Patrick Nulty (Dublin West, Labour)

I thank Deputy McDonald for sharing time and for allowing me to contribute to this important debate. I will oppose the Finance Bill in line with my decision to oppose the budget. One must draw the conclusion when one examines the Bill in its totality that it is not a progressive Finance Bill. It is not legislation that will help us to meet our international obligations in a way that is fair and balanced. While I support individual measures in the Bill, such as the changes to the universal social charge, measures relating to VAT and the household charge will outweigh the small gains achieved.

The introduction of the special assignee relief programme contained in the Bill is a scandal. It is not a new initiative of this Government but that is not the problem. The problem is that it is a development of previous measures started by Fianna Fáil in 2008. Effectively, very wealthy people who come to this country on salaries of €75,000 per year plus will be given a tax break by the State. It is shameful and disgusting to give a tax break to very rich people given that we are cutting community employment schemes and we are unable to fill vacancies in speech and language therapy services. What was going on when this was decided? Initially, this measure was provided as a tax rebate. That is the way Fianna Fáil formulated it. Individuals were to come along at the end of a given year and apply for their money back. Now, it has been changed and turned into a tax credit. We are increasing tax credits for PAYE workers, that is, for ordinary people but reducing tax credits for very wealthy people to come into this country and work. This measure will not create one single job. Where is the evidence? Where are the statistics that support the argument this will create jobs? If there are vacancies in areas like IT and financial services and there are two candidates for a vacancy, one a citizen living and working here and the other someone wishing to avail of this tax break, who will the company select? It will go for the person it will bring into the country. Therefore, how will a job be created? I do not see how this initiative will create jobs for our people. There are serious questions to be answered as to the reason this was included in the Bill. Who lobbied for this? Was it organisations like KPMG, the International Financial Services Centre or the Irish Aviation Authority? Was it the American Chamber of Commerce which was able to apply pressure to the Fine Gael Minister for Finance to create this tax break for rich people? I see it as a scandal and do not understand how we can stand over it. The Minister came into the House and said this would help job creation here. It will not help job creation here. What it does is provide a State subsidy for private companies to hire people on high salaries. That is a disastrous policy and one I can never support. Will the Minister provide details on who benefited from the programme in 2008, 2009 and 2010 and on who will benefit from it in the future? Will he provide details on how much it will cost the Exchequer? How many people will apply for it and what is the rationale for it? Can he or someone else explain to me how this measure will create jobs?

In his contribution earlier, Deputy Twomey said the priority for the Government was job creation and that people who were critical of the austerity strategy being imposed on this country by the troika, which was agreed by the Fianna Fáil Government in its memorandum of association, were engaging in fantasy economics. Is Deputy Twomey familiar with the work of Joseph Stiglitz or of Paul Krugman? Is he familiar with basic economic analysis? It is demand that creates jobs. If I run a company, a business or an enterprise, but am unable to produce a sufficient amount of the product I am making or to sell a sufficient amount of the service I am producing to cope with demand, I will then hire additional staff to meet that demand. That is simple economics. Driving down the wages of people on low pay and creating massive tax breaks for people on high salaries will not create jobs.

One way we could create jobs would be to use the €5.2 billion still in the National Pensions Reserve Fund over the next four years to invest in a world class broadband system and to roll out a world class child care system across the country. This would create jobs and the jobs created through the use of that money would have a knock-on effect in the economy and create other jobs, because spending would increase, activity would increase and the economy would grow. Organisations that are well respected by progressive parties, including TASC, have made this proposal. Why is it not being considered? I believe it is not being considered because we have an axis in Government that is dominated by conservative Fine Gael Ministers in the Department of Finance and the Department of Jobs, Enterprise and Innovation who are opposed ideologically to these progressive measures. I urge colleagues to look closely at this relief programme and to seek its removal from the Bill. It is a thoroughly scandalous proposal.

On the question of VAT, the poorest 10% of Ireland's population paid 15%, or one sixth, of their total income last year through VAT. Some three quarters of that was paid at the higher VAT rate of 21%, which has now increased to 23%. In contrast, the richest 10% of our population paid only 7% of their income through VAT. This is an economic fact provided by Social Justice Ireland. Across the water, the British Labour Party, of which I have been critical with regard to many of its initiatives over the past ten to 15 years, is attacking the Tories because of their decision to increase VAT. It is a core tenet of the type of politics I espouse that direct taxes distributed progressively are far better at raising revenue fairly than indirect taxation such as VAT, which by its nature is regressive.

With regard to capital gains tax, I asked the Minister for Finance last week how much would be raised by increasing capital gains and acquisition tax to 40%. The response was that this would raise €276 million per annum. It was also suggested that such an increase might impact on economic activity in the area of capital gains and acquisitions. That is a nonsense argument and an argument for zero taxation. When the rainbow Government left office in 1977, the rate was 40%, until the Fianna Fáil Minister for Finance, Charlie McCreevy, got his paws on the policy. Why can we not have the capital gains and acquisitions tax rate that was acceptable to the rainbow Government and why do we not use that €276 million to scrap the unfair household charge? Why do we not take €20 million of it, for example, for home improvement. In my local authority area of Fingal, it would cost €20 million to replace single glazed windows with double glazing throughout the entire local authority housing stock in the area. This would be taking a good environmental measure that would help combat fuel poverty. I am just using Fingal as an example.

Why can we not have taxation policies of this nature? Taxing capital, wealth and significant incomes would be an appropriate way to meet our international targets. Like others, I believe we can achieve our international obligations in a way that is fair. I do not believe we can walk away from the EU-IMF deal. I do not believe the country should simply not pay its own way. What I believe is that we have choices to make every day we spend in the House making decisions about our economy. We have choices to make about where the burden falls and about how we can bridge the gap between income and expenditure. In my view, the wrong choices are being made and I do not believe I am alone in that view. Organisations like TASC, ICTU, Social Justice Ireland and others have put forward constructive proposals on how to address the issues. I encourage those who share my values and view to run with these and to join me in lobbying for them in this Finance Bill. I thank the Chair for giving me the opportunity to contribute. I will oppose the Bill.

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