Martin Mansergh (Fianna Fail)

I move:

That Seanad Éireann,

—urges the Minister for Finance to continue to support a low tax regime;

—accepts that since 1997 the steps taken to lower taxes have been the key to growing employment and growing Government revenue;

—commends the Government for its record tax reductions which continue to have a positive impact on people's lives and the economy;

—notes that since 1997 the average tax rate for nearly all PAYE workers has fallen every year including the last two years — in no case has it increased;

—notes that since the parties in Government formed their first Administration €5 billion has been returned to Irish workers in tax cuts and almost 669,000 income earners are now out of the tax net compared to 380,000 in 1997;

—welcomes the fact that since 2000 we have had the lowest tax wedge in the EU 15 for the average single worker (per OECD);

—commends the Government for ensuring no one on PAYE pays tax at under €246 per week as opposed to €98 per week in 1997-98;

—supports the Government's policy of ensuring those aged 65 and over do not pay tax until they reach €15,500 per annum (single) or €31,000 per annum (married), more than double the level in 1997;

—believes in the forthcoming budget it is essential to keep direct taxes low to maintain Ireland's impressive employment levels;

—rejects proposals to raise taxes and maintains that high taxation leads to high unemployment and low revenue for funding public services and social inclusion;

—notes that business tax rates have been reduced, creating jobs and growth without sacrificing tax revenue in many cases;

—commends the Government for the completion in the reduction of the standard rate of corporation tax to 12.5% in 2003; and

—notes, in particular, that the major reductions in corporation tax were achieved while still increasing our corporation tax base and this has yielded over €5 billion in revenue, up from €2 billion when the rate was 36% in 1997.

I welcome the Minister to the House. There is no doubt the reduction in taxes in the late 1990s prolonged and intensified the period of the Celtic tiger economy. It is also the case that there were minimal tax reductions under the previous Government which cut the standard rate of tax by 1%. It is a striking statistic that since the late 1980s, 13 out of 14 points of income tax reduction were made under Fianna Fáil and all 14 points of income tax reduction at the top rate were made under Fianna Fáil.

This side of the House does not want low tax revenues and a distinction must be drawn between tax rates and tax revenues. Since 1997, with the exception of one year, the increases in revenue have been in double figures, which is a healthy state of affairs. There is no doubt tax reductions have led to vast increases in tax revenue. I remember the debate in the 1980s as to how one would increase capital and corporate taxes. In 1986, some £34 million was collected in capital taxes whereas in 2004, €1.159 billion was collected, an increase of at least 2,000%. The same applies in regard to corporation tax which was at 50% in 1986 when £258 million was collected whereas €6.32 billion is due to be collected this year. We have had similar experiences in more recent times. Since 1997, corporation tax was reduced from 36% to 12.5% and capital gains tax from 40% to 20%.

All this has led to more activity and more employment. It will not be many more years until employment will have doubled from just over 1 million in the mid-1980s. We know from the Exchequer returns that we are probably expecting an extra €1.5 billion, some of this admittedly coming from special investigations. There is little doubt we are raising the extra revenues needed to meet infrastructural and social spending. However, beyond a certain point it would not be wise to attempt to increase spending because we must consider the dangerous effect of inflation, which we had experience of in the context of construction inflation in the late 1990s.

There is a broad consensus in this regard among the main political parties, or I have not detected otherwise. I am not aware of the Labour Party or Fine Gael explicitly committing themselves to increasing any of the main taxes. I am of course aware that the Green Party proposes or insists that there be a carbon tax as the price of entry to Government and that Sinn Féin——