Clare Daly (Dublin North, United Left) | Oireachtas source

When he launched his budget, the Minister for Finance told us proudly that he was concentrating his available resources on tax reductions for low and middle-income families by reducing the marginal rate for people earning less than €70,000 per year. From this, we can deduce he believes that somebody just shy of earning €70,000 a year is a middle-income earner. While I do not believe that is an excessive amount of money, we have to be very clear that the number of people in this society earning above that amount is tiny. In fact, only 3.3% of households have a single PAYE earner with an income of €75,000 or more and only 6.6% of dual-income families do. The scandal that we really should be discussing is the fact that 60% of all of those people who pay tax in Ireland have an income of less than €35,000 a year. Someone earning €70,000 a year in that context is far from being in the middle.

Labelling them so, however, is yet another attempt to hide the fact the Government’s budget this year, like all of its other ones, is a Robin Hood in reverse budget. It is a budget that benefits high earners more than it does middle and low-income earners. The points have been well articulated. The USC cuts being introduced in this Bill will give the top 20% of households on average nearly twice the benefit to their disposable incomes as that given to those who are actually in the middle. It is probably not surprising given that the Taoiseach told us at one stage that he believed the minimum wage was €35,000 a year, which it is obviously nowhere near.

What the Government has done in this budget is not only reduced the tax burden of those at the top of society - it was not very burdensome on them in the first place - but it has failed to target the massive sources of that wealth which could be harnessed to deliver vital public services and a transformation of living standards. The budget contains not a single extra measure to tackle those at the top of society, however. We have that against the backdrop of the scandal that the top 100 individuals in this society saw their personal wealth grow by €12 billion in one year alone. Now we have an Ireland where the top 20% has a 70% share of the wealth, while the bottom 20% has a 0.2% share. The policies put forward in this Bill and the budget are only going to aggravate that situation. It is a total scandal that we have not sought to go after that wealth in any shape or form.

Like Deputy Boyd Barrett, I believe one of the key parts of this Bill is the so-called knowledge box. This is one thing and one thing only, namely another weapon in Ireland’s already impressive armoury of tax avoidance schemes for corporations and big business. We have activities that can be loosely defined as research and development, qualifying to be taxed at only 6.25%, a minuscule amount. In David McWilliams’s recent television programme on wealth in Ireland, he pointed to studies from the American bureau of economic statistics which showed many of the multinationals operating in Ireland earn $970,000 profit per employee but only pay $25,000 in tax per employee, meaning a 4% effective tax rate on that wealth. Obviously IBEC, the Irish Business and Employers Confederation, welcomes the knowledge box. The Minister has said it is a “significant enhancement to our corporation tax regime [which] shows Ireland’s ability to retain our core strengths, while keeping a keen competitive edge in attracting and retaining quality jobs and investment to our country.”

That simply is not the case. What we have been subjected to is a rehash of the argument that the corporation tax regime in this State is crucial to our economy, the cornerstone of our economic policy. The reality is that it is not. The number of jobs dependent on the multinational sector is relatively small by comparison to the overall scale of the economy. Of course, we welcome the jobs that are provided. However, they are only a tiny part of the economy. They disproportionately impact on our economy because of the amount of moneys washing in and out through these companies and inflating our GDP, gross domestic product.

According to the US Congressional Research Service, the profits of US-controlled corporations, as a percentage of GDP in Ireland, was a massive 42% in 2010, up from 7.6% in 2004. In Germany, as a point of comparison, the percentage was 0.4%. Germany is a productive economic powerhouse while Ireland is a country that prostitutes itself out on enticing money in to engage in tax avoidance schemes. Not only is it a shoddy set-up, it is destructive because of the huge figures involved, the inflation of our GDP and the smoke-and-mirror effects of the movement of the big sums of money through the large companies locating their European headquarters here. These all give a cover to the Government to take attention away from the real discussion we need to have on the lack of a proper indigenous and local industrial economic policy. That has been part of the ploy in this.

Our tax and foreign direct investment policies, aggravated by the Bill, have actually turned Ireland into a service platform for flighty and transient international capital with little consideration for the domestic economy. Michael Taft put it very well when he pointed out that the multinational sector has been grafted on the domestic economy but is indifferent to its long-term health. In that context, the knowledge box is really just the latest attempt to convince everybody that what is happening here is not industrial scale tax avoidance. However, no one believes that. Ireland is a tax haven and everyone knows it from the US Congressional Research Service to the UN Special Rapporteur on Extreme Poverty and Human Rights to Dr. James Stewart, associate professor of finance at Trinity College Dublin. He said, “This is complex, and multinationals love complexity because it allows them to develop tax avoidance strategies. The last thing they want is simplicity.” The New York Timeshas described the knowledge box as something akin to an onshore alternative to the double-Irish tax arrangement that this year’s budget was supposed to be doing away with.

This knowledge box proposal is a sham. The cornerstone of the Government’s economic policy is not productive capacity, investment or job creation but tax avoidance, which is pretty shameful when one thinks about it. While we could give the country-to-country reporting measures included in the Bill a guarded welcome, we know the Government only brought them in under duress and extreme international scrutiny. What impact, if any, they will have is really unknown at this stage. We will not be holding our breath in that regard.

There are loads of sleights of hand which mark this Bill as a total policy in neoliberalism which has hallmarked this Government. With one hand, it tinkers around with the tax credits for home carers. That is fair enough. However, with the other hand, the carer’s allowance was cut by 8% over the Government’s term.

Home help hours have been cut, with 600,000 hours being taken from the service, yet the Government is giving tax breaks to nursing homes under the guise of encouraging small business. The Government is exempting them from paying tax and giving them access to cheap credit. This Government is incentivising the privatisation of the care of the elderly. It is madness.

It sickened me to hear the Minister when moving this Bill reference for possibly the fifth time a measure people are already entitled to, which is an exemption from paying local property tax when the house is affected by pyrite. The Government said it brought in this exemption three years ago but people have not been able to claim it because of the clumsy way in which it was introduced. People would have had to spend thousands of euro to get an exemption worth hundreds of euro, which is obvious lunacy. The ridiculous situation is that the State did not require testing in order for people to be included in the Government's remediation scheme but required them to have a test carried out in order to get a tax exemption. I see nothing in this other than the Minister's words, again, that this will be addressed. It is not good enough.

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