THE LABOUR Party has said that no more than €1.9 billion should be cut from the public finances for the rest of 2009, a little over half of the savings of €3.5 billion which are expected to be sought in Tuesday’s budget.
Party leader Eamon Gilmore defended the measures contained in pre-budget proposals published yesterday, and rejected the proposition that the cuts were “limited”.
The basis of his party’s thinking, he said, was that the figures being mentioned for the Government’s budget would lead to a fiscal shock and would be far too severe.
“If the Government attempts to take an additional €3.5 billion out of the economy in the rest of 2009, they will do serious damage to the economy. That will have a serious impact on jobs.
“We do not want to get into a downward spiral where you cut and lose jobs and then you have to cut again,” said Mr Gilmore.
The measures announced yesterday propose a new 48 per cent tax band for those earning over €100,000; and the termination of tax shelters for property and rent relief.
A number of new taxes have also been proposed, including a carbon tax and a tax of one cent on mobile phone texts, which would raise €91,000 in a full year.
The party also calls for the immediate scrapping of decentralisation; reductions in private pension reliefs; and a new cap of €200,000 on public sector salaries (this measure would also apply to hospital consultants).
For the first time the party has published figures in relation to its position on the public sector pension levy, a measure it has campaigned against.
It calls for only a partial rowback of the levy of €175 million, a little over a tenth of the €1.4 billion in savings.
Mr Gilmore said yesterday that this reverse would protect the lowest paid from its effects, those on about €30,000 and less.
Other measures include reducing the number of junior ministers and committees, scrapping relief on trade union subscriptions and targeting capital acquisitions tax and rent-related savings.
The overall gross savings in a full year would be €2.8 billion.
Party strategists say that this would translate into savings of €1.9 billion for the remainder of 2009.
This falls some €1.6 billion short of the reported €3.5 billion in cutbacks that the Minister for Finance will announce in the budget, and a similar figure that has been arrived at by Fine Gael.
Labour also said that it would use the €1 billion in fees banks pay to the State for the guarantee scheme (a non-budgetary item) to fund training and employment schemes as well as pre-school education. The party has allotted €383 million to these schemes in a full year.
Mr Gilmore said that an appropriate balance had to be struck between dealing with the deficit and sustaining economic activities and jobs.
“You cannot close the gap between income and expenditure in one year alone.”
Sinn Féin has also proposed €2.5 billion in additional taxes and €800,000 in savings during the current year.
The document contained a number of spending initiatives including reversals of controversial Government decisions to stop funding for the cervical cancer vaccine for teenage girls; cutbacks on special needs teachers in primary schools; and the decision to delay a cystic fibrosis unit at St Vincent’s hospital.
