Spend ‘rainy day’ money on housing, says Labour

Money earmarked by the Government for the "rainy day fund" should instead be invested into a new bank to fund housebuilding, the Labour Party has said.

Labour was one of a number of parties to launch their alternative budgets on Thursday, along with the Social Democrats and the Greens.

None of the three parties are advocating any income tax cuts in Budget 2019, due to be announced by Minister for Finance Paschal Donohoe next week.

This budget will see Mr Donohoe and Fianna Fáil set aside €500 million for the rainy day fund, but Labour wants this to go towards the establishment of a new national housing development bank.

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In addition, Labour wants to reallocate €1.5 billion from the Irish Strategic Investment Fund (ISIF), which the Government also wants to put into the rainy day fund, to its new bank. In total, it would transfer €5 billion from the ISIF to the housing bank over the coming years.

“Their goal is to have €8 billion in the rainy day fund,” Labour says of the Government, adding it would instead put this into its housing bank. A further €8 billion would be raised from the European Investment Bank, pension funds and a housing bond to use a total of €16 billion to supply 80,000 homes over five years.

Taxes such as the 9 per cent VAT rate for the hospitality sector, the carbon tax and the bank levy would be raised to pay for increased investment in health, education and other areas.

Housing

The Green Party said it will spend an additional €1 billion in capital funds than already planned by the Government next year on housing but agrees with Mr Donohoe’s policy of allocating €500 million to a rainy day fund.

The Greens want to introduce a €238 per week minimum pension, at a cost of €584 million, as a first step towards universal income for all people. A full year’s maternity leave, which both parents can split, would also be introduced next year at a cost of €233 million.

Revenue raising measures proposed by Eamon Ryan’s party include the introduction of a minimum effective rate of corporation tax of 6 per cent, which would raise €1 billion, as well as the abolition of the special 9 per cent VAT rate for the hospitality sector. Other taxation measures include a reduction in VAT on repairs, such as those for shoes and clothing, to encourage “a move away from the ‘throwaway’ economy’”, an increase in the tax credit for carers in the home and the introduction of a refundable tax credit.

Sugar tax

The Social Democrats favour €1.25 billion of revenue raising measures, such as €232 million from a sugar tax; a 10 cent increase in alcohol excise; €160 million from tightening corporation tax “loopholes”; the gradual phasing out of the 9 per cent VAT rate, which would go up to 11 per cent next year and raise €216 million next year, and other measures.

This would help pay for almost €1 billion of spending on healthcare, such as the implementation of the Sláintecare plan, €600 million on housing; €309 million on childcare and related areas; €306 million to support businesses and €303 million on anti-corruption initiatives.

“Cost-of-living measures”, including welfare increases, will cost €503 million.