The Government is only prepared to pay interest of 11.75 per cent on payments which are overdue to suppliers while it imposes an interest penalty of 15 per cent on taxpayers who are late in paying their tax bills. These different standards applied by the Government were highlighted by the president of the Institute of Taxation, Mr Rory Meehan.

Since the Tanaiste, Ms Harney described the 11.75 per cent interest penalty on late payment by Government bodies as "a penal level", she had implicitly accepted that the 15 per cent rate suffered by ordinary taxpayers is "significantly above a penal level", he argued. The institute has already called on the Government to reduce the penalty on taxpayers. Mr Meehan yesterday urged that it should be made clear that interest received by suppliers for late payments was free of tax.