Dan Neville (Limerick, Fine Gael) | Oireachtas source

I welcome the opportunity to contribute to the debate. It is important that, given that the economy is improving, those on lower incomes see the benefit proportionately more than those on higher incomes. The difficulty up to last year was that the economy was stagnating. We had growth of 4.7% last year and it is forecast that this will continue over the coming years.

We should ensure that we tackle the economic and social issues present in society. We know difficult decisions had to be taken, and if I have time I will deal with them briefly. One of the areas where we can improve people's standard of living is employment creation. The benefits of growth in the economy must be focused on increasing employment and eliminating poverty. To date, we know that 84,000 new jobs have been created, and there are plans for 40,000 more. This will have a positive impact, but we must strive for full employment for all who want it by 2018.

One of the worst areas of unemployment is youth unemployment.

This must be tackled and we must build on the fall in the level of youth unemployment by 8% over the past two years, with schemes such as JobsPlus, JobBridge, First Steps and the Action Plan for Jobs having an impact on the level of all unemployment and particularly youth unemployment. We must endeavour to increase our contribution to ensuring that our young people can obtain work.

The income tax system has been seen as a disincentive to work but there is sometimes a contradiction in this argument. The system may be a disincentive to work as people must factor in the cost of having a job, which often outweighs the increase in the level of payment in not having a job. Ireland has the most progressive tax system in EU OECD countries and the second most progressive system in all OECD countries. The changes introduced in the 2015 budget will be such that the top 1% of taxpayers by income will pay 20% of all income tax and universal social charge, USC, collected in 2015. In contrast, the bottom 76% of income earners will pay only 21% of the income tax and USC collected. Internationally, we are seen as a progressive tax system so why is the income tax system seen as a disincentive to work in such circumstances? We must examine this issue as many other elements have an impact apart from income tax itself. We need an efficient, fair and competitive tax system to ensure growth and that our tax system can be fair to all sections of society. The budget has made an important start on the middle and low incomes but we must do much more to ensure the process remains progressive. We must continue to reduce the USC and phase it out over time. The reduction of the rate from 4.5% to 3.5% for those with medical cards with incomes below €60,000 should be extended to other groups and the concentration should be on reducing the USC rate further.

There has been mention of the need to spread the recovery to the regions, which needs a full debate rather than just a mention at the end of this contribution.

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