that he is choosing not to act on a windfall tax on energy companies?
Does the Minister accept he is choosing not to act in relation to windfall tax on energy companies now?
I fully accept that it is the very clear position of the Government that if we were to act on windfall taxation, we would do it at an EU level because of the interconnectedness of the EU market. That is the position of the Government. This week, Deputy Doherty wants to fund the new measures he would like to do outside of a budget with a windfall tax.
Who said that? Why are you making that up? Did I say that?
Speak through the Chair, Deputy.
With respect, did I say that? Is the Minister just going to make up lies? Is he just going to do that?
The transcript of the Dáil will show-----
I did not say it.
Let me speak, Pearse. Come on.
I did not say it.
The angry routine is not working. Just let me speak. I thank the Deputy. I thank the Cathaoirleach Gníomhach. The transcript will show that Deputy Doherty talked about bringing in a windfall tax measure that could help to provide supports families and businesses.
I did not say that. I actually did not say that.
Deputy Doherty can do this outside. This is not a conversation. There is no back and forth. The Tánaiste can finish.
This is my time. I am allowed to speak. I might be allowed to suggest the Deputy might tell me what the purpose of it is if he does not believe it is for that. Last week, he wanted us to use the surplus. The point is we have put in place one of the largest energy support packages in the European Union. We are working at an EU level because a co-ordinated approach matters. Being isolated and not working at a European level does not work for this country's economy.
Deputy Doherty has one minute.
He just used all of my time.
I know the Minister wanted me to say that and that is fine. I have no problem saying that but I did not say it. I did not work with the narrative of the Minister's script.
I do not have a script.
Let us be clear. The Minister has the power to do this now. He has the power to introduce a windfall tax on energy companies. He is refusing to do so. These companies are ripping off Irish customers left, right and centre. There is a decision the Minister has to take about which side he is on. He talks about the EU energy market but it does not stack up. The Irish energy market is not as integrated as that of other member states because we are an island nation.
That is the problem.
There is a difference there in the first instance. That is a bit of a smokescreen in relation to an action. The reality is that the Minister does not want to do this. The European Commission has given him the power to do it and, of course, he should do it. Let us look at the last time we saw money collected. We know that €178 million is still sitting there. That was money that was supposed to directly support workers and families with the cost of electricity. I told the Minister earlier on. There are 320,000 families who cannot pay their electricity bill and the Minister has sat on a fund of €178 million for the past three years that is just sitting there. It is ridiculous.
It is also important to note, as the Deputy referenced the last time, that when the temporary solidarity contribution was brought in, and this is already facing multiple legal challenges in the Court of Justice of the European Union, the actors questioned the legality of the measures and the actors questioned the retroactive elements of the measure. Claimants are arguing that the EU incorrectly adopted the levy under Article 122 of the Treaty on the Functioning of the European Union, TFEU, as emergency measures rather than requiring unanimous agreement. The last time this was done, it was subject to legal challenge.
The Government is working at a European level because we believe in a single market for energy. That is where we are all working to get to. There is an interconnectedness to this. We have provided significant financial assistance to families and businesses. We will be doing more in the budget to help people with the structural costs they face in their lives. We will continue to keep all matters under review.
Question No. 140 taken with Written Answers.
Tax Code
James O'Connor
Ceist:141. Deputy James O'Connor asked the Tánaiste and Minister for Finance if he is considering new taxation measures to strengthen Ireland's competitiveness to support the growth of the indigenous sector and encourage retail investment; and if he will make a statement on the matter. [39878/26]
Will the Government consider any new measures in the forthcoming budget to support the growth of the indigenous sectors in Ireland and to encourage more retail investment? I do not need to tell the Tánaiste the importance of small and medium-sized companies in this country. When we see the enormous exposure Ireland has regarding our corporation tax receipts, although it is a huge benefit to the economy, there is also a risk if we ignore Irish businesses and do not do enough to support them, foster them and help more businesses to grow, expand and be founded in our country. Does the Tánaiste have anything to say?
I thank the Deputy for this important question. A number of tax incentives that are in place are intended to encourage investment in indigenous businesses, particularly in our small and medium enterprises. These measures include the employment investment incentive, the research and development tax credit, the start-up capital investment and the relief for investment in innovative enterprises, also known as angel investor relief. The research and development tax credit is another tax relief that is now making a significant contribution to Ireland's competitiveness.
Ireland still does not have a sufficiently diversified savings and investment culture. This is a real issue in our country. Deposit accounts are appropriate for many people and for many needs but as inflation can erode their value over time, they should not be the only practical option. Investment in capital markets by retail investors can offer another path to long-term financial well-being while also supporting growth and competitiveness in the wider economy, as has been identified in the EU’s focus on the savings and investment union, SIU. I acknowledge the work the Minister of State, Deputy Troy, is doing with me in this key area.
An important aspect of the SIU is the European Commission’s recommendation on increasing the availability of savings and investment accounts in member states. At the recent savings and investment forum, I announced our intention to introduce a legislative framework for an investment account in Ireland in the next budget. We want to make investing simpler, clearer and more accessible for ordinary people. In designing the model that best fits the Irish economy and the needs of Irish households, the views of relevant experts are being considered and we are learning from international best practice. That is not about picking up something from another country and saying that we will take exactly that. We will learn from best practice and find what is the best model for our country too. Many countries have implemented similar schemes and they have reported that investors tend to have a home bias in their investment choices.
Budget 2026 included a commitment to publish a roadmap for the taxation of retail investment in 2026. The development of the investment account is a key part of that roadmap, as is consideration of the existing taxation regimes for investment. I expect to be in a position with the Minister of State, Deputy Troy, to publish that roadmap this summer.
I thank the Tánaiste and appreciate his response. Yesterday, we saw some very important information come from the International Monetary Fund that effectively warned Ireland about a level of exposure our economy has when it comes to bloated expenditure and wastage of public money and the risks in our economy, such as the advances in artificial intelligence. They are things the Government cannot afford to ignore. I fear that we are not quite at 2008 levels yet, but we are back in 2005, 2006 and 2007, when the Celtic tiger reached its peak and it all came to a miserable end. I wanted to say that on the record of this House and I hope I am proved wrong in four or five years' time. We need to ensure that indigenous businesses, our SMEs and our entrepreneurs are supported, that our economy gives them the best possible chance of success and that we are able to derisk Ireland from what the IMF has stated is a particular concern.
We know that multinational companies are moving five times faster than the SME sector when it comes to the application of artificial intelligence. We have a bloated number of employees in Ireland working in multinationals. The risk is clear and obvious. It is a serious risk to the State.
