The Government has spurned demands from trade union chiefs to curtail tax cuts next year in favour of increased spending on services.
On the first of two days of talks in Dublin Castle with business, union, farm and social leaders, a line of Government figures said there will be no change to the plan for a 50:50 division between tax decreases and rising expenditure in the next budget.
Taoiseach Enda Kenny opened the talks by saying the Government will go no further than its current plan for a budget package between €1.2 billion and €1.5 billion in 2016.
As the talks continued, demands from Ictu general secretary Patricia King and Siptu president Jack O’Connor for a 2:1 division in favour of spending over tax cuts were met with a cold response from the Government.
“To fulfil my objective of growing the economy I have to use tax instruments to get more growth out of the economy, so I think 50:50 is a fair split and I will have enough for my macroeconomic purposes in about half of what’s available,” said Minister for Finance Michael Noonan.
“Expenditure to tax was about 70:30, then it moved to about 60:40.
“Certainly, there is a need for extra expenditure in some areas, so we have moved to a 50:50 divide now.
“Obviously [Minister for Public Expenditure] Brendan Howlin needs additional expenditure under the Lansdowne Road Agreement.”
National economic dialogue
The national economic dialogue, which concludes today, was cast as an opportunity for open discussion between Government and former participants in social partnership, but Ministers made it clear a negotiation was not under way.
Mr Howlin told reporters the engagement was “not a parliament” and was better described as a discussion.
“We are not going back to the social partnership model where representatives of any sectoral interest get to make binding decisions on everybody else.”
Mr O’Connor told a session on tax with Mr Noonan that “meddling” with the State’s progressive tax system would have the effect of worsening income inequality.
“We should be working out how we’re going to increase pay so that people can pay more tax,” he said.
