Taoiseach's claims on tax increases
Deputy Micheál Martin challenged the Taoiseach to withdraw claims that the Government had not increased income tax, VAT or PRSI, citing the VAT rise. The Taoiseach defended the Government’s tax, employment and bailout-exit record, while exchanges continued over austerity, water charges and Greece.
The Greek debt crisis is very serious, not just for the Greek people but for the entire eurozone and European Union. People need to approach the crisis from very credible perspectives. In that context, I refer to remarks the Taoiseach made during the week on the situation, and in particular the manner in which he entered the fray, hectoring and lecturing and offering advice to the Greek Government, and in the process telling very big untruths. The Taoiseach said, "We did not increase income tax. We did not increase VAT. We did not increase PRSI". Most people found that statement and those remarks incredible. The economist, Seamus Coffey, summed it up succinctly when he said in speaking of the Taoiseach, "He is clearly wrong. Everything he said we did not do; we did do". In budget 2012 the standard rate of VAT was increased from 21% to 23%. That is a fact. The PRSI weekly allowance was abolished and the minimum PRSI contribution from the self-employed was significantly increased. Many additional charges and taxes, 45 in total, were introduced by the Government. I have a list of them with me. I do not know whether the Taoiseach was saying to Mr. Tsipras that if he pretends there are no tax increases, he will be fine and everything will be all right.
I say that knowing there are no easy solutions to a debt crisis. Hard decisions must be made. Very difficult decisions were made in this country, not least by a government of which I was a member. I equally accept that the Greek Government is behaving irresponsibly and playing Russian roulette with its own people. I do not approve of how the Greek Government is approaching the situation. Ultimately, the Syriza-Sinn Féin approach of saying to hell with everybody does not work. It creates a lot of stress, uncertainty and, ultimately, more misery for Greek citizens. However, the Taoiseach also loses all credibility when he does not tell the truth. His voice around the table loses credibility very quickly-----
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-----with the public not just here but in Greece when he says such things as he said during the week. If he wants to advise people towards a saner and more stable approach the first point of departure is to tell them the truth and not to tell them things that are fiction or an invention or whatever else. Does the Taoiseach regret his comments? Will he withdraw them and will he acknowledge that he was wrong in what he said?
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I am pleased to learn there is some movement today from the Greek authorities in respect of the difficulties in which the Greek people find themselves at the moment.
It is not the first time Deputy Martin has accused me of telling untruths in here. I happened to be at three European Council meetings where Prime Minister Tsipras spoke to the assembled leaders of both the eurozone and the European Union and in each case he made it clear that Greece did not want to default, that it would not default, that Greece wanted to remain a member of the eurozone, and that Greece wanted to do the things that are necessary to get its economy and its country back on an even track. At the special meeting of the eurozone on the Monday he repeated many of those objectives. He said clearly that the Greek Government accepted the objectives and principles set down by the institutions in so far as the path forward was concerned. He made the point that he was able to achieve social consent. He made a particular point about the tourism industry at all of those meetings in terms of how important and fundamental it was and is to the Greek economy. He also made a point about the number of islands off the mainland, the distances involved and the difficulties in so far as VAT is concerned, with particular reference to the tourism and hospitality sector. My comments in respect of VAT, PRSI and income tax were in that context, that our programme was not anti-growth or against the opportunity to create jobs and employment.
Deputy Martin said he himself was a member of a government that went about this business. That Government came to the House and said the programme negotiated with the troika was irreversible, unchangeable and could not be changed in any fact or area. That is the legacy he left. Those things were not acceptable to this Government and we set about negotiating alternatives with the troika.
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The Taoiseach will not be able to change the facts after the event, as he is attempting to do.
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I would be the first to say that the alternatives that were presented were by no means easy but those that were suggested and accepted were on the basis of being pro-growth, being competitive, and not increasing the tax burden and allowing for jobs to be created.
The first thing we had to do was deal with and reverse the situation Fianna Fáil had left of €750 million in tax increases over three years. A member of Deputy Martin’s Government said those increases were irreversible and could not be changed.
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Now, the Taoiseach is saying he did not change it.
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The measures Fianna Fáil put in place would have a disproportionate impact on the middle to low income families. As promised, the Government has not increased income tax, and has begun to unravel Fianna Fáil’s universal social charge, USC, and other huge income tax hikes.
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We reversed the cut to the minimum wage, which Fianna Fáil imposed on the lowest of the low paid and which it said was unchangeable.
