Éamon Ó Cuív (Galway West, Fianna Fail)

As a pragmatist, I know if one goes beyond a certain tax threshold it may become economically regressive. Instead of helping increase returns, it could actually diminish them. A debate is needed in which people can state what they believe to be the top rate that can be charged on the combined figure of PRSI, levies and tax without it becoming regressive. It is an argument many of us heard on the doorsteps during the recent election. Last year pensioners, such as retired teachers, engineers, informed me they paid 60% and 70% tax rates on modest incomes in the 1970s and 1980s. Fortunately, I never paid such high tax rates as I never had the income to pay them. Middle Ireland will not accept paying over a certain tax threshold, a fact which we must be realistic about when debating this matter.

While not justifiable, in the past we saw such high tax rates lead employers to pay three-quarters of their employees' salaries through the books while the remainder was slipped under the table. I do not want to go back to that world. It is one reason I believe taxes should not be too high. High taxes tempt people to cheat paying them which they then start to self-justify. In the past I saw straight businesses put at a serious disadvantage by their competitors who were not entirely in the black or white economy but the grey economy. These are the issues we must address when resolving our economic challenges.

Rather than Members slamming those on the opposite side with ex cathedra statements, it must be agreed there are huge issues facing us if we want to make a better, fairer and understandable tax system. A person should not need to have a computer to work out their tax. I would like to be part of a detailed debate on income tax, the universal social charge and PRSI from which a much better package than the existing one could emerge. We must also examine how we can ensure people are not penalised disproportionately by the tax and levy system. The challenge is to see, in a time of tight public finances, how one can move people to a more equitable, transparent and understandable system while ensuring one does not take a disproportionate amount from one sector, particularly from the low paid who have always been my concern.

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