Private Members' Business. - Taxation System: Motion (Resumed).

The following motion was moved by Deputy Michael McDowell on Tuesday, 30 April 1996:
That Dáil Éireann recognises the urgent need for fundamental reform of our taxation system and, in particular, demands measures which would relieve the huge burden of taxation on PAYE workers on low to medium incomes; eliminate employees' PRSI; reduce the penal levels of employers' PRSI; and that such measures would form an integral part of any successor to theProgramme for Competitiveness and Work, and help to create a pro-jobs, pro-enterprise economy properly geared for the competitive challenges which face us in the new millennium.
Debate resumed on amendment No. 1:
To delete all words after "That" and substitute the following:
Dáil Éireann welcomes the Government's firm and prudent management of the economy as reflected in the strong economic growth, increased employment, low interest rates and low inflation achieved over recent years; notes the control of public expenditure and the sound fiscal stance adopted in accordance with the Maastricht Treaty guidelines; recognises the substantial progress in reform of the income tax and PRSI systems and the other significant measures to promote enterprise and employment in the 1995 and 1996 budgets; acknowledges the Government's continuing support for the less well-off members of our society; and recognises the contribution Government policy is making towards creating a pro-jobs and pro-enterprise economy conducive to achieving real increases in take-home pay, improving the incentive to work and the deepening of the social partnership based upon consensus and consultation which has given Ireland the best economic performance of any country in the OECD in 1995.
—(Minister for Finance.)

I wish to share my remaining time with Deputy O'Rourke.

Is that agreed? Agreed.

I am glad to have the opportunity to speak on this motion which was tabled by the Progressive Democrats. Our party spokesperson. Deputy McCreevy, has already given our party's main views on the matter, which are in agreement with the motion.

One of its central thrusts is there cannot be another Programme for Competitiveness and Work unless there is a programme of tax reform. In tandem with that, any new national agreement must represent a balance between addressing the high level of taxation and making provision for tackling long-term unemployment; 150,000 people have become progressively long-term unemployed over the last number of years. I accept the necessity for significant and progressive tax reduction, which will continue to be at the top of our economic agenda. Since 1987, particularly in the years when Deputy Bertie Ahern was Minister for Finance, a radical look has been taken at tax reform with steady progress in that area.

However, the plight of the long-term unemployed, who make up an ever growing percentage of the live register, cannot be forgotten. In any democratic, socially conscious society the advancement of the haves cannot be at the expense of the have nots. There must be balance in that relationship. Any new national agreement must look at both of those measure in tandem. The following four measures with regard to employment and long-term unemployment should be delivered on and encompassed within the terms of the motion, particularly in the consideration of another Programme for Competitiveness and Work, if there is to be another.

First, we must set targets for the reduction of long-term unemployment. We constantly moan and bewail the number, which we trot out when it suits us, beat our collective breasts and say something must be done about it. If that is to be more than a ritual comment and condemnation of the figures, which it has become, difficult and different steps must be taken. Targets for long-term unemployment would concentrate the mind wonderfully.

Second, there should be an extension countrywide of the local employment services. When we asked the Taoiseach if the INOU and ISME will be included in the talks on a new agreement — as Deputy Harney asked several times — we were told their views are encompassed in this or that forum. We are weighted down with fora. They are very worthy, particularly the one run by Maureen Gaffney in Dublin Castle, and make very worthy proposals, but nobody pays a great deal of attention to them. It is almost two years since that forum proposed a nationwide local employment service. To date, efforts are being made to advance that in 14 areas, which has taken two years. Despite all the expectations, finance was not given to it in the budget.

Third, quarterly labour force surveys should be introduced. We are at sixes and sevens in terms of knowing who is unemployed; whether they are male or female; their age, profession and qualifications; how long they have been unemployed, for what reason and what type of work they require. We are far behind other European countries, particularly the UK, in regard to the depth and minutiae of their labour force surveys. Because of the faulty data, policy planners, those who plan education and training and job creation agencies do not have a clear picture of the work-force or the non-workforce. The introduction of quarterly labour force surveys would go a long way towards achieving that.

The fourth — and most important — point is that we should have one Minister in charge of employment instead of eight footling about with various bits of Departments with advisers, programme managers, mobile telephones, plans and agendas, appointments and meetings, and the plethora of activity associated with the various sub-Ministers and subDepartments. Eight of them have bits and pieces to do with employment. There is a clear case for one Minister for employment.

There is also a clear case for the consolidation of State enterprise agencies. Deputy Harney and I have spoken on this on several occasions. I must say mea culpa because we were responsible in Government for a particularly complex break-up of the IDA which was meant to render everything clearer. We have ended up with IDA Ireland, Forfás and Forbairt. I am sure each of them is working to what it thinks its agenda should be but they are all tripping each other. Within the job creation field there are also agencies such as Údarás na Gaeltachta, FÁS, area partnerships, return to work schemes run by the Department of Social Welfare, the Leader programme and county enterprise boards.

A woman who knows all about this came to my weekly clinic last Saturday week and said she will go to the six agencies in County Westmeath which deal with job applications in case she misses out on one. Imagine her trailing to Mullingar, going to two or three there, and coming back to Athlone where she will go to another two or three. She will fill in the complex forms, which have eight or nine pages, and then begin the round of telephone calls, call backs, call outs, reviews, previews, perusals and mainly, in the end, refusals.

All the agencies need to be streamlined. I am not casting aspersions on their personnel, whom I am sure are doing the jobs they are given. However, there is a clear overlap. Seeking advice and help is rather like entering the maze in Hampton Court for people who have no clear pathway. The term "one-stop-shop" is jargon. However, a person should be able enter one door and in one room, or a series of connected rooms, avail of the services and acumen of the Leader programme, county enterprise boards, IDA, Forbairt, FÁS, the Department of Social Welfare and so on, culminating in a perusal of their plan.

The motion is excellent and worthy of support. It looks forward to the consideration of another Programme for Competitiveness and Work. We all know the gains made from consensus. There must be a balance between proper tax reform and reduction on the one hand and diligent application to the issue of the long-term unemployed on the other. There must not be lip service to this latter issue, rather it must be tackled in a definite, coherent and structured way.

I propose to share my time equally with Deputies Upton and Lynch.

Is that agreed? Agreed.

The motion in the name of Deputy Michael McDowell links together the reform of our taxation system and the negotiation of a new agreement between the social partners. It suggests that national agreements are primarily based on tax reform and that tax reform is the principal tool in the creation of sustainable jobs in an enterprise culture.

On the question of national agreements and a successor to the Programme for Competitiveness and Work, the Programme for Competitiveness and Work and its predecessor dealt, as they should, with taxation issues. However, tax was by no means the only issue. The critical feature of each of the national agreements was the broad acceptance by all the social partners of core economic policy objectives.

