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Government should abandon plans for 'unaffordable tax cuts', says ICTU

Instead, Budget 2022 should prioritise spending on public services including early years care.

Image: Sasko Lazarov

Updated Sep 14th 2021, 11:01 AM

THE IRISH CONGRESS of Trade Unions (ICTU) has said there should be “no going back to the pre-pandemic economic model” in next month’s Budget and has called on the Government to abandon plans for “unaffordable” tax cuts.

The recommendations are contained in ICTU’s pre-Budget submission, published this morning.

It argues that “permanent tax cuts” set out in the Government’s Summer Economic Statement (SES) are “unjustified from a growth perspective” and from “an equality perspective”.

In its own pre-Budget analysis earlier this month, the Central Bank of Ireland said it was “notable” that the SES did not outline any new “potential revenue-raising measures”.

“Rather, when illustrating the budgetary strategy, [the SES] noted that part of the available fiscal space could be used for tax cuts,” the Central Bank highlighted.

The Government should abandon those plans, ICTU says, and prioritise spending on public services — including early years care, education, health, water and housing.

To fund these increases, ICTU proposes introducing a net wealth tax on families with net assets of over €1 million per year and increasing excise duties on pollutants like diesel, petrol and single-use plastic.

It also wants the Government to phase out various reliefs related to the Local Property Tax and the Capital Acquisitions Tax (CAT), which is paid on the value of inheritances or gifts received.

ICTU says reforming these taxes “offer the most promising ‘low hanging fruit’ for increasing government revenue in the short term”.

Earlier this year, the ESRI estimated that removing the CAT exemption for certain business and agricultural assets alone could raise an additional €200 million per annum.

“Society and the economy have fundamentally changed,” the submission states. 

“Basic services and the welfare state have shown themselves to be the indispensable bedrocks of people’s economic well-being. There should be no going back to the pre-pandemic economic model and the Government must do whatever it takes to ensure an inclusive, just and sustainable recovery.”

Minimum wage

The Government should also look to transform the Employment Wage Subsidy Scheme into a more permanent Short-Time Work Scheme (STWS), ICTU says.

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This could be modelled on the German ‘kurzabeit’ scheme and similar schemes that have been rolled out in other European countries.

“These schemes provide state supports for workers in firms or sectors hit by a reduction in demand,” ICTU says, “but on condition that participating firms meet certain criteria” that ensure the needs of employers and employees are met.

It argues, “This would incidentally be in line with IMF advice to the Government that ‘Income support measures should become increasingly conditional on re-skilling, and further shift toward subsidising new hiring in the expanding sectors.’”

ICTU also wants the minimum wage to be raised to €10.50 an hour from January.

The current €10.20 rate falls short of the previous Government’s commitment to increase the minimum wage to €10.50 by 2021, it says,

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