Vol. 519 No. 5
81 Mr. Gilmore asked the Minister for Finance if he intends to set new income tax reduction targets; if he has considered warnings from the EU that low income tax levels could lead to an inflation problem; and if he will make a statement on the matter. [14282/00]
In relation to tax reductions, the review of the Government's An Action Plan for the Millennium in November 1999, states:
Tax reductions are an integral part of our strategy to maintain and improve competitiveness and to encourage the take up of employment. Our aim will be to complete implementation of the specific and ambitious aims set out in our Action Programme for the Millennium, through a balanced strategy of removing more of the low-paid from the tax net altogether, by reducing tax rates, by ensuring that a large majority of taxpayers are subject to no more than the standard rate and by completing the transition to a more progressive system of tax credits.
The agreed Programme for Prosperity and Fairness further states:
Over the period of this Programme, up to and including Budget 2003, there will be increases in net take home pay, including pay increases, of up to 25% or more. The Government and Social Partners confirm their support for further tax reform and tax reductions to improve the position of all taxpayers, increase the real take-home pay of those covered by this Programme, especially those with below average earnings and to develop the structure of the tax system to deliver benefits and focus resources in an equitable manner.. It is also an agreed policy objective of the Government and the social partners that, over time, all those earning the minimum wage will be removed from the tax net.
Taken together, the Government action plan and the PPF provide the framework within which future personal tax packages will be drawn up. As regards the inflationary impact of any tax changes, my priority has been to cut direct tax rates to encourage the supply of labour, capital and enterprise and in this way expand the productive base of the economy and our ability to meet the demand side pressure on resources on an ongoing basis.
