Little relief for majority of workers

The impact in the wage packets of the vast majority of workers will be insignificant as a result of the lacklustre Budget delivered by Finance Minister Charlie McCreevy two days ago.

About the only aspect that characterised it was, despite Taoiseach Bertie Ahern’s dismissal of charges that he presides over a right-wing Government, there was practically nothing in it for the PAYE sector, while the wealthy will continue to be cosseted.

One facet that had immediate effect were the rises in petrol, diesel and cigarette prices which came into force already.

From midnight on Wednesday, the cost of living went up again and motorists will have to pay an extra 5c a litre on both petrol and diesel. Smokers will have to fork out an extra 25c on every pack of 20 cigarettes.

Mr McCreevy expects this to bring an extra 243 million into the State coffers in 2004.

Whatever about cigarettes, the seemingly small direct increase on diesel and petrol actually translates into a very considerable 22.7 cent increase on a gallon of petrol, which puts the increase into a more realistic light.

The increase in fuel prices will, inevitably, lead to other indirect costs to the consumer which will also begin to be felt as they are passed on.

It was the fear of inflation which kept the cigarettes lower than the anticipated 50 cent increase, and the same argument applied to letting alcohol untouched.

Whatever influence the Progressive Democrats claimed to have exercised over reducing the tax burden seems to have evaporated.

Previously, McCreevy Budgets gave some relief to most wage earners but the steam has gone out of the drive in this direction, helped invariably by the introduction of a plethora of stealth taxes.

Contrary to the PD mantra of pushing for an easier tax regime, and Tánaiste Mary Harney’s insistence that it is their policy, about 62,000 more people are going to end up in the higher tax bracket.

For the second year in a row, Mr McCreevy did not alter the standard rate tax band and consequently many people in the middle-to-higher income groups will be subjected to the higher rate of 42%.

What it means is that by virtue of getting a pay increase from their employers, that hike will be eroded because they will be pushed into the higher tax bracket.

Yet, the better-off in society who can well afford to invest in a whole range of tax efficient schemes can continue to enjoy the benefits from them.

The construction industry stands to benefit from the extension of tax incentive schemes and the minister has once again refused to bring in the incredibly wealthy of the bloodstock industry and rock stars into the tax regime.

The minister may feel entitled to point to increases in social welfare and other benefits as looking after the poor and needy, but at the end of the day they really do not amount to any great comfort for the recipients.

For instance, the slight hike in child benefit was put into perspective by Owen Keenan, chief executive of Barnardos. He pointed out that the increase in child benefit of 6 per month equates to 20c a day, which would not even buy an apple.