Thursday, 22 March 2012
Finance Bill 2012 (Certified Money Bill): Committee and Remaining Stages
David Cullinane (Sinn Fein)
I agree with much of what the Minister had to say. I agree with him that when the economy contracts, it has consequences for GDP, the domestic economy and people's level of spending, which we all accept. I have made the point that many retailers are struggling and trying to come up with creative ways to keep the lights on. There are sales offering discounts of 20%, 25% or 50% and retailers need to make tough decisions. They are trying to cut deals with local authorities on rates. In trying to cut costs they often need to let people go, as we know, and others may need to take a pay cut, as has happened. Lumped in on top of this, rather than helping them, the Government has imposed a two percentage point VAT increase which the Minister claims is marginal. It may be marginal in his head and when compared with all of the other issues retailers are dealing with it, but it still has an impact. No measure that has negative consequences for small and medium-sized businesses and retailers is good.
The Minister has said 1.8 million people are still in work, which is great, but 440,000 are out of work. One of the moves I welcomed in the budget, even though it did not go far enough, was the shift in the threshold for the universal social charge which went from €4,000 to just over €10,000 and removed 300,000 people from the net. That simply tells us that 300,000 were earning less than €200 a week. While 1.8 million are in work, there are far too many in low paid jobs, which is part of the problem, as they do not have any discretionary income. These regressive measures exacerbate the position in which they find themselves.
Senator Aideen Hayden, rightly, has suggested we outline the alternative to increasing VAT, while the Minister has said the parties making these charges are not being realistic about the alternatives. Let me outline some examples of what I would propose. There should be a third rate of income tax of 48% to be applied to incomes in excess of €100,000. This used to be a policy of the Labour Party, but it abandoned it for whatever reason; however, we still support it. Tax reliefs should be available at the standard rate for everybody. Those available at the top rate of tax should be standardised and the Department of Finance has put the savings at €1 billion. The Department has costed a top rate of tax of 48% on any individual income in excess of €100,000 to take in €400 million. We propose a 1% income-linked wealth tax on all assets in excess of €1 million, and we would exclude working farmland, business assets, 20% of a primary residence and a number of other exclusions.