IBEC seeks 3% cut in welfare payments

Friday 03 April 2009 07.20
IBEC - Pre-Budget submission
IBEC - Pre-Budget submission

Employers' body IBEC has called for social welfare payments to be reduced by 3% in next week's Budget.

The proposal is contained in the organisation's pre-Budget submission to Government, which also includes calls for a short-term emergency support package for enterprise and an increase to the income levy.

IBEC says increases to social welfare payments in last year's Budget were awarded on the basis of a forecasted inflation rate of 2.5%.

Given that consumer prices are now predicted to fall by 5% this year, it says social welfare payments should come down too.

It says a 3% cut would provide savings of €400m this year.

Elsewhere in its pre-Budget submission, it says any new tax measures should be simple to administer from a business perspective, and for that reason, it recommends increasing the income levy for this year only.

In its pre-Budget submission, St Vincent De Paul insists welfare payments should be left alone.

It says while inflation may be coming down, poorer households are spending a large proportion of their income in areas where prices are still high like electricity, heating, food and education.

Labour Party submission

The Labour Party is urging Brian Lenihan to introduce a limited Budget package of some €2.8bn next week.

In a submission launched this morning party leader Eamon Gilmore claims that the Government's implicit target of €5bn to €6bn in cuts and tax measures would be too great a shock for the economy.

Labour is arguing that the structural deficit, the underlying gap between income and spending when cyclical factors are exclude, should be cut by 0.5% to 4% in the next two years with a package of measures that prioritises job creation.

Among the proposals the party is putting forward is an 18-month PRSI exemption for employers who hire workers from the dole queues

Labour also wants the money paid by the banks for the state guarantee scheme to be transferred to the National Training Fund.

On tax, the party wants to see Capital Acquisitions tax raised to 28% and a new super tax rate of 48% for those earning over €100,000.

Labour is also urging is a one cent tax on all text messages.