Harney To Prioritise Services Over Tax Cuts

by Amanda Banks, Tax-News.com, London

01 August 2001

The Irish Tanaiste, Mary Harney, announced recently that she is prepared to put public services ahead of tax cuts in the next budget, due on December 5th. The Irish government appears to be backing away from the impression that they have been favouring the well off in budgetary policy, and with public concern about the state of the country's health service at an all time high, is concerned to be seen to be making improvements rather than cutting taxes.

A spokesman for the Progressive Democrats said on Monday that there was 'no great disagreement' between Ms Harney and the Irish Finance Minister, Charlie McCreevy, who indicated his support for the switch at the weekend. On taking office, the Coalition government pledged to reduce the top rate of tax from 48% to 42%, and the bottom rate from 26% to 20%, a goal which has since been successfully achieved.

However, although it was widely understood that both Ms Harney and Mr McCreevy were in favour of reducing the top rate of income tax further, to 40%, the Tanaiste has since stated that her main priority is to see everyone earning under £200 a week taken out of the tax loop.

Charlie McCreevy said over the weekend that the new direction being taken by the government marked a clear departure from the way in which budgets are usually approached, and according to the Irish Times, cabinet colleagues have indicated that he has taken into account the changing economic circumstances, and also the reprimand from the European Commission. 'The general election is not going to be fought on the basis of tax cuts, given the economy and the frustration with the health services,' said one minister.

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