On a point of order, this morning I received a nice letter from the Ceann Comhairle, but the news was not very favourable as the Chair is disallowing four of my amendments. I can understand why two were disallowed, but not the other two. It is suggested that my amendment to restrict a proposed ministerial provision is in some way imposing a potential charge on the people. Since the House has not yet made a decision to introduce the Minister's proposal, I am entitled to restrict its provision until such time as the House makes its decision. All I am seeking to do is to set conditions on the Minister's proposal, I am not introducing a charge in respect of a concession that is already in place and enjoyed by the Irish people. I question the Chair's——
Finance Bill 2004: Report Stage.
I will give a more detailed ruling when we come to the amendment, Deputy.
We may not reach the amendment.
It is not appropriate to discuss all the amendments now.
It is important to put down a marker in respect of the ruling. I do not think——
You have put down your marker. To which amendment are you referring?
Amendments Nos. 31 and 33. Will the Chair communicate with me on this issue?
I object also to the letter I received indicating that a number of my amendments are out of order, in particular amendment No, 1. In that amendment, I call for a new commission on taxation, 20 years after the first commission.
The Deputy will have an opportunity to debate that on amendment No. 1.
I want to make a point of order. The amendment has been ruled out of order on foot of it constituting a charge on the Exchequer. How can it constitute a charge on the Exchequer when we have not made a decision to do that?
We cannot have a debate on that here.
In the same vein as the previous two Deputies, I received a letter this morning indicating that five of my amendments have been ruled out of order because they may involve a charge on the people. I refer to one in particular, amendment No. 75, on page 18 of the amendment list, which seeks an extension of the levy on certain financial institutions. At no time in my deliberations on the Finance Bill was I seeking to impose a further charge on the people. The financial institutions are a very different body entirely.
The Deputy has made his point.
I am asking the Chair to revisit the ruling.
All amendments were carefully considered and the Chair ruled in accordance with Standing Orders.
On what basis can an extension of the levy on banks and other financial institutions be viewed as a charge on the people? That is not the case.
There are 83 amendments on Report Stage and a small number have been ruled out because they are not in accordance with Standing Orders.
You have not explained why the amendments have been ruled out of order.
The Chair does not intend to start explaining why amendment No. 75 has been ruled out of order.
I have put a great deal of work into preparing to engage in this debate and I am pointing out the reasons——
I am sure you did and if you have a problem, I ask you to come to my office.
I only received this letter when I came to the Dáil this morning.
I ask the Deputy to resume his seat.
I had no sight of that letter prior to coming in here. I strongly object to the ruling, the banks are not the people.
Amendment No. 1 has been ruled out of order as it involves a potential charge on the Revenue.
I move amendment No. 2:
In page 7, between lines 16 and 17, to insert the following:
"1.—The tax bands, exemption limits and tax credits relating to income tax set out in the Finance Act 2003 are hereby increased by 7 per cent with effect from the tax year 2004.".
Before I deal with this amendment I repeat that I regret the Chair's ruling on my first amendment because a new commission on taxation, which would seek to give parity in taxation matters to ordinary PAYE workers who in increasing numbers will pay tax at the 42% rate, would not constitute a charge on the people.
In amendment No. 2 I propose to give back to PAYE taxpayers moneys taken in stealth tax. In the December 2003 budget the Minister perpetrated theft and the greatest con trick ever on ordinary taxpayers, the workers of Ireland. People who in earlier decades avoided paying their due by putting money off-shore are now paying up and that tax money is being returned to the State coffers. The Minister is choosing to give it away in tax breaks to hotel owners, private sports injuries clinics, private hospitals and in very generous pension tax breaks for the owners of small self-administered pension schemes. By the choice of Fianna Fáil and the Progressive Democrats, the only section not sharing in this bonanza from tax returns by people who had invested money abroad to avoid paying tax in this country is the ordinary hard-pressed PAYE taxpayer. In this budget the Minister chose to give the most miserable tax breaks to ordinary PAYE workers so that his friends, the lobbyists, builders and owners of private hospitals could enjoy a tax bonanza on the backs of compliant taxypayers.
The tax structure is riddled with loopholes and tax breaks for the super wealthy. At the same time, contrary to the promises made by the Government in the course of the last election campaign, at the end of this year more than 50% of PAYE taxpayers will pay tax at the top tax rate. This constitutes the greatest silent theft of tax by a Minister for Finance from the back pockets of ordinary workers. It is a painless form of taxation because nothing was mentioned about it in the budget. The Minister is the "Oliver" McCreevy of the Irish tax system, dipping into the back pocket of every taxpayer. Like a good pickpocket, it is done silently and one does not work out what he has lifted until one sits down at the end.
