The Conference of Religious in Ireland (Cori) has said that the Government’s economic analysis is “extraordinarily pessimistic” and it has proposed that the overall recovery programme should run over a seven-year rather than a five-year period.
At a briefing on the economy given by the Minister for Finance Brian Lenihan this afternoon, Cori urged Government to broaden the tax base and raise the tax take.
It said that among the proposals that should be considered by the Government is the introduction of a carbon tax, a residential property tax and allowing all tax breaks to be claimed only at the standard rate.
Speaking at the meeting Cori director Fr Sean Healy said that it was crucial that the Government's response to the current economic situation – which it described as extremely difficult – should not exacerbate the problems faced by the country.
He questioned the basis for the Government's conclusions that €16.5 billion in cuts were needed over five years.
Fr Healy said that this €16.5 billion was based on the tax-take not rising beyond 30.3 per cent of GDP by 2013.
"This is interesting given the fact that total tax-take in 2007 was 32.5 per cent of GDP. I don't think there would be any objection to the total tax take returning to 32.5 per cent of GDP by 2011".
"This would mean that Government revenue would increase by more than €4 billion a year in the final three years of a five-year scenario outlined by the Government", he said.
Fr Healy said that if Ireland's tax take were to rise to the EU average of 37.4 per cent of GDP most of the required adjustments would be achieved.
He said that in making these points he accepted that there was a need for the country to be more competitive and that the public service needed to improve its delivery. He said that efficiencies were required across the system and that the Government needed to get better value for money.
Fr Healy said that for some time Cori had been advocating a widening of the tax base and a rise in the tax take.
He said that some of the proposals it had put forward included standard rating all discretionary tax expenditures, keeping people on the minimum wage out of the tax net, increasing tax credits rather than decreasing tax rates, making tax credits refundable and introducing a residential property tax.
It is understood that Mr Lenihan disagreed with the proposal that the recovery programme should be run over seven rather than five years.
The meeting between Mr Lenihan with the community and voluntary pillar formed part of the Government's briefing of the social partners on the economy.