Martin Mansergh (Fianna Fail)

Other things being equal, of course it is desirable to index tax allowances and bands. For most of the last five years, this has been done. In fact, more than this has been done but there are other circumstances where one is in the downward part of the cycle where it is not easy to do so. There is a lot of talk about stealth taxes. It is perfectly transparent as far as the public is concerned that the Government has not been able to fully index tax allowances and that to keep the public finances on a reasonably even keel it has also been necessary to increase charges. In some of the instances named – I think the television licence fee was mentioned – charges have not been increased for years, if not decades. This has to be taken into account.

To come back to the point, it is a good principle of fiscal management, in any year's conditions, not just this year's, for the Minister to retain flexibility. What has been done is what he sees as necessary to keep the rates in place. The alternative, as Senator McDowell has pointed out, would have been to straightforwardly raise the rates of income tax but that would have been very undesirable.