Government must introduce new stimlilus plan to offset deflationary budget

The budget for 2013 introduced by the Government contains no surprises as much of the detail has already been in the public domain, SIPTU General President, Jack O’Connor has said.

The budget for 2013 introduced by the Government contains no surprises as much of the detail has already been in the public domain, SIPTU General President, Jack O’Connor has said.

“Some progress appears to have been made in broadening the tax base and focusing on wealth as a source of revenue particularly in relation to pension tax reliefs. While this is positive as far as it goes, more emphasis must be placed on aggressively sourcing revenue from wealth and those on high incomes,” he noted.

THE SIPTU General President said that while the proportionate system of taxing property is an improvement on the flat rate household charge approach but the threshold at which the so-called mansion tax is set is far too high at over at €1 million.

“Ideally, the rate of 0.25% should be coming in at a much lower level i.e. €500,000, or thereabouts, with a higher level again on properties worth in excess of €1 million. The revenue generated at the higher rate from more valuable properties should then be deployed to alleviate the burden on those with average or lower values. We will continue to lobby and campaign for this,” he said.

“The abolition of the PRSI allowance for employees is a regressive measure which will disproportionately affect lower income families. It could have been offset somewhat at least for those on incomes up to average industrial earnings if the proposal for a 3% levy on all incomes over €100,000 had proceeded. It is now imperative that the Family Income Supplement must be made more effective for low income families. Similarly, across the board cuts in payments such as Job Seekers Benefit and child benefit are socially regressive and this must be the last budget where economies are achieved in this manner. Much remains to be clarified in relation to the precise sources of the total savings in the current budgetary spend and undoubtedly the devil lurks in the detail.

“Overall, Budget 2013 reflects the Troika’s insistence on on-going deflation. The Government has no discretion on the bottom line, but it is not the correct road for Ireland and it will further exacerbate the pressure on the domestic economy, mitigating against job creation. The Government must now follow through with a new ‘off-balance sheet’ infrastructure stimulus which would be facilitated by our improved international credit rating as well as other measures to support the domestic economy so as to generate jobs.”