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IMF deficit reduction suggestions would lengthen crisis - Doherty

18 July, 2012 - by Pearse Doherty TD


Responding to the report of the IMF today, Sinn Féin finance spokesperson, Pearse Doherty TD, said advice from the IMF, EU and ECB on how Ireland should fix its deficit had so far resulted in a lengthening of the Irish recession, and that today's IMF suggestions of further cuts and flat taxes, if implemented, would cause more damage.

Deputy Doherty said:
"Since this state was forced into a Troika programme, suggestions have been coming thick and fast about how we can reduce our deficit. From the beginning, Sinn Féin advocated separating bank debt from sovereign debt, burning bondholders, stimulating the economy, reforming the taxation system and eliminating spending waste.
The Troika, including the IMF, and along with the Government, has pursued a policy of bailing out banks, taxing lower earners, cutting frontline service spending and refusing first to acknowledge and then to deal with the jobs crisis. A crisis that began in 2007 is as bad as it ever was now in 2012, and we have many hard years ahead to reach the reduced deficit target.

"The measures recommended by the IMF today, if implemented, have the potential to lengthen that process. A flat rate, high property tax, levied at everybody, would seriously impact on the ability of low and middle income earners to continue consuming in this economy. This is not to mention what it will do their standard of living. The abolition of universal payments such as childcare and pensions would similarly target low and middle income earners disproportionately. The fact is not made by the IMF that many European countries provide services such as universal childcare and healthcare. We are not the only state that provides universal socially beneficial payments.

"First and foremost, this state needs to decouple its bank debt from the sovereign balance sheet. Then we need to initiate a real stimulus, on top of maintained capital investment to get people working again. We need to deal with the waste in public spending, such as Ministers overpaying their own special advisors and top civil servants being paid salaries far in excess of the European norm. And finally we need to deal with the leaks, loopholes and unfairness in our tax system - where billions can be handed out in private pension tax reliefs and people earning €250k per annum pay the same tax rate as those earning €35k.

"Ireland has been treated like a guinea pig by the IMF and its partners in Europe. To continue pursuing their policy advice would be madness, when it has worked so badly so far." ENDS

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