Unions welcome low-wage tax exemption

Minimum wage earnersThe removal from the tax net of those on the minimum wage was widely welcomed last night, but the Government was sharply criticised by trade unions for failing to do more on childcare and pensions.

Mandate, the union representing thousands of workers in the retail and bar trades, said taking minimum wage workers out of the tax net was an important step in assisting the low paid.

Its general secretary, Mr John Douglas, said he was pleased that the Government had "at last" honoured its commitment. But he said the Government had much more to do to close the gap between top earners and the lower paid.

"The top 20 per cent in terms of income in Ireland earn 4½ times more than the bottom 20 per cent bracket do. This is the biggest income gap in Europe," he said.

SIPTU general president Mr Jack O'Connor said the Budget was "unnecessarily cautious".

The union's principle objective had been a substantial increase in the PAYE tax credit, which would have benefited all workers.

"Although the increase of €230 in the PAYE tax credit and €60 in the personal tax credit represents a step forward, it is the absolute minimum that could have been expected in view of the healthy state of the public finances," he said.

Workers on the minimum wage, he added, would fall back into the tax net following an increase which is due from May next year, under Sustaining Progress.

The €14 increase for those on the lowest rate of social welfare, as well as the removal of minimum wage earners from the tax net, was welcomed by the Irish National Organisation of the Unemployed. But it said more could have been done to ease the transition from welfare to work, by ensuring that the take-up of employment guaranteed an increase in household income.

Those who leave the live register to take up even low-paid jobs lose a range of secondary benefits, such as medical cards, rent supplement, back-to-school clothing and footwear and fuel allowances, the organisation points out. The Budget, it said, had left the threshold for retention of these benefits unchanged for the eleventh consecutive year.

IMPACT, the State's largest public sector union, criticised the Government for failing to take more middle-income earners out of the top tax rate. Mr Peter McLoone, general secretary, said most wage earners continued to pay tax at 42 per cent, while tax avoidance schemes allowed the self-employed and "super rich" to get away with much less. The union also expressed disappointment that the Budget had "done nothing" to help working parents with childcare costs. "Many young families now have to spend more on childcare than on housing. There is little in this Budget for them," said Mr McLoone.

SIPTU's national women's committee also reacted angrily to the Government's "failure to act" on childcare. The union's national equality secretary, Ms Rosheen Callender, said members were "utterly appalled" at the Government's "inertia" on both issues. "Despite strenuous representations by social parties and a wide variety of groups, the Minister [ for Finance] has failed to introduce any form of tax relief or other assistance to working parents in respect of their childcare costs," she said.

"And despite the obvious pensions crisis, which clearly calls for radical action to protect existing pension schemes and encourage the establishment of new ones, the Government has failed to respond to any of the imaginative proposals put forward by SIPTU, ICTU and other organisations."