THE IRISH Congress of Trade Unions (Ictu) has asked the Government to introduce a new 48 per cent income tax band and a new property tax as part of a strategy for economic recovery.
Employers’ group Ibec, in its proposals to the Government, has also suggested that some broadening of the tax base is required which could involve new property and additional user charges.
However, Ibec argued that “the greater share of adjustment must come in the form of reduced current expenditure”.
It said cuts in expenditure by the State should be front loaded in the process “while taxation increases should not occur until the economy shows some signs of recovery ie in 2011”.
“Both the unit cost and the volume of services delivered by the public sector must be reduced in line with the contraction in the wider economy.
“A reduction in the unit cost of all public services will be central in efforts to restore competitiveness,” Ibec stated.
In its submission to the Government in advance of talks next week, Ictu called for the renationalisation of Eircom, to facilitate the extension of broadband coverage. It also called for the establishment of a national recovery bond to which the public could subscribe.
At a press conference yesterday, the trade union body gave its clearest public indication to date that it believes the deadlines for pay increases in the public sector due from next September are unlikely to be met.
Ictu general secretary David Begg said the trade union movement was willing to do business with the Government in talks which are expected to start next week.
However Siptu president Jack O’Connor said that any recovery programme could not see workers carrying the burden on their own.
Mr Begg said the public sector did not cause the current economic difficulties and the focus of the solution had to be on a broad economic basis.
He acknowledged that some in the union movement believed that a deferral of the pay rises under the national agreement would not on their own be enough. But he said he could not go too deeply into the unions’ position for the negotiations with the Government at this stage.
However, unions absolutely ruled out any cuts in basic pay for public servants, he said.
Ictu’s submission said it was “open to discussions on how to constrain the growth in public sector pay and pension costs”.
“This could include conditions for deferral of pay increases, restrictions on overtime working, incentivised career breaks, flexible working hours and other innovative measures of which this list is simply indicative,” it said.
Ictu also proposed that capital taxes should be applied at the same rate as income taxes. It said there should be an income-related property tax on all properties other than the primary domestic residence.
Mr Begg also suggested that primary domestic residences could also be brought within the scope of such a new tax if they represented “trophy houses”.
Ictu also argued that the Government should reintroduce a 48 per cent income tax rate on incomes that were a multiple of the average industrial wage. It said the “culture of corporate welfare” should be brought to an end.
Ibec forecast that the nominal value of Gross Domestic Product was set to decline by 11 per cent between 2007 and 2010.
“In 2009 tax revenues will be about the same as they were in 2004, while current expenditure will have grown by over 60 per cent during this period. It is therefore indisputable that substantive adjustments are required in order to eliminate the spiralling current budget deficits,” it said.
In addition to public sector reform Ibec also called for improved support for business including a fund to support enterprises exposed to the sterling currency crisis, a loan guarantee scheme and a suite of marketing and employment grants.