Labour would cut €2.1bn and borrow 90% to fill deficit

THE Labour Party has detailed how it would fill this year’s gaping hole in the public finances by cutting e2.1bn and borrowing the remaining 90%.

Its leader Eamon Gilmore said he does not believe the economy could cope with any more money being taken out of the system this year.

He said that if in power his party would not touch income tax rates for the bulk of workers and instead would introduce a 48% rate for those earning more than e100,000 a year.

It wants a e440 million-a-year carbon tax introduced and another e400m raised on petrol, alcohol and cigarette taxes. Tax relief for trade unions would be scrapped and pension relief would be reduced.

The party also wants to generate funds from all text messages sent from mobile phones.

Mr Gilmore said a 1 cent charge on all texts could raise e91m.

This would be kept in one pile and used to pay for the return of the axed cervical cancer vaccine programme and the funding of a cystic fibrosis unit.

Large inheritance payments would be targeted with a higher tax rate.

Labour would not scrap the pension levy but, as it previously outlined, change it to protect lower paid workers.

This would cost e175m.

Overall the proposals would save e2.8bn in 12 months (a maximum of e2.1bn in 2009) but the knock-on effect in other areas would lower the overall sum to e2.25bn in a year.

This would lead to the party borrowing upwards of e21bn to fill this year’s deficit.

Mr Gilmore denied the party had chosen populism instead of presenting tougher measures which international markets are demanding.

Labour’s finance spokeswoman Joan Burton said the period of recovery was likely to last six or seven years, and if the Government tried to take between €4bn-€6bn from the economy in next week’s Budget it would be too shocking.


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