Dáil Éireann - Volume 590 - 14 October, 2004

Priority Questions. - Budget Statement.

  2. Ms Burton asked the Minister for Finance when the Book of Estimates for 2005 will be published; the date on which he expects to deliver his Budget Statement; his priorities for the forthcoming budget; and if he will make a statement on the matter. [24850/04]

  Mr. Cowen: The Abridged Estimates Volume will be published on Thursday, 18 November 2004. Budget 2005 will be presented to the Dáil and published on Wednesday, 1 December 2004. As the Deputy knows, it is not usual practice to comment on specific budgetary policy measures in advance of the annual budget and I do not intend to deviate from that. The Government’s economic and fiscal priorities are based on An Agreed Programme for Government and are designed to sustain and continue the record economic and employment growth levels we have seen since we first took office in 1997.

  Ms Burton: Does the Minister agree with me that much of the buoyancy in tax receipts for the past two years has arisen from income tax largely on the backs of contributions made by PAYE workers for whom tax bands and tax credits have been frozen? As a consequence, these workers are looking to the Minister for tax justice in the forthcoming budget.

  An Ceann Comhairle: A question, please.

  Ms Burton: Does the Minister agree that it is not appropriate that more than 600,000 PAYE [679] workers pay tax at the top rate? The Minister spoke of social partnership to my colleague. He has indicated to the social partners that only 20%——

  An Ceann Comhairle: The Deputy should confine herself to asking a question. Otherwise she will not have time to ask a supplementary.

  Ms Burton: Does the Minister agree with what has been stated as Government policy to the social partners that only 20% of PAYE workers should pay tax at the top rate? Can we look forward to some tax justice for PAYE workers in the forthcoming budget?

  Mr. Cowen: On tax justice, some 380,000 PAYE workers were exempt from tax when this Government took office in 1997. Today, as a result of seven successful budgets introduced by my predecessor, 622,000 taxpayers are exempt from tax. For the 240,000 taxpayers who previously paid tax under the rainbow coalition of previous Governments, that is defined as tax justice.

It is misleading to say that half of those paying tax do so at the top rate. The number of income earners exempt from tax has grown steadily since 1997 from 380,400 to 622,800. That represents an increase of well over 60%. A 60% increase in the number of people not paying tax has occurred under this Administration, yet I am asked to ensure more tax justice. Results from the very significant increases in the personal and employer tax credits, formerly allowances, in successive budgets have also brought about greater tax justice because, as the Deputy will be aware, they favour the lower paid. That was not the case under the previous system.

The problem with using the term “taxpayers” rather than “income earners” is that the more people we exempt from tax using the personal and-or employee credits, the higher the percentage of taxpayers in the top rate even if there is no increase in numbers. The more people we take out of the tax net, the fewer people who pay tax, yet Members opposite use statistics to suggest more people are paying tax at the higher rate in statistical percentage terms even though there has been no increase in numbers. While I would not suggest it is mischievous on the Deputy’s part, it is a misleading and a partisan use of statistics. If fewer people pay tax — to the tune of 240,000 — than was the case when this Government came into office, that is real tax justice. When one brings about change under the credit system introduced by my predecessor rather than the allowance system, that too is greater tax justice because it ensures more people pay tax at the standard rate.

The role of this Government will be to ensure that those on low pay receive the best benefits. I will not accept the contention that this Government has not been according tax justice to more [680] taxpayers. Not alone has it done so, it has reduced rates. The net tax take from those on the average industrial wage, including PAYE, PRSI and the health levy, has been reduced by 10% from 27% under the rainbow coalition to 17% under this Administration.

  Ms Burton: Does the Minister agree that the same has not been done for those he describes as average taxpayers as has been done for the wealthy in terms of the creation by his predecessor of massive tax shelters? Some wealthy taxpayers in this society will make zero tax returns this month while 632,000 PAYE workers will pay tax at the rate of 42%. The Government has indicated——

  An Ceann Comhairle: The Deputy must ask a brief question as we are running out of time.

  Ms Burton: Does the Minister agree with the Tánaiste that something has gone sadly wrong with the PAYE tax system that so many workers now pay tax at the top rate of 42%?

  An Ceann Comhairle: I will accept a brief reply from the Minister.

  Mr. Cowen: I have just explained the situation for the Deputy.

  Ms Burton: Does the Minister not agree with the Tánaiste? The Tánaiste agreed with me.

  An Ceann Comhairle: Deputy Burton should allow the Minister to continue.

  Mr. Cowen: I am trying to answer the Deputy’s question. Some 240,000 people who paid tax when Deputy Quinn was Minister for Finance do not do so now. There are 1.8 million people in the workforce. We have made significant improvements in terms of tax justice for ordinary PAYE workers. The rates previously charged when the Deputy’s party was in Government were reduced by 10% by my predecessor.

  Ms Burton: More people pay tax at the 42% rate.

  Mr. Cowen: That is further——

  Ms Burton: It is not a low rate, it is a high rate.

  An Ceann Comhairle: Deputy Burton should allow the Minister to continue without interruption.

  Mr. Cowen: Some 0.76% of total taxpayers pay tax at the marginal rate.