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

No, I think the Deputy is trying to have it both ways. He represents a constituency where the value of family homes is the highest in the country. I think he is influenced by constituency considerations that are clouding his clear-cut ideological position. I think that is the case. Our system is already the most efficient in the OECD at improving direct income equality through the system of social transfers. This is measured using the Gini coefficient, of which the Deputy is aware. He will find that independent research has been done on this matter. It must be recognised that for social transfers to take place, we must have high earners to tax. If our income tax system becomes too high by comparison with other countries, fewer of these individuals will choose to live in Ireland and we will therefore lose some of the tax income that is used to pay for social transfers.

I reduced personal taxes in the budget because I believe personal taxes are too high. Regardless of one's level of income, if one is charged more than 50% on the next €1, I think that is too high. People start moving around and wondering whether they can become tax exiles. They also make certain arrangements, lobby for more tax breaks or do some kind of property tax break. We have gone through all that. I would like to have all income, as a starting point, taxed at below 50%. Then I would like to move it down progressively, in the first instance by organising incentives for people on low and middle incomes. I think that is the way to go. I will explain why I am doing this. If we increase taxes on fixed assets and reduce personal taxes, we are not taxing work. We are taxing assets that are very difficult to transfer. Skilled people are very mobile. If they are taxed too highly, they can move. We have a common labour market with the UK now.

Many young smart people in Dublin do not see a problem in working in London, if it is a choice. So we need to get our personal tax rates down to ensure that our workforce is incentivised and that we can continue our successful policies of job creation. I remind the committee that this morning's quarterly household survey shows that the level of unemployment has dropped to 8.9%, which is the first time since 2008 that the jobless figure in Ireland began with the figure 8. The other factor is that I want emigrants to come home. As the economy continues to grow at very strong rates, we will experience skills shortages within 18 months in certain sectors of the economy. We need to incentivise well-qualified young people to come back to make their homes and lead their lives in Ireland. That requires reductions in personal taxes. It does not require a one-size-fits-all system in which we take a tenner off everybody in the interests of equality.