The Labour Party yesterday accused the Government of "Enron-style" accounting to give the impression they have met their commitments to have only 20 per cent of taxpayers paying at the top rate of 42 per cent.
Party leader Pat Rabbitte, and the party's finance spokeswoman, Joan Burton, took strong issue with the Government for using a new formula which concludes that only 20.7 per cent of taxpayers are paying tax at the higher rate.
Speaking at the launch of the party's pre-budget priorities paper in Dublin, Ms Burton said a Dáil reply from Minister for Finance Brian Cowen on September 27th showed that 31.65 per cent, or 683,700, of people were paying tax at the higher rate.
However, a reply from the Minister on the same issue on November 22nd showed that 20.7 per cent, or 446,700 people, were paying the top tax rate.
In his Dáil reply Mr Cowen said the latest set of figures were calculated on the basis that tax credits fully offset the 42 per cent liability in the case of all but 20 per cent of all income-earners. "Effectively, therefore, many of the top-rate taxpayers actually pay at an average rate of 20 per cent."
In its programme for government, Fianna Fáil and the PDs promised to bring the number paying tax at the high rate down to 20 per cent. Ms Burton yesterday accused the Government of "restating" the figures in such a way that it can claim it has fulfilled an election promise. Mr Rabbitte described the re-statement of the figures as "farcical and mere sophistry".
A spokesman for Mr Cowen defended the new way of calculating the tax figures and said the change was to take into account the effect tax credits have on those who earn marginally more than €32,000 a year. "Increased tax credits have reduced the amount taxpayers pay in recent years and that is why the new formula is applied," he said.
Meanwhile, Labour said the budget must target low- and middle-income families and tax reform should be channelled into higher personal credits and the widening of the rate band.
Mr Rabbitte said low- and middle-income families are being crippled by higher interest rates, high inflation and Government-imposed "stealth taxes".
On taxes, the party is looking for a €5,000 increase in the standard rate band to €37,000 next year and an increase in personal credits by €410. The party also says stamp duty should be reformed to favour first-time buyers.
On health, the party is calling for an end to tax breaks for private clinics and an expansion of full medical car coverage rather thathe GP-only scheme.
The party also wants a commitment to a free pre-school place for every child and for child benefit and the childcare payment to be paid fortnightly, rather than monthly and quarterly.
Mr Rabbitte said families don't need pre-election stunts or more tax-breaks for the well-off from next week's budget.