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We cut the VAT rate for the tourism sector and abolished the air travel tax, which helped to stabilise the industry and create 30,000 jobs. These changes were made by the Government. We cut the lower rate of employers' PRSI by half for three years to encourage job creation and we kept our promise not to increase the standard rate of employers' PRSI.
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We also secured lower interest rates on our programme loans, as did others. We replaced the onerous Anglo Irish Bank promissory note.
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IBRC and all that. They handed it to Denis O'Brien.
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Deputies Martin and Adams and others used to ask, week after week, whether we were going to borrow €3 billion every year to pay the interest on it. We reached an agreement with the IMF to replace expensive loans with cheaper market funding, saving the taxpayer billions of euro over the period of the loans.
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The Government introduced water charges and handed Siteserv to Denis O'Brien.
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The Taoiseach is missing a few things.
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The changes we made were often very difficult in other areas, such as spending cuts and the temporary pensions levy. These were not easy decisions for us to make and they were difficult for people. While this was never going to be an easy path, it led us out of the bailout that was foisted on the country in which no changes could be made by Deputy Martin’s party. I am glad our people were able to exit the programme without conditions being attached to it.
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The Deputy Timmy Dooley school of economics.
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I would not like to see Deputy Kehoe's.
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No context was attached to any of this. Sometimes, it pays to say one was wrong.
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The Deputy should take his own advice.
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Surely the Taoiseach cannot believe it is credible for him to say he did not increase VAT. He increased it from 21% to 23% in his first budget. Could he please acknowledge that it actually happened so that everybody else need not scratch their heads wondering whether it happened or whether it was a figment of their imaginations? The Taoiseach was very clear that it did not happen. Today he is going on with a pretence, a fiction that his comments were made in the context of the Greek Prime Minister's concern about the Greek tourism industry. This is not the context in which the Taoiseach answered my questions.
Getting rid of the PRSI exemption for 1.1 million workers was a tax increase, although the Taoiseach does not want to call it that. The same applies to other things he said did not happen. I have a list of €3.5 million worth of extra charges and taxes. Before the last election, in every budget, the Taoiseach voted against every measure to correct the deficit and to get the macroeconomic position right. Again, he continued with a fiction that there was another way. It was wrong. When he came into government, he and the Tánaiste had to renege on everything they said and break promise after promise.
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Sinn Féin said we should tell the troika to go home and forget about the bailout, although it was needed to sustain education and social welfare spending. Although many falsehoods were propagated to the Irish people, what had to be done had to be done.
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The same problem applies to Syriza in Greece.
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What is the Deputy's position on Greece?
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Syriza made statements on which it could not possibly deliver, and we are in a crisis. I return to a very simple question I asked the Taoiseach. Does he accept that he got it wrong when he said VAT, income tax and PRSI were not increased? Does he accept that those three basic points were wrong?
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As I said, I was at the meetings at which the Greek Prime Minister made his case and outlined what his Government intended to do and where it intended to stand. I am glad there is some movement between the authorities and the institutions to work out a problem caused by instability and confusion which is having a great impact on ordinary people all over Greece. I am sure everybody here understands and empathises with the Greek people. In that context, I made the point at the European Council and eurozone meetings that Ireland had been left in an economic swamp by Fianna Fáil, which, when it abandoned ship, said none of it could be changed, that it was irreversible. I have pointed out some of the changes this Government negotiated with the troika and introduced that were pro-growth, pro-competition, pro-jobs and pro-enterprise. There were no income tax increases in the budgets of 2012, 2013 or 2014.
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The Taoiseach must be drinking the Greek ouzo.
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Some 330,000 people were removed from the USC entirely in 2012. This will rise to 500,000 this year.
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What about VAT? Was it increased?
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Income tax changes in the 2015 budget benefited 742,000 people and a further 87,000 were removed from the USC.
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Every taxpayer who paid tax and-or USC in 2014 will have benefited from the tax changes introduced this year.
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Were there VAT increases or not?
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During the first 100 days of the Government, in 2011, we introduced a 9% VAT rate for the hospitality sector. Well Deputy Martin may laugh at it.
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Of course I am laughing at it. Nobody believes the Taoiseach.
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When he saw the hospitality sector going down the tubes, he said it was irreversible. Employment in the accommodation and food sectors increased by 6,200 jobs, or 6%, within a year. According to Fáilte Ireland, 30,000 people are employed in the 9% VAT categories, which apply particularly to the hospitality sector.
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Steady now. The Taoiseach is talking up the Minister of State, Deputy Michael Ring.