Joan Burton (Dublin West, Labour)

This is Robbie:

So I sing a song . . .

. . .It's a song I sung before,

And a song I'm gonna sing again,

I mean every word,

I don't mean a single one of them,

Oh Lord, make me pure,

But not yet.

That is just about it on the tax shelters. Some of the more obvious tax shelters are to be closed down. They have outlived their usefulness and were causing serious harm and distortion. The notorious exemption for the stallion tax has to go but not for another two years. Lord, make me pure but not just yet. That will give the lads plenty of time to set their affairs in order.

The Lord does not close one door for the super rich but he opens another. Can we say that? Both parties in Government are addicted to tax shelters. It is interesting that, according to the documentation we will only see in great detail with the Finance Bill, the tax shelters will not really start closing until 2008. It is unclear what the Minister is proposing to do because he claims that, with regard to hospital relief, he will front load it. Again, in the small print of the budget, hospital relief will cost an extra €3 million next year and €2 million the following year. Savings will only be anticipated thereafter. It is hard to work out why it will cost more. It is because it is being front loaded and, I presume, will be an advertisement to the super rich to get into hospitals. The redoubtable Government backbencher, Deputy Ned O'Keeffe, said that hospitals are the new hotels. They are a new avenue for tax breaks.

The Harney plan to promote private hospitals is one of the most misguided proposals ever presented, even by a Government as full of misguided schemes as this one. The Harney plan will provide tax incentives to private investors to promote the building of private hospitals on the grounds of existing voluntary and public hospitals. It will almost certainly, after today's announcements, result in an avalanche of private medical facilities as investors race each other to find the most profitable locations and sectors to serve. It will lead to longer waiting lists and a more stretched service in the public system as scarce resources, such as consultants, are drawn out of the public system. Remember that there is worldwide shortage of doctors. Private hospitals will cream off the less complicated cases and distort decisions on who should receive treatment in hospitals.

We have to build capacity in the health system but the creation of a parallel private system is wrong in principle, expensive and likely to be inefficient. It creates a two-track system, with one speed for private services and another for public ones. Rather than designing the roll-out of additional hospital bed capacity around the needs of patients, the needs of investors will instead have precedence. When the private sector has cherry picked the most profitable elements of health care provision, the public hospitals will be expected to take responsibility for what is left. The Harney plan involves a significant level of hidden public subsidy for the so called private sector. Valuable sites in public hospitals will be made available to private concerns.

The changes announced by the Minister involve time based limitations, so they are welcome. However, a private hospital that costs €100 million will still attract tax breaks for single high net worth investors of approximately €42 million. The described changes will mean that the taking up of those reliefs, bar the front loading, which will bring them forward for the first two years but will later extend them out, will cost the taxpayers exactly the same. It will simply spread the relief over a longer period after the initial period of fast forwarding the relief.

With regard to the promoters of tax breaks for private investors, some brochures, which I am sure the Minister has seen, promise a return of €62,760 for every €75,000 invested. Obviously, a great deal of that profit comes from the tax break in terms of sheltering income from taxes but the private hospitals must also deliver profit for investors. How is that profit is to be obtained? If patient care is not to be compromised, it has to come from higher charges to the Exchequer and to private insurers. The inevitable result will be higher VHI, BUPA and VIVAS bills. The Harney plan will deliver high cost health care at considerable public expense. For the ordinary taxpayer, it will be a double whammy. A lucrative tax shelter will siphon off income that ought to bear a fair portion of taxation, while the imperative to deliver profit will ratchet up insurance costs for all of us. I am very disappointed.

The Government is addicted to stealth taxes and, for the first time ever, it is taking substantially more income this year in VAT than it is in income tax, particularly if from the special investigations by the Revenue Commissioners are subtracted from income tax returns. If an old age pensioner buys a new television, he or she pays VAT at 21%, as does a millionaire. The fact that VAT is such a significant element and the main generator of taxes is an indication of how regressive our tax system is.

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