Jim Walsh (Fianna Fail)

Like the other speakers I welcome the budget. It is remarkable that we have a budget based on income generated from economic growth rather than increased taxation or excise duty. I am not sure if it is unique but it has not happened very often. The economic growth we have experienced — last year it was 4.6% and the projections for the next few years are 4.8% and 5% — is impressive. One of the most impressive statistics in the budget is the increase in employment in 2005. Employment is up approximately 50,000 on the projections at the start of the year with 89,000 new jobs created. The projection for the coming year at 3% and 60,000 new jobs is also impressive. It shows the way the economy is going and how necessary it is to keep the ship on an even keel so the benefit of recent economic growth is continued without interruption.

Inflation is currently 2.5% and is projected to rise to 2.7%. It is on the high side when compared with our EU partners. We should be mindful that although the rate is at an historical low in Ireland, we should maintain every effort to keep it low if at all possible.

It is good to see taxation as a focus of the budget. People on the minimum wage are being removed from the tax band, an action that other Senators and commentators have sought and one which is welcome. The restrictions regarding capital allowances and other tax reliefs, particularly for very high income earners, are also welcome. I was somewhat surprised in reading the budget document to find one can carry forward unused capital allowances from one year to the next. Although this is standard practice, I wonder if it is advisable.

I take issue with the fact that loans for companies which are used for property rental will not be allowed to people who invest, either through shares or by extending a loan to a company. I have argued the point with previous Ministers for Finance that there is an inequity in that process. Most tax advisers will advise people to hold property outside a company as it is more tax efficient. Those who put capital into a company, for the protection of limited liability, for example, should not be penalised as a consequence. Any income generated within the company attracts a surcharge, so these are not moneys which can be retained. There is only a small saving of perhaps €15 million on the matter. It would be useful to examine the issue again.

An increase in stamp duty to 9% is high in comparison with other countries within the EU.