Ahern attacks coalition on "failure" to reduce tax

THE Fianna Fail leader deplored the Government's failure to cut income tax during the present period of economic growth. "Nob one should have to pay more than 50 per cent of their income," Mr Bertie Ahern said during resumed debate on the Finance Bill.

When the country was in a period of economic stagnation or in a currency crisis people understood it was difficult for a Minister for Finance to be generous. "They cannot understand, when we have had two years of record 7 per cent economic growth and good prospects of a third, that the Minister has nothing to give the taxpayer at all."

Labour and Democratic Left had "raided the taxpayers' kitty for large hikes in public spending, with an impotent Fine Gael party looking on". The so called champions of the PAYE worker had let the workers down. No wonder Democratic Left did not show its face in the two recent by elections and Labour did humiliatingly badly in Dublin West.

The vast majority of workers would barely notice a difference in their pay packets since April 6th because the money that could have gone to lower taxes had been pre empted by extra Government spending of 13.7 per cent over two years.

When account was taken of the ongoing reduction in mortgage interest and VHI relief to the standard rate the situation this year for most taxpayers would amount to no real change.

The tax system was now the biggest handicap to the growth of employment. Expenditure restraint was needed. There should be two priorities in regard to tax - to remove the burden from the low paid and ensure that middle income earners were no longer subject to a marginal rate of 56 per cent.

The tax system could be decisive in regard to the dispute over public service pay. "What matters is not so much nominal pay as take home pay." There should be strict adherence by all parties, including the Government, to the PCW, which gave scope for productivity based increases but which precluded industrial action.

He described job embargos in the public service as "blunt instruments" which ran counter to the spirit of such enlightened arrangements as the Strategic Management Initiative. While tight control of numbers was needed, more gardai, prison and court staff might be required to deal with crime.

"There are other places in the public service where we may not need as many staff. Where possible we should create autonomous self financing agencies who can recruit whatever numbers are needed for optimum efficiency. But job embargos obviously increase pay pressures because they tend to block promotion."

A tighter control of Government expenditure across the board would pay dividends. Lower tax levels could be sustained along with a higher quality of public services.

Regarding corporation tax he said a start had been made by introducing a lower rate for a threshold income of £50,000, but in Britain the lower rate applied to profits of less than £300,000. This was clearly an area where the longterm aim should be to align ourselves with Britain because of the positive employment effects.

The Government seemed to believe that all would be well if some tax relief could be given in the year of an election. "They could not be more mistaken. The public and social partners will judge this Government on the whole record of their budgets, and find it seriously wanting."

The 1966 Budget would bed considered a much better guide than: "any flash in the pan giveaway budget, assuming that they are able to put one together".

Mr Michael McDowell, Progressive Democrats spokesman on finance, said the Bill was a monument to the lack of vision and ideological confusion of the Government. In circumstances favourable to tax reform the Irish people were cursed to have a Government which did not have the appetite for a pro employment, pro enterprise reform of the tax system. "The cause of this malaise can be described in one word - Labour."

Labour had been in office for 13 out of the last 23 years and had largely shaped the tax and PRSI system. "Their insatiable spending plans have put a consistent upward pressure on taxation."

It was Labour and Fine Gael which between 1973 and 1987 raised the number of taxpayers paying above the standard rate from less than 2 per cent to 43 per cent. They brought surtax to the masses while doubling the national debt.

Ireland had an economy dominated by social democratic conservatism. There was no radicalism, which was very serious in a country in which there were many things radically wrong. Our "sick State" took 57p in taxes and PRSI out of every extra pound earned by a single worker on wages below the average industrial wage.

The Minister of State for Finance, Mr Hugh Coveney, said all the indicators were for low interest rates, low inflation and strong job creation. "I believe that the pro employment measures introduced this year will be effective, and my personal priority for next year and the priority of the Government will be for the reduction of the burden of personal income tax."

The Minister of State, Ms Avril Doyle, announced she was establishing a group, to be chaired by a senior official of the Department of Transport, Energy and Communications, to draft a code of practice for customer services in the commercial state companies. She wanted to put in place an agreed standard to which all relevant organisations would comply.

All the commercial state companies were operating in competitive. environments, but some were newcomers, having operated previously as monopolies. They would need to devote their attention to the delivery of quality services.

She was aiming to improve state services on the Civil Service "privilege" days after Easter and Christmas. This year the passport offices and Government Publications Sales office were open on the Tuesday after Easter. Next year, she said, the national newspapers would carry advertisements setting out the opening times of state offices.

Debate on the Bill continues today.