I thank the Deputy. He said he wanted to put something on the record of the Dáil so let me do that as well. While the Deputy is right that we should always be cautious about our economy and never take economic stability or growth for granted - sometimes that seems to be the case in our discourse - I contend that the country has structurally learned a lot of lessons in terms of plans and actions from the crash. That ranges from the fiscal rules we have in place to our level of indebtedness, both at a national level but also at a business level, being a lot lower too.
The Deputy's point about the indigenous sector is right. It is still a statement of fact that the greatest number of people in employment in Ireland are in Irish-owned SMEs. This is a sector we have to really support. The research and development tax credit is now being used by more and more SMEs, but making this as simple as possible for smaller companies to access is important too. On AI, the approach of the Government and country has to be to maximise the opportunities and minimise the challenges. I know both Ministers, Deputy Burke and Deputy Lawless, are working on how we can address the skills deficit that interacts with those two Departments. The Industrial Development Agency, IDA, and Enterprise Ireland, EI, are supporting companies as well. The Minister, Deputy Lawless, is looking at how we can train more people in these areas. There are also huge opportunities for the Irish economy, for both indigenous and FDI-supported companies, in terms of productivity if we can get AI right.
I appreciate the Tánaiste's response. Undoubtedly, the agencies he mentioned, including the IDA and Enterprise Ireland, have done great work. As Chairman of the Oireachtas Joint Committee on Enterprise, Tourism and Employment, I commend them on the huge body of work they have done over many decades. Beyond politics and beyond what happens in this House, they are working diligently on behalf of the State across the world and that has to be commended. We have to come to terms with the fact that AI will change the world. It will change how people work. It will reduce the number of people in our workforce and we know that. We see it happening. We saw it with Meta recently and other companies that are starting to downsize their workforce.
Informally, some governments are already talking about a future, amazing to say it, without the income from PAYE workers. That is the level of change. If we look at the pioneering companies in respect of this, such as Anthropic and others, they have discussed the possibility that from 40% to 60% of the current workforce in the United States of America could be finding themselves in some way redundant over the next ten to 15 years. We need to take this seriously and look at the key risks to the economy in Ireland.
That is right; we need to take it deadly seriously. I do not mean this about Deputy O'Connor but about me. I always think that speaking with great authority on something that is fast evolving is challenging because we are all learning about this in real time. That is not an excuse or a reason not to take it extremely seriously because the countries that work out how best to respond to this are the countries that will do the best. We have only to look at the Future Forty report, which my Department published.
It refers to the huge demographic challenges this country is going to face. One of the great ones is that everyone is going to live to be much older, on average, and the population is going to age. The question of whether we can transform healthcare through the use of AI, for example, points to one area where I believe we could see real productivity gains. At the moment, all of the conversation seems to be about productivity gains in the private sector and just being aware of the risk in the public sector. We have got to do a bit better than that.
The other point is that, up until now, every technological revolution has resulted in more jobs at the end of it than at the start. That merits close monitoring. What we do know is that training and upskilling comprise an immediate issue, and we have to take that very seriously.
Fiscal Policy
Cian O'Callaghan
Ceist:143. Deputy Cian O'Callaghan asked the Tánaiste and Minister for Finance the steps he is taking to ensure that the Government and the Central Bank are acting in accordance with the recommendations set out in the report on the Israeli bond programme of the Oireachtas Joint Committee on Finance, Public Expenditure, Public Service Reform and Digitalisation, and Taoiseach; and if he will make a statement on the matter. [39701/26]
Israel is still issuing war bonds across the EU and using this money to fund a genocide. While our role in approving these bonds has been moved to Luxembourg, Ireland remains the home member state for Israeli bonds. We have a legal and moral obligation to do everything we can to stop genocide when it is taking place. What action is the Minister taking to ensure we are not complicit in the sale of these bonds and in implementing the recommendations from the committee's report?
I thank an Teachta O’Callaghan very much for the question. I have read the report of the Joint Committee on Finance, Public Expenditure, Public Service Reform, and Digitalisation and it has also been reviewed by my officials. It was published last August. It sets out 15 recommendations, some directed to the Central Bank of Ireland and others to the Government.
Chief among the recommendations made is that the Government engage at EU level with a view to amending the prospectus regulation. I directed that senior officials in my Department engage with the Commission on this matter. Department officials subsequently liaised with their counterparts in the European Commission, drawing attention to the work of the Oireachtas committee in its report and, in particular, the committee's recommendation that the prospectus regulation be amended. We formally conveyed that as the view of the Oireachtas to the European Commission. This engagement reflected my view that the European Commission should have regard to the report, its findings and recommendations. Officials outlined, in their engagement, recent developments in Ireland and sought the views of the Commission on the possibility of a legislative initiative by the European Commission to address the Oireachtas committee's recommendation. In its response, disappointingly, the EU Commission indicated it currently has no plans for a review of the prospectus regulation.
My officials have also engaged with the Central Bank since the report was published. The Central Bank has also reviewed the report's recommendations. It has on a number of occasions, both before the committee and elsewhere, set out its position on the matter. I do not need to remind the Deputy, because he said it, that the Central Bank has no role in the review and approval of the 2025 prospectus for the State of Israel.
Ireland is continuing to press for appropriate action at EU level. I support the proposal of the committee, and also the suspension of the EU-Israel Association Agreement in response to the egregious Israeli breaches of human rights, international law and democratic principles. The Minister for Foreign Affairs and Trade, Deputy McEntee, indicated in the Dáil last week that she will advance the Israeli settlements in the occupied Palestinian territory Bill in the coming weeks, and she secured Cabinet approval on that today.
Our Taoiseach also wrote to European Council President Costa on 20 May reiterating Ireland's position on EU trade with Israel and requesting an urgent discussion of these issues among EU leaders at the next meeting of the European Council. Perhaps on foot of this question, I will brief the Taoiseach on the committee recommendation before that Council meeting.
I thank the Tánaiste for his response and for the work that has been done on this. What he said earlier, in response to a different question from a different Deputy, was that while we are part of the EU, we do not simply do what it tells us. Rather, we are part of shaping what it does. Clearly, therefore, the response from the European Commission is not satisfactory and is not in line with what we want as a country. What is the Tánaiste going to do to follow up with the European Commission on this? It saying it has no plans to do anything about this simply is not acceptable. We need to do as much as possible in Ireland and more broadly in the EU to address this. We cannot have a situation where bonds are being sold in Europe that have been marketed by Israel to fund its war and genocide. What follow-up action is the Minister taking with the European Commission to push it into acting on this, because its response simply is not acceptable?
I agree with that. What I will do is raise it at a political level as well. We have been raising it at an official level. I have directed my officials on a number of occasions on back-and-forth engagement with the Commission on this. I will speak to the Taoiseach as well because I know he has rightly sought a conversation at the European Council on foot of Israel's egregious breaches of international law. That is due to be scheduled for 18 and 19 June.
