Measures seen as widening gap between rich, poor

The Budget was warmly welcomed by employer organisations but criticised by trade unions and the community sector for widening…

The Budget was warmly welcomed by employer organisations but criticised by trade unions and the community sector for widening the gap between rich and poor.

The director general of the Irish Business and Employers' Confederation, Mr John Dunne, said the Budget would underpin the strategy of pay moderation. It would allow negotiations on a successor to Partnership 2000 to underpin competitiveness and growth.

"The Budget will also help ease labour market pressures by providing an incentive for those currently outside the labour market, particularly married women, to take up employment. This is reinforced by the measures designed to increase the supply of childcare places."

He also welcomed the continuing reduction in corporation tax to 24 per cent and said the accelerated reduction to 12.5 per cent for small enterprises would "encourage entrepreneurship, investment and continued economic growth."

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The director general of the Construction Industry Federation, Mr Liam Kelleher, said the Budget would underpin growth in the sector. "The reduction in income tax will strengthen the incentive to work and allow the growth in employment we so badly need."

The reduced corporation tax would encourage smaller companies to invest in increasing their capacity, and the new training levy emphasised the importance the Government attached to "a high growth, high productivity economy". As employers were funding the training schemes, he said they should also determine their use.

The trade unions were far more critical of the Budget. The Irish Congress of Trade Unions welcomed the £942 million in tax cuts, but added that much more needed to be done for the low-paid. A spokesman said the issue would be taken up directly with Mr McCreevy.

The reforms in tax were "nothing more than PAYE workers are entitled to", the spokesman said. "They must not be seen as a substitute for decent pay increases." The improvements in social welfare were significant but were no more than "a beginning of a move towards a fairer society".

SIPTU, the State's largest union, was more critical. Its president, Mr Des Geraghty, said the scale of the overall tax package was to be welcomed, but he regretted that many of the measures "will actually increase inequality". Particularly disappointing were the failure to increase the PAYE allowance and the inadequacy of the childcare measures.

SIPTU's regional secretary, Mr Jack O'Connor, said the measures on childcare were "pandering to the insatiable demand of the employers for labour, treating childcare as a commodity".

IMPACT general secretary Mr Peter McLoone said the Budget "didn't deliver on childcare, particularly in the light of skill shortages and the sheer cost and difficulty of trying to get childcare facilities". The scale of the proposals was "grand, but the Minister failed to use the opportunity to deliver progress in the area of social partnership. The general secretary of the Irish National Organisation of the Unemployed, Mr Mike Allen, said Mr McCreevy's "give-away Budget" had actually widened the gap between rich and poor. The Government had never had a better opportunity to tackle social exclusion and take the low-paid out of the tax net. Funding for childcare places was welcome but meaningless for those who could not afford to pay.

Mandate general secretary Mr Owen McNulty, who represents low-paid private sector workers, said the tax cuts had unduly favoured those on higher incomes. MSF regional secretary Mr Jerry Shanahan, who represents many higher-paid private sector workers, criticised the childcare measures and the absence of measures on profit-sharing.