Fine Gael and Labour have both blamed Mr McCreevy's budgetary policy for rising inflation, but have proposed different strategies to deal with the problem.
While Fine Gael yesterday called for the deferral of the benefits of promised tax cuts, Labour said all tax concessions should now concentrate on increasing the tax credit to the level of the minimum wage.
"Further tax cuts for the Minister's rich friends" would fuel inflation, said Labour's finance spokesman Mr Derek McDowell.
Fine Gael's finance spokesman Mr Michael Noonan said that the tax cuts promised in the Programme for Prosperity and Fairness must be implemented. However he suggested that those earning above a certain income should be given the bulk of the income tax relief through an "interest bearing bond" which could not be cashed for three years. This would ensure the tax cuts did not fuel inflation in the short term.
Mr Noonan said the last budget and the subsequent measures to make the individualisation plan more acceptable had overheated the economy.
Mr McCreevy must now "prepare and introduce a totally different budget for next year, and he must agree to an early review of the PPF," he said. Mr McDowell also blamed the last budget. "Minister McCreevy will now have to return to the drawing board on his plans to proceed with the controversial "individualisation" package and further reductions in the top rate of tax in this year's Budget," he said.
The budget had "injected too much money into the economy last year in tax cuts," he said. "Worse still, the reductions were aimed at those on high incomes and was guaranteed to add to the inflationary threat."
He also said the Government should discuss with the Social Partners the possibility of a reduction in the standard rate of VAT as part of a tax relief package.
"If a reduction of 2 per cent on the standard rate were announced in advance of the Budget, consumer pressure would ensure that this reduction were passed on. The reduction in the CPI would be almost 1 per cent," he maintained.
He called for the encouragement of foreign developers and workers to build the infrastructural projects proposed in the National Development Plan. The importation of plant and workers into the State would reduce inflationary pressure on the domestic building industry, he said.
It was ironic "that when the country was never more prosperous, when unprecedented exchequer surpluses are being chalked up and when growth rates are at an all-time high, most people in this country will end up the year worse off than when it started." The inflation rate meant that "all the pay gains under the PPF and all this years social welfare increases are cancelled."
Mr McDowell also called for moves to compensate people on social welfare who will be worse off as a result of inflation.
