THE Progressive Democrats spokesman on finance, Mr Michael McDowell, said the Government had clearly given up on tax reform. During the opening debate on the Budget, he said it tinkered around the edges with, little effect on tax rates.
The £150 increase in the PAYE for a single person would reduce the tax burden by 41p a week. There would be minor improvements in PRSI payments but they would do little to alter the situation where a worker on £247 a week, £30 less than the average industrial wage, would be faced with paying the highest rate of tax. "That is the radical change achieved by a Government which includes Labour and Democratic Left."
When the first Fine Gael/Labour Coalition took office, only 2 per cent of workers paid the highest rate of income tax; now almost half paid it. "What this Budget achieves is to move the goalposts by an infinitesimal amount." The savings made by most workers would be clawed back by the reductions in mortgage interest and VHI tax relief and by the higher tax on petrol, cigarettes and the ATM cards.
There had been an increase in public expenditure of 6 per cent last year and further increases were promised next year, a time when there could have been real change. Change was needed to prepare the Republic for post-2001 when EU transfers would disappear.
With the Government's attitude to borrowing and public expenditure, the Republic would only survive then as "the sick man of Europe".
The people being asked to pay crippling rates of taxation were not the "haves". They were the people of Coolock and Ringsend earning below the average industrial wage who were discouraged from working. If they earned an extra pound, half would be taken from them in tax.
The Government should encourage people to work by not taxing work. There were signs it was getting the message in regard to PRSI, but instead of lowering the burden, it was shifting it from one group of workers to another. There is no appetite for radical change in this Government.
If the Government had simply contained the growth in public expenditure, it could have embarked on a programme of tax reform. It should have kept the public service pay bill to the same level as the private sector and contained borrowing. That would have provided £700 million which could have been used for tax cuts.
The resolutions on income tax and the BES scheme changes were passed by 79 votes to 68. The stamp duty increase on ATM cards was passed without a vote.
The Dail will begin a general debate on the Budget today.