I move amendment No. 2:
In page 18, column (3), line 11, to delete "£1,628" and substitute "£2,104".
These amendments seek increase tax credit. Amendments Nos. 2 and 3 seek increase the married person's tax credit to 3,600 with an equivalent IR£ amount for the reduced tax year in 2001. Amendments Nos. 4 and 5 seek to increase the single person's tax credit to 1,800 while amendments Nos. 8 and 9 seek to increase the incapacitated child's tax credit to 800, again with the IR£ equivalent reduced to 74% for the year 2001.
These are my primary tax amendments on Report Stage. My party has always been of the view since tax credits were introduced that they are far and away the best means of reducing tax or potentially increasing tax in future years. They give the same benefit to all taxpayers, irrespective of what the marginal rate of tax is. It is a significant benefit over and above the system of tax free allowances we used to have. That case is now generally accepted and it is one significant reform which the Minister has instituted which I unequivocally welcome.
The Minister made a number of points on Committee Stage that he has begun to repeat today. He said that he does not believe that expenditure increases and tax reductions are mutually exclusive. Clearly, based on the Estimates for this year and last December's budget, he does not believe that now, but he has believed it for most of the last three or four years. When he first came to power he said that he did not see an increase in current spending over and above 4%. He went so far as to say that if inflation was higher than this figure, it would involve or entail real reductions in current expenditure. Clearly, the Minister has either changed his mind very dramatically or he misled us in the early stages of his regime. I suspect that he has changed his mind on the matter, or rather that he is accommodating himself to something which seems to make a certain amount of electoral sense.
It is important to acknowledge, as I do, if we are to have an intelligent debate on this matter, that this year's budget and Estimates are different. I acknowledge that the measure of the increase in expenditure and investment in services is about right. That was not the case in previous years when the Minister, albeit with a little smoothing of the figures, sought to keep within the targets he had set for himself. We need to sustain the level of investment that the Minister has instituted in this year's budget, assuming we maintain good budgetary numbers, in the next three to four years.
If one has a current budget surplus and a general Exchequer surplus, there are a number of things that can be done. One can reduce the national debt, reduce tax or increase expenditure. One can, as the Government has decided to do, broadly speaking with our support, set aside money for future liabilities through the 1% of GNP payment. One can do as the Minister has done and encourage personal savings: one can give money to people and seek to encourage them to tie it up for a few years. These measures are not all mutually exclusive and the fact that they are all happening is proof of this. They are not mutually exclusive, however, because our current economic circumstances are spectacularly good. Our current budget surplus is in the region of 9,000 million, which is totally unprecedented in our economic history and which we are unlikely to experience for many years to come. We can do everything and the Minister, with half an eye on the forthcoming general election, is doing just that. From a purely electoral point of view, if one was to discount the political and economic considerations, perhaps he is doing what he sees as right.
That will not remain the case into the future. We will have to make choices. I am not saying that these are absolute "either-or" choices, but they are choices which oblige us to set priorities. We must state what we consider to be the priority of Government for the next four or five years. That priority is investment. This is not to the exclusion of reducing the national debt, something we must do. Neither is it to the absolute exclusion of delivering on some tax cuts, something we must do also. It is no more or no less than a statement of political priority; it is a matter of saying that one believes that in four or five years all of us as a society need to be better off, not just have a few extra pounds in our piggy bank.
I have no wish to paint it as a clear choice between the rights and interests of "society" and those of individuals because the two are inextricably linked. Is it in our interests, as a society, that we have a decent public transport system? Of course, it is. It is also in each individual's interest that he or she should be able to get to work or school or to go shopping in town without the hassle and oppression from which one currently suffers. Is it in our individual and collective interests that we have a better and more equal health service? It is. To attempt to draw an artificial distinction between individual interests and the interests of society generally does not serve the argument well.
In his earlier comments Deputy Mitchell appeared to suggest, with some justification, that there are difficulties in spending now. There are constraints. They exist in the construction industry and there are labour constraints in some service sectors. There are many areas, however, where there are no constraints. An additional few dozen buses have been put on Dublin's streets in recent years, for example, but many more could have been provided. Hardly anything has been done to increase the rolling stock available to Iarnród Éireann, either for the DART or mainline rail services. The plans have been in place for at least two or three years, but they are only now being implemented. As these items are purchased abroad, I cannot see how their purchase could have any impact on inflation and the constraints in our economy are, simply, irrelevant in that regard.
There is no reason that we should have to ask teachers and students to raise funds for the daily maintenance of schools. I cannot see any constraints that should restrict the Government from increasing capitation grants and grants for maintenance, caretakers and so forth to a level which would allow schools to get on with the business of teaching, assuming we leave the current difficulties aside. A great deal can be done almost immediately in terms of the investment of public moneys without being affected by the constraints which are apparent in, for example, particular parts of the labour market.
We have debated my amendments at great length and I can anticipate most of the Minister's response. There was a brief discussion on Committee Stage on the tax credit relating to the incapacitated child and I understood the Minister might discuss that element of the tax credit on this Stage. I would be obliged if he would do so.
I said on Committee Stage that I have a real difficulty with the amendments tabled by Deputies Mitchell and McGrath which focus on the PAYE allowance. This allowance is being doubled by the Minister from £1,000 to £2,000 and converted back to a tax credit. The Fine Gael amendment seeks to quadruple it. I understand the grá the trade union movement has for the PAYE allowance. I also understand the difficulties it gives rise to. I have no difficulty with the increase from £1,000 to £2,000; we can live with it, provided it is sustainable. We should not forget, however, the debate on individualisation which took place about 15 months ago. If we choose to use the PAYE allowance to remove people from the tax net, we will take a considerable additional step on the road to individualisation. It is, effectively, individualising the personal allowances, something with which I profoundly disagree.
We should seek to remove those on the minimum wage from the income tax net, but we should try to do so by increasing the personal tax credit while retaining full transferability between spouses. We should not opt to do so only on an individual basis because the PAYE allowance, or the employee tax credit as it is now called, is not transferable between spouses. It is a cheap means of doing something that is politically popular, but we should resist that temptation. We should do it properly, in a way that maintains transferability between spouses.