I have examined whether Ireland can do something domestically because I know we have had debates in this House on the matter, but the clear, solid view is that national measures could not allow for the Central Bank to refuse a prospectus because the requirements of the EU prospectus regulation have to be met, including the standards of completeness, consistency and comprehensibility. We need to respect EU law, but I take the point that we also have a role in shaping it. There are different views across the EU on this matter, although I really hope it can be addressed, particularly after the horrors we saw in relation to the flotilla. It should not have taken that at all, nor should it have happened. If that is how Israel treats European citizens, it gives a real insight into how it must treat Palestinians.
I thank the Tánaiste. Francesca Albanese, the UN special rapporteur on the occupied Palestinian territories, clearly stated, “International law says that all financial actors have to abstain from being directly linked to human rights crimes”. That applies to the financial actors and authorities in Ireland, Luxembourg and across the European Union.
I welcome the Minister saying he is going to raise this at a political level. What does that mean? I welcome that he is going to raise it with the Taoiseach. Who is the Minister going to talk to and when? Will he give us details of the timeline for his plans to raise this at a political level?
That is a fair point. I will correspond directly with the relevant European Commissioner in the first instance, following up on the official engagement and reflecting the view of the Oireachtas committee on the prospectus regulation. I also do not rule out having further political engagement with EU counterparts on this.
What is clear, and I know there are strong views on this issue in this House and in this country, is that sometimes there can be a grey area and we can debate how much is in compliance with EU law and how much we can do domestically. On this matter, solidly, the EU treaties and the obligations of member states seem to necessitate any change happening at an EU regulatory level. In the first instance, I will personally correspond with the European Commissioner and will update the Deputy when I receive a response.
Tax Reliefs
Cathal Crowe
Ceist:142. Deputy Cathal Crowe asked the Tánaiste and Minister for Finance if he is considering a reduction in the capital gains tax rate from 33% to 25% for active business assets; and if he will make a statement on the matter. [39656/26]
We will revert to Question No. 142 in the name of Deputy Cathal Crowe. It will be taken now by Deputy Tony McCormack. I apologise to the Deputy for having skipped it.
I thank the Deputy very much for the question. The rate at which capital gains tax, CGT, is charged has varied both upwards and downwards since its introduction in 1975. The current standard rate of 33%, which applies to most gains, has been in place since 2012. However, a number of reliefs are already provided for business assets, including retirement relief on the transfer of business or farming assets, revised entrepreneur relief and participation exemption relief. For example, the revised entrepreneur relief provides a reduced rate of CGT for qualifying business assets. The lifetime limit of €1 million of gains on which the relief can be claimed was increased to €1.5 million with effect from 1 January this year. The increased lifetime limit should significantly assist entrepreneurs to grow and scale their businesses or to begin new ventures building on their previous entrepreneurial experience.
As with all taxes, there are options for amending the scope of the tax, including changing the rate of the tax, amending or abolishing existing reliefs or exemptions or considering the introduction of new reliefs and exemptions. However, a narrower base of a tax regime with significant exemptions often requires a higher rate to generate an appropriate yield. A wider base may facilitate a lower headline rate of tax as it applies to a wider set of economic and commercial activities, reduces reliance on any one activity and potentially maintains a more sustainable yield.
On the cost of changing the standard rate of CGT, and this is a legitimate issue people highlight, each 1% reduction or increase is estimated to amount to around €87 million in a full year, assuming no behavioural change. We always have to assume that, although it is harder to factor in. Therefore, a 5% reduction in the standard CGT rate in a single budget would have an Exchequer impact, at least in that budget, of €436 million, assuming no behavioural change. There are also costs to the Exchequer associated with extending the level of relief, as suggested in the question. I put that out to be helpful as people consider budget options.
The programme for Government commits to maintaining a broad tax base to guard against the need for countercyclical fiscal policy in the event of a downturn and to prepare for future budgetary challenges. CGT is an important part of the system to ensure taxation is not focused solely on income tax and that those who benefit from gains in the value of assets are included. As with all taxation measures, it will be kept under review as part of the budget.
I thank the Tánaiste for his response. I welcome the Government's continuing focus on competitiveness and supporting indigenous enterprise. As we all know, investment is vital in enabling companies to grow and expand and for start-up companies to get off the ground. However, Ireland's 33% CGT rate remains among the highest in Europe and there are growing concerns that it can discourage reinvestment, entrepreneurship and business scaling.
The Taoiseach himself recently acknowledged concerns that Ireland may be losing some investment and capital when people sell businesses and relocate elsewhere.
He also made the important point that what matters is ensuring that capital is recycled back into smaller companies, innovation and new technologies. In that context, would the Tánaiste agree that there is merit in examining a more competitive and targeted capital gains tax approach for active business assets, particularly where proceeds are reinvested into Irish enterprise, regional employment and productive economic activity?
I heard the Taoiseach's comments. I hear regularly from stakeholders and business groups about the importance of making sure that our taxation system is pro-enterprise. What I would say in response is that while that is important, everything is a balance. There will be a finite amount of things we can do in the budget on tax. I am eager that there will be a personal tax package. There was not one last year. I am very eager there will be one in the next budget and I know that is a view shared across the Government. It is probably shared by people beyond the Government. That is one of the options I want seriously considered and acted upon as part of the budget. We will obviously consider and review through our tax strategy group papers. We will have a national economic dialogue in June, the summer economic statement in July and the budget in October. We will keep all these matters under review.
As all Ministers for Finance are meant to say, all taxation matters are for budget day. We will give consideration to all matters. This evening, I wanted to usefully put the cost on the record of the House so that we can all be informed as we consider those suggestions. That cost would be approximately €87 million in a full year for each 1% reduction.
Another issue that has been raised consistently is the failure to index capital gains tax, CGT, thresholds and exemptions over time. When CGT was introduced in 1974, the annual exemption was £500 and if indexed properly would be a lot more than £500 today. That would have been 10% of the average value of a house at the time. Instead, the exemption currently stands at €1,270 and has not been adjusted since 1992, when it was set at £1,000. There is a legitimate concern that taxpayers can end up paying increased tax simply due to inflationary growth in their asset value over time rather than any real gain. Would the Tánaiste consider asking the Department to examine both indexation measures and a targeted reinvestment relief model ahead of the next budget, particularly where proceeds are reinvested into SMEs, innovation and job creation here in Ireland?
I thank the Deputy and will reflect on what he has said. I would point out that there are already a number of exemptions. If I am being bluntly honest with the House, I do not believe that existing levels of CGT are acting as a disincentive to investment because when they are looked at beyond the headline rate, we already have a range of exemptions and reliefs on CGT, which are designed to try to foster certain activities and avoid taxing people in situations that would be seen as unreasonable, such as retirements or the sale of a principal private residence. These reliefs reduce the level of CGT actually paid by many individuals, and include an annual exemption for the first €1,270 of gains arising from the disposal of assets. In addition, there are targeted reliefs for entrepreneurs and angel investors.
