IBEC calls for more tax for low earners, tax freeze for high earners

The employers' group IBEC says there is no further scope to increase tax for high-income earners in the next Budget, but it wants more low-paid workers to be brought into the tax net.

Unveiling its pre-budget submission, the Irish Business and Employers Confederation (Ibec) said everyone must contribute to help pull the country out of recession.

The lobby group denied it was placing the burden on low-income workers over high-earners, claiming almost half of the country’s tax take comes from the 5% of top earners.

Danny McCoy, Ibec director general, said the Government did not have the luxury of excluding certain earners from the tax net.

“The entire labour force has to make a contribution to this,” Mr McCoy said.

“We cannot afford to leave the (tax) base as narrow as it has been hitherto.”

Those on the €8.65 minimum wage are currently excluded from the tax net. At present, a single person starts paying tax at €18,300 a year.

The lobby group also proposed a doubling of the second home tax, from €200 a year to €400 a year, bringing in €80m, and reducing the number of tax credits yielding €550m to the state.

Ibec also called for a property tax to be rolled out as soon as possible, though it claimed it would be unlikely to be ready for the Budget.

The body said it supports finding at least €3bn in savings but claimed the balance should be on cutting spending rather than tax hikes.

While €1bn will be taken from the capital programme, the lobby group said 70% of the remaining two billion should come from slashing expenditure.

But they warned education services should be protected to ensure workers and young people are trained and skilled for the recovery.

Senior economist Fergal O’Brien said previous budgetary measures have been excessively on the tax side.

“And it has been more damaging to the economy than would have been if we had done more on the side of expenditure,” he said.

Ibec also warned that the Government should commit to the 12.5% corporation tax, must not increase income tax rates, VAT or excise duty, and roll out a national graduate internship programme to help tackle the jobs crisis.

They also called for reform of social welfare to help people get off the dole and into work, as well as a review of employers’ PRSI costs claiming it was hindering competitiveness.