Friday, November 6, 2009

Budget 2010 - There is another way

I was out today along with thousands of others marching against government policy and demanding a new approach to the problems this country faces. Below is an outline of how Sinn Féin feels the probelm should be tackled. It is written by Joanne Spain and appears in this weeks An Phoblacht.


This Friday, thousands of people are gathering across the state to oppose the savage Budget due this December that threatens public services, the vulnerable and our quality of life.

For the past 18 months, the Fianna Fáil and Green Party Government has been running two economies: one for the wealthy and one for everyone else.

The first entails huge borrowing and a cash stimulus for banks; the second comes with talk of deficits, tightening our belts and sharing the pain for a mess we didn’t make.

This ‘real’ economy (not the Monopoly one involving banks and ‘Get out of jail free’ cards for developers) will be dealt with in the Budget. The Government wants to reduce the deficit by over €4 billion. Almost all of it will come from slashing child benefit, social welfare payments, investment in schools, hospitals and public transport, and teaching and nursing jobs.

The Budget will create no jobs. There will be no stimulus package even though almost every other country in the world is employing one. At the same time as the Government is taking away our rights, it will be spending our tax on a €54 billion golden handshake for banks, developers and land speculators.

There is another way.

Next week, Sinn Féin will launch its pre-Budget submission. It’s not designed to protect the wealthy or save banks. Its purpose is to show how this economy can be saved through a stimulus package and how there is still a lot of money being left alone by the Government for deliberate policy reasons.

We show how around €7.5 billion can be added to the economy this year, €5.5 billion of which comes from making the wealthy pay their fair share; €2 billion comes from the National Pension Reserve Fund (the same fund that the Government used to inject €4 billion into Anglo Irish Bank) and we use it for a jobs stimulus package.
None of our proposals involves cuts to essential services, though we do tackle some of the waste in public spending, such as the subsidies to private healthcare and the exorbitant wages paid to elected representatives and senior civil servants.
We debunk the myth being propagated by the Government about our borrowing levels. No country wants to be in debt but most accept that trying to reduce a deficit in a recession is madness. Even in 2012, when our borrowing is expected to peak, we will still be below European average figures.

The Government and its puppet economists like Colm McCarthy are telling us we can’t borrow any more because they want to cut public spending. They believe social welfare payments (€204 a week) and nurses’ wages are too high. When they can find a logic for indebting the country, however, in this case €54 billion for banks, they will borrow.

We also put paid to the ‘slash social welfare’ mentality.

Our social welfare payments are not too high. They are barely adequate, as anyone who has just lost their job will tell you.

Consigning people to poverty because you don’t have the courage or the inclination to take on vested interests is not the answer.

Cutting social welfare rates in a state so reliant on VAT receipts is utter madness, as people on social welfare tend to put their money back into the economy. Sinn Féin has a novel way to cut the social welfare bill: Create jobs.

Our economy can be saved. There is a way to do this, a different way to what the Government will unveil in December.

Our way asks those who can afford it to pay more, stimulates the economy with job-creation, and introduces a cost-of-living package for people struggling to make ends meet. The Government’s way will push us further into recession as they fill the lifeboats with their friends and our cash.

HERE’S some of Sinn Féin’s Budget 2010 proposals

Introduce a third tax rate of 48% on earnings in excess of €100,000 - Raises €355 million

Standardise all discretionary tax reliefs – Raises €1.1 billion

Abolish mortgage interest relief for landlords – Raises €285 million

Abolish the PRSI ceiling – Raise €119.5 million

Introduce a 1% wealth tax on all assets worth more than €1 million, excluding farmland-Raises €1.6 billion

Increase Capital Gains Tax to 40% – Raises €190 million

Introduce measures to reduce the cost of medicines in our health system, including nationalisation of wholesale distribution of drugs and the use of lower-cost generic drugs – Saves €200 million

Establish a jobs retention fund available to SMEs. This measure has the potential to save 96,000 jobs in 2010. Cost: €600 million

Use the public sector and direct public employment to kick-start the economy. Increase and modernise CE schemes and invest in state infrastructure. Cost: €2 billion

Build the state childcare and pre-education sector. Cost: €500 million
Re-introduce the Christmas bonus scheme for social welfare recipients. Cost: €223 million

Implement the pay increases for 2009 as set out in the last social partnership agreement. Cost: €230 million

Implement a ‘cost of living’ package that freezes and lowers everyday expenses like public transport, television licenses; reduces VAT on essential items; reduces professional fees (High Pay Commission could help with this); and targets insurance policies offered through banks and other measures. Cost: €300 million


  1. Must admit I'm no economist but there are things here that appeal to me, including the third tax rate, the wealth tax, direct public employment etc.

    Would it be too much to seek a maximum wage (say €75,000 to €100,000), to balance out the minimum wage? A maximum wage could be brought in on a phased basis to keep the blaggards we might need in the short term... but I suppose we are that far into the global markets now that this idea, while just and fair, is ridiculous economically?

  2. Sean,

    I think that, as you say it would be hard to set a limit at a rate of 70-100k etc. I do think though that a lot of pressure needs to be brought to bear on high wages which contribute to this state's losing competitiveness as much as the lower paid.

    Looking at Monday nights Kenny live where pat kenny got pulled up rightfully by an audience member then there is a lot of talk about this right now and maybe more so among ordinary people than the chattering classes. It ties in with another popular theme at the mo and thats tax reform, appropriate tax burden, the extent to which our tax system is progressive etc. One argument that I have seen deployed repeatedly is that the top 20% is paying about 1/2 the income tax ( as if this were a noble gesture). People are using this argument, and the fact that higher taxes on the rich will only raise so much money while the gap is over 20 billion, to dampen the clamour for tax reform.

    They are right when they point out that we(south ireland) cant solve our current problem by just pushing for more taxes on the rich but a reformed, progressive tax system capable of funding the running of the state is required if we are to have a functioning state not to mind an equitable state. Just because it wont solve the immediate problem does not mean the right should be left get away with saying its not even necessary.

    So can we cap wages, i dont think we could successfully argue that, but arguing for a new tax system would be similar in effect. Also the SF policies on controlling the higher level public sector wages is bang on the money. Brian cowen does not need more than Obama. And for the boys and gals well paid in public sector bodies how many of them are there because they are the best for the job as opposed to being drinking buddies with various taoisigh. We can very justly target these issues and ensure the wages at the top get pushed down of ensure that they pay a level thats appropriate .

    As a side note an article by ronan lyons highlights the very low tax levels in the southern state.

    This review of our tax can lead to demands that the worst off pay more tax. In order to avoid that scenario i think the strategy must be to lead the debate and not respond to it as it is shaped by our opponents.

    bit of a rambling reply sean and i hope i didnt lose my train of thought. :)