Brendan Howlin (Wexford, Labour) | Oireachtas source

I will share time with my colleague, Deputy Duncan Smith.

I commend and thank my friend and colleague, Deputy Nash, for crafting this motion, which addresses the most serious and fundamental issue facing Irish society and our economy. I would have thought it would have united this House in collectively trying to find solutions to the real hardship that affects people. It is disconcerting there are still Members here who want to make political capital rather than try to solve real issues that affect all our citizens and constituents.

My colleagues have covered a broad canvas in this debate but at its core is the real challenge of the crisis being faced by ever more households to meet the cost of everyday living, including heating, transport, food, clothing and rent. It has all been put in very stark detail to the House. The sums for a growing number of families simply do not add up, and the consequences are depression, despair and a sense, which we all are hearing increasingly in our offices, that working people are working ever harder and they just cannot keep going because it seems the harder they work, the deeper they are sinking into debt.

I want to touch on the issue of work and pay. Members will have read of the research done by the Irish Tax Institute in conjunction with KPMG. It took a look, on a worldwide basis, at tax rates on income in 2021 and what it set out is no surprise to us. Ireland has the most progressive tax regime on income in the OECD. High earners here pay relatively high taxes. On an income of €150,000, an Irish worker pays an effective tax rate of 43%, almost the same rate as a German worker but more than double the rate of a Singapore-based worker, more than 40% more than a US worker and 9% more than a UK-based worker. At the other end of the spectrum, thanks to Ireland’s progressive system, workers here on €25,000 pay an effective rate of 12.5%.

However, the most telling issue that came out of that analysis is the high proportion of Irish workers who do not pay tax at all. Fiona Reddan in an article in The Irish Timesyesterday quoted Revenue figures that tell us that in 2022 almost 1 million earners will not pay income tax and 797,600 will not pay either income tax or the universal social charge. That is 27.8% of all income earners. That is less than last year when it was 30%.

The lesson I want to highlight from that is not an issue related to taxation, which we have worked hard to achieve - the Labour Party, in successive governments, has helped build that progressive income tax platform and it has been one of issues upon which we focused - rather it is to point out to the House the fact that far too many Irish workers exist on low pay. We have partially masked that through our tax system and income transfers through the social welfare system through what was formerly known as the family income supplement and now known as the working family payment. One million workers do not earn enough to pay tax. Too many Irish workers are paid too little. That is the simple message. Workers need a break.

We built two economies, one where at least a third of our workforce is barely getting by, that 30% I mentioned, and cost pressures are now putting them under, and a second economy where tech, medical devices, ICT and pharma and many professionals servicing those are thriving. I am delighted to see a thriving sector of our economy but we cannot have two parallel economies, one doing really well and one where people cannot get by on the wages they are earning. We have to address that reality. It was depressing to hear the Minister of State’s comments at the beginning of this debate and the Taoiseach say yesterday that somehow workers looking for wage increases will cause wage price spirals. The real issue in our economy is a skills shortage. Those with those skills who are already reasonably paid will get more but we cannot leave 30% of the workforce behind. I hope the realisation that we need to address low pay in our economy will be one of the outcomes of this debate.

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