Brian Lenihan Jnr (Dublin West, Fianna Fail)

With regard to the scheme outlined by Deputy Burton, the person must earn the relevant sum in the income split. If, for example, the business is a family farm, the person must do the equivalent amount of work to split the income. One cannot notionally assign income to two or three different persons in a particular family. In the treatment of the accounts submitted, there must be a real value performed by the person in respect of whom the income is paid. There is ample power in the legislation to set aside such arrangements and, indeed, evidence through the levy of the existence of such arrangements might furnish a pointer to the commissioners in regard to when such operations were being carried out. I do not accept the Deputy's argument that this is a valid avoidance scheme but it does draw attention to the fact this levy, unlike the levy introduced when Deputy Burton was a Minister of State, has a progressive element to it and has 2% and 3% rates, not simply a flat 1% rate.

To return to the topic opened by Deputy Burton of the tax treatment of persons who are at or just above the minimum wage rates, we in this country must be real about this — that was my reference to the Scandinavian issue. According to the latest OECD data, Ireland has the lowest tax wedge in the EU for single persons, married one-income couples and married two-income couples on average earnings. A low tax wedge makes it easier for employers to employ staff. Ireland has the lowest tax wedge in the entire OECD for married one-income and married two-income couples on average earnings. Ireland derives the fourth smallest proportion of tax receipts from labour of the EU countries. Only Bulgaria, Cyprus and Malta have lower tax receipts from labour and, as we know, Malta has tax receipts from persons who want to claim tax benefits there. Employees in Ireland make very low social security contributions by EU standards. Only Lithuania and Estonia have lower employee social security contributions and employers in Ireland also have the third lowest social security contributions in the EU, just above Cyprus and Denmark. We in this country have to recognise these facts because we are in circumstances where we must have a real discussion about the relative balance we have between taxation, borrowing and expenditure.

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