The €565 million allocated by the Government in today's Budget to cover benchmarking payments depends upon the successful completion of new partnership talks, the Minister for Finance said tonight.
Mr McCreevy said that he had "provided" for the payment of the sum which was agreed under the PPF and accounts for 25 per cent of benchmarking. However as the full implementation of the agreement is dependent on the ratification of a new national deal there is no guarantee this money will be paid.
Speaking at a press conference this evening Mr McCreevy defended his decision not to make any major changes on personal tax saying this was "a time for consolidation of the public finances." He added that he doesn't intend to make any more major changes in taxation in the next few years.
He said the changes announced in today's Budget were "not stealth but deliberate policy" to keep the 90 per cent of minimum wage earners out of the tax net.
Mr McCreevy claimed that today's VAT increases on tobacco, spirits and diesel would add only 0.85 per cent to inflation in 2003 and the overall inflation is likely to fall towards the end of the year.
Much pre-Budget speculation focused on the tax breaks available in the horse breeding industry, which the Minister left untouched. Mr McCreevy maintained that the closure of the tax exemption on stallion fees would jeopardise the jobs of the 25,000 people employed in the industry and his decision was supported by the Commission on Taxation which recently examined such tax loopholes.
Among the most controversial measures announced today was the increase in mortgage relief for first time buyers as a way of compensation for the abolition of the first time buyers' grant. Mr McCreevy said the increase in mortgage was a fairer way of supporting new home buyers as the old grant had outlived its usefulness benefiting only builders.
One of the few surprises in today's Budget was the combined €100 annual levy to be paid by all the banks. When asked how this would affect the banks, Mr McCreevy replied "they wouldn't miss it."