Vol. 474 No. 8
49 Mr. McCreevy asked the Minister for Finance the plans, if any, he has to initiate major structural reform of the Irish taxation system to assist competitiveness and to address disincentives to work; and if he will make a statement on the matter. [3994/97]
The Government's policy in relation to taxation is set out in the programme, A Government of Renewal. The programme stresses the need to reform the tax system, in particular to relieve the tax and PRSI burden on those with low incomes. Tax reform will favour the incentive to work, tackle the poverty trap, aim to reduce the tax wedge and encourage enterprise development.
The main principles underpinning my three budgets have been to reward work, promote enterprise and strengthen social solidarity. In these budgets I have introduced significant measures to relieve the tax and PRSI burden on employment. Such measures have included considerably increasing personal allowances and exemption limits, widening the standard rate band and reducing the standard rate of income tax. A new PRSI-free allowance was introduced in 1995 and increased to £80 per week for most employees in the 1996 budget. In addition, in this year's budget I also reduced the main rate of employees' PRSI by 1 per cent.
As a result of these measures the tax burden, for example of a single person on the average industrial wage will have been reduced from 31.3 per cent in 1994 to an estimated 27.2 per cent of gross income in 1997. In the case of a married couple, one earner, two children, on the same income level the tax burden will have fallen from 23.4 per cent in 1994 to 20.1 per cent in 1997. This represents continuing real progress towards making employment more attractive.
