THE GOVERNMENT intends to announce tax changes later in the year to supplement the public sector pensions levy, the Dáil was told yesterday.
Minister for Finance Brian Lenihan said during the debate on the legislation giving effect to the pensions levy that it would be “supplemented in due course by income tax changes to be announced in the budget later in the year”. Mr Lenihan said increasing income tax was not an alternative to the pension levy, but would be used to supplement it in the budget to be announced later in the year.
Meanwhile, Taoiseach Brian Cowen last night renewed his call for national solidarity and emphasised the significance of the Commission on Taxation.
Speaking at the Four Seasons Hotel at the launch of the Bruce Shaw Handbook, a guide to the Irish building industry, Mr Cowen abandoned his prepared script and said the global recession posed “real and unprecedented challenges” for the international economy “not only in this generation but for many decades”.
He said Irish people had to maintain “some sense of belief in ourselves and our capacity to build on the resources that we have built up over the good times”.
He said we had to restore order to our public finances and that the Government is determined to implement its plans to address that issue. “The gap that has opened up in our public finances position is such that it cannot be simply solved by expenditure adjustments alone. The Commission on Taxation will have to bring forward to Government in a systematic way, because it is the first review in over 25 years, the need to broaden the base of our taxation and to recognise that much that we have done in the past will have to adjust to the new realities.”
He continued: “Maintaining discipline in the public finances, continuing to contribute to a high capital spend but also, and most importantly, coming forward with short-term initiatives that will try and ensure that we maintain to the greatest extent we can those jobs that can remain in viable but vulnerable companies . . .”
He said that when “this recession passes”, he hoped “we will have the ability to say that this generation made the adjustments, made the few steps back that were necessary in order to forge ahead again in the future for our own sake and, more importantly, for the sake of our children, who have an entitlement to expect a good standard of living in this country as well”.
Earlier in the Dáil he insisted that “all aspects of taxation” would be considered by the Government as part of its strategy to deal with the crisis in the public finances. He also said he remained available for dialogue with the social partners, but expressed the view that the basis for a formal resumption had not been established yet. “However, I will continue to be available for dialogue,” said Mr Cowen.
A number of TDs criticised the Government’s decision not to attempt to impose the income levy on judges.
“It is unfair that people who work hard but are paid low incomes will have to pay the levy, while an exemption is afforded to those who are paid the most and have the most support services. They have an elegant way of life and an elegant support system,” said Labour’s Joan Burton.
“I am flabbergasted by this. Can we imagine a scene where the clerk of the court sees his wage deducted, while the judge on the bench does not make any contribution?” asked Fine Gael TD Seán Barrett.
Mr Lenihan said he had received advice from the Attorney General that under Article 35.5 of the Constitution the Government was prevented from reducing the remuneration of a judge.