Compare what the Minister is doing for the ordinary taxpayers with the special tax breaks that have been extended in spite of the report of the Revenue Commissions. We were solemnly told during the debate on the Finance Bill a year ago that the tax breaks were being brought to a close. The Minister told us the shutters were being brought down on property based tax breaks because they were poorly designed, some had run their course, some were badly targeted and in some areas they had a negative effect, for instance, the tax breaks for nursing homes.
The Minister has been told time and again, although the supply of nursing home beds are increasing, it is not making the cost of beds any cheaper. In spite of the introduction of this tax break it has coincided with nursing home chargers in the Dublin area increasing to between €600 to €800 a week on average. Many families do not benefit from the nursing home subvention for one reason or other. This is taking money from the ordinary compliant taxpayer to give it to people who are sufficiently wealthy to be in a position to invest in property and benefit from one of the Minister's pet schemes. It is Robin Hood in reverse.
Like other Members of the Opposition, I had the opportunity a half hour ago to witness as nauseating a display of political theatre as I have seen in a long time. It involved the cream of Fianna Fáil Deputies, including Deputies Glennon and Keaveney, the latter of whom was actually carrying a hurley. Rather than intending to bring the hurley to the House to hit the Minister for Finance on top of the head, she was on the plinth for a photo opportunity with a couple of Gaelic players. They were being told that Fianna Fáil backbenchers were pleading for some kind of tax justice for them and their colleagues. I hope my Opposition colleagues agree that there will be an opportunity for Deputy Keaveney and other Fianna Fáil Pharisees to vote in this House in favour of the very modest proposals put forward by the Gaelic Players' Association.
The dilemma of the association which involves people who have given a professional commitment to sport is a microcosm of what is wrong with our taxation system. As I told the Ceann Comhairle earlier, this is why I am so disappointed by the rejection of the Labour Party's reasonable proposal of a fresh commission on taxation to examine the system. The question should be how to establish a fair system of lower taxes in which everybody pays his fair share. If we maintain tax breaks, it should be as a system of necessary incentives for the State to encourage additional projects which would not otherwise be undertaken by private investors or individuals. I have welcomed the proposal on research and development, though I fear they may be open to abuse. We want a commission on taxation which brings fairness and sanity back to our taxation system to ensure that honest, compliant taxpayers are not ripped off by Deputy "Oliver" McCreevy.
The provisions on sport are typical of the approach of this Minister. No amateur sport, be it rugby, Gaelic games or soccer, benefits from the Minister's tax breaks. The Minister has chosen to give significant tax breaks to professional athletes in respect of their professional sports earnings if they are resident in Ireland. These considerable tax breaks amount to a recoupment of up to 40% per annum of the professional sports earnings of the professional sports person for the best ten years of his or her sporting career. It is not untypical for golfer or jockey to have taxable earnings from sport of €200,000 or more per annum during their highest paid years. Assuming the sportsman is using some of the Minister's tax breaks, he might have an effective tax rate of 20% and, in his best years, be paying, conservatively, between €30,000 and €200,000 in tax. Under the Minister's scheme, the sportsman will receive on retirement from sport a refund recoupment of 40% of the tax paid during his best ten years. The recoupment figure will be from €30,000 to well over several million if the sportsman is in the top earning sports category.
This scenario should be contrasted with the circumstances of GAA players who, when they reach the highest level of county football and hurling, train four to five nights per week and travel long distances to training. During the playing season, these players are heavily committed to their sport. Most of these sportsmen work at club, community and, in particular, school level. Nobody denies that great numbers of these players contribute significantly to their communities. A GAA player's career will, like that of a professional, last over an eight to ten year period. They have to forego other earnings to devote themselves to their sports careers and the enjoyment they bring to fans everywhere. Their reward is modest grants from cash-strapped county boards or the national system.
The players have made a proposal. I said on Committee Stage that while it is flawed, the idea behind the proposal is reasonable. With the agreement of all parties, we could work it out. We should look at what GAA players actually get. They are given hints by this morning's hurley wielders in Fianna Fáil to the effect that the party will look after the GPA. The Minister is invited to rub shoulders at the annual general meeting to provide the lads with the good news. However, when it comes to the Finance Bill, the very wealthy are well ahead of the Gaelic Players' Association in the queue. Fianna Fáil says that it is sorry and, while its heart is in the right place, there is nothing it can do for players. That is to give them the two fingers.
Like other taxpayers, members of the Gaelic Players' Association are entitled to feel they have received exceptionally shabby treatment from the Minister. Fianna Fáil Deputies rushing to embrace the players to say they are in favour of a degree of fairness of tax treatment for themvis-à-vis professional athletes is a farce. The Minister, as “Oliver” again, has to say he can provide for the multi-millionaire golfers and a couple of multi-millionaire jockeys, but not for dedicated players who are de facto professionals in terms of the commitment they give their game. This is a small example of the unfairness which underpins the Minister’s approach to this year’s Finance Bill.
