Marc MacSharry (Fianna Fail)

I join Senator Cannon in welcoming the Minister of State, Deputy Mansergh, and I welcome the opportunity to make a few brief points on the legislation. Like other Senators, I congratulate all members of the new European Parliament who were elected on these islands. In particular, I congratulate the esteemed former Senator Alan Kelly who put in a tremendous performance. Indeed, we are all proud not only that he is going straight from this House but that he is also the youngest member of the Irish delegation. We all wish him well, there is no question about that.

Like my colleague, Senator Cannon, I welcome the fact that finally there will be some level of equality in terms of payment scales throughout the European Union. While Hungary is a most extreme and perhaps more recent case, for many years Spain's MEPs were the lower paid ones while the MEPs of Ireland and other countries enjoyed pay scales and expenses that were very generous indeed. It is good that the 2005 recommendations are finally becoming law in this and other countries. I very much hope other countries will be rowing in as we have, and this can be the beginning of many reforms that are required throughout the European establishment.

As we do not get too many opportunities to speak about the European Parliament in the Seanad, I ask the Minister of State, Deputy Mansergh, to indulge me. He might take the message back that in the context of Seanad reform we would like to see all European legislation brought before this House at proposal stage so the Houses could debate the merits and issues that may arise regarding proposed EU legislation, rather than just inheriting EU directives through the committee system into law. The current system means we do not act in as representative a way as we should in the context of interpreting proposed EU directives. I would appreciate it if the Minister of State could take that on board.

As Senator Cannon said, this is a highly technical Bill and concerns a housekeeping matter. However, an issue has emerged which has been brought to my attention. In these days of scarce resources it would seem unusual that, if the European Parliament is prepared to pay the salaries of all of our MEPs, we should have an option for them to opt for a higher pay scale. I understand this provision is contained in section 5. The Minister of State mentioned the overall cost to the Exchequer is some €1.2 million. It may be less than that now because newer MEPs, such as Alan Kelly, will not be able to avail of the old regime. The vast majority of our MEPs will, presumably, avail of it, which will mean they will be on a higher pay scale of some €100,000 and would pay taxes here. We should seek to save money and on that basis we should try to incentivise all MEPs to opt for the new system, which provides for a salary of some €90,000. It would allow them to avail of a system that gives them a very generous free pension contribution of some 3.5% and makes them comply with European taxation, which would apply to the total amount of €90,000 without exemptions. The rate is substantially less and is 15% or 16%, but it would mean the European Parliament would save money.

There may be a loss in direct taxation to Ireland, but the overall saving of almost €1 million which would be paid to those who are eligible for the old scheme adds up to €5 million, €6 million or €7 million over the next five years. It makes sense to try and incentivise the MEPs concerned by asking them to be taxed at the European as opposed to the Irish level. We will then have direct savings on the payment of their salaries. It is something we should look at. If we cannot examine this issue in the House today, perhaps the Minister of State, if it comes before the Dáil, could consider it.

The issue arises over and above European taxation for MEPs who opt for what the Oireachtas is paying directly and are taxed and assessed on the balance, in terms of Irish taxation levels. In this day and age we should try to incentivise MEPs to opt for the cheaper scheme and, effectively, save the Irish Exchequer the money which can currently be saved. I understand, having spoken to a number of MEPs, this may be looked favourably upon and I welcome it.

It is appropriate to welcome Alan Kelly, MEP to the Gallery. We are all very proud of his achievements. He is a former finance spokesman for the Labour Party and I will miss the banter he and I had throughout various debates.

I welcome the Bill in terms of the streamlining it is trying to do in this area, but I ask that the area I referred to be examined because it is an anomaly. It is something we could proactively do and it would result in direct savings. Some tax would be given away in the context of allowing existing, former or re-elected MEPs to avail exclusively of the European taxation amount in the same way as Commissioners, auditors or other civil servants appointed by Ireland who are based in Brussels can. Theoretically it is a residence issue, but MEPs from all parties or none are based in Brussels or Strasbourg from Monday to Friday. It would be remiss of me as finance spokesman for this side of the House not to highlight a potential saving where one exists and this is certainly one.