I move amendment No. 27:
In page 11, Part I of the Table, to delete "£3,000" and substitute "£4,500".
If carried, this amendment would have the effect of restoring the tax bands to what they were in the last tax year. This is not a proposal to restructure the entire tax system. I am not under the illusion that I am introducing a budget. The Fianna Fáil budget proposal set out in the Finance Bill aims to reduce the 35 per cent tax band by one-third, from £4,500 to £3,000 for single people and from £9,000 to £6,000 for married couples. Even without inflation this would mean an increase in tax for many workers. Combined with inflation it represents a plan for a massive increase in the PAYE yield both as a proportion of workers' pay and as a proportion of total taxation. As a result huge numbers of workers will find themselves pushed into higher tax bands with many paying 60 per cent by the end of the tax year.
I pointed this out in my statement on budget day when, sadly, some of the other socialist Deputies, in The Workers' Party notably, were welcoming this budget as reasonable, well-balanced and a tremendous improvement and benefit. Indeed, they could find no fault whatsoever with it. I have been glad to notice that recently The Workers' Party have had second thoughts on the matter and I hope they will now reverse their vote of 25 March last and vote for this amendment to oppose this massive imposition on PAYE workers.
With this single but significant exception, I must say Deputy Desmond's new financial proposals represent a considerable improvement on those he supported in January. I would give my support to most of them. I reject Deputy Desmond's suggestion that only the very well-off would benefit from my proposal. A single man or woman on £6,362 in 1982-83 will pay 45 per cent tax, that is on £122 or so per week which is more than £20 below the average industrial wage. If a person earns £8,362 over the year to next April, that is, about £160 a week, he or she will pay 55 per cent tax plus 7.5 per cent PRSI. In other words, on any extra pound some of these people could be paying more than 60 per cent tax all told, more than the richest people in the country.
A single person earning £10,362, or under £200 a week, will pay 60 per cent tax at the top rate. By the end of this year, with inflation and the cost of living rising rapidly, these kind of earnings could hardly be described as princely. Similarly a married couple with only one earner bringing in about £12,000 over the course of the tax year may be better off than many but could not be said to be rich in a country with no wealth tax, a small tax on big farmers, and very low capital and profits tax. Should they be asked to bear the penal burden of hitting the very highest tax rates? Young workers who are paid well below the average industrial wage will now find themselves paying £52.5 per cent of every extra £1 between PAYE and PRSI, making it difficult for them to marry and set up home. I can hardly believe the Labour Party and The Workers' Party want this kind of situation.
In view of the fact that Fine Gael and Labour opposed the Fianna Fáil proposal on budget day, 25 March, and then proposed an amendment to increase the lower tax bands again I must express my disappointment at their attitude since that date. Deputy Michael Noonan of my own constituency, Limerick East, made a strong statement on that day protesting that the budget produced a situation whereby people on extraordinarily low levels of income would be moving into very high tax bands. Today, however, he apparently finds this acceptable. Deputy Bruton described the amendment on 25 March, quite similar to the one I am proposing today, as designed to help the lower paid. I hope to hear something from Deputy Bruton today on that score. While I would prefer a system of tax credits as a more flexible and fairer system of taxation, my amendment nevertheless does benefit the lower paid and should be supported by all Members of this House who believe in genuine tax reform.