FROM THE ARCHIVES:Facing into a general election, which it was widely (and wrongly) expected to win, the Fine Gael-Labour government produced a concessionary budget, reducing the top income tax rate from 77 per cent to 60 per cent, among other things. Political Correspondent Dick Walsh described its main features. –
JOE JOYCE
A BUDGET designed in election year to win the broadest possible support for the Coalition partners was presented yesterday by the Minister for Finance, Mr. Ryan, and grudgingly greeted by the Shadow Minister, Mr. Colley, as welcome in part but inadequate.
Mr. Ryan made relatively little – £93 million if job-creating projects are excluded – go a very long way by spreading concessions here and there, thinly, across the board, with emphasis on the urban zones in which, by general consent, the election will be won or lost.
There were increases for welfare recipients, incentives to industry and modest cuts in income tax; the promise of 25% relief on rates in the second half of the year and £56m. to create employment if and when the National Wage Agreement is ratified.
There were no increases on excise duty – nothing on spirits, beer or tobacco – but another £.5m. was added to subsidies on food, making a total of £49m. this year. This Mr. Ryan reckons to be the equivalent of 2½% on the consumer price index – added encouragement to the unions to accept the wage agreement.
Mr. Ryan drew another 6,500 farmers into the tax net. If the burden of the Budget appeared to fall on farmers – richest and poorest – its main attractions were directed at industrialists, urban house owners, those who pay tax as they earn, and social welfare recipients.
Mr. Ryan estimates that £36m. in his public capital programme to increase industrial investment, build schools and hospitals, improve harbours, provide loans and pay for development of the telephone services, will create directly a total of 7,000 jobs, with even greater indirect advantages.
He expects that the increases contained in the pay agreement and tax reductions combined will add to consumer demand, thus increasing revenue. The income tax concessions, however, will mean most to the highest paid, whose rate is reduced from 77% to 60%. The rate on the first £500 of taxable income is down to 20%, on the next £1,000 to 25% and on the following £3,000 to 35% .
The reductions, altogether worth £50m amount to a complete restructuring of the tax system. Personal rates were increased by £45 and by £90 for married people.
Perhaps the most dramatic assistance has been provided for industry. Mr. Ryan announced Corporation Tax reliefs which reduce the 50% rate to 45% and the 40% rate to 35%, while small company thresholds are raised from £5,000 and £10,000 to £10,000 and £15,000.
http://url.ie/8wxe