CGT, as with all taxes, is subject to ongoing review, which involves consideration and assessment of the rate of CGT and relevant reliefs and exemptions from CGT, and the policy and legislation around it will be reviewed as part of the annual budget and finance process. I will certainly reflect on what the Deputy has raised.
Banking Sector
Pearse Doherty
Ceist:144. Deputy Pearse Doherty asked the Tánaiste and Minister for Finance the reason €7.7 billion in proceeds from the sale of AIB shares is sitting, uninvested, with the Ireland Strategic Investment Fund, ISIF. [39793/26]
It has come to light that the proceeds of selling off the State's assets in the form of the shareholding in AIB is still sitting with the ISIF and is losing value. How has this been allowed to happen under the watch of the Tánaiste and his predecessor as Minister for Finance? What action is he going to take to address it? This is a significant amount of money that is losing value at a time when the Tánaiste has been running around and telling people that they need to get a return on their own investments. We have millions of euro losing value under his watch.
I would be interested to one day tease through the Deputy's view on the investment accounts. I hope that is something he might consider supporting.
As the Deputy is aware, ISIF is composed of the discretionary portfolio and the directed portfolio. ISIF holds the directed portfolio under direction from the Minister for Finance, comprising receipts of bank share sales. The National Treasury Management Agency, NTMA, has advised that at the end of 2024, the directed portfolio had a value of €7.7 billion, composed of ordinary shares in AIB, valued at the market price of €5.31 per share; €5 billion in cash and cash equivalents, including commitments of €165 million to the Strategic Banking Corporation of Ireland, SBCI; and a €305 million loan to Home Building Finance Ireland, HBFI.
Of the cash and cash equivalents, €4.838 billion was invested in Irish Exchequer notes. Exchequer notes help to ensure capital preservation and are relatively liquid, which is an important consideration to meet the timing and quantum of transfers out of the directed portfolio. The majority of the portfolio is now in Exchequer notes. The resources are actively being drawn down to support major infrastructure investment priorities.
The end of 2025 position will be disclosed in the 2025 financial statements, which will be published in the coming months. The unaudited end of 2025 value of the directed portfolio was €6.4 billion and since the end of 2025, the value of the portfolio has been further reduced due to drawdowns to the Exchequer on foot of directions. The figure of €7.7 billion was at the end of 2024 and the unaudited end of 2025 value was €6.4 billion.
As part of budget 2025, the Government decided to use €3 billion of the proceeds from bank share disposals to provide funding for infrastructure, including water, housing and the electricity grid, and in the case of housing and water is additional to ongoing Exchequer expenditure. In 2025, €514 million of the €1 billion allocated for Uisce Éireann was paid over. The remaining balance will be paid over the period out to 2028. In late 2025, a further €750 million was drawn from the directed portfolio to provide funding for investment in the electricity grid. The balance of €1.25 billion is for the Land Development Agency. The remainder of the directed portfolio is intended to be used in support of the national development plan. These are one-off receipts to support infrastructure development.
I have always been of the view that the State should have retained ownership of AIB. It was a mistake to sell off the shares. Fine Gael has a different ideological point of view and wanted the bank back in private ownership and is entitled to hold that opinion. However, the ideological position has come at a real financial cost. I think we can accept that now with the benefit of hindsight. The public AIB share was sold off at one of the worst times. When the Government started selling shares, they cost €2.32. They are now worth over €10. That shareholding would today be worth €16 billion before we even talk about the massive dividends that we no longer get from the bank. What we have instead is less than half of that sum. Worse still is that the Government sold off the public shares at that time and just left large portions of the proceeds sitting there. It did not use the money to build the necessary infrastructure. The money is losing value. That is the issue. The Tánaiste talked about Exchequer returns, but it is circular. It is in the State and getting a very low return. There is no actual return. It is a net zero return.
Does the Tánaiste accept that if we held those shares, they would be worth twice what we have now? That money should at least be getting some return as it sits in the ISIF account.
I appreciate the different political, ideological or policy positions on bank ownership. It is legitimate for people to hold different views on these subjects. The stated intention of the Government, and I think successive Governments, was to seek to return those banks to private ownership and to seek to recoup the money that the taxpayer had put into those banks, namely, AIB, Bank of Ireland and PTSB. That objective was largely fulfilled. I do not think the State should be in the business of owning banks. We all know how we ended up in that position as a State and it certainly was not by some sort of design. It was because of the financial crash and the chaos that ensued.
I am conscious that I am reading out a lot of figures and I am happy to send the Deputy a detailed note on the issue. I would just point out that the assertion around €7.7 billion was at a point in time at the end of 2024. What I have tried to do this evening is to update the Deputy on the current position because we have seen that number reduce as the result of investment decisions we have made, including for infrastructure projects. I will send the Deputy a note.
I appreciate what the Tánaiste has put on the record, that there was a reduction from €7.7 billion to a figure over €6 billion in the period of a year. However, it does not matter if the total is €7.7 billion or €6 billion. The money is sitting there and not making any return. It is in Exchequer notes, which means that the State is paying another organ of the State the 1%. It is making no return. It is financial mismanagement, on top of the fact that the Government sold the shares at one of the worst times. These shares would have been worth twice what we got for them if the Government held them today. We would be getting hundreds of millions of euro in dividends. This is serious financial mismanagement that the Comptroller and Auditor General should be exploring. We are not talking about hundreds of millions, or hundreds of thousands wasted on a bike shed or the €50 million wasted on the Irish Rail IT project. We are talking about billions of euro that has gone amiss as a result of selling the shares in AIB at the wrong time and then putting the proceeds from the sale of those shares in a fund that gets absolutely no return when inflation is running at 3.7%.
The Comptroller and Auditor General is welcome to look at anything he wishes to look at. Indeed, it was the Comptroller and Auditor General who put that figure on the record of the Committee of Public Accounts on 14 May and it was a figure for the end of 2024. It was a moment in time and the Government has thankfully been in a position to make a number of decisions about what to do with that resource, including investing in infrastructure such as water, housing and the electricity grid. There is no question of waste. There is a question of correct deployment of a one-off resource to try to improve critical infrastructure, particularly around water, housing and electricity.
I am looking at the end of the ISIF's 2024 financial statements. The ISIF discloses its direct portfolio total interest income in its financial statements and the end of the 2024 financial statements states the interest income earned in 2024 was €126 million. The position at the end of 2025 will be disclosed in the 2025 financial statements.
Thank you, Tánaiste. We move to Question No. 145
Who paid the interest? Was it the other organ of the State?
The ISIF does not disclose the terms of individual investments.
