Richard Bruton (Dublin North Central, Fine Gael)
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Question 16: To ask the Tánaiste and Minister for Finance if the Government tax reform priorities remain as cuts in the top rate and standard rate of income tax and the reduction in employee and self-employed rates of PRSI in view of the terms of reference set for the Commission on Taxation. [8063/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The terms of reference of the Commission on Taxation are entirely consistent with An Agreed Programme for Government. The terms of reference of the commission explicitly provide, among other things, that it should undertake its work "having regard to the commitments on economic competitiveness and on taxation contained in the Programme for Government". The Government programme is one for the full five years of the Government. As I have consistently said and as is reflected in the programme for Government, the personal taxation and PRSI commitments in the programme are to be implemented "subject to the controlling economic and fiscal framework".

Richard Bruton (Dublin North Central, Fine Gael)
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As the Minister knows from the terms of reference, the Commission on Taxation has been asked to examine the balance achieved between taxes collected on income and other taxes. The Government has made clear its commitment in respect of taxes collected on income, that is, to reduce PRSI from 4% to 2%, to cut the standard rate from 20% to 18% and to cut the top rate from 41% to 40%. There is no reference or direction to the commission that it must honour these specific commitments. Those commitments are ignored in the terms of reference offered to the commission. Has the Government abandoned the commitments? Alternatively, is the Minister waiting to see if the Commission on Taxation approves of it? These were presented to the people as solemn commitments but now it seems the Government has no intention of implementing them and is looking for cover to quietly drop them.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The purpose of the Commission on Taxation is to examine the taxation code. As I stated during discussions on Committee Stage of the Finance Bill, it has broad terms of reference to enable it to examine the gamut of matters that it believes are germane to improving our tax system. It is set out in the programme for Government that, subject to the controlling economic and fiscal framework, the Government will implement a specific approach. Our first priority remains low and middle income earners. Our first task is to use tax credits and bands to keep low income earners out of the standard rate band and average income earners out of the higher band. We have made further commitments on the basis of having a controlled economic and fiscal framework. The assumptions we made are on the basis of achieving 4.5% annual economic growth. Since autumn we have seen turbulence in the financial markets and growth predictions worldwide have moderated. Over the programme for Government we continue to have these proposals at the forefront of our minds on the basis of what is responsible fiscal policy.

Richard Bruton (Dublin North Central, Fine Gael)
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Am I correct in reading the Tánaiste's response as meaning that he has discovered he cannot implement the clear commitments made to the public? Under the guise of making a proper balance between income and other taxes, the Tánaiste is seeking a way to ignore commitments made solemnly to the Irish public. In May there was no problem in honouring these commitments. Fianna Fáil berated every other party and produced deliberate untruths about other parties. These are firm commitments on which the Tánaiste went to the public. He is now backing off them, saying he cannot afford them and failing to refer them to the commission. That is reneging on a solid commitment.

Brian Cowen (Laois-Offaly, Fianna Fail)
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That is a partial and predictable interpretation of the commitments. The point I made during the campaign, in an argument I believe I won, was that Fine Gael had not costed its proposals properly.

Richard Bruton (Dublin North Central, Fine Gael)
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That was not the point, and the Tánaiste may recall the advertising slogans that were produced.

Brian Cowen (Laois-Offaly, Fianna Fail)
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There is a major problem in the Fine Gael Party in getting over this. The record will speak for itself and I do not wish to detain the House. We set out what we felt was possible based on the economic assumptions in our plan, which were 4.5% growth rates. Fine Gael proposed a slightly lower growth rate and a slightly higher inflation rate. The bottom line is that in terms of overall nominal——

Richard Bruton (Dublin North Central, Fine Gael)
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The question the Minister was asked was if he will honour all the Government's commitments.

Brian Cowen (Laois-Offaly, Fianna Fail)
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Sorry, Deputy, for the purposes of the House, I am giving information. The Deputy is shouting across trying to win an argument that his party lost.

Richard Bruton (Dublin North Central, Fine Gael)
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Answer the question.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The fact, as the Deputy knows, although he is trying to stop me from saying it, is that the nominal growth rate assumptions in both sets of proposals were similar. My economic growth rate was slightly higher and my inflation rate was slightly lower, while the Deputy's proposals were based on a slightly lower nominal growth rate and higher inflation rate. It worked out at approximately 7.5%. They are the facts, so all of us are in that position in terms of how we would proceed with the implementation of our plans. We have always made it clear, and it is a requirement on us as members of the eurozone, that we would have a responsible fiscal policy. On that basis we will implement all of our commitments, not simply the tax commitments. All commitments are required to work in that context.

Richard Bruton (Dublin North Central, Fine Gael)
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Will the Minister publish the cost of his commitments to show his good faith?

Brendan Howlin (Wexford, Labour)
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I call Question No. 17.

Richard Bruton (Dublin North Central, Fine Gael)
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He will not.