Kieran O'Donnell (Fine Gael) | Oireachtas source

Yes, absolutely. The humble politician is an oxymoron in its own way. The issue is the standard rate of tax and I look at it as entailing a series of measures. It cannot be done overnight but what was put forward in this budget was that the Government will seek to do that and, to follow in that vein, to increase the standard rate bands. It makes absolutely no sense that someone who is on a salary of approximately €35,000 pays a 40% rate of tax. If one adds USC, it is just below 50%. It makes no sense that someone who is working receives just about half of every euro he or she earns. That has to change and I welcome that change. I also welcome the increase in social welfare benefits. I do not consider increasing tax bands and increasing social welfare payments to be mutually exclusive. We must look after all sections of society. Within the context of social welfare payments, we seek to create an environment where it is not a disincentive to work and where it is perceived as a measure for people that should be temporary. For some people, it will be permanent such as those who have disabilities across a range of areas. We are also looking to create that environment.

On the business side I welcome the retention of the 9% rate of VAT for the hospitality sector. I certainly believe there is a need to look at and review it in terms of hotel beds. One sees it in Dublin in particular, where rates are very varied. There is a need to conduct research on that and examine whether it is being abused. In rural areas where businesses are trying to survive, it certainly made an enormous difference at a particular point in time and still serves a purpose. We must make certain that it is not open to abuse for various sectors. There are questions to be asked about the hotel bed sector.

Other issues arise in respect of the measures that were brought in. The amalgamation of USC and PRSI is being looked at. It is extremely important that people see that they get something back. There is a perception among the public to the effect that PRSI payments serve only one purpose, which pertains to the State pension, and that USC serves no purpose. It was brought in effectively as a "war time" tax . It was punitive in the way it was applied to gross income. If we are amalgamating the payments, we have to show that the public is getting a return in various forms for that payment. The State pension is one such return. While benefits have expanded across a range of areas, that particular theme should continue. The pension review also factors into that, as it makes no sense that someone who starts much earlier in life in a job can get a lower pension than someone who starts later in life. We have to find a way to square that circle. We see it continually where through no fault of their own, people started to work at 16. Perhaps others had the benefit of going to college - their family could afford it - and they may not start working formally until the age of 20 or 21.The four years for which the person who started at 16 worked could result in him or her getting a lower pension because the number was being averaged. If there is a move towards total contributions, basing it on what one pays is a fairer system. I have seen occasions where there was a cohort of women in particular who were in jobs in the public sector that they were obliged to leave and, through no fault of their own, some of them do not qualify for pensions. I feel very strongly about it and hope this will be factored into the review of the USC and PRSI amalgamation. People will accept change as long as they see benefit in it and not change for change's sake alone.

An item which came up in the area of enterprise was an amendment intended as an anti-avoidance measure for management buy-outs, MBO. The Minister of State is probably aware of it. It was discussed on Report Stage in the Dáil in respect of bona fide MBOs. I note that it was accepted and there is a statement of practice coming from Revenue for bona fide management buy-outs. That group includes, for example, people who have engaged in farm consolidation, where a reduced rate of stamp duty applies. I am looking at succession in this regard. There should not be a situation in respect of someone who joined a small company and worked with it over many years and where the original owner is nearing an age where he or she wishes to retire or sell on to that person. That is a bona fide management buy-out because that person has grown with the company. I may touch on that on Committee and Report Stages on that since it has come up.

I want to touch on-----