Éamon Ó Cuív (Galway West, Fianna Fail) | Oireachtas source

I will come back to the whole question of a wealth tax. It is an interesting question but it is a little more complex than Deputy Boyd Barrett thinks. The same applies to corporation tax.

One thing I hate in any tax proposal is the situation where if a person moves above a certain figure, he or she goes back to square one and pays from there. As a modest proposal, how much would it cost to not charge any USC on the first €13,000 of earnings? At the moment, the tax applies when one earns €14,000. People tell me that nobody hits that but pensioners, in particular, do. We must remember that social welfare income is not counted as income. If someone has a private income of €14,000 or €15,000, they are paying a little bit of USC and have to make a tax return and so on. That is particularly the case for the self-employed. Going back to the real world, how much would it cost to make that adjustment?

There is a second measure I think would be sensible. I absolutely agree with the idea of a reduction from 4% to 3%. Allowing that anybody who has a medical card does not pay more than 2%, how much would it cost if the first €60,000 was taxed at 2%, as opposed to the situation at present? I do not particularly like using the medical card as a means test for schemes other than the medical card. The Minister and I know that when the Minister for Health proposes to extend eligibility for the means test, the Department of public expenditure starts looking at all the schemes that use the medical card as a shorthand for eligibility, as it does in this case. I am not suggesting anybody should go backwards. I am suggesting that the people who are not benefiting go forwards. On the other hand, we all know that in the real world in which some of us live and where we deal with people who have very modest incomes, it is an inhibitor for people who are afraid of losing their medical cards. This Government has given out a lot of GP cards, which is welcome, but they are no substitute in most people's minds for medical cards, if we are getting down to the brass tacks of the everyday realities of the people I deal with and have dealt with for the past 35 years. These are the issues that those people are raising. Will the Minister give an indication of the cost of both of those proposals? It would be useful.

The Minister might also give us the gross figure for how much comes from the USC. When people say we should abolish taxes, I always say that is an attractive suggestion. When I was a Minister years ago, somebody suggested we abolish the VRT. I said I would prove that the VRT is a good tax. It is progressive when compared with many other taxes. We were at that time getting something in the region of €1 billion from VRT. My question was what could we replace it with. We cannot abolish taxes without replacing them with something else because otherwise we would be changing the arithmetic of the budget. As somebody who was here during the good times and the bad times before them, I remember that the people who had been telling us to spend and reduce taxes were the very ones who criticised us for being profligate when the money ran out. At that stage, we effectively had no public debt, unlike now where we have a very large public debt. We had large budget surpluses at the time, particularly when taking into account the value of money at the time compared with now. As I said, that quickly ran out with the double whammy of a reduction in taxes and an increase in costs, particularly welfare costs, hitting at the one time. It is awfully easy to move away from a surplus. If there is a gross surplus of €24 million, that is fine, but it is very easy to go from there to a deficit of twice that amount if you get that double whammy. We were hit by the reduction in taxes. People often think that capital taxation was the issue but it was not. PAYE, PRSI and VAT were the big reasons for the downturn in Exchequer funding at the time. The banks and the building crisis were obviously the cause of the downturn in the income.

The issue of taxing corporations has been well debated. It seems that no matter how well we debate the issue, people blithely go forward as if we did not live in a bigger world. Some salaries paid to people in this country for services are, on an objective level, very high. However, I recognise that if you are in international competition, you have to pay the international rate. Deputy McGrath was talking about people emigrating but some people are emigrating to America or wherever else because the salaries are better.

Many of these are in the health sector, which are paid for by the State. People go to Dubai teaching or nursing, and good luck to them. The reality is that if you want to pay salaries of that order, you have to keep coming up with the money. It is, therefore, not as simple as people make out.

Going back to the corporations, I presume an analysis has been done by the Department of Finance as to the likely migration of some of the big corporations which are the big employers. We do not seem to have a conjoined debate on this. If the Government changed its corporation tax, what is the risk of flight of some of the big multinationals that are paying a totally disproportionate amount of corporation tax? What would the consequence of that be in terms of lost PAYE, PRSI and USC, which would follow? We would once again get into the whammy of losing our industry. It might not be an ideal world because we are not living in an ideal world. These corporations have enormous choice and power.

Furthermore, it is not necessarily that they leave. I am told the risk is that the pipeline dries up. As the companies we have stop being the top companies, the new companies that replace them do not come in. If we go back to 40, 50 or 60 years ago, companies that were then world renowned became redundant because technology caught up with them. An example of this is in Rochester, New York, which I visited in 2019. It was explained to me that many thousands were employed there. One employer was Xerox. However, Xerox continued to make photocopiers and computers caught it out. The other was Kodak, the biggest photography company back when people used rolls of film and got them processed. Kodak persisted with its technology and nothing came to replace that company. The danger for us is that the pipeline of new, modern, replacement technologies would not come in here. In my lifetime I have seen lots of fine technologies disappear. Only for the fact that we had new companies coming in all the time we would have lost a great deal of our wealth had we not kept it really attractive for them to come in.

As I said, it might not be an ideal world. In a world where everybody was generous and philanthropic in a massive way, and companies did not try to make money, it would be grand. However, in the real bad world out there, I would be interested to see the analysis that has been done on the movement.

Similarly, in regard to the wealth tax, do we know of small countries similar to Ireland that have high levels of wealth tax? Have we any data on what is being raised by wealth tax and whether there was a flight of wealth by the most wealthy in those circumstances? If we are trying to hit the multibillionaires, I suspect their money would be fairly mobile and there would be a flight of finance. I would be interested in the Minister’s views on that. What analysis has been done as to why a wealth tax would have downsides that we have to think of carefully before finding ourselves in a net-zero game where we actually lose rather than gain money, by changing it, due to the mobility of wealth in the world?

As I said, I am not lauding the fact that is the case. There is far too much wealth in too few hands. I believe in the old Fianna Fáil philosophy of a dispersed ownership of wealth. For example, I am a great believer in as many people as possible getting back to the 80% owning their own house and do on. I see challenges all the time in the very open economy that we have.

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