John Paul Phelan (Fine Gael)

I move amendment No. 1:

To delete all words after "Seanad Éireann" and substitute the following:

—notes the increase in stealth taxes introduced over the last three years;

—expresses concerns at the erosion of our international competitiveness as a result of the increase in our cost base caused by those stealth tax increases;

—notes that those on the national minimum wage remain in the tax net;

—notes that those on the average industrial wage remain in the higher tax bracket;

—notes that while the tax burden on low and middle income earners remains high, our tax system allows the extremely wealthy to avoid the payment of tax; and asks the Minister for Finance to,

—remove those on the minimum wage from the tax net;

—remove those on the average industrial wage and lower from the higher tax bracket;

—introduce measures to preclude the wealthiest individuals in Irish society from availing of property tax incentives so as to avoid paying tax while at the same time enjoying facilities and services provided by the State;

—cap the total allowances a person can claim from property and other relevant tax incentives; and

—examine the circumstances whereby Irish citizens are currently entitled to claim non-residency tax status under the existing Finance Acts.

I welcome this opportunity to speak on financial issues. A number of Private Members' motions have dealt with this area and Minister of State, Deputy Parlon, is back in the House to take this matter. He is a regular in the House at this stage. I welcome the opportunity to have this discussion.

To follow up on Senator Minihan's concluding remarks about no group or party being able to claim credit on the issue of fairness, it is clear from the context and wording of the motion and from what I have heard so far that one party is claiming sole credit for what has happened here over the past 20 years. We have achieved major economic success but that comes down to the work of ordinary decent individuals and taxpayers. The Progressive Democrats have been in Government for a period of that time but it is wrong for them to claim full credit for that, as its members seem to be doing tonight and have done on many previous occasions.

Senator Dardis referred continuously to efficiency and to the Government's efficient management of the economy. However, nothing could be further from the truth, particularly when the scandalous waste of public resources in various areas has been highlighted in recent months. During the last session we had a discussion with the Minister of State, Deputy Parlon, on a flood relief scheme in Kilkenny, which has since received notoriety. It is a good example of overspending. That scheme was originally estimated to cost €14 million but ended up costing almost four times that amount. Such overspending has been sadly repeated across the board in various sectors.

Senator Dardis devoted a large part of his contribution to outlining the increases in spending that have taken place. While there have been significant increases in spending on public services, the services have not improved to a corresponding degree. In some cases they have disimproved, noticeably in aspects of the health service. While spending on the health service has trebled in the past eight years, the service in many areas is worse, and in some areas much worse. It is unjustifiable for members of this component of the Government to congratulate themselves on those disimproving statistics.

I am disappointed at some of the wording of the Progressive Democrats' motion. It refers to the necessity to examine tax reliefs. Such an examination was announced by the Minister for Finance in last year's budget. The time for examining these tax reliefs is past, it is time to implement the changes that need to be made to them. Some of the property and other tax reliefs were introduced for an important purpose and I acknowledge they served that purpose, but they are now part of the problem rather than part of the solution in some cases. Those reliefs need to be seriously changed. Examining them indefinitely is not a substitute for their change and modification. There has not been enough of that during the past seven or eight years. The motion, as worded, is insufficient in that respect.

A subtle trick was played by the Minister for Finance when he announced in last year's budget that those earning the minimum wage would be removed from the tax net, knowing full well that the increase in the minimum wage during the year would bring those earners back into the tax net. That is the reason we included in our amendment a request that those earners would be genuinely withdrawn from the tax net. Furthermore, any proposed increase in the minimum wage should not result in those earners automatically re-entering the tax net in the next 12 months. It is also wrong that those people earning the average industrial wage and lower should continue to pay tax at the top rate, the rate at which millionaires and significant earners are supposed to pay but often do not pay because they avail of the various legitimate tax reliefs.

In recent years heightened emphasis has been placed on the number of high earners who avail of the various schemes and pay significantly reduced, if any, rates of tax. I urge the Minister for Finance to seriously examine and address that issue in the forthcoming budget. It is wrong that certain people who have significant earnings do not contribute any tax to the coffers of this State. The basis of any taxation system is that it is inherent that equality and fairness applies. It is not equal or fair that the highest earners do not pay any income tax.

A popular myth exists, and has been perpetuated by the Government, that this is a low tax country. This is a low direct tax country. Taxes on income are quite low and the Progressive Democrats Members who spoke prior to me outlined that fact. However, in terms of indirect taxation this is not a low but quite a high tax economy. Senator Dardis referred to the reduction in tax that took place during the time the Government has been in office. He failed to mention the increases in VAT and the price of fuel introduced in the budget a few years ago. There have been significant tax increases under the management of the Government while it has been in office and Progressive Democrats Members should be prepared to acknowledge that fact.