Press conference:Minister for Finance Brian Cowen said yesterday it was "not right" that a person earning €48,800 should pay the same level of Pay Related Social Insurance (PRSI) as a person on €200,000 per annum.
Responding to reporters' questions at the launch of Fianna Fáil's economic policy document at the Shelbourne Hotel in Dublin yesterday, he said the cost of the promised PRSI reforms would be €650 million, which the exchequer would reimburse to the Social Insurance Fund.
"There's no question of any funny mechanism here whatsoever, this is a transparent reform of the PRSI system which we believe is the right thing to do."
He added: "It is not right in our view that a person on €48,800 should pay the same level of PRSI as someone on €200,000. That's the present position."
Fianna Fáil was proposing to halve the rate for people on low to middle incomes and abolish the ceiling on PRSI payments.Those with higher incomes would now incur additional PRSI on earnings above €48,800 but at 2 per cent instead of the old rate.
He said the present PRSI system was "regressive in terms of who pays, and it needs to be progressive".
Asked if the Government intended to take an initiative with regard to stamp duty on the sale of houses, he replied: "We will do nothing that will disrupt the market. I have made my position very clear on this."
Claiming there were serious problems with Fine Gael's "ill-thought-out proposal" on stamp duty, he pointed out that it had been the policy of successive governments to concentrate on first-time buyers.
"That has always been the position, because they are the life-blood, if you like, of a planned, growing construction industry on the housing side, so that people who are coming into the market, first-time buyers, have access to getting on the rung as early as possible. So that's our position on that and I am not entering into any other speculation on it."
Pressed further on the stamp duty issue, Mr Cowen said he was not entering into speculation - as Minister for Finance he did not have the luxury of coming up with "ill-thought-out ideas" as the Opposition had done. He also warned about the equity impact of Fine Gael's "irresponsible" approach.
He added: "Stability in the market is crucially important. There are hundreds of thousands of people whose livelihoods depend on people not playing politics with that issue and I think it's important to say that. I am not speculating on the matter, full stop, at this time."
Taoiseach Bertie Ahern, who accompanied Mr Cowen at the press conference, said: "If the rate of increase in house prices for the next three or four years was to moderate down to very small increases, I will be very happy because it will make it easier for everybody.
"The key issue is the asset value against our mortgages is still a very good equity return."
He stressed it was crucial that nothing should destabilise the property market.
Mr Cowen was asked if there would be stealth taxes and cuts in services to pay for the Fianna Fáil package.
"There's no question of the burden increasing. There's no question of cuts in services whatever," he added.
The Taoiseach said the remainder of Fianna Fáil's policies in different areas would be announced in the near future.
Asked if he would name the date of the election, he recalled his undertaking that the Government would last until the summer of 2007.
Mr Ahern added: "The summer of 2007 is not too far off."
Asked if Fianna Fáil was involved in auction politics with the Opposition, he said: "I would reject totally the word auction."