The Minister was in confident form at the shindig which took place at Citywest at the weekend. The tax money is flowing in. Due to the campaign waged for 20 years by the trade union movement, the Labour Party and others, people who have dodged their taxes are now being asked to pay back their fair share, which is only right. The Minister is sitting pretty and smiling in the knowledge that the result over the next five years will probably be a bonanza of between €0.5 billion to closer to €2 billion. The latter sum is more likely in my estimation when the accounts people established in Northern Ireland to which money was not transferred through institutions in this jurisdiction are assessed.
My first amendment suggests that the Minister's Finance Bill this year is fundamentally unfair. It represents a series of extended tax breaks for the rich and able in society. There are tax breaks for private hospitals and a scheme which makes it easier to avail of tax breaks for sports injuries clinics. There are tax breaks for people who own, rebuild or refurbish hotels. The latter breaks were provided on the basis of a one-page letter from the Irish Hotels Federation which I displayed to the Committee on Finance and the Public Service.
More tax breaks have been provided for people involved in pension schemes. Permission to borrow will allow some of the small, self-administered pension schemes to be more efficiently levered from a tax point of view. The cost to the Exchequer will be high. There are 2,500 such schemes operated by the most well~off in society. While everyone believes in people providing for their pension requirement, why should someone on a modest wage that cannot invest such money in a pension be disadvantagedvis-à-vis a company director or owner? It is similar to what President Bush is doing in the United States. There are small, niggardly concessions to workers contained in the small print while in the large print there are multi-million euro concessions to the wealthy.
The Labour Party amendment seeks to engender a sense of equity and fairness. Ireland is now a more prosperous country and all parties in this House laid the basis for this. People made sacrifices to ensure the economy prospered. The proceeds of this sacrifice have not been given to widows, for example. The few additional cent they receive in the sad period when they change over to widowhood was clawed back by the Minister for Social and Family Affairs, Deputy Coughlan. This was one of the mean cuts she made in the overall €48 million cut in social welfare. The Minister did not deign to give us detailed figures of the cost of the bonanza he has given to the wealthy in this Finance Bill.
I urge my Opposition colleagues to support the amendment. It suggests an increase of 7%. The Minister did nothing either last year or this year and therefore owes ordinary PAYE workers on the double. The allowances he gave them were niggardly in the extreme.
Last year, the Minister moved to introduce PRSI and PAYE for benefits-in-kind. This reform move has been signalled for a long time and is correct in principle. Who does it impact on most? It impacts most on lower paid workers such as those in multinational companies that received bonus bonds to spend in certain shopping centres. The Minister has failed to reform PRSI in this Bill. As a consequence, the extension of PRSI and PAYE to benefits-in-kind means workers who are not particularly well paid are heavily hit. Our tax system is now crying out for reform. The Minister's mantra for the past seven years is that he favours lower personal direct taxes. While he favours lower PAYE rates and lower capital gains tax rates, the implication of this is the better-off are the biggest beneficiaries. The Minister does not say that he has consistently favoured the highest VAT rates in Europe. People on low incomes that must spend much of their money on fuel and electricity are hit by the Minister's high VAT rate. When the Government says it favours low taxation, it is low taxation for wealthy people and high indirect taxation for ordinary people.
Our system is adrift. The Minister has received a good press until now. The press is only now cottoning on to what has happened when it realises how many ordinary workers now pay the top rate of tax. In the run up to the previous general election, the Minister for Enterprise, Trade and Employment, Deputy Harney, promised that only 20% of workers would pay the top rate of tax. The figure is now more than 50%. This figure is to be found at the back of the budget booklet and states how many more people the Minister expects to pay tax at the top rate of 42%.
The 42% rate is not a low rate of tax for someone with a marginal income who moves into the top rate because of overtime worked.
The Deputy's party opposed every reduction to the top rate in the past five years.
Deputy Burton has the floor.
As the finance spokesperson for the Labour Party, I have told the Minister that I favour low marginal rates of taxation as they are effective in reducing poverty traps. However, people have not been told that the lower rates are not low for someone who earns €28,000, which is not a large salary, and who, having worked a few weeks' overtime, moves onto the 42% marginal rate. The headline low rates are great for our new class of millionaires, bloodstock breeders, etc. While the rates are great for the Minister's pals, they are not great for ordinary workers.
