Éamon Ó Cuív (Galway West, Fianna Fail)

Is maith liom éisteacht leis an Teachta Michael D. Higgins mar bíonn go leor rudaí speisiúla le rá aige. Tá fealsúnacht an-láidir aige agus ní thiocfaidh salach ar chuid mhaith den tuairimíocht atá aige. I share his belief that we must have a view on where we are going and a vision of Irish society. His vision and mine may not be exactly the same but we share a number of ideas. Arts, music, culture, the Irish language and community are very important. When making our decisions, we must keep them in mind. On the other hand, we must face the hard economic reality that if, as in a household, one continues to spend more than one earns, one must keep borrowing the difference. If one keeps borrowing the difference, the interest will eventually consume one and one will spend all one's money paying it.

There is a wide consensus - perhaps the Labour Party is part of it – that we must close the gap by approximately €4 billion next year. There are two way of doing so. One is to raise more revenue and the other is to cut expenditure. Cutting expenditure is problematic in that it results in cutting revenue at the same time. If, for example, the Government cuts expenditure, thus resulting in the loss of jobs, it loses the taxes accruing from those jobs and may have to pay for social welfare. With regard to increasing taxes, it is not necessarily true that if one increases tax by a certain percentage, one will receive that percentage in extra revenue. This is because one reaches the point of reducing returns. This is where the debate must lie.

Many advocate taxing the well off more. At present, taking the various levies and income tax into account, we have a marginal rate of 53%. Will somebody tell me what he considers the cut-off point above which he believes one can pay more than 53%? Is it the equivalent of the combined income of a married nurse and garda or the combined income of two assistant principal officers in an apartment? If so, one is talking about an income well over €100,000. One must ask how much tax one would raise even if one did decide to go towards the Scandinavian model really dramatically and adopt an effective rate of 63% at the top end. What would the net yield be in a year if one did so?

It is very handy to advocate not hitting the middle-income earners and hitting the high income earners without defining what is meant by "middle income" and "high income". The more one defines the two married assistant principal officers in an apartment or the married nurse and garda as not being in the high income bracket, the less revenue will accrue from income tax.

The other big source of tax in this State is VAT. Many would argue that we are at a point where, if the VAT rate were increased, more people would shop over the Border. Therefore, raising the rate is not the equivalent of increasing income and doing so does not solve the problem.

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