Arthur Morgan (Louth, Sinn Fein)

This is not so much a Finance Bill as depressing evidence of a Government that is continuing to sleepwalk through a crisis that not only threatens the banking system and the construction sector, but is also slowly bleeding the small businesses that employ most Irish workers and are at the heart of the economy. Hundreds of thousands of working families, whose effort drives this country's economy, have been abandoned in this Bill. They have been condemned to endure higher taxes and more stealth charges to fund the policies of failure. The Government has failed on income tax, on VAT, on tax exile status, on the reform of tax relief and on tackling tax fraud. It has failed to protect the vulnerable. Most importantly, in terms of ensuring economic growth, it is penalising working families rather than rewarding them.

There is nothing in this Bill to incentivise or stimulate the economy. Deputies should not just take my word for it — people outside this House have also criticised the Government's strategy. This Finance Bill has been described as a cobbled together package that does nothing to indicate that the Government knows what it is doing. The initiatives in the Bill have been described as not being of a scale that reflects the seriousness of the economic situation. It has been suggested that this legislation will do practically nothing positive for Irish business. I urge Members to listen to the voices of others outside the House.

I represent one of the parties in this House that was regularly castigated over recent years for pointing out the structural flaws in the Irish economy. There was a brief moment in September of this year when it seemed that the Minister for Finance was finally grasping the seriousness of the economic crisis threatening the Irish economy. I refer to his decision to schedule budget 2009 earlier than expected. Ten weeks on, it is clear that the decision was simply a public relations stunt. The budget was devoid of any substance and lacked any direction to drive the economy forward over the next three years.

Sinn Féin had proposed an increase of 5% in the PAYE tax credit so those on low incomes would get some respite from the higher energy, mortgage and food costs they have endured over the last year. This Bill, which leaves personal credits unchanged, widens the 20% tax band marginally. It does nothing to help families to deal with increased living costs at a time when inflation in the economy is over 4%. Double digit increases in electricity and energy prices have been levied on households this year. Many families face new transport charges for school buses, higher hospital charges, a new VHI levy and increases in university registration fees. When one considers these charges in the context of the tax increases for low and middle income families, it is clear — even at a conservative estimate — that the incomes of hard-working families will decrease by up to €1,500 in 2009.

The Minister has done nothing to restore the purchasing power of Irish families. His proposal to increase VAT to 21.5% is another regressive step that will have an unfair effect on Irish families. Towns on this side of the Border are being emptied of shoppers. The 2.5% VAT decrease that was announced by the British Chancellor of the Exchequer yesterday will exacerbate the gaping imbalance between the two economies. The Minister for Finance is actively encouraging shoppers to leave his tax jurisdiction. It is an example of the economics of "Fianna Fawlty Towers", rather than the financial stability he has promised us.

The 1% income levy on workers who earn more than €18,305 is unwarranted and will damage low income families. The income levy should apply only to incomes in excess of €38,000. A 3% levy should apply to incomes in excess of €200,100. Our proposal to remove the PRSI ceiling would have the double effect of raising much-needed tax revenue while cushioning those on low and middle incomes from the worst effects of these increases.

Sinn Féin welcomes the decision to end the Cinderella clause for tax exiles. I am bemused by the Minister's claim that tougher restrictions cannot be placed on Irish tax exiles because of double taxation agreements. Are we really to believe the Minister cannot act? He can raise taxes on a whim and write a blank cheque for the banks, but it seems he cannot take action in respect of a handful of supposed Irish citizens who do not want to pay tax here but demand to enjoy the benefits of Irish citizenship.

Perhaps we should not be surprised, given that more than ten years have passed since the first revelations of illegal private bank and offshore tax defrauding accounts held by hundreds of Irish citizens were uncovered by the McCracken tribunal and published in the Ansbacher report. We were told at that time that we could not get full access to the details of illegal accounts held by Irish citizens in the Cayman Islands. Following yet another unsuccessful High Court challenge by a Fianna Fáil Government, aimed at uncovering tax fraud, this Bill is making more changes in the tax code to empower investigations by the Revenue Commissioners. Such investigations have thankfully brought hundreds of millions of euro into the State coffers. Why is it taking so long to deal with offshore tax fraud?

The Government has stood by in recent years as billions of euro have poured out of the economy and into property investments in Britain and Europe. In 2006, Forfás estimated that the Irish economy had been a net investor outside this country since 2004, when Irish citizens invested €12.7 billion outside the economy. In 2006, Irish investors spent almost €8 billion on commercial property in Europe. Now that the horse has bolted yet again, the Government is introducing half-hearted measures.

The proposal to change the system of research and development tax credits is another example of a suspect Government measure. IBEC has described the changes in question as disappointing. Questions are being asked about the Government's entire research and development strategy. Such a strategy has to make sense in the boardroom and on the workshop floor, but that is clearly not the case with the current proposal. Much more serious action needs to be taken. The Minister either believes in empowering the knowledge economy or he does not. There can be no halfway house in this regard. When the 2009 budget was unveiled, I said, "We can rebuild the economy, but that means taking bold decisions". There is no evidence of such decisions in this Bill, unfortunately. Where is the investment in infrastructure that will create jobs and build competitiveness?

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