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Financial Resolution No. 6: Income Tax (Continued)

Wednesday, 5 December 2012

Dáil Éireann Debate
Vol. 785 No. 2

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(Speaker Continuing)

[Deputy Róisín Shortall: Information on Róisín Shortall Zoom on Róisín Shortall] The regime costs the Exchequer and us all about €2.5 billion. We know that about 80% of that tax relief goes to 20% of top earners. It is an extremely regressive regime. Given the regressive and anti-family nature of this budget, it is not surprising that the Government flunked this issue as well. We have had all the talk about child benefit and the fairly savage cuts implemented across the board for people on all incomes. People in receipt of child benefit, be they very poor or very rich, are still suffering the same cut in child benefit.

That is very regressive but the Government chose to target child benefit, which at least is given to every child, while completely ignoring pension tax relief. The cost to the Exchequer is about the same at approximately €2.5 billion. On what basis does the Tánaiste believe it is in any way fair that a person should be able to receive a lump sum of €200,000 tax free? What is the basis for continuing with that regime given that many thousands of taxpayers and others who cannot afford to make pension provision for themselves are in effect paying for the significant tax-free pension lump sums of some of the wealthiest people in the country? There is no justification for that. The Government inherited that regime and last year it indicated that it would do something about it this year. This year, it has failed yet again to tackle this gross inequality.

The Government promised that it might do it next year. What is the excuse for leaving that very generous and inequitable regime in place this year and failing to tackle pension tax relief for the rich? Not only is it not doing anything about significant lump sums, it also continues to allow the current level of tax relief on pension contributions. Again, that means that the poorest people and those on very modest incomes pay for the pensions of the very well-off. Has this something to do with the fact that those responsible for crafting this budget - the four senior Ministers in Cabinet, their four Secretaries General and their four advisers - are all in the bracket that can benefit substantially from the largesse of the existing ridiculously generous pension relief regime?

It is extremely disappointing that this is all the Government could come up with in respect of an area where there was potential to make savings of at least €400 million if it had delivered on the commitments in the programme for Government and introduced the cap on pension tax relief to allow a still very generous pension regime to continue where people on incomes of €120,000 could retain an entitlement to tax relief on pensions up to €60,000. That is still very generous and yet the Government was not prepared to take that decision to bring some element of fairness into the tax relief regime.

The Tánaiste has flunked it in a very serious way. Instead of tackling this area which was a stand out in terms of unfairness in our tax system, he chose to hit families and ensure that every family where there are two incomes of over a mere €18,000 will be caught for about €1,000 per year. There is no recognition of ability to pay in the burden imposed by the budget on working families. There was much talk about looking after working families. This pension regime and the budget generally represent an assault on ordinary working families and are disgraceful. I would very much welcome the Tánaiste's views on what possible justification he could have for not tackling the gross unfairness of the pension tax regime which he is allowing to continue this year.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett I am sorry His Whipness is not here to hear me say that we will support this measure because it is a marginally progressive move. It is a gesture or token towards being progressive and dealing with gross inequalities of wealth and income without any serious substance in the budget towards addressing these inequalities. I cannot say it better than Deputy Shortall because she hit the nail on the head. This is a token to make it look as if the budget is trying to be fair without dealing with the substantial issues.

The Government has hammered working families. The more I look at the detail of this, the worse it gets. The larger the family, the more it is hammered, which will hit working class families particularly hard. They will take some time to work out how large the hit is but they will be counting the cost for a long time. As has been said, there were potential savings and choices in respect of pension tax relief. Hundreds of millions of euro could have been saved that are spent on reliefs that benefit the wealthiest in society. It is fairly incomprehensible that the Government did not choose those options instead of the ones it did choose. One would have to speculate that it is either because the people making the decisions benefit from the current regime or it is a capitulation by the Labour Party to the Fine Gael agenda. Either way, it is deplorable, given what is being done to people who are hanging on by their fingernails.

We will support the measure. There are one or two measures further down that one would support but they are so marginal and fail to deal with these inequalities. It is unbelievable. Perhaps the Government would not have opted for as radical or, as some people might say, aggressive measures on taxing wealth and profits as some on this side of the House have proposed but it could have gone a hell of a lot further in dealing with those inequalities. Every step further it could have gone would have given relief to the people it has hit. That is not just a terrible wasted opportunity. It will continue the suffering for many and the understandable bitterness, anger and frustration of ordinary people who are the victims at the bottom of society and have yet again been hammered.

Deputy Michael McCarthy: Information on Michael McCarthy Zoom on Michael McCarthy I support this measure for very obvious reasons. The right-wing ideology manufactured and developed in recent years is not the fault of this Administration. This resolution should be welcomed on the basis that the matter is being dealt with.

The Tánaiste: Information on Eamon Gilmore Zoom on Eamon Gilmore We have heard some reasonable arguments today and some ridiculous ones. The minimum any Member of this House should do is at least read what is in the budget proposals before making a contribution on them. This measure is being introduced because the Government believes it is unfair that people who get a severance payment of over €200,000 should get a more favourable tax regime.

Deputy Róisín Shortall: Information on Róisín Shortall Zoom on Róisín Shortall Is €200,000 fair?

The Tánaiste: Information on Eamon Gilmore Zoom on Eamon Gilmore I did not interrupt any Member of the House so I think I am entitled to have a minute or two to reply.

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt The Tánaiste, without interruption.

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