Paul McGrath (Westmeath, Fine Gael)

The thinking behind the amendment proposed by Deputy Burton is that many rich people on huge incomes are paying a very low rate of tax. It emerged that there were ten millionaires who were paying no tax. This gave rise to anger among the ordinary PAYE taxpayers who feel they are being crucified by the level of tax they have to pay. They go on to the top rate of tax at a low income —€29,400 this year — and on every euro they earn above that they must pay tax at the 42% rate and on top of that their PRSI contribution. They feel aggrieved that people with huge incomes ranging from €500,000 to €1 million a year should not pay any tax. The amendment proposes a minimum rate of tax which people should be required to pay.

The Minister is examining the various tax shelters and tax breaks available and will report to us on what exactly they are in the next few months. There is a reasonable case to be made for having a base rate of tax which everybody should be required to pay. If a person has an income of €1 million per annum and because of various tax breaks, write-offs so on, the person has a nil liability for tax, what is the position regarding that person's children qualifying for higher education grants? Will that person receive a certificate to the effect that because he or she has a nil tax rating his or her income is deemed to be at a rate whereby the person's children would qualify for higher education grants? If that were the case, what is the Minister's comment on it? Furthermore, if that were the case, how can he compare that person's circumstances to those of a taxi driver in Mullingar, Tara or Tullamore who works long hours to make a living and who leases the taxi rather than purchasing it, given that the amount of the lease is taken out of his financial returns and added in for income purposes to assess him for qualification for higher education grants for his children? Would it not be a terrible scandal if those high rollers, who have a nil liability for tax, qualified for higher education grants for their children, while the ordinary working person who is working long hours to earn an income would have such a lease amount added in for income purposes?

I am sure the Minister is aware of the irony that there are different ways of assessing people's income in different Departments. In the Department of Finance and the Revenue Commissioners, if I was a taxi man and submitted my returns, for tax purposes I could deduct the cost of leasing my car as a legitimate expense in compiling my net income. However, if I produced the same returns and submitted them into the local authority to process them for grant purposes for a higher education grant, the local authority on the instructions of the Department of Education and Science would advise that it does not agree with what the Department of Finance has advised. It would advise that amount is not really my income and that I must add the money I pay for the lease of the vehicle. It is unreasonable that people should be treated in that way. There must be a uniform approach across all Departments in dealing with people's income. Perhaps the Minister, who is new to his Department, will examine this matter with a view to getting his Cabinet colleagues to agree to a uniform approach.

Amendment No. 2 proposes that everybody should pay a base rate of tax. In other words, one should pay a certain percentage of one's income as tax, regardless of how well-off one is. It will not be easy to introduce such a rate. With all due respect to Deputy Burton, it is not possible to include a measure of this nature in a Finance Bill just like that. The amendment proposes that the Minister should prepare a report on how such a system can best be introduced. In fairness, there is a case to be made for this approach. It is a scandal that somebody who earns €1 million per annum does not pay tax.

See this speech in context