Seanad debates

Wednesday, 10 December 2014

Finance Bill 2014: Committee Stage

 

12:15 pm

Photo of Simon HarrisSimon Harris (Wicklow, Fine Gael) | Oireachtas source

The universal social charge generates revenue of approximately €4.5 billion per annum. While I differ with Senator Bradford on his political commentary, as I am sure he will appreciate, I agree with much of his analysis of the burden of income tax. The greatest concern of the people I meet in my clinic and as I go about my daily life is not the name of a tax or the composition of the overall tax burden but the cumulative effect of taxes on their pockets. While I am sure we can and will have debates about how best to reduce the tax burden, the people I meet ask me to get on with reducing it. While I do not claim the budget is anything other than modest, as has been pointed out, the Government has, for the first time, begun to reduce the tax burden. We have a long distance to go in this regard.

Senators Bradford and Healy Eames have provided me with an opportunity to outline my views on what should be done with regard to the tax burden. I recently met a part-time worker in a factory in Gorey who told me that when his boss asks him to work a few extra hours overtime, it immediately pushes his earnings into the higher rate of tax. Another guy in the same factory told me there was no point working additional hours because the Government takes more than 50% of all income above the threshold for the marginal rate of tax. We have, by any measure, a progressive income tax system. That is not my conclusion but the conclusion of a number of reports that one could line up. The income tax system taxes the wealthy. I am genuinely worried that the definition of "wealthy" that has appeared in political discourse in recent weeks and months has changed to apply to gardaí, teachers, nurses and people working in small businesses. The mantra "Tax the Rich" sounds great and everyone can agree with it, especially when it is written on a placard. However, people need to define what they mean by the term "wealthy" because I do not consider a nurse married to a garda to be a wealthy couple. They are members of middle Ireland or the squeezed middle. The Government, in the budget, defines the squeezed middle as those who are earning between €30,000 and €70,000. Those are the rough parameters for the squeezed middle, the people who work to make ends meet.

Recognising that not everyone falls within this category, we have also looked at those who earn less than €30,000 and focused cuts in the universal social charge on this group. We cut the two lower rates of USC, thereby removing another 80,000 people from the USC net. Will the universal social charge be in place forever? I do not know the answer to that question, nor does anyone expect me to know it. Do I believe it should apply forever? My priority and focus are on reducing the tax burden and the composition of that burden does not keep me awake at night.

I will make one point in favour of the modality of the universal social charge. Senator Healy Eames enunciated a similar point in a manner with which I agree. There is merit in everyone in society making a contribution. While USC rates are extremely high and a major burden, the benefit of this type of tax is that it does not hit only the usual suspects in the tax system. I do not have to hand the figures Senator Healy Eames requested on the health and income levies but I will revert to her with the relevant information.

It must be recognised that the tax burden on workers was reduced in the budget. Every worker who pays income tax, the universal social charge or both has had the tax burden reduced. Have we done enough? The answer is "No" but we have done all we could manage and we will do more. There is no difference in the Government. Different members will always enunciate or emphasise different elements but ultimately the Government is unified in its objective of continuing to reduce the tax burden on the cohort of people I described.

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