Budget should raise taxes rather than cut spending

Friday 10th May 2013

The next Budget will be fairer, and more likely to hasten economic recovery, if it has a “greater orientation towards collecting more taxes rather than cutting spending and services,” according to the trade union-backed Nevin Economic Research Institute (NERI). Speaking at IMPACT’s conference in Portlaoise today (Friday), NERI economist Dr Micheál Collins said this was among the measures required to end the prolonged period of austerity predicted by most economic commentators.

In a session on how austerity was affecting workers in Ireland and across Europe, Dr Collins outlined NERI’s forecast of continued stagnation, with sluggish growth and high unemployment, over the next two years. “While there are signs of some stabilisation in domestic demand, the amount being spent by households, companies and the Government remains depressed. The lack of any ‘pick-up’ in domestic activities remains a key problem for the Irish economy. As this is the job-intensive sector of the economy, recovery is dependent on things getting moving on the ground around the country,” he said.

Dr Collins called on the Government to change course in three ways:

  1. It should adopt a large scale investment programme drawing on funds from the European Investment Bank, the borrowing abilities of commercial semi-state companies, pension funds, and the savings from various debt restructuring deals.
  2. It should address the unemployment crisis in a more focused way with investment in additional retraining and upskilling.
  3. And it should ensure that the next Budget takes a fairer approach to the distribution of the adjustment, with a greater orientation towards collecting more taxes rather than cutting spending and services.

Daniel Blackburn, director of the London-based International Centre for Trade Union Rights, told delegates that Europewas in a period of long-term economic decline as part of “a reorientation away from the massive inequality that the West enjoyed since the era of colonialism and slavery.” He said this would result in a more balanced distribution of wealth between global regions, but said it was no reason to erode workers’ rights. “Even if we are in for a long period of decline, there is no reason to assume that labour standards must deteriorate,” he said.

Mr Blackburn said governments across Europe had exploited economic decline and uncertainty to attack trade union and workers’ rights through an ‘Americanisation’ of industrial relations with labour law reforms that undermine collective bargaining protections and promote ‘flexible’ working with increased working time and atypical contracts. “The International Trade Union Confederation describes this as the ‘Americanisation’ of European industrial relations. The European Union and IMF are pushing these measures. Both have long supported such policies, including prior to the economic crisis,” he said.

Mr Blackburn said Governments incomes across Europe had been undermined through workplace measures (like job cuts, pay cuts and worse working conditions including longer hours), social security measures (including cuts in pensions, benefits, health services and education) and tax measures, including increased regressive taxes like VAT.

IMPACT national secretary Matt Staunton called on the Irish Government to legislate to compel employers to respect the “fundamental right” to collective bargaining. “When workers want a union to represent them for collective bargaining purposes there should be a duty on the employer to recognise that right. Our analysis is that the 2001-2004 Industrial Relations (Amendment) Acts have been rendered unworkable by the Supreme Court ruling in the Ryanair case and thatIrelandis failing in its duty, under international laws and conventions, to secure respect for the fundamental right to collective bargaining.”

He called for amendments to Irish legislation to require employers to engage in collective bargaining and give unions the right to distribute information and provide opportunities to meet and discuss collective bargaining with workers.

“Employers should not be permitted to create in-house associations to frustrate and undermine trade union collective bargaining. Ensuring that workers can organise and bargain collectively, free from coercion, intimidation, interference and retaliation, is essential. It is vital that legislation provides effective protection from penalisation, victimisation, and other prejudicial acts arising from members exercising their trade union rights,” he said.