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Social Justice Ireland comments on Government's Pre-Budget Outlook
Government published its Pre-Budget Outlook on November 12, 2009. According to the Minister for Finance, Brian Linehan TD, "The Government’s planned €4 billion adjustment to the public finances in the forthcoming Budget is forecast to result in the General Government Balance stabilising at -12 per cent of GDP next year."
Social Justice Ireland has published detailed Budget proposals which show how the €4 billion in adjustments can be achieved while protecting the vulnerable and without reducing social welfare rates (details here)
Ireland now has one of the lowest total tax-takes in the EU and it has fallen by 4 percentage points of GDP in the 2007-2009 period. Social Justice Ireland believes that:
- It is not possible to develop a country with EU-average levels of social services (e.g. health, education, social welfare) and infrastructure (e.g. social housing, public transport) while having a total tax-take that is far below the EU-average.
- If we are going to have Romanian levels of taxation then we have to be prepared to accept Romanian levels of social services and infrastructure as well as Romanian levels of salaries. (Romania is simply used as an example here; the question could just as well be asked comparing Ireland to the other countries with which it shares the lowest total tx-take in the EU i.e. Slovakia, Latvia, Lithuania and Estonia.)
- Irish people do not want to settle for these low levels of services and infrastructure.
- Government could raise Ireland's total tax-take to 34.9% of GDP and still be a low-tax economy according to Eurostat.
- Budget 2010 should be balanced with increases in taxation and reductions in current and capital expenditure.
A fair budget that protects the vulnerable and the economy is possible. However, this requires Government to commit to increasing Ireland’s total tax-take to a level closer to the EU average. This can be done while keeping Ireland a low-tax economy.