Michael McGrath: Cut taxes in Budget 2019 to spare workers

Fianna Fáil finance spokesman Michael McGrath has said there is a need for tax cuts in Budget 2019 or workers will in fact end up paying more taxes through higher wages.

His remarks came as a minister separately warned Brexit is a “cataclysmic” meteor that is hurtling towards Ireland and the budget would prepare for that.

Speaking at the Kennedy Summer School in New Ross, Mr McGrath said that “not giving a so-called tax cut means you have a tax increase”.

Debate is ongoing over whether the €800m extra available for next year should be spent on tax cuts on services.

Fine Gael wants to reduce the high rate of tax for workers, while opposition parties maintain that services such as health and housing desperately need funding.

Fianna Fáil also maintains more tax cuts and service funds are needed in 2019.

Mr McGrath told the audience that wage rises would in fact push up tax payments for workers. Without any changes, this potentially could result in the exchequer receiving an extra €300m to €400m, he said.

Finance Spokesperson @MMcGrathTD has said the government needs to use the opportunity afforded by Budget 2019 to improve the taxation and operating environment for small and medium enterprises (SMEs) in the indigenous economy.

Read his comments here https://t.co/vbKTkXgddG pic.twitter.com/ilocCrAlkK

— Fianna Fáil (@fiannafailparty) September 4, 2018

However, standing still and not reducing income taxes would see workers actually shouldering higher tax payments, he said.

Nonetheless, Social Democrats TD Róisín Shortall said tax cuts would in the main amount to €5 a week for higher paid workers or a fifth of employees.

People wanted better services, she added, and cuts in the cost of insurance, more competition in the energy market, and better housing.

Labour leader Brendan Howlin criticised the Government’s proposal to invest in the so-called ‘rainy day fund’.

Arts Minister Josepha Madigan said the Government wanted to reduce taxes more, but there was a need to be “prudent with finances” and to try and buffer against Brexit.

There was “very little wriggle room” in the budget, she said, partly because of the threats faced with Brexit.

“It is cataclysmic in my view, a meteor that is hurtling towards this island. It is quite frightening,” said Ms Madigan.

Negotiations on the budget between Fianna Fáil and the Government will resume this week.

Meanwhile, the British trade union movement is preparing to throw its weight behind a public vote on the final Brexit deal amid warnings the UK is going to “crash out” of the EU.

The head of the Trade Union Congress (TUC) said Britain was at “crisis point”, with no confidence in the government’s ability to protect jobs, workers’ rights, or peace in the North.

General secretary Frances O’Grady accused British prime minister Theresa May of “holding the country to ransom” over her approach to a Brexit agreement.

Ahead of the TUC congress in Manchester, she said:“If her deal doesn’t deliver justice for working people, if it doesn’t protect jobs, rights at work, and peace in Northern Ireland, then the TUC will throw our weight behind the call for a vote on the terms of Brexit.”