Burton aims to reform tax system to ‘incentivise people to work’

Joan Burton, who has been appointed Tánaiste after easily winning the Labour Party leadership election, will focus on reforming the tax system to make work more worthwhile for low- and middle-income earners, according to party sources.

Ms Burton will begin talks on Monday morning with Taoiseach Enda Kenny on renewed priorities for the remainder of the Coalition’s term of office.

The Taoiseach and the new Tánaiste spoke by telephone yesterday evening following her election and reaffirmed their commitment to the Government seeing out its full term until the spring of 2016.

She defeated Minister of State Alex White by 2,094 votes to 607in a ballot of Labour members for party leader. In the contest for deputy leader, Tipperary TD and Minister of State for Transport Alan Kelly won with more than 51 per cent of the vote and said he expected to be appointed to Cabinet.

Ms Burton yesterday emphasised her belief that the Government must now focus on social as well as economic recovery.

A key aspect of this will be a “streamlining” of the tax system, which had been built up on an “ad hoc” basis during the economic crisis with the addition of levies and the Universal Social Charge. Although yet to outline specifics, the new Labour leader would like to simplify the system to “incentivise people to work”, according to sources.

“We can’t do it all in 21 months but we can make a start on reforming the tax system to remove some of the obstacles and cliffs people face when taking up work,” a source said.

Minister for Finance Michael Noonan has already spoken of changing the tax bands to take middle-income earners out of the higher tax bracket, so there is already common ground between Labour and Fine Gael.

Housing supply

Ms Burton also said that increasing the housing supply, by both public and private means, was a priority, and recent ideas from the National Economic and Social Council on increasing affordable housing from off balance-sheet funding are likely to be used.

She also laid emphasis on increased living standards, saying she will “strongly make the case for a low-pay commission” to advise the Government on adequate levels of pay.

Fine Gael figures last night said they did not see a problem with such an idea but they expressed serious doubts about giving up the Jobs and Enterprise portfolio to Labour.

Jobs platform

One Fine Gael source emphasised, however, that the party will be aiming to fight the next election on a platform of jobs and the economy. “Keeping the Department of Jobs is crucial to being able to do that,” he said.

The Fine Gael source said a low-pay commission to examine the minimum wage, if not handled carefully, could undo much of the Government’s job creation programme.

One of the key issues for Ms Burton is whether her priority is to win the European commissioner post for former leader Eamon Gilmore or whether she places greater emphasis on her ambition to get the Jobs and Enterprise portfolio for Labour.

It is understood the new deputy Labour leader would like to be take this post.

The Tánaiste is expected to promote a woman to the Cabinet and junior minister Kathleen Lynch is widely tipped for that role.