THE CONSTANT focus on Government finances rather than on the whole economy in the last four budgets was damaging society and the economy, the independent think tank Tasc has said.

Dr Nat O’Connor, director of the economic organisation which works for a “more equal society and a stronger democracy”, said a recent report from the International Monetary Fund stated the high level of inequality here was “one of the causes of the crisis”.

Speaking at the publication of the Tasc pre-budget submission in Dublin yesterday, Dr O’Connor said greater equality was good for society and for the economy and working towards that would be one of “the causes of recovery”.

He said it was crucial there be balance in the budget.

“If there are only cuts and tax increases on labour, there will be economic shrinkage. The focus on austerity in the last four budgets has not worked. While reducing the deficit on one hand, a shrinking economy means fewer jobs, less tax coming in and more welfare spending, which in turn increases the deficit again.”

What is needed, he said, was job creation and a new model of economic development. Tasc is calling for more tax on property, new wealth and windfalls, and less on consumption and labour.

A key step was to increase the spending power of those with the lowest incomes.

This group did not save their money, or spend it on imports or on holidays away. Their money was spent directly on goods and services in the local economy. “We can use the tax and benefit system to increase the incomes of the low paid and those on welfare,” said Tasc.

Among its proposals are that tax relief on pension contributions be reduced, and the universal social charge be extended to all gifts, inheritances and capital gains.

Head of policy with Tasc Sinead Pentony said the budget would represent a “political choice” in which the Government could make inequality worse, or make it better.