Pat Rabbitte (Dublin South West, Labour)

I want to ask the Taoiseach about the breakdown of social partnership and the fact that talks are in abeyance for a new social contract, following events at Irish Ferries and elsewhere. Is he aware that there is as deep a concern in the trade union movement about the Government's failure to meet commitments on taxation as the concern about displacement and Irish Ferries? I refer him to an answer to a question asked by Deputy Burton last week, where she established that there are 160,000 more workers paying tax at the marginal rate now than when this Government started in 2002. The Government made a pledge in 2002 that 80% of people would be paying tax at the standard rate. That was essentially incorporated in Sustaining Progress. Although this is the third and last budget under that agreement, the figures have gone back significantly. Some 73% of people were paying at the standard rate in 2002, but now only 67% are paying at the standard rate. This has led to a situation where people on average industrial earnings are paying the 42% rate. Somebody earning €1,900 in excess of the average industrial wage in 2002 only then became liable for the marginal rate. In 2005, workers being paid €1,200 less than the average industrial wage are now liable at 42%.

This is the con at the heart of the tax policy driven by the Progressive Democrats. The cosmetics are put right and the indirect taxes and the stealth taxes are then piled on. The biggest stealth tax of all is the failure to index the standard rate tax band. As a result of the failure to index the standard tax band, people on very modest incomes are liable to pay income tax at the marginal or top rate. That is the con at the heart of the Progressive Democrats mantra about 42% and 20%. That looks great until people look at their actual wage packet. For hundreds of thousands of workers, this is a very serious point. For the trade unions that got this commitment in Sustaining Progress, the situation is getting worse and the number of people paying at the top rate is increasing.

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