Mr. Fergal O'Brien:

Yes, it is clearly our view. Given the resources we have available, what we should be targeting is increasing the entry point to the top rate of tax and reducing the top rate of tax over time. Ireland's tax system in its entirety is quite narrow in international terms and our income tax system is particularly narrow. We have one of the highest proportions of workers of any OECD country not paying any income tax at all. Further reductions to the USC or carving more earners out of the USC would further narrow our tax system but would not addressing the economic disincentives of a very high marginal rate at an exceptionally low earnings level. The reality we see from a business perspective is people on below-average earnings of €34,000 refusing to take up overtime because it means a marginal tax rate of almost 50%. People are reporting it is more difficult to have a shift operator become a shift manager because half of the salary increase is going in income tax deductions. These are the business and economic realities of having such a high marginal tax rate kicking in at such a low earning level. We suggest the evidence that should inform the reform of the income tax system should be that labour market reality. Focusing the resources on reducing USC has other social objectives, which we see, but from an economic perspective it is not the best use of our resources.

I will ask Mr. Brady to comment.