Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

Okay. The proposal would mean the top marginal rate of tax would be 59% for employees and 62% for the self-employed. One reaches a point where the levels of personal taxation are counterproductive. Not only would such a rise not yield the revenue estimated but people might do different things with their money like moving out of the country, as well as it being a tax on jobs.

I fully agree with the general proposition that the better-off should pay more tax, while the less well-off should pay less. I remind Deputies that last year I removed 330,000 people from the USC by having a base of €10,036. That was a progressive measure. While Deputy Richard Boyd Barrett's suggestion sounds wonderful, if we could afford it, we would probably use it elsewhere rather than in the way he has suggested. However, there is simply not the €2.4 billion available to meet this proposal.

The Finance Bill is imposing extra tax on those who can afford it. Pensioners on over €65,000 were given a tax break through a deal the previous Government did with the Independent Members - the Deputy Lowry deal. In his support for the previous Government, he insisted on an exemption for pensioners. It was a political deal and could not be justified on its terms. If anything, persons on pensions in excess of €65,000 have probably less call on their income than younger people on a similar income level. That differentiation was not appropriate, which is why we got rid of it.

Annexe F of the document deals with the progressiveness of the Irish tax system and states:

The Irish tax system is one of the most progressive in the world. Research by the OECD, the ESRI and the European Commission has shown that the income tax system is one of the most progressive in the OECD and that the overall fiscal adjustment has been progressive in nature.
A comparison of austerity measures to 2011 in six EU countries by researchers on behalf of the European Commission found that reductions in disposable income due to tax and contribution increases in Ireland were larger in the upper part of the income distribution. The research also showed that over 30% of the overall adjustment was borne by the richest 10% of the population and approximately 70% by the richest four deciles. The researchers also identified Ireland’s adjustment as the most progressive of the six countries that were reviewed.

The term "progressive" here is in the sense of tax being progressive. That was the conclusion of research on behalf of the European Commission. Of the countries involved, Ireland has imposed much higher charges on the highest income earners than others. Those are the facts of the situation. People debating these issues do so as if it were a one-year module but the correction has been going on for five years and if we consider the cumulative effect we can see that it is remarkably progressive. We can move a good deal further in that direction. That is not to say that there is no validity in the points the Deputy is making. It is simply to point out that if we identify a large reduction in taxes to the benefit of one section in the community, in logic, we must identify an equally large yield from new taxes on a different section of the population, because everyone knows that we have not balanced our books yet. We still have to deal with a decidedly large deficit in accordance with the way I have outlined.

I realise there is a difficulty for Opposition Deputies. I was in opposition long enough to know that when one proposes a tax reduction the amendment is in order but when one proposes a tax increase the amendment is out of order. What is termed "a charge on the State" is really a charge on the people. One can propose amendments to reduce taxes but one cannot propose amendments to increase them. I imagine the Chair will be tolerant on this and allow people in making their points to say how they would fund the propositions they are making.