These included, in the first instance, the promotion of economic growth. The Government has done this. Second, the creation of sustainable employment. A record 45,000 jobs were created in 1995. Third, the mainenance of low inflation, which we have now got down to a very low level. Fourth, the maintenance of low interest rates, which has meant more real money in people's pockets than any tax reductions. Fifth, national agreements have recognised the need to control borrowing in order to meet the Maastricht criteria. The Government is doing this and our general deficit has remained comfortably below the 3 per cent limit in recent years, which will allow us to qualify for Economic and Monetary Union. Finally, recent national agreements have made the link between wage levels and tax reform. I do not wish to underestimate this.

It is agreement on all of these core issues, and not just on tax, which has made the national agreements successful. The Government and my party hope that the social partners will together agree on how the nation approaches the new era of opportunity and challenge which lies ahead of us and to which Deputy Michael McDowell referred last night. While continued tax reform will undoubtedly be a feature of any such new agreement there will be many other important issues in any balanced consensus which might emerge.

Fine Gael has always supported the principle that real sustainable jobs are created when enterprise flourishes. However, the primary condition underlying an enterprise culture is a stable economic environment with high growth, low inflation and low interest rates. The overriding policy issue, therefore, must be the continuance of the prudent economic policies being followed by the Government. Certainly the tax regime does impact on the levels of investment, risk taking and employment and is a very significant element in the mix of issues which concern all of us.

Tax reform is the kernel of the motion in the name of Deputy Michael McDowell. The motion suggests that there has been no tax reform by the Government. However, there has been substantial progress in reforming the tax system incrementally in recent years. The level of progress has not been as rapid as we would all like, and it never will be. However, it has been as rapid as prudent management of the economy would allow. The record of that prudent management in terms of growth, inflation, new job creation and low interest rates is there for all to see.

My party is committed to the reduction of the effective tax rate which is levied especially on PAYE workers. What is relevant here is not just the rates of tax but also the allowances, the tax bands and the social insurance contributions by both employers and employees. What we must focus on is the overall take by the State out of the cost of maintaining each job. We believe that tax reform must achieve two principal goals: it must make it pay to take a job and it must be employment friendly. We are committed to this.

Deputy Michael McDowell's proposals may grab the headlines, but will they work? It is interesting to note that, notwithstanding the reduction of the standard rate and the abolition of the third rate when the Progressive Democrats were in Government in 1992, the effective rate of tax, or the tax wedge, did not reduce significantly at that time.

Is the Minister proposing that tax rates should revert to the level they were at?

This was because the Government of the time did not target the benefits by adjusting allowances or the tax bands.

Will the Minister propose their reversal?

By contrast, this Government has adjusted tax allowances and bands significantly ahead of inflation. Furthermore, the benefits have been directed at the lower paid — we make no apology for that. The reality is that the Government's programme of reform, which has been more pronounced at lower income levels, when taken with pay increases under the Programme for Competitiveness and Work has resulted in meaningful real increases in take home pay.

A key element of this reform has been the widening of the entitlement to the low rate of employer's PRSI, which now covers over 600,000 jobs. Many of these jobs are in traditional industries more exposed to the UK market and to the ever increasing competitiveness of the marketplace generally. The low rate of employer's PRSI, which is 30 per cent lower than the normal rate, genuinely supports these industries.

The Government is committed to the continued reduction of the effective rate of tax paid by taxpayers. We are not solely interested in the headline effects created by cutting tax rates because that is not enough. What is important to taxpayers is their level of take home pay and it is equally important that further reforms continue to promote job creation.

How should the existing programme of tax reform be continued in future years? The essential elements include, in the first instance, the progressive reduction in the standard rate of tax, which will benefit all taxpayers, and must be a priority. In addition, widening of the standard rate band will reduce the average tax rate for greater numbers of taxpayers, and of course reductions in the 48 per cent rate, which is paid by so many workers, will also have to be addressed.

The Government has not touched the standard rate of tax.

It will take time and we will do so. Second, reform has, up to now, been targeted at lower income levels. However, the income levels at which single people start paying tax at the top rate remains very low and must also be addressed. Third, the process of reducing corporation tax for service businesses commenced under this Government. I look forward to seeing this process continue in future years. Fourth, the burden of social insurance costs has been addressed by the Government. This process of targeting taxes on employment creation should and will continue. Fifth, the Government has directly supported all children by increasing child benefit by 45 per cent over the last two budgets. We must continue to recognise the need to support families in their care of children.

Deputy Michael McDowell spoke at length about the climate necessary to foster an enterprise culture, yet he did not address the issues relating to the tax treatment of small business people who are responsible for a substantial element of job creation in the economy. He asserts that there has been no tax reform, yet this Government, not the one in which the Progressive Democrats took part, introduced a low rate of corporation tax for small business in addition to reducing the existing rate. It is this Government which, over two budgets, has introduced a 75 per cent relief from capital acquisitions tax to facilitate the transfer of family businesses to the next generation. Actions speak louder than words. The business community, especially small businesses, can readily make this distinction.

The Deputy also promised the House last night that, if in Government, his party would reduce the existing tax rates to 45 per cent and 20 per cent and also abolish employee's PRSI over a five-year period. However, he did not tell us how he would pay for this package, which the Department of Finance estimates would cost about £2 billion. He made reference to a more efficient State sector but he did not spell out, even in general terms, how his tax proposals would be funded.

Control spending.

Any party which proposes to introduce tax cuts totalling £2 billion over five years without listing the major cuts which would be necessary in the big spending Departments of Health, Education and Social Welfare and in public pay is being dishonest with the people. It is incumbent on the Progressive Democrats to spell out, at least in broad terms, where the savings are to be made if any credibility is to be given to these proposals. Furthermore, the record of the Progressive Democrats in controlling public expenditure does not stand up to scrutiny.

On a point of order, the Minister's Department has several copies of a document we published recently which spells out how we would fund our tax proposal. I am disappointed that those who assisted the Minister in the preparation of his speech did not bring the document in their possession to his attention. I will ensure the Minister receives a copy later this evening.

Acting Chairman

That is a point of information, not a point of order.

I am surprised Deputy Michael McDowell did not spell out how he would pay for it last night, perhaps Deputy Harney will do so.

During the Progressive Democrats-Fianna Fáil coalition of 1991 and 1992 public spending rose by 10 per cent in each year. This contrasts markedly with the performance of the Government in 1995 and 1996.

My party and I are committed to genuine incremental tax reform and tax reductions, but they must be consistent with the prudent management of the public finances and the economy. We will continue to articulate that view in Government and we will make significant progress down that road in the lifetime of this Administration. In contrast, the Progressive Democrats motion and Deputy Michael McDowell's speech last evening offers the people an appetising but "pie in the sky" set of proposals with no convincing explanation of how they can be accomplished or paid for.

I am pleased to have the opportunity to contribute to this debate. Early on in his contribution last evening I gather Deputy Michael McDowell signalled that he would outline the grounds on which the Progressive Democrats would fight the next election. His speech portrayed his party as being anti-establishment and a party of outsiders. While I would not claim to have an intimate knowledge of the Progressive Democrats, its Members in the House, its public representatives and its supporters do not look like a group of outsiders.

