Adjustments in the upcoming budget should not exceed €2.7 billion, as opposed to the €3.1 billion adjustment set out under Ireland's troika agreements, according to the independent think-tank TASC.
Speaking at the launch of its pre-budget submission yesterday, the director of TASC, Dr Nat O’Connor, said that, by addressing anomalies in the revenue system, it was possible to have an equitable budget which addressed the deficit and was good for jobs and the economy.
The organisation called for the introduction of a wealth tax and reforms in pension reliefs, as well as a range of tax increases on gambling, tobacco, alcohol and carbon emissions.
“In terms of the amount of the consolidation needed, our analysis says we don’t need to make the consolidation of €3.1 billion; a lower consolidation is sufficient,” Mr O’Connor said.
TASC said the adjustment should not exceed €2.7 billion which, apart from €350 million to be generated in 2014 under the Haddington Road Agreement, would be made up entirely of revenue measures with no further cuts to public spending.
Economic trajectory
It said further cuts to public services were likely to damage the country's economic trajectory for many years to come and would deepen inequality in society. "We know that there is a huge cohort of families and individuals in Ireland facing severe pressure due to the series of cuts. It's not just people's income that has dropped; they don't have the same access to health services, to education services, to disability support services.
“We’ve seen disproportionate cuts affecting those who are on lower incomes across society and it is unsustainable on a social basis in terms of the social fabric as well as on an economic basis in terms of aggregate demand,” Mr O’Connor said.
TASC suggested a range of reforms as part of its pre-budget submission including the introduction of a wealth tax, the reform of tax relief for landlords and changes to capital acquisitions tax, measures which economist Dr Tom McDonnell said would impact primarily on wealthy and higher-income groups.
It suggested the introduction of a third band of employer’s PRSI contributions on the portion of salaries above €100,000 and reforms to pension tax reliefs, including the curtailment of tax relief on pension lump sums. The think-tank has also proposed a €1.5 billion of targeted investment to be allocated from the Ireland Strategic Investment Fund which it says would boost growth and employment.
Revenue-raising Proposed measures
A €2.7 billion consolidation proposed by think-tank TASC in its pre-budget submission includes €350 million generated under the Haddington Road agreement with the remainder coming from revenue measures including:
- The introduction of a net wealth tax and changes to other capital taxes which it says would generate over €370 million in revenue
- Reforms to pension tax reliefs with a view to generating over €580 million
- An increase in employer’s PRSI on the proportion of salaries over €100,000
- The introduction of an excise tax on food products containing saturated fat, sugar and added salt
- An increase in excise duty of 50 cents on a pack of cigarettes
- An increase in excise duty on a bottle of wine by 50 cents
- An increase of 3 per cent on betting shop profits
- Environmental taxes including an increase on the existing carbon tax rate