Alternative budget targets corporate tax and college fees

Ireland's corporate sector has yet to make a contribution to the recovery, a seminar heard today. By Alison Spillane.

Speaking at the launch of Social Justice Ireland's alternative budget, SJI director Fr Séan Healy called for the introduction of a 2.5% levy on profits from the corporate sector on top of the existing corporation tax (12.5%). This would provide an estimated €632 million for the exchequer, according to the SJI's fully-costed budget.

SJI's alternative budget proposes the introduction of third level fees through an income-contingent loan system enabling students to borrow the money needed to cover both fees and living costs. As with the system operating in the UK and Australia, these loans would be repaid at a later date once the participant's income rises above a particular level. With regard to education expenditure, adult literacy and primary school funding were highlighted as areas requiring investment.

Job creation is also considered in the document. Drawing on the Part-Time Job Opportunities Programme piloted by SJI between 1994 and 1998, the organisation says it is possible to create 100,000 jobs for long-term unemployed people. Jobs would be created in the public sector and the community and voluntary sector. Participation in the scheme would be on a voluntary basis; participants would be paid the going hourly rate for the job and they would work the required number of hours to earn the equivalent of their social welfare payment and a small top-up.

Fr Healy said: "In Ireland, one in three households at risk of poverty is headed by a person with a job". In light of this, SJI is asking the government to introduce a system of refundable tax credits in Budget 2011 to aid the working poor. SJI have previously published a detailed study on the subject and they estimate that 240,000 people would benefit from the scheme's introduction.

An increase in social welfare payments has also been budgeted for by the group, in order to ensure that the country's poorest do not fall further into poverty in 2011. Increasing weekly payments by €5 for all recipients, with proportionate increases for qualified adults, would cost €365 million.

The policy briefing also calls for healthcare investment of €1 billion over five years. The first phase of this would begin in 2011, allocating €200 million for healthcare expenditure in the areas of Older People's Services, Primary Care Teams, and Children and Family Services.

In terms of pension reform, the organisation proposes standard-rating all pension contributions which would provide €1.4 billion in income for the State. Healy said: "The tax break on pensions costs the exchequer about €2.6 billion. 80% of this tax break goes to the richest 20% of the population." Social Justice Ireland believes this inequality should be addressed immediately.

The full proposals can be read in detail here.

[Further analysis to follow].

Social Justice Ireland Budget Choices 2011