Labour's Plan for Stability and Growth
Budget based on surgery not butchery
Issued : Thursday 3 February, 2011
While Ireland has serious problems, we also have real economic advantages.
Labour believes that the cuts proposed by Fianna Fail and Fine Gael over the next three years pose an unacceptable risk to jobs and growth. Labour believes it is essential that the right pro-jobs policies are in place over the coming years.
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Summary
To safeguard Ireland’s future economic and employment growth Labour’s believes it is essential to:
• Re-negotiate the EU/IMF deal, extending its terms by a year to 2016
• Make savings in public spending and eliminate waste
• Introduce a fair tax system
FORWARD THINKING
• Labour is seeking a mandate in this election to re-negotiate the EU/IMF deal to achieve fair and realistic terms for the Irish people.
• Labour proposes a €7bn adjustment between 2012-2014 to allow room for jobs and recovery.
• Labour will reduce the deficit to 4.8% of GDP by 2014 and to below 3% of GDP by no later than 2016.
• Labour will target a €500m Jobs Fund on a range of job creation and training initiatives
• Labour will set up a Strategic Investment Bank in two phases: It will initially invest money from the National Pension Reserve Fund in infrastructure projects to boost growth. Then when market conditions normalise, it will develop into a functioning bank that takes deposits and raises long term financing.
• Labour will draw up 7 year National Development Plan to incorporate the funding that will be available from various sources, including Labour’s Strategic Investment Bank.
SAVING PUBLIC MONEY
• Labour will carry out a Comprehensive Spending Review and Waste Audit of all spending programmes to achieve €4bn in savings. That includes clamping down on welfare fraud, tackling long-term unemployment & driving down healthcare costs
• Labour will make savings in the public sector pay bill through a reduction in numbers of 18,000 over the next three years (savings included within the €4bn.
• Labour will reduce Ministerial salaries and cap public sector pay.
• Labour will reduce the number of paid chairs of Oireachtas Committees
• Labour will abolish the Oireachtas allowance paid to Ministers who have constituency offices staffed by civil servants
• Labour will ensure that Ministerial pensions and severance packages are set by an independent body, such as the Comptroller and Auditor General.
FAIRER TAXES
Income Taxes
• Labour will introduce a fair tax structure and seek to re-negotiate the EU/IMF deal to achieve this objective.
• Labour will carry out a review of the Universal Social Charge to identify the families that have been hardest hit, and will reform the tax accordingly (using €200m raised through other changes in the USC and capital taxes).
• Labour will not increase income taxes on earnings of less than €100,000 and will instead extend the 10% USC rate to include all income over €100,000 (raising €106m).
• Labour will ensure that people earning over €250,000 must comply with a Minimum Effective Tax Rate of 30%. (No estimated yield available)
Other Taxes
• During the 1990s Labour in Government introduced the 12.5% corporation profits tax rate, and we will insist that it remains in place.
• Labour favours the introduction of new progressive structures for Capital Taxes such as CAT and CGT. (Raising €236m)
• Labour will increase the carbon tax to €25 per tonne and offset €40m to fund fuel poverty measures (raising a net €180m).
• Labour will insist on action being taking to deal with the scandal of tax exiles, and we will further strengthen revenue action to reduce tax-evasion (raising €100m).
• Labour is proposing a 1% increase in the standard rate of VAT that will raise €310m in a full year.
• Labour accepts the need for a site value charge but does not believe it would be possible to introduce one before 2014. As an interim measure, Labour will increase the second homes tax from €200 to €500 to yield €95m.
• The composition of the adjustment should be fair and balanced. Our policy proposals will yield equal amounts in revenue and expenditure savings, net of priority expenditure measures.
• The macro-economic impact of the adjustment should be limited to €7.1bn, including the carry forward of the Budget 2011 measures.
