Fianna Fáil has today promised a broad range of tax cuts, including a reduction in PRSI for middle income earners, if re-elected in the upcoming general election.
However, the party refused to make any such gesture for first time property buyers, insisting it would not reform the stamp duty tax.
Announcing details of how Fianna Fáil would fund its economic proposals for a further five years in office, Taoiseach Bertie Ahern and Minister for Finance Brian Cowen said the party's priority was the continued implementation of the National Development Plan (NDP) and the securing of Ireland's prosperity.
Its economic policy document, Protecting Prosperity, the Next Steps Forward,published today, also outlined plans to "virtually eliminate" the national debt by 2012, with reforms that will require an annual budget of €840 million.
Mr Cowen insists the plans are affordable considering the Government has produced a tax budget this year of €875 million.
Speaking at the launch of the financial proposals, Mr Ahern said removing the national debt was a "key priority" of his and would be Fianna Fáil's legacy.
"Leaving behind a debt free Ireland, while investing to meet current needs today, will better enable our children to meet their needs in the years ahead," he said.
"Our parents worked hard for us and built a foundation for prosperity in hard times. We too can leave a legacy by lifting the burden of debt off the shoulders of our children."
Mr Cowen said the reform of the tax system would support the NDP, which he vowed would be implemented "in full, on time and within budget".
The Minister for Finance said he would:
- index tax credits and tax bands to wage increases
- cut the standard rate of income tax by 2 per cent to 18 per cent
- cut the higher income tax rate by 1 per cent to 40 per cent
- reform PRSI to make it fair - with those earning most paying most
- abolish the tax ceiling whereby those earning over €48,800 pay no PRSI
- cut full-rate PRSI from 4 per cent to 2 per cent
- cut self-employed PRSI from 3 per cent to 2 per cent
- double the home carer tax credit.
He dismissed the current high inflation rate of 5.1 per cent as a "temporary blip" which the Government had predicted and said his economic plans were based on a "consumer price index (CPI) projection which is conservative".
Mr Cowen was adamant the Government would not reduce stamp duty saying: "We will do nothing that will disrupt the property market. Hundreds of thousands of people's livlihoods depend on it."
Mr Ahern agreed saying stability in the housing market was now "crucial" to ensure it did not fall into negative equity.