TAOISEACH BRIAN Cowen has confirmed for the first time that the Government will increase income taxes in its efforts to bridge a widening exchequer deficit.
During the course of his Fianna Fáil Ardfheis speech on Saturday night Mr Cowen said taxes would be increased without specifying which particular form.
But in an interview yesterday evening on the new Dublin radio station 4FM, he said income tax would be targeted.
“Income tax rates are going to go up. Obviously we have got to look at other areas where we can broaden the tax base,” he told the station. He said the tax would be levied on the basis of ability to pay but added: “I have to say that the gap is so big that everybody will be asked to make a contribution and those who can bear it most will have to bear it best.
“We have built up a tax code at the moment where 40 per cent of the workforce are outside the tax net, where four fifths of tax payers pay at a rate of 20 per cent.”
Mr Cowen also ruled out a national government with Fine Gael, describing the idea as unrealistic.
“[Fine Gael deputy leader] Richard Bruton himself said last week that his priority was to get rid of this Government,” he said.
Asked if he had completely dismissed the idea, he replied: “I am not going to pooh-pooh it. But I am not saying it is a realistic runner in the present circumstances.
“We have in our parliamentary democracy a government and an opposition. It’s up to the Government to govern and for the Opposition to be constructive if they wish to put forward proposals if they wish. They have to be integrated into an overall whole to make sense.
“At the moment we have a coalition of confusion on the other side. The Labour Party has been saying we need to be spending our way out of this problem. The Fine Gael party has been saying we have been spending too much. The bottom line for me is I have to do my job is to make sure we deal with the problem,” he said.
Mr Cowen denied he had lost his leadership authority.
“A lot of people will ask [because] this has happened so swiftly and severely, how did this happen? We have to explain that. I do think that people are at that point where they realise that this is an international phenomenon,” he said.
On a personal level, Mr Cowen said his health was good and he was sleeping well. “I am up for this job. It takes up a lot of my time. I am very determined to lead the Government in these difficult circumstances. My job is to get on with the job.”