David Cullinane (Sinn Fein)

I agree with Senator Mooney that politics is about choices. Various options are always open to any Government. The options chosen by the Government in last December's budget and in the Finance Bill 2012 were the wrong ones. I do not believe they will solve the problems in the economy or uplift our domestic economy. Many of the measures in question are unfair and regressive. As a previous speaker mentioned, during a radio interview this morning the Minister of State, Deputy O'Dowd, spoke about how people see the household charge as unfair and unjust. Many people are choosing not to pay the charge for that reason.

I would like to deal with a number of issues that are of relevance to the Bill. A previous speaker mentioned that the increase in the threshold for the universal social charge from €4,004 to €10,036 will take 300,000 people outside the scope of the charge. That suggests that too many people in this country are on low incomes. It is shocking that so many people are earning less than €200 a week. That has to be addressed when we try to make sure people have a good quality of life and have money to spend. If we are to ensure the retail sector is thriving, people have to be paid well. Figures like the one I have cited show that many people are very poorly paid, which is wrong.

The universal social charge, which is a combination of the old PRSI and a number of levies, should have been scrapped because it is not a fair tax. It was one of the most controversial taxes to be introduced by the previous Government. At the time, it was met with consternation from all Opposition parties, including Fine Gael. The Labour Party said it would abolish the charge, but it is still in place. It has been modified slightly. As a result of other changes, people are getting less in return for all the new charges they are paying. People are paying more in terms of the universal social charge, but they are also being forced to pay private health insurance, for example. They do not get the dental treatment they used to get under the PRSI system. Like the Minister of State and a number of Senators, I wear glasses. We used to get something off the price of new glasses when we bought them but that is now gone. A raft of benefits was removed from people. The Minister of State might not have received them, but some people did. The point is that these benefits that were removed. The universal social charge should have been scrapped.

I will deal with some of the contents of the Finance Bill 2012 before I outline some alternatives. A number of Senators have spoken about the VAT increase. Any increase in VAT hurts the retail sector. Reference was made to the impact the increase is having on Border counties. The reality is that it is having an impact across the State. As I have said in this House previously, many small retailers have made the point to me that they are working for less than the minimum wage. They are trying to keep their premises open in the face of decreased footfall. Due to their self-employed status, no safety net and no benefits are available to them if they have to close their doors. If a self-employed person has a partner who is working part-time or full-time, he or she will not receive any support from the State. The 2% VAT increase has been a regressive step for retailers at a time when they are trying to keep going and keep people in jobs. It has also affected shoppers and people who had less money to spend in the first place. The introduction of the increased VAT rate was the wrong approach for the Government to take, especially in the context of all the new taxes and cuts.

As part of my Second Stage speech, I would like to mention an option that will be open to the Government in the future. With a few exceptions, no real increase in excise duty on alcohol was provided for in last December's budget. There has been a great deal of debate at the Joint Committee on Health and Children about what can be done in terms of pricing to reduce alcohol consumption. I know the Government is considering minimum pricing. I do not support minimum pricing because I do not believe it will work. It will simply put more money into the hands of those who sell alcohol. If we are minded to look at pricing as a means of dealing with alcohol consumption, a much better option would be to increase excise duty on alcohol. Such an approach would ensure that 100% of any price increase would come back to the State. That money could be ring-fenced for prevention, treatment and education measures. That would be far better than minimum pricing. I ask the Minister of State to take that suggestion back to the Ministers for Health and Finance.

Having proposed the abolition of the universal social charge and the 2% VAT rate, it is important for me to set out some alternative means of raising funds. We conservatively estimate that a 1% income-linked wealth tax on all assets in excess of €1 million, with the exception of working farmland and business assets, would generate approximately €700 million. We are proposing that all tax reliefs be standardised. Some tax reliefs are available at the top rate of 41%, but we suggest that all of them should be available at the bottom rate only. That would save €1 billion, which is a huge amount of money, and would be much better than the imposition of flat and regressive charges like the household charge and the universal social charge. In addition, we estimate that the introduction of a third rate of tax - we propose it should be set at 48% - on all income in excess of €100,000 would raise €400 million. That could be considered.

The alternatives that are being proposed by the Opposition should be examined seriously. The ones I have mentioned were supported by the Labour Party when it was in opposition. I accept we have to put measures in place to reduce our deficit - some of them will be painful - but we have to make sure we do not keep coming back to low and middle-income families and people who are out of work and expect them to be able to pay. If we go back to the same well again and again, it will not work. We are seeing that with the household charge. I appeal to the Government to examine other options, such as the imposition of higher tax rates on higher earners. We are not proposing that out of spite, but out of the need to reduce our deficit. I ask the Minister of State to reflect on our proposals in the context of next year's budget.