Dr. Seán Healy:

I wish to return to the Vice Chairman's initial question on indicators. The suggested range of indicators is far too narrow, as I said earlier. However, I shall deal with the questions first and return to the matter later.

First, I will deal with Deputy Kyne's queries. I feel that we should be prepared to go with the financial transaction tax if, as it appears, ten or 12 countries of substance are prepared to go with the tax. My response to another of his questions is "Yes, we do have a problem." We are part of the same area as the UK so there will be a certain consequence if we take on a financial transaction tax. I have a question, not just for the Deputy, but for the whole decision-making system and countries beyond Ireland. How do we propose to control the gambling instincts of the financial sector across Europe and the world? The financial transaction tax has at least some kind of mitigation or holding capacity. We need a mechanism. If the committee can come up with something better then I would be all in favour. The proposal seems to be one of the better things on the table at the moment.

The OECD does not believe - it is very important to pick up the nuance - and has never said that we have a progressive tax system. It has often said, and I agree with it, that we have a progressive income tax system. The fact is that the overall tax take and its base are not progressive. That is my basic point. The second issue, which is probably more important, relates to the overall tax take, not just income tax. I have not argued for a huge increase in income tax. I am saying that we have one of the lowest total tax takes no matter how it is measured. One can measure it as a percentage of GDP or GNP or use the new measure devised by the Irish Fiscal Advisory Council. It might solve the problem that Ireland always has in deciding whether to use GNP or GDP. Even using the new number, Ireland's level is more than €5 billion below what it would be if we were at the European average.

I am being fair when I say that there is room for work in the area. To have a decent social infrastructure we must support it, and not entirely through tax. It can be done with lots of combinations of private, public, community and voluntary engagements that are and will be required in the future. Therefore, we should take somewhere close to the European average in overall tax, as measured by the new figure. I would be prepared to go along with that decision.

I wish to say two things to Senator Hayden about her comments on the better-off having taken a greater proportion of the hit. The studies that revealed those findings omitted two things, which they acknowledged. First, there is the cumulative impact of changes outside the tax and welfare system, such as cuts in services. There has been an acknowledgement of same in the various studies by consultants such as Mr. Tim Callan, and the ESRI has shown this also. I have produced the rest of the study and the quotes that show that this is part of its acknowledgement that it did not measure the whole thing.

The second thing is more important in the longer term.

Some people have huge capacity to take hits, while others have very little. If someone is a millionaire and takes a 10% hit, that still leaves him or her with €900,000 and he or she will probably still able to survive. However, if someone is on €188 per week, he or she is already the best part of €20 below the poverty line and if he or she takes a 5% hit, it could push him or her over the edge. One is not comparing like with like in that context.

I am a little bemused by the lecture about the need to stop being parochial and realise there is globalisation and so on. As someone who has written books on the issue, I agree that we need to do it. To tell me that I have not done so is a bit much and I do not accept it. Last year I forwarded to the committee a copy of a book entitled, Does the European Social Model Have a Future, which looked at the five models, not three, across the European Union and which included a variety of contributions from academics across Europe, as well as our own views. In April we published the book What Would Real Recovery Look Like, a copy of which was also forwarded to the committee. In that publication we go back not just to the 1970s and 1080s but to the 1940s and 1950s. On some 80 pages we spell out exactly what happened across the world, using all of the best research available on financial issues, globalisation and a whole lot of other stuff-----