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Congress Launches 2012 Pre-Budget Submission

Ireland needs growth plan

Ireland needs growth plan

“Ireland needs a new plan for growth,” Congress General Secretary David Begg said on Thursday (27th October).

Speaking at the launch of Growth is the Key – the Congress Pre-Budget submission – David Begg said: “The most important deficit facing Ireland is the deficit in the demand for labour. That needs to be tackled as a priority.

“And the most effective way to tackle our financial deficit is with policies that create jobs and develop innovative new products and services. Austerity is self defeating and is suffocating the economy. Growth is the key to recovery.

“The single greatest priority for this budget is to avoid measures that will make the dole queues longer.”

“We must extend the ‘period of adjustment’ from 2015 to 2017, to give ourselves more leeway. Remember that the target date has already been moved twice,” Begg said.

He pointed out that the Congress submission contained a number of proposals on investment and job creation and outlined where funding could be secured.

It also focused on longer-term reform of the tax system to ensure it was fairer, more progressive and capable of funding the services required by a modern society. He said that Government had failed to fill the void left by the collapse in private investment and consumption.

“It should now invest in targeted initiatives that will create jobs and boost competitiveness,”  he said.

Growth is the Key: Investment Proposals
For every €1 million invested in infrastructure, up to 12 direct jobs are created. Congress has identified various sources of funding for jobs and growth:

€2bn from National Pension Reserve Fund over the next three years; Private pension funds should be encouraged to increase investment in the Irish economy by 5%, raising an extra €4bn a year; Encourage investment in Solidarity Bonds by pension schemes, as agreed by Congress, IBEC and the IAPF; The State Holding Company should be set to attract pension funds; A new state pension scheme could raise €1bn over the next year; Multinationals could defer repatriation of some profits and set up a commercial investment fund.
Role of State Companies
State companies can act as engines of the recovery. Giving the State Holding Company access to private capital for expansion and re-investment is a better than privatisation.

Bondholders
The entity formerly known as Anglo-Irish Bank/ INBS is a severe drain on public resources, due to planned payments to unsecured, unguaranteed bondholders and the enormous liabilities resulting from the Promissory Notes. This could see us pay out €4.2 billion every year, for the next 14 years.  There is an option to review and amend this arrangement with the Troika. Not to do so would be reckless.

Tax Proposals
The Universal Social Charge should be progressively restructured to reduce the rate paid by low earners.

There should be a new levy on wealth above €2 million, with ‘wealth’ defined as current value of all assets. This could yield up to €500 million.

The minimum tax for high earners should be 35% with the threshold cut to €100,000.
There should be a temporary ‘solidarity levy’ on incomes over €100,000.

Working people have seen their incomes levied, so there is an overwhelming case for a temporary levy of 2.5% on corporate profits.

The 183-day requirement for Tax Residency must to be halved to at least 90 days – as in the UK – and ‘tax fugitives’ must pay more.

A new 12.5% oil and gas Royalty Tax on production. Higher taxes should be considered for larger oil and gas finds.

It is essential any Property Tax is not a flat tax, but is linked to ability to pay.

Yields from Capital Acquisition Tax remain low and existing thresholds could be lowered. Business and agricultural reliefs should be restricted to the first €4 million of business assets.

Raise Capital Gains Tax from 25% to 30% and apply the Universal Social Charge. A proportion of gains on private dwellings worth over €1 million should be subject to CGT.

Close the property-based tax reliefs that cost the state more than half a billion euro. Tax breaks for high earners and investors should be progressively removed.

Congress is opposed to a reduction in tax relief on pensions to 20% and believes the imposition of temporary stamp duty on fund assets could damage existing schemes.

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