Eamon Gilmore (Dún Laoghaire, Labour)

The batch of financial resolutions before us covers quite a wide range. If taxes on income are to increase - and they clearly are in this budget in the form of the increased income levy and changes in PRSI - then there is a consistent logic in applying similar increases at least to capital taxes. On the issue of capital acquisitions tax, I understand why and I agree that in times when property values are falling the threshold for capital acquisitions tax should also be reduced. I have some difficulty however in following the logic of what is being done here. The Tánaiste took us through the reductions which are being made and then took us through the upward adjustments that are then being made on that figure in line with indexation. I am not entirely clear how that indexation works, so she might return to it in her reply.

The Labour Party does not have any difficulty with the increase in the rate of capital acquisitions tax from 22% to 25%. I suppose the same logic applies to capital gains tax, although I am surprised at the yield the Tánaiste suggested would arise from that increase. Given the extent to which capital gains are not being made at the moment and also the likely impact on transactions, the estimated yield is probably on the optimistic side.

I note the Tánaiste said there was a policy to have a consistent level of capital taxes at 25% in the context of the Government's policy to widen the tax base. When he was presenting the budget, the Minister for Finance indicated that it was intended to introduce a property tax, probably in the next budget but certainly in a future budget. From what the Tánaiste and the Minister for Finance have said, can we anticipate that the level of a property tax will also be at 25% whenever it is introduced?

I do not agree with the proposed increase in DIRT, which is a tax on people's savings. In this context, we are talking about people, many of whom have worked hard all their lives and have paid their taxes. The savings which attract DIRT are after-tax income. Many pensioners have seen the value of their private pensions decline. People were advised in pre-retirement courses to take out shares in banks, but have seen the value of those declining. This is a further tax on pensioners who have lost their entitlement to the medical card and may have some small savings on deposit. It is not something with which I can agree.

As I understand the stamp duty changes in financial resolution No. 10, the effect of the proposed increases is that the levy on life insurance will increase. In addition, the levy on mortgage insurance will increase, which will drive up the mortgage bill. Mortgage holders who have been benefiting from a reduction in mortgages, which is welcome, will find themselves facing a double whammy on their mortgages as a result of this budget. They will lose their mortgage interest relief and the insurance portion of the mortgage will be increased. Similarly, this resolution will also increase the cost of motor insurance, which comes on top of an increase in the price of diesel, thus hitting people whose pay packets are already being hit. When one adds up all the different hits on a person at work, they include the cost of travelling to work, the loss of the early childhood supplement, a large reduction in income as a result of levies, the loss of mortgage interest relief, an increase in mortgage insurance, and increased diesel and motor insurance costs. The Labour Party agrees with some of the proposals contained in this batch of financial resolutions, such as the change in the capital acquisitions tax threshold and the rate of capital taxation, but other measures are unfairly impacting on people.

I wish to make a final comment in respect of what Deputy Varadkar said and I understand the point he is making. The Government envisages that tax revenues in 2013 will be €43.7 billion. If our economy is in such a state that it will only produce tax revenues of €43.7 billion by 2013, we have a much greater problem than we believe. The Government has argued that as a result of what it is doing, it will restore order to the public finances, the economy will recover and people will presumably return to work and start spending again. We have had a large decrease in our tax revenue not because of our tax rates but because people are losing their jobs and fewer people are paying income tax. As a result of job losses and concerns about the future, people are not spending as they did previously and there has been a significant decrease in revenues from expenditure taxes. We also know what has happened to the property market, with the consequential decline in taxes from transactions.

If there is not a bigger recovery in tax revenues by 2013 than the €9 billion provided for in the projections, the budget will not have been a road map to recovery but, at best, a "business as business is" in 2009 and we are in for a much grimmer period economically than the Government has suggested might be the case. The Labour Party certainly hopes for and wants an economic recovery such that as a result either of increased domestic economic activity and, hopefully, an upturn in the global economy, tax revenues - by virtue of buoyancy and the activity that will take place in the economy - will have improved much more substantially than projected in the Government's figures.

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