ICTU plan for 100,000 jobs and wealth tax

7th November 2012

Policies for jobs, economic growth and renewed confidence in Ireland are the cornerstones of the Irish Congress of Trade Unions’ (ICTU) pre-budget submission to Government. ICTU says Government economic policy is failing, with Ireland now in its fifth year of recession, and it calls for a completely new direction.

The submission includes ten key recommendations, including the creation of 100,000 new jobs through an investment stimulus, more taxes for people earning over €100,000, a 1% wealth tax and a financial transaction tax.

It also calls on the Government to deal effectively with Ireland’s pension crisis and seeks stronger corporate governance in the private sector. It warns against the privatisation of major state-owned assets to repay the debts of failed Irish banks.

The pre-budget submission repeats the case for a longer adjustment timeframe, saying that Ireland should be given seven years, rather than five, to bring the deficit within EU limits. This would stretch the adjustment period to 2017.

It says Government policy has been counterproductive. The extraction of €16 billion from the economy over recent budgets has meant falling incomes, high unemployment and lower domestic demand which, in turn, have undermined growth and added to the budgetary problem.

ICTU says the Government’s target for deficit reduction is the only economic objective currently being met. Two-thirds of this is being achieved through spending cuts, while just one-third of the adjustment is coming from tax increases – largely in taxes that fall disproportionately on the less well off. Unions want this ratio reversed, with more taxes on the better off.

ICTU general secretary David Begg said the submission contained a menu of options on for raising up to €3.4 billion in new revenue. “December’s budget must rebalance the adjustment in favour of working people and raise more revenue from those with greater resources. Even the IMF has conceded that the approach adopted in Ireland was based on flawed calculations and therefore destined to fail. Almost 360,000 people have lost their jobs since the crisis began. That’s 360,000 compelling reasons to change course now and forge a route to recovery based on growth, hope and jobs,” he said.

The ICTU budget submission calls for:

  1. An investment stimulus of €3 billion a year for three years to create 100,000 new jobs and boost GDP by 2% a year.
  2. A new 48% tax rate for individual incomes over €100,000, along with a 1% wealth tax. The report argues that profitable companies must contribute more and calls for fewer corporate tax breaks and a clamp down on evasion and avoidance.
  3. The adoption of a financial transaction tax – which is already supported by ten EU countries – to raise €500 million a year in Ireland. ICTU also launched a policy document on the financial transaction tax today.
  4. An EU move to remove bank debt from Ireland’s sovereign debt.
  5. Policies to boost pension take-up and phase in the reform of state pensions to allow workers time to adjust and prepare.
  6. An extension of the adjustment period to 2017, with more of the burden in the form of tax rises on the better off, and less from public service cuts.
  7. Fair and focused policies to get unemployed people back to work including a broader apprenticeship system and a ‘youth guarantee’ to link young people to skills training and the workplace.
  8. Policies to address poverty traps and fuel poverty and more effort to tackle inequality. The submission calls for a reversal of cuts in disability services and criticises new state pension eligibility criteria, which impact most severely on women.
  9. No privatisation of major state-owned companies to repay the debts of failed Irish banks. Instead, the submission says Indigenous enterprise should be developed as an engine of recovery.
  10. Reform of private sector corporate governance in the private sector to tackle the “obsessive secrecy and perverse incentives” that helped create the economic bust that led to recession.

Read the full submission HERE.