Fianna Fáil has asked the finance minister to redraft options around changes to USC before they agree to support the upcoming budget.
Crunch budget meetings are to continue between Fianna Fáil and Fine Gael next week after discussions between the parties were held yesterday.
It is understood Fianna Fáil are unhappy with USC proposals put forward by Michael Noonan, which would include a lowering threshold at which people enter the lowest USC rate and reductions in the rates paid.
Fianna Fáil wants Mr Noonan to focus on potentially widening some bands and to look at placing more emphasis on lower and middle-income earners.
Mr Noonan met with Fianna Fáil finance spokesman Michael McGrath for a second time yesterday after initial budget discussions last week.
Afterwards, Mr McGrath said: “We had a good meeting. From our point of view we are emphasising the issues that are provided for in the confidence and supply agreement. We want a budget which is an overall test of fairness. We want to ensure that the tax package is fair and is pro-enterprise.”
Public Expenditure Minister Paschal Donohoe also met with his Fianna Fáil counterpart Dara Calleary yesterday. The hour-long meeting, which was at a political level with no officials present, was described by both parties as “positive”.
However, both politicians are expected to have several more meetings before the budget as consensus will have to be reached on major issues around education, health and pensions.
Fianna Fáil have been campaigning for a €5 increase in the state pension in the budget, and at a parliamentary party meeting last night, members were told there is a clear expectation this will be delivered upon by the Government. TDs also raised concerns around a possible hike in excise duty on diesel, but Mr McGrath told the meeting he had made it clear to Mr Noonan this could not happen.
Enda Kenny yesterday said Budget 2017 would be “prudent, reflecting our need to underpin Ireland’s economic recovery and to ready us for the future”.
Mr Kenny told the Seanad prudence is now “especially necessary” given that the international environment remains uncertain and cited Brexit and low economic growth rates across the EU. He said the Government would “continue to take a responsible approach to the management of the public finances”, adding the measures in the budget would be “forward-looking and sustainable, and must be focused on those areas where need is greatest”.
Mr Kenny said: “We have made clear where we have headroom… two-thirds will be directed towards investment in public spending and one-third towards tax measures. The budget for 2017 will prioritise new measures to help make people’s lives better and to deliver better services to them, specifically for hard pressed working families.
“The Government will also maintain its strong focus on the issues we have identified as being of greatest urgency, not least ensuring a functioning housing market and investment in infrastructure.”
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