I do not accept there is any duty to accept that recommendation and I never conceded that in the debate. On the merits of the recommendation, the position is that the PRSA contribution is fully taxed under the current income levy. As Senators will be aware, the social charge is a merger of the health contribution and the income levy. It is correct that the health contribution element of it was not taxed because that was levied on gross income but the income levy assessed it to taxation as a benefit-in-kind. It is not correct to say that this is a dramatic innovation in pensions. I accept it is an increase in taxation in so far as the health contribution element, fused now in the social charge, captures this income. That is the factual position.
I did not concede it was an anomaly. What I stated was that on this issue, along with all the issues on the treatment of the pension industry that I indicated in my budget speech, my position was I was open to amendment on all these issues and I would have liked a discussion with the pension industry about this.
The Fine Gael Party, the Labour Party or the Green Party did not recognise at any stage the proper timescale for a finance Bill implementing a budget. The priority has been to have a general election, not a finance Bill, and that is their, not my, decision. For example, normally I would spend a week going through the Finance Bill when the officials had the necessary draft ready for me. This year I was given a day to consider the Finance Bill. Last year I recall spending a week in total, over a four week period of separate sessions, considering in detail each section of the Bill. This year I only had a day to do it because the universal cry at that stage was to publish the Finance Bill. The Bill was published early to sate the demand for the exit of the Government.
I read editorials in many of the newspapers stating this Government has nothing to do and the Finance Bill can be passed in a day. We must learn from this episode that the Finance Bill cannot be passed in a day and the normal timescale, which would have been involved for many years, is that the Bill is enacted by the end of March. The Bill will not be enacted by the end of March this year. It will be enacted at the beginning of February.
The idea that the only consideration of the Bill takes place in the Dáil or the Seanad also is an illusion. The Bill is published and then there is a public response to that publication. The Bill was published on Friday week last. Normally, my Department would receive a considerable range of submissions, correspondence and representations about this. Likewise, Deputies and Senators would receive representations on an individual basis. My officials would have an opportunity to test these individual cases to see whether real anomalies were thrown up to see whether a particular exemption, proviso or qualification could address them. That opportunity has not been given because the headlong rush to have this general election has taken priority over the Finance Bill. Let us not delude ourselves into thinking that Seanad Éireann can solve this problem with a recommendation on a Saturday afternoon. I hope to discuss the constructive role of the Seanad in this Bill on Final Stage.
On the merits of the recommendation, I indicated that, along with the pension changes, this was an issue on which I would like to have had an opportunity to reflect. At the time of the plan, we had to identify that we would get a certain amount of revenue out of this sector and we put together a set of proposals with that end in view which we announced in the budget. We have not had the opportunity of refining this in the Finance Bill. Tax relief for pensions, the employer contribution, the employee tax relief in income tax, and the treatment of these in the levy system are all related. These issues could have been considered and should have been in a reflective way. That has not happened. There will have to be a finance (No. 2) Bill. I will arrange for my officials to have that necessary consultation with the interests involved and proceed on that basis.
The other question which was raised by Senators Harris and Quinn is an issue at the heart of tax policy. It is the question of marginal rates and how far one can push them. The specific issue raised by Senator Harris related to the treatment of the self-employed. By merging the health levy and the universal social charge, there was a reduction in the total income payable by all self-employed persons earning over €200,000. There was also a differential for those on between €100,000 and €200,000 in the impact of this year's measures. Hence, an amendment was introduced increasing the amount of the social charge for the duration of the four year plan for that group of taxpayers to put them in the same position as any other taxpayer.
That said, as a result of Government decisions and budgets adopted in recent years, marginal tax rates have slipped up beyond the 50% level. I have always believed that marginal tax rates should not exceed 50%. I have fought with might and main against it, but did so against a torrent of opposition, especially from the Labour Party and, of course, even more so from Sinn Féin which seems to believe there is a limitless pot of taxation and that taxation can be introduced and extended to 55%, 60%, 65% and 70%.