Fine Gael and Independent Alliance budget differences unresolved

Finance Minister Paschal Donohoe

Major stumbling blocks around Housing Assistance Payments (HAP) and the retirement age remain unresolved between Fine Gael and the Independent Alliance ahead of next week’s budget.

Members of the Independent Alliance expect budget negotiations with Finance Minister Paschal Donohoe to “go down to the wire” as they grapple to resolve a number of significant differences.

A meeting between the five Independent Alliance TDs and Mr Donohoe was described as “very tense”. Another meeting has been arranged for tomorrow and negotiations are likely to go through the weekend.

One source described this week’s meeting as “very aggressive” in tone with raised voices during discussions.

“He [Mr Donohoe] is now talking to Independents, who are 16 or 17 months into their job and have now got to know the workings of Government, we know the areas which need to be tightened up, and we will be fighting for those areas and issues,” the source said.

It is understood that much of the deadlock is based around the retirement age as members of the Independent Alliance believe that those who want to stay on in work over the age of 65 should be allowed to do so.

There is also significant difficulty around the HAP payments system and other issues around housing with the alliance proposing measures around kick-starting a greater amount of house construction.

The alliance has sought movement on over 20 specific items but are willing to sacrifice a number of those to see progress on a number of their key demands.

It is understood that John Halligan is pushing strongly for an increase in betting taxes of up to 5%.

Meanwhile, Fianna Fáil’s finance spokesman Micheal McGrath and public expenditure spokesman Dara Calleary are also meeting with Mr Donohoe.

It is understood the main negotiations between both parties centre around changes to both the USC and income tax bands.

While Fianna Fáil maintain they want to move to phase out USC, Fine Gael have signalled their intention to widen the tax bands to ease the pressure on the “squeezed middle”.

Separately the Labour Party has committed to scrapping the controversial Help to Buy scheme, a move it says would raise €40m.

Speaking at the launch of its alternative budget, party leader Brendan Howlin said there should be no tax cuts in next week’s budget, insisting that additional money should be spent on public services.

Mr Howlin said tax cuts of between €2 and €4 a week will not matter much to most people, and the money should be invested in areas such as health and housing.

The party wants to invest a further €300m in the health service in 2018, and believes prescription charges should be reduced and hospital inpatient charges removed.

Finance spokeswoman Joan Burton said: “We seek to raise up to €200m through closing existing corporation tax loopholes, and end refundable R&D tax credits for those that don’t pay tax.

“The Government is known for finding money down the back of the sofa on the day of the budget — particularly last year with €300m or more,” she said.

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