Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

We dealt with this matter on Committee Stage. I just want to make a few points on the amendment put forward by Deputy Richard Boyd Barrett. I will explain why we will not be accepting it. The Deputy criticised the last budget when we delivered, through a series of changes to the USC and by increasing the entry point to the higher rate of income tax, a set of gains of around €5 per week for people who tend to be on lower and middle incomes. During Deputy Boyd Barrett's contributions on the budget and in his contribution earlier today, he criticised us for tax cuts.

He criticised us for saying that we are putting in place any form of tax reform or reduction at a time when we should be investing in public services. On the one hand he is saying we cut taxes too much in the last budget and in this amendment he is proposing a tax change that would mean that anybody earning up to €1,731 per week would pay no USC at all. During the debate on the last budget he said we cut taxes too much and now he is saying we should put in place a tax reduction on income which is many multiples ahead of what we did in the last budget.

I know Deputy Boyd Barrett will go on to say that he would seek to introduce a number of other measures that would raise revenue in other ways. He can expect that my response will be to say that raising revenue in those other ways would narrow our tax base even further or create difficulties that would undermine the competitiveness of the economy. If Deputy Boyd Barrett goes back to the exchange we had on Committee Stage, I understand he envisaged that increased income tax rates of between 50% and 65% on income above €100,000 would be used to off-set the USC reduction. However, as the Deputy is aware, we are already at the point where in 2018 the top 1% of income earners will pay 25% of all income tax and USC. It is for all of those reasons that I believe to put in place such a measure would really concentrate the risk that the State has in relation to the collection of tax revenues. As I indicated on budget day, I believe that we should have a threshold into USC, that we do not change in the years to come because if we were to do that it would undermine the breadth of the tax base which we will need even more in the coming years with all of the challenges that could lie ahead. For those reasons I will not accept Deputy Boyd Barrett's amendment.

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