Labour fights for pensions cut amid backlash

Labour was frantically looking for “red meat” measures targeting wealthy pensioners last night in order to stop TDs jumping ship in protest at the harshness of tomorrow’s budget.

With most of the key provisions agreed, the junior coalition party was seeking moves to tax high-income pension pots after being blocked by Fine Gael in its bid to increase the universal social charge (USC) for top earners.

A Fine Gael minister was dismissive of the Labour tactics, saying: “This type of last-minute brinkmanship is pathetic, the fact is that there is no fat on the red meat they want and the moves against wealthy pensioners will only be counted in the tens of millions when we need a correction of €3.5bn.”

Labour was seeking a cap on pension tax relief set at €60,000, an end to social charge reductions for wealthy pensioners, an extension of PRSI to larger pensions and movement on capital gains tax, but a senior party figure expressed widespread discontent, saying “we were rolled over on the USC and these scraps hardly make up for that”.

Labour is also seeking 10,000 extra community placement and JobBridge places as well as a major investment in after-school care. A backlash is expected if child benefit is, as anticipated, cut €10 per month.

Moves to end the PRSI threshold looked set to cost an individual earning more than €18,300 an extra €258 a year — about the same level as the average property tax, which is set to be 0.2% of dwelling value.

With tension in the Coalition still running high after the USC clash, Ruairi Quinn, the education minister, refused to deny that he agreed with Labour TDs that James Reilly, the health minister, was not up to the job at a party meeting, but did say the Fine Gael TD had his “confidence and sympathy” in dealing with the health brief.

A Fine Gael minister said: “Labour will face a big backlash over child benefit because they promised not to cut it, property tax will be the headache for us.”

Pensioner groups reacted angrily to proposals to slash the medical card threshold down from €36,000 to €30,000 for an individual and €72,000 to €60,000 for a couple, warning that the substitute GP-only cards would leave elderly people paying up to €145 a month for prescriptions.

Pensioners are expected to retain free travel, but energy allowances are set to be cut, while university fees are earmarked for an increase.

Social protection spending is set to fall €500m, with entitlements to benefits tightened with non means-tested jobseekers’ allowance shortened from 12 months to nine.

Drivers face a 15% hike in motor tax, with lower rates for greener vehicles swept away in a move expected to generate €150m.

Teachers will see maternity leave cut by six weeks in a bid to save €21m.

Sinn Féin dismissed plans to introduce a so-called mansion tax on properties worth over €1m as a “gimmick” intended to hide Labour’s embarrassment at failing to force through higher taxes for the wealthy.

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