'Many socialists' will be happy with new package, says Cowen

Press conferenceThe Minister for Finance, Mr Cowen, has said "many socialists" will be happy with the Budget he introduced yesterday in the Dáil.

He indicated that he had confidence that the Budget would find favour on the Fianna Fáil backbenches by saying that "many constitutional republicans" would also be pleased with the package.

At a press conference last night in Government Buildings, Mr Cowen said he was committed to introducing transparency and equity in a review of tax breaks before next year's Budget but said the "community benefits" that arose from some of the breaks would have to be considered.

Citing the "common good", he said such benefits included employment, VAT payments and additional revenue from stamp duty. While Mr Cowen said he was not in favour of "unrestricted access" to tax breaks given the current state of the economy, he was conscious of the argument against the creation of a minimum tax rate which said that such a rate would become the target for high earners.

The Minister said his Budget package had proved that those who favoured low taxation were not "in some way ambivalent about public services". High taxation had led to high unemployment, he said.

He acknowledged that the Government will have to revisit the question of excluding minimum wage earners from the tax net when the minimum wage increases under the next social partnership deal.

"We made the choice to take those on the minimum wage out of the tax net and obviously we're aware that this matter is up for review again," he said.

"Until there's another minimum wage, we'll see what that is and we'll deal with the issue at that stage." Speaking of a "transformational change" in the tax code, he said the Government remained committed to the objective of excluding 80 per cent of earners from the higher tax band.

Such a change would have to be considered in the light of the resources available to the Government and the question of whether to exclude an increased minimum wage from the tax net again. "They're not necessarily an either-or equation. But I'm just making the point - you can't do everything in one Budget and we've our choices today and we stand by them," he said.

"If you like, we've dealt with the first structural issue. On the second issue of moving toward the target of 80 per cent is something that will have to be considered in future Budgets."

Mr Cowen stressed the impact of the Budget changes for average earners in the period since the Government came to power in 1997.

"After this Budget, the average industrial worker, compared to 1997, has an industrial wage which is €11,300 more than in 1997 when we came into office.

"And despite the fact that is has risen by that amount, he is paying in net terms, €220 less than he paid in 1997."

He had considered the "human element" when deciding not to increase excise on cigarettes. Asked what this meant for smokers, he said he "wanted to give them a break".

While he introduced a tax break for microbreweries after receiving a pre-Budget submission from the industry, he quipped that he was in favour of more beer brands on the market.

Mr Cowen said he was not daunted by the prospects of introducing his first Budget. He had behaved as "my co-operative self" in his discussions with other Ministers. After 21 years in the Dáil, he was familiar with the Budget process and had been through "torrid" bilateral meetings with previous Ministers for Finance.