THE TAX exile system should be abolished and property tax breaks which cost the exchequer up to €800 million annually should be scrapped, Labour leader Eamon Gilmore has said.
Questioned about his party’s proposals to cut State spending, Mr Gilmore refused to outline cuts but insisted that jobs must be saved.
Fine Gael said it accepted the need for €2 billion worth of savings in 2009, but warned that the cutbacks needed in coming years could “deteriorate further”.
Speaking to The Irish Times, Mr Gilmore said: “I know what I am saying is not part of the consensus talk. Cuts in public expenditure will not solve this problem without addressing unemployment.
“Everybody is transfixed by this €2 billion . . . €2 billion is not the problem.
“It is another €2 billion if we accept what says that there will be 400,000 unemployed before the end of the year.” he said.
The Labour Party would be prepared to accept public spending cuts if a programme to safeguard jobs, and retrain unemployed was first agreed.
“You have to keep people at work, and get people back to work. Unless we do that, the problem can’t be solved. You can’t park that. That is where it is all going out the other end. Unless that haemorrhage is stopped and reversed the bad news is that we are not going to solve the problem in the public finances.”
Questioned about the Government’s public service pension levy, he described it as “crude” and questioned if it will not be open to challenge.
“Does it apply to basic pay, overtime, allowances. The question is can you do that? Can you have a pension levy on income that is not pensionable? Some are paying 6.5 per cent pension contributions.
“Are they now going to be paying 14 per cent?” he asked.
The Labour leader said small tax-breaks and grants could kickstart house refurbishments, while locally-raised bonds could pay for schools. Ultimately, the public purse will get back more by having the €50,000 spent.
“You have to do just enough to get the thing flowing but not do too much that it is going to cost too much. It could be a mix of grants and tax relief,” he said.
Landlords, bar those renting out their home if they are working away from home, should not be able to offset mortgage interest against their tax liability, he said.
“If we want to start getting back some payback from those who made the big killings during the boom years, this should be introduced. The existing tax exile rules allowing millionaires to avoid paying domestic tax if abroad for half the year should be scrapped.
“Why should they be exempt? If we are asking a nurse, or a county council employee to pay an extra €6,000 or €7,000 to help out the country, what is so precious about these guys? Ireland should follow the United States’s rules where if you carry the passport, you have a tax liability.”
“It is wrong . . . We are in an era where everybody has to put their shoulder to the wheel.”