AS EMPLOYERS, unions and the Government prepare to engage in intensive bilateral talks over the next fortnight in a bid to determine whether a new social partnership deal can be agreed, the general secretary of the Irish Congress of Trade Unions warned yesterday that inflation could reach 6.5 per cent by next January.
Speaking at a meeting yesterday, David Begg warned that the inflation rate could rise as a result of interest rate increases put in place by the European Central Bank (ECB). Mr Begg said that in addition to yesterday’s interest rate rise, there were signals that there could be two more increases on the way in the months ahead.
He said the Government should speak to the head of the ECB, Jean-Claude Trichet, because the rate increases would damage the Irish economy, hinder investment and make life impossible for people trying to pay mortgages.
Mr Begg added that if the Government wanted to show fairness in dealing with its problems, it had a number of options. He raised the issue of tax on capital gains being levied at 20 per cent.
He also urged a review of tax shelters and said that the largest of these was the hospital co-location initiative, which could cost the exchequer up to €500 million.
He also said answers to parliamentary questions had revealed there were very wealthy people who paid “close to zero” in tax.
However, employers’ group Ibec, in its presentation, criticised the tax proposals put forward by the trade unions. It said the social partnership talks were not the arena for debating these issues and that the Government had established a commission on taxation to look at these matters.
Ibec also signalled that it would not agree to any measures that reduced the attractiveness of Ireland for investment. It said that taking money out of the economy would lead to a further deterioration in unemployment levels.
Entering the talks yesterday, Tom Parlon of the Construction Industry Federation warned that the sector was under severe pressure to keep businesses going and that some companies were facing liquidation.
It is intended that Government officials will meet employers and unions in separate meetings over the coming fortnight on a number of issues including pay, collective bargaining rights and pensions.
All sides agree that they will have to take stock at the end of the week after next to determine whether a deal is possible.
However, it looks likely that a comprehensive deal, involving all the issues, will not be concluded by the end of the month.