The constant focus on government finances, rather than on the whole economy, in the last four budgets was damaging society and the economy, the independent think-tank Tasc has said.
Dr Nat O’Connor, director of the economic organisation which works for a “more equal society and a stronger democracy,” said a recent report from the IMF had said the high level of inequality here was “one of the causes of the crisis”.
Speaking at the publication of the Tasc pre-Budget submission in Dublin today, Dr O’Connor said greater equality was good for society and for the economy and working towards that would be "one of the causes of recovery.”
He said it was crucial that there be balance in the forthcoming Budget. “If there are only cuts and tax increases on labour there will be economic shrinkage. The focus on austerity in the last four budgets has not worked.
“While reducing the deficit on one hand, a shrinking economy means fewer jobs, less tax coming in and more welfare spending, which in turn increases the deficit again.”
What is needed, he said, was job creation and new model of economic development.
It is calling for increases in taxes on property, new wealth and windfalls and less on consumption and labour.
A key step that must be taken was to increase the spending power of the those on lowest incomes. This group did not save their money, or spend it on imports or on holidays away. Their money was spent directly on goods and services in the local economy.
“We can use the tax and benefit system to increase the incomes of the low paid and those on welfare.”
Among Tasc’s proposals are that tax relief on pension contributions be reduced, that the universal social charge be extended to all gifts and inheritances, and also to capital gains.
It recommends a 0.3 per cent tax on residential property; an increase in the carbon tax to €22 per tone of CO2; the implementation of the €200 car parking-space tax introduced in the 2009 Budget but never implemented, and, the introduction of a 20 per cent tax on sweets and sugar-sweetened drinks.
Head of policy with Tasc, Sinead Pentony said the Budget would represent a “political choice” in which the Government could make inequality worse, or make it better.
“Our proposals are about making society more equal. More equal societies are better abale to recover.”
