SIPTU vice-president Mr Des Geraghty has clarified the union's position on the Budget, following media reports that it might withdraw from Partnership 2000 if the top rate of income tax is reduced.

He says that SIPTU is not opposing cuts at the highest income tax rate, but that the primary aim of the tax reform package agreed in Partnership 2000 was to increase personal allowances and widen the standard tax band. As far as SIPTU is concerned this means that the £500 million in cuts must go to increasing tax allowances and widening the standard rate tax band. He did not rule out reductions in the top rate but said these must be minimal and would be of less benefit for all tax payers, including those who remained on the top rate after allowances and bands were widened. SIPTU's approach was shared "by all of the key social agencies, the social partners and most economic commentators".

If, as some media reports suggested, the Minister for Finance Mr McCreevy, was considering widening tax bands and tax free allowances by "a mere £70 million", the vast majority of PAYE workers would "lose out massively". SIPTU would then be seeking a special delegate conference of the Irish Congress of Trade Unions to consider withdrawal from Partnership 2000, he said.

Earlier yesterday the director general of the Irish Business Executive Confederation, Mr John Dunne, expressed concern at media reports that SIPTU might be reconsidering its attitude to Partnership 2000 if there was a reduction in the top rate of income tax.

"The fact of the matter is that all parties - government, employers and trade unions - have made a series of commitments in the national agreement. As we have said many time before, we expect an agreement, once made, to be fully honoured", Mr Dunne said.

He saw no reason to doubt the Government would honour its commitments. He said that IBEC fully supported the policy of increasing personal allowances and widening the standard tax band "to boost the take-home pay of those on low incomes, alleviate the unemployment trap and encourage the unemployed to find jobs."

At the same time a reduction in the top rage of tax would "help increase work incentives for many thousands of employees currently paying at the 48 per cent rate, at or below the average industrial wage. Such a move will also help encourage suitably qualified Irish people abroad to return to this country to fill a critical vacuum in the skilled technical/management areas".