Michael McGrath (Cork South Central, Fianna Fail)
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I wish to address the universal social charge issue which is relevant to section 3. I agree that there is a limit which the Government can reach in respect of income tax and the universal social charge. Certainly, it should not be the balancing figure whereby when the Government is preparing the figures whatever is left to be achieved is done by hiking up income tax. That is not our view. I accept the marginal rates are high at 52% and 55%, including the universal social charge, and they cannot continue to increase indefinitely. I accept that completely.

It is not that someone earning over €100,000 will decide to stop working. Clearly, such a person will not do so on that level of income but it does have an impact in terms of stifling enterprise and potential foreign direct investment decisions. I accept that. It is a debate about degrees, how far we can go and the impact of the decisions the Government makes. That is why we did not propose an additional 7% on income tax but an additional 3% on incomes in excess of €100,000 in respect of the universal social charge which, according to the Department, if applied for a full year to employed and self-employed people would represent approximately €200 million. However, that is not the decision that has been made by Government.

I refer to the substance of section 3. Will the Minister outline the impact of the increase of 3% in the universal social charge on persons over 70 years of age? Does this create an anomaly? For example, a person earning a little in excess of €60,000 will now have income from €16,000 to €60,000 subject to the additional 3% on the universal social charge, which will be approximately €1,300 per annum extra, whereas someone coming in at a little under €60,000 will not have to pay that additional €1,300. Will the Minister address that issue and confirm whether my interpretation is correct?