The Fine Gael leader has criticised a reported proposal by the Economic and Social Research Institute that tax relief on mortgage repayments be phased out.
Mr John Bruton described the proposal, said to be contained in a Department of Finance-commissioned report, as "seriously flawed" because it failed to recognise that the State urgently needed to build huge numbers of new houses as well as encouraging people to build their own homes through private borrowing.
The study, which is likely to be the basis of the Government's National Development Plan for the next round of EU structural funds, is expected to be submitted to the Department of Finance today.
Written by a team of 15 economists and private consultants, led by an ESRI research professor, Mr John FitzGerald, and his co-editors, Mr Edgar Morgenroth and Ide Kearney, the report covers all aspects of Government spending in the first half of the next decade.
A draft version was circulated to Government Departments shortly before Christmas.
Responding to a report in yesterday's Irish Independent that the ESRI had recommended an end to all tax relief on mortgages, with the money saved going to social housing, Mr Bruton said he had to flatly reject this.
Housing price rises had been hardest felt by families whose space requirements were greater, he said. "Mortgage relief should reflect this on a tax credit basis and should be an instrument of policy that seeks to support and sustain family units rather than disadvantage them."
