The Labour Party today said it will not change income tax levels, but will divert money from the pension fund for capital expenditure and tackle the growing gap between rich and poor.
At the launch of the party’s economic manifesto, finance spokesman Mr Derek McDowell said diverting three quarters of contributions to the pension fund over five years would generate €5 billion for investment in health infrastructure.
He stressed Labour will not borrow to fund current spending. The party's plans will make funding available for infrastructure and these funds will be managed by a new Department of Infrastructure, said Mr McDowell.
In Government, Labour does not intend to lose control of semi-state companies. Mr McDowell said a minimum of 51 per cent control would be retained.
He criticised Fianna Fail’s plan announced today to create a new agency to manage capital projects - funded by bond issues.
"This is borrowing by another name", said Mr McDowell - adding Fianna Fail fears Labour because "we are the only party prepared to tell the Irish people what we will do and how we will pay for it."
To raise additional income, Labour proposes taxing capital gains at the same rate as income - with exemptions for employee share ownership schemes and the family home.
Labour said the employers PRSI rate would be returned to 12.5 per cent. In the last budget it was cut to 10.75 per cent.
Mr McDowell said this would allow all earnings below €254 per week to be taken out of the tax net and for income tax rates to remain unchanged.
Mr McDowell also pledged to row back individualisation of the standard tax rate but conceded if he were Minister for Finance in the next government it would not happen in the first Budget because of a lack of funding.
To ensure Oireachtas control of the increasing number of industry regulators, Labour also plans to introduce an Enterprise Regulation Commission made up of at least five commissioners.
Earlier, leader Mr Ruairi Quinn said diverting part of the pension fund would stop "people dying today waiting to get into hospitals that are stretched beyond their capacity".