It is an Exchequer note, which means it is the other organ of the State. It makes a mockery of it.
Thank you, Deputy Doherty.
Middle East
Cian O'Callaghan
Ceist:145. Deputy Cian O'Callaghan asked the Tánaiste and Minister for Finance if he will ensure the Irish Strategic Investment Fund, ISIF, is fully divested from all companies that are directly and indirectly involved in illegally occupied Palestinian territories, OPT; and if he will make a statement on the matter. [39699/26]
The ISIF remains invested in companies that are profiting from illegally held Palestinian territories. More than €6 million of public money remained invested in six companies identified on the UN database at the end of 2024. Irish people do not want this. Will the Tánaiste ensure that the ISIF, which is public money, is divested fully from companies operating in illegally occupied Palestinian territories?
I restate the Government's clear opposition to illegal Israeli settlements, which are contrary to international law and damaging to the pursuit of peace in the Middle East.
Ireland has demonstrated its support of the Palestinian people and taken practical steps at national, EU and international levels. On 13 January, the Minister for Foreign Affairs and Trade, Deputy McEntee, announced that Ireland will provide €42 million in assistance to the people of Palestine in 2026, including €20 million in core funding to support the work of the United Nations Relief Works Agency, UNRWA, in providing vital services to refugees in Gaza and the West Bank. Ireland has provided more than €122 million in support to the people of Palestine since January 2023. This includes €68 million to UNRWA, of which €10 million was provided this January.
The Deputy is referring to the UN Human Rights Council database, known as the UN database, which identifies businesses involved in specific activities. It was first issued in 2020, updated in June 2023 and most recently updated to include 158 companies in September 2025 as mandated by the UN Human Rights Council. It is important to state that the ISIF has complete independence in implementing its investment strategy under the law of the land, the NTMA Acts, through an investment committee that reports to the NTMA's board.
I met the NTMA earlier this year and was assured that the ISIF will continue to monitor its holdings to ensure that investments remain aligned with its risk profile and investment parameters. Legislation underpinning the ISIF reflects a commitment to be a responsible investor, as a steward of public assets, by protecting and enhancing the long-term value of the ISIF and the reputation of the NTMA in how it delivers its mandate. The ISIF has taken an investment decision to divest from six companies, all of which remain in the UN database, with a total value at the time of the divestment decision of approximately €2.95 million. The six companies - I think I have read the names to the Deputy previously - were a variety of banks and a chain store. It is important to state that the type of companies on the UN database in which the ISIF still has holdings are ones that operate all over the world and that the ISIF's investment in them represents a very small proportion of its overall investments. This is part of the challenge. Unfortunately, divestment from these companies does not mean that they would stop deriving income from activities in the occupied Palestinian territories, OPT. The NTMA also divested from directly held sovereign bond holdings within the global portfolio across Egypt, Israel, and Jordan in July 2025.
I thank the Tánaiste. I acknowledge the huge importance of the Irish support of UNRWA, the funding that is in place and the real difference it makes. I also acknowledge the Government's complete opposition to illegal occupation of Palestinian territories. However, when we are talking about the ISIF - and it has complete independence - this is public money the Government hands over the NTMA to manage on its behalf. It is fine to say the NTMA monitors this and that it is meant to be a responsible investor and is meant to worry about its reputation and so forth, but this is public money. I do not think there is any support in this House or in this country for public funds to be invested in companies profiting and operating illegally, against international law, in the occupied Palestinian territories. This requires action from the Minister as the shareholder, on behalf of the public, to ensure our money is not used in this way.
I fully accept the Deputy's sincerity on the issue and share much of his sentiment. I pointed out the NTMA Acts and the Deputy acknowledged that. I also acknowledge that the ISIF has taken the investment decision to divest from six companies, all of which remain on the updated UN database, with a value of more than €2.95 million at the time of divestment.
While these are decisions for the ISIF to make, some of the companies that operate are large global companies and they may have a very small presence in the occupied Palestinian territories. It is not perhaps obvious, or possible to work out, the level of benefit individual companies gain from being active in the OPT. It is a somewhat pedantic point, but it is somewhat important. There is no external indication of the level of revenue that arises from these activities and no indication it is significant in their overall worldwide activities. Therefore, it is difficult to know whether these companies have economically significant activities in the OPT.
However, I take the broader point the Deputy made and I stress the views of this House to the NTMA on a frequent basis.
The Tánaiste expresses the views of the House to the NTMA on a frequent basis. That is welcome but, at the same time, he is equivocating a bit. He is asking how much they profit, how much they are involved and saying that is not clear, so he is kind of sending a signal, that perhaps, as the person responsible - the Minister for Finance, the shareholder - for funds, the Government is against it, but maybe it is okay. He is equivocating so I ask him not to do that. I want him to be really clear - and I think these are the views across the House and country - that we do not want a single cent of our public money to be used in this way. Will he be clear about that and clear with the NTMA? That is the kind of support that is needed on this, not equivocations saying that maybe it is okay in some circumstances. Will he be clear that we do not want a single cent to be used?
I am not trying to equivocate, though I take the criticism. However, I have a particular legal role as Minister for Finance and I am not in a position to direct the NTMA or the ISIF about this. That is why I am perhaps somewhat precluded, more than other Deputies, from expressing my personal view because the law of the land is clear that these investment decisions must be independent of the views of the Minister for Finance of the day.
The NTMA operates a commitment to be a responsible investor as a steward of public assets, by protecting and enhancing the long-term value of the ISIF and the reputation of the NTMA and how it delivers its mandate as manager and controller of the ISIF. In this context, the ISIF operates an exclusion policy that is consistent with its statutory mandate, as amended from time to time. Exclusion is used on a limited basis. It reflects exclusions mandated by legislation. The investment strategies for the Future Ireland Fund, FIF, and the Infrastructure Climate and Nature Fund, which are also to be extended to the ISIF, include certain companies listed on the UN database of business enterprises involved in specified activities in the occupied Palestinian territories. Certain Israel-based companies that are on the UN database and derive a significant element of turnover from Israel and the OPT will be excluded from investment by the ISIF, FIF and the Infrastructure Climate and Nature Fund.
Credit Unions
Willie O'Dea
Ceist:146. Deputy Willie O'Dea asked the Tánaiste and Minister for Finance the way in which he is supporting the expansion of the credit union sector; and if he will make a statement on the matter. [39633/26]
Question No. 146 will now be taken by Deputy McCormack
We all know about the great work done in our communities by credit unions. In some cases, they are the lender of last resort for some people.
The Government is committed to supporting the continued development and expansion of the credit union sector, recognising, as the Deputy does, its important role in providing community-based financial services. A range of legislative and regulatory measures have been delivered and the focus now is on the development of a new five-year strategy for the credit union sector. On 19 April, I formally announced the commencement of the credit union strategy project. This programme for Government commitment will, for the first time, deliver a sector-wide approach to future-proof the credit union movement and allow the sector to address challenges and capitalise on emerging opportunities.
