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

I will speak to the amendments first before I come to Deputy Michael Healy-Rae's comments. Deputy Doherty's amendments refer to reports on the tapering out of income tax credits on certain incomes and the introduction of a levy on high incomes and new income tax rates across particular income ranges. I will make the point that in order to fund all of the improved public services and the social security net Deputy Doherty refers to, we need an economy that is growing. In order to have an economy that is growing, we need to have a competitive environment here in Ireland in which jobs are created and kept. The competitiveness of our personal tax code matters in that regard. That is the key reason I will not be accepting the amendments Deputy Doherty is putting forward which propose that these reports be prepared.

Let us examine the impact of the Deputy's proposals on the marginal tax rates. Were the personal tax credit of €1,650 to be tapered out at a rate of 5% per €1,000, the marginal tax rate at those income levels at which the tapering would take place would be just over 60%. Once that tapering has happened, an income of more than €120,000 would revert to a marginal rate of 52%. I believe that taxation of €60,000 on an income, albeit a high income, would make it more difficult to attract jobs into Ireland. We want to get consultants back to Ireland to work in our hospitals. I look at how much they are paid. A marginal tax rate of 60% would be an impediment to our efforts to get consultants back and to bring to Ireland the jobs and decision makers in companies who are critical to the growth and retention of foreign direct investment in Ireland. That is the main reason I am opposed to the policy Deputy Doherty is seeking to advance through his proposed reports.

While I accept that there would be a potential gain in revenue from the measures being proposed, this gain would be threatened and lost over time as a result of the effect the measures would have on the competitiveness of our tax code and on the kind of incentives we need to ensure that those who can make a valuable contribution to our economy and public services, who I accept are paid at a high level, do not face marginal tax rates that high.

With regard to Deputy Michael Healy-Rae's point, I would never attempt to put him under my thumb, although I do disagree with him. I assure the Deputy that the Government does not have an agenda to extract money from or target the ESB. I accept that what we are doing has an impact on the price of energy and contributes to it. The Deputy mentioned diesel. We are making changes to taxation to try to change behaviour over time and, while this behaviour is changing, to bring in revenue that we can, in turn, invest in getting our country, our economy and our environment ready to deal with the consequences of climate changes. We can also use this revenue to fund our efforts to use less carbon, thereby reducing harm to our environment. I hope and expect that the rest of the world will do the same. That is why we are making changes in respect of carbon taxation. Some 70% of the change we have seen in the price of a litre of diesel during the year has had nothing to do with taxation.

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