As I have already pointed out, in a series of unprecedented mean cuts, the Minister for Social and Family Affairs took €48 million from the weakest and most defenceless in society. What is the response of the Minister for Finance? He hopes that, in the run-up to the next general election, he will have a sufficiently large fund built up by which he can tell people that he is giving them back some of their money. However, people should beware. When the Minister returns the money, he will return it to the wealthy and those on modest incomes will receive less.
The tax system is facing serious structural problems. The Minister has promised to introduce a carbon tax next December. We have had no detailed debate on this. Five different senior Ministers have spoken about carbon taxation and I hope these five different opinions will converge into a strategic position. This decision has major implications for employment, tax costs and the environment. What have we heard from the Minister? We have heard nothing. If I know the Minister, the impact of carbon taxes will simply lead to an increase in fuel prices, especially the price of coal, turf and briquettes. Who will then suffer most? It will be old age pensioners and other elderly people, people living in uninsulated and badly heated homes, and those living in rural areas.
One does not have to be Einstein to work out that we are drifting towards a system where, because of the Minister's failure to act on carbon taxation, multi-million euro industries, such as the cement industry, will be the major beneficiaries from permits for trading emissions. These will be worth many tens of millions of euro on their balance sheets. As with intellectual property rights and milk quotas, they will be saleable values that will be handed out free by the Exchequer. On the other hand, elderly persons in rural areas living in badly insulated homes will end up paying significantly increased fuel costs. Will there be any counter-compensation? In the meantime there will be a crisis in some of our existing industries and the jobs therein. There will also be a crisis in inward investment which has high energy requirements, and we are getting nothing from the Minister.
There is need for a commission on taxation to have a detailed look at the tax system which will provide an efficient and effective system and give a fair deal to PAYE taxpayers, widows and pensioners. The tax concessions the Minister presented to the PAYE sector in the budget are little short of disgraceful. The purpose of the Labour Party amendment is to provide, even at this late hour, some justice to the PAYE sector.
It is ironic that we are going to have a very truncated debate on the Finance Bill on the eve of Cheltenham. To adopt that theme in regard to this amendment, one can be sure it will not be ordinary workers who will get the beef or salmon. It will be the best mates of the Minister and other colleagues who will reap the benefits of the Finance Bill. A week before Cheltenham, we are already making clear our preferences on where the winnings should go from the Finance Bill.
The process in which we are engaged of consideration of the budget and the subsequent Finance Bill is almost wholly designed to prevent proper scrutiny of the decisions being made here. One might ask why ordinary taxpayers have been left without any increase in their allowances in the last two years. One would have to consider the very poor scrutiny of spending and tax decisions in the Oireachtas. In the 24 months prior to the last general election, the Government increased spending by 48%, an incredible increase in spending in a very short time, and it secured nothing of value to match it. It is the ordinary punters who will pay the price for this, as we have seen in the last two budgets.
We have also seen the poor way in which we scrutinise tax proposals. The Comptroller and Auditor General had to call attention to the fact that of 91 allowances which the Minister generously provides, only 48 have any proper costing done, and none have been the subject of a cost benefit analysis.
We must look seriously at our attitude to tax expenditure. During last year's Finance Bill, the Minister came riding in on his charger at the very last minute of Report Stage with a tax concession which was uncosted. No one knew the benefits of it but it was possible within the financial procedures to do this. No doubt the Minister was doing what many of his predecessors did. We must grow up in regard to our attitude to tax expenditure. The Comptroller and Auditor General pointed out that tax expenditure is worth approximately €4.8 billion. If one were spending even €1 million in one of the Departments, one would have to produce an estimate and bring it to this House for scrutiny. One would have to produce an estimate again after the budget. One would go before the estimates committee to, at least, examine it, even though it would be a bit late to examine it half way through the spending year. One would then have to account for it in the appropriations account. The Comptroller and Auditor General would crawl all over the spending to ensure it was proper and right. As far as tax expenditure is concerned, it is dished out and there is no scrutiny. We need to wake up and adopt more modern and strategic ways of examining the decisions being made.
I support the trust of the amendment. It is important to get away from the approach whereby the Minister uses inflation as his hidden tax collector. He has done that by abandoning indexation, not just in respect of income tax, but in respect of capital gains tax. It is a general decision the Minister has made that inflation is to be the ally of the Government in raising taxes. This is a very retrograde step. It means that paper money rather than real earnings is being taxed. It means people will get poorer as a result of this type of tax code, which is why we need to move away from it.
