MAJOR differences have emerged between the main social partners on how tax cuts should be used in a new national agreement.
The Irish Congress of Trade Unions and the Irish Business and Employers Confederation have submitted claims estimated at £1.2 billion, even though the Government has indicated that only £800 million is available over the next three years.
Last Friday ICTU is understood to have submitted a claim for £1.1 billion in relief for PAYE workers during a meeting of the technical subcommittee on taxation.
At the same meeting IBEC is understood to have sought £150 million for a reduction in Corporation Profits Tax, lower employers PRSI and a higher ceiling on pretax profits for small enterprises.
The Conference of Religious of Ireland, which is involved in the wider discussions on a national agreement, has also called for tax reforms. But it wants £2 million allocated to dealing with social exclusion for every £1 million given in tax cuts to unions or employers.
A CORI spokesman, Father Sean Healy SMA, said tax relief was of no benefit to the 40 per cent of the population who either had no job or earned too little to be taxed. Those who benefited most from income tax cuts were people on the higher rate of marginal tax.
He said these comprised only a sixth of taxpayers. Using Government funding for tax cuts "is not an equitable use of the available money".
However, at the Dublin regional conference of SIPTU at the weekend, the union's general secretary, Mr Billy Attley, defended the £1.1 billion tax claim.
He said tax cuts would be a crucial component of successful talks.
He told delegates of difficult negotiations ahead. But he also warned the other social partners against thinking that the ICTU was "upping the ante" with its claim.
"We are simply saying that if we don't tackle tax inequities in a period of unparalleled economic growth, we would be better off to walk away from these talks". If conceded, ICTU demands would mean an extra 3 per cent a year in tax relief for workers earning £12,000 to £23,000, he added.
Employer sources close to the talks confirmed yesterday that tax reform had created difficulties on Friday but stressed the committee had no negotiating mandate. The sources also confirmed that employers were seeking about £150 million of the £800 million the Government had indicated was available.
IBEC is anxious to see Corporation Profits Tax reduced from 38 per cent to 32 per cent over the life of any new agreement. This would begin to bring CPT more in line with the 10 per cent rate paid by manufacturing industry.
Such a reduction would also "release potential in the services sector" for growth and employment.
IBEC wants significant reductions in employers' PRSI, especially for sectors like food and clothing.
It also wants the ceiling on pre tax profits for small enterprises raised from £50,000 a year to £150,000.
The fact that the second secretary of the Department of Finance, Mr Michael Tutty, has told the social partners there is £800 million available for tax relief so early in the talks makes it likely that the amount can be increased.
But it will be difficult to meet the aspirations of IBEC and ICTU, let alone CORI, while keeping public expenditure within the limits needed to accommodate such cuts.