Kenny says consumers 'fleeced'

If running the economy was based on penalty points the Government would already have lost its licence, Fine Gael leader Mr Enda…

If running the economy was based on penalty points the Government would already have lost its licence, Fine Gael leader Mr Enda Kenny claimed as the Taoiseach, Mr Ahern, rejected allegations that the Government was not controlling its fiscal policies.

Mr Kenny claimed the Irish consumer was being "fleeced" in the services sector.

Through price increases, the Government was responsible for 60 per cent of inflation since 2002 and this year Ireland would be the most expensive EU state.

He also told the Dáil that excise and other taxes were six times greater in Ireland than other EU countries.

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The Labour leader, Mr Pat Rabbitte, gave a list of additional charges that "Duncan and Mary" - created by the Minister for Finance to demonstrate how much a couple got out of the Budget - now faced: "€274 for college registration fees; €72 on ESB bills, €178 on VHI charges; €8.30 to visit an A & E department; €30 to tax the car; €69.50 stamp duty on credit cards and ATM cards; €40 on gas bills; €43 on the TV licence; 1 per cent VAT on fuel, hairdressing, cinema tickets and car repairs and an extra €200 on prescriptions."

Earlier the Taoiseach said that inflation was falling and that while indirect tax changes and increased administrative charges had affected inflation, it was "not to the extent" Mr Kenny was claiming. The charges were necessary to fund services TDs were demanding every day.

Rejecting allegations of lack of fiscal control, Mr Ahern said deputies "cannot have it both ways". He added that drink and other sectors had added 30 per cent of the inflation.

They had not put up excise tax but "the prices are put on anyway and that creates the inflationary impact". His comments were echoed later during Question Time, by the Minister for Finance, Mr McCreevy, who said that he reduced the VAT rate from 21 per cent to 20 per cent a couple of years ago, "with the proviso that I would like to see this passed on to the consumer.

"All the evidence suggested that nearly none of it was passed on by the retailer to the consumer and in the following Budget, I properly put it back up to 21 per cent."

Mr McCreevy conceded that it was a cause of concern to the Government that Ireland's inflation was higher than that of its main trading partners.

"Our inflation rate must be reduced to that of our EU partners if competitiveness, which has been so instrumental to our economic success, is to be maintained." He pointed out that Ireland had a higher growth rate and lower unemployment than its trading partners, a view echoed by the Taoiseach.

Mr Ahern said that Ireland still had a very respectable rate of economic growth, one of the lowest debt ratios in Europe and the Budget position at 0.6 per cent, was also one of the lowest in the EU.

However, accusing the Taoiseach of "waffling", Mr Rabbitte said he could not believe Mr Ahern would suggest that all those charges, indirect and stealth taxes, were demanded by the Opposition.

Mr Rabbitte said people on fixed incomes were now living in the second-highest priced economy in the eurozone and there was no evidence that the Government was taking any measures to address our competitiveness situation or the extent of the escalation of price rises. Mr Ahern however said the Government had been criticised by most economists for the above-average pay increases it had given.

This was done to protect people on fixed incomes when inflation was high.

"You cannot have a position, where you call for the Government to follow policies that control the economic situation and then call every day for increased expenditure in this, that and the other."

Marie O'Halloran

Marie O'Halloran

Marie O'Halloran is Parliamentary Correspondent of The Irish Times