Joan Burton (Dublin West, Labour) | Oireachtas source

It leaves a very flat taste in the mouth.

The Comptroller and Auditor General has done us a huge favour by highlighting the startling finding that some of Ireland's richest citizens, with a net worth of €50 million, have a taxable income of less that the average industrial wage, with many paying income tax at a lower rate than the average taxpayer. This is not news to the people in the banks and it is not news to the Minister, as he is one of the people who promotes it. However, the deep unfairness of it amazes ordinary people. I was not surprised by the report. When lobbyists urge Ministers to have a low-tax system, what they really mean is to have a no-tax system for their clients while the rest of us pay.

There was a similar outcry over a decade ago when my research highlighted a scandalous situation where some people with declared income in excess of €1 million annually managed to reduce their tax bill to zero by skilled use of the now notorious property tax shelters. As it was impossible for the then Minister, Brian Cowen, to allow this to continue, reforms were introduced to limit the use of such shelters to ensure everybody paid a minimum effective income tax, regardless of how many reliefs were available to them. That reform paid dividends then and still produces excellent results according to recent Revenue Commissioners reports. The notion of minimum effective taxes still has much to offer, even in the cases of so-called high net worth individuals who declare remarkably low incomes. We are aware of the old axiom that justice must be done and be seen to be done. The same must be true in the tax code. Tax justice must be done and it must be seen to be done. The doctrine of minimum effective rates of tax is a valuable tool to achieve that end.

The same is true with regard to corporation tax. Again, the Comptroller and Auditor General has produced valuable data on how different companies, foreign and domestic, approach taxation. Some effectively pay a zero rate while others, in fairness, pay close to the headline 12.5% rate. This special corporation tax rate has proven to be a valuable instrument to attract foreign investment but it should not become a sacred cow in policy making. Some companies systematically use various mechanisms to reduce their exposure to the bare minimum, even to zero. Consider the banks at present. We all know how tough the banks are when people owe them money, whether it is an ordinary household, a business or a business person struggling to survive. When the banks have their claws into people they do not relax or let go easily. Those banks are currently sitting on a vast amount of tax losses, certainly €2.5 billion to €3.5 billion, which means that in many cases, the big banks that taxpayers bailed out at so much cost to every person in Ireland, and the Minister referred to some of the costs earlier, will not pay any corporation tax, notwithstanding that they are now back in the money and the bigger banks are earning annual profits of over €1 billion. Basically it could be ten or 12 years before they will pay a single cent in corporation tax. That is not only wrong in terms of the business case, it is also morally wrong to allow people to be non-contributors to their society and economy. Many people who work at bank desks in banking houses are paying more tax than the bank pays on corporate profits.

We can still retain a competitive edge in the market for foreign direct investment while insisting that companies here pay an effective tax rate of between 6% and 8%, at least. That would offer stability in the assessment of future tax yields and flows rather than the current system of windfalls in some years, such as this year, and financial droughts in others. The Minister will boast of the extra personal allowances that raise the threshold for the higher tax rate, but we all know they are very modest. The tables provided in the booklet with the budget show that the increases, even for people on higher incomes, range from 1% to less than 3%. We are talking about small money if we are honest about it. However, that will be welcome to those on low and middle incomes but the Minister knows that wage and salary increases will eat away at the benefit very quickly through the notorious fiscal drag in this case. This happened last year as workers found that the share of their income that went on taxation actually increased despite last year’s similar increases in allowances. As the Minister knows, many companies are paying an extra 2% or 3%, which means that most workers are likely to pay more tax next year. Ministers should be careful in their boasts about lower taxes. When reality bites it leaves a sour taste.

I wish to comment on the health budget, that most voracious user of tax euro and a financial black hole if ever there was one. I must confess I gasped with amazement when the Minister, Deputy Donohoe, casually revealed last week that he had a windfall of €1 billion. Some people called it the €1 billion that had fallen down the back of the sofa somewhere in the Department of Finance and, hey presto, it was found on the weekend before the budget. Bless whoever came to the Minister and told him it had been found. It is only €1 billion but it will make things so much easier. The proposal is that it will cover the overspend on health in 2018. To be honest, the Minister of State, Deputy D'Arcy, must be as shocked as almost everybody else in the country is.

The Minister for Health is fond of his Instagram and Twitter accounts and "Please make it stop" was one of his gems. That is exactly what taxpayers want when they observe the annual weary announcements of overspends on health which have become a truly farcical feature of Fine Gael’s tenure in that Department. It has been ongoing for seven and a half years. How did the Taoiseach allow this to happen again, although he was as much a culprit during his dismal occupancy of Hawkins House? How do other Ministers tolerate it as they face tight restrictions while the Department of Health gets a free pass?

I recall a year when I had nursed the Social Insurance Fund back from a €2 billion deficit to solvency. It appeared in that October that the Government would have the funds to restore some valuable dental and optical benefits to PRSI contributors. However, the Department of Health was in crisis and needed every cent from my Department and from others to avoid a total services meltdown. All my carefully laid plans bit the dust. This farce has been repeated year after year during Fine Gael's stewardship of the Department of Health. In just four years the cumulative overspend on health amounts to a eye-watering €2 billion. In fact, the Minister for Finance has the most accurate figure and he referred today to an overspend of €2.5 billion.

In 2015, under the then Minister for Health, Deputy Varadkar, it was €600 million and subsequent years were not much better. One could forgive it if there was a tangible benefit to be observed in better health outcomes, more operations, fewer people on trolleys and expanded health promotion but there is not a bit of it. Sláintecare is the joint project of all sides of this House. How can it proceed if financial projections in health cannot be accurate for months let alone years? The danger here is that a culture of indifference to financial controls sets in and managers shrug because nobody, least of the responsible Minister, is held to account. If a Minister cannot do the job and deliver targets, he or she should be shown the door. This applies to the current incumbent regardless of how many admirers he has on Instagram.

While today's debate is focused on the specific measures announced by the Minister today, they involve only a tiny percentage of the total income and expenditure of the State for 2019. The full picture is about €70 billion or more. One only gets a true view of public spending priorities by digging deep into aspects of the budget that get no attention in the Minister's speech. One feature of policy that ought to command attention is the continuing challenge of climate change. There can be no doubt now that this is a fundamental matter that will affect every aspect of economic and social life for decades to come but one would not believe that given the Minister's attention to it today. He has cravenly given in to the vested interests that object to carbon taxes and betrayed this and future generations of this country.

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