Budget 2016: ICTU lays out costed pre-Budget measures

The Irish Congress of Trade Unions created a detailed pre-budget statement in which it laid out a number of costed measures it believes would begin to make tangible differences in the lives of people who were yet to benefit from the recovering economy.

  • The umbrella organisation said it wants a total of €2.15bn in public spending and tax measures “aimed at supporting economic recovery and restoring living standards vulnerable groups, including low and middle income earners”. ICTU rejected the 50:50 split between public spending and tax cuts as outlined in the Government’s spring statement. It wants a 2:1 ratio — €1.43bn on public spending and €720m in tax measures in tomorrow’s budget.

  • ICTU says Budget 2016 should implement a targeted and progressive reform to the universal social change (USC). It has proposed that €300m be allocated for that purpose. It says a USC credit should be introduced for all individuals with an income of less than €70,044.

Budget 2016: ICTU lays out costed pre-Budget measures

“The value of the credit would be set at a level consistent with a full year cost to the exchequer of €300m,” it says. “This means the value of the credit would be worth close to €200 for an individual.” It said the gain as a percentage of gross income would be largest for those on lower incomes and it proposed that individuals earning €70,044 or more should not benefit from the introduction of the USC credit.”

  • It says a minimum of €100m can and should be raised in Budget 2016 through the reform of tax expenditures “with particular attention paid to those reliefs available at the marginal rate and the suite of reliefs structured as capital deductions”.

“Tax breaks and favourable tax treatment for non-productive assets such as houses and hotels distort investment away from more productive use and are therefore damaging to long-run growth,” it says. “The distortion erodes allocative efficiency in the economy, is damaging to growth, and provides mechanisms for tax avoidance.”

  • ICTU wants all welfare payment rates to be increased by 1.5% in Budget 2016 “in order to insulate the most vulnerable groups in Irish society against the effect of price increases in 2016”. It says recent research by the ESRI has shown that increasing all welfare payment rates by 1.5% would cost almost €275m.

Budget 2016: ICTU lays out costed pre-Budget measures

  • ICTU has proposed funding of €150m be obtained to expand on the public provision of suitable, publicly provided, and subsidised childcare. It says this should be funded by increasing the employer PRSI rate to 13.75% on incomes in excess of €100,000.
  • It says the Government should introduce a small and recurring net wealth tax, focused on those households with net assets in excess of €1m and it should aim to collect €210m in revenue during 2016.
  • Budget 2016 should move to reinstate the standard Job Seekers Allowance rates for those under 26 years of age at a cost of approximately €140m.
  • ICTU proposes that Budget 2016 should set €75m aside to partially restore the weekly income of households adversely affected by the changes to the one-parent family payment.
  • The trade union umbrella body says there are infrastructural needs in housing, telecoms, transport, energy, schools and sanitation to name just some areas. It proposes a €500m increase in off-books capital spending in 2016 to be used on projects with a commercial return.
  • Separately, Siptu has produced a document, ‘A Progressive Alternative to the Universal Social Charge’ in which it says it wants USC to be replaced by a ‘social solidarity contribution’. It says this would be accompanied by a social solidarity credit, similar to what is outlined above by ICTU.

Siptu says its proposal is based on four key principles: Retaining the progressive elements of the existing USC; dedicating the yield for social investment purposes; ensuring transparency as to the use of the contributions; reducing the charge on low- to middle-income earners

Budget 2016: ICTU lays out costed pre-Budget measures

“The revenue generated from this social solidarity contribution, which should at least equal the approximately current €4bn USC yield, would no longer go into central exchequer funds,” it says. “Instead, it would be dedicated exclusively to social investment purposes, such as improving healthcare, education and training, childcare and elder care as well as providing for the housing needs of all the population.”

For its part, Unite trade union has published budgetary package amounting to €4.8bn.

On the expenditure side, Unite has proposed increasing public expenditure on investment, public services and social protection of €1.925bn together with €700m on the initiation of new public service programmes — affordable childcare, a cap on prescription medicine costs, and pay- related sickness and unemployment benefit.

The union is also proposing tax reforms, including elimination of the PRSI step effect and the introduction of refundable tax credits at a cost of €220m.

Unite is also proposing a special temporary housing investment programme to tackle homelessness and provide housing for those with priority needs. The cost of this programme would be €2bn, and would be funded by “the repayment of bank bailout funds”.

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