THE Taoiseach has signalled that taxation and other measures in the Budget will be geared towards helping the long term unemployed and low paid.
The Government parties are close to agreeing Budget measures aimed at reducing unemployment, which are likely to include a move to exempt more employee income from PRSI by increasing the £50 PRSI allowance substantially. Moves to allow those moving from unemployment to work to retain some social welfare benefits for a period are also likely.
Speaking to a Fine Gael meeting in Navan, Co Meath, last night, Mr Bruton said the high rate of long term unemployment would inform the Government's tax policy. More people would take up job opportunities, he said, if there were greater rewards from work for those whose take home pay was barely above social welfare levels. The Taoiseach did not specify what measures he had in mind to improve the lot of the low paid. However, his speech gives a clear indication of the budgetary priorities.
He said the Minister for Finance, Mr Quinn, twill be striking a balance between the need to tackle long term unemployment, to maintain social stability and the need to keep our finances in order so as to hold interest rates low" in next week's Budget.
Reductions in personal taxation were a priority, he said, "but the Government in the Budget is looking to enhance total family welfare, not solely the after tax income of the principal earner."
The Government is working on a package of around £100 million of reductions in the tax and employees' PRSI. This would pay for some specific measures aimed at the low paid, generally aimed at cutting taxes on the lowest earners.
However the indications, reinforced by Mr Bruton's speech, are that there will be limited relief for most taxpayers, although a widening of the standard 27 per cent income tax band is expected. A further £20 million is also earmarked to reduce business taxes, particularly employers' PRSI.
On the spending side of the Budget, the Minister for Social Welfare, Mr De Rossa, is said by sources to have sought another £35 million, above the £80 million already allocated for welfare measures on Budget day. However, further discussion on this will be needed as Mr Quinn is arguing that a spending ceiling set in December should not be breached.
Some of Mr De Rossa's proposals will form part of the unemployment strategy, along with those put forward by the Minister for Enterprise and Employment, Mr Richard Bruton.
A subsidy to employers for hiring long term unemployed people is also under consideration, but is again meeting reservations from the Department of Finance on cost grounds.
The Taoiseach last night said action to reduce the level of long term unemployment "will benefit all families", and linked recent concerns about crime firmly with long term unemployment. "Only by providing sufficient legitimate alternative outlets for the ambitions of young unemployed people will we ensure that they do not see crime as a means of escape from their situation", he said.