It is best in such speeches to get areas of common ground out of the way initially. It will be a short exercise. I share Deputy Michael McDowell's concern about the management of the public service. I, too, would like to see a system with more responsibility and flexibility in the management of how services are delivered. I would like civil servants to be allowed to use their initiative and hard work to alter the system in which they work and to see them rewarded appropriately. However, there is no link between that approach and the low wage, low skilled and low investment economy Deputy McDowell went on to outline.

Deputy McDowell outlined the success of his model in other countries and he singled out New Zealand. When challenged on "Questions and Answers" recently I understand he had little to say as to the effect of the new model on the welfare of pensioners in New Zealand.

That is complete rubbish.

He did not mention that the fastest growing party in New Zealand is a xenophobic and anti-emigration one and that the Labour Party, which is responsible for these changes——

——is going down the tubes as a result of the implementation of those policies.

At least the Deputy's party has something in common with it.

I assure the Progressive Democrats that my party has no intention of taking any example from our unfortunate colleagues in New Zealand, who should know better.

The Deputy's party can go down the tubes on its own.

The Progressive Democrats are trying to impose a low wage and a low skilled economy where the unemployed would be forced into the marginal fringes of the labour market to work in poor jobs with few entitlements. Contrary to Progressive Democrats rhetoric, social justice has no part in that equation. In its eulogy of free market liberalism it forgets to mention the effects this has in countries such as the United Kingdom and the United States in which an underclass has developed. Indeed, the policies pursued were not successful in coercing the unemployed back into the labour market. That is something of which we should be aware.

I note the tragic aftermath of the unfortunate events at Packard Electric. A large number of people face job losses in a constituency adjacent to mine. It is a pity that the best the Progressive Democrats could do in those circumstances, by way of offering hope and solutions to those unfortunate people, was to resort to their tax mantra. Taxation has had relatively little to do with the problems experienced in Packard Electric. When the Progressive Democrats make comparisons between the wages being paid to people working here and to those in the corresponding factory in Coventry and when one looks at the tax wedge between Ireland and the United Kingdom, the difference is of the order of 2 per cent. It is really alluding to the fact that in Coventry workers are prepared to work for almost £2 per hour less than the rate paid in Tallaght.

They get more take-home pay.

If that is what the progressive Democrats propose as a solution——

They take home £17 more.

——they should have the courage to say so rather than resorting to their tax mantra in the hope that it will create some difficulty for unfortunate politicians of the Left who find themselves in these circumstances. It is totally without value in terms of reaching a solution.

The Progressive Democrats go on ad nauseam about the high levels of taxation paid in this country. The truth is that the levels of taxation paid are more or less in accordance with the European average. We pay marginally less than the going rate of taxation in EU countries. We do not spend inordinate amounts of money on social welfare. It is true the tax burden for demographic reasons is concentrated on fewer taxpayers than in other countries, but that relates to the high dependency ratio which exists — 1:2.5 — compared to countries like Denmark where it is of the order of 1:0.9.

When the Progressive Democrats chant their mantra that tax will solve all our problems and that we will have huge economic growth and development if we lower the tax rates, we must realise that economic progress is derived from a range of factors, such as political stability, a well educated labour force, good management and careful, wise and prudent Government investment. We hear relatively little about these matters from the Progressive Democrats, who simply chant on about tax. That might be understandable if we did not have the experience of what it did when in Government. As the Minister said, when it was in office, Government expenditure rose and tax reform was directed at the better off. No significant improvements were made in key areas like personal allowances, marginal relief or in employers' or employees' PRSI.

It is worth looking at the Progressive Democrats' proposal which regrets that the officials in the Department did not crank up its computer and run the master plan through the system. It might be as well that they did not because there are areas of vagueness in the proposal which would leave blank spaces. A rough calculation of what it proposes indicates that £1.1 billion to £1.5 billion would be taken out of the economy.

The Minister said £2 billion.

They get more tax mad by the minute. In their document An End to Tax and Spend, they propose for 1996 a standard tax rate of 26 per cent and a higher rate of 46 per cent. During the debate on the Finance Bill this morning they proposed rates of 25 per cent and 45 per cent. The proposal in their amendment to the Bill would take £300 million out of the economy. They propose that employers' PRSI be abolished in one fell swoop. This would take another £300 million out of the economy.

We are talking about leaving it in the economy.

If employee's PRSI was phased out, it would cost £100 million a year. If it was done in one step, it would cost £450 million. The tax band adjustments they propose would cost in the order of £150 million. The total amount of these tax reductions would amount to between £1 billion and £2 billion. The Minister of State, Deputy Coveney has experts to advise him on the implications of these figures.

It would be no harm to reflect on what this type of expenditure reduction would mean. The proposals of the Progressive Democrats could be implemented by getting rid of the security services — the Army and the Garda — which cost £1.057 billion.

We would start with programme managers.

If this is not acceptable, I have other suggestions. The abolition of the Department of the Environment, in which Deputy Harney served with distinction, would provide a mere £950 million. The Progressive Democrats could then put together a package aimed at social welfare recipients. They could abolish old age pensions, child benefit, disabled person's maintenance allowance and supplementary welfare allowance, which would provide £308 million, £368 million, £116 million and £152 million, respectively. This is the type of action they would need to effect their proposals.

Did the Deputy watch Tony Blair's television broadcast last night?

It is important that we understand what they are talking about. What they put forward has a shallow, superficial, opportunistic appeal, but when we begin to work our way through what it would mean, we see that they are advocating a recipe for social chaos. They propose a socially discordant society which would have virtually no social cohesion. It would be made up only of a collection of individuals centred on the concept "me and me only". This is the type of society from which I recoil and I sincerely hope the public understands exactly what would be the full implications of taking £1 billion to £2 billion out of the economy. This is what is in the Progressive Democrats' document.

In this motion we are discussing something constructive in which there is widespread interest. This will be one of the main issues in the next general election. I would find it difficult to speak or vote against this motion. My colleague from Cork, the Minister of State, Deputy Coveney, who has a far better grasp of economics than I, would have had great difficulty doing so, until he read the Progressive Democrats document.

He never heard of it.

The document shows that we need to carefully examine what people propose. Its language is as catchy as the motion; it is entitled An End to Tax and Spend. Anybody who pays tax could not disagree with the motion. We all feel we pay too much tax and are not provided with sufficient services. It is attractive to say people should not pay so much tax and tax rates should be reduced to 20 per cent and 42 per cent. This, and the removal of insurance based contributions such as employers' PRSI and the health levy would cost £2.261 billion. The Department of Finance did not include the cost of abolishing the health levy.

The Department did cost it, but did not tell the Minister about it.

This is a staggering sum. The Progressive Democrats are the masters of economics. They are all in extremely well paid jobs. How do they suggest we pay for their proposals? The document talks about cuts in the costs of job creation agencies. I assume this refers to FÁS and other agencies which help the long-term unemployed. Amazingly, the document talks about cuts in spending on primary education and child support services.

Where is that proposal?

