The Government is insisting that it was not advised by its Tax Strategy Group against proceeding with the controversial individualisation proposals announced in the Budget last month.
Following publication of papers from the group in yesterday's Irish Times, a Government spokesman said the group had not advised the Taoiseach, Mr Ahern, the Tanaiste, Ms Harney, or the Minister for Finance, Mr McCreevy, not to proceed with individualisation. He said the Opposition had seized on inaccurate information.
A spokeswoman for Mr McCreevy said many of the comments attributed to the Tax Strategy Group should have been attributed to a review of a report prepared by a committee within the Department of Social, Community and Family Affairs.
The Tax Strategy Group conducted the review of the report of the Working Group Examining the Treatment of Married, Cohabiting and One-Parent Households under the Tax and Social Welfare Codes following its publication in August 1999.
The Tax Strategy Group document quotes the conclusion of the working group that the impact of not allowing the transferability of tax bands between spouses could run against Government policy. However, contrary to the report in yesterday's editions of The Irish Times, the document does not say that this conclusion was shared by the Tax Strategy Group.
However, the Fine Gael spokesman on finance, Mr Michael Noonan, last night rejected the Government's interpretation of the review paper as "incorrect". It was clear that the conclusions in the paper were those of the Tax Strategy Group.
He said the group had examined the issues arising from individualising the income tax code so that tax bands would no longer be transferable between spouses. The Minister for Finance had been "economical with the truth" when he claimed that critics of the Budget were operating with the benefit of hindsight. He called on the Government to "scrap the Budget, recall the Dail and introduce a new Budget".
The papers released to The Irish Times under the Freedom of Information Act revealed that the members of the Tax Strategy Group had their final discussion on individualisation at a meeting on October 5th, 1999. The group includes most senior civil servants, including the second secretary at the Department of Finance, Mr Michael Tutty, and the Revenue Commissioners' chairman, Mr Dermot Quigley.
Senior political advisers to the Taoiseach, including Dr Martin Mansergh and Mr Gerry Hickey, are members of the group, as are the Tanaiste's senior advisers, Ms Katherine Bulbulia and Mr Maurice Roche.
The group concluded that the fundamental tax and constitutional issues involved in restructuring the tax system to direct resources to families with children needed further consideration. The group agreed that this matter was "not a priority for the forthcoming Budget".
The working group at the Department of Social, Community and Family Affairs had failed to reach agreement on "the abolition of married tax treatment and restructuring of transferability of bands and allowances". Given this situation, the Tax Strategy Group acknowledged that it could be "very difficult to generate a public consensus which would be necessary for any such radical change".
The Labour Party spokesman on finance, Mr Derek McDowell, claimed Mr McCreevy seemed to suggest after the Budget that he was surprised at the reaction to his proposals. "It is now clear that in important Government circles, at least, others were not surprised."
The Irish National Organisation of the Unemployed said the latest information on the preparation of the Budget "could further jeopardise the partnership negotiations". The INOU general secretary, Mr Mike Allen, said the controversy put a dent in the Taoiseach's credibility.