THE 2012 BUDGET should focus on cutting the deficit through tax increases and not spending cuts, according to a submission from Social Justice Ireland (SJI).
The submission, which has been sent to the EU-IMF Troika, argues that two-thirds of the amount which should be cut from the Budget deficit in December should come from taxation increases.
It outlines, however, that none of this new revenue should be drawn from income tax – and describes the scenario for 2012 outlined in the bailout agreement as “not credible”.
The submission argues that the outcomes outlined in the original bailout agreement – such as reductions in unemployment, and growth in economic output – have not been realised, and that as a result it is unrealistic to adhere to its targets.
The report also calls on the government not to make adjustments larger than the €3.6bn minimum threshold expected, which it says would make Ireland’s economic situation worse.
By prioritising tax increases rather than spending cuts, SJI director Dr Seán Healy said, Ireland could retain its reputation as a ‘low tax’ country – and reverse the trend of the public having to share the burden of budget adjustments through spending cuts.
“In precarious times such as these, a country, government, ociety or an international institution defines itself by the cuts it makes, the people it protects, its effectiveness on economic growth… and the values underpinning its choices,” Healy said.
“Using this yardstick, the ECB, the IMF and the European Commission have on balance acted in the interests of the wealthy and the strong while seriously damaging those who are poor and vulnerable.”
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