FF tax briefing:Minister for Finance Brian Cowen yesterday backed away from an SSIA-type pension savings plan announced 24 hours earlier by Minister for Social and Family Affairs Séamus Brennan.
Fine Gael's finance spokesman, Richard Bruton, attacked the plan's lack of costings, but Mr Cowen said that it had not been budgeted for, as no decision had been taken to proceed with it.
"The matter cannot be imposed by Government, it has to be determined and negotiated and agreed with the social partners. We are committed to pushing those negotiations under the social partnership process. We are not at the point where we have decided what in fact are the parameters for these negotiations," Mr Cowen said.
He emphasised that Fianna Fáil was committed to reforming the system of pension provision within the context of the existing tax-based pension arrangements, which cost the exchequer in the region of €2.5 billion a year: "What we want to do is discuss with the social partners the context of pension reform and see can we devise an SSIA-type scheme for low-income people who clearly have not taken up, to the extent we would like to see, pension provision through tax-based schemes."
He said that if returned to office Fianna Fáil would embark on a programme of tax reform and reduction. "We will do so because we believe in low taxation from experience and from conviction. It rewards people for their effort. It helps working families by putting more income directly into their pockets. It promotes social and economic inclusion. It supports enterprise and risk-taking, and our proposed tax reforms will increase opportunity for all our citizens."
He said that the proposals would increase further the rewards of work, and they would do so in a way which was socially just and economically appropriate. "Most importantly, they will eliminate the last great injustice in our taxation code by making PRSI a fair tax, paid on a fair basis by all the people working in this country. It is currently structured as a regressive tax as it is borne most heavily by those on low and middle incomes. We will make it a fair tax, levied on the basis of ability to pay, with those who earn most paying most."
In contrast, Fine Gael and Labour had nothing to say about PRSI. "Having plucked a new belief in low taxation out of the air, they have not managed to make their proposals progressive. In fact, those on low incomes gain nothing from their tax package, while those on higher incomes gain most," he added.
Mr Cowen continued: "Our changes are focused on low and middle-income workers and families, people largely ignored by Fine Gael and Labour. We have come to a sorry pass when the Labour Party is willing to sign up to a fundamentally-regressive tax package in its desperate attempt to win power."
He said that Fianna Fáil's proposals meant the vast majority of workers would be substantially better off, with the greatest benefit being enjoyed by ordinary workers: "In fact, the tax tables we are publishing today show that all single-income earners, all double-income couples and all single-income couples earning up to €60,000 per year will be better off under our proposals. In fact, 97 per cent of income-earners will be better off under Fianna Fáil's reforms than under the Fine Gael package."
