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Financial Resolution No. 9: Income Tax (Continued)

Wednesday, 5 December 2012

Dáil Éireann Debate
Vol. 785 No. 2

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(Speaker Continuing)

[Deputy Sean Fleming: Information on Seán Fleming Zoom on Seán Fleming] There have been various attempts at that legislation in the past. The new regime is in place. People were getting standard rate tax relief on their health insurance premiums net of the age related equalisation credit. That has now gone and it has been replaced by a new risk equalisation credit under the legislation. The standard rate of tax relief should continue on that basis, and I would support that.

Fianna Fáil supports Financial Resolutions Nos. 8 and 9. We support the contents of Financial Resolution No. 7 but we oppose it on the basis it is far too mild and does not do enough. We oppose Financial Resolution No. 7 on the basis that the Government should have done more on the universal social charge.

Deputy Pádraig Mac Lochlainn: Information on Pádraig MacLochlainn Zoom on Pádraig MacLochlainn I welcome Financial Resolution No. 7. However, it is really disappointing what has happened in this respect in that, clearly, Fine Gael won the battle in the debate in terms of the wealthy paying their fair share.

My party put three proposals to the Government, as the Tánaiste and Minister for Foreign Affairs and Trade, Deputy Gilmore, will be aware. The first was a 1% tax on assets worth more than €1 million that would have yielded €800 million.

Deputy Michael McCarthy: Information on Michael McCarthy Zoom on Michael McCarthy Who costed that? Deputy Mac Lochlainn should table a parliamentary question.

Deputy Pádraig Mac Lochlainn: Information on Pádraig MacLochlainn Zoom on Pádraig MacLochlainn The second was the third rate of tax, at 48%, which would have raised €365 million. The third was the standardising of discretionary tax reliefs that would have raised approximately €969 million. Those were the three options given to the Government.

If the Government wants to dispute what the wealth tax raises, it should apply it in and let us see what it raises. The Government could have tested it and seen how many hundreds of millions it would raise, and not relied on the international benchmark of 0.5% of GDP. This is now the mainstream trend in Europe. In France, Spain and Iceland, there is the issue of a wealth tax. In Germany, the sister party of the heckling Labour Party is considering a wealth tax. This is the challenge. Do we tax wealth or do we tax homes? Unfortunately, it is clear that Fine Gael has won this battle and has put in place this resolution. The resolution is welcome, but it is very disappointing. That is the reality. For my party, it is a half-hearted vote in that respect.

I seek clarification on Financial Resolution No. 8. The Tánaiste describes those concerned as employees. Are those who would benefit from that reduced rate directors or employees of companies? My party would have some concerns. We welcome Financial Resolution No. 9.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett Fianna Fáil is a funny party.

Deputy Pádraig Mac Lochlainn: Information on Pádraig MacLochlainn Zoom on Pádraig MacLochlainn It would want a big tin of Brasso for sure.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett I have sympathy with the Government here. Whatever deficiencies there might be in the failure to address the issue of incomes in excess of €100,000, it is not a reason to vote against what is a progressive measure. There are genuine questions about the other two resolutions and I would appreciate explanations. I support this measure because to be hit with this extra level of universal social charge, a person would have had to have earned during his or her working life approximately €120,000 a year and be getting a generous pension of €60,000. The idea that one would be brought up to the same level of universal social charge as somebody who is working and earning that money is reasonable and the measure is at least a move in the direction of wealth redistribution. Although not a reason to vote against it, the measure, if the Government can do so, raises the question of why it cannot raise the income tax level for those earning more than €100,000 a year. I do not understand it.

In response to the Deputies from the Labour Party who were heckling on this matter, whatever dispute there might be about how much can be raised from a wealth tax, we certainly acknowledged in our submission that there is a dispute about it. We do not have accurate figures on wealth and assets and therefore it must be estimates. We accept that fully.

Deputy Arthur Spring: Information on Arthur Spring Zoom on Arthur Spring The budget must be accurate.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett Similarly, it is also true to say that there would have to be some deep scrutiny of how much one would gain from corporation tax, etc., although one would certainly be talking about billions of euro if one enforced the effective 12.5% rate.

On the issue of increasing income taxes for those earning €100,000 or more, there is no dispute about how much it could raise. It merely depends what rates one imposes, and we have the tables. Our proposal was that the effective rates, from €100,000 up to the very top of €8 million to €10 million, inclusive, should go from the current levels of 31.3% to 46% and from to 33% to 62%, respectively, and that would raise €2.5 billion according to the tables.

Deputy Sean Sherlock: Information on Seán Sherlock Zoom on Seán Sherlock What is the yield?

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett On the yield, one would be taking approximately €1 million a year off somebody who is earning €3 million to €4 million a year. I do not have a difficulty with that.

