John O'Donoghue (Kerry South, Fianna Fail)

The Deputy will be aware that issues of taxation are a matter for the Minister for Finance and that I am not at liberty to discuss the possible contents of the next budget.

Ireland has a distinct model of economic development. A key part of this model is a low direct tax take on income which is balanced by a higher tax take on consumption. This approach has proven very successful and I would be slow to advocate that we move away from it. For our overseas visitors, however, there is a different perspective. They pay VAT and excise duties on items consumed here but do not have the benefit of the lower direct taxes. We are conscious of this, particularly given the competitiveness challenge facing tourism in the recent past. For this reason, my Department maintains an active dialogue with the Department of Finance on certain budgetary fiscal issues bearing on the costs of tourist consumption.

In the previous budget, I am pleased to note there was no increase in the VAT and excise lines that impact on tourism. This is a benign outcome on the broad tourism front. On a narrower front, there are a few fiscal issues that we continue to pursue with the Department of Finance, one of which is the subject of a separate question later. All Ministers responsible for specific economic sectors would probably wish to improve the fiscal position of their sectors but, in the heel of the hunt, every budget has to strike a balance between a wide variety of different needs and priorities, of which tourism is only one.

Having said that, we should bear in mind that our tourism companies pay low rates of corporation tax, their employees pay relatively low rates of income tax, our hotels have benefited from generous tax incentives and this year's Exchequer allocation for tourism services is at an all-time high.

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