Colm Keaveney (Galway East, Labour)

A Chathaoirligh, I thank you for giving me the opportunity to speak on this important issue. Tonight's debate gives the House an opportunity to discuss the universal social charge in an informed and objective manner. I thank Sinn Féin for using its time to raise this important issue. I note that the primary objective is to achieve as much fairness as possible in respect of the effect of the universal social charge on people.

A review of the universal social charge is on the cards at this stage. The programme for Government clearly states the establishment of a review mechanism is one of its primary objectives. I am delighted such an opportunity is to be made available. During the recent bruising and hard general election campaign we heard many difficult stories about the effect of the universal social charge on people in society. I do not doubt that this matter can be debated objectively by those who say their words tonight. If Sinn Féin's motion is not passed, I trust that it will enthusiastically participate in the forthcoming review. Everyone agrees that there are some anomalies with the universal social charge. We have all heard stories about the difficulties that need to be reviewed in this context.

Sinn Féin has called for the immediate abolition of the universal social charge and its replacement with income and health levies, but that is entirely impossible. It would require us to envelop ourselves in a legislative process. I do not think the public would forgive us if we had to undertake a precess of legislating again, which is what would be required to make the health levy practical at this juncture. The idea that we should change the tax system during the tax year is entirely impractical, as it would cause significant problems for the various Departments which rely on the revenue received from the universal social charge, the abolition of which would present significant problems for the Government. It would impose a significant cost on the administrative burden of government at this juncture. I will not claim that the universal social charge represents the most progressive means of raising revenue. I suppose our EU partners and the European Commission have stated it is a fair way of approaching the question of providing for a fairer taxation system. I do not have much more to say on it, other than to emphasise that we have to move forward with it if we are to ensure the public finances will be sustainable in these difficult times. As a consequence of the mismanagement of the economy, there are no more opportunities to raise boom revenues. We have to broaden the tax base and steer the country out of the receivership in which it finds itself.

Taxpayers deserve to be able to contribute to a progressive taxation system. In its current form, the universal social charge is not perfect. When the review takes place, we will come up with a formula that will lead to a fairer system. I accept that the universal social charge removes some of the poverty traps evident when the old levies were in place. However, we have to agree that we have an obligation to pay tax in order that important public services can be delivered in times of scarce resources. We have to start building a sustainable and robust system of taxation. Unfortunately, the universal social charge is part of the system as it stands. I accept that Sinn Féin has a well meaning objective. However, we are at risk of exposing the State to significant costs if we reintroduce the historical system. I am sure our friends in Sinn Féin will engage with the review enthusiastically. There are anomalies in the implications of the universal social charge. It is clear from the questions tabled to the Minister for Finance this week for written reply that there are significant problems with it. We have to adjust it and move on.

See this speech in context