This strategy will build on the foundations of the Credit Union (Amendment) Act and the Central Bank’s lending reforms, and will focus on establishing a shared vision and a clear strategic direction for the sector, primarily within the existing legislative and regulatory framework. The Credit Union (Amendment) Act 2023 introduced significant reforms aimed at strengthening and modernising the sector and broadening the range of services available to members. Key measures include loan referrals, loan participation and provisions relating to the establishment of a corporate credit union. Amended lending regulations, which commenced on 30 September 2025, significantly enhanced the lending capacity of credit unions. The regulations increased the lending limits to 30% of total assets for mortgages and 15% for business loans, thereby enabling credit unions to expand their offerings and compete more effectively in these markets. Based on sector assets of €22.5 billion at the end of 2025, these changes permit up to €6.8 billion in mortgage lending and up to €3.4 billion in business lending.
I thank the Minister of State for his response. As I said earlier, credit unions already play an enormously important role in communities, with millions of account holders across Ireland and a very high level of public trust. Following the departure of a number of retail banks from the Irish market, there is clear need for greater competition within the banking sector. One of the most significant opportunities for expansion is in mortgage lending. While credit unions currently account for only 1% of the mortgage market, the sector has ambitious plans to expand substantially in this area, potentially up to €10 billion in mortgage lending over time. Greater competition in that space would be hugely positive for consumers and could help place downward pressure on mortgage rates. Does the Minister of State agree that supporting the responsible expansion of credit union mortgage lending represents a significant opportunity within the Irish banking market?
I could not agree more. Certainly, since my appointment, I have been struck, as I go around the country visiting different credit unions, just how in tune they are with their members' needs and how ambitious they are to meet the enhanced needs of the communities they represent. That is why the amended lending regulations, which came in on 30 September last year, offer a huge opportunity to the credit union movement to really compete in the mortgage sector and in the SME lending sector. As I work with the sector to develop a five-year strategy, I am engaging in a series of consultation events with the credit union movement to see what more we can do to ensure we put this critical financial institution on a long-term sustainable footing for the next five years.
I thank the Minister of State. Credit unions have also been given greater capacity to grow, as he said, including the ability to lend over 30% of their assets in long-term lending. However, business lending still remains a relatively small part of the overall market, with approximately €190 million currently in SME and business lending. There is clearly potential for further growth in this area, as the Minister of State said, particularly for small businesses and local enterprise seeking relationship-based finance. At the same time, one of the real strengths of the credit union movement is that while credit unions continues to modernise and adopt new technologies, people can still walk into a local branch, sit down face to face and discuss financial matters with someone who understands their circumstances but also, most important, understands the community they come from. Does the Minister of State believe there is scope for further support, collaboration and shared service models within the credit union movement in order that the sector can continue expanding responsible while maintaining that trusted local presence?
The credit union is an extremely trusted financial institution. In fact, for ten years in a row the credit union movement has have been awarded the ranking of the most reputable brand. There are huge opportunities based on the very trust its members have in its service. We have already seen that the amended lending regulations has given credit unions opportunities in both the mortgage space and the SME lending space, and there is an appetite there to exploit the opportunities that exist. I have been very strong in requesting the participation of the local enterprise offices and the chamber of commerce representative bodies, as I go around engaging with various regional workshops, to ensure we hear from business representatives to see what type of products they require so that the credit union can fill that gap. There are great opportunities there. There is an ambition by the credit union movement to exploit those opportunities and I want to help it to make sure it does just that.
Tax Reliefs
Edward Timmins
Ceist:147. Deputy Edward Timmins asked the Tánaiste and Minister for Finance if he will reintroduce indexation for capital gains tax to eliminate this annual stealth tax; and if he will make a statement on the matter. [39883/26]
Indexation for capital gains tax relief was abolished in 2003. Will the Minister of State consider reintroducing this indexation, something that, at the moment, is effectively an annual stealth tax because there is no indexation?
I thank Deputy Timmins for raising the matter. Ireland's capital gains tax rate is 33% and is paid on the chargeable capital gain made when a person disposes of an asset. The chargeable gain is usually the difference between the price paid for the asset and the price it is disposed of and is payable by the person making the disposal. Section 556 of the Taxes Consolidation Act 1997 provides a measure of relief for capital gains, which are attributable purely to inflation, commonly known as indexation relief. The Finance Act 2003 amended section 556 such that indexation relief does not apply from the 2003 tax year onwards. Indexation relief, does, however, continue to be available in computing a chargeable gain arising on the disposal of an asset where the deductible expenditure on that asset was incurred prior to the tax year of 2003, with the relevant indexation multiplier being determined by reference to the year in which the expenditure was incurred. Indexation relief was ended as a means of gradually broadening the tax base, and my officials would contend it has been proved to effective in that regard.
It is the case that when indexation was introduced in the 1970s, inflation was extraordinarily high. Since then, inflation, while somewhat high now, has been consistently much lower, even taking into consideration spikes we have had around the Covid pandemic and recent geopolitical events. It is also important to bear in mind that there is no indexation of other taxes. We do not currently have an indexation of income tax, corporation tax or capital acquisitions tax.
The programme for Government does commit to maintaining a broad tax base to guard against the need for counter-cyclical fiscal policy in the event of a downturn and to prepare for future budgetary challenges relating to an ageing population. CGT is an important part of our system to ensure that taxation is not focused solely on income tax and that those who benefit from gains in the values of their assets are included within the tax net on an equitable basis. As with all taxes, CGT is obviously subject to ongoing review, which does involve consideration and assessment of the rate of CGT, the relevant reliefs and exemptions, and wider tax policy considerations.
I will give a simple example to illustrate this better. If you had €10,000 in savings, you bought shares today and they gained by 20% over the next five years, say, 4% per annum, that would mean they would be worth €12,000 in five years' time. If inflation is a similar rate, which may well happen - 20% over the next five years - your €12,000 in five years is worth the same as €10,000 today because the 20% inflation has wiped out that 20% gain. You have no real gain, in effect, but if you go to sell those shares in five years' time, you are deemed to have made a gain of €2,000 because you bought the shares for €10,000 and sold them for €12,000. However, you are actually no better off because the €12,000 in five years' time is worth the same as the €10,000 today. Yet, you have to pay a tax on that €2,000. That is my whole point. It is effectively an annual stealth tax.
I hear the Deputy and I never like to disagree with my constituency colleague, but the point I would make is that we consider all taxation measures as part of the annual budgetary process through the tax strategy group papers and the likes. Being honest with the House, I would be concerned with an indexation for the CGT space when one could make similar arguments or cases for indexation of other taxes that we do not currently do that with either. My biggest priority in terms of a taxation package this year will be around personal income tax because there is a real need for that, and I know the Deputy and I share a view on that. There is a compelling case around CGT, how it operates, how it works and the rate, the relief and the exemptions.
