BSE crisis overlooked in Budget, says Dukes

The last four budgets have seen dramatic progress in the area of personal tax reform, the Tanaiste, Ms Harney, said. This was due to reduced tax rates, widened bands and raised allowances.

When the Government came to power in 1997, it had inherited a tax system which had remained unchanged over the previous three budgets. This regime "bore down heavily" on modest and middle-income earners.

In 1997 the basic rate of income tax was pitched at "a punitive 26 per cent". In four budgets the Government had got the rate down to 20 per cent.

Two major factors affecting the economy had been overlooked in the Budget statement, said the Fine Gael spokesman on agriculture, Mr Alan Dukes.

First, no reference had been made to the BSE crisis. Secondly, there was no reference to forthcoming talks in the World Trade Organisation "which could also have important implications for the value of the output of our agriculture and food-processing sectors".

The effects on the export values of the vital livestock sector was potentially enormous, he said. Cattle prices had already fallen substantially because of BSE. "The effects of this situation will be felt on farms, in rural communities and in employment in our meat-processing industry."

Based on the Minister for Finance's own words in the Budget statement it was clear that a worker on the average industrial wage would increase disposable income next year by 0.5 per cent, said Mr Pat Rabbitte, the Labour Party spokesman on enterprise.

"The Minister's figure give a lie to the impression that the average worker will receive a huge benefit from the Budget," he said.

What the Minister had unintentionally achieved, said Mr Rabbitte, was to highlight the extent of low pay "in the land of the Celtic Tiger".

There was no equity in the type of tax reforms driven mainly by the Tanaiste and her party, he added. She and the Minister for Finance were "political Siamese twins".

Earlier, the House voted to accept four other financial motions proposed by the Tanaiste. The first provided for a reduction in excise duty of auto diesel by 7.26p per litre. The second provided for a duty increase of 3.1p on a packet of 20 cigarettes, with pro-rata increases on other tobacco products.

The third motion provided for a 1 per cent decrease in the VAT rate currently charged at 21 per cent - as well as a 0.1 per cent increase in the rate of VAT from 4.2 per cent to 4.3 per cent - charged on the supply of livestock and live greyhounds and the hire of horses.

The fourth stipulated that it was expedient to amend the law relating to inland revenue (including VAT and excise duties).