I move amendment No. 1:
In page 14, to delete lines 19 to 34 and substitute the following:
"2.—Section 2 of the Finance Act, 1991, is hereby amended—
(a) as respects the year of assessment 1995-96, by the substitution of the following Table for the Table to that section:
‘TABLE
PART I
Part of taxable income |
Rate of tax |
Description of rate |
(1) |
(2) |
(3) |
The first £8,900 |
25 per cent. |
the standard rate |
The ‘remainder |
45 per cent. |
the higher rate |
PART II
Part of taxable income |
Rate of tax |
Description of rate |
(1) |
(2) |
(3) |
The first £17,800 |
25 per cent. |
the standard rate |
The remainder |
45 per cent. |
the higher rate |
",
(b) as respects the year of assessment 1996-97, by the substitution of the following Table for the Table to that section:
"TABLE
PART I
Part of taxable income |
Rate of tax |
Description of rate |
(1) |
(2) |
(3) |
The first £10,000 |
23 per cent. |
the standard rate |
The remainder |
42 per cent. |
the higher rate |
PART II
Part of taxable income |
Rate of tax |
Description of rate |
(1) |
(2) |
(3) |
The first £20,000 |
23 per cent. |
the standard rate |
The remainder |
42 per cent. |
the higher rate |
",
(c) as respects the year of assessment 1997-98, by the substitution of the following Table for the Table to that section:
"TABLE
PART I
Part of taxable income |
Rate of tax |
Description of rate |
(1) |
(2) |
(3) |
The first £12,000 |
21 per cent. |
the standard rate |
The remainder |
40 per cent. |
the higher rate |
PART II
Part of taxable income |
Rate of tax |
Description of rate |
(1) |
(2) |
(3) |
The first £24,000 |
21 per cent. |
the standard rate |
The remainder |
40 per cent. |
the higher rate |
",
(d) as respects the year of assessment 1998-99, by the substitution of the following Table for the Table to that section:
"TABLE
PART I
Part of taxable income |
Rate of tax |
Description of rate |
(1) |
(2) |
(3) |
The first £14,000 |
20 per cent. |
the standard rate |
The remainder |
38 per cent. |
the higher rate |
PART II
Part of taxable income |
Rate of tax |
Description of rate |
(1) |
(2) |
(3) |
The first £28,000 |
20 per cent. |
the standard rate |
The remainder |
38 per cent. |
the higher rate |
",
(e) as respects the year of assessment 1999-2000, by the substitution of the following Table for the Table to that section:
"TABLE
PART I
Part of taxable income |
Rate of tax |
Description of rate |
(1) |
(2) |
(3) |
The first £15,000 |
20 per cent. |
the standard rate |
The remainder |
35 per cent. |
the higher rate |
PART II
Part of taxable income |
Rate of tax |
Description of rate |
(1) |
(2) |
(3) |
The first £30,000 |
20 per cent. |
the standard rate |
The remainder |
35 per cent. |
the higher rate |
.".
I embark on this debate with a heavy heart as a result of what has transpired here today. Some of the most important amendments to be considered by this House are still unknown to me and this House has voted to allow them to be decided by one question tomorrow, without adequate debate or notice.
This amendment proposes that over a number of years there should be a gradual but sustained programme of tax reform designed to bring the standard rate of income tax down to 20 per cent and the top rate below 40 per cent. The necessity for this arises from the present state of our tax laws. Even taking into account the minuscule changes made in this year's Finance Bill which add 3 per cent to the real value after inflation of bands and allowances, single workers earning approximately 80 per cent of the average industrial wage — slightly more than £12,234 per annum — are still taxed on any extra earnings they receive at the rate of 57 per cent if PRSI is included in the transaction. This means that the total outlay for an employer who wants to give an employee earning below the average industrial wage an extra £10 in his or her pocket is of the order of £26. That is the reality of modern Irish employment taxation under the Minister for Finance, Deputy Ruairí Quinn.
We have failed thus far to address adequately this anti-worker tax system. An employee who takes home £172 per week faces confiscatory tax rates of 56.75 per cent on all his marginal earnings. This means that many employees do not want promotion or the responsibility that goes with it. An employer who wants to give an extra £10 in overtime to an employee in those circumstances has to lay out £26. I am talking about real people, not imaginary people. I am not talking about statistics; rather I am talking about genuine people who are caught in the Minister's poverty and taxation trap. If I were talking about the super rich or super wealthy, the haves in our society compared with the have nots, I imagine that a Labour Party Minister for Finance would be the first to remind me that there were people who deserved priority over others when it came to tax reform.
I have looked at the budget, which the Minister claimed was radical, to see what is in it for ordinary single workers. During a year in which the Exchequer could have permitted a radical departure in the direction of tax reform these workers got nothing except a collective insult in the form of a tiny marginal increase in the value of bands and allowances. I am not talking about the haves, the super rich or the moderately comfortable. I am talking about men and women who take home in their pocket £172 per week. It is immoral and wrong politically and economically to say to people in those circumstances that they must hand up more than half of every extra penny they earn in taxation and social insurance.
It is not a matter of abstract figures on paper. This is a matter of real people suffering real deprivation and being cemented into a real trap from which they cannot escape. These people are earning well below the average industrial wage and they are entitled to a tax system which gives them incentives, which values their work and encourages them to work harder and to take overtime, promotion and extra work if it becomes available.
I am talking about ordinary people like those in Packard. Last year the Exchequer took £5.5 million or 35 per cent out of Packard's total payroll cost of £15.5 million. That is the reality of the tax system. It was inevitable that Packard, a highly labour-intensive industry which has to complete with sister plants around the world, would begin to contract before our eyes and probably disappear because of the brutal anti-work tax system.
If the Packard plant had been located in Newry as opposed to Tallaght approximately £750,000 less would have been taken out of its payroll costs by the United Kingdom Government than is taken each year by the Irish Government. There would have been that much more money for management to divide with the workforce to ensure decent productivity and working conditions for ordinary men and women. Instead, £15.5 million is spent on the payroll including employers' and employees PRSI and PAYE. Packard is effectively in crisis and is bound to suffer as long as this tax system exists.
This is radically wrong and something radical must be done to correct it. Successive Ministers for Finance since the budget in 1993 have abandoned the process of tax reform and, on one occasion, set it in reverse. In the 1993 budget the 1 per cent income levy was equivalent, for most lower paid workers, to a 2 per cent increase in income tax. That was in force for one year in scandalous disregard of what was suggested in the Cullition report.