Brian Cowen (Laois-Offaly, Fianna Fail)

The levy is applicable to all people working in the public service and whatever legislative changes required to give it effect will be introduced as a matter of urgency. Regarding the impact it will have on the overall budget deficit this year, we are trying to stabilise the situation by providing a €2 billion provision in this series of announcements today. We will have an opportunity tomorrow to set it out in a wider context. I am here to announce the decisions that were made by the Government today in the context of the €2.1 billion full-year savings decided this afternoon. Tomorrow we will have a debate in the House that will put in the broader context how we see the Government dealing with the economic issues of the day, going forward.

As has been said, in the context of a contraction in the economy this year of more than 4% — between 4% and 4.5% on recent analysis — it is a question of ensuring that we do not have further major tax changes during the course of this year. In answer to part of Deputy Gilmore's contribution to the House earlier, I have indicated that this gap of €17 billion cannot be simply filled by expenditure savings. There will obviously need to be a contribution by the taxation system in the years ahead in order to meet the difference that now exists between the spend in which the Government is engaged and the tax revenue that is being provided at the moment. This recession is having a particular impact on our public finances that we will need to address, therefore, it will be a combination of tax and expenditure items.

With regard to identifying items for next year and further on, the McCarthy public service committee is looking at numbers and expenditure items in all areas of expenditure in all Departments. In addition, the Commission on Taxation is taking a systemic review — the first in more than 25 or 30 years — as to what is the best way in which we can provide a taxation base that can meet the needs of the society in which we live today and in the years ahead.

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