Joan Burton (Dublin West, Labour)
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Question 102: To ask the Minister for Finance the number and percentage of income earners who are paying tax at the higher rate and the standard rate for 2005; the comparative figures for each year since 1998; when the Government will honour the commitment given in An Agreed Programme for Government that 80% of all earners will pay tax only at the standard rate; and if he will make a statement on the matter. [33305/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I refer the Deputy to tabular data provided in reply to Parliamentary Question No. 531 on 28 September 2005. This remains the most up-to-date information available. The data indicates that for 2005 only one third of earners will be on the higher rate of tax, while almost 31% are on the standard rate and almost 36% are exempt.

The 80% target in An Agreed Programme for Government was set in the context of a broader economic and budgetary strategy which provides, among other things, that the public finances will be kept in a healthy condition and that personal and business taxes will be kept down in order to strengthen and maintain the competitive position of the economy. Further progress in this area will be a matter for consideration in the context of the annual budgets over the coming years consistent with the Government's overall economic and budgetary strategy.

The Government's tax policies since 1997 have ensured that Ireland now has the lowest tax wedge in the EU, and one of the very lowest in the entire OECD as measured by that organisation using comparative data relating to those earning an average production wage. After tax income for a person on the average industrial wage, adjusted for consumer price index inflation, is now 40% higher than it was in 1997. Approximately half of this increase is due to lower taxes.

Moreover, one reason many income earners pay at the higher rate is that incomes have increased significantly. This is not an indication of a problem but of a major economic success.

Joan Burton (Dublin West, Labour)
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The Government made solemn promises in its partnership agreement for Government and in Sustaining Progress agreements with the social partners that 80% of tax payers would pay at the standard rate or below. The figures in the Minister's earlier answer show that this year only 67% of tax payers will be at the standard rate or below. Is this not the biggest smash and grab raid on ordinary PAYE workers by this Government?

These workers were mugged by the previous Minister for Finance for two years in a row when he failed to index the credits and allowances. Deputy Cowen continued the mugging last year when he promised a decrease in numbers on the higher rate but the Minister's figures show some 25,000 more workers are now paying at the top rate than were paying at that rate last year. Where is the tax justice when millionaires pay no tax? Someone just above the standard industrial wage will pay 42% on overtime and additional earnings. Where is the tax justice for PAYE tax payers?

Brian Cowen (Laois-Offaly, Fianna Fail)
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There is significant tax justice for lower paid income earners since this Government came into office. When Deputy Quinn was Minister for Finance one in four workers were exempt from the tax net on much lower income. More than one in three workers is now exempt from tax and this occurs in the context of an extra 500,000 people at work. The number of people exempt from tax has doubled. If I were to pursue a programme for Government which left one in four exempt from tax, Deputy Burton would quote figures of 75% of workers on the standard rate. The difference between 33% and 25%, some 8.5%, now exempt from tax because of our tax policies, would pay standard rate tax at 20%. In other words, Deputy Burton is criticising me for taking more people out of the tax net at the bottom and for not having 80% of taxpayers paying 20%. I have taken people out of the tax net. Is Deputy Burton suggesting I should not have changed the policy that left one in four workers exempt from tax? If this were the case an extra 8.5%, currently exempt, would pay tax at the standard rate and this would add to the figure of 67%, giving a total of more than 75%.

Joan Burton (Dublin West, Labour)
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Social partnership is under strain at present. The commitments by the Government in the programme for Government and in Sustaining Progress, to have 80% of taxpayers paying at the standard rate, have been breached repeatedly. On the other hand, millionaires can pay no tax and the top 400 earners pay little or no tax, according to the Revenue Commissioners. A worker just above the average industrial wage, on approximately €32,000 per year, will pay 42% on a miserable bit of overtime. This is contrary to the Governments promises to the social partners. What is fair in that and what is the Minister doing to address this?

Brian Cowen (Laois-Offaly, Fianna Fail)
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According to the Deputy's view of the world——

Joan Burton (Dublin West, Labour)
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I quoted the Minister's statistics.

Brian Cowen (Laois-Offaly, Fianna Fail)
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Statistics can be used for any purpose but the reality is that an extra 500,000 people are working and there is an increase in the number of people who no longer pay tax. More people pay at the 20% rate than before. If the Deputy wishes to make the comparison between how workers fare under the tax policies of this Government and the policies when Deputy Quinn was Minister for Finance, we can do so and I will win the argument hands down.

In respect of high earners paying no tax I intend introducing proposals to deal with that situation in so far as I can. There may be reasons for paying no tax in cases of recurring losses, capital allowances or profit not being made. Others are using tax relief schemes in ways I did not envisage and I intend to introduce proposals on this matter. If one considers the number of people working and the number of people exempt from tax, working people have more money in their pockets as a result of our tax policies than was the case when the Labour Party was in office. The final nail in the coffin of Deputy Burton's argument is that of the 19 percentage points reducing taxes, only one occurred during a Labour Party administration.