Seán Fleming (Laois-Offaly, Fianna Fail)

I urge the Tánaiste to reconsider this measure. Many of the points have been made by those who have spoken so far. It is very disturbing that we are introducing a 2% VAT increase. The Tánaiste said it will generate €650 million in a full year and €560 million in the coming year. VAT is paid after a two-month period, so there will be ten months of receipts in 2012.

The figures included in the budget are inaccurate because for the first time ever, they have taken no account of the impact this VAT increase will have on business. The Government has taken the figure from VAT receipts and added the 2% on to that. Adding the 2% will cause a reduction in sales and in activity and will lead to a reduction in the VAT take. This will be very severe in the Border area. Our party leader, Deputy Martin, visited a number of businesses in the Border area which are alarmed by the prospect of this.

If the Government could have brought it in before Christmas, it would have done so, but as it is being brought in from 1 January 2012, it has actually cancelled the January sales. Who will go to the January sales if VAT is increasing on 1 January? I accept that because VAT will increase from 1 January, it will probably help sales in the run up to Christmas because people will want to buy before the VAT increase comes in.

The best trading period for many businesses is the December-January one but VAT will be increased in the middle of it on 1 January which will hammer the sales. I do not know how retailers will survive this attack on their January trade. They need that trade because February and March are normally lean months in business. To hit them early in the year will be very severe and will cause untold difficulties and loss of jobs.

The areas affected include cars, confectionary, detergents, diesel, to which we have already applied a carbon tax, petrol, furniture, fittings, fridges and washing machines. People need those items. One of the elements about which I am most concerned is children's toys, which are being taxed. This Government would have taxed Santa Claus this Christmas if had been able to do so.

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