Distribution of the 'hit' in Ireland's bailout confirms the EU, the IMF and the Irish Government favour the rich and powerful over the poor and the ordinary taxpayer

Social Justice Ireland has issued the following initial statement on the Programme Documents that set out the terms of the EU/IMF Bailout for Ireland. 

1. The distribution of the ‘hit’ contained in Ireland’s bailout confirms that the European Commission, the IMF and the Irish Government favour the rich and powerful over the poor, the sick, the disabled, the working poor and the ordinary taxpayer.
2. Budgetary adjustments of €15bn are to be achieved by 2014 through taking €10bn in cuts and only €5bn in tax increases. This distribution of the ‘hit’ is unjust and, unfair.
3. Ireland’s total tax-take is one of the lowest in the European Union. It is possible to raise Ireland’s total tax-take by €10bn and still remain a low-tax country. Instead Government proposes to target the poor, the sick and the low-paid while protecting the rich and the strong. This approach is biased and unacceptable. 
4. The adjustments in the coming four budgets, at the very least, should be the other way around with €10bn of the adjustment being achieved through tax increases and €5bn in adjustments being achieved through cuts.

 
The following are key facts that are being ignored by the European Commission, the European Council, the IMF and the Irish Government:

5. Despite significant increases in the tax-take from the PAYE sector in the last two Budgets, the scale of collapse in Ireland’s tax revenues has been dramatic. Even though GDP has fallen dramatically Ireland’s total tax-take is one of the lowest in the EU.
6. Table 7 below (taken from Social Justice Ireland’s recent publication ‘An Agenda for a New Ireland’, reports on this decline using data from Eurostat and Budget 2010. It shows how Ireland’s overall taxation burden has dropped to 29.4 per cent of GDP in 2009 and 2010 – levels equivalent to those among the lowest European countries. (Full text can be accessed here.) 
7. Social Justice Ireland believes that over the next four years policy should focus on increasing Ireland’s tax take to 34.9 per cent of GDP, a figure defined by Eurostat as ‘low-tax’. As a policy objective, Ireland should remain a low-tax economy, but not one incapable of adequately supporting the economic, social and infrastructural requirements necessary to complete our convergence with the rest of Europe. 
8. Government proposes to increase the total tax-take in 2011 by €1.5bn and by 2014 to reach an increase of €5bn. However, cuts of €4.5bn are being planned for 2011 rising to €10bn by 2014. This distribution of the ‘hit’ required to reduce Ireland’s borrowing by 2014 to 3% of GDP is unfair and unjust. The proportions should be the other way around.
9. Consequently, in the coming four budgets tax increases should account for two-thirds of the adjustment required and only one third should come through cuts in public expenditure. 

Social Justice Ireland states that while both the IMF and the Government have said that poor people will be protected and that everything must be on the table when decisions are made concerning the adjustments required in these difficult times, this is accompanied by an insistence that: 
· Senior bond-holders cannot be asked to bear any part of the adjustment;
· The corporation tax rate cannot be increased;
· A greater part of the adjustments will come through expenditure cuts rather than through tax increases.

This approach is hypocritical and deeply unjust. Either everything is on the table or it is not.

Social Justice Ireland believes a fairer future is possible. We urge Government, the IMF, the European Central Bank and the European Union to act fairly and to reverse the distribution of the ‘hit’ to be taken by Ireland in the years immediately ahead.