Cuts should help those who hit the top rate too early

Mr Ken Doyle is assistant manager at AIB Bank in College Street, Dublin. He has been with the bank since 1964.

Mr Ken Doyle is assistant manager at AIB Bank in College Street, Dublin. He has been with the bank since 1964.

MY initial reaction when I heard the Minister had allocated £517 million for personal tax reductions was one of delight.

But I think he aimed it at the wrong people. The main problem with our taxation system is that people on low to middle incomes are hitting the higher rate too early; little of what the Minister did will change that.

The mechanism to do that is widening the tax bands and increasing personal allowances. The £250 increase in personal allowances for single people is simply not enough and the increase for married people is as bad.

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There was a lot of double-think in this Budget, for example in the area of capital gains tax.

While the reduction from 40 per cent to 20 per cent is welcome, the decision to reduce the current annual allowance for capital gains to £500 per annum (for both married and single people) will just mean more people paying tax.

If we are trying to create a shareholders' society, then this is not the way to go about it.

Many banks, for instance, operate employee share option schemes and they may be less attractive as a result of the decrease in the allowance.

Another disappointing feature is the total failure to come up with policies to deal with spiralling house prices. I would like to have seen a decent increase in mortgage interest relief, to support those under pressure at the moment.

The cuts in the lower rate of income tax were derisory and will mean that questions of low pay are not addressed for another year. Many of us feel that under the various national wage agreements we have had to tighten belts, but so far there seems to have been little reward for this. Certainly not for low-paid people. This is a misdirected budget.