THE Fine Gael party has presented a Cabinet sub committee with a three year plan to cut personal taxes to 25 per cent and 45 per cent, to abolish all levies on income, and to abolish tax and PRSI on incomes of less than £100 a week.

The proposals for tax reform, to be submitted to the Government Taxation Committee, also call on the social partners to opt for tax reductions in lieu of wage increases for workers in the current negotiations for a new national agreement.

Publishing the proposals last night, the chairman of the Fine Gael parliamentary party, Mr Phil Hogan, said he and his colleagues believed that, subject to the Maastricht criteria and maintaining public services, the recommendations could be implemented over three years.

The proposals, considered at yesterday's parliamentary party meeting, amount to "a menu of options" which could be undertaken from the next Budget, he added.

The main suggestion involves progressively raising tax allowances to the level of exemption limits in order to reduce the present "penal marginal tax rates on low income earners". Fine Gael also wants to cut existing tax rates of 28 per cent and 48 per cent to 25 per cent and 45 per cent.

In addition to cutting out all levies on income and abolishing tax or PRSI on income of less than £100 a week, tax bands should also be widened so that progressively more taxpayers would pay tax at a new lower standard rate of 25 per cent.

Reform of the tax system would deliver a number of key objectives vital to future prosperity, Mr Hogan said. These goals involved fostering enterprise so that it pays to create a job "and pays to take a job" encouraging workers to trade off increases in gross wages for reductions in personal taxation and underpinning economic competitiveness through a low and stable inflation rate.

Meanwhile, the tax burden on work remained "unacceptable" and the tax wedge between what the employer pays out and what the employee takes home does not meet the Fine Gael objective of rewarding work and promoting enterprise.

"While there has been a substantial increase in employment in the past two years, Fine Gael believes it is necessary to look at further specific measures that will assist job creation for new entrants to the labour market," he said.

The party also recommends further incentives, with a lower Corporation Tax rate of 25 per cent on an increased profits ceiling of £100,000. It calls for reduced employers PRSI "within the context of maintaining the Social Insurance Fund". The band should be widened so that the 8.5 per cent rate ensured greater competitiveness for exporting companies.