Download a PDF of Sinn Féin's Emergency Budget Submission 2009.
At a press conference in Dublin Sinn Féin set out the details of the party’s submission to the government to address the shortfall in public finances. The party’s proposals would protect those on low-to-middle incomes and those on social welfare and call for a third tax rate on income in excess of €100,000, standardized tax reliefs and an end to tax exile status and shelters. Sinn Féin’s proposals would raise an additional €3 billion in tax revenue and savings in 2009 and almost €5 billion in a full year. The party has also called for borrowing to be increased to 10.5% which would raise €2 billion this year and have warned against taking too much money out of the economy at this time.
Speaking at a press conference Sinn Féin Deputy Leader Mary Lou McDonald said:
“Next week’s emergency budget must include measures to start stimulating as well as stabilising the economy. Last week Sinn Féin set out in detail how we would stimulate and stabilise the economy through a major plan to retain and create jobs across the country. Today we are setting out the detail of our submission to the government to address the shortfall in public finances. “Fianna Fáil and the Green Party’s handling of public finances is compounding the problem. They have stated that they need to raise €4.7 billion to meet budgetary targets but we are conscious that their financial projections have been consistently wrong and that their failure to take measures to stabilise tax receipts makes it impossible to define exactly how much will be needed month on month to stay within budget estimations The government did nothing over the last ten years to broaden the tax base or make it more equitable and as a result, as the construction and retail sectors began to depress, public finances went into freefall. And now instead of bringing forward a framework and strategy for growth they have introduced a set of non-aligned short-term initiatives, many of which are counter productive.
“The government has confused accountancy with economics. They should have put more money aside in the boom and invested in long term priority projects. Instead they wasted much of the state’s money on non-productive schemes such as property incentives, fueling and prolonging the property bubble. Now we have the same thinking in reverse. They will exacerbate the recession by over taxing and spending cuts, rather than stimulating the economy.
“Sinn Féin believes that the only way to secure the economic future of this country is to retain existing jobs and to create new ones; to create a fair and progressive taxation system; to reduce the trade deficit; and to stabilise the financial sector. Next week’s emergency budget must include measures to start stimulating as well as stabilising the economy. We recognize there are growing fears about the damage that has been done to our international reputation and how that will impact on our ability to borrow and at what rate. Measures have to be taken to control our public finances and send a signal to the lending community that we have economic leadership in this state. But we cannot tax or cut our way out of this crisis – borrowing will also be necessary to stimulate the economy, but it must be strategic, just as taxes and cuts must be both strategic and fair.
Public finance proposals
“The crisis in public finances needs to be addressed but it needs to be done in a fair and effective way. We believe that the vast majority of workers are willing to contribute but they are not willing to shoulder an unfair share of the burden. Sinn Féin believes that: • Those earning the minimum wage should be kept out of the tax net and those on low-to-middle incomes protected. • Social welfare payments must not be cut – a person on a weekly payment of €204 cannot be asked to carry the can for this government’s failure. • Waste and duplication must be eradicated in the public sector, but frontline services must be protected. • Borrowing must be strategic and, as in other states, an acceptable method of financing infrastructure. • There must be tax justice – everyone must pay their fair share, there can be no exile status or legal evasion, tax defaulters should be vigorously pursued.
“The proposals we are putting forward today are a response to the emergency situation caused by the government’ s mishandling of the public finances. A total overhaul of the tax system is required to broaden the tax base and make it more equitable and sustainable and this needs to be undertaken with some urgency.”
Revenue raising – Total 2009 €2.460 billion – Total Full Year €4.119 billion We would introduce a range of tax measures which would generate €2.460 billion over the next seven months and €4.119 billion over a full year. These include: • Make all discretionary tax relief schemes available only at the standard rate; exceptions should be made only if there is a proven benefit to the Exchequer. 2009 - €600 million. Full year €1 billion • Abolish the PRSI ceiling and raise PRSI on employees by 1%. 2009 – €563 million. Full year - €950. According to the government the Social Insurance Fund will run out by the end of the year. PRSI is ringfenced to ensure that the money is there to meet unemployment benefit, contributory and non-contributory pensions, maternity benefit and redundancy payments. Combining this measure with abolition of the PRSI ceiling will support the Fund in a fair way. • Increase the health levy by 3% on those earning in excess of €100,000. 2009 – 90million. Full year - €230million. • Introduce a new 48% tax rate on income in excess of €100,000. 2009 - €180 million. Full year €435 million. • Charge Capital Gains Tax at 30% (up from 22%) 2009 - €286 million. Full year - €491 million. • Raise the tax on second homes from €200 to €600 per annum. 2009 - €80 million. Full year €80 million (assuming the tax is paid in a once off payment. • Reduce the tax reliefs on mortgage interest for landlords by 50%. 2009 - €233 million. Full year - €400 million.
Savings – Total 2009 - €598 million. Full Year €803 million • Abandon co-location scheme • Implement a new contract on all hospital consultants which would cap their start off pay at €100,000, with a maximum of €150,000. 2009 - €122 million. Full year €210 million • Nationalise the wholesale distribution of subsidised drugs and compel medical practitioners to prescribe low cost generic drugs. 2009 - €100 million. Full year - €200 million. • A 20% cut in travel expenses across all departments. 2009 - €8.4 million. Full year - €14.4 million. • Cap TD salaries at €80,000 and senators at €60,000 2009 - €4.423 million. Full year - €7.725 million. • Remove the allowances payable to Chairs, Vice Chairs and Whips of 23 Oireachtas Committees and 5 sub-Committees. 2009 - €485,000. Full year €830,931
Borrowing to be increased to 10.5% of GDP - €2 billion
Borrowing to sustain current expenditure, without a plan to stop borrowing through economic growth is not advisable. However, we believe that it is not just acceptable but necessary to borrow for infrastructure that has the potential to grow our economy.
We believe that the government should borrow 10.5% of GDP to allow stimulation in economy and prevent too much money being taken out via tax hikes or spending cuts.