Technical difficulties may delay tax changes
During the second day of substantive negotiations on how the state is going to save €2 billion in exchequer spending, the social partners appeared to agree on the need for a broadening of the tax base.
However, after the talks, Irish Congress of Trade Unions general secretary David Begg said he did not know to what extent the Government will act this year. “They have some technical problems which make it difficult to adjust the tax base this year relating to the time of the year you start to do things,” he said. Unions are of the opinion that there should be a budget in 2009, and last night Mr Begg reiterated ICTU wants action as soon as possible.
The sides also reflected on ICTU calls for a national recovery bond, with unions saying people would pay into a bond if they believed it was to the benefit of the country and would be spent on infrastructural development.
He said the Government was worried about the potential displacement of money from the banks to the bond, but unions argued banks are not lending and any money going into them is being used to build up their capital base.
The sides also discussed pensions and ICTU warned the Government of a potential exposure to action in the European Court of Justice.
“The immediate problem is the funding quality of the [private sector] pensions. Many are not up to standard and have lost a huge amount of their value. Where a pension fund exists in a company that becomes insolvent there is a real problem, as in the case of Waterford Crystal where someone has 40 years’ service but gets no pension. We know the status of a number of these funds is very bad, with 90% under-funded.”
He said the European Court of Justice last year found Britain had not got enough pension protection in place and the judgement said there should be a least 50% of the value protected.
“Ireland was a party to that case, but where Britain lost the case and put in place a protection minimum, Ireland did nothing, so we are saying to them they are exposed if anyone takes them to the European court.”
Tomorrow the sides discuss flexisecurity, up-skilling and general labour market issues. The thorny issue of public sector reform and whether that will result in job losses or cuts in pay, remains to be discussed.
Taoiseach Brian Cowen returns to the country today after two days of meetings at the World Economic Forum in Davos.
In his absence Finance minister Brian Lenihan addressed the Dáil after two days of statements on the economy. He said the Government was continuing its efforts to provide financial capital for the banking sector and finalise arrangements for the newly nationalised Anglo Irish Bank.
The internal auditors of Anglo go before the Dáil committee on regulation on Tuesday to discuss the loans to directors scandal.
