Pearse Doherty (Donegal South West, Sinn Fein)

Nobody should think that we in Sinn Féin underestimate the magnitude of the problems in our public finances. We have a structural deficit apart from the banking crisis that must and can be addressed. It has been caused by the Government's steadily eroding the tax base, allowing unemployment to rise and allowing a culture of waste and excess to develop in sections of the public sector. Latterly, it has been added to by the Government obsession of the banks and the debt servicing interest that will be incurred by this.

We can reduce the structural deficit but it must be done hand in hand with growing the economy in a sustainable way. Sinn Féin has put forward a six year plan to reduce the deficit to within the Stability and Growth Pact, beginning with an immediate €4.671 billion reduction of the deficit in 2011. This can be made if public spending is eliminated and the taxation system is overhauled. We have identified more than €1 billion in wasteful spending and more than €4 billion through making the taxation system fairer. When we put forward our six year plan, the Taoiseach excluded us from the talks in Government Buildings.

Fine Gael and Labour leapt on the four year bandwagon and were invited to join the consensus on cuts, which they did all too willingly. We said it could not be done in four years and that the cuts would make everything worse. What have we seen since? The European Union has already extended the adjustment period by a year to 2015 and it is widely accepted that even that is too optimistic. Again, we have been proven correct.

If the Government laid out a credible strategy to restore the economy to a growth trajectory, the bond markets would have more confidence that Ireland would be able to pay its debts and, therefore, yields would lower accordingly. The Government strategy to date has simply focused on the deficit, without enough attention to the wider economy which is the engine that provides both tax revenue and contributes to overall GDP. The deficit is a result of our economic woes, not the cause. If we treat the causes - unemployment and the tax collapse - the deficit will be treated. The four year plan is a joke. It is an accountancy exercise with no economic impact assessment. If taking €4 billion out of the economy in 2009 reduced the tax take by €7 billion, what will a €6 billion adjustment do? Also, it is based on the most ludicrous assumption of growth ever imagined by a Government about to slash the State's finances. The Minister announced average projected growth rates of 2.75% today. He should get real. The international community is laughing at him.

I now want to deal with some of the specifics of this budget. Bad economics, tax cuts, deregulation and tax subsidies for speculators during the boom got us into this mess and the bad economics of this budget, with its spending cuts, slashing of incomes and stealth taxes will dig the hole deeper. The four year plan indicated that €3 billion would be taken out of the social welfare budget by 2014. Details on what this means have been revealed by the Minister today. People have lost their jobs and these unemployed people are sitting at home tonight in cold houses. However, the additional €40 fuel allowance announced today will only go to households in receipt of the fuel allowance. The Minister pointed to low inflation as a justification for cutting social welfare rates by 4%, but prices for many essential goods and services have actually increased. All one need do is look for example at health, education, transport and energy costs, which have all increased.

A survey conducted by Sinn Féin of 278 social welfare recipients last week clearly demonstrated that families on social welfare simply cannot afford to take the hit. Almost 90% of those surveyed will go without bare essentials, whether food, heating or Christmas presents. How are people supposed to live on the welfare allowances announced by the Government? Cutting social welfare should be the last thing the Government does in a time of economic difficulty. Cutting social welfare will have a detrimental effect on the economy and society. Welfare payments are always returned to the economy. They are not saved or invested abroad but spent in the real economy. They are spent on rent, mortgages, food, utilities and other essentials. Cutting welfare is a false economy and will only cause misery and hardship for those on the receiving end of the policy. If less money is spent, the economy will contract, businesses will struggle and more jobs will be lost. More people will be reliant on social welfare.

Do these cuts make any sense? Of course they do not. However, cutting benefits is the policy the Government is pursuing. Sinn Féin is absolutely opposed to any cuts in social welfare and to the cuts announced today. We have shown where the revenue could be raised to ensure that welfare rates are protected. It is a matter of political choice whether to start cutting at the top where the highest paid and the wealthy can afford to take cuts or at the bottom as the Government has done, targeting those struggling to get by and barely able to survive from day to day. Any Deputy who votes for these cuts deserves to be kicked out at the next general election.

The Minister has told us that it is too complicated a task to make the tax system fairer. Why is it too complicated a task to reform the taxation system so that those on huge salaries contribute more, but not too complicated to consign the poorest to a life of scrimping, saving and poverty? If one looks at the public finances, it is apparent that we have less of a spending problem and more of a tax raising and retention problem. There is ample room for overhauling the taxation system, without turning Ireland into a high tax economy. Sinn Féin has shown how this can be done and how €4 billion could be immediately raised, with the least negative impact and effect on the economy. Instead, the tax changes in this budget once again target the least well off, those on the minimum wage and the low paid.