Ireland often gets told we have a high rate compared to other European countries. At a headline level, we probably do, but when the reliefs and exemptions are factored in, does that alter the picture somewhat? It does. All these things are kept under review. As of now, there is no plan to reintroduce indexation, but I will ask my officials to reflect on what the Deputy has said and will come back to him with further views.
I understand this is a tall order because the position has not changed since 2002. That is 24 years. It has been an issue every year since then but various finance Ministers have chosen not to act. I would also argue that capital gains tax is different from income tax, gift tax and inheritance tax. In fact, tax credits and bands have increased considerably over the past 20 years. The exception has been capital gains tax, where there has been no indexation whatsoever, unlike all other taxes. When indexation was abolished, one of the reasons was capital gains tax was 20% at the end of 2002 and for a few years prior to that. That was given as a reason - we did not need taxation because it was being taxed so little. Since then, it has steadily increased, as the Tánaiste said in reply to an earlier question, and is now up at 33%.
There is an argument to be had around CGT - on the rates, the reliefs, the exemptions and how it acts as an incentive or otherwise to entrepreneurial activity. I have given views on that, as has the Taoiseach. As is always the case in a budget, all this will come down to balance and priorities as part of the overall tax package.
We will have the national economic dialogue in Dublin Castle in June. The Minister, Deputy Chambers, and I will publish the summer economic statement in July. That will give an indication of how the Government intends to divide between spending and tax. I have no doubt there will be an opportunity to have intense engagement between then and the budget in October as to the best menu of options to deploy. There are always trade-offs. CGT will, as with all taxes, be reviewed as part of that.
Budget 2027
Emer Currie
Ceist:148. Deputy Emer Currie asked the Tánaiste and Minister for Finance the income tax measures he is considering for budget 2027 to support middle-income workers; and if he will make a statement on the matter. [39178/26]
Working families are under pressure. They feel like they are often chasing their tails and that there is not enough at the end of the month to show for all their hard work. It is what I have always described as the struggle to juggle. We have consistently supported working families over the years. The Tánaiste and others have said this budget will include income tax changes, which I welcome because those families deserve to get more back based on what they are putting in.
I thank the Deputy for the question and for her consistent raising of this issue around working families. Programme for Government 2025: Securing Ireland's Future contains specific undertakings with regard to personal taxation. It commits to "implement[ing] progressive changes in taxation if the economy remains strong, including indexing credits and bands to prevent an increase in the real burden of income tax". It also states that "in the event of an economic downturn and unexpected deterioration in the public finances ... [w]e would also postpone changes to income tax credits or bands, as we did in Budget 2021". As we plan for budget 2027, it is my intention to have a personal income tax package as part of that budget.
As the Deputy will be aware, to ease the burden facing average and middle-income earners, over successive budgets the previous Government substantially increased the entry point to the higher rate of income tax for all earners by €8,700, or around 25%. The main tax credits increased by €350, or around 21%. In line with the Government's policy of ensuring full-time workers on the minimum wage remain outside the top rate of USC, the ceiling of the 2% USC rate band was increased. Budgets 2024 and 2025 also cumulatively reduced the 4.5% rate of USC to 3%. Broadly, the income tax measures implemented over the period of the previous Government are expected to be in line with wage growth. We used a formula in the previous Government to allow people to earn more before they paid the high rate of tax and to make changes to the USC. That formula was an interesting and potentially desirable one.
Budget 2026 was the first of five budgets to be delivered by this Government. There was not a personal income tax package in the first one. I think there needs to be one in the next four, all things being equal.
On the exact levers we will pull and the exact menu to use around personal tax, I am not an ideologue when it comes to that. I want to see what is in the best interests of families and how people benefit the most. I would like, if possible, to anchor tax policy for the next four budgets. In other words, if we pick an option for the next budget, could that be a roadmap for the following three to provide certainty?
I welcome the principles of what the Tánaiste is setting out. I know he cannot get into the details. I can see the Government, in an extremely difficult geopolitical situation, is trying to future-proof our country with the infrastructure and the foundations it needs as a growing modern state, and to deliver on our promise to move away from cycles of boom and bust to something far more consistent, stable and sustainable, planning ahead with the Future Ireland Fund and the Infrastructure, Climate and Nature Fund. However, workers need to feel more of the benefits of that strategy now, especially considering what has happened in the last six months. A quick look at other countries in the EU will show we are pushing average workers into the higher tax band at one of the lowest entry points. This is having an impact on people's decision-making, livelihoods and home lives.
I fully agree. We want work to always pay and we want people who work hard to be able to get ahead, not just get by. The tax system is an important part of that. That is why we are committed to delivering a personal income tax package.
I will make a point to somewhat balance my comments. While it is absolutely correct that Irish people pay the higher rate of tax at a lower entry point than many other European countries, when you look at the social insurance contributions other countries make, that somewhat adjusts for that. The broader point the Deputy makes is entirely correct. We have taken people from paying the higher rate of tax at around €33,000 in 2015 up to €44,000 now. I would like to see more progress on that.
I do not need to tell the Deputy this as she champions issues like this, but when these families we are talking about are looking for a break and a chance to get ahead and not just get by, tax is a part of it. Other costs, like childcare, are part of it. Also, how can we structurally try to reduce energy costs? The budget will need to look at all of this in the round. Tax is a part of it, but so too is whether we can make permanent structural cost reductions in key areas like childcare.
The Tánaiste is right that it is difficult to compare like for like and that we have to look at working families and their budgets in the round. He has consistently referenced childcare as an area where he wants to support working families. Every week, I speak, as I know the Tánaiste does, to families, women and services about the cost of childcare and about provision.
Today, with Deputy Carrigy, I met with Longford Women's Link. I know the Tánaiste is completely committed to reducing childcare fees to €200 per month over the next four years but the wider reform I spoke of earlier is critical too. That means putting systems in place that last and that people have confidence in. State-led childcare is a major opportunity in the short and long term and should be allowed to evolve. The not-for-profit services that are due to provide it, at least in the short term as it evolves, need a system around them so they can scale up. That is achievable. Core funding requires reform but it is fixable as the State continues to play a greater role. I could go on but my point is this: these are not just problems to fix; they are opportunities for genuine reform and innovation.
I did not realise the Deputy met members of Longford Women's Link today. They are amazing. I visited them in the not-too-distant past and am grateful for the work they do and the opportunities and accessibility they provide to people in a range of areas. I met them in the context of higher education.
