The Irish Congress of Trade Unions (ICTU) has urged the Government to allocate an extra €400 million to social housing, household benefits and mental health services next year. Its pre-budget submission also calls for a reduction in water charges for households earning less than €80,000 a year, and proposes the introduction of refundable tax credits to ease the tax burden on low-income families.
A Budget for Jobs, Homes and Growth says new spending cuts are unnecessary to meet Ireland’s deficit reduction targets. Research by the union-backed Nevin Economic Research Institute suggests a €800 million adjustment could be paid for through a new wealth tax, increased employers’ PRSI on incomes over €100,000, reform of capital acquisitions tax, and higher duties on tobacco, sugar, salt, saturated fat and online betting.
Launching the ICTU submission in the summer, ICTU general secretary David Begg warned that there was no room for cuts in headline tax rates. He said any tax cuts would have to be funded through reduced spending or increased taxes elsewhere.
“Tax reform in the shape of refundable tax credits would be beneficial on employment and equity grounds. On the other hand an increase in the standard rate tax band or a reduction in the marginal income tax rate would not benefit the majority of PAYE taxpayers,” he said.
ICTU says the current system of tax credits has a limited impact for many low-paid workers because they don’t earn enough to use their full tax credit. “The introduction of refundable tax credits would tackle this issue as the unused portion of their tax credits would be refunded to such workers. A study undertaken for Social Justice Ireland identified that 130,000 low-paid workers and their families would benefit from refundable tax credits,” said Begg.
The union submission also says household water charges should be limited to households with a combined income of over €80,000. “Access to water is a human right. Moving to a system of regressive user charges risks plunging vulnerable households into water poverty. The announced system of free allowances is insufficient to prevent households from falling into water poverty, as well as being an inefficient and expensive policy tool,” said Begg.
“There has been a private investment strike in Europe and the public sector has been unable to fill the gap because of debt. Public sector capital expenditure has all but disappeared in Ireland and we urgently need to reverse this trend,” he said.
