THE NATIONAL Economic and Social Council (Nesc) has said that any policy response to the banking crisis must convince Irish society and those making sacrifices that the people who caused the problems in the financial sector and who were major beneficiaries of the boom are being held accountable for their actions and bearing their share of the cutbacks.
It also said that the country needed to show that a new regulatory regime and governance culture was being created in the financial and business sectors.
In a report published last night Nesc said that it seemed certain that a medium-term strategy to restore balance in the public finances would require an increase in the tax share of GNP if satisfactory levels of service provision and benefits were to be achieved.
Nesc said that Ireland was facing five closely related crises and that an integrated national response to these is now needed.
It said that these were a banking crisis, a fiscal crisis, an economic crisis of competitiveness and job losses, a social crisis of unemployment, income loss and indebtedness and a crisis of reputation.
In dealing with the problem in the public finances, Nesc said that one way of doing this would be to widen the tax base. “A long-standing feature of the Irish tax system is a complex range of discretionary tax reliefs . . . Reliefs should be . . . critically assessed.
“There should be additional progressive tax measures . . . so that those who benefited most from the economic boom will contribute to the adjustments required,” it said.
The Nesc report suggested that there was scope for the State to raise revenue through auctioning assets such as mobile phone licences, radio licences and non-EU import quotas.
The report also stressed the need for public service reform.
It endorsed the role of the new public expenditure review group in achieving better value for money. However, it said that retrenchment should be consistent with the process of structural change necessary to make public services more responsive to the changing needs of citizens.
In responding to social challenges, Nesc said that practical measures were needed to re-order existing education, training and welfare budgets.