It is in the document An End to Tax and Spend. Obviously, the Deputy did not read it either. What would Deputy O'Donnell think about a cut in child support services?

Will the Deputy please give me a page reference for that?

The Progressive Democrats also trot out the usual suggestion about selling off State companies such as TSB, Aer Lingus, Telecom and, of course, our airports, which seems to be a particular favourite of the leader of that party.

The Minister of State, Deputy Rabbitte also supports this.

When a political party puts its ideas on paper, particularly for a debate in which everybody is interested, we should say it has the courage of its convictions. However, when a party does so, it must realise that its document will be scrutinised by others. When we scrutinise this document, we quickly see that under the Progressive Democrats proposals those who could afford services would have them and those who could not would have to do without. The document appeals to the selfish core in us all. I readily admit that we are selfish and want the best without paying for it.

The Deputy should speak for herself.

The Progressive Democrats and Fianna Fáil voice concern for the hard pressed PAYE worker. We share this concern and it has been substantially addressed by the tax and PAYE changes in the Finance Bill. However, both parties are less vocal when it comes to ongoing inequities between farmers and the self-employed on one hand and PAYE workers on the other. Deputies who seek to make short-term political capital out of the plight of PAYE workers may be interested in a few facts in which PAYE workers also need to be interested. In 1994 income tax paid on farming profits — that is profits made by big farmers on declared income — amounted to only 1.8 per cent of the tax take. Huge farmers and ranchers, who gain from every available subsidy only had enough profit to pay 1.8 per cent tax.

What did Democratic Left take from them in 1995?

The figure fell to 1.7 per cent in 1995.

That means Democratic Left took less from them.

It frightens me that the Progressive Democrats do not refer to farmers in their document. In the same year the average tax paid by a PAYE worker amounted to £4,087. This was nearly three times the average tax take from a farmer, which stood at £1,031. It is obvious the PAYE sector shoulders 86 per cent of the national income tax burden. I should not be intrigued, but I am, that only 25 random audits were carried out on the self-employed, including farmers. Only five had an added tax liability. If more audits were carried out, how much tax would be collected? When I speak about farmers, it is perceived that I am against all farmers but this is not the case. In 1987 23 per cent of farmers struggled to subsist on incomes of £5,000 or less. Part time jobs and social welfare payments made up the rest of their incomes.

A fair tax system should treat all income in the same way. It should strike a careful balance between four objectives, which may often appear to be in conflict. It must be fair in the way it collects revenue; it must take similar amounts from people and corporate bodies with similar resources, although it does not in this case; it must redistribute income, wealth and work; and it must collect sufficient revenue for the Government to pay for things that are socially necessary.

That is the difference between what Democratic Left considers to be tax reform and what the Progressive Democrats consider it to be. While the Progressive Democrats and Fianna Fáil were in Government from 1989 to 1991 the average PAYE worker paid £3,127. That was in 1989.

What would they have paid under Democratic Left?

By the time they left office in 1991 this had jumped to £3,565 — an increase of 14 per cent in just two years.

What is this Government taking?

In contrast — and this is what the PAYE worker needs to be careful of — the average tax take from farmers in that period declined by 30 per cent.

That is not true.

The difference between the Progressive Democrats and Democratic Left is that we want everyone to pay their fair share. We do not want people in certain professions to pay nothing while the PAYE worker pays everything. Unlike the Progressive Democrats, we want good social services which are necessary. It is interesting to examine the tax take for the years they were in Government along with cuts in the public service.

With the permission of the House I wish to share my time with Deputy O'Dea.

Acting Chairman

Is that agreed? Agreed.

In addressing this debate there is a sense of déjà vu given the involvement some of us have had this week and last in the Finance Bill. Much of what has been said in the debate on that Bill is relevant to the topic we are discussing.

In the past 12 to 18 months this debate has gone to centre stage and it will be the central argument in the next election. Underpinning it is the question of employment and unemployment. That is as it should be because it still is the greatest problem we have. It is the greatest problem facing the European Union and, while we are not alone in having this debate, unfortunately our unemployment levels are worse than in other countries.

I have listened to members of the Labour Party and the Democratic Left who in discussing this subject use a redundant mantra that emanated from Eastern Europe a few decades ago. Thankfully, that has disappeared but they do not seem to have anywhere else to go. They lean backwards to the past to try to find some ideology with which they can reach into the future. However, the old axioms they have been used to are no longer there. The reality is that left wing labour parties in every other country are moving towards much lower personal tax regimes. That is a fact. One needs only to look at the Labour Party in the United Kingdom to see them expounding personal tax rates of 20 per cent. Yet here, the left, led by the Labour Party, has still not accepted this basic argument which has been embraced throughout the world.

The economies that are doing best and which have the lowest levels of unemployment also have the lowest levels of personal taxation. There is a message in this. One of the issues central to this debate which is causing concern is the question of future programmes that may or may not be negotiated. Programmes leading to the present Programme for Competitiveness and Work have played a role in developing ecomomic growth.

There are three basic parts. One is the community support framework in the national plan that we have in situ and which have had in the past. We are currently involved in the 1994-99 plan. The second element is the Maastricht Treaty and the disciplines that has put on Government. The third element comprises the programmes for Government which have married all three elements together.

The big disappointment in all this was in the PAYE sector which was told it would have to make the greatest sacrifices if the country was to be pulled back from the abyss it was looking into the last time Fine Gael and Labour were in Government together in the mid-1980. The PAYE sector responded through responsible people in the trade union movement. They had to deal with two specific issues. One was the question of productivity involving ancillary questions about work conditions and practices which had to be resolved. The second element was restraint in the wage market. Both of those were given by the PAYE sector on the understanding that genuine tax reform would come. The PAYE sector was told that when these programmes were completed and real economic growth began to drive the economy, some of the benefits created primarily by restraint in the PAYE sector would be given back. Every Member of the House who was involved in the recent by-elections must understand the deep anger and frustration in the PAYE sector which feels it has been betrayed by politicians. They did not get back what they were entitled to, what they were told would be given to them and what they expected us to deliver.

This was in train from 1987 to 1993 in every Fianna Fáil-led Government. In difficult circumstances, year in and year out, efforts were made to reduce the burden of taxation on employees and employers. What happened? When the Labour Party finally got its hands on the golden chalice — the Department of Finance — all movement towards tax reform ended.

I would like to see a more radical and substantial approach to this issue in budgets. It is not a simplistic equation whereby if you go for lower tax rates you must cut large chunks out of public expenditure. That is not the central question. Choices must be made by us that the public will have an opportunity to vote on in the next 12 months. The retarding of the levels of public expenditure we have now reached will be central to future economic development.

We cannot get back what we have spent. We know that the inflows to the Department of Finance through the Revenue in 1996 are substantially ahead of target. The economy is still growing ahead of expectations. Given that buoyancy, and hopefully its maintenance, more choices are avilable. Choices were available to the Minister for Finance last year given the budgetary situation he found himself in. He was the first Minister for Finance in 25 years to be handed a current budget surplus and he had even more opportunity in the 1996 budget. He had some excuse because he had not been long enough in the Department to make decisions.

