Government tax plans could be a deal-breaker for FF

Fianna Fáil leader Micheál Martin is strongly resisting Government plans to widen income tax bands in Budget 2018, and says the move would be a breach of the confidence and supply arrangement under which his party allows the Government to hold office.

Minister for Finance Paschal Donohoe has indicated the Government will focus on tax rates, rather than reductions in the Universal Social Charge, in the upcoming budget. In an interview with The Irish Times, Taoiseach Leo Varadkar also indicated there would be a shift away from the 2:1 split in allocating funds between increased public spending and tax cuts.

However, speaking in Co Longford at Fianna's Fáil's pre-Dáil think-in, Mr Martin pointed to the agreement between Fine Gael and Fianna Fáil and said the budget must be compatible with it.

“If tax reductions have to come, they have to adhere to what’s in the confidence and supply. It’s very clear from the outset that what underpins our support for the budget is the confidence and supply.”

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The confidence and supply arrangement commits to at least a 2:1 split between investment in public spending and tax reductions.

Reductions in USC

Reductions in the Universal Social Charge (USC) on a fair basis, with an emphasis on low and middle income-earners, are also a key part of the agreement.

Mr Martin said it is Fianna Fáil’s view that reductions in USC would benefit more people than the Government’s proposals. They would take in 1.3 million people and be far more effective than what Fine Gael is proposing, “which would benefit far fewer, on higher incomes,” he said.

The Fianna Fáil parliamentary party, which was gathering for its annual think-in ahead of the Dáil resuming this week, discussed housing, health and Brexit.

Mr Martin claimed Fine Gael has focused its efforts on PR and spin rather than making substantial differences in key policy areas.

He singled out Minister for Foreign Affairs Simon Coveney for criticism, claiming his decision to leave the Department of Housing was a cynical move.

“It says to everybody out there, ‘this housing problem is intractable, I’m getting out of there and going to Foreign Affairs.’ That’s far too cynical in my view. The Taoiseach should have said to Minister Coveney, ‘no, you wanted housing and I want you to continue with housing. You said you had a number of commitments and one of the key commitments was to end the scandal of children in hotels by July.’”

Fianna Fáil would invest in social housing and make housing more affordable for young couples, he said.

Fianna Fáil has insisted it is not preparing for a general election despite expectations one will take place within the next 18 months.

Incompatible with government

Mr Martin stressed whatever the outcome of the next election Fianna Fáil would not be entering any arrangement with Sinn Féin. He said the party was incompatible with government, focusing on recent comments by Sinn Féin president Gerry Adams about the killers of Tom Oliver. Mr Oliver was murdered in 1991 by the IRA and Mr Adams said his killers should not be pursued.

Asked if his position could change if Mr Adams stood aside, Mr Martin replied: "It is very clear whatever Gerry Adams says, Mary Lou [MCDONALD]will say. There is a sense that nobody at all will disagree with Gerry Adams."

On Fianna Fáil's support for President Michael D Higgins for a second term, Mr Martin said Mr Higgins had carried out his duties with distinction. However, he declined to state whether the party would back him for a second term.

“I have always had a policy that one has to allow dignity and space to the incumbent and that idle speculation on the possibility of an election is just that. We should allow President Michael D Higgins continue currently, and face that issue when we come to it.”

Mr Higgins’ term is due to expire in 2018. Mr Martin added: “There may be other elections before the presidential election.”