Pat Rabbitte talks to Stephen Collins, Political Correspondent, about Labour's election plans and his views on the Irish Ferries and Frank Connolly affairs
A minimum tax on the super rich is likely to be a key element of Labour Party policy at the next election, according to party leader Pat Rabbitte, who said that fairness in the tax code was now a key issue. "I personally believe there is a lot of merit in looking at the concept of a minimum effective tax for very high rollers," he said.
The Labour leader said it would be premature to spell out his tax policy this far in advance of the general election but there was clearly something wrong when a worker on the average industrial wage was liable to tax at the top rate of 42 per cent while some very rich people paid nothing.
"I think it is offensive to all the compliant taxpayers that there are people on super high incomes shown to be not paying any tax at all or negligible tax. I think that is an idea, the minimum effective tax, that we are working on and that we are likely to develop."
Mr Rabbitte repeated that he would not be proposing any increase in personal or corporation tax rates. "After that it is about fairness in the tax code. It is about shutting off some of the tax shelters. It's about limiting the tax incentives unless there is a manifest economic purpose."
On the question of capital taxation Mr Rabbitte said he was highly amused at the way his views on the issue had been reported in the media last year.
"Labour fought the last election on increasing capital gains tax from 20 per cent to 40 per cent and I thought I had done a great job by getting us off that and saying that just because you can reduce it from 40 per cent to 20 per cent it would be a nonsense to suggest that you should increase it from 20 per cent to 40 per cent. But the concentration was on a subsequent phrase that I used which was to the effect that I wasn't prepared to rule out any increase in CGT depending on the circumstances, rather than on the fact that Labour had fought the last election on 20 to 40 and I had said that was not realistic any more."
Mr Rabbitte said the fact that he was sticking to a 12.5 per cent corporation tax and not increasing personal taxes showed a shift in traditional Labour thinking. "I think the left in Irish politics down the years has misguidedly focused on requiring people on very high incomes to pay a very high top or marginal rate without understanding that people on very high incomes avail of a myriad of schemes to minimise their tax.
"It is not popular with our own constituency to stick with the 12.5 per cent but I think that the process of argument has explained that it is an instrument of industrial strategy that confers some competitive advantage on Ireland. I think we have won that argument inside the organisation and that is great progress too."
Dealing with the recent row over the Centre for Public Inquiry, Mr Rabbitte said that Frank Connolly had refused to give answers to questions that he would regard as perfectly legitimate if he were asking them as a journalist. He added, though, that a lot of people were uneasy about the manner in which Minister for Justice Michael McDowell had handled the controversy.
"I think the Minister undermined his own case somewhat by not coming into the Dáil and making whatever statement he had to make in the Dáil. It is no secret that both Fine Gael and Labour were uncomfortable with the fact that reasonable questions remain unanswered by Frank Connolly but there is a great deal of unease about the manner in which the Minister put Garda files into the public domain in a selective fashion."
On the recent dispute at Irish Ferries, Mr Rabbitte said that even as the Taoiseach was making noises about the Government being more caring, compassionate and socially democratic, the Government had been blocking the directive on agency workers in Europe and the maritime directive.
"If the EU services directive goes ahead you can establish a company in Poland or Latvia and come over here on contract and do an Irish Ferries. You get an agency to employ the workers here at domestic rates in Poland or Latvia. It is a big issue."
Mr Rabbitte said it was nonsense to argue, as Ibec and the Taoiseach had done during the Irish Ferries dispute, that the practice was confined to maritime industries. "That is manifestly not the case. Displacement is going on in the meat factories and it is going on in the hospitality industry and it is going on in the building industry.
"The time may be coming when we will have to sit down and examine whether we would have to look at whether a works permit regime ought to be implemented in terms of some of this non-national labour, even for countries in the EU. We didn't require any such regime at the time of accession. The time may be coming when we have to examine it because we need to know more about what is going on.
"What Irish Ferries has done has lanced the boil and we need to know more about the numbers coming here, the kind of work they are engaged in, the displacement effect, if any, on other sectors. We need to look at that because there is anecdotal evidence about it happening in construction, and happening in meat factories and happening in the hospitality industry."
Mr Rabbitte said he did not expect that there would be any outcry from Ibec about the situation because it was contributing to wage moderation.
"We can't compete now in the traditional type industries. The rate of attrition in terms of job losses has been far higher than we have acknowledged. It has been concealed by the scale of the boom.
"There are many positive spin-offs from the diversity of labour here now but to say that that should for all time go unregulated I think has been thrown into question by the Irish Ferries dispute. There are 40 million or so Poles after all, so it is an issue we have to have a look at."