Brian Cowen (Laois-Offaly, Fianna Fail)

I will come to that. Changes to the income tax regime since 1997 mean that the average tax rate has been reduced at all income levels. For example, after last week's budget, the average tax rate for a single person on the average industrial wage will be 15% compared with 27% in 1997. In this regard, the position is that a single PAYE worker on the average industrial wage has seen their after tax income increase by approximately 44% in real terms since 1997, of which approximately half is due to tax reductions. There has been a 44% real increase in take-home pay for those on the average industrial wage.

Another factor which can influence people's repayment capacity in terms of their commitments is that mortgage interest rates are at historically low levels of 3.3% to 3.65%, down significantly from the rates of 7.1% to 8.85% prevailing in 1997. The prospect of interest rates going higher over the medium term should be kept firmly in mind by borrowers in terms of continuing commitments.

When the Deputy mentioned the number of people, he omitted to take account of the fact that we have taken another 340,000 people on lower incomes out of the tax net. It was one in four when we came into office and it is one in three now. When we examine the structure of our income tax reforms and the move to a tax credit system rather than maintaining a tax allowance system, the Deputy will realise it is a much more difficult proposition to talk about taking people off the top rate in that respect when the tax credits assist people at the lower end, which is a far more socially progressive measure from an income tax point of view. That was the case at the time.

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