Like other Members I welcome some elements of the Bill, particularly the retention of the 9% VAT rate for the hospitality sector. I lobbied the Minister for Finance on that throughout the year and an excellent campaign was run by the Restaurant Association of Ireland and other groups pointing out the business case for it, that it has paid for itself and supported employment particularly in small businesses. The restaurant and hospitality sector is a very labour-intensive industry so I was delighted that the special 9% rate was retained in the budget.
I also welcome the home renovation tax relief although I share comments by others about how it could be more comprehensive. It is too limited to restrict it to primary residences. As Senator Hayden and others said, this is an opportunity to improve rented housing stock. Will the Minister consider reviewing that on Committee Stage? I will speak in more detail about the single parent tax credit on Committee Stage as we will table an amendment on this. I share the concerns expressed by Members on both sides of the House. This measure is extremely regressive. It is in every child’s interest to have the strongest relationship and the most contact possible with both parents, whether still living together, separated or divorced or whatever the circumstances of their relationship may be, whether it is amicable or whether they have had to fight through the courts to reach agreements on access and custody. We should do everything possible to ensure both parents have contact and a positive relationship with their children.
It can be financially difficult because separated parents must run two homes on the same income that used to provide for one. I have received e-mails from fathers all over the country pointing out the impact separation has had on their income. After they pay for maintenance there is little left to pay for accommodation that has enough space to take their children at the weekend and to take them out to the cinema or spend quality time with them. We must recognise that it is more expensive for separated parents to look after children than if they are a married couple. It was appropriate that we had a tax credit that recognised that and gave them a bit of support and it would be incredibly regressive to remove it. I would prefer if we could leave the situation as it was because it recognised those extra costs.
That was appropriate but I hope the Minister of State will accept amendments to ensure that at the very least the credit can be transferred so that it is not just left to the primary carer but can be used by the parent earning the bulk of the income, who, in many cases, is the father. Trinity College has conducted research on Irish separation cases which shows that in 97% of cases, the courts deem the mother to be the primary carer, even where there is 50:50 access. The courts overwhelmingly deem the mother to be the primary carer. Restricting the credit to primary carers is regressive. Mothers should be able to sign the credit over to the father if he is earning the most money or it should be possible for the credit to be shared. However, I can see difficulties in sharing the credit, particularly where the separation is not an amicable one. In fact, I think this entire provision is unnecessarily messy and regressive and would ask that the Minister reconsiders it.
We will also be tabling an amendment on Committee Stage relating to physiotherapy referrals. We raised this issue with the Minister last year because we believe people should be able to get tax relief on physiotherapy services if they self-refer. They should not have to go through a GP to get tax relief on physiotherapy. They do not have to do this for other medical services. When we raised this issue earlier in the year with the Minister for Finance he gave a commitment to look at it in the context of the budget but it was not included. We ask that the Department consider this issue again on Committee Stage.
As I said earlier, I welcome the retention of the 9% VAT rate for the tourism and hospitality sectors but there is a need for fundamental reform of our VAT regime. Senator Reilly mentioned the fact that there is no VAT on oral contraceptives but that VAT is payable on non-oral contraceptives. There are lots of other illogical examples of the application of VAT. For instance, there is no VAT on many high-fat, unhealthy processed foods but we pay 23% VAT on bottled water; there is no VAT on limousine rental but we pay 23% VAT on walking sticks; a rate of 9% applies to lap-dancing while marriage counselling is subject to a rate of 23%. Perhaps the Minister of State will give his views on that in his response.