Economic Policy:A range of tax cutting commitments, including the immediate reform of stamp duty before the Dáil summer recess, were reiterated by the Tánaiste and leader of the Progressive Democrats, Michael McDowell, when he unveiled his party's economic policy for the election in Dublin yesterday.
Launching the document entitled Sustaining Success, he said that in successive governments the PDs had been the party to champion policies that delivered the most positive environment for business and enterprise, based on Ireland's skilled and flexible workforce and one of the lowest corporate tax rates in the world.
"Ireland is in the process of continuing radical transformation - it is not something that is yet complete or to be taken for granted. This country is unrecognisable from the failed economic wreck of the mid-1980s. The pace must be kept up if Ireland is to remain at the forefront, to remain the envy of nations across the globe - and most importantly, remain a country that can deliver employment and prosperity to its population," he said.
He said the policies of low taxes, competition, and investment in innovation and enterprise, which the Progressive Democrats have championed in Government had resulted in record levels of investment and the development of a vibrant indigenous enterprise sector that can compete successfully on world markets.
"The Progressive Democrats do not see taxation policy as a residual of economic performance. Rather, taxation reform can and has been a driver of economic growth - a key policy-instrument in unleashing potential, stimulating growth, promoting enterprise and delivering employment and prosperity.
"Tax reform is an effective instrument in wage moderation and inflation control. We reject the analysis of the left that suggests tax reform follows prosperity. In fact, we consider inaction on tax reform as a threat to continued growth and prosperity, and devise our policies in this context."
The document outlined the economic progress that had been achieved since the PDs entered Government with Fianna Fáil in 1997. It pointed to reduction in the top rate of tax from 48 per cent to 41 per cent and the cut in the lower rate from 26 per cent to 20 per cent.
"In 1997, a single person on the average industrial wage paid 22 per cent of their income in income tax. In 2007, such a person will pay just 9 per cent.
"In 1997, the top 1 per cent of income earners contributed 14 per cent of the total income tax take. Now they contribute over 20 per cent. As a result, unemployment has tumbled from "old Europe" levels of over 10 per cent with emigration under the Rainbow, to less than 5 per cent with considerable immigration today."
Under the heading "New Opportunities" the document outlined a series of measures the PDs would implement if returned to government, subject to maintaining budgetary prudence.
They included commitments to adjust tax bands so that a couple, both earning, could earn at least €100,000 and only pay income tax at the standard rate, while a married couple with one earner could earn up to €59,000 and only pay tax at the standard rate.
It also proposed increasing tax credits so that couples earning up to €40,000 would pay no income tax and a single worker could earn €20,000 without being taxed. The party also proposes to reduce the higher rate of income tax to 38 per cent in the lifetime of the next government and reduce the lower rate of income tax to 18 per cent.
Economic policies: main points
Tax reform
Reduction in the higher rate of income tax to 38 per cent and the lower rate to 18 per cent in the lifetime of the next government.
Adjust tax bands so that a couple, both earning, can earn at least €100,000 and only pay income tax at the standard rate. A single worker could earn €50,000 before hitting a higher tax band, while a married couple with one earner could earn up to €59,000.
Increase tax credits so that couples earning up to €40,000 will pay no income tax. A single worker could earn €20,000 and pay no income tax.
Continue to increase tax credits and bands so that inflation is not used as a tax-raising mechanism.
Abolition of stamp duty for first-time buyers by a new government before the summer.
"Band" stamp duty rates so that owner-occupiers pay the higher rate only on the portion of the price over each threshold.
Stamp duty reform to be enacted before the new Dáil rises for the 2007 summer recess.
Other measures
Net national debt to be eliminated by 2013.
€8 billion to be spent on science, technology and innovation.
Double the output of fourth-level graduates and provide greater support for applied R&D.
An increase in the children under-6 payment from 1,000 to at least 2,000 per year.
A total of €12 billion in spending on childcare services, child protection and recreational facilities.
Up to 50,000 new childcare places will be created by 2010.
Schools will become accessible to students outside normal school hours to help commuting parents.
One year's free community-based pre-school - initially for low-income families or deprived areas.
Economic assumptions
Economic growth forecast of 5 per cent per year.
Day-to-day spending to grow in line with economic growth plus inflation. Total spending growth of 7.5 per cent.
Capital borrowing requirement to rise to 5 per cent of GNP.