The Minister had real choices in the 1996 budget about the direction in which the Government wished to proceed. However, as we learned in the past, the Labour Party approach is one of high tax and high spend. The tragedy is that Fine Gael has permitted this to happen, despite the promises it made and the lessons it learned. I read with amusement some of the speeches made by Deputy Yates as spokesman on Finance for Fine Gael in the past. Fine Gael's finance policy was abandoned on the day the Mercedes Benz cars stopped outside Leinster House and its members found themselves in Government. It is a tragedy that ordinary taxpayers will be obliged to foot the cost. They are heavily burdened and work day and night to create a standard of living for themselves and to educate their children. However, the Government has made no response to that sort of approach or attitude, at a time when the opportunity was greatest to make a meaningful contribution to tax reform.

I do not accept the Minister's somewhat trite amendment to the motion before the House which commends the Government for its prudent management etc., and takes credit for strong economic growth, increased employment and low inflation and interest rates. The environment to facilitate such developments was created during the past six to seven years by Governments led by Fianna Fáil, in which Deputy Bertie Ahern served as Minister for Finance. It did not happen because the Labour Party entered Government. However, when the rainbow coalition leaves office, the situation will be similar to that in 1987 if changes are not made in the Government's approach to fiscal policy. This is a tragedy for PAYE workers and undermines the Government's ability to negotiate seriously with the social partners on the next programme for Government. There is a perception that the expected payback of serious improvement in personal taxation rates has not taken place. If the Government has any desire to negotiate a new programme in the coming year — I hope that this will be the duration of their stay in office — that issue will be central to any agreement.

With regard to the number of State agencies responsible for the creation of employment. I will not denigrate any of the efforts being made in this regard. However, we must call a halt to the proliferation of the number of agencies involved in employment creation. There is no need for the explosion of agencies in this regard. It has been stated on previous occasions that the Culliton report set down a framework but, for various reasons, we have gone in the opposite direction from the one suggested by that report.

Specific, targeted agencies must be involved with employment creation. Ireland has a population of 3.5 million. Councils in the UK have responsibility for running cities with larger populations. We do not need the overlapping and confusion regarding filling out forms which exists at present. The system has reached the point where a person seeking employment cannot face applying to the various agencies involved. I have become lost in my attempts to cross-reference information with regard to advising people about the agency from which they should seek help. We must deal with this problem because it is not adding to the prospects for creating employment. In some cases it is preventing the creation of employment.

I commend the motion to the House. It is an important contribution to the debate on this topic, which will not die and will resurface on a weekly basis. The public expects that somebody — I believe it will be the next Government led by Fianna Fáil — will seriously deal with redressing the balance regarding the low personal rates of taxation which are so badly required.

The Minister of State alleged that the proposers of the motion were attempting to create the impression that tax reduction would solve the country's economic problems. I will not pretend that this is the case because, demonstrably, it will not. Nevertheless, I broadly and enthusiastically support the terms of the motion tabled by Deputy Michael McDowell.

Some of the fundamentals of the economy are good and the Government has not been slow to remind people of that fact. However, as the Minister for Finance is aware, there are three critical fundamentals in the economy which are dangerously askew, current expenditure, the level of the national debt and taxation. These fundamentals have one thing in common in that they are far too high. It is not merely the Opposition which is making that case, it is being made by every objective economic commentator on the subject.

Despite the fact that the Government has kept within the letter of the Maastricht Treaty, the fact remains that current public expenditure has continued to increase at a multiple of both inflation and the target set down and published, for public consumption, in the programme for Government. Current spending will have risen by 2.5 times the rate of inflation during 1995 and 1996. This level of spending has grossly exceeded the Government's targets. Deputies Upton and Lynch did not advert to that during their rants about comparative tax rates, levels of spending, etc., throughout Europe. They did not refer to the simple fact that the levels of current public expenditure in which the Government has engaged since taking office have grossly exceeded its own targets by a multiple of almost three.

This excess in current public expenditure over the rate of inflation, and the Government's own targets, represents about £600 million in lost opportunities to reduce taxation and/or debt. No Government speaker has attempted to answer the question why, with extraordinary levels of economic growth, any real increase in current public expenditure is needed. Why has the Government failed to meet its own relatively modest targets for increases in public expenditure? This country owes £30 billion to its creditors which is equivalent to providing mortgages worth £40,000 on every property in the country.

It is ironic that, at the changing of the guard in 1994, the country was in a position of having a current budget surplus. In other words, we had managed to wean ourselves off borrowing following a generation of doing just that. The rainbow coalition then decided, as a cold and calculated policy, to return to deficit budgeting at a time when the country was at the top of the economic cycle. It is basic economic theory that budget deficits occur when the economy is at the bottom of the cycle and a Government must borrow money and spend more to stimulate the economy. There is no economic theory which supports the notion for giving the economy an artificial stimulus through using a deficit when it is at the top of the economic cycle. This makes no sense.

As I have already stated, we had weaned ourselves off borrowing by the beginning of 1994. At last we were in a position to make ends meet. However, the "rainbow warriors" unilaterally decided, as their first act of economic policy, to change ends. The Minister of State stated that there has been substantial progress in reforming the tax system in recent years. There may have been progress, but it did not originate with this administration. Last night the Minister for Finance referred, on a number of occasions, to the significant tax and PRSI reductions brought about by this Government. Let us look at those significant reductions, particularly in relation to the 1996 budget which was the first the rainbow coalition prepared on its own without arguments about policy or expenditure agreed by anyone else. The Principal Features of the Budget, issued on budget day, set out the reduction in net income for people with various levels of gross income. That was a fraudulent document. The figures illustrated that people at certain levels of gross income would be better off by 0.6 per cent, 2 per cent, 1.9 per cent, 1.8 per cent, 1.7 per cent, 1.5 per cent and 0.8 of per cent. Those figures were taken without factoring in the reductions in mortgage interest relief and VHI changes. When those were factored in by a number of experts, the figures dropped dramatically to 0.25 per cent, 0.2 per cent and 0.1 per cent.

The Deputy would need to factor in children's allowance as well.

It is not mathematically possible, as the Minister of State knows, to factor in the indirect tax increases. The people who are, therefore, better off as a result of the budget are those rare individuals or families who do not pay a mortgage or VHI, do not smoke, do not use ATM cards, do not drive or do not engage in any other form of activity which would attract increased indirect taxation.

Even if we accept — which I do not — that in some minimalist way people are better off as a result of the budget and that the budget resulted in a real increase in after tax income, we are only working on the basis that income stands still when it does not. We estimate that incomes will rise by about the rate of inflation over the 12 months after the budget — by 2.5 to 3 per cent and the tax yield will increase more in percentage terms. On budget day the Government announced that its proposals would extract £730 million more in taxation in 1996 than in 1995. That is £2 million more in taxation for every day of the year. If one accepts there are one million taxpayers in the country, that represents £14 per week per taxpayer. That is the significant tax reduction which was delivered in this budget.

