Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

With regard to inequality and wealth, there is poverty in our country that we have to alleviate and there is social injustice that we must address. The core point I am making, however, is if one looks at the aggregate measurement of these matters and uses the Gini coefficient, which is used by many figures on the left elsewhere, the fact is it has not changed in Ireland, despite the horrific period our country has gone through. We still have a progressive tax code through the combination of USC and income tax. With regard to the levels of wealth that individuals might hold, we have a way of taxing that through capital gains, income tax and USC. Where I take a different view from the Deputy is that if we were to change the tax levels in the way he proposes, that would have an impact on economic policy and on the performance of our economy, which would cause other issues that we would have to deal with. We differ on that and I understand that.

If there were to be no change in employment and no change in economic activity as a result of returning the 9% VAT rate to 12.5%, it would equate to between €120 million and €150 million per percentage point in Exchequer revenue. The cumulative amount would be between €550 million and €600 million. I have not made a decision on that, just as I have not made a decision on any other tax measure because I will make them all together on budget day. I will consider each matter in the aggregate in the run-up to that. If that VAT rate was changed, it would have another set of effects in the economy that I might need to manage. One of the issues I have to consider is the number employed by the tourism industry and in the service sector. For example, the impact on sterling of Brexit and, therefore, the number of British visitors coming to Ireland has to feed into the decision. The read-out from our airports regarding the number of British visitors also has to feed into my decision. However, all the decisions will be taken together later in the year.

The Deputy referred to an underperformance in income tax receipts. We will properly know by the end of the year whether there has been an underperformance in income tax or USC. The first six months of data could change completely in the second half of the year. I have to base conclusions on a year of data, not months of data. The Deputy asked whether I believe the underperformance is the result of changes in the nature of employment. I do not believe that is a contributory factor because, according to the latest CSO figures, employment has increased in all sectors and more people have moved into full-time employment. Other figures produced by the CSO a while ago highlighted that disposable income is beginning to recover in a robust way. None of those indicators is consistent with a change in the nature of employment but I will continue to track this because I want to ensure people entering employment take up good jobs. That is one of the reasons the Government accepted the recommendations of the Low Pay Commission to increase the national minimum wage, which is the second time we have done that under this Administration alone.