Tax cuts pledge is centrepiece of programme for new government


THE incoming government aims to reduce the top rate of income tax by 6 percentage points, from 48 to 42 per cent, and the standard rate gradually from 26 to 20 per cent over five years. These are the strongest commitments in the Fianna Fail/Progressive Democrats Action Programme for the New Millennium, which was ratified by the two parties last night.

The first instalment of tax reductions will come in the new coalition's first Budget next November. If economic circumstances permit, the document says, the objective will be to reduce the higher tax rate to 40 per cent within the lifetime of the government.

The proposals in the 27 page programme, representing a fusion of the election manifestos of the two parties, include a "review of the electoral system", implementation of the recommendations of the McCracken report into the Dunnes Stores payments to politicians affair and a White Paper on defence policy within a year.

The programme sets out a number of key priorities to sustain economic growth, including commitments to run a current Budget surplus and to eliminate Exchequer borrowing over the next two to three years if present conditions continue. Net current spending growth will be limited to 4 per cent and capital spending growth to 5 per cent, on average, up to 1999. The terms of Partnership 2000 will be fulfilled.

The private sector will be invited to design and build new prisons which can then be leased and managed by an independent Prisons Authority.

A Green Paper on a basic income and the introduction of a national minimum hourly wage are among the proposals for an inclusive society. The establishment of a 25,000 place programme to tackle long term unemployment, paying the goings rate for the job, is also included.

Provision of a specific budget for preschool education, the extension of the ban on bituminous coal to all major urban areas and a study of the option to put the LUAS light rail system underground in Dublin city centre are other key priorities.

The establishment of a register of sexual offenders and the mandatory reporting of child abuse are among the social issues which will be pursued. A voluntary register to facilitate adult adoptees in contacting their birth parents will also be set up.

The programme contains specific commitments to increase the old age pension to £100 per week over a five year period and to protect public service pensions. There will be an urgent review of the implications for disabled people of the Supreme Court's decision on the Employment Equality Bills.

The new coalition promises to restore confidence in public life through a credible policing mechanism for ethical issues" and to bring local authorities within the ambit of the Ethics in Public Office Act.

The baldly stated "review of the electoral system" is not explained, but is the only completely new proposal in the programme. Otherwise, each party can claim credit for different aspects of it.

Fianna Fail's plan to finance local government by means of a fixed percentage of national taxation survives in its entirety in the programme. There is no mention of the PDs' proposal to reintroduce water charges.

The PDs, on the other hand, have negotiated a commitment to reduce the higher rate of income tax to 42 per cent, one percentage point below the level promised by Fianna Fail. The proposals to allow the private sector to build prisons, to widen the ban on bituminous coal and to introduce mandatory reporting of child abuse are PD policy.

Some high profile promises made by Fianna Fail and the PDs during the election campaign do not feature in the programme at all. The commitment made separately by the two parties to amend the Act providing State funding for political parties is not mentioned. Neither is the Fianna Fail leader's proposal to deal with the abortion issue by way of a new referendum and/or legislation. The joint commitment to publish the files in the Brigid McCole case on entry to government is also not mentioned.