Michael Noonan (Limerick City, Fine Gael)

In case the figures have been lost in the noise, the change means that 330,000 people will no longer be liable to pay the universal social charge.

The Revenue Commissioners will collect the universal social charge on a cumulative basis next year, thereby reducing the risks of over or underpayment of the charge. This will offset the costs of the very positive change made for the lower paid.

VAT

The previous Government agreed with the IMF and the European authorities to increase VAT by 2% - 1% in 2013 and 1% in 2014. In the interests of giving certainty, we are bringing these increases forward to 2012. During the lifetime of the Government we will not increase the standard rate of VAT beyond the 23% being announced today. That is another commitment in the programme for Government we intend to fulfil.

Other European countries have tended to place the burden of fiscal correction on indirect taxes rather than income tax. At this point, 20 of the 27 EU member states have increased VAT in the past four years and further increases are being considered by several member states. It should be borne in mind when people debate this sensitive issue that most food, children clothes, oral medicines and other goods and services will remain at the zero VAT rate.

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