Opposition urges employment drive not taxes to plug defecit

By Conor Ryan Political Correspondent

Thursday, December 03, 2009

THE main opposition parties were in harmony regarding the €22 billion exchequer deficit, claiming job creation was the best way to plug the hole.

The November figures, traditionally the most significant of the year, revealed the Government has raised just €30.8bn in taxes this year which is more than €1bn short of the emergency target it set in April.

Fine Gael’s finance spokesman Richard Bruton said rising welfare costs and falling revenues were being compounded by the spiralling interest payments on the national debt.

He said the Government needed to use Wednesday’s budget to show it could increase competitiveness and lower the costs of employment – rather than relying on new taxes.

"The Government’s crude attempt to tax its way out of the hole in the public finances has backfired spectacularly. Instead of raising the extra €6bn in taxation that was being sought, tax revenue is actually running over €8bn behind," he said.

Labour finance spokes- woman Joan Burton said Finance Minister Brian Lenihan had ignored the jobs issue, which she said offered the quickest route out of the recession.

She said Mr Lenihan needed to ensure the lower paid still had money to spend in the economy after next week’s budget, because this would provide a stimulus for businesses.

"Consumers are responding to a Government that has no action plan for jobs, and keeping their hands in their pockets. Even a modest recovery in consumer confidence would have a hugely beneficial effect on revenues from these sources.

"The November Exchequer figures must give the Minister for Finance pause for thought as he drafts his budget. In particular, swingeing cuts for people on welfare and low incomes will result in less spending and ever lower tax revenues," she said.

President of the Irish Taxation Institute Olivia Lynch, also said there was no scope for further taxes.

She said despite the additional levies introduced in April, income tax is down 5% on his emergency budget projections.

"It is clear that we have exceeded the tipping point for overall income tax rates and that any further rate increases will only succeed in having a negative effect on the economy and reducing the national income tax take," she said.

This story appeared in the printed version of the Irish Examiner Thursday, December 03, 2009