Arthur Morgan (Louth, Sinn Fein)

We want investment in education and training programmes to be linked to information technologies. We also want the national action plan for social inclusion to be delivered. Our approach to this budget has been unique. Rather than focusing on cuts, we focused on revenue generating ideas and job creation. It is a poor indication of what we will face in next year's budget that this Government did not take the same approach, but chose instead to make savings in areas where we can least afford them.

For too long, our taxation system has been biased in favour of the well off. I have already mentioned how this Government's policies led to instability in the tax system, but nobody should think that such instability was an accident of design. We have the fifth lowest tax take in the European Union. The tax structure by tax type — indirect 44%, direct 40% and social security contributions 15% — differs considerably from the structure typical for the EU as a whole, where on average there is less reliance on indirect tax. The fact is, if there is high VAT, there is a range of stealth taxes on everything from accident and emergency visits to waste management, and this will have a disproportionate effect on those with the least in their pockets.

Sinn Féin has long called for reform of the tax system. There are people in the system paying too little and people paying too much. The biggest con-trick the Government ever played on the people was convincing them that we have a low-tax economy. We only have a low-tax economy for those who are well off. Everyone else is paying through the nose. In our pre-budget submission, we called for the Government to undertake a rolling review of taxation, through the Commission on Taxation, with a view to increasing the number of income tax bands. This morning the Minister for Finance stated that the Government's priority was to protect the vulnerable and to ensure that those who earn the most pay the most in tax. He said he supported a progressive tax system. This would be a major Government U-turn in policy if it was delivered, but it has not been delivered. Instead, the budget only tinkered at the edges of the taxation system and with stealth taxes, as opposed to overhauling the system to bring in money to the Exchequer. The Minister has made the situation far worse for many families, particularly those most vulnerable. The income levy and the VAT increase are a disgraceful attack on people on low incomes. They are neither fair nor progressive.

I welcome the Minister's decision to take on board our proposals to increase the PAYE tax credit to meet the annual increase in the cost of living, the increase in betting tax and DIRT. However, we have serious concerns regarding other measures. The proposed income levy is regressive. While it is positive that people earning more than €100,000 will pay 2%, the fact that all those on under this figure will pay the same levy means it disproportionately hits those on low incomes. It is almost a flat tax. The increase of the 21% VAT rate by 0.5% is also regressive. It will hit low income families and does nothing to reverse the State's dependence on consumption taxes, one of the key contributors to the current public finance difficulties.

Prior to the budget, we had called for all discretionary tax relief schemes to be available at the standard rate. This would have yielded €1 billion to the Exchequer. It is staggering that the Minister only tinkered with this. It is also hard to understand why the Government failed to abolish the ceiling on PRSI. The social insurance fund will come under more pressure until we can get people back into work, and this measure would have provided essential resources.

I am also concerned that there were no firm proposals on utilising the National Pensions Reserve Fund. We called for this money to be used to fund critical infrastructure projects that would improve competitiveness and provide jobs. There is now concern that this fund will be used to help recapitalise the banks. That should not happen. The Minister said that no vested interests were served in this budget, yet the Construction Industry Federation's demands on cutting commercial stamp duty have been almost wholly met by slashing this tax from 9% to 6%.

We proposed a number of additional revenue producing initiatives, such as increasing motor tax for the highest emitting non-commercial vehicles, increasing the health levy by 1% on those earning more than €100,000 per annum, introducing legislation to end tax-exile status and ending State subsidies to private schools. Denis O'Brien and Bono, two of our biggest tax exiles, will not be perturbed by this budget. Bono's concern for Africa is laudable, but it is a pity he does not share the same concern for the people in this State.

The fear among the most vulnerable in society that this budget would harm them most has been realised.

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