Seanad debates

Thursday, 22 March 2012

Finance Bill 2012 (Certified Money Bill): Committee and Remaining Stages

 

1:00 am

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)

Aontaím leis an tSeanadóir Ó Clochartaigh. We have discussed this on many occasions. This is an anti-competitive tax. The Minister mentioned that the Government made a commitment on income tax. It is the Government’s choice to decide whether it wants to increase income tax for higher earners or introduce a disproportionate tax such as this one.

In recent months in this Chamber and in the other Chamber Members have raised the issue of people being driven to use illegal fuels such as agricultural diesel, not for the purpose for which it was intended, and the weak penalties available to us to tackle those operators. This measure, coupled with the immediate VAT increase of 2% which was not agreed in the original memorandum of understanding - it was a staged increase - and the price of petrol at the pumps is affecting business. It is also affecting people who are trading and trying to reduce costs. On the one hand the Government is endeavouring to address that but on the other hand an increase in a tax like this, coupled with a VAT increase, makes that exceptionally difficult, particularly for haulage companies.

This measure is disproportionate because it affects everyone regardless of income. It will affect those in rural areas where the commutes are long and also younger couples who have long commutes into this city in particular. Those are the costs they are bearing, and they are bearing those costs on the basis of the choices the Government made in the budget. The Government made a commitment, which I do not believe is tenable, not to increase income tax but if it will not even examine the higher bands of income tax it will be left with decisions such as this one that are affecting people, regardless of whether they are working or in receipt of social welfare payments, the old age pension or other benefits. They also affect the indigenous businesses we say we want to support.

I will oppose this section on that basis because while I understand the position the Minister is in and that we must raise income, bridge the budget deficit and ensure the Government has a wider tax base, these types of taxes are regressive. I put it to the Minister that the mistake the Government made on taking office was to give a commitment such as the one it gave on income tax, which I do not believe it will be able to honour. However, having given that commitment it now must get the money from somewhere else and in this instance it is getting it from small businesses, people on low incomes and people with no incomes.

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