FG deputy criticises tax relief in Budget

FINE GAEL backbencher yesterday criticised the income tax relief provided in the Budget Mr Brendan McGahon (Louth) described the reliefs as meagre, "disappointing and farcical from the point of view of middle income PAYE taxpayers, particularly in view of reductions in mortgage interest and VHI "allowances.

"Fine Gael supporters need reassurance that they will not be ideology of the two left wing parties," Mr McGahon said during resumed debate on the Budget.

He also condemned "fiddling" going on in social welfare. He had every sympathy for those genuinely in need but there was a lot of dishonesty in claiming benefits. It was amazing how people on the verge of redundancy developed illness problems before giving up work and had their illnesses medically certified so that they could claim social welfare.

"There is a major scam. We have created a social welfare monster and the alarm bells are ringing," he warned.

He complimented the honesty of the Fianna Fail spokesman on finance, Mr Charlie McCreevy, when he spoke about social welfare. Aspects of the system were in need of a thorough investigation.

The Minister of State for the Marine, Mr Eamon Gilmore, said that clearly the rising economic tide had not lifted all boats. "As a society we have a choice to confine the benefits of the boom to those who are participating in it and leave the damaged boats behind to sink, or to go back and repair those boats and ensure that society in Ireland develops in a cohesive way so that the quality of life for all of us is improved."

The argument from opposition spokespersons and from some commentators, that this year's Budget should have effectively confined itself to reducing taxes, was the worst kind of "short termism", because it ignored unemployment, which was the biggest problem in our society.

Ms Mainn Quill (PD, Cork North Central) said the association representing retail grocers reported 500 jobs unfilled in shops, and said young people were unwilling to take up jobs at £150 a week.

There was no use in complaining that the jobs were low paid. Much of the problem was the level of taxation on people with modest incomes. A person taking, up a £150 a week job paid £26.50 week in income tax and PRSI.

What encouragement was that to work? she asked.

We had created a deep divide in terms of personal taxation on this small island. A worker in Newry on £300 a week was £16 a week better off in take home pay than a worker on the same wages in Dundalk, just 12 miles down the road.

It would cost an employer in "Newry £1.67 to give an employee an extra pound a week in take home pay. The cost to the employer in Dundalk of doing that would be £2.54, some 50 per cent, higher.

"The message is clear if you want to create jobs, do so in Northern Ireland, not in the Republic."

The Minister for Agriculture and Food, Mr Yates, said the Budget provided a significant boost to the agriculture and food industries. The tax and other measures would provide for a more competitive food industry. The reduction in the rate of corporation tax from 38 to 30 per cent on the first £50,000 of income would benefit all trading and service companies and be of special significance to indigenous service companies in the agriculture and food sectors.