Vol. 498 No. 6
39 Mr. Sargent asked the Minister for Finance his views on the desirability of shifting the tax burden in society away from personal endeavour in the from of employment or self-employment and towards corporate profits, environmentally degrading activities and the appreciation of capital. [27293/98]
In my budget speech at the start of this month, I restated the Government's commitment to reduce the burden of personal taxation in order to reward effort and improve the incentives to work. I also stated my view that high tax rates in many areas of taxation — personal, corporation, capital, inheritance — lead to disincentives, evasion and finally less yield to the Exchequer, constraining Government in implementing socially progressive policies.
Ireland's low rate of corporation tax for manufacturing and certain internationally-traded services has been one important element in attracting foreign direct investment and in encouraging, domestic enterprise. The policy has contributed to a substantial increase in employment. The yield from corporation tax has increased significantly during the present decade. With regard to capital taxation, there has been a significant increase in the yield from this area. Some of this increase may be attributable to the reduction in the rate of capital gains tax in the 1998 budget. The buoyancy of these tax categories has supported the significant reduction in the burden of personal taxation which I introduced in my first two budgets.
In budget 1998, I reduced both the standard and higher rates of tax by 2 per cent, and in budget 1999, earlier this month, I introduced a major reform of the tax system to remove as many people as possible from the tax net and to further maximise the incentive to work. I also made reference to environmental taxation issues in the budget speech, and among the measures I announced in this context were a reduction in motor LPG and an increase in the vehicle registration tax on certain motor vehicles.
41 Mr. Howlin asked the Minister for Finance the reason he did not act on the recommendations in relation to green taxation in his Budget Statement; and if he will make a statement on the matter. [28040/98]
As the Deputy is aware, it is not possible for a Minister for Finance to act on all the proposals, pre-budget submissions and recommendations which are received.
With regard to recommendations in relation to so called green taxation, I refer the Deputy to the following specific measures which were announced in my budget: restructuring of the VRT rates; the tax incentives for park and ride facilities; that monthly rail and bus passes provided by employers for employees will not be subject to benefit-in-kind tax; the review of the introduction of benefit-in-kind tax on car parking spaces made available by employers; and a reduction of excise duty on liquid petroleum gas. These particular initiatives were sought as part of a process of greening the budget.
The Deputy will also, no doubt, be aware that I announced in my budget that tile formulation of any agreed policy measures on green taxation would form part of the discussions on the successor to Partnership 2000.
As I said, in the budget, we will need to put in place an agreed indirect tax policy which will assist in meeting our international obligations on CO 2 emissions. However, such a policy needs the support of all sections of the community as represented by the social partners.
