Labour says Hayes tax assertion 'premature'

A statement by Minister of State for Finance Brian Hayes that the Government had almost reached the limit of how much taxation it would impose has been described as “premature” by a Labour backbencher.

Dublin South East TD Kevin Humphreys was responding to Mr Hayes’s claim that most of the taxation measures “for the lifetime of this Dáil” had effectively been implemented already by the Coalition.

“It’s far too premature. It’s far too early to be talking about the make-up of next year’s budget in terms of the breakdown between tax and savings,” Mr Humphreys said.

“We’re 11 months out from the next budget. We’ve important negotiations on the promissory note to be signed off and we have to look at the whole element of debt forgiveness.”

Fianna Fáil finance spokesman Michael McGrath said Mr Hayes’s remarks on the RTÉ radio programme Morning Ireland yesterday was evidence that the Fine Gael side of the Coalition was “flexing its muscles” in relation to budgetary policy.

“I would think the Labour Party would take quite a different view. I would be very surprised if the Labour Party rolls over again and doesn’t insist on some input from those at the higher end,” he said.

In discussions ahead of last month’s budget, Labour’s proposal for a 3 per cent increase in the universal social charge (USC) for those earning €100,000 or more was rejected by Fine Gael.

Minister for Finance Michael Noonan said on the evening of the budget that the proposed measure was rejected on the advice of the multinational sector because it could give an advantage to Ireland’s competitors for foreign direct investment, particularly the UK.

Protecting high earners

Sinn Féin Senator David Cullinane accused Mr Hayes of making clear the Government was prepared to protect high earners at the expense of low- and middle-income workers.

“What the Minister really means is that cuts will be the order of the day for this Government and we already know that when this Government introduces cuts they affect low- and middle-income earners disproportionately,” Mr Cullinane said.

Mr Hayes had been speaking in wake of better-than-expected end-of-year exchequer figures published on Thursday. “I think we’ve reached virtually the end of the income taxation side . . . on the basis that 40 per cent of all the taxes we take in are on the income side,” he said.

“If we are going to get into a better position in terms of the domestic economy, in trying to ensure that we get greater growth within the domestic economy, we can’t tax the hell out of people.”

After several years of tax and spending adjustments, Mr Hayes said the Coalition’s focus would now be on other areas “like radically reforming our public sector through shared services”.

Mr Hayes said “all of the indications” were that the country would be able to exit its bailout programme by the end of this year.