There will be plenty of time to deal with this during the debate on the amendments. The way we handle the debate on the budget and the Finance Bill is out of the ark. It kills off proper scrutiny of spending. It encourages a system whereby a very narrow range of choices are considered by Ministers on the day. The bureaucracy goes on. All the schemes go on and there is no proper debate on the strategic choices we need to make. What passes for serious debate about the economic future in this House is often a sham. We need to move away from that and provide proper content in a timely way to this Oireachtas in order to make mature decisions on the matter. The Minister, who is a reforming Minister — perhaps we do not agree with everything he does — should make one mark in the remaining period he has as Minister for Finance. He should begin reforming the financial procedures so we can have a more intelligent debate on the choices we face as a community.
It is interesting that there are 83 amendments on Report Stage of the Finance Bill which followed a budget speech that must have been the slightest in years in terms of its content and size. In fact, it needed to be padded out with the Minister's announcements on decentralisation or, as I prefer to call it, his "once-off Government Department programme coming to a town near you." Some 30% of the amendments are tabled by the Minister, which bears out what Deputy Bruton said on the scrutiny and decision-making process in formulating financial legislation. If a bit more thought was put into the original budget speech and the Finance Bill as initiated, I do not think there would be 83 amendments to be discussed at this stage, 25 of which are in the name of the Minister. The Minister appears to have accepted one of my amendments on the tax break for research and development and its effect on small and medium sized-enterprises.
On the amendment itself, the arguments have already been well made in regard to the refusal to increase the bands over the last two years. This is the Minister's revenge for benchmarking. The large-scale payments for low and medium paid public servants will immediately be eaten up by moving them into the higher tax bracket as a result of the Minister's inaction in this area.
As Deputy Bruton said, there is a need for future Ministers for Finance when introducing future finance Bills to have legislative control which would automatically take into account the rate of inflation. One of my amendments seeks to do this in terms of tax band exemption limits and tax credits. This measure, which already exists in other jurisdictions, needs to be adopted here, not only in terms of legislative control over automatically increasing the band exemption limits and tax credits, but also in terms of further fiscal controls over the type of accelerated spending that could be engaged in. Three months before the local and European Parliament elections, we see on a smaller scale the same process that took place two years prior to the last general election. This type of stop-go expenditure for political purposes should not be allowed. In other jurisdictions legislation has been put in place to prevent people from politically abusing the process.
I support Deputy Burton's amendment and I hope that by 7 p.m. we will have come close to debating most of the 83 amendments. Amendments Nos. 81 to 83, inclusive, in my name are the last three on the paper. I have an interest in ensuring that Report Stage progresses as speedily as possible.
I will certainly assist my colleague, Deputy Boyle, to reach his amendments.
I support Deputy Burton's amendment which seeks the increase of exemptions, tax bands and tax credits in line with inflation. I hope that the Minister for Finance, Deputy McCreevy, will yet surprise us by acceding to this proposition. On Committee Stage, I asked him to explain the Government's view on what the taxation system is about. There is a clear dichotomy between the Minister's view of what taxation is intended to achieve and my view. I view tax revenue as a key resource of all the people which should be designed to ensure the just distribution and use of the nation's wealth. The use of tax revenue is as important as its distribution.
As a result of the budget for 2004, more than 50% of taxpayers in the State will be pay tax at the higher rate of 42%. This is not reflective of any major or magical increase in income levels or earnings. It is not that people are earning so much that they suddenly find themselves in the 42% rate. The reality is that many continue to struggle to make ends meet, especially those supporting families. That 50% ranges from ordinary industrial workers on average industrial wages to the highest paid people in the State. However, on an examination of the 400 top earners, we find that those who should pay their fair share only pay as little as 18% in tax. They are able to exercise and mould the measures that the Minister for Finance has introduced over a succession of budgets to their advantage when ordinary workers cannot even consider accessing these.
Inequality is perpetuated by the Minister. If he decides not to support this amendment, under the administration of taxation, he will continue to perpetuate the inequalities that have become inherent in society. It is important to recognise that the burden of tax is shouldered disproportionately by the PAYE sector. Many people on average and below average incomes are the ones who suffer most. They suffer because of the Minister's unwillingness to address the important issues of tax bands and at what various points people are brought into the system.
Amendment No. 3 addresses this issue for those who live on and below the minimum wage. It also refers to the constant introduction of new stealth taxes which have been a feature of the Government's approach to compensate for the loss of earnings from corporation tax. Through the steady introduction of stealth taxes, the Government has increased its tax intake. Those who shoulder these stealth taxes are those who can least afford to pay. They are the people who are already suffering in society, especially those who are slightly above the minimum wage but still in the tax bands and for whom medical cards, for example, are not accessible. The Minister for Finance must be conscious that these people are suffering, especially those bringing up families. These are the people who would benefit by the adoption of this amendment and the subsequent amendments Nos. 3 and 7.
