Senator Seán Kyne::I thank the Cathaoirleach’s office for choosing this Commencement matter this morning. I welcome the Minister of State, Deputy Peter Burke, to the Chamber. I do not have to tell the Minister of State of the statistics showing that 2.61 million people are now at work, more than 100,000 jobs were created in the past 12 months and the unemployment rate stands at 3.8%, which is the lowest ever. The State’s employment agencies such as IDA Ireland, Enterprise Ireland and Údarás na hÉireann support companies and businesses that employ some 528,000 people. Throughout the country the SME sector, small and local businesses, provide work and opportunities for hundred of thousands of people. With full employment, there are record levels of revenue from income tax and corporation tax, record levels of inward investment and a growing economy despite the international challenges. None of this happens by accident. It happened because the right policies are being implemented and we must never take any of this success for granted.

In the context of a growing economy and increased revenues, it is possible and reasonable to cut taxes while also being able to increase spending in a targeted and responsible way. The programme for Government commits to index-linking tax credits and tax bands so as to prevent an increase in the real burden of income tax. One of the policies of my party, which I wholeheartedly support, is rewarding work and enterprise. The best way of helping people to manage the cost of living is to cut their tax bill. Fine Gael and the Government have pursued this policy in cutting tax and USC over the past decade. However, people on very modest incomes still pay a high rate of tax far too soon. The argument against cutting tax is that it will fuel inflation. However, inflation has halved in the past year and is expected to halve again in 2024. If we do not cut taxes, inflation by its very nature will actually increase the burden of taxes on workers. That goes against the commitment in the programme for Government.

The summer economic statement forecasts an overall budget package of €6.4 billion. Of this, €5.2 billion will be additional spending and €1.1 billion will be for tax measures. Will it be possible to achieve the programme for Government commitment and fully index-link tax credits and bands within these allocations? That is an important point in regard to the commitments in the programme for Government on tax cuts and changing tax credits. We have seen in the past year the entry point increased to €40,000 for the higher rate of income tax. We want to see that progressed over the next number of years to €50,000 before people would pay the higher rate of tax.

It is important to recognise that without index linking, eventually everybody would end up at a higher rate of tax as wages grow. A tax cut is a misnomer to a degree. It is about indexing tax rates to wage growth. That is important. It is important to acknowledge that people in this country are working very hard. In particular, they have had great difficulties for the past couple of years with the cost of living, including the cost of energy, the impact of the war in Ukraine and high rates of inflation, which we have not experienced for some time. Thankfully, the rates are dropping. They were down to 4.8% in June and, hopefully, they will continue to reduce as projected. It is important that the tax code and tax credits keep pace and reward people for the work they are doing. The majority of people are working hard and have no issue supporting those in need through social welfare and the pensioners who built this country. They should be rewarded but the workers also need help. They need assistance. They need the continuation of tax cuts and index linking of tax credits. I hope the budget will continue to reward workers for their work and, to use a cliché, for getting up early in the morning and putting in the hard graft to provide the taxes that support all and sundry.