Paul Murphy (Dublin South West, Socialist Party) | Oireachtas source

The Finance Bill tells a tale of two different budgets. One of these budgets is for working class people, the most vulnerable and unemployed people. It is a budget which, in effect, ensures the continuance of austerity for them. The other budget is a recovery budget for the rich, high earners, developers and corporations. The weekend before the budget was announced, the headline on the front page of The Sunday Business Post referred to the end of austerity and gains for top earners, builders and farmers. The article was correct in so far as the budget did signal the end of austerity for those groups as well as for private landlords. However, alongside this recovery for the 1%, the budget continues the logic of austerity for the 99%.

This continuation of austerity for ordinary people is clear in the cut of €179 million in the budget of the Department of Social Protection, which is the largest cut for any Department in this budget. We have a continuation of the incredibly cruel cut of 20% in the respite care grant, which has had a huge impact on people with disabilities and their families. Many of them depended on this money to pay bills and to cover the extra costs of having a disability. Even at this late stage, I urge Minister to reverse that cut at a time when recovery has supposedly arrived.

Under this budget, an unemployed single person will benefit by 90 cent per week. A single person earning €75,000 per year will benefit by €14.30 per week. For those on low incomes, the scraps given in this budget will be more than wiped out by the water charges. The latter are central to the continuation of this austerity agenda but the reality is that people simply cannot afford to pay them. The water charges may start at the €200 the Minister for Social Protection, Deputy Joan Burton, promised yesterday, but will quickly rise once the caps are lifted. The propaganda by the Government on water charges has undergone a significant shift. Originally it was all about conservation and asking everybody to pay their way to facilitate the investment in infrastructure that is needed. Now the Government is arguing that this was all a trick on the European Commission and troika, a way of fiddling the numbers that would cost us very little and save us money in the long run. That is the latest propaganda from the Government.

The reality is that whether the money is off balance sheet or on balance sheet, it is money that has to be found and the question remains as to how it will be raised. There is a great deal of talk about the fact that taking it off balance sheet will meet the market conditions test. However, a requirement of the market conditions test is that the seller acts to maximise its profit. The Government accuses us of scaremongering about privatisation and rising costs. However, the Government's argument for water charges is built on the foundation of a test that says the seller must act to maximise its profit. Irish Water will have to negotiate with the Commission for Energy Regulation to eliminate the allowances. It will have to make the argument that the price, which is already double what corporations pay, should go up over time. That commodification of the water supply points ultimately to privatisation.

Looking at the other side of the budget, the benefit for high earners on €70,000 or more will be four times that of the gain for those on minimum wage. The budget includes a specific measure, the elimination of the cap on the special assignee relief programme, SARP, which is targeted at a very particular class of people, namely, CEOs and similar earning more than €500,000. It is incredible that the Government would take time to allocate a special tax relief for those earning €500,000 or more. This is a developers' budget. The elimination of the windfall tax, in particular, is simply incredible. The Government has dressed it up as somehow being intended to ensure more homes are built. It will not lead to any more homes being built, but it will give more profits to developers. There is a deficient level of house building not because of the existence of this tax but because of the absence of investment by the State in this area. Such investment is at an all-time low. We are going back to allowing these people to speculate on land and make huge profits while ordinary people who are simply looking for somewhere to live pay the price.

This is also a budget for private landlords, who benefit from the extension of the home renovation incentive to rental properties. It seems the explosion in rental costs being paid by ordinary people has not been sufficient to enable landlords to shell out for some new furniture. We must incentivise them with a tax break. In his Budget Statement the Minister expressed his expectation that these tax savings would be reflected in rent levels. That is a joke. If the Minister lived in the real world and interacted with landlords, he would know they will take whatever they can and raise rents as high as they possibly can.

We have a corporations’ budget, with an extra €95 million in corporate tax breaks, before we even deal with the patent box tax subsidy. Earlier in a reply to Deputy Richard Boyd Barrett on the corporation tax regime, the Minister for Finance stated the Government played fair but played to win. This encapsulates in an honest way the tax competition strategy of this and former Governments. This is a notion that countries around the world are all engaged in a race to the bottom to provide the best environment for corporations through the lowest corporation tax rates and the most flexible and exploited labour markets, with the lowest wage rates. That is the game in which the Minister and the Government is involved. It is one, however, in which there is only one winner, namely, corporations.

In the OECD, Organisation for Economic Co-operation and Development, the average corporation tax rate in 1981 was 49.1%. In 2012 it was 32.4%. Has investment gone up in that time? No, it has actually declined. Have growth rates for GDP, gross domestic product, gone up? No, they have declined, too. It is the same in Ireland. For years we have been incentivising corporations to invest here through the introduction of the 12.5% corporation tax rate and the double-Irish rule. The result, however, has been a collapse in private sector investment since 2007. The winners are the corporations which have managed massive tax avoidance schemes on a global scale. The patent box will just allow them to continue to do so after 2020.

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