I welcome the PRSI reductions in so far as they go, but they do not go far. The employers' PRSI rate was reduced from 12.2 per cent to 12 per cent. That is not much when one bears in mind that part of it was immediately clawed back by increasing the ceiling on employers' PRSI from £25,800 to £26,800. The reduction in employees' PRSI from 9 per cent to 8.5 per cent was clawed back by the elimination of the PRSI allowance for tax purposes — another revolving door. Estimates suggest that the reduction in the lower rate of employers' PRSI from 9 per cent to 8.5 per cent will yield a net benefit of £2,500 to a clothing manufacturer employing 50 people. It will yield approximately £4,500 to a company employing 100 workers. It is no exaggeration to say that will not make any significant difference to cash flow. I scrutinised the budget and the Finance Bill carefully but I cannot find a scintilla of evidence of the significant or substantial tax reductions which the Minister mentioned and the Minister of State repeated tonight.

The Government insists on continuing to make a virtue of having kept within the letter of the Maastricht guidelines. As a demonstration of fiscal virility, that is a pathetic delusion. The Maastricht criteria were designed more than four years ago for a European Union——

We were one of only two countries in Europe to do it.

——in the grip of recession when deficits all over Europe were going through the roof. In November 1994 the then President of the Bundesbank, Herr Tietmayer, said that the criteria of a 3 per cent Government deficit should be at maximum when the economy was at the bottom of the economic cycle. For Ireland — the Minister of State and the Fine Gael Party should bear this in mind — adherence to the Maastricht criteria is not synonymous with good economic management because we are at the top of the economic cycle. We should not only exceed the Maastricht criteria, but build up reserves for when the current period of rapid economic growth slows down and the financial life support system from Europe is switched off, as it will be at the end of this decade.

It is not a question of qualifying technically to come within a single currency because that is only the start. The real issue is whether Ireland will be in a condition economically to participate within the discipline of a single currency. That will require a more competitive economy than the economy which this Government will hand over to Fianna Fáil early next year.

We are not ready to hand it over.

The economy can only become more competitive if the burden of taxation is substantially reduced. Whatever gloss is put on it, reduction in current Government expenditure is the sine qua non to reduce taxation; we cannot have the former without the latter. The Government has failed abysmally to grasp the public expenditure nettle, that will have dire consequences for this economy within the new harsher financial discipline which participation in the single currency will demand.

The Labour Party espouses social justice. Nobody should try to create the impression that low taxation is in some way the opposite to social justice or that low taxation implies that one is not in favour of social justice. They are two sides of the same coin. The best way — I have not heard a better way advocated — to promote social justice is to allow more people to participate in the economic life; to take people away from the margins and bring them into the mainstream. The best form of redistribution — another pet ideological goal of the Labour Party — is to reduce the 290,000 unemployed and allow more of those economically excluded people into the mainstream. The best way to promote social justice is to reduce taxation and the only way to do that and to make this country more competitive is to reduce current public expenditure.

We have wasted a great opportunity over the past two or three years to avail of historic economic growth rates. In the past 18 months in particular, fiscal continence has been cast aside. If it is not already too late. I appeal to the Minister for Finance when he is framing the next budget to please bear in mind the type of competitive environment this country will require to participate within the discipline of a single currency. I ask him to frame a budget which is not dictated by political exigencies because they will fail. It has been shown in the past that spending the people's money and buying their votes is a failed economic strategy. If the Minister for Finance, when framing his next budget, acts patriotically and tries to reduce taxation to create a more competitive economy in the interests of this country, he will be thanked more for that than for the other failed political and economic strategies.

Judge me by what I do, not by what I say. It is incredible that we must spend our time in the House tonight responding to this motion in the name of the Progressive Democrats, particularly when one looks at their track record for the only couple of years they were in Government. They want to reduce income tax and introduce various other measures, involving a shopping list of £2 billion, but they have not indicated from where £1 of this amount will be collected in savings in public expenditure. We all wish the tax bill could be reduced by £2 billion, and it is our intention to reduce it as soon as it is prudent and possible.

Regarding the track record of the Progressive Democrats in Government, public expenditure increased by 10 per cent in the two years they were part of the coalition Government with Fianna Fáil from 1990 to 1991. We are now expected to believe that Deputies McDowell, Harney and others have changed their minds and the Progressive Democrats have undergone a road to Damascus conversion. However, they are really electioneering on the backs of the productive sector in a desperate hope of securing more votes and a few more seats. They will not fool anybody, least of all the productive sector which minds every penny because it is hard earned. People in this sector want more disposable income in their pockets and they know a credible policy, such as that being implemented by this Government.

The Government will reduce tax rates, particularly the standard rate, and widen the bands as soon as possible. Great progress has already been made in this area. The Progressive Democrats promise 20 per cent and 45 per cent tax rates. However, this will cost £2 billion.

The Minister of State should get the figures right.

The Minister of State without interruption please.

This sum must be found in the money spent on health, education and social housing services but the Progressive Democrats are not responsible enough to indicate where this money will be found. This motion should be taken for what it is, opportunism of the worst type, and I am surprised by the Progressive Democrats. I would not have been surprised if Fianna Fáil had put down the motion because adversarial politics have been played long and hard across the House by our parties. However, I did not expect it of the Progressive Democrats, which was supposed to be a new party which would show us all the light and how things should be done.

The Progressive Democrats have fallen into an appalling trap. They are not credible and they can be judged by their actions which are contrary to what they claim to espouse now. They will not fool anybody, particularly Members of the House and the productive sector that pays the taxes which keep the country running. These people want to know about disposable income. When the Progressive Democrats were last in Government with Fianna Fáil in 1990-91, people with a £45,000 mortgage paid £40 a week more given the interest rates at the time. These rates were due to the lack of proper management of the economy and the public sector. People paid £2,000 a year more on average mortgages then. No amount of tinkering around with tax levels in a budget would give a person £2,000 more disposable income, but the Progressive Democrats expect us to believe the nonsense in the motion. They surprise me.

The Progressive Democrats were the new kids on the block who would change everything and who would not be opportunistic or canvass on the backs of the people. They are starting early because there is 18 months to go before the next election. They should examine their actions and the policies they put forward in the House should be more credible. Deputy McDowell spoke at length during the debate and mentioned the climate necessary to foster an enterprise culture. However, this Government, and not the Administration of which the Progressive Democrats were part, has made the most progress in this direction. This Government introduced the lower rate of corporation tax for small businesses in addition to reducing the existing rate. Over two budgets, this Government also introduced a 75 per cent relief from capital acquisitions tax to facilitate the transfer of family businesses in particular.

We should not be fooled by an empty record. The Progressive Democrats should be judged on their track record which is appalling in the area of public expenditure. Their motion is incredible and they are a major disappointment to those who expected more of them.

The Minister of State claimed great credit for the high growth rates in the economy and low inflation. However, the high rates of growth have nothing to do with the Government.

The Deputy should be fair.

