Labour The Minister for Finance is implementing the "biggest stealth tax of all" by ensuring that one-third of all taxpayers will be on the top tax rate, the Labour Party Finance spokeswoman, Ms Joan Burton, told the Dáil Budget debate.
Responding to the speech by Mr McCreevy, Ms Burton said that ministers were "getting bright new Mercedes" but it was a "pity that the policies are driven by the same old clapped-out PD banger that seems to be driving this Government". She described the Budget as one "of silence" and she accused Mr McCreevy of being a "tax-and-spend Minister of a very unique kind".
"You tax unfairly and you spend unwisely," she said.
The Government had squandered the boom and now looked set to "fritter away the chances offered by an international recovery".
Ms Burton said the Minister never mentioned "one big item of news". By freezing the standard rate tax band, "he has ensured that tens of thousands of workers will be moved back to the higher tax rate, a third of all taxpayers next year".
Last year, 53,000 workers moved onto the top tax rate. This year a further 62,000 workers are going to move on to the top rate of tax, she said, making it the biggest stealth tax of all.
The Budget was "silent on healthcare, silent on education, silent on crime, silent on medical card holders".
Ms Burton added that "it is silent on child poverty, with an increase in child benefit that wouldn't buy a packet of Pampers at €6 a month".
Hitting out at the Minister's surprise announcement on decentralisation, involving at least six Government departments and State agencies, Ms Burton said that we could expect decentralisation to be talked about as much as possible between now and the local elections and then "a great silence will fall".
She welcomed Mr McCreevy's extension of the Section 481 tax relief to the film industry until 2008 and the increase in the investment ceiling per film to €15 million from 2005. Mr McCreevy said that further decisions would depend on their being no further abuse of the scheme.
"I'm glad the Minister saw sense," Ms Burton said. She was glad that abuses in the provision had been exposed and was hopeful that they would be prevented in future.
However, Ms Burton said that while Mr McCreevy had closed off some shelters, he had opened others and she believed that the Budget should have included a commitment to review the "tax exile" requirements, where non-residents can only be in the State for 183 days. She said the review should particularly look at the "Cinderella" requirement that a "resident day" only counts if the individual is still in the State after midnight. Ireland's rules on non-residency were "immensely more relaxed" and generous than those operating in other jurisdictions.
It was really bewildering to witness the extraordinary phenomenon of business leaders carrying on their business and social life in the State for more than 180 days and it was "nonsense" that such individuals did not pay tax.
