The Government must keep its commitment to halve the numbers on the top rate of tax if partnership is not to collapse, the State's largest union, SIPTU, has warned.
In a speech to be delivered tonight, Mr Manus O'Riordan, head of research at SIPTU, will warn that the Government will have to deliver on agreed tax cuts as well as measures to boost profit-sharing to secure a new agreement.
He will point out that the numbers paying the top rate of tax have actually increased to 44 per cent from 38 per cent when the Government took office, despite a commitment in the "Action Programme for the Millennium", to ensure only 20 per cent would pay the top rate.
The paper states that SIPTU is proud to have made the Minister for Finance, Mr McCreevy, "eat humble pie" by completely changing tax strategy in last December's Budget. Pointing out that the 1998 Budget came "perilously close" to wreaking Partnership 2000, he warns that the Government's stated intention to revert back, with a cut in the top rate of tax this year, will be at a cost. "The Government must learn from past and present mistakes and change accordingly," he adds.
The paper to be delivered at a symposium being held by the Statistical and Social Inquiry Society of Ireland also argues that another sustained approach will be needed to ensure the Government takes more low-paid workers out of the tax net altogether.
The paper argues that the only way for workers to share in the fruits of growth without inflationary pay demands is through profit sharing. And Mr O'Riordan warns that if there are no "notable advances" towards profit-sharing this year, trade unions may conclude that the only way to take advantage of very high profitability is by "reverting to more traditional demands for much higher wage increases".
Overall, according to Mr O'Riordan, the Government will either win or lose the argument with its next Budget. "There is everything to play for in the coming year. But it is easy to get it wrong and cause the structures that ensured progress over the past 12 years to completely collapse."
