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

The Deputy's point comes back to a point I made to Deputy Boyd Barrett. If one believes that regardless of qualifications, ability, enthusiasm, work ethic and all of the rest of it, everybody should be paid the same, I would argue that is an unrealistic model of society and an unrealistic model of the labour market. I think we would all acknowledge that because of the nature of society people get different levels of wages and different levels of salaries and they pay tax in proportion to the level of wages and salaries they have. As soon as one starts giving reliefs, the reliefs will be in proportion to the level of wages and salaries as one winds it down. I would give the following example. A single individual employed on the standard minimum wage of €17,542 per annum pays income tax of €4.01 and USC of €10.51 per week. Furthermore, someone on the standard minimum wage is also exempt from paying PRSI.

As a result of the changes introduced in budget 2015, the weekly USC of €10.51 per week will fall to €7.19 per week. This means the tax bill will be reduced by 20%, which is significant at the bottom. If one examines the percentage, one gets a better impression of the proportionality of the changes made. A single individual earning €70,000 per annum currently pays €25,531 per annum, or €490.98 per week, in income tax, USC and PRSI. After the implementation of budget 2015, this individual’s tax bill will be reduced by approximately 3%. In fact, the highest proportionate benefit as a percentage of net income from the budget tax changes occurs at an income level of just €12,000. This is as a result of my decision to extend the USC exemption threshold from €10,036 to €12,012. This affects 80,000 individuals.

It is not a flat-rate relief that is being applied. Reliefs are availed of in proportion to the incomes to which they apply. Percentages indicate the profile is far more even than one might believe. Next year, if resources are available, I will try to mirror this. Of course I agree that there are inexactitudes and anomalies but, within the policy instruments available, amounting to only three, namely, PRSI, income tax and USC, we have gone a long way. We will try to iron out the anomalies also.

I do not believe Deputy McGrath's approach is too distant from mine. I accept the points he made and we will examine in next year's budget the anomaly at the entry point to the higher rate.

Deputy Pearse Doherty and Deputy Boyd Barrett hold a different position. They are opposed to the policies on personal taxation that are enshrined in the budget and Finance Bill. Anyone considering the impact of tax must consider a range of taxes, as when the Deputies asked us to take account of water charges in addition to personal taxation. However, Deputy Doherty wants the marginal rate of income tax to go from 40% to 48% and he also wants a wealth tax. He would tax the economy out of existence if he brought in those two measures in the same year. I do not run with scare stories about people leaving the country, but I certainly do not believe one will get 15,000 extra jobs if those proposed tax measures are introduced. I could not quantify the result but I am strongly of the view that there would be a reduction in the number of jobs and the propensity of young emigrants to come home if both measures were introduced. I have no problem with Deputy Doherty proposing these measures for debate but I am pointing out that there is a fundamental difference of approach between Sinn Féin and me. I have outlined mine and Deputy Doherty has outlined his, but they are different. The two do not meet. There is no overlap or common purpose in respect of the proposals. I am not criticising as I understand the policy position from which the Deputies come and that the effect of pursuing it is to move amendments along the lines of those tabled. The Deputies' position is different from that of the Government, and ultimately the electorate will have to decide which approach it prefers.