Spring Statement to target emigrants and the 'squeezed middle'
Published 28/04/2015 | 02:30
The coalition will today lay out the groundwork for a five-year tax plan aimed at the so-called 'squeezed middle', as well as tens of thousands of Irish professionals who emigrated during the recession.
Finance Minister Michael Noonan will pledge €1.5bn "wriggle-room" in October's Budget, which will be split evenly between tax-cuts and spending measures.
Workers earning between €35,000-€70,000 will be targeted in the Government's so-called 'Spring Statement', which has effectively shaped into a pitch for re-election.
There will be a focus placed on taking 90,000 workers out of the Universal Social Charge (USC), with sources confirming that increasing the entry point from €17,000 to a higher amount was under examination.
While Labour previously dismissed talk of a five-year tax plan, the Spring Statement will outline tax and spending measures that range beyond the General Election.
It will be predicted that the economy will return to levels of growth not seen since 2007.
Ministers will tell the Dáil that the country is to experience a period of inward migration in 2017 for the first time since the crash.
Next year, will see a balance between outward and inward migration, before an expected "rush" of people returning home.
The statement is geared towards convincing tens of thousands of emigrants that they will find employment here, as the Government continues in tandem its plans to introduce income-tax reductions.
"We are predicting a rush of Irish emigrants returning home. It is of enormous importance to the Irish psyche and to confidence," said a senior government source.
Both Mr Noonan and Public Expenditure Minister Brendan Howlin will deliver separate speeches in the Dáil, similar to the process adopted on Budget Day. Opposition parties and TDs will then be given an opportunity to make their cases.
The Coalition's economic strategy is based on projected growth of over 4pc this year.
It will be predicted that the target of 'full employment' - whereby all the jobs lost in the recession are restored - will be achieved by 2018.
In his speech, Mr Howlin will announce the beginning of negotiations with public sector unions over the restoration of pay.
Mr Noonan will hint at measures aimed at avoiding spiralling property prices, particularly in urban areas.
A report on the matter, by Dr Don Thornhill, is due to be presented to the minister next month.
The Fine Gael minister will also refer to his plans to haul in the pillar banks in a bid to bring about a cut in variable mortgage rates.
But the decision to include a five-year tax plan as part of the Spring Statement may cause some unease within the Labour Party.
Some party figures previously rejected taking such an approach, so as to avoid the perception that Labour is wedded to Fine Gael ahead of the General Election.
While Fine Gael sources insisted the plan was targeted at those earning €35,000-€70,000, Labour sources said it would ensure that low-income earners also benefit.
Speaking yesterday, Mr Noonan said the statement was not an attempt to "buy the election".
He insisted the Government would not allow the country to return to a "boom-and-bust" model.
"We need to give people back money in their personal taxes, USC and income tax. We need to reduce those," he said.
Mr Noonan insisted the Government would be prudent, adding that it was still bound by EU fiscal rules.