betterbudgeting

8/7/2019 BetterBudgeting

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BETTERBUDGETING

The Green Partys plans to manage

the public fnances.

vote.greenparty.ie

RENEWING

IRELAND

ONFEB25THVOTEGREEN


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Introduction

In the last couple of years the Irish people have seen very painful budgetary

adjustments in the form of cuts in pay, social welfare and services and tax rises.

It is important to distinguish between our banking debts and our primary budgetary

deficit. The debts left at the door of the Irish people from reckless lending and an

economically, socially and environmentally disastrous housing boom, are a cause ofgreat concern and regret to the Green Party. Regardless of the policies developed to

deal with the consequences of this boom and banking collapse, it is clear that Ireland

and the Irish people will be paying in some form or another for a number of years to

come.

However, it is necessary to be clear with the Irish people that the primary budgetary

deficit, that is the difference between what we earn and what we spend must be

bridged. Currently, we have made a commitment to our European partners and the

IMF that we will aim to save a total of15bn in four years. As budget 2011 will

produce savings in the order of6bn, the next Government will have to find further

savings of9bn in the years 2012-2014.

There can be no doubt that taking a further9bn from the economy is no easy taskand will cause a drop in living standards. However, by sticking to some important

principles, the bulk of these adjustments can be dealt with in a way that is fair and thatwill provide a sound basis for future growth, sustainable development and a more

equitable society.

The Green Party believes that the 15bn adjustment over the four year period should

be based on a 2:1 relationship should apply between adjustments of expenditure and

revenue. This, we believe, is the most fair and economically sound way of tackling

the deficit.

General Principles

The underlying principles of the four-year adjustment should be that it:

Supports economic growth and jobs; Is fair; Broadens the tax base and ensures it is more sustainable and Promotes the move towards a low carbon economy.


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Broad Outline of Adjustments

2012M

2013M

2014M

Current: Pay (incl. PS Numbers &

Pensions)

500 700 1000

Current: Social Welfare 250 500 800

Current: Non-Pay 600 1300 2100

Current total 1350 2500 3900

Capital 300 550 750

RTE Transmission Assets 150 150

NPRF Capital Investment (insulation &selected public transport projects)

250 500 1000

Tax 1237 2262 3204

Total 3137 5962 9004

Investing in Jobs, Growth and a Low Carbon Economy

The Green Party believes that Government investment in sustainable capital projects

should be maintained to the greatest extent possible. Infrastructure projects are not

only directly and immediately labour-intensive but they can also provide much-

needed stimulus in the wider economy.

That is why we will readjust downward from 1.2 billion to 750 million over the

course of the 4 Year Plan. In addition, we will also draw down 1 billion from the

National Pension Reserve Fund to intensify and accelerate investment in the National

Retrofit Programme and in public transport projects. 300 million will be drawn down

and added to the existing Retrofit budget so that 200 million will be invested in the

project each year over the next three years. The remaining 700 million will beinvested in the construction of the Metro North, which will start creating constructionand immediately as well as developing a critical piece of our capitals 21st century

transport system.

State Assets

The Green Party is strongly opposed to a fire sale approach to the sale of state assets.

In particular, we are opposed to the sale of strategic semi state companies including

Coillte, the ESB, Bord Gis, Bord na Mna and EirGrid. However, given the currentsevere pressure on the public finances, full consideration must be given to making the

best use of state assets. To that end, we propose the sale of RTE transmission assets,which will contribute towards savings in the capital budget.


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Creating a Sustainable, Stable and Fair Taxation System

An equitable and progressive income tax system

In the years before the economic crisis, successive Irish Governments eroded our tax

base. This means that as a country we were relying less on stable taxes such as

income tax and more on the proceeds of the housing boom. This was always a

dangerous policy that was guaranteed to leave Ireland in a difficult situation when the

inevitable happened and the boom collapsed. The Green Party has always advocated amore sustainable and equitable approach to taxation.

Income TaxBudgets 2009 to 2011 saw rises in income taxes which were aimed at bringing more

people into the tax net. By 2010, 45% of earners were not paying any income tax.This was not sustainable and was completely out of step with the taxation systems of

our European partners and competitors. With the introduction of the Income levy and

now the Universal Social Charge, our income tax system has been brought back to a

more sustainable level. However, it is also important to remember that those on higherincomes also saw their taxes rise. In Government, the Green Party prioritised the

abolition of the PRSI ceiling, which had previously benefited higher earners. Thehighest marginal rate now stands at 55%.

The Green party believes that PRSI should be fully integrated with the USC in 2012,

taking care that no particular income group is unfairly disadvantaged. This can be

done on a revenue neutral basis.

The Green Party commits to no further increases in income tax.

Integration of the taxation and welfare systemsThe Green Party believes that the taxation system and the social welfare system

should be integrated. This would allow for better targeting of social welfare payments

and diminish the need for means testing.

As first step in this, the Green Party will introduce refundable tax credits. Refundable

Tax Credits return a portion of a persons personal tax credits if they earn too little touse them. This will benefit those who work part-time and those on very low wages

and will assist in the move from unemployment to work. The refundable tax creditswould be introduced initially at a rate of50 and would be increased incrementally.

