Diarmuid Wilson (Fianna Fail)

I welcome the Minister of State, Deputy O'Dowd, to the House. Like my colleague, Senator Mooney, I must begin by saying I do not envy any Minister for Finance who has to put a budget together in a difficult economic climate. The same problems were faced by the late Brian Lenihan when he was Minister for Finance. Regardless of what one attempts to do in the current economic circumstances, one will affect somebody.

I welcome some of the measures set out in the Bill before the House, including the decision to increase the exemption threshold for the universal social charge from €4,004 to €10,036 for the 2012 and subsequent tax years. I would like the threshold to be increased further in next year's budget, if possible. I also welcome the introduction in this legislation of an enhanced scheme of stock relief for registered farm partnerships. The scheme, which is one of the many measures in the Bill that I welcome, fits very well into the Harvest 2020 project. This excellent and visionary document was put together by my colleague, Deputy Smith, and is now being implemented by the Minister, Deputy Coveney, to a high level.

I welcome the decision to increase the price of cigarettes by 25 cent. While I would like a larger increase to be provided for, if possible, I remind the House of the need to consider the amount of revenue being lost to the State as a result of cigarette smuggling. I suggest that the level of excise duty on petrol and diesel should be looked at and reduced, if possible. At a time when employment in this State is decreasing, the incidence of diesel and fuel laundering is increasing, particularly in Border counties. This is causing huge expense to the county councils, particularly Cavan County Council and Louth County Council, where a recent find cost the council €50,000 to clean up. This is an issue we should consider enforcing even more and redeploying people from under utilised areas of the Civil Service into the prevention of diesel and petrol smuggling and laundering.

The 2% VAT increase from 21% to 23% is having an effect in the town of Cavan and in the whole Border area and as Senator David Cullinane said it is having an effect throughout the length and breadth of the country. In the Border area people travel to the North to do some of their shopping and while they are there they do the rest of it. Throughout the rest of the country, those who do not travel across the Border are not spending as much. The 23% VAT rate applies to a wide range of goods and services including petrol, motor vehicles, electrical supplies, furniture, adult footwear and clothing, alcohol and soft drinks, tobacco, which I welcome, accountancy and legal services and tax advisory services. It was the Minister's intention to raise €670 million this year but I do not think that will happen. Based on a conversation I have had with the chairman of Cavan Chamber of Commerce, the VAT increase is having an effect in Cavan and in the Minister of State's county of Louth and throughout the country. I ask that the issue be examined before the Bill is finalised. I do not envy any Minister who has to bring in a budget in the economic circumstances but that is one area I would like to have addressed.