Prepare to be blinded and taxed with figure

PREPARE to be confused. The political parties are already starting to bombard us with examples of "typical" taxpayers who would be better off under their plans. Over the coming weeks the term "the average taxpayer" will be stretched to its limits and beyond as the different parties pull out examples of married couples earning so many thousands of pounds, with so many children, and so much to gain under their proposals.

Perhaps such tactics will eventually cancel each other out. After all, the electorate will realise that plans for big tax reductions could be quietly forgotten if the economy slows or if the next government cannot get a grip on public spending. Politicians may offer people an extra £15 or £20 a week from tax reductions in five years' time, but who will be counting in 2002? And after all, the main participants are offering roughly the same amount in income tax reductions - about £1.5 billion, or £300 million a year.

It remains to be seen for how long during the campaign "the battle of the £1.5 billion" will run. Fine Gael launched its package yesterday, and is claiming its tax plan targets a higher percentage of the population more efficiently than the Fianna Fail/Progressive Democrat alternatives. The Fine Gael proposals include widening the standard rate income tax band, increasing PAYE allowances, cutting employees' PRSI and reducing the top tax rate from 48 to 45 per cent.

Launching the plan yesterday, the Minister for Enterprise and Employment, Mr Richard Bruton, said almost 85 per cent of single taxpayers and two thirds of married taxpayers would be better off under its plan than under Fianna Fail's.

This calculation is based partly on the large number of taxpayers earning salaries close to the average, who would do a bit better under the Fine Gael plan. It is also based on Fine Gael's claim that its proposals to phase in a £300 per child per annum supplement for each child under five years will be worth more to a greater number of families than Fianna Fail's plan for a £2,000 tax allowance paid to spouses staying home to mind children, or to be claimed against child minding costs.

Fianna Fail's tax plan, meanwhile, offers a bit more to higher earners than does Fine Gael's. But it is important to realise that both plans offer fairly sizeable gains to taxpayers on all incomes. It is just the proportional spread of gains which is different. The Coalition parties say their plan is fairer and attacks the key inefficiencies of the tax system. Fianna Fail and the PDs say their strategy is more transparent and will offer a clearer incentive to workers.

Both sides will spare no effort in the weeks ahead to try to drive a wedge between partners in the opposing group. Fianna Fail and the PDs agree on many items of the tax plans. But the PD plan to abolish employees PRSI may unsettle Fianna Fail, as may its more gung ho approach to privatisation.

Meanwhile, the three Coalition partners, while publishing their own tax programmes, have tried to head off accusations of going in different directions by agreeing that in the next two budgets they would concentrate on widening the standard income tax band and on increasing PAYE tax allowances. In other words, Fine Gael's plan to cut the top tax rate would have to wait until year three at least, further underlining the appeal to the better off in FF/PD commitments to cut the top 48 per cent rate.

But the issue of which group of parties the voters believe can keep their promises - rather than the details of the promises themselves - is likely to become more important as the debate goes on. Suffice it to say that the lack of control on public spending exercised by all recent governments gives the voters no clues in this area.

Fianna Fail has promised it would ensure current public spending does not rise by more than 4 per cent a year, thus leaving scope for the £1.5 billion in promised tax cuts to grow to £1.8 billion or more. There is no doubt that Mr Bertie Ahern, as a former Minister for Finance, understands what it would take to deliver on this promise. But it would represent much tighter control than that exercised by any recent government.

Fine Gael has made its play for fiscal responsibility through a promise to introduce a fiscal transparency Act, which would set targets for government borrowing and debt, require the publication of longer term targets for the public finances, provide better information on spending to the public and establish rigorous value for money evaluations of spending.

Come polling day, voters may well decide not on the basis of the details of the different packages but on which of the alternative governments on offer they trust more to oversee the economy and share the fruits of economic growth. But in the meantime, prepare to hear some heated debate about the intricacies of our complicated tax structure.