Joan Collins (Dublin South Central, United Left) | Oireachtas source

This budget and Finance Bill, like the Government's three earlier budgets, yet again increases the regressive and unfair nature of the taxation system. Those who claim we have a progressive tax system do so on the basis of a sleight of hand - when they refer to the tax system they exclusively mean income tax, the universal social charge and pay related social insurance, PRSI. This allows them to claim that a small number of high earners pay the bulk of taxation and that working people on low incomes and people in receipt of social welfare benefits pay no taxes. This is completely untrue and those who consciously peddle such ideas are spreading an untruth.

Examination of indirect taxes and consumption taxes such as VAT which accounts for 20% of the State's total tax take, along with various charges and services that are actually taxes, shows that the wealthiest families in Ireland pay out some 28% of their incomes in taxes. Meanwhile, using the same measurement, the poorest families also pay out 28% of their total incomes in taxes. This Government continually uses false arguments and the deliberate distortion of figures to make the Irish tax system increasingly regressive and to justify tax cuts which, of course, means cuts in income tax.

If we examine the cuts in income tax made in the budget and how they affect people with different levels of income it is immediately apparent that they are regressive in nature. Total income tax cuts in the budget amounted to €688 million and if they had been evenly applied they would have meant a gain of €405 per year for working families. However, the cuts were not evenly applied. A single worker on the living wage of €23,247 per year gained €173 per week in the budget while a worker on €80,000 per year gained €747, five times as much, from the tax cut.

For the lower income worker, it immediately wipes out a benefit since the Government is trying to introduce the water tax. It's presumption is that it will get the water tax in, but I have a different presumption. For workers earning €15,000, the net change, after water charges, is minus €61, according to the numbers of the Commission for Energy Regulation, while for a worker earning €70,000, after the budget and water charges, the net income gain will be €570. That is the difference and how fair the Government's budget has been. Let us consider all of the figures, for example, those for working couples and those with children. The more a person earns the more or he or she will gain.

Another element in making the overall tax system regressive is the preoccupation with low corporate taxes. Low corporate taxes are supposed to incentivise investment, which means higher productivity, economic growth and job creation. The problem is that this is not backed up by the evidence. The OECD has seen a significant fall in corporation tax rates. In 1981 the OECD member average rate was 49%; in 2012 it was 34%, far above the Irish rate of 12.5%. With the exception of a number of years in the 1990s, the level of investment and growth was lower in the 32 year period since 1981 than in the previous 30 years. Low taxes on business are not proof in the worst economic crisis since the OECD was formed.

Let us consider the position Ireland. The pattern is similar. The 12.5% corporation tax rate was in place in 2003. According to the theory, it should have led to high investment, high growth and full employment. In the ten years since 2003 the reality is that we have the lowest growth rate in the history of the State, the lowest rate of investment, seen the biggest crash and the highest level of unemployment. We need a new model for the economy and society. We need to put people's interests before those of big business and the wealthy.

A point was made about how in the case of the fundamentals the devil was in the detail. The devil is in the detail when it comes to VAT and other cuts. Families are forced to pay the property tax, the household tax and the water tax that the Government intends to bring in. What happens in society in general and what has happened recently is that the wealthy have become wealthier. The richest 85 people in the world added a collective €668 million per day to their wealth in the past year according to the charity Oxfam. The study concluded that global inequality was firing out of control as the number of billionaires had doubled during the period of the economic crisis. In March 2009 there were 793 billionaires throughout the world, but as of March 2014 the number had rocketed to 1,645. That is the type of society in which we are living and the type of society in which the budget has been framed. It is the same in Ireland. According to the Irish rich list of the Sunday Independent, the 300 wealthiest individuals in the country were worth €57 billion in 2011; in 2014 they are worth €70.75 billion. That is the extent of the wealth they have gained during the period of austerity on the backs of ordinary people who in the past eight years have had to take the brunt of the €30 billion in cuts in their pockets. That is not fair; the budget is not fair and the Finance Bill is not fair.

These are the fundamentals that need to be addressed to apply real equality or have any move towards equality in people's pockets. We need a fair and progressive taxation system under which the wealthy pay their fair share. A mere 1% wealth tax on €70 billion would raise €7 billion. A financial transaction tax has been mentioned many times in the Dáil. If it was set at 0.1%, it would bring in €500 million. The Government has choices, but it has not made them. It has listened to the troika, the OECD and the ECB, but it has not listened to the people. Its priority is to protect the wealthy in society and it will continue to protect them in the coming period, rather than protecting the majority from the worst austerity and the when the opportunity comes,, give them some gain in their pockets. However, it has not done this; the budget does not do; neither does the Finance Bill. Ttherefore, I have to oppose it.

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