The Tanaiste has ruled out a cut in the top tax rate in the December Budget, indicating that tax relief will be concentrated on the lower paid.
Ms Harney said yesterday that the public finances would not allow a cut in the 42 per cent rate this year. December's Budget, the Coalition's fifth and last, will therefore be the first containing no reduction in the higher rate.
While the Taoiseach, the Minister for Finance and the Tanaiste have all talked down expectations of significant tax cuts in recent months, Ms Harney's comments in an RTE interview represent the clearest statement yet of the Government's budgetary thinking.
With the Coalition constrained by a falling Exchequer surplus and a global economic downturn, Ms Harney said there would be no "give-away" pre-election Budget.
"The scenario we face now approaching this Budget is very different from the scenario we faced approaching the four previous budgets," she said. "We clearly will have to bear that in mind as we frame the Budget."
She pointed out that the Coalition had already fulfilled the Programme for Government commitment to bringing tax rates down to 20 per cent as a standard rate and 42 per cent as a higher rate. The programme set down a target of 40 per cent for the top rate "if the public finances would allow it", she went on. "It may well be that the public finances won't allow that this year.
"I believe there still needs to be income tax relief for PAYE workers at the bottom, particularly those earning below the minimum wage. I would like to see tax reductions for lower income groups in this year's Budget but it will not be possible, I think, to reduce the tax rate this year because of the economic circumstances we face."
She warned against possible demands from some Ministers for increased spending in an election year. "This government is not going to blow the economic success that took a long number of years to achieve."
The Progressive Democrats would not engage in that kind of politics. "Under no circumstances will we engage in any effort to buy the people's votes with the people's money."