Tax policy: A tax policy aimed directly at reducing the tax bill of middle- and lower-income workers during the lifetime of the next government was produced at the final session of the PD national conference in Limerick.
The chairman of the party's economics committee, Senator John Minihan from Cork, announced details of the policy. The three key elements are:
A couple (both earning) can earn at least €100,000 at the standard rate (€50,000 for single worker).
Credits will be increased so that couples (both working) earning up to €40,000 will pay absolutely no tax (€20,000 for a single worker).
The top rate will be cut to 40%.
"Other political parties may or may not talk, over the years, about reducing the tax burden, but only the Progressive Democrats actually do it," said Mr Minihan. "My shorthand for this is 100 40 40," he said. He added that there were three key budgetary objectives the party wished to achieve within the lifetime of the next government. "The overall budget balance must be close to, or better than, balance (ie no deficit). The majority of the benefits of economic growth must go to essential public spending, which should rise considerably faster than inflation. But a portion must be reserved to radically reduce the tax burden on lower- and middle-income workers," he said.
The plan is based on a number of assumptions about the economy. GDP is expected to grow by 5 per cent, as forecast by the ESRI. Inflation is assumed at a yearly average of 2.5 per cent. Capital spending will reach and remain at 5 per cent of GNP with growth of 7.5 per cent a year.
Day-to-day spending is also forecast to grow in line with inflation plus economic growth which comes to 7.5 per cent. Finally, tax revenues are forecast to grow at 1.1 times economic growth, a standard assumption.
Under the terms of the plan an extra €30 billion a year will be available to the Exchequer. Of that €7 billion is forecast to go on health, €8 billion on social welfare, €4 billion plus on education and €1 billion plus on justice.
Ninety per cent of the extra revenue would be devoted to spending but 10 per cent would be reserved for tax cuts. "The Progressive Democrats do not see the present level of income tax as a floor, any more than we saw the level achieved in any of the last nine years as a floor. The level of income tax is never finally settled and off the political agenda.
"Income tax is a fruit of people's own work. Taxpayers have the right to require the government not to take their tax for granted and not to take any more than can efficiently be spent. The presumption should be in favour of low taxes."
He said the PDs believe that incomes at the minimum wage level should be kept out of the tax net,ld see cl while middle-income earners shouear, measurable tax savings. "The radical nature of our proposals is illustrated by the fact that low- and middle-income earners would see a radical reduction in tax bills."
