The issue of taxing our way out of the current crisis in an effort to generate the €4 billion adjustment needed in the economy is a “false choice”, Taoiseach Brian Cowen told the Dáil today.
Mr Cowen said the Government had already increased personal taxation considerably during the October and April budgets in an effort “to shore up the situation as things stood” yet overall the tax yield is down and unemployment is up.
“If you move to a [tax] rate of 54 per cent do people think that that’s going to maintain jobs that are already under threat?" he said. "Do people think that’s going to get more people back to work more quickly?”
Mr Cowen said the idea that the social welfare budget could be immune from consideration doesn’t take into account the “scale of the challenges” facing the country.
During a heated leaders questions, Labour Party leader Eamon Gilmore accused the Government of protecting the rich at the expense of the most vulnerable in society.
"There are choices to be made and one of the choices that your government appears to have already made is ruling out any tax increases for the super rich in this country," he said. "You are not applying the same principle to ruling out reducing the income on people who are at the very lower end of the scale."
Mr Gilmore said the Government had “no difficulty” in coming forward with a formula for dealing with the banking crisis. ”You are doing what is needed to protect the interests of those who are very rich in society while turning around and telling the poor they have to pay the consequences for it.”
However, Mr Cowen said the idea that there was “a monopoly of compassion” on the Opposition side of the house is not true.
“Creating growth in the economy is fundamental to providing the money for the services, for all public services including public welfare recipients. And we have to be mindful of that, if that engine of the locomotive isn’t going properly you can’t pull the train behind you," he said.
“It’s a false choice to suggest it’s about taxing there or not spending there, it's about looking at the overall and saying to yourself you‘ve got maintain the jobs in the economy."