Poverty data and shadow lobbying
Deputy Burton cited CSO poverty figures and then raised concerns about shadow lobbying and tax avoidance through section 110 structures. The Tánaiste welcomed the improved statistics, said lobbying must come out of the shadows, and urged any evidence of improper activity to be brought to the Minister for Finance.
The publication yesterday by the Central Statistics Office, CSO, of the survey on income and living conditions in Ireland, SILC, for 2014 and 2015 shows some progress has been made in the fight against poverty and a welcome reduction in economic equality. Much remains to be done, however, and tax justice is clearly the means by which we will advance this agenda. This week, we learned that the National Asset Management Agency will pay an additional €158 million in tax on profits made by the agency from the sales of property held through section 110 companies.
Today, it is reported that Matheson has closed three charities that were used by vulture funds to avoid paying tax. I welcome that. However, a fortnight ago The Irish Times published a comprehensive investigation showing the intense lobbying before the budget by companies such as Kennedy Wilson, Oaktree Capital, Hammerson and CarVal. This investigation shows the depth and extent of lobbying activity by vulture funds of the Department of Finance to ensure that changes to our laws did not inconvenience their elaborate tax avoidance structures.
The statutory lobbying register shows a lot less activity. The lobbying returns for September-December 2016 show that only a small portion of those meetings were required to be declared and that much of the lobbying by these companies is carried out with junior officials so that it flies under the radar. It is clear that lobbying rules in regard to tax matters need to be strengthened so that all activity is captured. In at least one case letters from a vulture fund directly to the Minister for Finance, Deputy Noonan, have not been declared. In other cases, it may be that vulture funds avoided the necessity to declare their interactions by channelling their contact to more junior officials with whom contact does not have to be declared.
Tax policy is a particularly important part of public policy. Our tax must be just and fair. Continuing to allow vulture funds to influence tax policy under the radar is unfair to families and small businesses across the country who have no such access. Will the Government prescribe the higher executive officer, HEO, and assistant principal grades within the tax division of the Department of Finance as designated officials to ensure that lobbying on tax matters, particularly by vulture funds, can no longer be hidden in the shadows?
In the context of the €150 million paid by NAMA, how much does the Government expect to collect from other companies following the rule changes?
Comment on this
The Deputy has raised a number of issues. On the CSO data, I welcome that survey which shows that Ireland became a wealthier and more equal country in 2015 as compared with 2014. It is also shows an increase in income of 6.2%, with consistent poverty falling from 8.8% to 8.7% and a significant fall in deprivation rates. The rate of those not poor but at risk of falling into poverty is also decreasing. This data highlights the improvements that have been made in regard to those issues.
The Deputy also raised the issue of NAMA and section 110. As the Deputy will be aware, that issue has been discussed in the House previously. The Government has taken action in regard to section 110. A a decision was taken to end the eligibility of section 110 companies, not taxable in Ireland, in relation to profit-making from property-related investment under that section. That change has been made.
The Deputy's point about lobbying, vulture funds and contacts with the Department of Finance is an important point in relation to lobbying on tax policy. A lobbyists register has been put in place. If there is evidence of people who should be registering not doing so that needs to be pursued. The message must go out to people that if they are lobbying in any area of government policy they need to register. I will ask the Minister to examine the report from which Deputy Burton quoted. There are clear obligations on lobbyists, the legislation in respect of which is very recent and was introduced by the previous Government. I am sure that it will be reviewed and that any gaps identified will be examined.
The principal point is that we all expect that if we have legislation stating lobbyists ought to register, they should do so. I understand many have registered. If there are gaps, however, they need to be examined. If changes to the legislation are required in order for that to happen, that can be considered.
Comment on this
I asked the Tánaiste about shadow lobbying in Ireland. In order to seek tax advantages in this jurisdiction, very clever people are engaging in shadow lobbying. It makes our tax system more unequal than it needs to be. The reason I raised the SILC statistics is that they show clearly how much further we have advanced by comparison with Northern Ireland, for instance, in making a more equal and fair society, particularly through social welfare increases in 2014 and 2015. The statistics and comparisons exist and people can read them.
If we want to make our society more equal, which is what everybody wants, we must have circumstances in which lobbying is properly accounted for. People are flying under the radar and lobbying in the shadows by approaching people such as senior officials but also more junior officials at assistant principal and higher executive officer levels.
I asked the Tánaiste previously whether the Government will introduce a standing commission on taxation so society and the Parliament can be constantly on the watch for new tax-avoidance creations. Will it do so?
Comment on this
The Deputy was at the Cabinet table when the legislation was passed by the Government. It was very important legislation. If what the Deputy is describing as a shadow system exists, it clearly needs to come out of the shadows. I have made that very clear. The legislation exists and lobbyists have a responsibility to register. If the Deputy has information about the shadow lobbying she believes is taking place, she should make it known to the Minister for Finance. It needs to be examined. We introduced the legislation because there was lobbying of various sorts occurring behind the scenes. A decision was taken by the last Government to have more transparency in this regard. If there is further work to be done on it, that can happen.
I agree with the Deputy's point on social transfers and their impact. The evidence from yesterday's CSO report and Gini analysis is very clear that social transfers continue to perform very strongly in reducing the at-risk-of-poverty rate. There was a reduction from 34.9% before social transfers to 16.9% after social transfers. That is a very significant reduction in poverty as a result of the decisions taken by the current Government and its predecessor.