Róisín Shortall (Dublin North West, Labour)

There was widespread leaking of the budget provisions yesterday to all media outlets. The Minister for Finance benignly read out details of a budget that did not seem to be doing any harm to anyone in particular. He made a statement that was blatantly untrue. That is why I am calling it a lie. He said people on the minimum wage will not be brought into the tax net, when it is clear that they will be. Not only will they lose €40 per week in their pay packet but they will be taxed to the tune of €8 per week, bringing the total deduction to €48 per week. That is wrong. It is part of the deceit the Minister for Finance and his colleagues have engaged in over recent times and continue to engage in. People do not realise just how vicious this budget is for a number of categories of people. It is about time we had some honesty about what the Government is engaged in.

The universal social charge dramatically increases the marginal rate of tax. A single person currently has a marginal tax rate of 26%. This is being raised to 31%. In the case of a married couple with two children on family income supplement, the new levy means an effective marginal rate of tax of 64.4%. That goes up to a marginal tax rate of 90% if the couple are also in receipt of rent supplement. There is hardly any point in such workers taking a promotion, increasing their hours or in any way increasing their income.

The new charge disproportionately affects working widows and widowers, working lone parents, the over 70s and people with a medical card. Each of these groups has been exempt in one way or another from the income levy and/or the health levy. The Minister for Finance did not explain, yesterday, just how the new universal social charge is to impact on all of those groups. We did not hear anything about that from Fianna Fáil backbenchers yesterday. We still have not got the views of the Independent Deputies who are planning on supporting this budget about the impact of the universal social charge on their constituents. People in those circumstances will now have to pay the universal social charge. This represents a very significant and sudden jump in their tax bill.

All of those vulnerable categories of people who are trying to supplement their incomes through working as well as having a social welfare payment will be hit. Apparently, no thought has been given to the cumulative effect of the charge on a number of different groups. For instance, a widow or widower who has a job that pays, for example, €600 per week stands to lose €8 from the widow's pension. They will be paying an extra €17 per week as a result of this new universal social charge. Their tax credits have been reduced by 10% and they have to endure all the other budget cuts, such as the general reduction in tax credits, child benefit and so on. In total, a widow or widower in these circumstances will lose approximately €50 per week. It is completely unfair to burden one group - and especially this group - with such a major adjustment in their financial circumstances in one year.

Similarly, combined with other measures, the charge also imposes a very significant burden on pensioners. Again, I want to break the Fianna Fáil myth that the budget protects pensioners. The Government may have left the State pension alone, but it is hammering pensioners in so many other ways. The example of the retired couple, Áine and Vincent, given on page C25 of the budget document, shows that a couple with an income of just under €40,000 in total, will now be paying income tax and the new social charge. Previously, this couple would have been exempt from income tax and the income levy. Now, they are paying both, resulting in a 5% cut in their net income. Such a couple are not only hit by extra income taxes but, in addition to that, they will now have to pay DIRT tax and in many local authorities they will be caught for bin charges as well. It is nonsense for Fianna Fáil to claim they have protected pensioners. Pensioners are going to be hit in so many different ways under these proposals and people are really only copping on to that today.

Earlier today, I understand, Deputy Thomas Byrne made a statement that the universal social charge would be phased in for previously exempt groups, such as the ones I have mentioned. I ask the Minister for Social Protection to clarify that point. Is that the case?

I cannot find a mention in the Bill as to whether the charge will be taken into consideration in the calculation of family income supplement. I would have thought that would form part of the legislation.

See this speech in context