Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I would be delighted to do that because while I agree with much of the Senator's analysis of the economic situation, I do not agree that we should be legislating in the Finance Bill to put in a series of reports. I want to be supportive of many of the points the Senator is raising, and I will be in a moment, but in terms of the reason I am not accepting the amendment, and I have taken this approach, as has the Minister, Deputy Noonan, throughout the debates on the Finance Bill in both Houses, I do not believe the Finance Bill should contain commitments to a series of reports, particularly where the information being sought in the reports is already available by way of attending the finance committee, raising it on the Adjournment, by way of parliamentary question in the other House and by ready reckoner on the Revenue website.

I am not being dismissive of the point the Senator makes because it is valid and one on which we agree. I hope it does not damage her credentials if we can agree on this point because I do not believe this is a party political issue. The burden on work is too high. We discussed that extensively yesterday. That is why this Finance Bill tries, and I appreciate the Senator has acknowledged it, to reduce the burden. It tries to higher the point, albeit modestly by €1,000, at which one enters the marginal rate and it also tries to reduce the marginal rate. I also outlined yesterday some of the things it does relating to the USC at the lower income end of the scale, and we have a good deal more to do.

I will give the Senator my official answer because her points merit it. She is aware that budget 2015 reduces the tax bill for everybody currently paying income tax and-or the USC. The focus is on reducing the marginal rate of tax from 52% to 51% for everyone earning between €32,800 and €70,000, while maintaining the highly progressive nature of the Irish income tax system. The extension of the standard rate band by €1,000 provided for in the Bill is an integral part of this tax reduction package. It is the Government's stated position that this is the first stage in a three-year plan to reduce the tax burden on the Irish people that will be implemented across subsequent budgets if there is the fiscal space, which we believe there will be, to allow us to do so.

I would draw Senator Healy Eames's attention to the Tax Ready Reckoner as published by the Revenue Commissioners on their website. This contains estimates of the likely cost of changes to income tax and USC rates, credits and bands. For example, an increase in the standard rate band of €2,000 would cost in the region of €421 million in a full year. I assure the Senator that this is something Government has to do in advance of every budget in terms of deciding what we can afford to do and what would benefit the economy and our people in doing it. That is happening but in terms of citizens, Members of the Oireachtas and all of us modelling the cost of a change, the ready reckoner on the Revenue's website provides us with the information on the cost of changing a band, a rate or a credit.

Using the ready reckoner it is possible to model numerous changes to the tax system and calculate the resulting costs and yields. However, in considering options for a budgetary tax package it is necessary to take account of all parts of the package, along with expenditure proposals. That was part of the discussion we had yesterday, and Senator Hayden intervened on this point as well. Obviously, when we are considering the cost of giving back on tax and the benefit to the economy we must weight that with the cost of providing public service. That is the balancing act for every government the world over because there will always be limited resources.

There is limited value in further analysing individual measures in isolation so for the reasons I have given, the Minister does not see the need to produce a report. He certainly does not see the need to legislate to produce the report in the Finance Bill, and he cannot accept the recommendation. However, I would reiterate, as would the Minister for Finance if he were here because he has already publicly done so on many occasions, that it is the outlined position of both parties in the Government to look at that real tax wedge, which I agree with Senator Healy Eames is currently a disincentive to work. It is certainly a disincentive to work harder, to being promoted and to moving from part-time to full-time work. I outlined some scenarios yesterday where I had come across that as being a real disincentive. I hope the measures in this Finance Bill will act as an incentive in the sense of sending a message to the young people the Senator spoke of, my own generation, that we are moving onto a trajectory where we are trying to reduce labour taxes. That is something I want to see through, and I hope it is something the Senator can support.

I am sorry, but I cannot accept the recommendation. I accept the spirit of what the Senator said, the concept behind reducing taxes on work and the acknowledgement that the high tax burden is costing us talent in the country. It is something we have to recognise.