Dan Boyle (Cork South Central, Green Party)

A story teller in Cork city would tell his audience about his humble beginnings. He would say that his family had nothing growing up and the neighbours had nothing but there seemed to be an awful lot of nothing to share. Despite him not being a particularly useful storyteller, he might have made a good economist. If one changes the story to refer to a man who has it all, a Minister for Finance who has it all and a Government that has it all, one gets to the heart of this Government's economic performance. Never has there been a Government with such resources that has used them so wastefully.

There are many indicators of Ireland's economic performance in the past 15 years. There are many more in respect of Ireland's social performance. The 30 OECD countries have several indicators of how Ireland is performing poorly. We are at the bottom of the table in terms of how much we spend on education. We are fifth from the bottom in terms of how many people leave before completing secondary education. Our health expenditure remains below the EU 25 average. Over the past ten years, the Government has had the opportunity to provide a fairer, better Ireland, a slogan heard at the recent Fianna Fáil Ard-Fheis but one that seems no closer to coming into being.

On the surface, there seems very little the Minister could have done wrong. Unfortunately, he missed the opportunity to put better measures in place. The headline figure is the reduction of the top rate of income tax from 42% to 41%. This will not benefit the majority of workers at all and will be on a sliding scale for those who pay tax at this rate.

The 1% reduction may be a sop to the Progressive Democrats or perhaps a "so long and thanks for knowing you" present on behalf of Fianna Fáil. What has not been noticed is that the Progressive Democrats has managed to achieve the same 1% reduction in income tax in the second term of Government with Fianna Fáil as the rainbow Government achieved in its two and half years of existence.

The sting in the tail is the introduction of a new form of taxation for higher earners. I am not sure if the Progressive Democrats approved it or read the fine print, but the increase in the health levy from 2% to 2.5% for people with incomes over €1,900 a week means most of the benefit of the 1% decrease in the tax rate is being taken away almost immediately. That is not bad in itself, but it is the ultimate confidence trick from the Minister and the Progressive Democrats. An increased health levy was the one item they could take out of this budget, taking into account the 1% tax rate decrease, to mask that nothing has been achieved on the stamp duty issue. The shortfall is immediately ameliorated by introducing what is, in effect, an additional tax on high-income earners.

The increase in the tax bands and credits are to be welcomed, but the index linking from when bands and particularly credits were introduced means taxpayers are more or less paying the same proportion as when they were introduced. There is no real additional money being given to taxpayers and that is the reason we see the net increase year on year in most tax receipts of the Government.

The 1% decrease in the 42% tax rate will cost approximately €230 million. There are arguments that the money could have been used to further increase the tax credits or bands or, in particular, to reduce the taxes which have most effect on the majority of our citizens. The highest tax we collect in Ireland is not income tax, corporation tax or even stamp duty, but value added tax. Value added tax is very indiscriminate in its effect, as it is a tax on every citizen's spending, regardless of where their income is coming from.

The Government proclaims to have a social justice agenda and would have been far better served in ensuring the VAT bands were altered so people who have the least in our society would end up paying less tax.

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