Policies being pursued by the Government are producing the wrong results and further adherence to them will only compound the problems facing the State, Irish Congress of Trade Unions general secretary David Begg has said.
Speaking at the launch of the congress pre-budget submission yesterday, Mr Begg said there had been some positive signs for the economy recently but there remained a sense that “we are bouncing along the bottom rather than reaching some kind of inflection point”.
“The policy mix at the moment is not right,” he said, adding that the unemployment rate was 13.7 per cent. “It is not producing the right results and . . . the longer it goes on, the more you compound the problems which are all too apparent after these six years of recession.”
Congress called on the Government to take savings generated from the deal with the EU on the Anglo Irish Bank promissory notes – expected to be some €1 billion in 2014 – into account and aim for a consolidation of €2 billion rather than the €3.1 billion being sought by the EU-IMF troika.
It argues that the Coalition’s objective of reducing the deficit to 3 per cent by 2015 could still be reached by following its policies.
It says the €2 billion figure could be achieved without having to introduce further cuts to primary spending, which could drop to one of the lowest levels in Europe if the current approach continues.
Tom Healy, of the Nevin Economic Research Institute, said targeted tax increases could deliver €1.65 billion in extra revenue and that the anticipated €350 million in savings from the Haddington Road deal on public sector pay would make up the difference.
The submission says the Government could raise up to €600 million in two years if it raised the effective rate of tax paid by the highest earning 10 per cent of households in the State, where income was above €109,000.
Mr Healy said headline tax rates would not need to be increased to achieve this. Instead, he said, the Government should seek to raise the effective rate on these households, now 26 per cent, by 2 per cent by eliminating tax reliefs.
Altering reliefs
A wealth tax could raise €150 million and changing the corporation tax system, by altering reliefs linked to corporate losses, could save a further €250 million next year.
Mr Begg said tightening up the corporation tax regime, while maintaining the 12.5 per cent marginal rate, would send a strong signal internationally given the bad publicity Ireland attracted earlier this year following revelations about Apple's tax affairs.
“If there were to be a tightening up on tax havens across the world it might be in Ireland’s interest to have a more transparent system here, albeit with a relatively low nominal tax rate.”
Congress also called for the roll-out of a €4.5 billion capital investment stimulus package over the next two years aimed at addressing infrastructural deficits such as broadband, transport and energy. It says the package could reduce unemployment and boost revenues.