The commitment in the programme for Government is clear. We want to get childcare to €200 per child per month in the lifetime of the Government. The Deputy is right that fees and the cost to families make up a part of it, but there is also building the system and reform. I would like in the next budget to make progress on childcare costs but also make progress in the roadmap. In fairness to our colleague, the Minister, Deputy Foley, some important steps have been taken in the recent past around capital being for the first time available to invest in public facilities.
We need to be conscious - and we are - that one size does not fit all when it comes to childcare. We have to empower parents to make the decisions that make sense for them. Sometimes it is someone coming into your house to mind the children, sometimes it is your children going to someone's house, sometimes it is your child going to a crèche and sometimes it is a voluntary provider. There are many options.
That is why to get the best return for the taxpayer, the parent and the child, we need to see the roadmap of reform alongside the fee reduction.
Questions Nos. 149 to 163, inclusive, taken with Written Answers.
Banking Sector
Pearse Doherty
Ceist:164. Deputy Pearse Doherty asked the Tánaiste and Minister for Finance the rationale for selling PTSB; and the safeguards that will be in place to protect jobs and the bank branch network. [39794/26]
This question is in relation to the sale of the State's shares in the banking sector. Will the Minister outline to the House the rationale he had for selling the shares? I acknowledge that parties are entitled to different ideological positions. Permanent TSB was never a strategic bank. I would rather have held the ownership of AIB within the State, but Permanent TSB has the potential to be a third force in banking in the State. Will the Minister outline the rationale and also the safeguards that are in place to protect jobs in branches? Will he also expand on the new ownership of the bank? How long is it involved in retail banking with branches?
It is Question No. 164.
I thank the Deputy.
I did not think we would reach it.
I did not either.
I apologise, but I am glad that we have.
I appreciate that.
I thank Deputy Doherty. The State's investment in Permanent TSB, PTSB, was made during the financial crisis to safeguard the stability of the banking system and protect depositors. The State has been and continues to be very supportive of PTSB. The Government believes that it is in the long-term interests of PTSB and citizens in general that the bank be returned to full private ownership. I accept that we have differing political views on that. This transaction would mark a successful conclusion after a period of stabilisation. A sale reflects the Department’s confidence in PTSB’s strength and ability to succeed without State support. A sale of the State’s investment would be consistent with the objectives of recovering taxpayer funds that were used to rescue the Irish banks and deploying these to more productive purposes.
The board of PTSB announced a formal sale process on 30 October 2025. This process was conducted under the Irish takeover rules and resulted in the board unanimously recommending a cash offer from a subsidiary of BAWAG Group AG. BAWAG has set out a long-term ownership approach, including maintaining a strong and resilient PTSB, investing in the business, retaining the headquarters in Dublin, keeping a meaningful branch footprint and safeguarding existing employment rights and pension arrangements in line with applicable law. BAWAG noted that in its view, the PTSB branch network is a real asset. I met BAWAG and its representatives reiterated that point to me as well. It genuinely sees the branch network as an asset. It does not intend to make any material changes with respect to the fixed asset bases. Instead, it notes that branches could shift from being transactions-based based to advisory-based, as it adds new products to the bank’s offering. This is probably something that we would see PTSB and others doing anyway, in terms of the role of a bank branch changing rather than the branch not being there. BAWAG has also indicated its intention to leverage its broader European expertise to strengthen the bank’s competitiveness, including in areas such as SME banking, which would be very welcome, energy-efficiency finance and operational integration. These stated intentions formed part of the overall assessment to support BAWAG’s recommended cash offer.
The Minister mentioned the policy objective to return the banks to private ownership. I mentioned earlier that the State should have retained its position as a majority shareholder in AIB. It is not unique, as I am sure the Minister knows, for countries across Europe to be the majority shareholder or a significant shareholder in significant banks. It happens right across Europe, including in France and Germany. Many western European countries have that model, so the idea of the State having a share or a majority share in a bank is not something alien in terms of other European countries and in some cases competitors. The issue in this country is that we have a very small retail banking sector. I have always believed that despite some of the activities of AIB, the fact that the State was a shareholder forced it to be first movers in a lot of issues where it brought Bank of Ireland along with it. Will the Minister expand on whether he has received any guarantees from BAWAG during this sale process in relation to staffing and the branch network?
I accept that we have legitimate points of difference in relation to bank ownership and there is a legitimate debate to be had there. The position that we have always taken and the position that the programme for Government takes is to move the State out of the ownership of the banks and to restore them to private ownership.
I want to make the point that the circumstances in which Ireland ended up being in the position of bank ownership certainly was not strategic. We did not sit down to plan it out. It was an emergency rescue response to the financial crash.
The Deputy's point in relation to the lack of competition in retail banking is an important one. We have seen some potentially positive moves lately with Monzo getting a banking licence, along with Avant Money and others. I look forward to the banking competitiveness report at an EU level that will be published during our European Presidency because competitiveness in the banking sector is important.
In relation to BAWAG, in the interest of accuracy, I will come back to the Deputy with a note on this. I am very happy to write to the Deputy on this, but I did meet BAWAG and it made it clear that it is committed to the branch network. It made it clear on quite a number of occasions that it sees PTSB's branch network as a real asset and that it does not intend to make any material changes with respect to the fixed asset base. It has also met with the trade unions and others and has talked about safeguarding existing employment rights and pension arrangements in line with the applicable law. It is also a company that does not particularly like outsourcing, so there may be insourcing opportunities too. I am happy to correspond with the Deputy on the engagements I have had with BAWAG and any commitments it has given.
The Minister is aware that a number of taxation and levy measures flowed from the fact that the State rescued these banks at a time when they were literally bankrupt and bankrupted the State with their activities. The Government has already overturned some of those, for example, the salary caps within banks. There is a prohibition on bonuses or at least there is an excess charge that applies in terms of a 45% additional USC charge on any bonuses that are paid out above a certain limit. There are other restrictions as well, including the levy. Where does the Minister now stand in relation to those issues with the State divesting its shareholdings in these three banks that were bailed out?
That is a fair question. The Government makes a decision annually on the banking levy, as the Deputy knows, as part of the budgetary process. We will do that again because we find it desirable to do it as part of the annual budgetary process, but I do not see a case for not having a bank levy.
In relation to the super charge on what are referred to as bankers' bonuses, while every bank in Ireland and anybody doing business in Ireland might have a view, I do not see a case for changing the policy position in relation to that either.
That ends the session on questions. I am not sure if we have a Minister for the Topical Issues yet. We will suspend until 11 p.m.
Is féidir teacht ar Cheisteanna Scríofa ar www.oireachtas.ie.
Written Answers are published on the Oireachtas website.
Cuireadh an Dáil ar fionraí ag 10.57 p.m. agus cuireadh tús leis arís ar 11.01 p.m.
Sitting suspended at 10.57 p.m. and resumed at 11.01 p.m.