FG's deficit plan envisages taxes of up to €3bn

 

PROPOSALS TO reduce the national deficit unveiled by Fine Gael yesterday have shown its approach is closer to that of the Labour Party than previously indicated. Fine Gael yesterday published its economic policy Let’s Get Ireland Working which contained proposals to bring the current budget back into balance by 2016.

Its finance spokesman Michael Noonan confirmed last night that the party’s proposals for achieving this was for a ratio of cuts to taxes of a little over 2:1.

This is a marked departure from the party’s previous approach to reducing the annual deficit by €15 billion by the middle of the decade, which it said it would achieve by three times as many cuts as taxes.

Mr Noonan said last night that the target had been reduced by €6 billion as a result of the outgoing Government’s Budget. The balance of €9 billion he said would be achieved by cuts of €6.3 billion and €2.7 billion in additional tax revenue. “You could argue that it is slightly nearer a ratio of two to one, than three to one,” he said.

“We say there will be saving of not less than €6 billion and tax of not more than €3 billion which is two to one.”

However, he said, “to claim that we are moving towards Labour is not true. Labour has said it wants 50 per cent cuts and 50 per cent taxes. There remains a big difference between the approaches of the two parties,” he claimed.

The ratio of 2:1 has been the one pursued by the Government to date. There were a number of formal election launches to mark the first full day of the campaign.

At the launch of Fianna Fáil’s campaign yesterday, party leader Micheál Martin highlighted the differences between the economic policies of Fine Gael and Labour and warned that they would be a “tug-of-war” government if elected.

“The fundamental problem with the plans that Fine Gael has proposed yesterday is that Labour, their prospective partner, is opposed to so many of them. Ireland cannot afford a tug-of war government,” he said.

Mr Martin instanced the gap between Fine Gael’s budget-day proposal of €6 billion in savings compared to a figure of €4.5 billion suggested by Labour. He also pointed to what he said was the wide variance in their positions on the balance between tax and cuts.

He also asserted Labour had flip-flopped on economic policies by dropping its proposal for a 48 per cent tax rate for those earning over €100,000. On the question of reducing the national debt, he said this week Labour had suddenly extended the timescale to 2016 and lowered the overall cuts by €2 billion.

“The Labour Party on the eve of election has lost its nerve,” he said.

“It is a worrying shift in such a short space of time”.

Fine Gael leader Enda Kenny dismissed Mr Martin’s criticism. “He seems to think that you suddenly can emerge form the shadows of the worst government in the history of the State for 13 years and forget about that,” he said.

At the launch of the Labour campaign in the Guinness Storehouse yesterday, leader Eamon Gilmore vowed that, in government, he would renegotiate the EU/IMF deal. “We can’t afford it. It won’t work. We will find ourselves in 2014 if anything worse off than we are now if we stick with that deal,” he said. He also committed his party not to increase income taxes on people earning less than €100,000 a year if elected to government.

Sinn Féin leader Gerry Adams called for fundamental reform of politics and an end to what he described as political cronyism. He also rejected Mr Martin’s claim that Sinn Féin in government would devastate the economy.

“This is rich coming from the leader of Fianna Fáil and a man who was part of all the major decisions which have bankrupted the State and imposed a terrible, crippling burden on citizens.”