Alternative budget could save 75,000 jobs
Updated 16th July 2013
The trade union-backed Nevin Economic Research Institute (NERI) has rejected calls for the Government to proceed with €3 billion of cuts and tax increases in the forthcoming budget.
Reacting to a report by the rival Economic and Social Research Institute, NERI said cuts on this scale would undermine jobs and growth, making it harder for Ireland to reach its target of a 3% government deficit by 2015.
NERI research shows that an alternative approach, which combines an investment stimulus with increased taxes on capital and the top earning 10% of households, could save 75,000 jobs over two years. This would also reduce the deficit by boosting tax revenues and reducing social welfare and related costs.
The think-tank says the Government’s current budgetary approach will inevitably cause further job losses. The findings are contained in NERI’s latest Quarterly Economic Observer, which proposes:
- Full use of the proceeds of the ‘promissory note’ deal to reduce the fiscal consolidation (cuts and tax increases) by €1 billion in the forthcoming budget
- An investment stimulus of €4.5 billion over the next 30 months and
- Increases in capital taxes and income taxes for the top 10% of households (by income).
NERI’s alternative approach would mean no further cuts in current public spending programmes. The Government has already pledged to stop cutting capital spending.
NERI director Dr Tom Healy said an alternative budgetary approach was entirely possible. “We can reach the target of a 3% government deficit in 2015, while directing most of the fiscal adjustment towards taxes for those who can afford it. It is vital that we retain key public services in education and health while safeguarding the incomes of those who are most vulnerable,” he said.