Irish Social Partners Discussions Axed, Government To Decide Unilaterally

by Jason Gorringe, Tax-News.com, London

03 February 2009

Discussions between the 'social partners' and the Irish government broke down early on the morning of February 3 after they failed to reach a consensus on fiscal measures designed to save the government EUR2bn.

The crucial discussions, which have lasted nearly a week, were to determine what action could be taken in relation to tax and spending levels to help the government find an additional EUR2bn as part of a larger initiative to save EUR15bn over the next five years. Initially the proverbial axe hung over the public sector payroll, but discussions have also encompassed the possible creation of a new top tax band of 48% and a further increase to property tax on second households or luxury housing.

Prime Minister Brian Cowen had previously agreed that talks would be finalised by January 31, although the government allowed talks to continue beyond this deadline in the hope that an agreement could be struck.

Vice Prime Minister Mary Coughlan said that the government would now discuss new tax and spending measures internally. However, it is expected that the government will cut public spending despite opposition from the unions.

Upon departing the negotiations, Irish Congress of Trade Unions General Secretary David Begg said that discussions had fallen apart because the unions were not prepared to retreat on proposed measures that would have allowed the government to cut the pay of low- and middle-income public servants.

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