A chorus of "wolf criers" are predicting the economy will encounter trouble in the years ahead because they failed to predict the last crash, Minister for Public Expenditure Brendan Howlin has claimed.
Mr Howlin said many observers “took their eye off the” ball during the latter years of the Celtic Tiger and failed to predict the last crash.
The Wexford TD claimed his party would be prudent if elected to the next government and said Labour would prioritise public spending over tax cuts.
“Because the crash was caused last time by everybody taking their eye off the ball and nobody crying wolf, there is now a whole chorus of wolf criers on the basis that if they keep crying, one of them will be right,” he said.
Labour's general election tax proposals were outlined by Mr Howlin and Minister for Communications Alex White at the opening of the party's conference last night.
Tánaiste Joan Burton will give the televised address from the gathering in Mullingar, Co Westmeath, this evening – effectively the last major political set piece before the general election.
A worker earning €25,000 would pay a third less tax by the end of the next government’s term of office under plans being proposed by the Labour Party.
The key features of the plan outlined by Mr Howlin and Mr White are the abolition of the universal social charge (USC) on all earnings up to €72,000 over the next government’s lifetime. There would also be a targeted PRSI reductions for low-paid workers, who would benefit from PRSI and USC cuts, as well as a clawback mechanism of higher-paid workers.
The cost of the party’s entire taxation package would be €3 billion, out of €12 billion available to the next government between 2017 and 2021.
Mr Howlin said the remaining €9 billion would be allocated towards increased spending in areas such as health, education and childcare.
“Our plan is to target the available funds we have in tax reductions to benefit those on low and middle incomes,” he said.
Abolition of USC for those earning less than €72,000 would mean someone on €25,000 would pay €668 less a year. Someone on €50,000 would pay €2,043 less. Someone on €72,000 would pay €3,302 less. Those earning between €72,000 and €100,000 would pay €3,302 less USC because of a mechanism to cap the benefit in that bracket.
The gains would progressively reduce between €100,000 and €120,000 and those earning more than €120,000 would pay the same amount of USC that they do now.
Labour says the effect of the entire tax package would mean those earning €25,000 would pay 34 per cent less tax; those on €50,000 would pay 15 per cent less; 13 per cent less for those on €72,000; 8 per cent for those on €100,000 and 4 per cent less for those on €110,000.
When asked if Labour would plan for a contingency fund to provide for financial shocks, Mr Howlin said it would prioritise certain areas of spending. It would outline an “unallocated” fund that could be used for different purposes.
He said it was important to “broaden the tax base”, while Mr White claimed it was hypocritical of other parties of the left to promise to abolish property tax and water charges.
