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Government cannot afford to cut taxation - Morgan

24 October, 2007

Speaking during the debate on the Pre Budget outlook this evening Sinn Féin spokesperson on Finance Arthur Morgan TD has said government cannot continue to lower taxes and deliver equitable and accessible public services and social protections. Morgan slammed Government proposals to cut PRSI contribution and to further reduce the top rate of income tax.

"The 2002 Government Programme committed to 'keep the public finances in a healthy condition'. It is notable that no such commitment appears in the new programme for Government. With lower growth projected for the economy government will need to take a very different tack to managing the public purse if delivery of public services and social protections are not to be adversely affected.

"We need to ensure that we do not go further down the current road of a low tax-poor public services model that will inevitably result in the downgrading and dismantling of public services and social protections.

"I welcome Dr Alan Barrett of the ESRI comments yesterday on taxation and hope that a frank and robust debate in this house can now take place. A number of key vulnerabilities in the economy were evident in advance of the general election. Chief amongst these was the implication for tax receipts of a broadly predicted decline in the construction and property sectors. The Tax Strategy Papers prepared in advance of the last Budget show that there was a clear awareness of this within the Department of Finance.

"During the recent general election campaign Sinn Féin warned that the Government cannot afford to cut taxes and maintain, let alone improve, public services.

"The Government was wrong to cut the higher tax rate from 42% to 41% last year - this resulted in high income individuals getting the highest increases in the weekly income as a result of budget 2007. It was wrong to promise to cut the top rate by another 1%.

"The ERSI yesterday echoed Sinn Féin's position when Dr. Barrett stated he was "not entirely convinced" that the proposed reduction in the top rate of income tax from 41 per cent to 40 per cent was the most pressing change required in the tax code.

"It is incomprehensible that the Taoiseach continues to insist that government intends implementing tax and PRSI cuts despite the projection for tax collection in 2008 being €2.2 billion lower than predicted last year at Budget time.

"Nothing in this Pre-Budget Outlook shows that government is doing anything to avoid the disgraceful situation where end-of-year budget over-runs have seen the HSE imposing cuts in services to patients. In my own region, the latest fallout from HSE cuts is that there will be no elective surgery in Dundalk Hospital in December. The most fundamental issue regarding health spending, as with all public service spending, is not how much is spent but how it is spent." CRÍOCH

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