Éamon Ó Cuív Urges USC Relief, Warns on Corporation Tax Risks

Come back to the whole question of the wealth tax. It's an interesting question, but I think it's a little bit more complex than Deputy By Barrett thinks it is. The same thing in relation to corporation tax. One of the things I find, I hate in any tax proposal, is the situation that when you hit over a certain figure you go back to square one and you have to pay from square one. And just as a very modest thing, I was wondering how much it would cost to not charge any USC on the first £13,000. At the moment, if you hit £14,000, then people will tell me, well, nobody hits that, but particularly pensioners do, because remember, the social welfare income is encountered as income, so if they have a private income of £14,000 or £15,000, they're paying a little bit of USC to make a tax return and so on. And particularly if they are self-employed. And I was just wondering, how much, since we are going back to the real world now, how much would it cost to make that adjustment? Now, the second one, that I think would be very sensible to move to, I absolutely agree with the idea of the reduction from the 4% to the 3%. However, I was wondering, how much would it cost, allowing that anybody with a medical card doesn't pay more than 2%, how much would it cost to say the first £60,000 was at 2% as compared to what you have at the moment? I don't particularly like using the medical card as a means test for other schemes other than for medical cards. The reason for that is that you and I know that when the Minister of Health proposes to extend eligibility for means test, the Department of Public Expenditure then start looking at all the schemes that use the medical card as a shorthand for eligibility, as they do in this case. Now, I am not suggesting anybody goes backwards, I am suggesting that the people who are not benefiting from that actually go forward. And on the other hand, we all know in the real world that some of us live in dealing with very modest, people with very modest income. It is a huge inhibitor on people, they are afraid of losing the medical card. And GP cards are no substitute, this government has given a lot of GP cards out and that is welcome, but they are no substitute in most people's minds for the medical card. If we are getting down to the everyday everyday realities of the people, certainly I deal with and have been dealing with for the last 35 years, these are the issues that they are actually raising. So, in relation to both of those, I was wondering, could you give an indication of what the cost would be? I think that would be very useful. You might just also give us the growth figure for the USC, what it is earning. And I always, when people say abolish taxes and so on, I always say that is really attractive. And I remember, one day years ago when I was minister, somebody said, well abolish VRT, I think it was at the time. And I said, I am going to prove to you that VRT is a good tax, in terms of being progressive, compared to a lot of other taxes. But the first thing you have to tell me is we were, I think, getting at that time, something in the region of a billion euro from VRT. And my question was, what are you going to replace it with? Because you cannot abolish taxes without replacing them with something else or otherwise you are going to change the arithmetic of the budget. And as somebody who was here during the good times and the bad times before, I remember how quickly the people who had been telling us spend, spend, spend, reduce the taxes, taxes, taxes, were the very ones who absolutely criticised us for being profligate. When the money ran out and I saw where we had at that stage no, effectively no public debt. Not like the way it is at the moment, we have a very large public debt. We had large budget surpluses at the time, particularly when you take the value of money into account compared to now. And as I said, it quickly ran out when you got the double whammy of a reduction in taxes and an increase in costs, particularly in welfare costs. Hitting at the one time, it is awfully easy to go from a surplus of, no matter what figure, if it is 24 billion gross, fine. But it is very quickly, very easily to go from there to a deficit of twice that, if you get that double whammy of a reduction in the taxes, particularly the three taxes that hit us. People often think it was capital taxation. It was not actually. It was POI, PRSI and VAT that really were the big reasons for the downturn in terms of the Exchequer funding at the time. Obviously, the banks and the building crisis were the cause of the downturn in the income. Now, the issue of taxing corporations, I think, has been well debated. But it seems to me that no matter how well you debate this issue, people blindly go forward as if we did not live in a bigger world. There are salaries paid to people in this country for services. And to me, on an objective level, they are very high. But I do recognise that if you are in international competition, you have to pay the international rate. So people, Deputy McGrath was talking about people emigrating. But some of the people are emigrating to America or to wherever because the salaries are better. And a lot of these would be in the health sectors and so on, which are paid for by the state. Or people go to Dubai teaching or nurses or so on. And good luck to them. But the reality is, if you want to pay those kinds of salaries, you have to keep coming up with the money. So it is not as simple as people make it out to be. But going back to the corporations, I wonder what the analysis, I presume an analysis has been done by finance, as to the lightly migration of some of the big corporates who are the big employers, because we seem not to have a very conjointed debate on this. What would be the risk of flight of some of the big multinationals who are paying the most corporation tax, a totally disproportionate amount, if you were to change your corporation tax? And the consequence of that in loss of POI, PRSI and USC, which would follow, and we would once again get into the whammy of losing our industry. It might not be an ideal world, because we are not living in an ideal world. These corporations have enormous choice and enormous power. And the other thing is, it is not necessarily that they leave. But what I am told is the risk, often, is that the pipeline drives up, and as the companies we have stop being the top companies, the new companies to replace them do not come in. So if we go back 40 or 50 or 60 years ago, companies that were world-renowned became redundant, because technology caught up with them. If you ever want to see a brilliant example of this, I was in Rochester, New York in 2019, and they were explaining to me that there were thousands and thousands implied in Rochester, New York. And one was Xerox. But Xerox continued making photocopiers, and computers caught them out. And the other was the film company, the biggest photography company that used to make all the films, when you used to get a roll of film and you would get a process. Kodak, Kodak, yeah, absolutely, Kodak. Kodak were there, and they persisted with the technology, and nothing came to replace them. And they did not replace the technology. Now, our danger is that the pipeline of new and modern and replacement technologies will come in here. I have certainly seen in my lifetime lots of buying technologies disappear, and only for the fact that we had new companies coming in all of the time, we would have lost an awful lot of our wealth if we had not kept it really, really attractive for it to come in. It might not be an ideal world, as I said. In a world that everybody was generous, that everybody was filling traffic in a massive way, and companies did not try to make money. It would be grand, but in the real bad world out there, I would be interested to see the analysis that has been done on the movement. Similarly, in the wealth tax, do we know of companies, of countries, smaller countries, like Ireland, who have large wealth tax, and have we any data on what has been raised by wealth tax? And is there any data on whether there was a flight of wealth by the most wealthy in those circumstances? Because if you are trying to hit the multi-billionaires, my suspicion would be that their money would be fairly mobile, and that you just get a flight of finance. So I would be interested in getting your views on that, and what analysis has been done as to why a wealth tax would have downsides that we would have to think of very carefully before we found that we were in a net-zero game where we were actually losing money rather than gaining money by changing it, because of the mobility of wealth in the world. And as I said, I am not lauding the fact that it is that way. I think there is way too much wealth in too few hands. I believe in the old filofile philosophy of a dispersed ownership of wealth. I am a great believer, for example, in as many people as possible, getting back to the 80 per cent owning their own house and so on. But I do see challenges all the time in the very open economy that we have.