THE Progressive Democrats' plans for major cuts in personal tax rates, the phasing out of employee PRSI and reductions in corporate and capital tax rates have been condemned by Government Ministers.
While the PD leader, Ms Mary Harney, said she was proposing "the most dramatic tax reform this State has ever seen", the Minister for Social Welfare, Mr De Rossa, said the party's proposals would only be achieved "by slashing a wide range of essential social services".
The Minister for Enterprise and Employment, Mr Bruton, said the proposals "would lead to Partnership 2000 being torn up".
The Progressive Democrats propose to reduce the two PAYE rates from 26 and 48 per cent to 20 and 40 per cent respectively; to phase out employee PRSI over five years and make a number of other major changes during the lifetime of the next Dail.
The party's finance spokesman, Mr Michael McDowell, told a press conference in Limerick: "A commitment to radical tax reform is a precondition of the Progressive Democrats' participation in any Government".
He said the PD tax reform targets "are not merely targets, they are our solemn pledge to voters".
The party's proposals include the introduction of environmental taxes such as charges for domestic water supplies and tax on disposable packaging. However, the party warns against carbon taxes that could place Irish industry at a disadvantage.
The PDs would phase out the health levy and employment levy, give special tax breaks to old age pensioners and widowed people and simplify procedures for hiring childminders and carers.
The standard rate of corporation tax would be reduced to below 25 per cent by 2002 and to 10 per cent by 2010. Employers' PRSI would be reduced to a single rate of 7 per cent. The standard rate of capital gains tax would be brought down from 40 to 20 per cent.
Mr McDowell particularly criticised the Labour Party which, he said, was largely responsible for Ireland's "crazy anti work system".
He said the tax and spend policies of the Labour Party were now totally at variance with the approach of New Labour in Britain. Irish socialist parties were, he said, "living in a tax time warp, but don't worry, they have a date with democratic destiny on June 6th.".
According to Mr De Rossa, the PD plans would cost over £2,000 million to implement, and the implications of such a drop in tax revenue "would be catastrophic for a wide range of public services.
"Few people will be taken in by the notion that these tax changes could be implemented without cuts in public services," he said. "People remember vividly the `dirty dozen' social welfare cuts of the last Fianna Fail/PD government and know all too well that to fund these proposals there would have to be major cuts in such areas as health, education, social welfare and justice.
"Fewer medical cards, a higher pupil/teacher ratio, social welfare cuts and less resources to combat the drugs and crime menace would all be possible results", he said. "Is this a price Fianna Fail is prepared to pay for support from the Progressive Democrats?"
The Minister for Enterprise and Employment, Mr Bruton, said the PD tax plans would lead to the end of the Partnership 2000 deal. "Michael McDowell today suggested that his new 20/40 tax plan could be achieved within the context of Partnership 2000. What he isn't telling us is that it could only be achieved if all tax allowances and bands are frozen, which would be totally contrary to Partnership 2000.
"It would mean a total renegotiation of the plan agreed with the social partners," he said. "However, we shouldn't be surprised, as this is not the first time that the PDs have tried this trick with tax reform."
Mr McDowell said, however, that the Partnership 2000 programme envisaged tax cuts of £300 million a year for three years. It would be possible to adhere to 20 per cent and 40 per cent tax rates, with a standard rate band of £15,000 single and £30,000 married, over five years for £262 million per year".