When Pat Rabbitte criticised the opposition yesterday for failing to acknowledge measures in the budget to hit high earners such as cutting tax relief for their pensions, Roisin Shortall responded with one word.
The question was meant to expose the fact that the move to end tax relief for pensions that will pay out more than €60,000 a year won’t actually take effect until 2014.
Just months ago, Ms Shortall and Mr Rabbitte were party colleagues.
All changed following the row over primary care centres, when Ms Shortall resigned on principle as junior minister at the Department of Health. She resigned the Labour Party whip at the time, meaning she is technically an Independent TD.
And that makes her dangerous for the Labour Party leadership, because she has shown she will not be silenced on issues.
Ms Shortall will criticise Labour decisions in Government if she feels those decisions are betraying core Labour values.
What’s more, because of the principled way she handled the primary care issue, a lot of Labour grassroots members will view her as someone with moral authority. Her words will carry weight. So if she is criticising the party leadership, they may well be inclined to take her side.
She did so in unflinching terms on Wednesday night, when the first wave of financial motions to implement aspects of the budget were proceeding through the Dáil.
She said the budget was “anti-family”, “regressive” and that the Government had “flunked” it.
In particular, she said it was incredible that the Government had not done more to limit tax relief on pensions.
Currently, relief is given on pension contributions at an individual’s marginal rate. In other words, if they are paying tax at 41%, they will get relief of 41% on contributions.
A cohort within Labour had argued that this relief should be cut back to the standard rate of 20%.
Ms Shortall said 80% of all tax relief granted on pensions went to the top 20% of earners.
“What is the basis for continuing with that regime given that many thousands of taxpayers and others who cannot afford to make pension provision for themselves are in effect paying for the significant tax-free pension lump sums of some of the wealthiest people in the country? There is no justification for that.”
She proceeded to launch a stinging attack on Mr Gilmore himself, as well as the Taoiseach, finance minister, public expenditure minister and aides who had helped craft the budget.
“Has this something to do with the fact that those responsible for crafting this budget — the four senior ministers in Cabinet, their four secretaries general and their four advisers — are all in the bracket that can benefit substantially from the largesse of the existing ridiculously generous pension relief regime?
“The Tánaiste has flunked it in a very serious way. Instead of tackling this area which was a stand-out in terms of unfairness in our tax system, he chose to hit families and ensure that every family where there are two incomes of over a mere €18,000 will be caught for about €1,000 per year.”
Mr Gilmore stuck largely to reading his documents, barely looking at her as she spoke. The tension was clear.
The criticism of opposition TDs is one thing. Ms Shortall’s criticisms may hit home much harder.
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