Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

In reply to the Deputy, I would like to make three points. As stated, we have had the greatest fiscal adjustment in the history of the State. When we went into government at the start of 2011, the deficit was over €22 billion. At the end of next year it will be less than €5 billion if our budget comes in on target. This shows the extent of the adjustment.

Second, while one can have many anecdotes in these debates, one's argument must be evidence-based to establish the true position. The strongest piece of evidence is the ESRI's research. The ESRI states that those in the highest income quintile were subject to the biggest adjustments, in the order of 13% to 14%. Other quintiles were subject to an adjustment, or a loss of income, of approximately 10%. Therefore, the evidence contradicts what the Deputy is saying.

There is another very fundamental fact about giving relief by reducing taxes and the USC. Those who pay most obviously have greater scope for benefiting if tax rates come down, and those who pay very little tax do not have the same potential to benefit. For example, somebody on €17,000 pays less than €600 per year in tax and USC, while somebody on €70,000, where I capped it, pays just short of €25,000. Obviously, if the pool is €25,000 as against €600, the potential when one adjusts for higher gains obviously goes with the higher income.

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