Dr. Nat O'Connor:

I will quickly go through the six main blocks of our submission to illustrate how we arrive at our totals and will attempt to incorporate answers to the questions posed. The first block is €377 million raised on wealth, wealth transfers and passive income. All the research available shows that of all forms of taxation, this would have the least damaging effect on jobs. We have a wealth tax proposal for €150 million. My colleague, Dr. Tom McDonnell, can elaborate further on that, having written a 60-page technical paper on wealth taxation which forms the basis for that estimate. We also propose to reduce tax breaks for landlords, whose income is passive. This is less damaging to jobs.

The second block is the pension tax reliefs. We can raise €580 million by standard rating the tax break and reducing the tax-free lump sum. In answer to the question as to how this will affect ordinary people saving for their pensions, we know that 80% of the benefit goes to the top 20% of earners. Most people would not be affected by the tax break changes. They would only affect those at the top. At the moment we have a situation where high earners can get their tax back at the marginal rate and walk away with a tax-free lump sum of €500,000. This is egregiously inequitable and it is unusual to have tax-free lump sums in any pension system. We view this as a major issue.

The only labour taxation we would introduce is a third band of employer's PRSI on that part of salaries above €100,000. This would affect fewer than 50,000 workers, all of whom are on the high-pay end of the scale. It would also have the least damaging effect on consumption in the economy and would bring in €162 million.

The fourth area is excise duty and we recognise that there is a regressive effect associated with introducing taxes on, for example, saturated fats and sugar. However, there is both a short-term and long-term gain in terms of public health benefits and encouraging people towards more healthy lifestyles. Such taxes also include an element of choice in that people can choose not to consume these goods, thus avoiding the tax. While we recognise its regressive effect, we would view the overall package of measures we are putting forward as broadly progressive.

My colleague, Dr. McDonnell, will deal with the issues of the marginal tax rate, jobs and the wealth tax.