John Paul Phelan (Fine Gael)

It has been asserted in this House that reforming the system to exempt first-time buyers from paying stamp duty would distort the market and increase prices because developers would pass on any reduction in stamp duty to the purchaser. I do not accept this argument. Figures show that of approximately €1 billion collected in stamp duty on residential property, only €50 million was paid by first-time buyers. This is a small proportion of the larger figure. A strong case can be made for reforming stamp duty with particular emphasis on first-time buyers. I am disappointed the Minister did not avail of the opportunity to address the issue in this Bill and previous Finance Bills.

The Minister referred briefly to the environment. The Government had adopted a short-term policy of purchasing carbon credits to offset our increases in our emissions allowance under the Kyoto Agreement. It has not developed a long-term strategy for meeting our commitments under the agreement without having to resort to buying credits. The next Government must examine this issue as a matter of urgency.

As I have frequently stated, in recent years a myth has developed that Ireland is a low tax economy. While taxes on income have been significantly reduced and further reductions in income tax in the budget are welcome, we do not live in a low tax economy. In 2005 or 2006, the Government, for the first time in the history of the State, presided over circumstances in which people paid more in indirect taxation than direct taxation. Indirect taxation is regressive because those on low incomes spend a much higher proportion of income on it than those on higher incomes.

Another legacy of the Government has been a continuous barrage of stealth taxes and charges. The increase in VAT introduced in the budget immediately after the previous general election has not been rescinded. The Minister could do a serious job in the area of indirect taxation. I look forward to the next Minister of Finance tackling the issue.

The Minister referred to effective tax rates, about which we have heard a great deal in recent months. The programme for Government between the Fianna Fáil and Progressive Democrats parties featured a commitment that 80% of employees would pay tax at the lower rate. The term "effective tax rate", which has crept into the debate, was not mentioned when the commitment was given in the parties' manifestos and the programme for Government.

One of my principal concerns in the area of taxation is the repeated underestimation of Exchequer tax receipts in the past three or four years. I do not know who is at fault or how this failure can be explained. Last year, tax receipts exceeded expectations by €4 billion. I am anxious to learn how the Minister proposes to ensure expectations of annual tax revenues become more realistic. Are the figures deliberately massaged for political purposes to give an impression during the subsequent budget debate that the economy is in a stronger than expected position and the Minister for Finance can divvy out more money?

I and many other Senators have expressed concern about inflation. While the most recent monthly figure indicated a marginal decrease in the inflation rate, most observers agree that the rate will rise again in the coming months. It is worrying that our rate of between 4.5% and 5% is significantly higher than those of most of our European competitors. The Government made no perceptible effort in the Bill or budget to reduce the inflation rate. I am anxious to hear the Minister's comments on the issue.

In the past two or three years, Ireland has become the second or third most expensive country in the European Union. If we are serious about maintaining economic competitiveness, we must keep our costs low and inflation rate down.

The Minister made a number of positive announcements on agriculture in the Budget Statement and Finance Bill. In order to firmly establish the biofuels sector and provide a viable alternative for agriculture and environmental benefits, excise duty on domestically produced biofuel most be completely removed. The Government must introduce such a measure as a matter of urgency.

As I have argued previously, the Government must introduce roll-over relief for capital gains tax, having reversed its decision to introduce such a relief immediately after the previous general election. I will outline again the case of man in my area who will lose ten acres of land because the new Dublin to Waterford route traverses his property. As an unwilling seller, it would be fair to exempt this man from capital gains tax and afford him an opportunity, within 12 months of having received compensation, to spend the money on buying replacement land. To do otherwise and impose capital gains tax of 20% would effectively allow the State to take two of the ten acres.

Many people do not understand how roll-over relief operates. A strong case can be made for providing this type of relief to persons such as the farmer to whom I have referred, who are required to give up land as a public service but wish to remain in agriculture. Such persons should be allowed to spend the compensation they receive in lieu of having land purchased to make way for a road without having to pay capital gains tax. I urge the Minister to introduce roll-over relief in this area.

I had hoped to discuss the topical and important issue of education and class sizes. The Taoiseach spoke for 23 minutes at his party's Ard-Fheis. Listening to his speech on my way home from mass on Sunday, I nearly crashed my car when he said he wanted to fire 4,000 teachers, before correcting himself and using the word "hire". He outlined planned expenditure amounting to approximately €6.9 billion, most of which consisted of rehashed and reheated promises from the previous general election campaign. Perhaps the Fianna Fáil Party's new green image on the environment has been earned from its tendency to recycle political promises.

I have serious concerns about competitiveness and inflation when I hear the Taoiseach talk about splashing such large sums of money around after the next general election. It is a matter of political priority as to which areas need investment. I look forward to being in a position following the general election, when Fine Gael is in government, to ensure we provide that political priority.