Republic requires higher taxes and a bigger State, Ibec chief tells conference

Taxes should be raised rather than cut in the coming budget to pay for better public services, Ibec’s Danny McCoy has told trade unionists at a labour history conference.

Mr McCoy said he was realistic enough to accept that tax cuts are an easier sell from a political perspective but that the old social partnership mantra of “modest wage growth, industrial peace and tax cuts” was outdated.

“Modest wage growth, social wage increases, industrial peace and tax rises” is now required, he said.

Better services

Speaking at the Irish Labour History Society’s international conference at Liberty Hall on Sunday, where he debated the issue of social partnership with Fórsa general secretary Kevin Callinan, Mr McCoy said the Government is likely to introduce tax cuts because “if you rob Peter to pay Paul, you can generally rely on the support of Paul”. However, he said, the reality is that thousands of additional public servants are required to provide the improved services people need and expect along with the public system of administration required by the business community.

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“We have pretty much the same number of public sector workers as we had 15 years ago but as societies get richer, they want their public services improved. These things are all a function of State but the fact is that that State is demonstrably shrinking,” said the Ibec chief executive.

“That’s where the tax rises and more government come in; they are needed in order to get the rebalancing going in our economy because it’s way out of whack at the moment. The workforce has grown substantially but nearly 85 per cent of that workforce now is private sector and 15 per cent, at best, is public sector. I don’t have a magic number but I’d be comfortable at an 80/20.”

Some of the tax cuts being talked about were also being aimed at sections of the population that needed services more than they needed the money, he suggested, citing the example of students, who would benefit from reduced tuition fees but had a far more urgent need for somewhere to live.

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Tax increases, he said, were needed in any case as a shortfall in revenues at present is being addressed through the use of a portion of corporation tax receipts.

All of these, he said, need to be treated as windfall income although he said the current corporation tax receipts are “as likely to go up as they are to go down in the short term”.

In terms of the “social wage” concept commonly referenced by Government, employers and unions, he said there needed to be a clearer definition of what was involved. And he would like talks between the various stakeholders on the costs and benefits involved.

He said employers do not object to moves on issues like domestic abuse leave and flexible working but need the additional costs involved to be recognised.

He said he would like to see the practicalities of the “social wage” negotiated with employers having an input into how their workers actually benefitted.

Sinn Féin government

Asked about the prospect of a Sinn Féin government, he said some of the party’s policies had already been adopted by the current Government, most notably around labour legislation.

He said, however, that a drive for a poll on the issue of unification before the required groundwork has been laid could create uncertainty and have the effect of disrupting international investment in Ireland as it had in the UK when there was first a referendum on Scottish independence before the Brexit vote on leaving the EU.

“That uncertainty about jurisdictional or constitutional change can start an investment freeze a long way out from actually having the vote. So I’d be worried that that might be a distinguishing feature of Sinn Féin.”