The next government will have to consider tax increases and spending cuts to achieve an economic recovery, the state budget regulator warned.
With unemployment close to 30% and the cost of state emergency measures now over € 13 billion and on the rise, Fianna Fail, Fine Gael and the Greens are being told this weekend to reconsider the proposal “very risky “of maintaining the pension age at 66, as well as discussing increases in property and inheritance taxes in the program for government talks.
The dire warnings came from the chairman of the Irish Tax Advisory Council, Sebastian Barnes, who said the state is now facing the “most dramatic” recession in its history. His comments came yesterday when it emerged that the highest-ranking official in the Department of Education has raised serious questions about the possibility of reopening schools in September.
Sean O Foghlu, the department’s secretary general, told opposition TDs on Friday that there would be significant accommodation challenges in having to operate smaller classes to meet social distancing in schools.
Barnes also criticized the parties’ promise not to raise taxes or cut welfare while pledging large spending on housing, health, transportation, and climate action.
“Given that tough decisions and uncertainty will have to be made, particularly because we don’t know how things will turn out from the Covid crisis, I think it’s risky to make these commitments without knowing what the full picture will look like and can complicate difficult decisions prosecutors to be done in the coming years, “he told the Sunday Independent.
“They will face a higher unemployment rate, a higher level of public debt and the need to increase the budget balance so that the debt has a downward trajectory. All those options will be much more difficult.”
“In that context, making commitments to take large chunks of taxes or spending off the table will make it very difficult to strike a good balance between spending-side ambition and what people want to do on tax.”
“Given the uncertainty, I think it’s very important to stay flexible on those things so that when those tough decisions are made, they don’t get even harder.”
With unprecedented social assistance and salary plans due next month, the government is likely to extend them at least until August, with some modifications. Options being examined include transitioning as many people as possible into the € 350 pandemic unemployment payment to the temporary wage subsidy scheme when they return to work. This scheme, which foresees that the State covers up to 85 percent of an employee’s net weekly salary up to € 412, will be reduced to reduce companies ‘dependence on taxpayers’ money.
For the most affected sectors, such as tourism and hospitality, the Government is examining employee activation schemes that involve retraining or retraining workers for other roles. “There will be no cliff edge. You will have to unwind from these things with a more flexible and specific scheme with the policy of getting people back to work. But all of that will be really costly,” a source government said.
Barnes said Fianna Fail leader Micheal Martin’s commitment in this newspaper last month to rule out plans to raise the state pension age to 67 years next year, which has been endorsed by the Green Party, was “very risky. and it could complicate life in the future. ” .
“Not raising the pension age in one year costs 600 million euros a year, and that cost will increase as more people reach retirement age,” he said. “That is the type of commitment that can be very expensive and could significantly affect the amount of space they have for other things.”
Figures by Fine Gael and Fianna Fail privately believe that the promise in their joint document not to raise income tax may not be sustainable for the next five years.
Barnes said property and inheritance taxes, rather than income tax increases, should be kept on the table in government talks.
“Those kinds of wealth taxes are areas that many countries are considering. I think there is renewed interest, in part as wealth inequality increases, in part because governments need to raise more revenue.”
Barnes said Ireland had seen the cost of operating an unsustainable fiscal policy in the past and also raised specific warnings about “the state’s over-reliance on corporate tax, which cannot be sustained forever,” and said the main spending commitments in policies like Slaintecare it will require revenue collection measures.
“Therefore, it is necessary to make very difficult decisions and that is why getting things off the table now seems premature,” he added.
Yesterday, it emerged that hundreds of workplaces face unannounced inspections and may be closed in the coming weeks if they fail to comply with the new stringent measures aimed at preventing the spread of Covid-19.
The Health and Safety Authority (HSA) has already carried out more than 400 on-site inspections and investigations under the Occupational Safety and Health Act since March and will now have the powers to enforce a new mandatory public health guidance.
The government’s Return to Work safety protocol includes regulations for social distancing, hand hygiene, and mental health support for returning workers.
Employees will also be required to complete a pre-return form indicating that they have not been in contact with the virus.
Employers should designate a worker representative who will be responsible for ensuring that staff “strictly adhere” to health measures. Business Minister Heather Humphreys said: “HSA inspectors will be able to take appropriate compliance measures under the Health and Safety Act of 2005. This means that if a company fails to cooperate and comply with health guidelines After being asked to make improvements, the HSA may order them to shut down the workplace. “
HSA Executive Director Dr. Sharon McGuinness said every complaint about a workplace would be followed by an employer and this could include on-site inspections without notice.
