Joan Burton (Dublin West, Labour)

I move amendment No. 3:

In page 11, between lines 13 and 14, to insert the following:

1.—The tax bands, exemption limits and tax credits relating to income tax set out in the Finance Act 2004 are hereby increased by such rate as would maintain the real value of those bands, limits and credits in terms of changes in the cost of living since 2003.

The purpose of this amendment is to restore to taxpayers the stealth taxes exacted on them in a highly secretive fashion by the former Minister for Finance, Charlie McCreevy, in the budgets of 2003 and 2004. His failure to offer compensation for the increase in prices and his freezing of the tax bands and credits resulted in perhaps the single greatest stealth tax in the history of the State. The Minister for Finance, Deputy Cowen, will argue that he made some attempt in this year's budget to compensate for increases in the course of 2004. However, taxpayers were ripped off to an incredible extent by the former Minister in his last two budgets, for 2003 and 2004.

In regard to tax credits, we must move towards a system in which the taxpayer is compensated for changes in the value of money. The failure of the former Minister to do so in two successive years resulted in a massive additional windfall in tax revenues collected by the State, much of which was not well spent. We recall the Minister for Transport, Deputy Cullen, blowing €60 million of it on the electronic voting system, and the substantial sum doled out to the former Minister for Finance's favourite object in Punchestown. All this was paid for by taxpayers, particularly PAYE workers whose wage packets were dipped into by Mr. McCreevy at an ever-increasing rate.

This year, as in the last two years, the majority of PAYE workers will pay tax at the top rate. A single person earning slightly more than the average industrial wage, approximately €31,000, will pay tax on overtime or other additional payments at a rate of 42%. We are all familiar with the credo of the Government in regard to low taxes. The Government believes in low tax rates of 20% for capital gains tax, low rates of 20% for inheritance tax and effectively no tax for a number of millionaires who choose to invest in the plethora of tax avoidance schemes which were created consciously by the former Minister for Finance.

However, a single person earning €31,000 per annum does not get the benefit of any of this. If such taxpayers receive a wage increase as part of a national wage agreement, do overtime or get bonuses, they are likely to find that incremental income taxed at the rate of 42%. When one includes social contributions, the average single taxpayer earning more than €31,000 is subject to a total take of approximately 50%. That is not a low marginal rate. Moreover, those on this level of taxation, unlike their counterparts in many European social democracies where those who pay that level of tax enjoy superior levels of entitlement, particularly to health and other social services, are likely to have relatively few entitlements if they exceed a certain income level.

The Minister is aware that the income limit for parents seeking a third level grant for their children, except perhaps for those in the farming business, is so low that most PAYE workers, including those who have retired early and whose partners have a part-time job, do not qualify. Similarly, the income limits for medical cards are very low. Admittedly, the Minister introduced in the budget a new form of yellow pack medical card which provides an entitlement to free GP visits. Again, however, the Minister should check the income limit for this provision against the average industrial wage. He should check it against the circumstances of a family where one partner is working full-time, the other works 20 hours a week and they have a child suffering from asthma. That family does not get a fair deal, but pays a considerable amount of income tax on the nail. This cuts to the heart of the type of tax system that Fianna Fáil and the PDs has created. Taxpayers in the PAYE net pay a considerable amount of income tax but they have a relatively restricted entitlement to services, particularly in the health area. Therefore, if they earn anywhere in the region of the average industry wage or upwards, they also pay high levels of health insurance coverage. Their position can be contrasted to that of the golden circle that surrounds the Government which invests in property-based tax breaks. When the Revenue Commissioners carried out a survey two years ago they found that 400 of the top earners between them availed of €78 million in tax breaks, the bulk of them arising from property-based tax breaks. As well as intensive advertising of a low marginal rate for corporation tax which Deputy Quinn of the Labour Party introduced when he was Minister for Finance——

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