Deputy Sean Sherlock: Information on Seán Sherlock Zoom on Seán Sherlock How many of them are there?

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett There are approximately 120 of them, according to tables we received from the Department.

Deputy Eamonn Maloney: Information on Eamonn Maloney Zoom on Eamonn Maloney What would Deputy Boyd Barrett do the second year?

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett What I do not understand is, if the Government can do what is proposed in this resolution, which is a progressive measure, why could it not have increased to some degree, if not as much as we wished, the income tax for those earning more than €100,000 on some sort of progressive increasing scale?

I have genuine questions for the Tánaiste and Minister for Foreign Affairs and Trade, Deputy Gilmore. Is there an issue on the loans employees may receive? I have no difficulty with employees getting loans from their companies and being giving some relief to them on that basis, but I ask the Tánaiste in his response to allay my concern that this is a method through which directors and executives could lend to themselves and get tax relief on it. It summons up images of certain families in this country who helped bring the country to its knees who played all sorts of games with their companies and siphoned wealth out of them. I seek assurance that this scheme could not be abused by such people.

The measure on risk equalisation seems reasonable although I would appreciate elaboration on who is likely to be affected by it and how it would translate. I would like to vote for these, but I seek clarification on them. Perhaps the Tánaiste would also answer why, if the Government could implement the measure on pensions in excess of €60,000, it could not do so on earnings in excess of €100,000.

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt I call Deputy McCarthy, and then Deputy Kevin Humphreys.

Deputy Michael McCarthy: Information on Michael McCarthy Zoom on Michael McCarthy This is a progressive measure. This is one of the measures in this budget that taxes wealth. I cannot reconcile any party which pretends to be or thinks it is left wing which opposes taxation of wealth and-----

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett I stated we would support it.

Deputy Michael McCarthy: Information on Michael McCarthy Zoom on Michael McCarthy Let me finish.

Deputy Pádraig Mac Lochlainn: Information on Pádraig MacLochlainn Zoom on Pádraig MacLochlainn Deputy Boyd Barrett stated they would support it. Is Deputy McCarthy speaking of Fianna Fáil?

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt Deputy McCarthy has the floor.

Deputy Sean Fleming: Information on Seán Fleming Zoom on Seán Fleming The Government is not doing enough.

Deputy Michael McCarthy: Information on Michael McCarthy Zoom on Michael McCarthy One hears ideological reasons being put forward in opposition to a measure which are based on economics which, to say the least, do not stand up, because those who support that economic school of thought are amateurs. Not one individual to the left of my party went to the Department of Finance to cost his or her proposals.

Deputy Pádraig Mac Lochlainn: Information on Pádraig MacLochlainn Zoom on Pádraig MacLochlainn We tabled parliamentary questions.

Deputy Michael McCarthy: Information on Michael McCarthy Zoom on Michael McCarthy There is too much at stake in this country-----

(Interruptions).

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt Order.

Deputy Michael McCarthy: Information on Michael McCarthy Zoom on Michael McCarthy -----to return to the economics of former taoisigh, Mr. Brian Cowen or Mr. Bertie Ahern. This is a game that requires serious politicians with serious figures, not a bunch of amateurs who table parliamentary questions and use the basis of that to pitch party policy.

Deputy Pádraig Mac Lochlainn: Information on Pádraig MacLochlainn Zoom on Pádraig MacLochlainn That is where it is at in the Department of Finance.

Deputy Michael McCarthy: Information on Michael McCarthy Zoom on Michael McCarthy It is comical in the extreme.

Deputy Pádraig Mac Lochlainn: Information on Pádraig MacLochlainn Zoom on Pádraig MacLochlainn Deputy McCarthy is likening the Department of Finance to amateurs. That is what he is doing. It is terrible.

Deputy Michael McCarthy: Information on Michael McCarthy Zoom on Michael McCarthy The stakes are too high.

Deputy Pádraig Mac Lochlainn: Information on Pádraig MacLochlainn Zoom on Pádraig MacLochlainn Deputy McCarthy should withdraw that comment.

Deputy Michael McCarthy: Information on Michael McCarthy Zoom on Michael McCarthy The stakes are so high that when the live wire act is going on, the clowns should stay out of the ring.

Deputy Pádraig Mac Lochlainn: Information on Pádraig MacLochlainn Zoom on Pádraig MacLochlainn He is now calling the Department of Finance officials clowns.

Deputy Michael McCarthy: Information on Michael McCarthy Zoom on Michael McCarthy Any reasonably minded left-wing politician should have his or her figures done and should support this measure based on those.

Deputy Pádraig Mac Lochlainn: Information on Pádraig MacLochlainn Zoom on Pádraig MacLochlainn Amateurs and clowns in the Department of Finance. The Minister for Finance, Deputy Noonan, might have to come into the House to make a statement.


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