Joan Burton (Dublin West, Labour)

I find the Minister's approach very disappointing. When governments around the world are producing stimulus programmes for their economies, the strategy in this budget is not only to increase taxes, but to increase them in a counterveiling way. Much of the increased taxation in the budget is disastrous for the real economy.

Of the tax increases the Minister put forward in the budget, the levy means there will be a poverty trap because it offers no marginal relief. If people move from €18,304 to €21,000, €22,000 or €23,000, they will immediately incur an extra €183 in tax. These are the people at the bottom of the scale and they, more than anybody else, are the ones the Minister should wish to encourage to earn more income. Their earning more income has two important benefits. First, it gives a person who is on little more than the minimum wage an opportunity to have a much better standard of living. A sum of €183 per year will buy a lot of sliced pans, sausages and chips for families on very low incomes. These are the people whose children end up eating cheap food because they cannot afford expensive food. This measure is not without implications for people's lifestyles. A person on social welfare is exempt, correctly, from the levy. However, we are talking here about the working poor. In his scheme, the Minister proposes to tax the working poor and if they earn a little bit over the minimum, he will tax them even more. I know the Minister is not without compassion. All we suggest is a marginal scale of relief.

The tax increases, such as the 0.5% increase in VAT, are the worst signal the Minister could send out. He would have done better to send everybody free tickets to travel to Newry rather than raise the VAT rate by 0.5%. His tax increases are ill-thought out and do not produce any kind of economic stimulus, unlike measures taken by every other government in the world. Instead, they will make people want to keep their incomes low and, in the case of the VAT increase, will make them want to shop in Newry.

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