PensionsTax relief on pensions will be standardised, thus increasing equity in taxpayer support

for private pensions.


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Promoting Sustainable Development

Site Value TaxIreland is amongst the few developed countries in the world that does not have some

form of stable property tax/ local rates. For too long we have been dependent on

stamp duty to fund our Government spending. This has proven to be a disastrouspolicy, which contributed to escalating costs for homebuyers and poor use of

development lands. There is a recognition by most experts and political parties that alow-level and stable property charge is preferable to volatile stamp duty revenue. To

this end the Government, in Budget 2011 and in the four-year plan, indicated a shift tosite value tax and reduced stamp duty to 1%.

Site Value Tax is based on the principal value of land, i.e. without any improvements

or buildings. As it is not based on the building occupying the land, it does not penalise

homeowners for making improvements to their own homes, such as adding an

extension. Land which is better served by facilities and transport links will have a

slightly higher value. This will lead to more efficient land use in the future by

providing an incentive for the productive use of land and by discouraging landhoarding. Site value tax will be introduced in 2012 as a low-level charge and full site

value tax will be introduced in 2013 once valuations are complete.

Carbon Levy

The carbon levy was introduced by the Green Party in Budget 2010 as a way of

discouraging the use of fossil fuels. Since then, the carbon levy has been embraced by

all political parties. The Green Party recognises that fuel poverty is a serious issue for

some households and that is why we insisted on increases in the fuel allowance in2010. We propose to increase that carbon tax to 30 per tonne over three years. Fuelallowance will also be increased to help poorer households and the insulation

programme will be significantly extended with 200m per annum invested in creating

warmer homes.

Waste

It has been a longstanding policy of the Green Party to use economic incentives to

reduce waste and incentivise good behaviour. In order to encourage less waste and

more recycling, the Green Party proposes to increase levies on waste to landfill and

place a tax on packaging.

A More Efficient Taxation System

As part of the Programme for Government, the Green Party ensured that a

Commission on Taxation be established to examine the efficiency and fairness of our

current taxation system. One of the areas where reform was badly needed was the

number and scope of tax breaks. Property tax breaks such as Section 23, outlived any

usefulness they may have had and contributed to Irelands housing boom and

subsequent collapse. While most of these were discontinued in 2006, legacy costs

continued to take revenue from the Irish state. The Green Party in Government pushedhard to ensure that these legacy costs were tackled. Budget 2011 introduced the


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facility to recoup the losses to Section 23 tax breaks over a period of four years. TheGreen Party commits to commencing this action in 2011,

Financial Transaction Taxes

The failure of the banks and regulatory systems in many countries, not least inIreland, has prompted widespread public anger across the globe. Rightly, people have

been asking how the financial sector can be forced to contribute towards the costs of

this crisis. For many, the answer is to be found in a form of global banking activitiestax. For years campaigners have been arguing for a form of taxation on financial

transactions as a way of raising money for development and to pay for the effects ofclimate change. The financial crisis has brought the issue back to the fore, with

support from political leaders in Europe adding to the chorus of NGOs and

campaigners. While the issue is still being debated internationally, Ireland can lead

the way and an initiate a low level tax on share transactions, which can be applied

more widely once international agreement is obtained on the issue.

2013M

2014M

2013M

Income Tax & USC

PRSI

Pension relief 225 450 605

Financial Transactions Tax 21 31

Site Value Tax 210 438 675Second Home Charge 80

Stamp duty

Environmental Taxes

Carbon Levy 220 220 300

Tax on packaging 40 60 60

Waste levies 15 30 50

Capital Taxes 170 215 259

DIRT

Corporation Tax

VAT 310 570

VRT

Excise Duties 142 283 389

Abolition and modification of Tax reliefs 165 295 355

Total 1267 2322 3294

Refundable Tax Credits 30 60 90

Total 1237 2262 3204


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Current Spending

Under the Green Partys proposals, savings from non-pay current expenditure will

amount to 2.1 billion over the next three years. While this will undeniably mean cuts

in public services, the adjustment is significantly less than the 3 billion set out in the4 Year Plan. We are also determined that significant savings can be made in areas

other than frontline services, such as introducing cloud computing across all public

and Government services and reverse auctioning public procurement.

Public Sector Pay and Numbers

The Croke Park agreement provides a framework to deliver further efficiencies in a

co-ordinated and co-operative manner. The Green Party believes that the Croke Parkagreement must deliver its promised savings of over1.2bn, as laid out in the four

year plan. If these savings and efficiencies are not found then Croke Park will have to

be re-examined.

The best way of ensuring that these savings are made and that the public service

delivers for the citizen is through co-operation and partnership with those who deliverthe services.

Social Welfare

The Green Party proposes to take just 800m from the social welfare budget over

three years. Keeping social welfare cuts to a minimum will allow us to retain rates attheir current levels. Increased efficiency, labour activation measures and the

integration of the tax and social welfare system will make up the bulk of the 800M

savings.

The Green Party will not cut social welfare rates.

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