Brian Cowen (Laois-Offaly, Fianna Fail)

The answer to the Deputy's questions is yes. The Government's approach to tax policy is set out in An Agreed Programme for Government and in recent budgets and Finance Bills. In addition, the partnership agreement, Towards 2016, states the Government is committed to a taxation policy designed to maintain and strengthen the competitive position of the economy, foster improvements in productive capacity, economic and social development, and equity, while maintaining a sound fiscal stance.

With regard to the fairness of current tax policy, improvements in the tax system since 1997 have meant more than 776,000 income earners are out of the tax net compared with approximately 380,000 ten years ago. Those on the minimum wage are exempt from tax. In addition, the tax burden for the married one-earner on average earnings has fallen from 20% to 8% under our watch. The married one-earner on average earnings has seen his or her annual tax bill fall by almost €1,500 even though his or her annual gross income has risen by over €12,000 in that time. Even for those whose tax is calculated at 42%, the effect of the new fairer tax credit system brought in by the Government parties in 1999, combined with the other income tax changes to rates and bands, means that four fifths of earners pay no more than one fifth of their earnings in income tax.

Rates under most tax heads have reduced since 1997. At the same time, the tax yield to the State has continued to rise due to the extra economic activity accompanying this policy. In some cases, such as capital gains tax and corporation tax, the tax yield increased substantially after rates were cut. This extra tax revenue has been used, among other things, to reduce tax on the ordinary PAYE worker, remove lower income earners from the tax net altogether and fund the provision of increased public services. The Government's tax policies have been designed to promote the competitiveness of the economy, support enterprise and reward work. The practically full employment which the economy enjoys is tangible evidence of the success of these policies in delivering fairness and dignity to ordinary families.

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