Michael D'Arcy (Fine Gael) | Oireachtas source

I thank Senator O'Brien for giving me the opportunity to speak at this stage in the proceedings. The Minister of State is very welcome to the House.

The budget was a welcome departure from previous budgets in which there were only tax increases. On this occasion, there was a tax reduction of €650 million. For the first time in a number of years, the very hard-pressed taxpayer got an opportunity for his or her tax to be reduced. I am very satisfied that this has happened. I am not satisfied, however, with the dishonest debate that has been perpetrated from one end of the country to the other.

It is important to put things into context. There has been a reduction in the universal social charge for tens of thousands of people, and I support this. In conjunction with the reduction in the rate, an increasing number of people on lower rates of pay are being taken out of the universal social charge net.

I also welcome the reduction of the higher rate of tax from 41% to 40%. However, I am disappointed with the dishonest conversation on this from some sectors of the body politic. We keep getting the examples of someone earning €15,000 and someone earning €70,000. We need to delve further into this. Someone earning €15,000 on the minimum wage is a part-time worker. If a person earns €15,500, he or she will take home more than €15,000 after taxes are paid. That is the difference between the gross pay and the net pay. Someone earning €70,000 pays approximately €26,000 in taxes. Those are the real figures. I have said all along, and anyone who has listened since the time I entered this House knows it, that we need to have an honest conversation about people's earnings and their gross pay versus their net pay. We have not had this honest conversation. If a person is on the minimum wage, they will have a gross salary of €18,000. They will pay less than €1,000 in taxes and therefore net €17,000. The minimum wage for a person on a 40 hour week versus someone on a salary of €70,000 is, in take home pay terms, €17,000 versus €44,000. We have not had an honest conversation about this at all. Then we factor down the rates of pay. When we look at the rates of moneys going to someone in social welfare, we only have a gross figure. There is no net figure for people on social welfare payments. Therefore, there are people, and I am quoting the Professor Richard Tol report from the ESRI, who are better off on welfare than in work. That cannot be allowed to continue in a functioning state. Let us at least have an honest conversation about net pay, gross pay and the income of people who are in receipt of social welfare payments.

I thank the Minister for Finance, Deputy Noonan, for giving me the opportunity to pursue the conversation about the so-called double Irish regime. There was group thinking in the Department of Finance that the double Irish had to go. I had that conversation with the Minister for Finance. The position is now clear. A five-year period is in place for the phasing out of the double Irish. That will play itself out. I have no doubt there are tax firms in the city which are already looking into new methods of tax efficiency.

We also had a conversation with some people about the wealth tax and the implementation of a wealth tax by other parties.

Wealth taxes are already in place. I have previously made the point in this Chamber that capital gains tax is as high now as it was in the 1990s. When former Deputy Charlie McCreevy was Minister for Finance he reduced the capital gains tax from 40% to 20%. It is now back up to 40%. Also, the tax on people's private pensions was a wealth tax. Senator Darragh O'Brien and I have for some time been raising the issue of the €2.2 billion taken from the private pension funds. That €2.2 billion is a multiple of what will be raised by way of the water charges yet there has been no conversation about the people whose pension funds have been reduced.

I support the special assignee relief programme. While it rails against everything that I believe in if such offers have to be made to encourage highly paid executives to come here then that is what has to be done. On the motor tax issue, approximately 60% of motor tax is paid online per quarter. I have a difficulty with the cost of motor tax on a quarterly basis being more expensive than the annual cost if met by single payment. I would ask that the Minister revert to the House on the cost of this to consumers countrywide. I am clear on what I believe should happen, namely, the total cost of motor tax paid on a quarterly basis should be equivalent to the annual cost. The people who are paying their motor tax on a quarterly basis are probably the most hard pressed middle who are commuting two and from work.

On the employment and investment incentive, EII, in my view this does not go far enough. I have made that point on previous Finance Bills. I am not perpetrating the view that we should be introducing construction sector tax relief but there are many derelict buildings the length and breadth of this country that are eyesores. The introduction of a tax relief in respect of construction work on such buildings, perhaps on a pilot basis, would be of benefit. It could be an economic generator not alone for specific towns and villages but specific regions. This is an issue that needs to be addressed in a coherent manner.

I welcome the agri-taxation review conducted over the past 12 months. I also welcome the €40,000 exemption for farmers on long-term leases. Again, there is a need for consideration of a reduction in capital gains tax on land obtained by compulsory purchase order. I believe that where a person does not wish to sell his or her land and that land is acquired by compulsory purchase order in the national interest for the construction of roads or other programmes he or she should have the benefit of a lower rate of capital gains tax.

In regard to off-licence sales, we have a good record in this Chamber in terms of trying to have something done about off-licence sales. They are too cheap. The damage being done to our young and old people is not good. I do not support the loss leaders which the supermarkets in particular are getting away with. The introduction of a tax in this area was discussed previously. I understand there is currently a case in this regard before the European Court of Justice by the Scottish jurisdiction. We have been waiting an interminably long time for something to be done in this area.

I thank Senator Darragh O'Brien for allowing to speak before him. I will now return to the banking inquiry.