Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

There is a fundamental difference here. The two Senators will always see work as something to be taxed at a higher level. They will always see companies, entrepreneurs and innovation as things to get more tax from. They, frankly, ignore the fact that other countries want the innovative companies that are located in Ireland. That is an inescapable fact of having a small, open economy in which ideas and people are mobile. I find it extraordinary that in the arguments and facts the Senators have put forward to me, they give no credence to the fact that we already have one of the most progressive tax codes in the OECD. They have not acknowledged that at all. I will put the facts in that regard onto the record of the House. A single person who earns €120,000 in Ireland pays an average effective tax rate of 40.4%. If the same person earns €20,000, that tax rate is 6.4%. As one earns more in Ireland, one's average tax rate goes up as one's marginal tax rate goes up. Those are facts that are fundamental to considering how progressive and effective our tax code is. Those facts are relevant to the debate we are having here.

The Senators suggest that a higher tax rate for income above €140,000 would not have consequences that bear consideration. I believe those consequences would be difficult and potentially damaging for our economy. It is not an easy argument to make because somebody who is earning more than €140,000 is exceptionally well paid, but those individuals have ideas, skills and training. They may have people reporting to them who I want to keep in our country. That is a difference between the Senators and me.

Senator Gavan suggested we have a different rule for people who are on low to middle incomes and those who are on higher incomes. If one is on a lower level of income, one's average effective tax rate is lower than those who are on higher levels of income. We have proposed tax changes that will primarily benefit those who are on low and middle incomes and the Senator's party voted against it. Sinn Féin thinks it is okay for somebody who is on the average wage in our country to continue to pay the higher rate of income tax. It is comfortable with that and wants that to be maintained. I disagree. I believe that if people earn a few extra euro each year due to getting a promotion, staying longer in a job, doing some overtime, getting a new role within their company or changing companies, it is appropriate that we look to ensure they do not always pay a high marginal rate of tax as their income goes up due to their efforts.

I make a similar point to Senator Higgins. She does not believe there is any role for a change in our tax policy as prices and incomes are going up. In the model the Senator has espoused, as incomes go up, as they are, and as prices go up, as they are, tax revenue will go up and those who are on low levels of income will progressively end up paying higher and higher rates of tax. That is something I believe we should be proactive in trying to change. The measures we brought forward in the budget are all about ensuring that somebody who is earning between €30,000 and €40,000 is not always paying the highest rate of income tax. I believe we should change that.

In the arguments they put forward to me, why can the Senators not acknowledge that we already have a very progressive personal tax code here in Ireland? There are high marginal rates of income tax for those who see their incomes grow and average rates of income tax that mean those on high incomes already pay higher levels of taxation than those who are on lower levels of income. For those reasons, I believe the tax changes we are making at the moment are appropriate. I am not going to accept this recommendation, which provides for a report, because I do not believe the Finance Bill is an appropriate location for committing to reports.