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

The universal social charge is a tax which was in place before the Government took office. There is a very high yield of in excess of €4 billion. The yield is so high because it applies at very low levels of income. The percentage increases as income increases, which is in line with Deputy Richard Boyd Barrett's idea of progressivity.

The amendment seeks to exempt all income below €65,000, removing a massive tranche of those liable for the universal social charge. The cost of this would be €2.4 billion. What I have done in the budget corresponds to what the Deputy is suggesting. I removed a tax break for persons on high incomes over 70 years of age because I did not think it was justified. People over the age of 70 years now pay the same rate of universal social charge on their income as any other person.

That is the progressive nature of what was proposed in the budget. The fallacy in the Deputy's argument is that it is based on the premise that somewhere in this country there is a very small group of undiscovered billionaires and if only we were to hammer those lads nobody would have to pay anything. The argument is all about generalities and does not stack up. People in this country are taxed very highly; we have one of the most progressive tax systems in the OECD. Our marginal tax rates are very high and a very large proportion of our tax comes from the wealthiest 5% of individuals. The undiscovered group, which if taxed sufficiently so that everybody else could be relieved, does not exist. That is not the position we are in; our position is that we have an enormous deficit all the time, even though it is diminishing. We can either cut expenditure, raise taxes or grow the economy in order to close that gap. The Government is approaching it on all three fronts.

It is not correct to suggest the economy is in some kind of slump; it is growing. In 2011 it grew by 1.5%, in 2012 by 0.9%, perhaps 1%, and this year is growing again. We have built our budget on growth rates of 1.5%. Those forecasters who criticised the Department of Finance forecasts are now re-examining their position and moving towards ours. For example, the European Commission raised its forecast for Ireland for 2013 to 1.3%. Davys, which rated us quite low during the week, raised its forecast of growth for Ireland to 1.3%. Our forecasts are now being reinforced by private sector forecasts. I am confident that the budget being built on 1.5% growth rates is a correct position. So far, given the taxes coming in for January and February, there is no cause for concern that budget targets will not be met but it is very early in the year.

Some people point dramatically to a lack of consumer demand in the country, and of course it is very low. After what the country has gone through why would it not be? Savings ratios are very high for the same reason because people had fears for the future, but that is changing as well. For the past four months the retail sale index has been up, consecutively, and I hope that will continue in 2013. I do not say it is easy and I accept all the points made by Government and Opposition Deputies demonstrating that many individuals and families are having it very hard. However, to quote the Deputy, there is no money tree in the back garden owned by a small number of ultra-rich people, whose fruit, if we took it, would ensure we had no further problems. I am afraid we are in the unfortunate position of having to pull together - that is what people are doing and have been willing to do. There are no magic beans unfortunately, but the Deputy appears to base his arguments as if there were.