Minister for Finance Brian Lenihan has signaled that the 50 per cent of
income earners who do not pay tax, will have to make some contribution to
the exchequer.
During a Dail pre-budget debate he said the Government will bring forward policies in the Budget that "will ensure that the burden of adjustment is spread as evenly as possible".
But the Minister warned that in overall terms 4 per cent of income earners contribute almost half of the income tax yield. Furthermore, for 2010, it is now estimated that around half of income earners will pay no income tax.
"While they may have some exposure to the income levy, having 50 per cent out of the tax net is not viable if we want to fund the range of services we expect Government to provide," he said.
They were facing "tough challenges, and, to succeed in dealing with them we must continue to pursue appropriate policies to position the economy to benefit from the global recovery".
He said "we must borrow €500 million each week to fund it. Another way of looking at this annual deficit is to consider it in the terms of our National Debt. At end 2008, our National Debt stood at about €50 billion, next year it is now likely to be nearly €100 billion and without action would continue to spiral out of control."
Fine Gael finance spokesman Richard Bruton proposed employers' PRSI should be reduced, halving it in the case of the low rate and reducing it by two per cent in the case of the ordinary rate.
"We will fund that by extending the PRSI ceiling and removing the allowances at the bottom,'' he added.
"We will also fund it by a carbon tax and by the windfall tax in respect of energy.''
Mr Bruton said that 30,000 jobs would be created over time.
Labour's Joan Burton said that she would offer support for the €4 billion budget target, if and only if, the burden of sacrifices was shared, and seen to be shared, by measures that required a major contribution from those who owned the lion's share of the nation's wealth. Salary reductions should oblige those on the highest incomes to
sacrifice most and those on the lowest should be protected.
The spending cuts, she said, should be spread across the board in each department and focus on the elimination of duplication and other sources of waste and inefficiency.
There should be compelling evidence, said Ms Burton, of deep cuts in the cost of maintaining "this bloated Government with all the perks and luxuries accumulated for far too long''.
Sinn Féin finance spokesman Arthur Morgan said that while his party was prepared to take on big earners and vested interests, the Government would rather take from children and the elderly.
"We won't join with the other opposition parties in taking a red marker to the social welfare bill,'' he added.
"Our total stimulus package of €4 billion has to be paid for and to this end we sat down and looked at the taxation system and genuine waste in the public sector.''
In total, said Mr Morgan, combined with a transfer from the National Pension Reserve Fund of €2 billion, the party had raised €7.6 billion in its pre-budget submission.