Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I do not agree with the amendment. Those who advocate higher personal tax rates often say that what really matters are the effective rates and not the marginal rates of tax. Effective rates matter, but marginal rates matter as well. The landmark level of income has become €100,000. While someone at that level is paying a marginal rate of 52%, the budget day booklet indicates such a person is paying an effective rate of 39%.

When we are considering the amendment, we should bear in mind what is actually being suggested. I assume that when the Deputy refers to new tax bands and he puts a percentage next to them, the percentages are replacing the income tax rate of 40%. Therefore, the rate of 40% will become 50%, 55%, 60% and 65%. Deputy Boyd Barrett is advocating that the existing marginal rate of 52% would rise to somewhere between 62% and 77%, plus an additional 3% for the self-employed. That is what has been proposed.

I do not believe that someone on high levels of income is going to decide not to work because his tax goes up. However, I do not believe that such a measure would be without consequence either. There would be consequences not only in terms of the take-home pay of the people concerned but in respect of investment decisions and other employment decisions. The notion that we can tax to the hilt people on higher incomes without any consequence for people earning less than those levels is not one to which I subscribe. This is because the investment environment, tax environment and employment environment are all connected.

I take it seriously when representatives from organisations like IDA Ireland, which is selling Ireland, make the point that personal taxation rates matter. I believe they matter and I think what is being suggested goes too far. Certainly, it is not something we could support.

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