McCreevy’s legacy on tax rates and prices
Charlie McCreevy has been given undue credit for many measures that have affected the economy in recent years.
John Bruton, as head of the rainbow coalition in January 1997, introduced the low corporation tax rate of 12.5%. It was not the work of Charlie McCreevy, as the article stated. The first finance minister to run a budget surplus in the history of the state was Ruairi Quinn in the 1997 rainbow coalition budget again not Charlie McCreevy.
The non-indexation of tax bands in Budget 2003 by Mr McCreevy was effectively an increase in the tax burden on the worker of around €300m. It will cost the average family an extra €400 per year. There are 800,000 people, many of them children, living in households on incomes of less than €173 per week. This represents 22% of the population.
Price increases over the past five years have sharply outpaced those of our European neighbours. This has resulted in an estimated consumer price level which is 12% above the euro area average. The strong inflation differential has resulted in a further divergence in consumer price levels, adding to already high competitiveness risks.
Mark Wakefield
Mercier Park
Turner's Cross
Cork
David Clerkin replies: The article clearly stated Mr McCreevy's move on corporation tax rates "rubber-stamped the proposal of his predecessor." On the budget surplus point, Mr Quinn did not see out the year in which he first provided for a surplus. The electorate intervened in June 1997 to install Mr McCreevy before it was realised.
