Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

I thank all my colleagues who contributed to this debate. I know it is difficult to respond so quickly after the speeches in the other House have concluded. Many of the issues raised will be clarified over the course of the next few days.

On the assertion that one party in government has sold out to the other, that is not how I see it. This is a national Government of the two largest parties in the State, who have come together in a moment of economic crisis. This is the third of five budgets the Government hopes to present to the Houses. The Government is made up of the centre left and centre right, representing a broad spectrum of opinion in this country. Despite all of the difficulties faced by the Government since taking office, I am proud of some of the things we have managed to do, in particular as mentioned by Senator Moran, the retention of the current pupil-teacher ratio. We now have more teachers in our schools than was the case last year and the year before that. This is an example of the fairness which this Government has put at the centre of its policy platform. We stand over the following: that we managed to re-establish the national minimum wage, which was previously abolished by Fianna Fáil; the exemption of 320,000 people from payment of the universal social charge and the charge on private patients, which contributes to the cost of public patient care in our public hospitals; and the taxing of people at the high end in terms of pensions cover. All of this illustrates that fairness is at the heart of Government's decision making.

I accept the most recent budgets have been difficult, in particular the VAT increases. However, it is logical. When the crash occurred, Ireland was spending approximately €50 billion per annum. In 2008-09 the tax yield was only €34 billion, leaving an enormous chasm of €16 billion. It was inevitable, even for the previous Government, that the first necessary step was to increase tax and reduce expenditure. The truth is that the totality of budgets introduced thus far by the Government have been broadly progressive. The view of the OECD, which has no axe to grind one way or the other, is that of the 36 member states of the OECD, Ireland has the third most progressive taxation system. The European Commission has stated that of the four countries currently in a programme, Ireland's adjustment programme by way of tax rises and expenditure cuts is the fairest. It was inevitable that during the early days of the programme there would be radical tax hikes. We are now working on the expenditure side. The decisions being made are very difficult ones given much of the fat has been already taken out. Ministers are at the pin of their collar trying to identify additional savings.

As I stated previously, we have a very high taxation burden in this country. The top 10% of income earners in this country pay 60% of the totality of income tax. It is not credible to suggest that one can continue to kick those people around and get even more from them and that this would solve the problem. The problem is that we do not have enough wealthy people in the country. Currently every €1 over €32,800 is taxed not at 41% but at 52%, plus 7% and 4% in USC and PRSI, respectively. Self-employed people pay up to 57% in tax. It is Alice in Wonderland economics to suggest that we can continually take more from these people in order to secure savings. It is not possible and everybody knows that, including Sinn Féin and the people who are smart about these things, to whom the Irish people listen. It was inevitable that the tax increase agenda would come to an end. Sinn Féin wants the Government to abolish the universal social charge, which would cost approximately €3 billion.

The Senator also wants to reduce VAT from 23% to 21%, which would cost a further €1 billion. The hole in his party's budgetary arithmetic is not €2.5 billion but approximately €7 billion. That is the truth.