I support Deputy Burton's amendment. I encourage the Minister for Finance to recognise that these are not just exercises in arithmetic. It is not a case of tweaking here and changing there but about recognising the daily reality with which ordinary people must contend. I assure the Minister that this reality is a far cry from that to which he will be exposed at Cheltenham in the coming week. The people to whom I refer will have no such option as to how they will spend next week. It will be a challenging and worrying week, like every other, as they continue to wrestle with the concerns and responsibilities of child upbringing in this unequal society.
This amendment requires a general increase of 7% to be applied to all tax bands, exemption limits and tax credits for 2004. The cost of this measure at €440 million in 2004 and €605 million in the full year is more than double the cost of this year's budget income tax package of €287 million in the full year.
This year, as last year, it was decided that the available resources would be focused on the lower paid and the elderly. It is fully in line with the commitments contained in An Agreed Programme for Government to deliver further real improvements to pensioners and people on low incomes. Over the next five years, it is intended to achieve a position whereby all those on the national minimum wage are removed from the tax net.
Since 1997, the Government has made significant improvements as resources have permitted. The income tax system is in a much better position than in the past. Both the top and higher rate of tax are six percentage points lower than they were in 1997. The standard rate band has been significantly increased and the tax credit system is fairer than the allowances system. Since 1997, average tax rates have fallen for all categories of taxpayer. For the person on or below the average production wage, Ireland has the lowest tax rate in Europe and the OECD. The burden of income tax on the average worker has dropped significantly over the past seven years. The average tax rate for a single worker on the average industrial wage has dropped by ten percentage points from 27% to 17%. In addition, it is expected that, in 2004, those earning at or under the average industrial wage will contribute about 6% of the total income tax take. The equivalent percentage in 1997 was 14%.
An increasing proportion of those on the income tax record — more than 35% of all income earners — pay no tax. They are outside the tax net as a result of tax changes introduced over the past seven years. The number in the exempt category of income earner has increased by more than 75% from around 380,000 persons in 1997-98 to 669,000 in 2004.
The Government is committed to sustaining economic growth, strengthening and maintaining the competitive position of the economy and maintaining full employment. Responsible fiscal policies are central to the achievements of these aims and the proposal outlined by the Deputy would be inconsistent with such an approach.
Regarding the amount of money contributed by high income earners, the Revenue projections for 2004 indicate that the top 1.7% of income earners — those earning more than €150,000 per annum — will contribute more than 28% of the total income tax yield.
I point out that 35% of all income earners are now exempt from tax and 90% of the national minimum wage is free of tax at higher minimum wage levels. We have cut the standard rate of tax to 20%. We reduced the lower rate by 6% and cut the top and standard rates by 6%. As I recall, every decrease in the top rate was opposed tooth and nail by the Labour Party in particular — I think Deputy Ó Caoláin is in that camp as well. I find it a bit ironic that Deputies are criticising the 42% rate when, in every budget and Finance Bill, it was opposed time after time. That should be borne in mind.
For Deputy Boyle's information, the purpose of Report Stage is to allow consideration of the matters that were raised on Committee Stage. Of the 25 Government amendments, some respond to issues that were raised by Opposition amendments on Committee Stage, and the Deputy should hardly suggest that I should not respond. I think that about half of those 25 amendments respond to suggestions the Opposition made. Some respond to technical issues that outside groups raised following the Bill's publication and a small number relate to drafting mistakes, which are normal in any Bill. For a Bill of the size of the Finance Bill, the number of Government amendments is not unusual. Indeed, it is smaller than that for many Finance Bills in the past and very much smaller than for other Bills.
I thank the Minister for responding to some of the Labour Party's proposals. I hope we have time in the debate to reach amendments Nos. 27 and 77, which are to do with the preparation of tax returns and under which taxpayers will be obliged to give information about the use of various capital allowances. I welcome that. I would like a detailed examination of it because it is an important development. I am glad the Minister has acceded to the Labour Party's request to start compiling that information because it is disgraceful that the Revenue Commissioners indicated in the survey of the top 400 taxpayers that, in the survey year a couple of years ago, those 400 taxpayers benefited to an inordinate extent from property-based tax breaks but, in many cases, there was no information on the cost of those breaks. I thank the Minister for acceding to the request I made as Labour Party finance spokesperson to get tax returns to cost fully, but I would like an opportunity to discuss how that will operate and I hope we will have time for that.
