Lenihan seeks broadening of tax base

IRELAND NEEDS to broaden its tax base, Minister for Finance Brian Lenihan has told the Dáil, as he said savings of €2 billion would be announced next week.

Closing the two-day debate on the economy, Mr Lenihan said that next year a further adjustment of €4 billion would be necessary “and a proportion of that must come from tax”. The Government plans to make €15 billion in cuts over the next five years.

The Minister also pledged to redouble efforts to stabilise the banking and financial systems and to improve competitiveness. There was a “fundamental” need to “economise to ensure that Ireland can pay its way and that we as a State do not live beyond our means”.

He said that discussions were ongoing with AIB and Bank of Ireland about recapitalisation and that the nationalisation of Anglo Irish Bank aimed to show that “the bank is secure and stable and will continue to conduct its business on normal terms”.

Mr Lenihan added that day-to-day business at the bank would continue and the new board would put a “particular focus on ensuring that all debts are fully pursued by the bank in a commercial way”.

He also said that “notwithstanding current difficulties, our medium-term economic prospects remain positive and our economy has the capacity to grow once the current difficulties are overcome”.

Mr Lenihan highlighted Revenue data from some 2.4 million income earners, showing that “38 per cent are entirely exempt from income tax, and the top 20 per cent of income earners pay 77 per cent of all income tax.

“Of these the top 2.5 per cent of income earners pay one-third of all income tax, the top 6.5 per cent of income earners pay a half of all income tax and the top 12.5 per cent of income earners pay almost two-thirds of all income tax.”

Earlier, the Opposition complained that economic proposals issued for the talks with the social partners were issued to the media before Oireachtas members.

Fine Gael deputy leader Richard Bruton said this happened “at a time when members were given the impression that the Oireachtas was being asked to play a role in framing a strategy to recover from the great economic problems we face”. He added that “the manner in which this House is being treated does little to the credit of politics at this time of crisis”.

Labour party president Michael D Higgins said the Dáil was being treated with “contempt” and he asked “how can a document be distributed to the media generally and yet not be distributed to elected members of this House”.

Sinn Féin Dáil leader Caoimhghín Ó Caoláin said: “We all have repeatedly indicated a collective responsibility to assist Government to address the current difficulties and we cannot do it with this continual effort on the part of Government to blindfold and drive to the irrelevant margins of this debate other voices in this Chamber.”

But Tánaiste Mary Coughlan said it was “quite laughable at the end of the day to hear the Opposition, especially Fine Gael, looking for a document which is a working document with the social partners when, in fact, they have no regard for the social partnership”.