The Finance Bill 2011 puts into legal effect the measures that were passed by the Dail in late December of last year. All the major establishment parties, including the Labour party, want this bill passed immediately and have expressed willingness to facilitate this in the coming days.
All party agreement on the Finance Bill- including Labour
People before Profit is staunchly opposed to the current budget and by extension to the Finance Bill. We are calling on Fianna Fail to call an immediate general election and allow the people to have their say. The vast majority of the people in this country are opposed to this budget that attacks social welfare, child benefit and the minimum wage, slashes public services and imposes further pay cuts on low and middle earners.
People Before Profit condemns the hypocrisy of Fine Gael and the Labour party over the Finance Bill. Their posturing over the past few days would almost put Fianna Fail and the Greens to shame. The Finance Bill gives legal effect to the budget; you can’t be against the budget and at time express a willingness to ‘facilitate’ it passing through the Dail in a week. This is utter hypocrisy. The truth is that both the Labour party and Fine Gael have no alternative to budget cuts and austerity policies and are committed in principal to EU/IMF bailout agreement. They may play around with the details of the budget but they are committed to implementing €15 billion in cuts because they argue there is no alternative.
People Before Profit argue that there is an alternative and it begins with tearing up the EU/IMF Memorandum of Understanding and burning the bondholders. It certainly does not involve pouring money into a failed banking system and the private pockets of property developers.
THE FINANCE BILL: MAIN POINTS
The Finance Bill contains particularly regressive cuts that will see further pay cuts to low and middle earners and must be opposed.
Income Levy and Universal Social Charge
- The income levy and health levy will both be combined and replaced with the new Universal Social Charge (USC). This will hit those earning in and around €25,000 (i.e. the low paid) the most amounting to an effect pay cut of 4.6 percent. In 2010 someone earning €25,000 paid nothing on the health levy and €500 on the income levy; under the new system, the same person earning €25,000 will pay €1,069 in the Universal Social Charge.
- A USC of 2 per cent will be paid by anyone earning more than €4,004 per year or in other words by a person earning less than €80 a week. The rate increases to 4 per cent for those earning over €10,037 and to 7 per cent for those earning over €16,017. These changes will lead to an increase in the numbers of working poor.
- The top rate for the USC, 7 per cent, will apply regardless of whether you earn, for example, €20,000 or €200,000.
Income Tax
- In a similar wage the changes in Income tax rates are also highly regressive forcing the greatest portion of hardship onto low and middle earners; it reduces the incomes of all individuals earning more than €18,000 by the same amount. For example, a single person with a gross income of €15,000 will see his/her net income fall by €729 while a similar status person with a gross income of €176,000 will see his/her net income fall by €725. Indeed, a person earning an income of over €201,000 will actually see an increase in net income and this increase in income widens as income increases.
Lobbyists win reprieve for Property Tax Reliefs
- There has been widespread anger and revulsion by ordinary people against the budget cuts to social welfare and the minimum wage. Yet these cuts government were bulldozed through almost immediately. However the same swiftness was not forthcoming when it came to the promised reform of tax expenditures and incentives for property developers. These changes were omitted from the Finance Bill after the Minister for Finance decided to defer the changes after extensive lobbying from vested interest groups such as the Irish Property Owners association and Institution of Professional Auctioneers and Valuers. The abolition of these property tax reliefs would have saved the state €60m this year.