One of the biggest spins pedalled by the Government is that we must extend the tax system to those who do not pay any tax. This compounds the ignorance of the Irish tax structure. Let us set the record straight. Ireland relies disproportionately on indirect taxation and always has done. For every €100 received by the State in direct taxes, some €146 is paid in indirect taxes by every man, woman and child. These taxes disproportionately hit lower income earners. Yesterday, I was asked in an interview whether I thought such a large group should not pay any taxes. I replied that it was easy to talk about groups, but that we should break it down and look closer at the issue. We believe that a person earning €300 a week already pays enough tax. Today, the Government has told us how much it thinks they should pay. This extra tax must now be absorbed into all their other bills, their rent, food, child care and electricity. Which service does the Government think they will think drop first? They cannot afford to drop any of them. The tax increases announced today are spread across the board and fail to target those who have the ability to pay. This is a big mistake, one that will damage the economy and consumer spending.

The changes in taxes and bands will be as follows, based on a 10% reduction. The cut off point for the standard rate tax band will be reduced from €36,400 for a single person to €32,760, putting more people in the higher tax rate bracket. The cut off point for the standard rate tax band will be reduced from €45,400 for a one income married couple to €40,860. The cut off point for the standard rate tax band will be reduced from €72,800 for a two-income married couple to €65,520 and the cut off point for the standard rate tax band will be reduced from €40,400 for a single parent family to €36,360. It is clear the screw is being tightened once again on the lowest paid, punishing them for the Government's incompetence and the recklessness of the banks, but there are no increases in tax for top earners. No 48% tax band has been introduced nor has a wealth tax been introduced.

The decision to abolish the income levy and health levy and to create a universal charge is a step backwards. This is a flat tax and this change will benefit the better off. The cost will be the same for everybody, regardless of their ability to pay. We did not support the income levy when it was first introduced, but at least it was somewhat measured, so that those on lower incomes would pay less and those on higher incomes more. However, the universal levy will in effect represent a cut for top earners, while lower earners will be brought deeper into the tax net.

The Minister did not mention any increases in VAT today, but we know they are coming. These increases will push up the cost of living, disproportionately hit low earners and will cause chaos for businesses, particularly those trying to survive in Border communities. We need to start from the top down and make those who have most pay most. That seems totally alien to the Government. A wealth tax could and should have been introduced as part of this budget. Wealth taxes have been successfully implemented in other European countries and form an essential part of those governments' revenue streams. However, rather than introduce a wealth tax, our Government prefers to cut social welfare benefits and to drag the low paid deeper into the tax net. Despite the economic collapse, there is still considerable wealth in this State.

The top 1% of the population in this State owns 20% of all the wealth. Our proposed wealth tax would raise €1 billion at a conservative estimate in the form of a 1% income linked tax on all assets including property worth in excess of €1 million but excluding working farm land.

The Government could have introduced a range of other measures to raise revenue while making the tax system fairer. It could have immediately standardised all discretionary tax reliefs to raise €1.1 billion, introduced a third tax rate of 48% on incomes in excess of €100,000 to raise €410 million or increased capital gains tax to 40% to raise €240 million. None of these measures has been introduced.

The cuts to public spending bear no logic. The amount being cut will be detrimental to services that are already struggling. Health and education will suffer most of the brunt.

Salaries of public servants should have been capped at €100,000. This would have saved €350 million for the State per year. The Government instead chose to make aesthetic cuts to the highest paid civil servants. The head of the HSE earns in excess of €300,000 per year. The heads of our semi-State companies earn more again. Padraig McManus of the ESB was reported as earning over €750,000 per year, at a time when this Government introduced three budgets that took the legs from those on low incomes or social welfare.

The Taoiseach and the rest of the Ministers earn more than most of their European counterparts even though they bankrupted the State. The Minister for Finance claims that very few people in the public sector earn over €250,000 but a report published in the summer found that 66 public servants in Ireland, including 37 judges, the head of NAMA and the head of the NTMA, receive more than €500,000 each. Even with the so-called pay cuts taken by the Taoiseach and Ministers, the Taoiseach still earns €36,000 more than David Cameron.

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