Éamon Ó Cuív (Galway West, Fianna Fail)

We are moving on tax shelters and on the thresholds for inheritance tax so that when money transfers, there will be a bigger take for the State.

As Minister for Social Protection, I believed it was time to rationalise the PRSI contribution. This means adjustments. What we have done is ensured that everybody who is employed or self-employed, other than those on very low incomes, and public servants will pay 4%. The advantage of having that simple system in the longer term is that it allows one to conjoin the rest of the tax system such that there will not be a rate of 3% for the self-employed, but with no limit, and a rate of 4% for an employee, but with a limit, as used to be the case. In eliminating the old system and having a single rate of 4%, it makes it easier for future Governments to change tax policy without the social welfare contribution, because of its anomalies, creating difficulties.

I have always felt it was wrong to attach non-medical entitlements to the medical card. By attaching entitlement after entitlement to the medical card, one puts people in a poverty trap that we have all encountered. People were afraid of doing overtime not only because it would have affected medical card entitlements but also because it would have affected PRSI and other areas. A rational debate is warranted on this. I believe it is better to keep the medical card for medical entitlements and have a more coherent tax system for entitlements not attached to the medical card. In time, when people look back at the old arrangement, they will say it was bizarre and that it is better to pay tax relative to income, not based on whether one has a medical card. When one makes changes in this area, one can encounter hard cases but, in the longer term, a system with a single rate of 4% is better. The system with the 36 rates of PRSI, which I do not believe anybody fully understood, is now much simpler and more understandable, which is important.

I am a little surprised by the Labour Party's great objection to the universal social charge.

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