Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I will be brief. It has been an interesting debate but it captures the essence of the budgetary debates we have had, not just this year but also in the last few years. Neither I nor my party believe that someone who earns €70,000, €80,000 or €100,000 is necessarily on the pig's back. It is all relative and it depends on people's financial commitments such as mortgages and child care costs. I believe it would be wrong to examine one particular measure on its own. One must look in the round at the Government's approach to budgeting. That is why we advocated a different approach this year. The Minister is correct in that the more tax a person pays, the more he or she will benefit from a tax cut; that is simple maths. However, when one looks at the effect of the last number of budgets and the fact that many of the instruments introduced did not take into account in any way a person's ability to pay the local property tax, the water charges, or PRSI after the abolition of the exemption, then it is my view - and I think it is borne out by the evidence - that the burden was placed most heavily onto those who had quite low levels of income. That is why we advocated for a different approach in budget 2016 to reducing the tax burden. For example, an increase in tax credits would have meant more proportionately to a person on a modest income. Equally, a greater expansion of the USC bands at the lower rates would have benefited everybody but would have proportionally meant more to those who have had to carry the burden of water charges, the local property tax and the abolition of the PRSI exemption. The Government is doing it one way now when it is giving money back, but when it was taking money from people it was done in quite a regressive way. As justification for his approach the Minister has used the significant increase in direct taxation in the earlier years of the crisis. That increase was introduced largely by the late Minister for Finance, Brian Lenihan, in the form of the USC. Those increases were very significant for people's pay packets but they were progressive. However, the measures brought in by the current Minister, Deputy Noonan, prior to the last 12 months were strongly regressive, and now when he gives money back he is again doing it in a way that benefits people on higher incomes. People who are on high incomes are not necessarily very well off in net terms; it depends on individual financial circumstances. This budget was an opportunity to undo some of the damage done by the failure to take into account ability to pay. The Minister said that he looked very carefully to see where he could help somebody on €25,000, because their gain is about 1.1%.