ICTU demands budget relief

Friday 30th August 2013

Ireland could pursue an alternative to austerity and still meet its 2015 deficit target, according to the Irish Congress of Trade Unions (ICTU).

Launching its pre-budget submission yesterday, ICTU called on finance minister Michael Noonan to abandon plans for further spending cuts in health, education and other public services. Congress also said further tax increases should be confined to the top 10% of households – which means those with a gross income over €109,000 a year.

The Congress alternative to austerity calls for:

  • No further cuts in day-to-day public spending
  • The proceeds of the promissory note deal to be used to reduce the budgetary adjustment by €1 billion in 2014 and 2015
  • An investment stimulus of €4.5 billion over the next two years, which would generate jobs and exchequer income
  • Targeted tax increases for the richest 10% of households, along with an increased contribution from the corporate sector.

Congress has outlined ways that capital spending can be increased without placing additional burdens on the exchequer. And it says increased taxes on the highest earning households can be achieved without increasing tax rates or changing tax bands.

Speaking after yesterday’s launch, Tom Healy of the union-backed Nevin Economic Research Institute said this could be done primarily by targeting tax reliefs enjoyed by businesses and higher income households, which would avoid hitting all but the very highest paid PAYE earners.

“The nominal tax rate for the highest earners is currently 52-55%. But tax reliefs mean that, on average, they pay a much lower percentage of their income – an estimated 27% in 2011 – in tax. If this average figure were increased to around 30% by targeting tax reliefs and other breaks, there would be no need for increased taxes for households that earn less than €109,000 a year,” he said.

ICTU general secretary David Begg said Government policy should become more job-focussed and growth-friendly. “There is no contradiction between this approach and meeting agreed budgetary targets. In fact, by adopting this strategy for budget 2014 we stand a better chance of reaching those targets, while creating more jobs and minimising social damage,” he said.

Mr Begg said recent good news on employment was welcome but not enough. “We still have one in four out of work or underemployed, plus collapsed retail sales and flat domestic demand,” he said.