FINE GAEL:DEEP CUTS in public sector numbers, higher Dirt taxes on savings, and an "all-out war" on social welfare fraud are among the key pre-budget proposals by Fine Gael which it has said can achieve €6 billion in savings.
Party leader Enda Kenny and finance spokesman Michael Noonan launched the party’s budgetary proposals for 2011 yesterday. The document also sets out Fine Gael’s perspective on the Government’s four-year plan, and the party’s own plans to reach a deficit reduction of €15 billion by 2014.
The plan includes a stimulus element, which the party claims can create 100,000 jobs. The €6 billion remaining in the National Pension Reserve Fund would provide the bulk of funding for growth.
One of the most controversial proposals is the party’s plan to seek 30,000 redundancies in the public sector, some 18,000 more than is provided for in the four-year plan. The paper also proposes that the number of national politicians be cut by 35 per cent, from 226 to 146.
It will also seek additional payroll savings of 1 per cent each year in the public sector, by clamping down on overtime, sick leave, flexitime and special allowances.
The party puts the emphasis on cuts rather than taxes: a three-to-one ratio in 2011; and a two-to-one ratio between 2012 and 2014. It is against any increases in income tax. However, an increase in Dirt tax from 25 per cent to 30 per cent – to encourage consumption – will yield €125 million next year. The party says the four-year plan’s doubling of carbon tax is too punitive, arguing for an eventual increase to €25 per tonne.
Among the other measures is a temporary cap, until 2014, of €200,000 on all public sector salaries. This would include politicians, consultants and chief executives of semi-States upon renewal of contracts. The party said it would ensure judges took pay cuts.
One of the more ambitious elements of the plan is the proposal to save €1 billion per year by an “all-out war” on social welfare fraud.
The party says a €6 weekly cut in social welfare should be imposed next year, rising to €18 by 2014. The welfare cuts would yield €216 million next year and some €650 million by 2014. Pensioners, the blind, the disabled and carers would be excluded from cuts.
More modest cuts in child benefit from those indicated in the Government’s plan are set out. Under the plan, there will be no reduction in child benefit in 2011. A system called “child income support” – the details of which are not spelled out – will deliver savings of €250 million by 2014.
Fine Gael says it will reverse the cut in the minimum wage. To offset the cost to employers, it wants a three-year abolition of the lower 8.5 per cent rate of employer PRSI for employees earning up to €356 a week.
This measure is included in the €800 million stimulus plan for 2011. Other key elements are a temporary reduction of VAT from 13.5 per cent to 12 per cent for labour-intensive services and the abolition of the €10 travel tax.
Some €700 million can be gained in 2011 from the sell-off of unnamed semi-State companies. It claims some €1.2 billion can be raised from closing tax breaks.
Fine Gael envisages a low rate (6-7 per cent) of capital gains tax on primary residences. This will be levied on the difference between what the property was bought for and its price when sold.
To offset the tax burden on those moving house, it has proposed a reduction in the 7 per cent and 9 per cent rates of stamp duty to 2 per cent for at least two years. The tax on second homes should be increased to €300, it says.