Dr. Tom McDonnell:

Much of the large scale foreign direct investment that is attracted to Ireland is related not so much to income tax but corporate tax and our highly educated workforce and so on. While it is true that the American Chamber of Commerce and other such organisations would lobby for lower marginal tax rates, evidence-wise the impact of marginal tax rates would not be in the same ball park as the issues I have just discussed.

The Deputy referred to child care costs. I agree with the ESRI position on child care. Child care costs in Ireland as a proportionate of the disposal income of the average earner are the second highest in the OECD, which is a massive barrier to labour force participation by second earners and by lone parents. It is one of the reasons, historically, that Ireland, in comparison with other north-west European economies, has had a low employment rate. We are essentially deciding through policy that this cohort of the population is not going to be in employment and because to be in employment does not make sense for them we are losing extremely educated human capital and tax receipts and all of the economic benefits that come from that. I would certainly regard child care as one of the major potential policy reforms that could unlock economic growth and employment growth over the next five to ten years. Child care spend as a proportion of GDP is extremely low by OECD standards.

The Deputy is correct that marginal tax rates kick in at a high rate, which is a little above the average industrial wage. There is room for reform of the overall structure. I have spoken about moving to a two taxation system. For example, if various tax expenditures were abolished tax rates could be reduced. That would help. I imagine that most of the people in this room are on the marginal tax rate. I wonder if anyone here was disincentivised from working or whether-----