SIPTU: 1% levy could derail pay deal

THE Finance Minister’s decision to impose a 1% levy on workers could sound the deathknell for the new national wage agreement.

Yesterday’s budget will, according to the country’s largest trade union SIPTU, leave workers with 0.7% less money in real terms if they accept the new pay deal.

The union was already having problems selling that deal to its members and the new levy on the working class may have pushed the doubters into a definite “no” vote.

“The 1% levy is the most striking feature of the budget. It is a crude instrument,” said the union’s president Jack O’Connor. “People are going to react very negatively to it. It will influence their consideration of the national wage agreement proposals.”

The new tax is the focal point of the wrath of most of the unions, particularly as they feel the 1% deduction on those earning the average industrial wage of €38,000 is much more invasive than the 2% for those earning €100,000.

“The levy is not consistent with the objective of making those who did best out of the Celtic Tiger contribute most,” said Mr O’Connor. “We recognise the necessity to raise revenue to address the public finance deficit, but it should have been a threshold to exclude all those earning the average industrial wage or less.

“We realise this would still leave a gap given the very proportion of people who are on average industrial earnings or less, but that deficit could have been made up by a more progressive extension of capital and wealth taxes which apply in progressive and dynamic economies in northern and central Europe,” said Mr O’Connor. He described the 2% levied on those earning €100,000 or more as “tokenism”.

David Begg, general secretary of the Irish Congress of Trade Unions said the tax was “arbitrary and indiscriminate” and agreed that it would hit the lower paid disproportionately.

He said he believed the levy would have the effect of virtually wiping out the extra increase negotiated for the lower paid in the recent national pay deal. Mr Begg said it was utterly unreasonable to have applied the levy only to PAYE workers and to have been equitable, it should have applied to all income including business profits.

He also condemned the rise in the VAT rate as a further attack on the lowest paid.

IMPACT trade union said despite the budget its public service members should still vote in favour of the new national wage deal.

The union’s deputy general secretary Shay Cody said: “Despite the budget, the national pay deal remains the best possible outcome for workers in these difficult economic circumstances...”