I also thank the Minister for referring to the Revenue Commissioners' summary of who pays tax. The Minister has many civil servants working for him. I found the Revenue Commissioners' report on who pays tax tough. I am only an accountant; I know that the Minister is as well, but he has others to crunch the numbers for him. The Minister mentioned that high-income earners are people who earn more than €150,000 and that they are now paying about 28% of tax. We should go behind those figures. I would like to know how many of those are dual-income couples. I suspect many of them are. Two senior civil servants who are married to each other would have an income way over €150,000. I see Deputies smiling. Those civil servants might not be married to each other after decentralisation is completed. We are again talking about the PAYE sector, that is, the top-paid public employees, paying most of that tax. I would like more detailed information on that from the Minister because the Revenue Commissioners' summary of those figures is done not statistically but in gross figures, and it is awfully difficult for someone such as me, who is doing that work on her own, to work out who pays that level of tax, because I do not get any research back-up.
I welcome the Minister's bringing out the figures because we could have a good debate about who pays what tax. Deputies should bear in mind that two senior teachers, gardaí or civil servants who are married to each other, if the civil servants stay married after the Minister has completed decentralisation, would be in the top-earners bracket. We cannot therefore simply say that such people, who are all traditional PAYE workers, are paying their fair share of tax. I hope that they are paying their fair share of tax because they ought to be, but what about the non-residents who are at every race meeting and fair in the country, the horse breeders, who have tax exemption, and the new super-elite sportspeople, who will get a 40% rebate on their best ten years? Such provisions are the reasons the tax system is skewed against ordinary PAYE workers, even if they are earning relatively good incomes.
I hope that what the Minister has just said is the beginning of a debate in which we show that, although what he has done appears to be headline tax breaks for everyone, when one reads the small print, it becomes clear that those breaks really benefit the super-well-off in Irish society and do not benefit ordinary PAYE taxpayers. That is why I call on the Minister to accept the Labour Party's amendment to acknowledge the impact of inflation. By failing to increase the tax bands and credits, he is, like Oliver Twist, dipping silently and stealthily into the back pockets of every ordinary PAYE worker in the country. What is more, as he has indicated, he is confident that he is getting away with it, but I think that people are catching up with him.
I ask the Minister for further information about the statistics that he has just given us. He says it is anticipated that 1.7% of the top income earners for 2004 will pay 28% of the income tax that will be received. We are in lies, damned lies and statistics territory because we do not know whether that 28% corresponds to the share that those taxpayers already have of the national wealth. The Revenue Commissioners' report of 1999-2000 on the top 400 earners indicated that the proportion of income that those earners paid in income tax was much less than the proportion that the average taxpayer paid. We need to be informed of whether that is the case. As Deputy Burton said, that statistic does not take into account all the income that has been earned in Ireland as a result of the loose residency laws that we continue to have.
The second statistic the Minister supplied was that, in 1997, those on average incomes and less contributed 14% of the total payment of income tax and that that had reduced to 6% in the past reckonable year. I argue that that is a direct result of an increase in the distance between those on the highest and lowest incomes. It is, in effect, the result of McCreevy economics. The ability to pay tax on average and lower incomes has been affected because the proportion of the national wealth that those on such incomes have has reduced. That is why the discrepancy arises.
The Deputy is not correct. It is more a factor of an increase in the number of people getting out at the bottom of the scale.
The fact that 90% of the national wealth——
That is the reason for that. If Deputy Boyle does the sums, he will work that out.
The reality is that 90% of those on——
If Deputy Boyle does a little maths, he will realise it.
I argue that it shows the growing discrepancy between those with and those without in our society. It is a fairly shallow statistic to quote, and the first statistic is the more important. We need to know what share of the national income those on the highest incomes, above €150,000, have and what their average tax payment is compared to the average taxpayer. That would be real information that the taxpayers of Ireland deserve to know.
In his reply to Opposition Members' contributions, the Minister made the point that average taxes have dropped over the period of his stewardship of the Department of Finance, but — this is a big but — what is the reality for, in the first instance, those on average incomes and below who depend on their own transport to access their work? Have they benefited from the so-called average tax drop over the period? No, they have not.
Taxation has a wide application. The Minister should consider the increases in vehicle registration tax, VAT and motor tax. The excise duties on petrol and diesel were increased again in the most recent budget. All of this has an effect on ordinary people. These are stealth taxes. What about the increases in VAT that have applied across the board over the same period? These affect everybody because we all pay tax on consumables. Everybody in our society is a taxpayer from the cradle to the grave. Everybody is caught up in the tax system. That is a fact of life.
The stealth taxes being proposed will affect people in a range of different areas. The first-time buyer's grant was done away with more than a year ago and now a development charge is being introduced across the board. The Minister may wash his hands, Macbeth-like, of responsibility, saying it is a matter for local government, but the effect is exactly the same no matter whose signature is on the order. Whether it is a managerial order or a ministerial order, the net effect is to decrease dramatically the spending power and room to manoeuvre of ordinary people who are struggling to survive. Those are the people for whom I am most concerned.
