Brian Cowen (Laois-Offaly, Fianna Fail)

The Deputy will be aware from last year's supplementary budget that there has been a fair increase in income tax levels and impositions on income earners as a result of the need to close the gap between expenditure and revenue. At a time of fragile economic recovery, we are doing as much as we can to protect and maintain jobs and increase competitiveness. Over the longer term, that will involve expenditure savings and the budgetary policy for this has been outlined to and agreed with the European Commission.

Tax takes are a higher percentage of GNP or GDP in continental countries and the demographics are also different. At the time when there was growth in this economy, growth rates in those countries were not as great as we achieved in Ireland. Mr. Trichet and others have looked to the model we tried to progress in terms of maintaining low tax rates on income as one of the ways by which employment growth could be encouraged. The wider issue that arises of expanding the tax base over time has been considered by the Commission on Taxation. We have to look to that as a means of finding a sustainable way forward in light the new circumstances in which we find ourselves. The issue has to be carefully considered in the context of those recommendations.

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