Community and Voluntary Pillar says fiscal adjustment should be achieved in a 2:1 ratio between tax increases and expenditure cuts in 2012 Budget

The Community & Voluntary Pillar has said that the fiscal adjustment in 2012 and beyond should be achieved in a 2:1 ratio between tax increases and expenditure cuts. The Pillar made its comments at a briefing for media and members of the Oireachtas on their latest document, Choosing a Viable Future in Precarious Times.

Document can be downloaded form here

The Community & Voluntary Pillar said that it is important to remind ourselves that Ireland is not a poor country – our total tax-take is one of the lowest in the developed world – and that we do have choices. Choices exist even within the terms of Ireland’s Bailout Agreement with the IMF/ECB/EC.

“At the conclusion of the Troika’s inspection of Ireland in July 2011, they said in a statement that it is the duty of Government to protect the vulnerable in the adjustments being made in Ireland. In addition, it’s clear that the Government is free to adjust the terms of the Bailout Agreement on condition that the final outcome remains the fiscal adjustment to which the Agreement commits Ireland.”

In the context of the choices facing Government, the Community & Voluntary Pillar believes that:

· Decisions made by Government should be made on the basis of the answer to a single question: where should Ireland be in ten years’ time?

· The core values that should inform the answer to this question are: human dignity, sustainability, equality and human rights and the common good.

· Government needs to conduct more in-depth analysis on the impact of decisions that are being considered, to identify the consequences of choices made and show clearly how budgetary choices will impact on services down the line.

· The fiscal adjustment in 2012 and beyond should be achieved in a 2:1 ratio between tax increases and expenditure cuts.

· The tax-take should be increased through broadening the tax base and eliminating tax breaks that benefit mostly the better off and not through increasing income tax.

The Community & Voluntary Pillar also raised questions on the ‘workability’ of the Bailout Agreement, although the Pillar’s 17 member organisations made clear that they fully recognise that Ireland’s budget imbalances have to be addressed.

“The scale of the challenge for Budget 2012 serves to illustrate our point about the terms of the Bailout Agreement undermining Ireland’s potential for recovery. In 2012, adjustments of €3.6bn are required together with a growth rate of 2%. In practice this means that the economy must grow by over €7bn in 2012 to achieve these objectives. This is an underlying growth rate of almost 5% of GDP. All of this must be achieved without any new investment programme of scale.”