John Paul Phelan (Carlow-Kilkenny, Fine Gael) | Oireachtas source

I support the measures included in the Bill. Pretty much all of the speakers who have addressed it have had positive things to say. In terms of the institutions of the State, the Revenue Commissioners do an important job very well. However, this Bill can ensure they have an enhanced appeals mechanism for tax cases. That is to be welcomed. There are other technical changes included in the Bill which outline how the new appeals mechanism will work in practice.

Like many previous speakers, I want to use the opportunity to say a few things in advance of the budget. I do not think I was here when Deputy Eoghan Murphy introduced his Bill on tax transparency. I have no difficulty supporting it. It is primarily about taxes earned on income. It would be more difficult for people to calculate how much indirect tax they pay in VAT at different rates for different products. It might be more correctly termed an income tax transparency Bill, as it includes USC and PRSI. It is a good idea that people would know where the money they contribute to the State from their incomes ends up.

When it comes to income tax, Ireland has the fairest system in the world. I heard Deputy Healy saying this was rubbish earlier. He quoted Fintan O'Toole and others. It is not the Government saying it; the OECD has been saying it for years. Ourselves and Israel, of all places, are up there consistently in terms of income tax as having the fairest systems in the world. That is an outside verified fact.

Unlike Deputy Healy, I come to the question of taxation with the view that everybody, lower, middle and higher paid, should pay less tax. I suppose he has profoundly held ideological views that certain sectors of the population, at least, should pay more tax. I do not want to rehash everything we have gone through as a country, but in the last few years, direct and indirect tax rates have increased substantially.

In last year's budget, changes were made to the top tax rate and to the universal social charge, which was welcome. In the upcoming budget, the Government should focus its resources on substantially reducing the universal social charge and devising a road map as to how this temporary measure introduced at the height of the recession can be phased out. In addition, the income threshold at which people go on to the top rate of tax is substantially lower here than for most of our neighbours in the European Union. I think it is something like €33,000 or €34,000 here that puts people into the top rate of income tax. In Britain, it is something like £60,000. People who are earning €33,000 or €34,000 are not well off and should not be paying tax at the top rate. Income tax bands and USC are the two areas on which the Government should primarily focus.

The reduction in VAT to 9% for the hospitality sector has been a resounding success. I suspect it has more than paid for itself in increased employment and economic activity. That sector is an important part of our economy and is spread right across the country. The Government should, if resources allow, look at our VAT rates in the future. We have quite high VAT rates. One thing on which I do agree with Deputy Healy is that it stands to reason that people on lower incomes end up paying proportionately more in VAT and other indirect taxes than those on higher incomes. This is something which should ultimately be addressed.

We should look at capital tax rates, which have increased substantially in the last few years. It has been borne out by our own history; when capital gains tax was halved in the late 1980s or early 1990s, the actual amounts taken in under that tax heading increased substantially because it allowed for a lot more activity. People were prepared to sell things and move around a bit more of their capital. The Exchequer benefited greatly from that reduction.

Our levels of DIRT tax are very high and were increased substantially during the recession. This should be addressed in the coming budget if possible, or otherwise in the next one - whoever is in government: hopefully it will be the same Government.

Perhaps it is again time to start encouraging people to save. I can understand that at the height of the recession the Government's desire, expressed in policy, was to take in more tax revenue through DIRT and encourage people to spend money to provide some sort of economic stimulus. We have probably reached a point where we need to at least have a discussion on encouraging people to save for the future.

I am struck by the fact that in the past month or so I have received a fair few items of correspondence from constituents in Carlow and Kilkenny on this matter. They are people who had modest enough incomes and who saved money for their retirement with a view to having some sort of income from those savings. They saw the rate of DIRT charged increase substantially to the point where the part of their income that would have derived from interest on their savings has been substantially reduced. We have probably reached a time in the recovery of the country at which we need to encourage people once more to consider the prospect of saving. One of the ways of doing that would be by reducing the rate of tax we currently charge on people's savings, which is really too high.

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