Derek Nolan (Galway West, Labour)

As is customary when making a maiden speech, I thank the people of Galway West for their support in the general election and for the trust they have placed in me. In the course of my time in the 31st Dáil, I hope to live up to their expectations and to represent them with determination and honesty in any debates and business I conduct.

The debate on the universal social charge, USC, and its impact is very welcome. During the course of the recent general election campaign, it was an issue that came up repeatedly on the canvass. There is scarcely a Deputy in this House who did not spend many an evening discussing it with their constituents. Given the worry and anxiety the USC is causing, it is right that we should discuss it at this early time in the life of the Dáil, and I thank the proposers for taking the initiative on it.

The history to the USC is well known. Its introduction was facilitated by Fianna Fáil and the Green Party in the last budget. It has been much discussed in the course of the debate, and the hardship it causes is continuing. The programme for Government commits to a review of the USC. I think this acknowledges that the USC is an important issue, and that it must be addressed, not merely examined again.

I appreciate the difficulty of changing the taxation system mid-year. The State has become dependent on the revenue to be raised. There is a need for legislation and there is an administrative cost both to the State and to employers in implementing the change. The delay must not be used or abused as a method of desensitising people to the pain they are feeling, however, nor must it be used to create a breathing space for the administrative acceptance of the USC as it stands. On the contrary, it must be used to draft necessary changes and find sufficient resources to ease the burden on the lowest earners in society whom the USC is hurting so badly.

The very name of the tax - the universal social charge - must be viewed with much cynicism. In the minds of many, it created the impression of a social insurance charge for which people would receive a tangible benefit in return, such as a guaranteed health benefit in the form of health care access, dental services, unemployment benefit or some such other social benefit. However, it did not do that. It is a tax, pure and simple. To attach such a euphemistic and confusing label as a universal social charge was cynical and deliberately confusing.

The context in which the tax was introduced also needs to be highlighted. I remember one evening canvassing on the doorsteps in Galway and meeting a lady who was working with the HSE and who was mortgaged to the hilt. She had already seen her pay cut and suffered tax increases, and it was in that context that a further universal social charge was introduced. The tax in itself cannot be viewed in isolation from the previous taxes and pay cuts that have been introduced.

There is a need for a wider debate in this House on taxation. The idea of a social wage and a social charge, as is common in Germany and the Nordic states, is something we do not have in this country. The idea is not that we give up money to have it transferred to the State only to see it disappear, but rather that it is a give and take benefit which we receive and which is part of the State's commitment that taxpayers and citizens will have their taxes used for their benefit. I worked in Frankfurt for two years and I will always remember getting my first pay cheque. It contained the tax payable, which was only a small amount of money, a solidarity charge to help pay for the rebuilding of the former East Germany, a public health insurance charge, a public nursing insurance charge, and a charge for the public pension. There was utter transparency and openness in what one was paying and why one was paying it.

We need to rephrase our debate to explain how we want the taxation system to work in our country. We need the same buy-in in order that people appreciate that paying tax is part of a wider benefit to them. That kind of a debate will lead to greater tax compliance and enthusiasm for the taxation system. We need to work on that model with the same level of priority we have for other things. We must create a real social taxation system that is wider than the universal social charge, but not as much an imperative. I hope that this will happen over the course of the next few months.

See this speech in context