Richard Bruton
Question:103 Mr. R. Bruton asked the Minister for Finance the plans, if any, he has to ensure that no more than 20 per cent of taxpayers pay income tax at the higher rate; and if he will make a statement on the matter. [13853/98]
Written Answers. - Tax Reform.
The Government's Action Programme for the Millennium contained a number of commitments in the area of taxation. I am glad to say that the last budget gave me the opportunity to advance these commitments significantly.
My priority in the 1998 budget was to increase the personal allowances and reduce tax rates. Personal allowances were increased by £250 in the case of a single person and by £500 for a married couple. Both the standard and top rates of income tax were reduced by 2 per cent. Furthermore, the PRSI allowance was increased by £20 to £100 per week for full rate PRSI contributors.
Due to the considerable cost of these measures it was only possible in the budget to widen the bands by £100 single and £200 married. In light of the above, and allowing for growth in incomes due to strong economic growth in addition to a greater propensity of both partners in a marriage to be working, it is estimated that the proportion of taxpayers who are taxed at the higher rate of income tax will increase slightly in the current tax year.
The commitments set out in the Action Programme for the Millennium, including reducing the proportion of taxpayers being taxed at the higher rate, will be implemented over the five year period of the programme. However, as stated in the programme, the full implementation of the measures will depend on continued strong growth in the economy, as all policies will be subject to the overriding requirement to stay within the terms of the EU stability and growth pact and the Maastricht criteria. The precise changes to be included in any budget will be only decided at budget time each year.