Brian Cowen (Laois-Offaly, Fianna Fail)

——and would involve making political decisions at this time which would simply be untenable. I agree we must move to eliminate the current budget deficit to finally establish a long-term sustainable path, whereby day-to-day expenditure corresponds to tax receipts. As tax revenues are 10% less than expected for this year, with little improvement in that position assumed for next year, that can only be done progressively over time.

I wish to comment further on the matter raised by Deputy Gilmore during Leaders' Questions. I am conscious of the sacrifices people will make as a result of yesterday's budget. If we begin a process of correction now and stick with it in the years ahead, we will provide the best means of protecting our prosperity and supporting the vulnerable in the years to come. We have done our utmost to adhere to the principle of fairness in making our budgetary decisions. When money is less plentiful, we must divert it to those who are most in need. The contributions people make to the cost of public services must be structured in line with their ability to pay.

We have increased the income tax band to ensure that workers on modest incomes do not pay tax at the higher rate as a result of standard pay increases. We have structured the necessary income levy to ensure that those on higher incomes will pay more. We have capped the tax benefits of pension contributions at a significantly reduced level of earnings. In that way, we will ensure we do not provide subsidies to those who are not in need. People on modest incomes are sheltered from the necessary increases in charges. The criticisms of the income levy from Opposition Deputies ring hollow when one considers that when they were in office——

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