Unite warns against false trade-off between tax cuts and wage rises

Jimmy Kelly 1 copyIreland is low-tax, low-wage economy says Jimmy Kelly

April 13th: Speaking this morning, Unite Regional Secretary Jimmy Kelly rejected suggestions that workers refrain from lodging wage claims in return for possible tax cuts in the next Budget, and warned against what he termed a ‘false trade-off’ between tax cuts and wage increases.  Mr Kelly was speaking following publication of In whose interest? Our low tax economy, the latest in a series of Unite Notes published by the union.

“Ireland is a low tax, low wage economy. When one looks at total taxation on labour, Ireland is near the bottom of the table – just above Malta and Bulgaria. Our low tax status is mainly due to extremely low levels of employers’ PRSI .

“Many workers earn too little to benefit from tax cuts, and only a small minority would benefit from a change in the standard rate tax band – but most workers depend on the public services and income supports which are funded by tax revenue.

“Workers need affordable childcare, a free health service at the point of use, a truly free education system without ‘voluntary’ fees or back-to-school costs, guaranteed pensions in retirement age and an end to deprivation and poverty – especially food poverty. Tax cuts would make it more difficult to address these issues because they would reduce the resources needed to improve living standards.

“Tax cuts won’t benefit workers – and they won’t benefit the economy. What will benefit both is wage increases which go into the pockets of workers and the cash registers of businesses up and down the country. Wage increases will also generate increased tax revenues which can be re-invested into public services and other economic activity. Irish workers and businesses need a new model of wage-led growth.

“The idea that workers can be compensated for wage stagnation by tax cuts amounts to a false trade-off”, Jimmy Kelly concluded.

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