How many times do we hear from those who criticise the
critics of austerity – ‘well, what’s your alternative.’ That the alternative has been outlined and
measured by a number of groups for years is rarely acknowledged. This time, however, it will be difficult to
ignore given the recent work by Claiming our Future.
They have compiled a menu of tax measures which would
largely impact on high income groups, capital, property and corporate income
taken from a range of civil society groups. It shows that not only are spending
cuts unnecessary, tax increases on low-average income groups are also
unnecessary. The key message in the CoF document
is that if the Government wants to hit low-average income groups, it is a
political decision – not one based on economic or budgetary necessity.
CoF takes proposals from TASC, UNITE, Social Justice
Ireland, Nevin Economic Research Instiute (NERI) and ICTU which supplied the revenue estimates – most of which has
been taken from the Department of Finance (the proposals and estimates supplied
by UNITE have not yet been published).
The full list can be accessed at the link above. Here is a broad breakdown.
There are also proposals to increase DIRT and introduce
a Financial Taxation Tax (though the revenue estimate of €500 million is not
included by CoF in its final tally since it wouldn’t come on stream in 2013
even if the Government supported it).
So what’s the bottom line?
CoF provides three of them.
- The total for all measures would raise between €5.5 and €6.9
billion.
- The total for all measures, excluding a recurrent household
property tax, would raise between €5.2 and €6.2 billion.
- The total for all measures, excluding a recurrent household
property tax and a rise in the corporate tax rate, would raise between €4.7
billion and €5.4 billion.
These measures would be sufficient not only for Budget 2013
but for Budget 2014 as well.
The CoF also brings together the recommendations
for investment which is not only a tool of economic growth and employment but
fiscal consolidation as well – since growth and employment increases tax
revenue and reduces unemployment costs.
Proposals from NERI, ICTU, Social Justice Ireland, TASC and UNITE all
propose investment programmes ranging from €1 billion to €3 billion sourced
from different funds: Government cash
reserves, National Pension Reserve Fund, private funds (pension funds, etc.),
Recovery Bonds, etc.
So how much better would it be? NERI, using their HERMIN model, has already measured
the impact of a budget with €2.3 billion in tax increases, €400 million in
spending cuts (via Croke Park savings) and a once-off investment of €500
million. They found that this set of
proposals would create an extra 21,000 jobs and boost growth by an additional
1.3 percent – while hitting the Government’s own deficit reduction target.
All of this shows what progressives have been saying for
some time – a budgetary strategy combining investment and ‘growth-friendly’
fiscal adjustments (increased taxation on high-income groups) will produce a
better result than an austerity strategy.
Claiming our Future has brought together the information for
a budget strategy that does not rely on spending cuts or tax increases on
low-average incomes. So the next time
someone asks, ‘What’s your alternative’ – just direct them to the work of
CoF.
Notes on the Front 
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