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Ó Caoláin says Welfare rises and tax benefits already wiped out

4 December, 2003


Speaking in the Dáil Budget debate Sinn Féin Dáil leader Caoimhghín Ó Caoláin said social welfare increases and alleged tax benefits for the lower paid had already been eaten up by welfare cuts and stealth taxes. On taxation he said Minister McCreevy had "done nothing to reform, nothing to target the highest earners, nothing to tackle multi-millionaire tax exiles or tax evasion. There will be more people on the higher rate of PAYE after yesterday's budget".

Deputy Ó Caolain pointed out that there were "huge variations within that higher tax band —from workers on average industrial wage to the top executives who awarded themselves 50% wage increases last year".

The Sinn Féin leader said the Budget was "a blank page" as far as Health is concerned: "This Budget has again spurned the Fianna Fáil promise to extend medical cards to a further 200,000 people because this Budget was totally silent on health".

FULL TEXT FOLLOWS

Minister McCreevy has repeatedly asked us to judge him on all of his budgets. We do. Since 1997, this Government has increased inequality in Irish society and widened the gap between rich and poor. In 1997, some 18% of people were living on incomes of less than half the average. The figure today is nearly 21%. After six years of unprecedented economic growth, that should have been reduced to single figures.

This is a Budget of inequality which does absolutely nothing to narrow the gap between wealth and poverty maintained by Minister McCreevy in every Budget since 1997.

The Government's own National Action Plan Against Poverty and Social Exclusion says nearly 25% of children are living in poverty — that‚s about 300,000 children. 70,000 children are in consistent poverty where there is real daily hardship such as lack of a hot meal or lack of proper clothing. That is obscene in a small country like ours where there is so much conspicuous wealth. And it is a reality which was denied by the Taoiseach in the days leading up to the Budget and in the face of all the agencies who are working on a daily basis with marginalized communities.

That denial of the reality of economic hardship for so many in our society was clearly manifest in the Budget presented yesterday.

The Government has broken its promises to deliver substantive increases in Child Benefit and Old Age pensions to levels that will meet the National Anti-Poverty Strategy targets. An increase of €1.50 and €2 per child per week is an insult from a Government that has repeatedly claimed to be addressing child poverty.

Increasing child benefit for the first and second child to €142 per month and to €176 per month for third and subsequent children would have cost an estimated €216 million. The totally unnecessary and gratuitous cut in Corporation Tax from 16% to 12.5% in Budget 2003 cost the exchequer €305 million according to the government's own figures. That speaks volumes about the thinking that dominates this right-wing coalition.

The social welfare increases in this Budget are totally inadequate and are already undermined by stealth taxes such as local authority charges, the savage 16 cuts to welfare entitlements, and the cuts in CE schemes. It is disgraceful that the government did not use its increased revenue to reverse these cuts, especially the miserly and dangerous Rent Allowance cut.

The Rent Allowance cut is a Fianna Fáil/PD Catch 22 — you can't get Rent Allowance if you haven't been in a flat for six months but you can't afford to rent a flat if you don't have rent allowance.

The social welfare increases have already been undermined by inflation, by stealth taxes, by the savage 16 cuts, which remain in place, and by the loss of community services provided with the help of CE schemes. The Budget was delivered on the very day when this Government voted against a Dáil motion to reverse those CE cuts.

The minimal tax measures in the Budget have been presented as good news for the lower paid but they are no such thing. The Minister has done nothing to reform, nothing to target the highest earners, nothing to tackle multi-millionaire tax exiles or tax evasion. There will be more people on the higher rate of PAYE after yesterday's budget. There are huge variations within that tax band — from workers on average industrial wage to the top executives who awarded themselves 50% wage increases last year.

Last year in our Budget submission Sinn Féin asked the Finance Minister to undertake a survey that exposed the minuscule tax take from the super rich in Irish society. The Revenue Commissioners did the survey, as they had previously done in 1997, and the results for 2002 were just as damning. Of the top 400 earners surveyed, 117 had an effective tax rate of less than 30%, in a system where over 500,000 PAYE workers are paying the top 42% rate of income tax. 18% of the top earners were paying less than 15% tax. Some were paying no tax at all.

It is appalling that there are some 20 tax relief schemes where the exact cost to the State of the lost tax revenue is not actually known. In many cases it is simply putting money into the pockets of the wealthy such as the millionaire operators of the bloodstock industry. Nor do we have a proper assessment of the actual benefit to the economy of reliefs or an evaluation of whether direct State investment of funds in many cases would provide a better social and economic return.

We do know the benefit of Section 481 relief for the film industry and I welcome its retention.

It is workers on average and below average incomes who are being hit hardest by stealth taxes. Those taken out of the tax net with great fanfare yesterday are already having that benefit wiped out by increased health charges, ESB bill rises, local authority charges, bus fare rises (if you are lucky enough to have access to a bus) and motor tax and fuel rises if you depend on a car to get to work.

This Budget has again spurned the Fianna Fáil promise to extend medical cards to a further 200,000 people because this Budget was totally silent on health. And it was equally silent on housing.

On disabilities, the €25 million increase in current expenditure in support of people with disabilities is welcome. But much more was needed — especially if the promised rights-based Disability Bill is to be implemented. The Government has again failed to meet its own commitment to increase Disability Allowance to the level of Contributory Old Age Pension. And it has again failed to even recognise a key requirement of people with disabilities — that is a Cost of Disability Payment Scheme to help meet the many extra costs people with disabilities incur as a result of their disability. These people are still assessed on the basis of means rather than needs.

This Budget was an empty package wrapped in tinsel paper marked 'decentralization'. Decentralisation is not a Budget measure but something which has been promised by Minister McCreevy every year since 1999. I welcome plans to move Departments out of Dublin but we must ask how long it will take to deliver these promises. There is no timescale for this programme but it is obvious that the main time period the government has in mind is run-up the local elections of June 2004.

When we will see actual delivery of the promised decentralization programme is another question. The surprised reaction of trade union representatives is ominous. The Fianna Fáil backbenchers who have been given this shiny present by Santa McCreevy might very well find that the shine will go off it after the June local elections.

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