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Social Justice Ireland Policy Briefing on Budget 2014

By editor - 28 June, 2013

Social Justice Ireland Policy Briefing on Budget 2014 argues that: There should be no more cuts in expenditure in Budget 2014. A minimum effective corporate tax rate (6%) and a maximum effective income tax rate (45%) should be introduced. Tax credits and welfare rates should rise by €5 a week. Budget 2014 should provide a […]

  • Social Justice Ireland Policy Briefing on Budget 2014 argues that:
  • There should be no more cuts in expenditure in Budget 2014.
  • A minimum effective corporate tax rate (6%) and a maximum effective income tax rate (45%) should be introduced.
  • Tax credits and welfare rates should rise by €5 a week.
  • Budget 2014 should provide a major investment programme and protect public services.
  • All of this can be done while reducing borrowing by €3.1bn in 2014.

New Approach – Key proposals
Social Justice Ireland believes there should be no more expenditure cuts in Budget 2014.  It is long past the time Government realised austerity is not working for Ireland. A new approach is needed. As part of such a new approach, no corporation should pay less than 6% of its profits in tax.  In its latest Policy Briefing Social Justice Ireland sets out a series of fully-costed proposals for Budget 2014, proposing:

  1. No more cuts in expenditure (except where they flow from reforms and don’t damage the social infrastructure).
  2. A reduction in borrowing of €3.1bn in 2014 as agreed with the ‘troika’.
  3. A minimum effective corporation tax rate of 6% (i.e. no corporation would pay less than 6% of their profits in corporation tax).
  4. A maximum effective income tax rate  of 45% (i.e. nobody would pay more than 45% of their earnings in income tax + social insurance + USC).
  5. A Financial Transactions Tax of 0.01%.
  6. A universal state pension.
  7. An increase of €5 a week in the PAYE tax credit and in the basic social welfare rates.
  8. A capital programme focused on developing physical and social infrastructure.
  9. Elimination of the fuel dyeing process for agricultural and industrial diesel.
  10. 21 further initiatives covering a wide range of policy areas.

In the Briefing, entitled ‘Budget Choices’, Social Justice Ireland outlines how all of its proposals can be financed while reducing borrowing by €3.1bn in 2014.

All the costings are based on Government calculations and reliable research.
The full Policy Briefing may be accessed here.

A Budget along these lines in 2014 would be good for the economy, good for those on low and middle incomes, and good for Ireland. It would be fair and just and would be seen as such.

Ireland’s austerity has benefitted the rich, be they bondholders or multi-national corporations, while seriously damaging the current situation and future prospects of low and middle income people.

The Budgets of 2012 and 2013 targeted the poor more than the rich and provided very little investment. Without investment there will be no jobs. Without jobs there will be no recovery. Without a recovery Ireland will be forced to continue its current austerity programme indefinitely.

The briefing presents a fully-costed series of proposals for Budget 2014 that would see Ireland’s borrowing reduced by €3.1bn, provide substantial targeted investment, introduce a maximum effective income tax rate and a minimum effective corporate tax rate.

It would also protect public services and increase the incomes of the working poor and those on social welfare.
Austerity is not working for Ireland. Government has cut spending, raised taxes, increased unemployment, lowered wages, decimated services and allowed infrastructure to deteriorate on the understanding that austerity would lead to recovery.

Austerity, however, has been exposed as having an unsound academic basis, as being a failure in practice and as morally unethical because poor and middle-income people have borne an unfair share of its consequences.

What it has produced in practice is structural unemployment, rising poverty levels, a sustained child poverty problem, on-going adult literacy challenges, high emigration, lengthening social housing waiting lists and declining physical and social infrastructure.

Government’s austerity approach has, however, protected the rich at the expense of the rest of us. In practice it has produced the single biggest transfer of resources from low and middle income people to the rich and powerful in Ireland’s history.

The main beneficiaries of this transfer have been parts of the corporate sector (mostly multinationals) and wealthy individuals.
The full Policy Briefing may be accessed here.

