Kathryn Reilly (Sinn Fein)

It is good to have such an audience for my contribution. I am sure everybody will listen intently to what I have to say.

It is now over a year since the Government was sworn in, elected on a promise that things would change and improve. Earlier speakers spoke of the road to recovery but I am not sure I share their enthusiasm. Are we are not still on the road to some sort of ruin? To a large extent we have seen some of the same failed policies of the past being implemented. This Finance Bill has been cited as incontrovertible proof that there is not a great deal of interest in, or much intention of, bringing about change in how we manage our economy, create sustainable economic growth and distribute the wealth of the State to bring about genuine economic equality.

As we all know, this Bill is about implementing last year's budget. Economic Thatcherism is being perceived as a choice, not as arising from necessity. This Government is perfectly happy to impose austerity because that will see us signing up to the austerity treaty and making austerity part of our national law. In recent days, my party has shown how the blackmail argument is merely a convenient choice of the Government in order to link to the treaty when it could actually veto the link between the austerity treaty and access to the ESM. I call on the Government to do so.

For many people, what is disappointing is not the bowing down to international capital in terms of the Anglo Irish Bank incident or the austerity treaty but the complete lack of change in political culture. The Government can argue it has had no choice on the big economic issues and some people will believe that. Undeniably, however, there are things that could have been changed but were not. I refer, for example, to the continued practice by the Government of breaking its own rules on pay to special advisers. Party hacks earn enormous money from the public purse and there are additional allowances for junior Ministers.

There are aspects of this Bill I welcome, for example, the increase in capital gains and acquisition taxes. We support these moves and regret they do not go further. One area of particular concern, however, is the VAT hike, from 21% to 23%. I find the short-sightedness of this policy extremely frustrating. Coming from a Border county I know the effect this will have on already struggling Border towns and businesses. Partition is a significant cause of economic displacement and inefficiencies and Border counties already bear the brunt of this. Raising VAT by 2% will take a further toll on businesses in counties such as Cavan. That is why in my amendments I will try to remove that hike in VAT from the Finance Bill and I call on all representatives from the Border area to support me in this attempt. VAT is a regressive tax. Crucially, it hits the spending power and disposable income of ordinary people which will result in a further drop in retail sales. It will detrimentally affect domestic demand. The rhetoric about progressive taxes and making those who can pay most pay, trumpeted by Government parties when they were in opposition, has long since gone out the window. This Bill does not do anything to create the fair tax system we need. Regressive flat taxes have once again been championed over progressive taxes.

The removal of 300,000 people from the universal social charge net is also welcome. However, the USC remains a crippling rock around the necks of most working families. Again, it is an unfair, blanket flat tax that was imposed in a panic by the last Government and again the present Government continues a policy of Fianna Fáil in supporting its retention. The social effects of this conservative economic dogma will be brutal. Likewise, the increase in the carbon tax charge will be another burden on struggling families and the reduction in tax credits for third-level fees will copperfasten inequality into the next generation. At the same time there is the use of the old Fianna Fáil magic trick of the tax break. The special assignee relief programme will see high-earning individuals from outside the State benefit from enormous tax breaks; they could earn €635,000 tax free over five years. Nobody should be allowed to earn that type of money without contributing. There is nothing in the legislation about job creation. It is a free ride and it is unjust.

Sinn Féin has argued and will continue to argue for an alternative to austerity programmes. We argue for a fair tax system in which those who can afford to pay more pay more and those who are least able to bear the cost are relieved to some extent. We would remove all the 500,000 affected by the USC from the income tax net and have effective tax rates of 45.4% on income between €100,000 and €175,000, with 51% on income in excess of €175,000. Critically, we would move away from flat regressive taxes such as VAT.