PERSONAL tax allowances should be doubled to at least £5,200 or £100 a week, according to IMPACT, the union which represents income tax inspectors and tax officers. In a new analysis of taxation it also proposes that employees should get tax relief on PRSI contributions, similar to that given for contributions to superannuation funds.
At the same time it criticises tax reliefs like the Business Expansion Scheme - to business and high earners, which can be claimed at the highest marginal tax rates. In contrast, most allowances being claimed by PAYE workers, such as mortgage interest relief and VHI, are only given at the standard rate.
The document is scathing about tax amnesties. It says 35 per cent of those who availed of the 1993 tax amnesty had also availed of the 1988 amnesty.
The IMPACT report, A Burden Shared: first steps in Tax Reform, proposes a range of tax measures to the Government. It is likely to become the blueprint which will be adopted by the unions if they opt, at the special delegate conference of the Irish Congress of Trade Unions on Thursday, to enter talks on a new national agreement to succeed the Programme for Competitiveness and Work (PCW).
The IMPACT national secretary, Mr Paddy Keating, a former tax officer, says the actual cost to the Exchequer of doubling the personal tax allowance would not be great, but it be of enormous benefit to the low paid. It would also reduce the "tax wedge" and make work more attractive to the unemployed.
The IMPACT general secretary, Mr Peter McLoone, said tax changes over the past 10 years had been "pro investor, pro business and pro high earner". Tax reliefs for company directors and the self employed had risen faster than for PAYE workers.
Unions like SIPTU, which represents large numbers of low paid and part time employees, will welcome the proposal to increase basic tax allowances and give relief on PRSI contributions. However, such unions will be less happy with IMPACT's defence of current Government policy, which is to tax short term welfare payments such as unemployment benefit.
To achieve tax equity, the report says, allowances should be converted to tax credits and index linked to either the average industrial wage or inflation, whichever is the higher. Such a change would be worth an extra £10 a week to low paid single workers, or £20 a week to a married couple, says Mr Keating.
"Most of these proposals could be implemented fairly quickly to ease the PAYE tax burden and create a fairer system of tax," says Mr McLoone. While inflation has risen by 30 per cent since 1985 and average industrial earnings by 65 per cent, PAYE tax had increased by 96 per cent. "These proposals show that it is possible to redress the balance in the short term."