Budget 2002 will include measures to help the construction sector and a possible reduction in employers' Pay Related Social Insurance rate, the Tβnaiste and Minister for Enterprise and Employment, Ms Harney, has indicated.

"We want to incentivise people to work for a living to keep as many people in employment, and that means we have to look at taxes and how they impact on employment. Clearly we want to ensure that this economy remains competitive. PRSI is another tax on employment," Ms Harney said on This Week on RT╔ Radio One yesterday.

Stating that the Minister for Finance had said he intended to "reform the PRSI system in its entirety", Ms Harney said she was "conscious, as the Minister with responsibility for enterprise and employment, of the negative impact that all taxes have if they are imposed unfairly on employment - and the Government certainly will be bearing that in mind in the changes we will introduce in the Budget".

The Budget measures will be announced on December 5th.

Asked if she was saying employers' PRSI rates would be reduced, Ms Harney insisted that she would not say what was in the Budget.

"Obviously we are in the middle of negotiations at the moment and clearly it would be irresponsible of me, and I don't wish to do so in any event to say what might or might not happen - that is a matter for the Minister for for Finance to announce on Budget day."

Last year, Mr McCreevy announced the abolition of the employer PRSI income ceiling, a move that was heavily criticised as increasing the costs of employing workers earning more than £36,600 (€46,472) a year.

Employers have called for a compensatory reduction in their PRSI rate from the current 12 per cent level.

There has been speculation that the reform of the PRSI could involve the removal of the employee PRSI income ceiling.

Ms Harney indicated that the Government was prepared to "interfere" in the market again to boost the construction sector.

She did not indicate the measure likely, though speculation has been centring on the reduction of the 9 per cent stamp duty rate, along with possible increases in deductions for mortgage interest payments.

"We have to look at it in the context of what the situation is now . . . Interfering in the market is not always the best thing but it is necessary from time to time to ensure that other good behaviour happens.

"We have to look at how we can ensure that we get employment moving in this country . . . that we again incentivise those in the construction sector to build more houses and certainly to invest in Ireland rather than invest abroad," she said.

Despite the more difficult economic circumstances, there is still capacity to help lower-income earners, she said. Progress can be made in removing many of those earning below the minimum wage from the tax net.

"This year, the priority is to keep as many people in work as possible, to keep taxes low on work and to take those at the bottom out of the tax net altogether," she stressed. Discussing income tax rates, Ms Harney confirmed there would be not be any changes.

While the Government had achieved its target of reducing the standard rate to 20 per cent, she said the top 42 per cent rate would not be reduced to the target rate of 40 per cent.

"The circumstances are such now that we could not afford it this year and it would not be a priority," she said.

In the future, when the economy is growing again and there are Budget surpluses, there would be more capacity to address some of the anti-work measures within the tax code, she added.