Government admits 'minimal' scope for tax rises in next Budget
JUNIOR Minister Brian Hayes has said that the scope for further tax rises is "quite minimal" after an early Budget row broke out between unions and employers.
Business group IBEC has called for €500m of planned tax hikes to be dropped from the Budget, leading to accusations from union SIPTU that it just wanted to protect the rich.
But Junior Minister for Finance Brian Hayes said he and Finance Minister Michael Noonan had been consistently pointing out the tax burden on workers at the moment.
"The scope for further tax rises is quite minimal. We need to do more on the cutbacks agenda," he Mr Hayes said.
It is another sign that there is set to be an intense coalition battle over the Budget – despite the promissory note deal earlier this year providing €1bn in savings.
Labour favours using the €1bn to reduce spending cuts, including reducing any cuts in social welfare, while Fine Gael ministers want to ease off on taxes.
The current target for the October Budget is €1.1bn of tax increases and €2bn in spending cuts, bringing the total adjustment to €3.1bn.
But this could be cut to €2.1bn, depending on the performance of the economy.
Mr Hayes said no decision would be made until mid-September at the earliest – when the figures for tax revenue and spending for the second quarter of the year are published.
The Government has already budgeted for €600m of extra tax revenue next year, including €250m in revenue from a full year of property tax and €250m from scrapping tax relief on pensions over €60,000.
But IBEC wants it to drop an additional €500m of new taxes which will have to be raised from other sectors. Its chief economist Fergal O'Brien said middle-income earners were already paying an excessive amount of tax.
"The real prize here is in the psychological stakes, if people are told that there will be no more tax increases.
"The fundamentals of the economy such as incomes and employment are improving but spending is very poor," he said.
But SIPTU president Jack O'Connor has accused IBEC of trying to protect the rich by calling for €500m of new taxes in the Budget to be dropped.
"Is it not legitimate to ask those at the top of the income spectrum to contribute something? Over the next two Budgets, those at the top of the wealth spectrum can comfortably contribute €1bn," he said.
Mr O'Connor said public sector workers were already taking a hit of €1bn over the next three years under the Haddington Road agreement, on top of previous pay cuts.
And Labour TD Kevin Humphreys said it was "not acceptable" for IBEC to focus only on cutting public services in the Budget.
"We have to look at a range of measures to meet the budgetary targets and taxation is part of that," he said.