Michael D'Arcy (Wexford, Fine Gael)

I am pleased to discuss the first budget since I became a Member. I am concerned about the borrowing of approximately €5 billion for 2008. Department of Finance projections for recent years have not been very accurate. What I describe as the Cowen budgets have, so far, been inaccurate to the extent that from 2004 to 2006, they have underestimated the tax take by about €5 billion. The Government's numbers were incorrect to this extent. In 2007, the Department underestimated the numbers by €1.75 billion so, hopefully, the numbers with which we have been presented will be somewhat accurate or more accurate than they have been in the past number of years.

The Minister for Finance did what he had to do. He was absolutely obliged to go forward and borrow moneys to keep the national development plan on track and to continue the current day-to-day spending that must be continued in respect of health, education and other Departments. The question I pose is whether the Minister was prudent in his previous budgets. Should he not have set aside moneys and slowed the economy so as to ensure that when the day which we all knew was coming arrived, we would have the cash we needed? I likened the Irish economy to somebody riding a bicycle down a hill as hard as they possibly could but being afraid to touch the brakes because they were going too fast. We are, to some extent, in a speed wobble. Nobody really knows where or when we are going to come out of that wobble. Will it be a crash? If so, what will be its extent? We just do not know.

As I stated, my concern relates to borrowing €16 billion in the next three years. I am worried that this is where we must go when one considers where we have been in the past three to four years.

I will touch on some of the numbers within the budget in respect of our source of income — where the moneys are coming from and where the stream is coming into Revenue. VAT is the largest contributor within the State. The 2008 projections are for €15.15 billion in VAT. That is an increase of about €700 million from 2007-08. VAT moneys are now greater than income tax. The scenario whereby the tax take from products or labour sold or traded is greater than income tax does not happen in very many economies. It worries me for the simple reason that the small amounts of moneys — €12 and €14 per week — that have gone to pensioners and upon which my colleagues have touched will be eaten up very quickly by the increase in VAT.

In terms of the other Departments that have received moneys, as my colleague, Deputy Bannon noted, there was practically nothing relating to agriculture. Given world prices for grain and dairy prices, one would have considered that this economy might have received a bit of a boost. We have always seen that farmers here are excellent spenders. However, there has been no reinvigoration of that market. I am sure the Acting Chairman will agree on a point I have previously raised with him concerning a land-based payment in respect of the bio-fuels sector. Competition from the cereal sector has been very significant in that the margin per acre for cereals is now much greater than it is for bio-fuel crops. We have heard much talk about the Green imprint on this budget but this imprint should have touched upon the land-based payment. If we do not continue to support the burgeoning bio-fuels sector, it could fall by the wayside very quickly.

Fine Gael has long argued that stamp duty badly needed to be reformed. The Minister held the position, which was consistent, that he would not be the Minister for Finance who would reform it but he did. He was left with absolutely no other option. He was obliged to move. However, I have a particular concern about it. He has reorganised the bands, which is very welcome, but we do not know whether the reorganisation will be a real help to the market. For example, the stamp duty on a house, property or unit — whatever one wishes to call it — priced at €250,000 will be slightly less than €9,000. To be frank, the markets are dropping by €9,000 every six months for those houses. I do not know if this is correct but the cumulative effect of the drop in the market prices and the reduction in stamp duty, which will be small and will not amount to €9,000 for a small unit, might be enough to stimulate it. However, I am concerned that it is a minimalist approach. The Minister could have been braver and done more in trying to reform this sector.

I made a submission in respect of stamp duty applying to sites in a letter I wrote to the Minister. Anyone who buys a property will get the benefit of the €125,000 exemption, with the exception of the person who purchases a site. This is something that must be examined. Many rural Deputies, of which I am one, know this is something we need to consider. It is just an oversight on the part of the Minister but it badly needs to be addressed.

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