Derek McDowell (Labour)

Senator Mansergh has somewhat, but not entirely, misrepresented my position. There is an argument for indexation and for saying that, in any given year, allowances and credits should increase in line with the CPI for the previous year. That is not to say that I would necessarily have favoured index-linking the reliefs, allowances and credits to the CPI this year. I can see why the Minister did not do so and have some sympathy with his position. However, there is an argument for being explicit so that a Minister who increases income tax by stealth will have to say so.

The Minister has chosen to increase indirect taxation, although he has not said so explicitly. He has done so by giving the nod to various State bodies that wanted to increase charges, and he has increased VAT explicitly. As I said on Second Stage, I am not convinced that this is the time to increase indirect taxes, although one could make an argument for doing so in different circumstances. For the first time in many years, we have a genuine competitiveness problem, partly because of the state of the international economy and largely because of the appreciation of the euro in recent months.