LABOUR leader Eamon Gilmore has for the first time outlined specific details of the party’s budgetary strategy. During the Dáil debate on the economy, Mr Gilmore said there should be a voluntary redundancy scheme in the public service and that the social welfare budget “must be curtailed”.

He also said taxation had to be “part of the mix” with an “even split” between tax increases and spending cuts. He referred to potential savings of €100 million through “more robust and modern anti-fraud measures” and €50 million in savings on rent supplements because of the oversupply of residential accommodation.

He called for the abolition of tax relief on trade union membership, the scrapping of all property investment tax reliefs which currently cost €380 million and the ending of patent royalties which he said were often used for tax avoidance and cost €50 million. There should also be a cut of at least €500 million in pension reliefs, from a current total cost of €3 billion, particularly by limiting the total amount individuals can claim, he said.

His proposals include the introduction of a 48 per cent tax rate for high earners and a system where high earners must pay a “minimum effective tax rate” which would limit the tax relief any one individual could claim.

Property investment tax reliefs worth €380 million should “simply be scrapped” and interest relief on investment property should be cut by at least €430 million. The tax on second homes could be increased but he did not specify an amount.

Mr Gilmore also said capital spending could be cut by €2.8 billion over three years, bringing it down to just under 3 per cent of GDP, in line with other euro zone economies. And he called for the suspension of payments to the National Reserve Pension Fund, some 1 per cent annually of GDP. This was because the State “is borrowing money on the international markets at 6 per cent to invest back into the international market place through the purchase of shares by the pension fund”.

During his speech the Labour leader said the €15 billion in cuts over the next four years announced by the Minister for Finance was “double the amount that was previously expected”.

He said “we had been told we had turned the corner. Some corner.” He questioned the basis for the €15 billion figure and he criticised Government claims that the Opposition had been “shown the books”. Mr Gilmore said the “kernel of the briefing” was “three sheets of paper” with a few “so-called scenarios, about how the deficit might possibly be reduced”.

He said when asked how a massive hit on the economy next year would produce higher growth in 2012, the Government’s answer was “one word ‘confidence’”, or what the economist Paul Krugman described as the ‘confidence fairy’. While five-year-olds in Ireland are understandably prepared to believe in the tooth fairy, it is unwise for a country or an economy to put its faith in the confidence fairy”. Mr Gilmore said the Opposition was often challenged about specifics but the Government had provided very few specifics.

“The reality is that we now face a fight to hold on to our economic freedom and the right to make decisions about our own future, if the Government cannot convince investors to lend money to Ireland at reasonable rates again.” He said “we need to come up with a plan not so much to satisfy our partners in Europe, but to convince international bond markets to invest in Ireland, while we go about the difficult work of restoring our public finances.” Mr Gilmore said: “Labour wants to make it clear that a change in Government in Ireland will not result in the goal of deficit reduction being abandoned.” But agreeing to try to get the deficit down to 3 per cent by 2014 “does not mean that we are tied to any particular deficit figure for next year. We will not solve this problem by resorting to ever greater and ever more crude adjustments,” he said.