Austerity holes remain as Government prioritises tax cuts over investment

USC cut worth most to higher earners

Unite disappointed at decision to further reduce Employer’s PRSI

Union welcomes moves to address PRSI step-effect for low earners

Social protection changes do not compensate for cuts since 2012

October 13th: In its initial response to Budget 2016, trade union Unite today warned that the Budget measures are set to entrench inequality by failing to address the structural deficits left behind by austerity. The union’s Ireland Secretary Jimmy Kelly accused the Government of ‘blowing the recovery’ by failing to invest not only in our infrastructure, but in the public services on which we all rely.

Mr Kelly was particularly scathing of the decision to cut USC, disproportionately benefiting the top 20 per cent of earners, and he pointed out that by choosing to cut taxes for the better off, the Government was reducing the funds available for investment. He also expressed disappointment at the decision to further slightly reduce Employer’s PRSI at a time when Irish employers already pay the lowest social insurance in the EU. However, Mr Kelly did welcome moves to address the so-called ‘PRSI step effect’ anomaly which has penalised low earners receiving a wage increase.

“As we slowly emerge from recession, we are facing a housing crisis as well as deficits in a range of other areas, from schools to broadband.  Yet, two weeks ago, the Government announced a capital plan which represented almost no increase in investment spending as a proportion of GDP.

“Today, the Government continued to turn a blind eye to the glaring structural deficits left by austerity.

“With growth rates due to weaken over the next two years, and the risk of considerable uncertainty in the European and international economy, the Government should have substantially increased investment in our infrastructure, productivity and education. Instead, it is recklessly cutting taxes. This is boom-and-bust economics.

“A Budget which cuts inheritance taxes while failing to restore the real value of Social Protection payments will only further entrench inequality.

“Half of all workers earn less than €29,000. They will see few benefits from the USC cuts – and the few Euro extra they do get will be swallowed up by inflation and by increased charges for services which, in other European countries, form part of the ‘social wage’.

“Nor will these measures do anything for the 50 per cent of those reliant on unemployment, lone parent or disability payments who suffer multiple deprivation experiences. While the partial restoration of the Christmas bonus will be welcomed by many struggling families, a Budget is not just for Christmas and those families’ incomes in 2016 will still be less in real terms than in 2012.

“Although Unite welcomes the decision to address the so-called PRSI step effect, which has penalised low-earners receiving a wage increase, we are particularly disappointed at the decision to effectively further reduce Employer’s PRSI, which is already at the bottom of the EU, by raising the entry point to the top rate.

“Today, the Government had an opportunity to start raising employers’ social insurance to European levels to fund a ‘social wage’ in the form of European-style social services.

“Instead, they are effectively asking working people to subsidise their own tax cuts by sacrificing investment in the social and economic infrastructure which would benefit all of us and help create a more equal society.

“Budget 2016 is the latest in a series of regressive Budgets produced by this Government. By failing to invest in equality they are blowing the recovery.

“This is not only an Election Budget – it is clearly a Fine Gael Election Budget from which any Labour fingerprints have been carefully wiped”, Jimmy Kelly concluded.