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

I thank all Deputies who participated in what has been a very lengthy and substantial debate reflecting the importance of the Finance Bill, which is central to the management of our economy and which responds to the many pressing needs in our society of which I and the Government are so well aware.

In the time available to me I will respond to the five key themes that have been raised with me: the role of fairness; the role of middle income workers; the concrete levy; one-off measures and where we are with regard to taxation and the energy sector. As I respond to each of these themes, I want to frame where the budget stands overall. It is important, as some Deputies on the Government side indicated, that we make the case for the fact that our country and economy can bring forward an €11 billion budget without having to borrow for it so soon after dealing with the extraordinary cost of Covid and the impact that pandemic had on our country.

I remember in the early days of bringing in the first set of economic supports that were needed to help our country deal with the impact of Covid in 2020. At that time in the debate the question that I had to face again and again was whether austerity was coming. Analysts, the media and the Opposition made the case that in the aftermath of Covid the first response would be the need for austerity. I cannot predict what the future will bring or the circumstances that could yet happen as a result of what this war may make our economy and that of Europe confront. What I can say is that so soon after having to deal with the need to support our country in dealing with a pandemic, to be able to bring forward a €11 billion budget and respond to the array of needs that our country has at a time when prices are going up so sharply does demonstrate the need to be careful with public finances and does demonstrate the value of there being resilience within our economy. The key thing that has enabled us to do that is that at a time when corporate tax receipts went up again, from approximately €11 billion in 2020 to over probably €20 billion this year, the Government did not use those additional revenues to fund permanent increases in expenditure or taxation. When it comes to spending, there was not a day that I walked into the Dáil Chamber that I was not called on to do that but we did not do that. What the Government did was that we used the increase in corporate tax revenue to fund the emergency supports that we needed to deal with the impact of Covid. Those supports were then withdrawn as the impact of Covid on our society withdrew. That led to our country having a surplus, which is a rare thing across Europe at the moment, and that will allow us to fund what we need to do now.

That leads on to some of the criticisms that have been made of the budget, first, that it is not fair. The ESRI’s analysis and the distributional analysis of the Department of Finance on budget day showed clearly, objectively and based on evidence that those who have the least got the most in this budget as a combination of the taxation changes and particularly the social welfare changes that were brought in by the Minister for Social Protection, Deputy Humphreys, and the one-off measures that have been brought in by various Departments mean that those on the lowest income and those who are most vulnerable received the most support from this budget. This is a fair budget and a progressive budget and is shown to be in any independent analysis since.

The second theme was continued criticism on the taxation changes brought in. It makes me wonder what the Opposition has against someone earning around €40,000. What is it that drives the tone that the Opposition has to changes in taxation when it is continually against any kind of changes that mean someone earning €40,000 or €45,000, a Garda or a plumber or someone working in any part of our economy who sees their wages go above €38,000, €39,000 or €40,000 and that they do not deserve recognition in this budget? Because they do. They absolutely do. All those workers who make such a critical contribution to our country, economy and society need recognition at a time when the cost of living is going up. I heard the point made that a person earning €140,000 gets a gain but nowhere in that analysis was it said that someone earning €140,000 is getting the same cash gain in the budget as someone who is earning €40,000 which means that the percentage gain to someone earning €40,000 is more than someone earning €140,000. This is a budget that has a particular focus in our tax code and in our tax changes on those on a middle income. I do not believe it is appropriate, and it is something that I have wanted to change in budget after budget, that someone who is on a normal average wage in Ireland is already on the higher rate of income tax. I believe that is worthy of change. It is what this budget does. The Opposition, particularly Sinn Féin, appears to be against this at every corner.

I refer to the changes I made in the concrete levy. Of course I was aware of the debate that happened in the aftermath of budget day. If happens with every budget. There is always a reaction to a particular measure, some of which deserves a response and some of which does not. Those who are against the specifics of a concrete levy are for the generality of spending billions of euro all the time. I remember being in this Chamber over many years and hearing debates on the need to spend more money to help those who need help; the poor families and poor property owners who have been afflicted by mica. Those making the case for more to be spent are against any effort to look at how it could be funded. What is as dangerous as any trade offs that can be created by a specific measure such as this is the idea that our country can spend billions of euro in the future and we need never find a way by which some of that cost can be funded. On the trade offs behind this measure and the impact it could have on construction costs are 0.2% to 0.3% for a house and 0.15% and 0.2% for an apartment. That is the actual change that it could deliver.

That leads to the fourth area. Some of the debate I heard particularly from Independent TDs and the Social Democrats suggested that all was well and good but we should really exclude the one-off measures when evaluating the budget. I want to tease out that logic. They say that first, we should exclude €4 billion from evaluating the budget. Second, a point made most clearly by the Independents at the end of the debate, they say that in the analysis for next year we should either say that the one-off measures should be made permanent, the very thing the think tanks and the independent institutes they quote warn us against doing - they say they should be temporary and appropriate to where the economy is at any time - or are they suggesting we do not do this at all?

What is the argument they are making? Is it to exclude €4 billion from a budget or make the measures permanent, which is the very thing the bodies they quote would warn against?

On the charge that the State is in some way profiting from the change in energy prices, which charge has been made by the Rural Independent Deputies, in particular, it is the case that as the price of something goes up, the VAT we collect on it does too; however, the other part of the story, which the Deputies did not go into, is that as the citizens to whom they referred spend less in our shops and economy, we collect less VAT.

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