Fianna Fáil wants tax cuts scrapped in the budget

Fianna Fáil is set to press the Government to scrap plans for tax cuts in the budget and instead to spend money on services and alleviating living costs for struggling households.

The main opposition party also wants a €200m pay equality package nailed down before budget talks progress and a future deal on supports to retain staff in sectors such as health.

In an interview with the Irish Examiner, public expenditure spokesman Barry Cowen outlined key battlegrounds for Budget 2019, the last one under the confidence and supply agreement.

“How can this budget address the cost-of-living issues? It may be better if it were focused away from tax. That’s a debate and a conversation we will have,” he said.

In the last budget, cuts to USC rates and income tax saved an average family €9 a week.

Finance Minister Paschal Donohoe says there is €800m for extra spending next year, with the Fine Gael and Fianna Fáil agreement being that this is split 2:1 on services and tax cuts.

Mr Donohoe has signalled he may broaden the tax base, like last year, to further cut workers’ taxes. However, Mr Cowen says tax cuts should be forgone, so rising living costs are instead reduced.

“There is no point in giving a tax cut that puts €2 in your pocket, which amounts to €100 a year, when your insurance costs are going up by €300 a year and your mortgage or your rental costs are going up by another €300 a year,” he said.

That is a style and substance argument. The perception is you are looking after the working man by giving him a €2 cut. You are crucifying the working man by not addressing the cost-of- living issues.

“It is only a sap to them almost. [The Government says] ‘we’ll give you a tax break’ that might amount to €2 a week. That doesn’t make any indentation on the cost of living. It is going in one pocket while there is a hole in the other one.”

The Irish Examiner can also reveal other key issues that Fianna Fáil want progress on. These include:

  • A solid commitment on ending the two-tier pay system in the public service by spending €200m to restore equal pay for new entrants. This could be over a number of budgets;
  • A financial package to support the recruitment and retention of staff in public services, particularly in health;
  • A green fund that would be ringfenced for initiatives and businesses moving out of fossil fuel environments. The carbon tax-based fund could benefit from modest increased charges for diesel;
  • Targeted initiatives to reduce costs for housing, rent and childcare;
  • Further funding for the national treatment purchase fund to reduce hospital waiting lists.

Mr Cowen said the green fund would support efforts to move away, for example, from peat-fired power plants.

“We are talking about portions from the existing [carbon tax] and maybe modest increases,” he said, adding that this could include diesel.

A special financial package could also support the retention and recruitment of public service staff, he said.

The Offaly TD added the public pay commission could look at the issue and “come up with a formula, whether it is pay-related, increments or allowances”.

“The Government have to be aware there may well be costs associated with that,” added Mr Cowen.

These opening demands will be discussed by Fianna Fáil before its TDs start meeting ministers later this summer.

However, Taoiseach Leo Varadkar has insisted he wants the confidence and supply agreement renewed before budget talks begin. This demand has yet to be agreed with Fianna Fáil.

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