Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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9. To ask the Minister for Finance in the interests of fairness and economic sustainability in his budget deliberations, his views on increasing taxes on higher earners over €100,000; his further views on introducing wealth taxes and seeking a larger tax contribution from the corporate and financial sector as an alternative to further public spending cuts and as a means of financing financial and tax relief for low and middle income earners; and if he will make a statement on the matter. [28540/14]

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I strongly agree with the Minister's sentiments about so-called experts in the media. They drive me bonkers.

When we oppose measures such as a property tax, the universal social charge and water charges the Minister states we do not have alternatives to propose. When we call for big programmes of investment in social housing, which would deal with the threat of a property bubble, the Minister asks where we will get the money. Our view is that imposing higher income taxes on those earning more than €100,000 would yield a great deal of revenue, put money back into the economy and not really damage the economy because it would be taken off high earners who have enough to manage anyway. Will the Minister respond to this, particularly in light of the written question to which I received a response yesterday, which was based on a draft proposal. It showed that, according to the Department, if we had a 50% band rate on earnings between €100,000 and €140,000; a 55% rate on earnings between €140,000 and €180,000; a 60% rate on earnings between €180,000 and €250,000; and a 65% rate on earnings over €250,000 it could yield €922 million a year. These are akin to income tax rates in places such as Scandinavia, and what existed in much of the world in the 1960s and 1970s. I do not see any reason we cannot do this as an alternative to hitting low and middle income earners again and again.

Michael Noonan (Limerick City, Fine Gael)
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I should point out that it is standard practice for the Minister for Finance to review all taxation policy in the run-up to the annual budget. It is also a long-standing practice of the Minister for Finance not to comment, in advance of the budget, on any tax matters that could be the subject of budget decisions. With regard to budgetary matters, when focusing on the primary objectives of reducing the deficit and returning sustainability to the public finances, it has been of vital importance to the Government to spread the burden of the adjustments made in as fair and equitable a manner as possible, while also seeking to minimise their negative impact on economic growth.

To respond to some of the more specific points made by the Deputy, as I have stated many times in the House, the programme for Government states that as part of the Government's fiscal strategy we will maintain the current rates of income tax, together with bands and credits, and not increase the top marginal tax rates. To do so would negatively influence individual decisions to work and harm our competitiveness. It should be acknowledged that Ireland has one of the most progressive tax systems in the world, ensuring that those on higher incomes pay proportionately higher rates of tax on their income than those on lower incomes. In addition, it should be noted that the Government has no current plans to introduce a wealth tax.

As the Deputy is aware, in budget 2014, I introduced a stamp duty levy on certain financial institutions. The levy is 35% of the DIRT paid by the relevant financial institutions in 2011. It will operate for a period of three years, from 2014 to 2016. The expected yield is €150 million per annum.

The high earner's restriction for individuals on high incomes who make significant use of certain specified tax reliefs was introduced in budget 2006 and came into effect from 1 January 2007.

Additional information not given on the floor of the House

The restriction works by limiting the total amount of specified reliefs that a high income individual can use to reduce his or her tax liability in any one tax year. Prior to the introduction of this restriction, such individuals, by means of the cumulative use of various tax incentive reliefs, had been able to reduce their tax liability to very low levels or to zero. The programme for Government included a commitment to ensure a minimum effective tax rate of 30% for very high earners. The changes already made in budget 2010 ensure that this is achieved.

Furthermore, I assure the Deputy that the need to balance the competitiveness of our corporation tax offering for mobile foreign direct investment while ensuring the maximum benefits to the State is a matter that is considered by the Department and others on an on-going basis. The importance of maintaining the standard 12.5% rate of corporation tax to Ireland's international competitive position in the current climate must be borne in mind. Ireland, like other smaller member states, is geographically and historically a peripheral country in Europe. A competitive corporate tax rate is a tool to address the economic limitations that come with being a peripheral country, as compared to larger core countries. Ireland's corporation tax rate plays an important role in attracting foreign direct investment to Ireland and thereby increasing employment here.

As to how successful we are at getting this balance right, I highlight to the Deputy that the revenue generated by corporation tax in Ireland is broadly in line with the EU average. In 2013 we collected just over €4.2 billion, which is 11.3% of overall Exchequer tax revenue and equivalent to 2.6% of gross domestic product. As I stated previously, the 12.5% rate is settled policy and the Government remains fully committed to this rate.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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That is a fairly standard answer and is fairly non-illuminating. Preparations are being made for the budget and already very harsh measures have been imposed on low and middle income earners among whom there is growing poverty. There is also the growing phenomenon of the working poor and huge numbers of people at the low and middle end have no incentive to work. What incentive do low and middle income workers have to work at present? Their take-home pay has been hammered. They will be hammered with increasing water charges, property taxes and bills. Faced with this and as demonstrated in the response to the written parliamentary question I tabled, if we had a series of bands of taxation to be imposed on earnings of more than €100,000 it could yield €922 million. Imagine the relief that could give to low and middle income earners and the investment we could make in social housing. Why will the Minister not consider it given the very cruel choices he may have to make in the budget?

Michael Noonan (Limerick City, Fine Gael)
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We are following a taxation policy which we clearly stated during the election campaign and reaffirmed in the programme for Government. We think income tax is a tax on jobs, and if we were to identify one of the big problems in the country it is the level of employment. If one taxes something one gets less of it and if one relieves tax on something one gets more of it. We are not loading income tax. In any of the three budgets I introduced I did not increase the rates, bands or credits on income tax. This is our position on taxation. The Deputy seems to think anybody with an income of more than €100,000 is wealthy. It seems to be his definition of wealthy. He misunderstands what it is like in normal households. When the two incomes are taken together in a household with a teacher married to a garda, or a nurse married to a garda or teacher, the total is more than €100,000 but these people are not well off. They are struggling. They barely make ends meet. They barely get the children up in the morning and out to school, pay the bills, pay the mortgage and keep the car on the road. This is the position in many parts of rural Ireland. If the Deputy thinks a gross income of €100,000 for a couple is wealth he is not meeting real people.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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We need an honest debate. The bulk of the new burden we propose would be on the 10% or 15% of people on very high earnings. It would finance real relief for the vast majority of people who earn between €30,000 and €60,000. They have been hammered with the universal social charge, property tax and water charges, which are regressive and disproportionately hit people on low and middle incomes. These are the real people and the Minister knows it well as he talks to them on the doorstep. The idea the majority of people on the doorsteps to whom he or I speak earn in excess of €100,000, €150,000 or €200,000 is nonsense. I do not understand why the Minister is not willing to impose an extra burden on them rather than continually hitting low and middle income earners.

Michael Noonan (Limerick City, Fine Gael)
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There is only one thing more mobile than labour is capital, which moves in and out of a small country like Ireland. Labour is also very mobile. Young people, particularly young college graduates, up and leave.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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They are not earning €100,000.

Michael Noonan (Limerick City, Fine Gael)
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If income tax is raised much more there will be a problem. I do not know whether the Deputy is following the debate in the newspapers on young doctors and the number of them leaving the country. Somebody I know personally is relocating to Perth, where she will earn double the money and pay half the tax. Why would one not go? We must look at international comparisons. We cannot act as if there is a wall around us and what we do here does not have any influence on how people behave. Deputy Boyd Barrett's tax rate would probably close down the IT industry in Dublin-----

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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No way.

Michael Noonan (Limerick City, Fine Gael)
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-----because companies would not be able to get young electronic engineers. There are relativities which need to be examined.