Leo Varadkar (Dublin West, Fine Gael)

The majority of these resolutions provide for increases in capital taxation. I share the view that capital taxes in Ireland should be considerably higher because it is wrong to tax income from work at such a high rate while taxing wealth not gained through work, such as inheritance or capital gains on property, at a lower rate. That is why I have no difficulty in seeking significant increases in capital taxes provided that they form part of a wider package involving reduced taxes on income.

These resolutions, however, merely comprise yet another major tax grab by the Fianna Fáil led Government. Death and gift taxes are being increased, as are taxes on life assurance and savings. These come on top of the horrendous increases in tax on work through PRSI increases, the Lenihan levy, the health levy, excise increases and the previous budget's increases on VAT and taxes on second homes and parking spaces. The Minister for Finance has indicated his intention to tax children and homes in the next budget. I have not even mentioned the travel tax on those flying to this country. The Government's entire economic and budgetary strategy appears to be tax and more tax. My party opposes this view because we do not think one can tax one's way out of recession. A much more sophisticated approach is required. First, one needs to control spending. The adjustment should come two thirds from spending and one third from tax increases. Some measures also need to be included which will stimulate demand and employment. We have put those views across for reducing both VAT rates, abolishing the travel tax, and bringing the pension fund back home to invest in infrastructure and new State enterprises. The Government's strategy, however, is just about tax.

What really defines this budget and the entire policy is subhead C15 which refers to gross current expenditure at €62.4 billion this year, €64.5 billion in 2010, €65.4 billion in 2011, €67.4 billion in 2012, and €68.9 billion in 2013. It is spend, spend, spend and when the Government has finished doing that, let us spend some more. How will the Government manage that? It will hit people on tax. Tax revenue will be €34.4 billion this year, €35.3 billion in 2010, €38.9 billion in 2011, €41.3 billion in 2012 and €43.73 billion in 2013. This is the budget that Fidel Castro or Kim Il Sung would have eaten their hearts out for. These are the pure tax-and-spend, old-fashioned policies of the early 1980s, the kind of failed policies that ended up with a national debt of 120% of our gross domestic product, unemployment of 20% and a recession-depression for the best part of a decade. That is where the Government is going.

We have learned nothing from our economic history in this State if we think this kind of approach will work. It will not work because the Government will not get the returns from tax increases that it expects. It will find out that these attempts to tax everything that is not already taxed while taxing everything else more will not bring increased revenues. It will drive money out of the country and drive people out of jobs. The Government will have to come back here either in three or six months' time with a new budget that involves some of the measures that are necessary, including reduced spending. One cannot increase spending from €46.3 billion to €54.5 billion in five years. The Government has already spent too much. We already spend 48% of our gross national product, our national income, on public spending. It will be well over 50% within two years, so the Government cannot go on like this.

Tax and spend is not the solution. That is my argument in a nutshell when it comes to these particular issues. We will certainly be voting against this. I could countenance increases in capital taxes if they were part of a process that involved reducing taxes at work but certainly not in this scenario. This policy will lead us to ruin. It is back to the 1980s.

See this speech in context