Brendan Kenneally (Fianna Fail)

It is a possibility. We are all too well aware that the old bugbear, inflation, is a problem once more. It affects our competitiveness and has had an adverse effect on our "fundamentals", that much loved term from some years ago.

While a number of factors are involved, indirect taxation is a major concern. Having reduced the general rate of VAT to 20%, the Minister raised it to its previous level of 21%. I urge him to consider reversing this decision to relieve pressure and to reduce inflation. There is every reason to believe that the present rise in inflation is a temporary setback, but any measure to curb it should be given serious consideration. I was under the impression that our eventual VAT target was a rate of 17%, which would bring us into line with our European partners. During his summation, I would appreciate indications from the Minister of his plans in this regard.

Ease of comparison is one of the many benefits of the euro, but tourists are complaining about our prices which obviously exceed those on the Continent. Pricing ourselves out of the market would be disastrous for the tourism industry, traditionally one of our largest employers and sources of foreign revenue. We must reduce indirect taxes as a matter of urgency as this will help to reduce inflation and impact positively on wage demands and awards.

I am well aware of the dangers, having witnessed the recent loss of 63 jobs in my constituency. The jobs at Honeywell were further up the skills ladder than is usually the case but they were not lost to the company, rather they were transferred to India. India is much more competitive and has a better educated young population than was the case in the past. It is now in the position we were in 20 years ago and we must be on our guard against creating a climate in which jobs are lost to another well-educated but less costly workforce in another jurisdiction.