Seanad Report: Whether the Progressive Democrats liked it or not, the next general election would not be fought on taxation issues, Derek McDowell (Lab) said.
Labour would commit itself not to raise income tax rates and it would not propose increasing the 12½ per cent corporation tax rate. Capital gains tax would have to be examined to see if, for example, there was a migration of income tax into CGT, where one paid at a lower rate. He knew that the Department of Finance was concerned about that, and it should be. He did not know what conclusion the party's leader or finance spokesperson would come to, but it would be made known before the election.
As far as Labour was concerned, the next election would be about what we did with the €40-€45 billion in tax revenues that we had. "And on that issue this Government is extremely vulnerable and will lose very badly."
Mr McDowell was speaking on a PD motion noting the Government's commitment "to keeping the public finances in a healthy condition and keeping down personal and business taxes in order to strengthen and maintain the competitive position of the Irish economy".
The motion also urged the Minister for Finance to examine measures to preclude some of the wealthiest individuals in Irish society from availing of property and other tax incentives so as to avoid paying any income tax while at the same time enjoying facilities and services provided by the State. It called for consideration to be given to capping the total allowances a person could claim from property and other relevant tax incentives.
Finance Minister Brian Cowen said he would consider the need for measures such as a cap on the total allowances which would limit the amount any individual could claim from these incentives. "Any decisions in this regard will be taken in a thoughtful and balanced manner in order to minimise the impact on employment, particularly in the construction sector and with a view to ensuring that the positive role which tax incentives can play in social and economic development is maintained."
Martin Mansergh said it was clear that the Labour Party was making noises about capital gains tax, which suggested that they were still not fully convinced that it should remain at 20 per cent. He was sure people in business would duly note that.