Fianna Fail pledges £1.5bn tax cut in bid for a decisive result

A £1.5 billion tax package, tailor-made to target different income groups, was unveiled by Fianna Fail yesterday in a bid for a decisive result in the general election.

Promising a "stable and harmonious" government that would last "the full term to May 2002", Mr Bertie Ahern set out eight key priorities for reducing the tax burden over the next five years when he launched the party's election manifesto in the National Gallery. The main components of the tax plan include:

. A new introductory tax rate of 20 per cent for all workers, to be progressively extended to become the standard rate;

. Broader tax bands with the target that 80 per cent of total income is taxed at the standard rate;

. A reduction in the top rate of tax from 48 per cent to 43 per cent;

. A lower ceiling on the combined marginal rate for all deductions - income tax, levies and PRSI - of no more than 50 per cent. It is currently 56 per cent.

The Fianna Fail leader also announced new tax concessions for the elderly, for married people who stay at home to care for their children, and on child-minding expenses.

Mr Ahern gave a clear undertaking at the start of the launch that he would provide an open, honest and up-front style of government. "No one will have to worry about whether any public decision will enhance my personal wealth," he said, rather pointedly, "because apart from my house I don't have any.

Apart from taxation, the thrust of his message was that "whatever else we are able to do, we will not depart from our basic financial framework". They estimated that if they kept a tight rein on expenditure, at least £1,500 million and, perhaps, as much as £2 billion would be available for reducing taxation.

He promised a 4 per cent ceiling on current expenditure, equivalent to 2 per cent on top of inflation which, he said, created some room for ongoing necessary and desirable improvements in services.

He also addressed some of the economic issues on which he differs from his prospective partner, the Progressive Democrats.

Fianna Fail, which was firmly committed to maintaining the integrity of the social insurance fund as a measure of social solidarity", would establish a board to administer it.

Cuts in rates of PRSI would have to be funded by buoyancy in employment or by adjustments in the ceilings, he said, "though we would be against sudden drastic changes which would push up an employer's liability.

On State companies, he said that they would not be privatising Dublin Bus or selling off wholesale any vital public service.

"We approve of workers holding stakes in the State companies in which they work, where there is going to be a strategic partner," he added.

Fianna Fail had a clear and comprehensive policy programme setting out what they would like to do over the next five years, Mr Ahern concluded. "The contrast with the thin and flimsy 21 rainbow coalition points could not be greater. If they are united at all, they are not united on much," he said.

The Progressive Democrats will not operate a vote transfer arrangement with Fianna Fail in Ms Mary Harney's Dublin South "vest constituency, despite a call from Mr Bertie Ahern for his party supporters to transfer votes to the PDs.

The PD and Fianna Fail party leaders have made it clear that vote transfers between the parties would be decided by local constituency organisations. However, Mr Ahern confirmed yesterday that he would be seeking Fianna Fail transfers to PD candidates.

The decision of PDs in Ms Harney's constituency not to recommend transfers to Fianna Fail may be based on Ms Harney's attempt to win a second PD seat in the constituency, by asking supporters to give their first preference to her running mate, Mr Colm Tyndall, and then second preference to her - a strategy she has acknowledged as "high risk".