Michael Noonan (Limerick City, Fine Gael)

I make a general point. The national finances are in a fraught situation. A fiscal correction of €6 billion is underway in 2011 and so far we are on target. We are slightly under profile on tax collection but are also under profile on expenditure. As we go through June, facing the end of the first half year ,we are on target to achieve the fiscal correction of €6 billion. Next year the commitment under the programme is a correction of €3.6 billion. Over the two years, therefore, we will approach a correction of €10 billion, a huge amount of money. In those circumstances I will not rule out any tax initiative, increase or reduction. I say this at a level of principle. I have nothing in mind.

The Deputy referred to the fact that we are funding the jobs initiative through the pension levy. Yes we are, but that levy is temporary. We are writing into the Act that it is for the years 2011-14, inclusive, and therefore the funding for the jobs initiative through the pension levy will end in 2014. Obviously, if we are to continue with these initiatives there will have to be another source of funding. I signal that now.

Whether the VAT rate is passed on is the precise and focused issue but there is also the general issue every Minister for Finance faces of how to meet one's fiscal targets and pay for the country on an ongoing basis. I do not say anything new. This is always there as an issue.

It is also true to state, as Deputies will know from their own constituency experience, that passing on the VAT reduction is not the only issue. I have met people in the food business who claim they have been run off their feet for the past two years and needed two more people to run their business but could not afford them. Now they say they can afford to hire two extra people and are taking them on. That is job creation but they are not passing on the reduction. There are other situations where the very fact that 4.5% is being taken off the bottom line is keeping places open. We might not be creating jobs but we are saving many. We shall see how the summer goes in the tourism industry.

It is not exact, as all Deputies know. One has to use political judgment, take the best advice one can rely on from the sector and see how things work out. That is the position.

See this speech in context