LAST Friday's column by Fintan O'Toole made depressing reading. In the public debate on the issue of personal taxation there is increasing acceptance of the need for reform of our present regime, an acceptance that was heightened by last week's announcement of the closure of the Packard plant in and the consequent loss of Trade unions accept the need for reform business groups accept the need for reform independent economic commentators accept the need for reform the vast majority of politicians in Leinster House accept the need for reform.

I was surprised to read in Mr O'Toole's column that it was "blindingly obvious" that reducing taxes on work had nothing to do with Packard's decision to close.

I would like to draw his attention to a major policy document, Growing and Sharing our Employment, published last week by the Department of Enterprise and Employment.

That document devoted a section to how tax reform could be used to increase employment. It pointed out that increasing the after tax income, particularly of low wage earners, will be a major focus of labour market policy. The document bears the political imprimaturs of all three parties in Government, Fine Gael, Labour and Democratic Left.

The Progressive Democrats also believe that tab reform has a vital part to play in employment creation and employment protection. I am afraid Fintan O'Toole is on his own if he fails to see the connection.

Is it not "blindingly obvious" that if you reduce the incentive to work by imposing four separate taxes on earned income, and reduce the incentive to hire people by imposing high levels of employers PRSI, you twill have some impact on the employment market?

Fintan O'Toole rightly denounces the Packard management for the insensitive way in which news of the closure was communicated to the workers.

However, he goes on to make a very disturbing assertion making the country safe for the Packards of this world is a mug's game. He wants to see those in low paid jobs earning more money working for better companies.

It is all very well to categorise Packard as a profit seeking business determined to minimise its costs. But what about native Irish companies struggling to compete in international markets? What about the 20,000 people trying to earn a living in the textile industry, many of whom would earn less than those at Packard?

Are we going to turn our backs on these people and say that we are not interested in them? Are we telling them they must retrain themselves as electronic engineers or else face a life on the dole? Is that the only choice we want to offer them?

It is all very well to categorise Packard as a profit seeking business determined to minimise its costs. But what about native Irish companies struggling to compete in inter wage economy.

Any successful economy must offer a wide range of opportunities at different wage and skill levels. We must also realise that international competition for jobs is not confined to low skill employment. Ireland has made significant strides in computer software in recent years, but a major competitor for projects in this field is the burgeoning software industry in India, a country to which we still send development aid.

So much for Fintan O'Toole's assertion that technological skills are a scarce asset, not easy to pick up on the world market. Should we forget about software jobs as well, and leave them to the Indians?

In any event, it is even more difficult to sustain high paid jobs in Ireland than it is to sustain low paid ones. This is because we insist on imposing a marginal tax rate of 56 per cent on "the rich", a class of people defined under the tax system as anybody earning more than Pounds 247 per week.

Fintan O'Toole highlights the problem of low pay at Packard by pointing out that take home pay was just Pounds 162 per week. What he failed to mention was that the company's weekly wage cost for each employee was a much more respectable Pounds 232. In other words, Ruairi Quinn was collecting Pounds 70 a week for each worker at the Tallaght plant.

How do we explain a situation whereby a Government committed to employment creation imposes a tax of 30 per cent on low paid work?

Fintan O'Toole drew attention to the poverty associated with long term unemployment. The most obvious escape route from unemployment for most people is into jobs paying relatively modest wages. But we cannot expect people to move into these kinds of jobs if we continue to penalise them through the tax system for doing so. We must put social justice into our tax system.

Where is the justice in a system that takes Pounds 47 in taxes from a single worker on Pounds 200 a week?

WHERE is the justice in a system that takes Pounds 68 in taxes from a married couple, with one earner, on Pounds 300 a week? Where is the justice, in a system that levies employee PRSI at a rate of 4 per cent on a person earning Pounds 250 a week, but at a rate of 1 per cent on a person earning Pounds 2,500 a week?

Our unjust, anti work tax system puts us at a major disadvantage in a world increasingly based on free trade and the free movement of persons, goods and capital.

There are several European countries with punitive personal tax regimes. Our problem is that we happen to live beside a very large economy, Britain, which firmly believes in low rates of personal taxation.

THE British Labour Party is now every bit as committed to a low tax regime as the Conservatives. In fact, "Labour's election broadcast on television last week was virtually indistinguishable from a Tory broadcast at the last general election.

The problem is compounded by the fact that we share this island with part of the UK economy. The different tax regimes are creating, huge cross Border differences in the jobs market.

A worker in Newry earning Pounds 300 a week is Pounds 17 a week better off in,terms of take home pay than his counterpart 12 miles away in Dundalk on the same money. Furthermore, if the firm in Dundalk wanted to give its employee an extra pound in take home pay it would cost Pounds 2.53, 50 per cent more than it would cost in Newry.

In the modern world of open competitive markets, a small country of 3.5 million people cannot pursue a policy of high taxation on labour while its nearest neighbour, principal market and major rival, a country of 60 million people, pursues a diametrically opposite policy.

According to the laws of economic gravity, jobs will flow into the economy where they are most welcome. We saw this process in action with the transfer of Packard's operations from Tallaght to Coventry.

Mass unemployment in the Irish context is not some unavoidable natural phenomenon. In New Zealand, a country with the same population and a similar economic structure to Ireland, but which receives no EU funds, the unemployment rate is less than half that of Ireland.

We in Ireland have opted for tax policies which lead to mass unemployment. We penalise people for, working and we make it expensive to hire people.

Each successive budget produces yet more enormous increases in taxation. This year, the Government's total tax take will rise by Pounds 730 million. That represents an increase of Pounds 14 per week for every family in the State.

Why do we do this? Because we believe that higher public spending is the answer to all our problems. Or, as Ruairi Quinn intimated in a Dail debate last week, people cannot simply be trusted to spend their own money.

In most countries there is a hard choice between tax cuts and spending cuts. We in Ireland are fortunate that an expanding economy gives us a much easier choice we can apply the fruits of growth to increasing public spending or to reducing the burden of taxation on working people.

The key to tax reform in the Irish context, therefore, is not cutting public spending, but controlling it. Provided the rate of growth in Government expenditure is kept in line with inflation, significant resources will be released to fund cuts in personal tax rates. If this had happened in the current year, we could have seen a 5 per cent cut in the basic rate of income tax in the January budget.

Finally, I would like to put the record straight on two points.

In his article Fintan O'Toole accused me of being in favour of cutting wages and cutting social services. I have never advocated either proposition and neither has my party.