Brendan Howlin (Wexford, Labour) | Oireachtas source

It is ten years since Ireland's economic collapse. When the economy collapsed, Ireland's tax base was exposed as fragile and narrow. Ten years ago, tax receipts fell by 30% in one year. This did not happen by accident. For a decade, Fianna Fáil had riddled the tax system with all sorts of tax breaks and bought popularity at budget time by cutting personal taxes to a level far below those of other European countries. The property boom meant that windfall tax receipts from stamp duties and VAT brought in the necessary cash for public spending. This all ended with the economic collapse, leaving Ireland unable to pay for basic public services such as schools, hospitals and the Garda. We all know the history because the people of Ireland suffered and endured it. It is not clear that the current Government has learned the lessons of history. I am determined that we will not return to a situation where our basic health and social services are vulnerable to collapse because our tax system is weak.

Tax lobbyists are seeking cuts to income taxes, with comparisons being made with personal tax levels of ten years ago. From my perspective, income taxes in 2008 were excessively low. Government spokespeople have suggested in the last week or ten days that the local property tax should no longer be linked to property values, which totally undermines the logic of a tax on assets and undermines the economic benefits of such a tax in dampening the growth in property prices. This Government is now, I believe, embarked on the same process of driving down income tax. From what we have heard in terms of the kites that have been flown over the past ten days, its focus is almost entirely on the top 20% of income earners. Reports from the Revenue Commissioners make it crystal clear that only the top 19% of taxpayers pay any tax at the higher rate, which means over 80% do not. Yet the Taoiseach insists on calling this 19% of taxpayers "the middle", as he did again today. They are not "the middle". The Taoiseach obsesses about the marginal rate of income tax. I remind him that I was directly involved in the negotiations in respect of which the Taoiseach referenced Fine Gael having taken the lowest paid workers out of the income tax system. The Labour Party insisted on that. I negotiated directly with the Minister for Finance. Fine Gael's plan was to reduce the top rate of income tax but by agreement, we took the lowest paid out of the universal social charge. Despite that almost all north-western European countries have higher rates of personal income tax than Ireland, the Government is talking about reducing income tax. My point is there is a real risk of repeating the disasters mistakes of the past.

Will the Taoiseach confirm that only the top 19% of income taxpayers pay tax at the marginal rate at present and will the Government confirm its intention to strengthen rather than weaken the overall tax base of this economy in the forthcoming budget to ensure we provide decent and sustainable public services into the future?

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