Call to protect the ‘working poor’

The Government has sufficient scope in its finances to make no further expenditure cuts in 2014, while also raising tax credits and social welfare payments by €5 per week, according to a leading advocacy group.

Social Justice Ireland (SJI) is today publishing a fully costed budget it claims will allow the Government to introduce measures to protect “the working poor”, while retaining its target of reducing borrowings by €3.1bn.

SJI has also proposed the introduction of a minimum effective corporate tax rate and maximum effective income tax rate as well as a major investment programme.

SJI spokesman Seán Healy said a new approach was needed to the budgetary approach adopted by the Government.

“There should be no more expenditure cuts in Budget 2014. It is long past time Government realised austerity is not working for Ireland. Government has cut spending, raised taxes, increased unemployment, lowered wages, decimated services and allowed infrastructure to deteriorate on the understanding that austerity would lead to recovery.”

Dr Healy said austerity measures were morally unethical because poor and middle-income people have borne an unfair share of their consequences.

The group has called on the Government to ensure there is a minimum effective corporate tax rate of 6% arising out of recent controversies which suggest that some foreign-owned firms based in Ireland are paying considerably less than the standard 12.5% corporation tax.

In addition, SJI has proposed a maximum effective income tax rate of 45% consisting of combined rate for income tax, social insurance, and the universal social charge.

Dr Healy said such measures which also included a universal state pension and €5 weekly increase in all basic social welfare rates can be achieved within the borrowing target cuts of €3.1bn next year.

Other proposals include a 0.01% tax on all financial transactions which would raise €500m per annum and the elimination of the fuel dyeing process which has sparked a major black market in illegal diesel.

The SJI also recommends the introduction of the social charge levy of 3% to all income more than €100,000 which it estimates would raise an additional €71m.