Emmet Stagg (Kildare North, Labour)
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Question 63: To ask the Minister for Finance when he expects to meet targets set in the Programme for Government and Sustaining Progress that 80 percent of all taxpayers would pay at the standard rate of tax; the percentage of taxpayers currently paying only at the standard rate of tax; the percentage of taxpayers currently paying at the higher rate of tax; and if he will make a statement on the matter. [24963/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The 80% target in An Agreed Programme for Government, which refers to "earners" rather than to "taxpayers", is given in the context of a broader economic and budgetary strategy which provides, among other things, that the public finances will be kept in a healthy condition and that personal and business taxes will be kept down in order to strengthen and maintain the competitive position of the Irish economy.

After Budget 2006 it is estimated that, in the current tax year, 35.9% of all income earners will be exempt from income tax and a further 32.2% of income earners will pay tax at no more than the standard rate. It is estimated 31.9% of income earners will pay tax at the higher rate of tax.

Further progress in this area will be a matter for consideration in the context of the Budget consistent with the Government's overall economic and budgetary strategy.

However, I would point out to the Deputy that the Government's tax policies have ensured that, since 1997, average tax rates have fallen for all categories of taxpayer and, for 2006, an unprecedented number of low paid income earners are projected to be outside the tax net altogether as is clear from the information provided in this answer. Also, after tax income, adjusted for CPI inflation, for a person on the average industrial wage, is now 44% higher than it was in 1997. About half of this increase is due to lower taxes.

Furthermore, the latest OECD data relating to the year 2005 indicate that for the single worker on average earnings, Ireland has the lowest tax wedge in the EU and one of the lowest in the OECD. For a married one earner couple with two children on average earnings, Ireland has the lowest tax wedge in the entire OECD.

One reason why many income earners pay at the higher rate is because incomes have increased significantly. As I have indicated to the House previously, this is an indication, not of a problem, but of a major economic success.