Fine Gael promises VAT rate cut in alternative budget
FINE Gael will today promise a cut in the lower rate of VAT in a bid to boost trade and create new jobs in small and medium businesses.
The Labour Party will demand a salary cap of €200,000 across the public sector, including a 15pc cut in the salary of ministers.
Fine Gael and Labour will publish their long-anticipated alternative budgets today -- which will expose the differences between the likely coalition partners.
Fine Gael agrees with the Government that a €6bn package of cuts and taxes is required in next week's budget but Labour was last night sticking to an adjustment of €4.6bn.
Both parties agree that the budget deficit must be reduced within the next four to five years and both want an economic stimulus package.
One of the headline proposals in Fine Gael's alternative budget is a reduction in the lower rate of VAT from 13.5pc to 12pc.
This, the party believes, would be a major boost to the hospitality and building industry, hotels and small businesses in general.
The party is expected to argue that Ireland's economic recovery will come from increased trade and activity among small and medium businesses.
If a lower rate of VAT can generate more cash and business, then more jobs can be protected and created, the party will argue.
While Fine Gael favours a ratio of 3:1 in cuts versus taxes, Labour favours a 50:50 ratio between taxes and cutbacks.
Under the Labour Party's plans, it will be seeking a cap in the region of €190,000-€200,000 on all public sector salaries--which covers a cut of 15pc in ministers' pay.
The Labour Party is also expected to claim that some €400m can be saved from tweaking pension reliefs and lump sums. Another €200m will come from social welfare fraud and changes to rent supplement.
Under the party's version of the budget, to be unveiled today, it is expected to call for a cap on the amount of tax relief on contributions to private pensions by employers and employees.
Mr Gilmore and the party's finance spokeswoman Joan Burton are expected to call for a 48pc tax rate for those earning over €100,000.
The party's jobs plan would cost €230m but would help get work for some of the 442,000 people on the dole queues.