The fiscal consolidation measures introduced by this Government are among the most progressive in OECD countries, according to Finance Minister Michael Noonan.
Mr Noonan, who was appearing before the Oireachtas Finance Committee on the Finance Bill, had to fend off sustained attacks from People Before Profit’s Richard Boyd Barrett, Sinn Féin’s Pearse Doherty and Fianna Fáil’s Michael McGrath, and claims that the past two Government budgets have favoured the better-off at the expense of the more marginalised in society.
“A research study conducted by the European Commission shows that the fiscal consolidation has been very progressive,” said Mr Noonan. “It shows that 30% of the burden has been should by the 10% highest earners.”
Mr Barrett proposed an amendment that people earning below €60,000 a year should be excluded from the universal social charge (USC). Mr Noonan said this demographic pays €2.4bn of the €4bn raised in total USC payments every year, and criticised Mr Barrett for making this proposal without outlining where the Government can generate the funds to replace the €2.4bn.
“The premise for this argument is that there is some group of undiscovered billionaires out there and we can tax them and the rest of us will be fine,” said Mr Noonan. “There is no money tree out there. There are no magic beans. What we are doing is very difficult but it has to be done.”
He also rejected amendments by Sinn Féin for a third 48% tax rate for high earners, which Mr Doherty claimed would raise €365m every year. Fianna Fáil proposed adding 3% to the top USC rate for high earners.
Mr Noonan said that the tax rate on high earners was already at punitive levels. “If we were to adopt Deputy Doherty’s proposal, the marginal tax rate for high earners would increase to 59%,” said Mr Noonan. “These levels of taxation would be counter-productive. It would cause people to move away and it would be a tax on jobs.”
He argued that his budgets have been fair and helped turn around the economy. He said the budget was based on a GDP growth rate of 1.5%.
Mr Doherty proposed another amendment — that every budget be subjected to an economic impact assessment that would gauge the fairness of the measures introduced and outline what it would mean for people in lower socio-economic categories.
Mr Noonan rejected this proposal on the basis that it would be too costly and time-consuming for the 40 staff members in the Department of Finance who work on taxation policy. He said there were cost/benefit analyses of the property tax, research and development tax credits, among other “significant revenue-raising measures”. However, it would be too onerous to do a full analysis of every budget proposal.
The tax on maternity benefit would raise roughly €40m a year and it will only apply to women who are in receipt of salaries from their full-time positions.
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