Higher taxes proposed for top earners, savers and owners of second homes

LABOUR: LABOUR HAS proposed cutting spending by €4

LABOUR:LABOUR HAS proposed cutting spending by €4.5 billion next year, less than the €6 billion target put forward by the Government and accepted by Fine Gael.

The party’s pre-budget proposals include a plan for a €500 million jobs fund, a cap on public salaries, higher taxes on top earners, second-home owners and savers, and a €400 million cut in public sector pay.

The party says its proposals are based on the principle that everyone must contribute, but those who have the most must contribute the most.

It is proposing savings of about €5 million through political reforms, including the application of a €190,000 cap on public salaries to the Taoiseach’s earnings, with a commensurate further reduction of 17 per cent applying to ministers and ministers of state.

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Ministerial cars would be pooled, and Garda drivers replaced by civilians, except where security was an issue.

The party says it would increase the tax on second homes from €200 to €500, increase Dirt tax on savings from 25 per cent to 30 per cent and cut personal tax credit by €250. Property-related tax reliefs would be abolished, yielding savings of €360 million a year.

The capital budget would fall by €1.2 billion, but Labour leader Eamon Gilmore claimed this did not mean Metro North would not go ahead. The public sector pay bill would be reduced by €400 million, and €215 million would be saved by tackling welfare fraud and curbing spending on rent supplements.

Labour also says it can achieve almost €1 billion in non-pay savings next year while maintaining investment in education and front-line health services. Resources would be prioritised for job creation and the public sector pay bill would be reduced by at least €1.4 billion over three years.

The document published yesterday draws together a number of existing Labour commitments. A Strategic Investment Bank would be established to lend to innovative firms and Irish citizens, and the diaspora would be encouraged to make deposits in the bank. Employers would be encouraged to take on interns for six-month stints, who would be paid the equivalent of the jobseekers’ allowance. The recently unemployed would be allowed to claim back two years’ tax to help fund full-time studies, and people on short time would be incentivised to get more training or education.

Political reforms include a 50 per cent increase in Dáil sitting days and an end to allowances for chairing Oireachtas committees. A temporary fees commission would be set up to control fees charged by doctors, lawyers and other professionals.

Labour argues that a reduction in public service numbers can be achieved through natural wastage and voluntary redundancies. It also says social welfare rates can be protected, while efforts to reduce fraud and abuse can yield €100 million.

The biggest proposed cuts are in the high-spending health sector, where savings on generic drugs are projected to save €200 million and charging the full cost of private beds in public hospitals can save €100 million. A further 8 per cent reduction in fees paid to dentists, doctors and pharmacists would save another €85 million, Labour says.

The abolition of the €10 air travel tax is proposed, but capital gains tax would go up to 35 per cent on amounts over €100,000.

The artists’ tax exemption would be capped at €40,000.

Paul Cullen

Paul Cullen

Paul Cullen is a former heath editor of The Irish Times.