Govt must clarify status of income tax and welfare promises following publication of troika document

The FG / Labour coalition must clarify the status of its promise not to increase income tax or to cut social welfare rates after the publication of details of Budget 2013 agreed with the EU / IMF contradict commitments made to the Irish people in the Programme for Government, according to the Fianna Fáil Finance Spokesperson Michael McGrath.

Deputy McGrath stated, “The Programme for Government explicitly promises that FG and Labour will ‘Maintain the current rates of income tax together with bands and credits’. However, the government has committed to the EU / IMF that next December’s budget will include ‘a broadening of the personal income tax base’.

“The government now needs to clarify whether the promise made to voters on income tax still stands. The most obvious way of broadening the income tax base is to adjust bands and credits but this would be a breach of a solemn promise made to voters and would result in more money coming out of employees’ pay packet.

“In recent days, there have been suggestions that the government will look to increase PRSI in the budget so as to avoid income tax increases. Any increase in PRSI contributions from employees would have the same effect as income tax hikes on workers’ pay packets. Such a sly move by the government would be seen by voters for what it is – an increase in income tax through the back door – and would only serve to increase the sense of betrayal felt by voters towards this government.

“The revised Memorandum of Understanding released this weekend also shows that the government has committed to ‘Social Expenditure reductions’ as part of Budget 2013. However, in the Programme for Government, FG and Labour made a commitment to ‘Maintain social welfare rates.’ In recent weeks, Minister Joan Burton has been publicly jockeying for position in the budget negotiations but it seems some of her cabinet colleagues are more willing to abandon their welfare pledges in the forthcoming budget.

“Fine Gael and Labour have broken a whole litany of promises made to voters since coming to office almost 18 months ago. Thousands of families around the country will be alarmed at suggestions that the government may now be preparing the ground to ditch their promise not to increase income tax or reduce social welfare rates. The government had no difficulty restating this promise before, during and after the election, and should put any speculation on the issue to rest now by clarifying the position. This would allow consumers to plan their affairs with a little more certainty about their financial position through 2013.”