Several Tax Measures Tabled At Crucial Irish Discussions

by Jason Gorringe, Tax-News.com, London

27 January 2009

The Irish government and trade unions on Tuesday continued their discussions over what further action could be taken in relation to tax and spending levels to help the government find an additional EUR2bn, with the axe hanging over the public sector payroll.

The meetings, which began on January 26, are in response to trade unions', employers' and other social partners' appeals for the government to increase taxes on those that can afford to pay them - rather than cut public sector wages - to balance the budget. Among the suggestions is the proposed creation of a new 48% income tax band for Ireland’s highest earners, as well as increased taxation on owners of two or more properties or luxury housing.

The Unions also attacked the government’s proposals last month to cut public sector pay claiming that such a move would be illegal and would ultimately be detrimental to the economy. In a statement from the Irish Congress of Trade Unions, General Secretary David Begg said that any attempt to cut pay would merely exacerbate the crisis: "We cannot be party to an exercise which is designed solely to cut wages and services. This crisis requires new thinking and Congress is bringing forward several new proposals on how it can be tackled – by all of society."

Prime Minister Brian Cowen had previously agreed that talks would be finalised by January 31, although the government has confirmed that the deadline might be extended if an agreement looked to be within reach.

The government is ultimately hoping to make savings of EUR15bn over the next five years, but the government would prefer to achieve this by cutting spending rather than raising taxes given the fragile state of the Irish economy and the tax increases announced by Finance Minister Brian Lenihan in last year's budget.

Recommended