Three reasons account for the growth rates. One is the success of the American economy which is pumping foreign investment into Ireland, while the second is the state of the British economy which is supporting increased Irish exports. The third reason is low inflation and low interest rates which came about as a result of the German economy maintaining low interest rates in Europe for several years. These three factors alone and nothing the Government has done account for the growth in the economy and low interest rates on mortgages.

That is absurd.

Deputy Harney knows it is absurd.

It is a fact. The Minister of State should read their Government's document. The two Ministers of State are in the Department of Finance, but they seem to know little about finance because they ask where cuts can be made and from where the money will come. The Minister of State, Deputy Coveney, mentioned the need to find £2 billion, while Deputy Upton mentioned £1.6 billion and Deputy Lynch mentioned £2.2 billion. They do not even have their sums correct. Does the House realise that since the Labour Party came back into Government three and a half years ago, £1.6 billion over and above inflation has been spent running the country?

What about the Progressive Democrats' spending? A 10 per cent increase in public expenditure.

The Minister should listen.

That party's figures and record are there; a 10 per cent increase in public expenditure.

Deputy Harney is entitled to the same level of order which obtained for previous speakers and the Chair will ensure she gets this. Deputy Harney without further interruption.

Since the Labour Party went back into Government, £30 million a week more, over and above inflation, has been spent running the country. If that money had been applied to tax reform, each taxpayer would have received an extra £30 a week in take home pay. If the Government had applied the proceeds of growth to tax reform in the budget and maintained spending in line with inflation, it could have reduced the standard rate of tax from 27 per cent to 22 per cent or the top tax rate from 48 per cent to under 40 per cent. Either of these moves would have done more for employment, job creation and social cohesion than the action the Government chose to take.

Some people seem to think the answer to every problem is to set up a new State agency. The Culliton report said the greatest single action the Government could take to generate employment and reward effort was to change the tax system. It went on to say that, in addition, there was a need to streamline the number of agencies for job creation. However, there are now 120 different agencies in the area of job creation which employ over 4,000 people. The job creation industry is bigger than distilling or brewing, two of Ireland's major industries. This is the current position.

I do not apologise to Deputy Upton for saying taxation was a major cause of, but not the only reason for, the job losses in Packard Electric. I did not criticise the Government for its handling of this matter unlike the Minister for Equality and Law Reform, Deputy Taylor, and others. I have not sought to raise false hopes among the workers and I have supported the Minister of State, Deputy Rabbitte, and the Minister Deputy Bruton. However, it is the case that those jobs have gone to Coventry because labour costs are lower there. The reason for this is tax. A worker in Coventry pays a marginal rate of tax of 34 per cent while a worker in Packard Electric paid a marginal rate of 56 per cent. A worker in Coventry must earn £547 before paying the top rate of tax, while a worker in Tallaght would pay it on under £230. This is the reality. In the last year in which Packard Electric was in full production and its 800 employees were at work, 35 per cent, or £5 million, of the total pay bill of £15 million went to the Government in tax and PRSI.

My party tabled this motion because we need a new deal for taxpayers. We need a new deal that will ensure that the present system, which is failing this country, is changed. It is failing this country because it is killing the incentive to work by imposing penal levels of tax on those on low and modest incomes. It is failing this country because it discourages employers from creating more jobs. High payroll taxes increase the cost of labour and reduce the incentive to create jobs. The present system is failing this country because it damages social cohesion. It is isolating thousands of our people to a life of unemployment where they have no dignity or self-esteem.

I would say to Deputy Upton that people are better off working, even in badly paid jobs, than not working. That was the answer I got when I met some of the Packard workers early this morning. They want to work and participate in their community and their country and any just society will give them that entitlement. Above all our tax system flies in the face of what could be regarded as a reasonable social justice.

Is it socially just that we impose four taxes on those who work for a living? Is it socially just that a single person who earns £250 per week pays £65 a week in tax? Is it socially just that a married couple with one earner on £300 a week pays £68 a week in tax? What does that do to support family life? Is it socially just that we take tax from the average earner at a marginal rate of 56 per cent and if they earn £10 in overtime the Government takes £5.60? Is it socially just that by way of PRSI we take 4 per cent of the income of a person on £250 a week and only 1 per cent of the income of those on £250,000?

Our tax system penalises in the main the low and middle income earners. The wealthy people in Ireland do not live here for tax purposes. They are based in tax havens in Gibraltar and Monaco. They do not pay the penal levels of tax that the ordinary workers of Packard were paying. They are not really interested in the levels of tax here because if they are high earners they will just be domiciled abroad. Many of our leading business people are tax exiles. Is it not ironic many of those who work on the factory floor pay more tax than the people who own the companies? Is that socially just? Is that what the Labour Party and Democratic Left believe is fair?

Our complicated system of taxation, which has been added to over the years in various Finance Bills, has given us an array of tax breaks, reliefs and allowances. We have reliefs and allowances for Deputy Higgins's Hollywood films, for holiday homes and for extensions to hotels. No doubt these are all worthy causes but the PAYE taxpayer cannot avail of them. Indeed, they cannot even afford the professional advice that could allow them to navigate their way around the array of allowances, reliefs and schemes.

A change in our tax system is fundamental if we want to encourage incentive, reward effort and create jobs. It is a fact that for every eight people who work in the wealth creating sector of this economy, there are 24 dependants. The smaller that sector gets, the less money we will have for health, education and many of the other fine things we all want.

I believe in a society where the Government does a few things but does them well, such as, protecting the citizen and providing a decent health and education system. I do not believe in a society where the Government runs airports and ports, makes fertilisers and steel, runs hotels and, recently, a pub in Dublin, dog tracks and many other businesses. Deputy Lynch criticised me for wanting to see Baldonnel airport commercialised.

Civilianised.

Is it not strange that the Labour Party and Democratic Left in Government have decided that the voters and residents of Dublin South West cannot use that airport? It cannot be commercialised but they will allow private jets land at Baldonnel. No doubt the tax exiles will be able to use Baldonnel's facilities, but not the ordinary residents of the area. What kind of party would give that facility over for private jets? It is of no economic benefit to the area. It is a great convenience to the people who are tax exiles and can fly in and out for their 120 days a year but it will be of no economic value to the majority of the people who live in the south west part of Dublin.

We need a new deal for taxpayers and I propose a five point plan which must be introduced if we are to have that fair deal. This plan can be introduced in the life of a Government. We must have two basic rates of tax — 20 per cent and 40 per cent. No worker should pay more than one tax. We should not have levies, whether for health, employment, or PRSI. No worker who earns less than the average industrial wage should ever have to pay the top rate of tax. No worker should ever pay more than 40 per cent of what they earn to the Government, at any level, by way of tax. Allowances, bands and so on should be index linked to protect against the ravages of inflation.

I do not know if many Members watched the British Labour Party's broadcast for the local elections last night. I had an opportunity to see it and it was all about tax. Tony Blair made it very clear that if one wanted a socially just Britain, the level of tax on work had to be lowered. I pointed out how attractive those levels of tax are in comparison to Ireland.

