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News : Irish Last Updated: Nov 4, 2009 - 5:38:09 AM

ICTU calls for return to 1980s era Irish income tax rates with combined top rate of 65%
By Finfacts Team
Nov 3, 2009 - 8:06:20 AM

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The Irish Congress of Trade Unions (ICTU), has proposed a top income tax rate of 54% that combined with PRSI and other levies would result in a combined top rate for salaries over €100,000 of 63% and earners above €175,000 would pay at a rate of 65% - - a 1980s era level.

ICTU which on Monday launched a 10-point plan, said it could only provide "guesstimates" on the amount the new tax rate would bring raise.

Minister for Finance Brian Lenihan said last week that the marginal rate of tax is 53% and that if the Government was to increase it further to raise an extra €1 billion “everyone or every couple earning over €100,000 would pay tax at a marginal rate of 63%.”

ICTU says "it is a matter of public record that €1.8 billion in taxes remains uncollected," but at any time, there is always tax outstanding but not necessarily overdue. No distinction is made.

Their document which argues for a fiscal adjustment period to 2017, has no proposals on public sector reform as an alternative to pay cuts or a reduction in payroll numbers.

The Minister for Finance has said that as part of a fiscal adjustment of €4 billion in the December Budget,  €1.3 billion in public sector pay cuts would be required.

"The level of suffering that will be experienced by the most vulnerable in the community if €1.3bn is cut in Budget 2010 will be traumatic," ICTU head David Begg said on Monday.

He should join the tens of thousands of forgotten people on the dole and wonder what could be even more traumatic.

The ICTU says the point being made by the "Hard Jocks," who want to inflict immediate and sudden pain on the Irish economy and society, is that interest payments may run out of control and will eat into taxes. Interest payment will rise substantially and may double but compared to the levels in the 1980s, they will be a still be manageable - - especially if growth returns earlier - - which this longer recovery scenario enables.

The union congress says; "We know that the top 1% of the population made about €75 billion during the boom era. Specifically, it can be computed from revenue data that a minimum of €66 billion was made by individuals between 2002 and 2008 - -  almost €10 billion a year. The top 1% in 2007 held 20% of the wealth, the top 2% held 30% and the top 5% held 40%. How can this money have disappeared because for every developer who paid over the odds for land there had to be an owner who received the money?"

The ICTU also opposes any cuts in social welfare rates.

The union group says that "whatever other problems Ireland has, it has at least entered this recession with the lowest debt-to-GDP ratio in Europe."

It says gross debt as a % of GDP is forecast to rise to 61.9 in 2009.

According to the European Commission today, the ratio will rise to 96% in just the next two years.

So we entered at the lowest rate and should we aspire to be among the highest with a growing interest burden?

SEE: Eurozone will return to gradual growth in 2010 and Ireland by 2011 when Irish debt/GDP ratio will rise to 96%

The Irish Times reports today that any deal with the Government to avoid public sector pay cuts is likely to involve significant reductions in the number of people employed in the public sector from 2011, Impact general secretary Peter McLoone has warned officials in his union.

In a private and confidential letter sent to Impact industrial relations staff in recent days McLoone said: “In my judgment the alternative [to pay cuts] is likely to involve a significant reduction in public service numbers over the next three to four years, with the likelihood that some additional exceptional measures will also be needed in 2010 to deal with the budgetary crisis next year.”

McLoone outlined in the letter what was happening in talks between the ICTU Public Services Committee and Employer Representative Bodies and said the talks would not deal with the issue of additional taxation.

“In fact, in my view, further increases in existing tax rates in the December Budget will simply not feature,” he wrote.

SEE: Finfacts article, Oct 30, 2009:Minister warns "a type of civil war" exists between workers in Irish public/ private sectors; Suicides jump 43% in Q1 2009

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