Ictu proposes third rate of tax

The Irish Congress of Trade Unions (Ictu) has said that Ireland should not tighten expenditure until the economy begins to recover.

Ictu unveiled A Better Fairer Way, its ten point plan to tackle the public finances this afternoon.The strategy also proposes a third rate of tax on the wealthy and opposes social welfare cuts.

It recommends that the Government should lengthen its adjustment period and reduce its debt by 2017 instead of 2013. Ictu said that cutting spending too quickly could collapse the economy as well as key public services.

Congress general secretary David Begg said he feared that reducing debt could bring about a “severe deflationary shock on he economy not unlike Japan."

“Ireland should not engage in fiscal tightening until the economy begins to recover,” he said.

Ictu warned that wage cuts could also cause deflation. “You could get a negative kickback as domestic demand adds to deflationary shock,” Mr Begg said. It argues against cutting wages across the economy in order to improve competitiveness.

A third tax rate aimed at the wealthy is proposed in the plan. The rate would be “up around 54 per cent” and would be “a clear demonstration affect that the people who are best able to make a contribution are the people who are seen to do it.”

The plan argues against cutting social welfare rates in a crisis. “Going after people like that for money is wrong and crosses a threshold of decency,” Mr Begg said.

It proposes a one billion euro fund to promote job sharing as undertaken in Germany and Singapore. It would also retiteriates an earlier proposal of a National Recovery Fund for infrastructure projects which would boost employment.

Measures to protect households and those in severe debt using the Nama legislation are also proposed by Ictu.

It has suggested setting up an Office for Indebtedness and giving people up to three years free from threat in order to sort out their problems.

Ictu argues that cuts in service provision make no sense and could fatally undermine health and education services.

It also wants the Government to tackle the pension crisis, reform the banking industry and introduce legislation on workplace rights.