Seán Crowe (Dublin South West, Sinn Fein)

The Minister, Deputy Cowen, speaking on the Bill stated "the system of indirect taxes under this Government seeks to safeguard the lower paid. It is not regressive as some studies maintain". I take issue with that comment. I accept there are some anti-regressive features built into the VAT system, such as its non-application to certain very basic necessities. However, the Minister is entirely wrong to dismiss evidence of the impact of VAT and user charges on low income families. There is no question but that the extent of indirect taxes disproportionately penalises those on low income. Indirect taxes are inherently regressive because they are paid at a fixed percentage of a price and do not take into account the ability to pay. They also hit low income earners hardest.

Almost one third of the overall tax take is raised through VAT and more than 13% is raised by way of excise duties. The Combat Poverty Agency, the State advisory agency whose job it is to develop and promote evidence-based proposals to combat poverty, found that indirect tax payments for the lowest income households amounted to more than 20% of income; for the wealthiest households, it was just over 9%. The Minister's comments last night suggest he disputes these findings. In addition, there is a growing number of user fees and service charges for public services, which are also unjust as the public already pays for essential services, such as waste management, health care and road building and maintenance, through the general taxation system.

During his speech, the Minister made many claims about the Government's record to date, including the statement: "In this Bill I seek to ensure the benefit of strong economic growth is shared by all taxpayers and, in particular, low and middle income earners." Surely the greatest indictment of the present Government is that the wealth generated over the past decade has not been used to deliver better public services nor has it been used to eliminate the scourge of poverty. The State is characterised by increasing inequality between the well-off and the low and middle income earners. Having a job and being poor are not mutually exclusive given the prevalence of low paid workers.

The Minister told us 845,000 low income earners are now exempt from income tax. One must be on or below the minimum wage, €8.30 per hour, to be exempt. It is a question of what has been done and what could have been done had the political will existed in a time of plenty when the revenue was available to make a decisive impact on the elimination of poverty. History will not absolve the Government for its failures, for presiding over growing inequality, for contributing to unprecedented deterioration in the quality of so many people's lives and for failing to use its record resources to ensure public service delivery. More than 80,000 children suffer consistent poverty and go to school hungry. Those on low pay join others left behind by the Government, such as the 40,000 households on social housing, the 62,000 households living in consistent fuel poverty, the 100,000 or more children who do not get proper food and parents trying to raise a family on far less than the Minister's expense account.

It is right to examine the Government's legacy as its second term in office comes to an end. Public services, health in particular, are in crisis. Those on low incomes hoping to have a roof over their heads must contend with costs of accommodation in the rental sector at an all-time high. Those on average incomes cannot afford to purchase a home, particularly first-time buyers in the greater Dublin region. Getting home from work is an increasing struggle because the Government has failed to prioritise the development of public transport. Despite the dire need for extra buses, funding for Dublin Bus has been held back. Low and average earners do not have the ability to cope with the range of economic pressures, including the rising energy prices and rising mortgage prices they now face.

In addition to all this, we have record levels of household indebtedness, over-valued property, an economy over-dependent on construction and a Government over-dependent on revenue from construction and consumption. People deserve better.

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