Cutting tax will benefit only rich, says O'Connor
Published 05/09/2016 | 02:30
The leader of the country's largest union has said taxes should not be cut in the next two budgets because this would benefit the well-off over the poor.
Siptu's general president Jack O'Connor said improving public services should be the Government's biggest priority as it decides how to use its €1bn spend. He warned that cutting tax would reduce the pool of cash available in the Budget to achieve this.
Mr O'Connor claimed that the argument for tax cuts was "immoral" as it would penalise those who had suffered most during the austerity years.
He said: "Tax cuts ultimately and inevitably mean penalising the people who depend most on public services.
"There is less money for healthcare and childcare and elder care, less money for housing and less money for local authority and environmental services. It means an exacerbation of inequality."
Mr O'Connor said he was not against some alleviation in the marginal rate for middle-income earners, as long as this was funded by an increase in taxes for the wealthy.
But he said that even this should not be done until key issues like the housing shortage had been addressed. "Our union's position is that in this next Budget and almost certainly in the Budget the following year, there's no scope for tax cuts of any kind at all," he said.
Mr O'Connor has predicted a wage explosion if economic growth continues, as unions will lodge pay claims. Siptu is a driving force in setting the agenda for pay rises.
So far, Siptu has been successful in negotiating annual increases between 1pc and 3pc, particularly in the manufacturing sector, and has predicted pay rises of up to 5pc this year.
But Mr O'Connor rejected any suggestion that high rates of tax were fuelling wage demands as "codswallop" and said the longest wage standstill in the history of the State was driving pay claims.
Asked whether he felt the so-called "squeezed middle" need some easing of their tax burden, he said this should happen only after key issues have been addressed.
These include rebuilding the health service, housing people and restoring local authority services.
Mr O'Connor said arguments put forward about cutting marginal rates were "absolute nonsense and quite disingenuous".
"This argument is promoted in the interests of those who would benefit most," he said.
"They are not the least bit concerned about the people in the middle.
"The unspoken effect of the kind of tax-cutting they're advocating is the better off benefiting most and those who depend on public services suffering more."
The union has called for the abolition of USC, but said it should be replaced by a Social Solidarity Contribution. It wants any USC cuts to fund a new pension system for those without retirement savings.