Budget 2013 – Summary of Key proposals (with relevant page numbers indicating where these proposals are addressed in the Briefing)

In this Policy Briefing Social Justice Ireland sets out a range of fully-costed proposals that would (i) reduce Government’s borrowing; (ii) protect the vulnerable, (iii) make the tax system fairer; (iv) set a minimum effective corporate tax rate; (v) protect public services; (vi) increase domestic demand; (vii) increase social welfare rates (viii) distribute the ‘hits’ in Budget 2014 more fairly.   Among our major proposals are the following:

  1. Reduce borrowing by €3.1bn.
  2. Do this mainly (over 90%) through tax adjustments.  P.7
  3. Introduce a minimum effective corporate tax rate that would ensure that all corporations in Ireland pay at least 6% tax on their profits here.   P.7/8/10
  4. Implement a maximum effective income tax rate of 45% . This would ensure that nobody would ever pay more than 45% of their total income in tax no matter how high their income was.  P.10
  5. Make tax credits refundable in Budget 2014.  At a cost of €140m this proposal would directly benefit 113,000 low income individuals and begin to address the ‘working poor’ issue.  P.11
  6. Extend the USC levy of 3% to all income in excess of €100,000 irrespective of its source.  This would increase revenue by €71m.  P.10
  7. Increase the PAYE Credit by €5 per person in 2014.  P.9
  8. Increase Social Welfare rates by €5 in 2014.  P.15
  9. Introduce a universal basic pension payment for all people over the age of 65 from July 2014.  This would be set at €230.30, the current level of the Contributory Old Age Pension.  Standard rating the tax break for all pension contributions to 20% would increase the tax-take by €700m in 2014 and would help fund the universal basic pension payment.  This would be a fairer and more equitable way of organising the pension system in Ireland.  P.14
  10. Introduce a Financial Transactions Tax of 0.01% which would yield €500m in 2014.  P.10
  11. Remove the dyeing process for agricultural and industrial diesel. Eliminating the fuel dyeing process would save €750m and would have a significant impact on reducing fuel laundering and criminal activity. P.11
  12. Introduce a rebate system for farmers, road hauliers and bus and coach operators whereby they can claim the price differential for agricultural diesel.  This proposal would cost €122m to implement.  P.11
  13. Introduce a tax of one third of one cent on each text sent by SMS through mobile phones or any other devices.  This would provide an additional €35m in taxation revenue in 2014.  P.11
  14. Introduce a ‘bad nutrition’ tax on the main components of junk food, fast food and soft drinks to yield €15m in 2014.  P.11
  15. Invest €65m to enable 12-15 community nursing facilities with approximately 50 beds each to be replaced or refurbished in 2013.  P.13
  16. Invest €50m for the infrastructural development of Primary Care Teams in 2013.  P.13
  17. Invest €50m for the infrastructural development of Children and Family Services.  P.13
  18. Invest €35m to support the development of Community Mental Health teams.  P.13
  19. Introduce an income contingent student loan facility to allow students to borrow to pay for third level fees and living costs.  This would save the exchequer €445m in 2013.  P.13
  20. Invest €150m in quality facilities and training for Early Childhood Education and Care.  P.13
  21. Invest €20m in Adult Literacy programmes. P.13
  22. Increase the provision for Social Housing by €50m. P.12
  23. Increase the tax take on online gambling to 5% to yield €100m.
  24. Remove tax expenditures of €150m in Budget 2014. P.9
  25. Increase the ODA Budget by €47m to reach the UN Target of 0.7% GDP in 2015. P.20
  26. Reduce expenditure on procurement of goods by public bodies by €41m.
  27. Implement savings in the public procurement process to yield €75m in 2014.
  28. Reduce public expenditure through measures identified in the Comprehensive Expenditure Report 2012-2014 and the Haddington Road agreement.
  29. Use promissory note savings of €500m to invest in social infrastructure and boost domestic demand.
  30. Reverse planned Capital Expenditure Consolidation of €205m in Budget 2014.

The full Policy Briefing may be accessed here.

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