Dr. Tom McDonnell:

Yes, Deputy. One of the things that speaks to is that we should be very cautious about engaging in tax cuts, particularly when the economy is on an upswing. Actually the best time to cut taxes is during a recession, provided one has built up a sufficient surplus to be able to do that, to keep demand going in the economy and to keep things on a steady ship. With employment growing and the economy doing well, what one wants to avoid doing is overheating the economy. Given that we all acknowledge that there is a problem in the housing sector, the response to that, whether it is private or public, will be to ramp up house building and construction. We have seen that construction is already starting to expand quite quickly. What one does not do is to supplement it by cutting taxes at the same time because one runs the risk of overheating, such as what has happened in virtually every country in the world at different points. When people think about having all of this money, they suggest spending it and improving things now. Our emphasis is always on investment. What I mean by that is investing in something now to gain something even in 20 years' time when it comes to child care or education or in the near future when it comes to infrastructure and perhaps never at all, as it is a gamble when one invests in research and development. However, one cannot win if one does not try.

One point, that was perhaps taken up incorrectly, was that I did not actually mean to give the impression that we think that excise taxes should be cut necessarily. I agree the bad items should be taxed, whether it is alcohol, cigarettes, sugar, carbon and so on. I was simply making the point that it is actually the one area where we are a high tax country. It might be a good thing that we take those things seriously as problems, betting, of course being another example.

I agree absolutely that in the longer term it would be better to co-locate and to roll preschool education in with primary education. It will take us a long time to get to that point, but to do it will require fiscal resources and ramping up. It would be wonderful to get a commitment from this Dáil to deal with this preschool issue, as well as housing, by putting in place a plan for it to happen during the next five to ten years.

On the question of the vulnerable middle classes, my first port of call is to say that their tax burden, as it were, is actually quite low compared with other high income countries. Perhaps that may be slightly simplistic. The labour taxes are low, but the employee contribution is not necessarily low. Perhaps reorienting the distribution of who pays labour taxation from the employee to the employer would help the hard pressed worker. We know that the countries that have a high level of employer PRSI do not seem to have a dearth of employed workers but tend to be the countries with the highest employment rates in the world. Of course, it is more complicated than that. Measures, such as reducing child care costs, improved infrastructure, which means lower public transport costs, better roads and rural broadband are all things that will help the economy and will help reduce costs.

Dealing with the housing crisis will push down the cost of rental in the long run and also will push down property prices as well. All of those measures will benefit the younger generation coming through, which of course, is the suffering generation, the people who did not get jobs in their twenties in 2008 and beyond and are now suffering from higher costs in many ways. That is the generation that has really suffered. What we can do for them is ensure that we have strong infrastructure and that we are Brexit-proofed by investing in education infrastructure or in research and development. There are certain sectors to which we will need to provide specific help to assist them, such as agrifood, but overall that would be the strategy that we would employ in terms of helping the hard-pressed middle earner. We are very cognisant of the issue but in our view the strategy we are proposing would help them more in the medium to long term.