In Dundalk, for example, a worker on £300 a week is £17 a week worse off than the same worker in Newry. In addition, for the employer in Dundalk to give his employee an extra £1 by way of take home pay costs him £2.53. It is 50 per cent less in Newry across the Border. Even though those rates are much more attractive than in the Republic, Tony Blair, the leader of the British Labour Party, wants an initial rate of tax of 10 per cent. He wants to reduce tax in Britain which he believes is too high.

I hope the Tánaiste who canvassed for the British Labour Party in the last general election campaign, takes a leaf out of that party's book and that he studies very carefully what Tony Blair and his Labour Party colleagues are advocating for the British economy.

In the last election campaign the Labour Party ran with the slogan that they wanted to put justice into economics and trust into politics.

They failed on both.

We know from the recent fund-raising events about trust in politics and that ethics means that no Labour Minister ever resigns.

Labour has been involved in the preparation of four budgets and has had an opportunity to put justice into economics. It has had an opportunity to reward the ordinary worker and those who used to be the concern of the Labour Party. Instead of doing anything for them in the first year in Government it imposed a 1 per cent levy on ordinary workers which it was forced by the trade union movement to abolish in its second year in office.

Every commentator I read, every trade union leader I meet and listen to, every small businessman I meet and virtually every Deputy in this House, particularly the Deputies in Fine Gael. know that we need to change our anti-work tax system. It was very unedifying to watch Fine Gael Deputy after Fine Gael Deputy in advance of this year's budget tell us that we had to reduce personal levels of tax. How humiliating for them to watch the Government and the Minister for Finance ignore them completely.

The left wing parties have less than 20 per cent of the vote in this country but yet, because of ideological obstacles, they have stood in the way of reforming tax, rewarding effort and encouraging enterprise in this economy. Fine Gael is the largest party in the coalition. It is certainly in Government but it is not in power and they are not in control. One only has to look at the way the Taoiseach dealt yesterday with the comments of the Tánaiste's programme manager — he would not even answer my question. He took up his file to read what Minister of State, Deputy Burton, said last week. Today on radio he must have got the courage to say something because the Minister for Social Welfare, Deputy De Rossa, had expressed a view. The Taoiseach is afraid of the Labour Party.

Many people, particularly business people and workers, would have much more respect for the Taoiseach and for Fine Gael in Government if they exerted their authority in the interests of the taxpayers. As the majority in this House, the trade union movement and the country know, we must reform our anti-work tax system if we are to generate employment and reward effort. The greatest thing the Government can do, by way of learning a lesson from Packard and ensuring that we do not have more Packards, is ensure this is a competitive economy that recognises that high levels of tax on work, PRSI and other taxes on employment are a disincentive and sent jobs out of Tallaght and out of Ireland and into Coventry and other places.

Reforming tax and reducing the rates is not about cutting public expenditure. It is merely about controlling public expenditure. There is an enormous difference. We have spent £1.6 billion in addition to inflation since the Labour Party got back into office. If that had gone towards reducing taxes we would have a very different country — one that would genuinely reward effort.

Amendment put.
The Dáil divided: Tá, 64; Níl, 54.

  • Ahearn, Theresa.
  • Allen, Bernard.
  • Barrett, Seán.
  • Barry, Peter.
  • Bell, Michael.
  • Bhamjee, Moosajee.
  • Boylan, Andrew.
  • Bhreathnach, Niamh.
  • Bree, Declan.
  • Broughan, Tommy.
  • Browne, John (Carlow-Kilkenny).
  • Burke, Liam.
  • Burton, Joan.
  • Byrne, Eric.
  • Carey, Donal.
  • Connaughton, Paul.
  • Connor, John.
  • Costello, Joe.
  • Coveney, Hugh.
  • Creed, Michael.
  • Crowley, Frank.
  • Deasy, Austin.
  • Deenihan, Jimmy.
  • Doyle, Avril.
  • Dukes, Alan M.
  • Durkan, Bernard J.
  • Ferris, Michael.
  • Finucane, Michael.
  • Fitzgerald, Brian.
  • Fitzgerald, Eithne.
  • Fitzgerald, Frances.
  • Flaherty, Mary.
  • Flanagan, Charles.
  • Gallagher, Pat.
  • Gilmore, Eamon.
  • Harte, Paddy.
  • Higgins, Jim.
  • Higgins, Michael D.
  • Hogan, Philip.
  • Kenny, Enda.
  • Kenny, Seán.
  • Lowry, Michael.
  • McCormack, Pádraic.
  • McGrath, Paul.
  • McManus, Liz.
  • Mitchell, Jim.
  • Nealon, Ted.
  • Noonan, Michael, (Limerick East).
  • O'Keeffe, Jim.
  • O'Shea, Brian.
  • O'Sullivan, Toddy.
  • Owen, Nora.
  • Penrose, William.
  • Quinn, Ruairí
  • Ring, Michael.
  • Ryan, John.
  • Ryan, Seán.
  • Shortall, Róisín.
  • Stagg, Emmet.
  • Taylor, Mervyn.
  • Timmins, Godfrey.
  • Upton, Pat.
  • Walsh, Eamon.
  • Yates, Ivan.

Níl

  • Ahern, Dermot.
  • Ahern, Noel.
  • Brennan, Matt.
  • Brennan, Séamus.
  • Browne, John (Wexford).
  • Burke, Raphael P.
  • Byrne, Hugh.
  • Callely, Ivor.
  • Clohessy, Peadar.
  • Coughlan, Mary.
  • Cowen, Brian.
  • Cullen, Martin.
  • de Valera, Síle.
  • Doherty, Seán.
  • Foley, Denis.
  • Geoghegan-Quinn, Máire.
  • Gregory, Tony.
  • Harney, Mary.
  • Haughey, Seán.
  • Ó Cuív, Éamon.
  • O'Dea, Willie.
  • O'Donnell, Liz.
  • O'Donoghue, John.
  • O'Hanlon, Rory.
  • O'Keeffe, Ned.
  • O'Leary, John.
  • O'Malley, Desmond J.
  • Hilliard, Colm.
  • Hughes, Séamus.
  • Jacob, Joe.
  • Keaveney, Cecilia.
  • Kenneally, Brendan.
  • Keogh, Helen.
  • Killeen, Tony.
  • Kirk, Séamus.
  • Kitt, Michael P.
  • Kitt, Tom.
  • Lawlor, Liam.
  • Lenihan, Brian.
  • Martin, Micheál.
  • McCreevy, Charlie.
  • McDaid, James.
  • McDowell, Michael.
  • Molloy, Robert.
  • Morley, P.J.
  • Moynihan, Donal.
  • Ryan, Eoin.
  • Sargent, Trevor.
  • Smith, Michael.
  • Treacy, Noel.
  • Wallace, Dan.
  • Wallace, Mary.
  • Walsh, Joe.
  • Woods, Michael.
Tellers: Tá, Deputies J. Higgins and B. Fitzgerald; Níl, Deputies O'Donnell and Molloy.
Amendment declared carried.
Motion, as amended, agreed to.