The Minister made an observation about my and my party's reactions to previous changes in taxation. He should make no mistake: while I do wish to see fewer people at the lower end of the income scale within the tax bracket, I have clearly stated to the Minister in one budget submission after another that a further, higher tax band should be introduced for incomes of more than €100,000. The Minister will need to consider this seriously in the future if he has not already done so. He should not be afraid of it. People are prepared to pay. The Minister needs to effect change in the delivery — in how the money is spent on people's behalf. If they receive services in the areas of health, education and infrastructure, which have been neglected in the past, they will be far more tax-compliant. Throwing money at problems is not enough.
I do not wish to go over the discussion about taxation again in the manner of a wide-ranging Second Stage debate. Even organisations such as the Combat Poverty Agency, in its analysis, said that the 2004 budget was redistributive and benefited most of the lowest income deciles.
Other independent commentators have made the same points over the last few budgets.
The average industrial wage is not the same as the average income. As I stated on Committee Stage, the average tax rate for a single worker on the average industrial wage has dropped by ten percentage points, from 27% to 17%. I made the point earlier that 1.7% of income earners — those who are earning more than €150,000 per annum — will contribute about 28% of the total income tax yield for 2004. That is the projection of the Revenue Commissioners for 2004.
What is their share of the national income?
I am giving the figures supplied by the Revenue Commissioners regarding the revenue profile and statistics of people who earn more than €150,000 per annum. If the Deputy obtains the reports he can see a breakdown of the returns for income tax purposes. We had a debate on Second Stage about taxation and I am sure this will continue. I disagree with most of the Opposition's opinions about taxation — that is no secret.
The Minister's approach to taxation is deeply unfair. He made reference to the Combat Poverty Agency. This agency and others, commenting on poverty and related issues in Irish society, are all on record as saying one of the developments of deepest concern during the years of economic advancement is the widening gap between rich and poor. We all played a part helping Ireland to progress economically and are happy to share in the results. We are rightly proud of our achievements. Certainly, the Labour Party is proud of the role it played in making Ireland more prosperous.
We are not so far removed from the days in which people had to head for the boats. My colleague, Deputy Stagg, was obliged to leave the House this morning because he sought justice for those people who were sent off like cattle by Fianna Fáil in the 1950s and 1960s with nothing. Now that they are old and living in various towns in the UK, the Government will not even throw them a few bob, although Ministers are jetting off around the world. A few cuts in the Ferrero Rocher provision at embassy parties would finance some provision for looking after our emigrants who have fallen on hard times.
The Combat Poverty Agency and other similar commentators have pointed out that during the years of the Celtic tiger and the seven years Deputy McCreevy has spent as Minister for Finance, only in one of his budgets did the Minister narrow the widening gap between the very rich and the very poor. In terms of the overall health of our society — not just our economy, but Ireland as a social structure and a series of communities — we must look after the people who lack economic power because they are ill, have special needs or are unemployed or because they come from families who have particular needs. The Minister should not be proud of having widened the gap between these disadvantaged people and our multimillionaires who have done exceptionally well.
The Minister has spoken before of how he admires the USA and the tradition of giving that exists there. In that country, very wealthy people give back to society between 2% and 3% of GDP through donations and contributions to various not-for-profit good causes. Their counterparts in Ireland contribute quite a lot to the society pages of our various newspapers but their rate of monetary contribution is only about 0.1%. This is far below the rate of contribution of American philanthropists. The Minister has created a society in which we are all supposed to look up and admire these wealthy people. Of course we are happy they have succeeded, but we should not create a dog-eat-dog society in which the gap between those at the bottom end of the scale and the very wealthy grows wider, as has happened in all but one of the Minister's budgets. That is wrong. Combat Poverty and the Society of St. Vincent de Paul are on record as stating this.
Organisations such as the Combat Poverty Agency, the Society of St. Vincent de Paul, Fr. Healy's organisation and CORI spend much time and money making representations to the Minister and to me, as finance spokesperson of the Labour Party, suggesting ways in which the problem of the widening gap between the very rich and the less well-off could be addressed. The actions they suggest are fair and would not disadvantage the country economically. However, they got nothing in this budget. They got €48 million of miserable cutbacks from the Minister's colleague, the Minister for Social and Family Affairs, while the Minister granted about 14 additional or extended tax breaks which will cost our society tens of millions of euro in the years to come. Only in the case of two of these tax breaks was an argument put forward about how they make economic sense. The Minister's budget was deeply flawed. He is producing a more unequal, more divided society. This is one of the reasons people sometimes feel that as a social community, although we are better off, we are losing our way. This week we have listened to parents express their distress about what is happening to some young members of their families. Some of this is the result of the materialistic society we have created. What the Minister has done is wrong.