Martin Mansergh (Tipperary South, Fianna Fail)

Senator Norris suggested doubling betting tax while Senator Quinn pointed out that when the tax was reduced in earlier years, the tax yield increased. In an era of Internet betting, an increase in the tax on betting would not necessarily provide an increased yield and might well be counterproductive.

Senator Norris asked why we would not raise income tax rates in the middle of the year. Making changes to the income tax system in terms of rates and bands mid-year gives rise to significant logistical and cost problems, not least for employers. This is essentially because of the cumulative nature of the income tax system. The calendar year would need to be split into two short income tax years. The legislation would also be very complex and, as a result, the commencement date would have to be postponed, which would result in a lower yield. All in all, adjustments to the income and health levies and the PRSI system comprised the most efficient mid-year mechanism to achieve an increase in revenue.

Senator McCarthy suggested an individual earning €750,000 per year would pay a lower proportion of his or her income on the health contribution than an individual earning €75,000 per year. There is no upper limit on the health contribution and it applies to all incomes, and therefore what the Senator suggested is not the case. The health contribution rates have been doubled in the budget and it will cost more for high-income earners than low-income earners. There is an upper limit on the employee PRSI threshold, which has been increased to €75,036. However, this only applies to employees and there is no upper limit for the self-employed.

Senator McCarthy also mentioned the tax exiles issue. The Minister for Finance took action on this, not in last year's budget but in the Finance Act, by ending the Cinderella rule. From 1 January this year, an individual is regarded as present in the State for tax purposes if he is here at any part of the day, not merely if he is only present at midnight. This is part of the Government's commitment to fairness and to ensuring everyone plays his part in achieving economic recovery. Some of the very wealthiest in our society, or half in our society, have made very big losses on various activities and in some ways one wonders whether they would have been any worse off had moneys been paid into the Exchequer.

Senator Paddy Burke asked about small businesses getting into difficulties with taxes. Penalties and interest are matters for the Office of the Revenue Commissioners but it is always possible for taxpayers to make arrangements with that office for meeting their obligations.

A number of Senators naturally raised the issue of the national asset management agency, NAMA. NAMA, acting for and on behalf of the taxpayer, will not be paying the book value for the assets. On transfer of the assets, the banks concerned will have to recognise losses on their books. Developers will be required to repay their loans in full or forgo their securities and collateral. Where developers have made losses, they will have to recognise those. It will not be the function of NAMA to go easy on them. NAMA's mandate will be commercial and there is no intention for the State to incur a loss.

The stream of income from the assets and proceeds from the eventual sale of the underlying assets or the repayment of the loan will accrue to NAMA. If NAMA fails to make a full recovery on the realisation of the assets over the long term, the Government intends that a levy should be applied to the banks to recoup the shortfall.

Senator Twomey referred to the potential size of the land and development loan books to be transferred to NAMA. I can assure the Seanad that, in recent months, extensive analysis has been carried out on the loan books of the covered institutions. This has given a clearer picture of the size and nature of the banks' loan books. The Minister for Finance has confirmed that entire portfolios of loans will be transferred to the agency, not just land and development loans but also related loans and the largest aggregate associated exposures in the banks. The potential book value of loans transferred to NAMA is in the region of €80 billion to €90 billion although the amount paid by the agency will be considerably less. Significant further detailed work and extensive due diligence on the loan books will be required to ensure the appropriate categories or portfolio of loans are transferred and that the banks are cleared of the identified riskiest loans by NAMA.

NAMA is not a toxic bank and will have loans on its books based on real physical assets. While some of these will undoubtedly be of better quality than others, there will be a mix of good or performing loans and bad or non-performing loans. The objective of NAMA is to strengthen the banks' balance sheets to reduce considerably uncertainty over bad debts and, as a consequence, ensure the flow of credit on a commercial basis to the real economy to protect and increase employment while also maximising and protecting the interests of taxpayers.

Considerable work on the detail of the proposal will take place in the coming weeks in parallel with the preparation of legislation. The transfer of assets from the banks' balance sheets to NAMA will complement measures already introduced with bank recapitalisation to improve the flow of credit and support economic recovery. These include the provision of at least an additional 10% in capacity for lending to small and medium enterprises in 2009 and an additional 30% in capacity for mortgage lending. If the mortgage lending is not taken up, the extra capacity will be available to small and medium enterprises. There will also be new funds for lending to support new businesses and environmentally friendly and innovative investments. In addition, new codes of conduct pertaining to mortgage arrears and business lending were introduced on 27 February and 13 March, respectively.

With reference to the contribution of Senator Doherty in particular, it is very easy to work oneself into a state of passionate condemnation of this or that aspect of the budget without having any regard to the circumstances we are in and which the Government must address. With regard to the various measures adopted, there were very few easy or problem-free choices.

I am trying not to sound patronising in saying Sinn Féin has recognised and is recognising the need to produce more credible and coherent economic alternatives. However, further work must be done. There are many easy solutions which have great popular appeal but might have a severe impact on the solvency of institutions we need to keep going.

An issue was raised which has absolutely nothing to do with this budget debate. It relates to a decision of the Houses of the Oireachtas Commission, and two members of the commission are here. The figure mentioned, approximately €200,000, is at least three times the cost put forward prior to the decision being taken. The issue of not being in compliance with planning permission goes back to my time on the Houses of the Oireachtas Commission.

A very definitely stated Government policy to encourage a move to public transport was set out in a letter from the Minister for Transport. This House is exceptionally well-served by public transport. At least 50% of the time I arrive by public transport, whether by bus, train, Luas or whatever. The Office of Public Works made a recommendation and a decision was made by the Houses of the Oireachtas Commission and I believe it is a good decision.