Éamon Ó Cuív (Galway West, Fianna Fail)

The problem with wages is that there is a pyramid. In other words, when one starts working up through salary levels, one finds that - despite popular myth - there are not many people at the €100,000 level, so large amounts of tax must be paid to raise the required amount of money. I will come to that issue shortly.

It is important for us to recognise - the penny dropped for the Government when it got into the hot seat - that if we do not reach our fiscal targets, it is not just a question of being €400 million, €500 million or €600 million short. Not only would we fail to be in a position to borrow that extra €400 million or €500 million, the other €16 billion could not be borrowed with it either. That is our dilemma. While I do not like it any more than anyone else in the House, the fact is we are borrowing as much as we can this year. There is no easy answer such as taking the low-paid out of the tax system and borrowing another €500 million. It simply cannot be done because no one will give such a loan. To follow the logic of such a scenario, we would really be in cutback territory because one third of the State's income would disappear overnight. The €16 billion borrowed to keep services going would not be available anymore. This would mean cutbacks in the health, education and social welfare budgets because 80% of the spend goes on them.

The other argument is to target the top-end of the tax system. I subscribe to the 1932 Fianna Fáil theory of not paying people too much.

See this speech in context