Longford-Westmeath Fianna Fáil TD Robert Troy has said the Finance Bill brought before the Dáil cements a series of regressive budget measures that will have a significant impact on consumer confidence and spending, further eroding the capacity of businesses to grow and create jobs.
Speaking during the Dáil debate on the Finance Bill Deputy Troy said: “At a time when we should be rebuilding the domestic economy, the Government has increased VAT to 23%, the fifth highest rate in the European Union. This measure will have a devastating effect on local economies and small businesses and will cost jobs. The distributional effects of the VAT increase were examined by the ESRI. It found that those hardest hit by the VAT increase are households in the lowest 10% income bracket, households in rural areas and one parent families. Once again, we have had an attack on the most vulnerable.
Deputy Troy added: “How can the Government, which only a few short months ago heralded a reduction in the lower rate of VAT as a mechanism for creating jobs, subsequently argue that an increase in the higher VAT rate will not have any effect on jobs? Its argument does not add up. Many retailers in my home town of Mullingar argue that the increase in VAT will dampen demand and cost jobs. While we will have to wait on the figures for the first quarter to find out who is right and who is wrong, I predict the VAT increase will cost jobs.”
“We welcome some aspects of the approach that is being pursued in the Finance Bill, such as the increase to €10,000 in the universal social charge exemption. However, many elements of the budget and this Finance Bill are regressive. One after the other, Government backbench Deputies have praised the Government for its fairness and for protecting the weakest and most vulnerable. If only this were the truth. The ESRI assessment of the budget states:
Looking at the impact of the 2012 budget, it is clear that the greatest reduction in income is for those on the lowest incomes – a fall of between 2% and 2.5% for the poorest 40% of households. This compares with a fall of close to 1% for the next 40% of households, and of 0.8% for the top 20%.
Deputy Troy added: “Job creation and supporting small and medium sized enterprises in the domestic economy are the only solutions to the economic crisis. The Minister failed in the Bill to take action in two areas. Since my election to the House, I have continually highlighted the issue of commercial rates. Small family businesses and retailers, which the Government promised to support by amending commercial rates, are on their knees. Nothing has been done and the opportunity has been wasted.
“Similarly, no action has been taken on upward only rent reviews which the parties opposite promised to abolish during the general election campaign. Do the Deputies opposite remember making such promises? I remind the Government that its failure to act in this regard is also forcing small family retailers to close their doors.
Deputy Troy concluded: “There was an opportunity for the Government in framing the Finance Bill to soften the blow of some of the more regressive measures announced in the Budget and they failed to show the creativity and vision for this. I will continue to fight for support in the Dáil for the protection of community services as the budget measures are implemented.”