Sinn Féin Pre-Budget 2000 Economic Statement

On the eve of the new century and the new millennium, there has never been more optimism about the present health and future prospects for the Irish economy. No government in the history of the 26-County State has had such a large budget surplus as that which the Fianna Fáil/Progressive Democrats Coalition now possesses, the third such surplus since it took office.

Once again, it has a huge opportunity to create fundamental and lasting change, the change from inequality to equality in Irish society. The truth which must be recognised is that the ongoing economic upturn is happening in an economy which is warped by structural inequalities. The Celtic Tiger hype ignores these inequalities but they persist. The improved conditions for many sections of our society, and the conspicuous luxury enjoyed by a minority, contrasts sharply with the plight of those who have not been allowed to benefit.

 

Budget 2000 comes at a time of three other important developments with profound long-term implications:

Progress in the peace process towards the full implementation of the Good Friday Agreement.
The opening of negotiations for a new Partnership Agreement.
The publication of the `National Development Plan'.
The Good Friday Agreement has the potential to transform politics and society in Ireland as a whole. The peace process has had a beneficial effect on the Irish economy on both sides of the border. Further progress will bring further benefits only if government policy ensures that it does.

The All-Ireland institutions, when established, must be fully worked and cross-border development accelerated, with special emphasis on the needs of the disadvantaged border region.

If the `National Development Plan' is to be truly National then the chapter on North/South co-operation must not only be fully implemented but significantly expanded. The creation of an island economy must be made central to the National Development Plan.

Sinn Féin believes that the series of agreements between governments, trade union leaderships, farming organisations and employers have operated to the disadvantage of most workers. The ability of the labour force to mobilise its strength was thwarted and the wages of many workers were kept artificially low. However, now that the majority of trade unions have voted to enter the negotiations, it is vital that the balance is redressed. There must be real increases which benefit low-paid workers most of all and any new agreement, if it comes, must make the elimination of poverty its first priority. Budget 2000 will be a test of the government's willingness to deliver on that priority.

Radical action to tackle the Housing Crisis


Plans for 22,000 local authority dwellings over the next four years are totally inadequate, and would not even cater for the current waiting list, let alone the expected increase in need.

Tinkering at the edges of the private housing market will not address the current crisis. Sinn Féin proposes:

Massive State investment in a new and comprehensive Social Housing Programme, funding the local authorities to house our citizens.
The control of land prices with a statutory ceiling on the price of land zoned for housing to stop speculation and reduce soaring housing prices. A constitutional amendment to allow for this if necessary.
Rent control and strict application of standards in the private rented sector.
A renovation grant of up to £5,000 to assist home-owners to improve their properties.
A special grant to encourage utilisation of urban and rural derelict sites for new domestic dwellings.

Taxation justice


Sinn Féin believes that the vast majority of citizens are glad to see their taxes used for progressive public spending, improving services for all and assisting the least well off in our society. We refuse to join the simplistic chorus which calls for giveaway tax cuts and which thereby spurns the opportunity of the current economic climate to make real social progress.

What we need is taxation justice, not taxation reduction.

This past year has seen unprecedented revelations about how the banks have actively encouraged and assisted the wealthy in our society to evade tax and deprive their fellow citizens of funds needed to provide public services. The Minister for Finance should impose an increase in Corporation Tax for Irish retail banks and finance houses with the resulting tax funds earmarked for community and local development projects in the most disadvantaged areas throughout the State, such as the Border region.

Sinn Féin believes that with record exchequer returns, this is the best possible time to take those first steps towards creating an equitable taxation system in Ireland.

Income tax


Throughout the 1990s, there have been marginal cuts in the rates of income tax; many workers have benefited as both the top and bottom rates of tax were cut. Alongside this there has been a small amount of progress on taking low-paid workers out of the tax net altogether.

These changes amount to tinkering with an inequitable system. The cuts in marginal taxes have manifestly benefited the higher paid workers more than any other sector. This is clearly not fair.

This year, the government should devote funds for income tax cuts to increasing the personal tax allowances of workers. All workers would benefit from this and low paid workers would finally begin to see the real benefit of tax reform.

Corporation Tax, Capital Gains Tax and rent control


Sinn Féin proposes:

No more cuts in corporation tax or capital gains tax. The level of capital gains tax should be restored to its 1997 level of 40%, except in the case of speculative housing, where a further 12-month lead-in period should apply.
Increase Capital Gains Tax on speculative owners of multiple dwellings. Such a tax would be introduced on a phased basis over two years at 40% in April 2001, and 60% in April 2002.
Rent control linked to the year of purchase and asset value of a dwelling.
Abolition of Stamp Duty on houses whose 1999 value is £150,000 or under and index-linking stamp duty thereafter, to a related base value.
The idea behind these proposals is that throughout the 26 Counties there are possibly tens of thousands of homes that have been bought purely as investment vehicles. They are not family homes. The owners of such dwellings have seen a huge rise in the money value of their assets.

They have also been able to enjoy a hugely increased income stream from the houses in the form of rent. In many cases the rent being paid on the house bears no relation to the cost borne by the speculator who purchased it.

The Department of Social Welfare is also in many cases subsidising the income generated for these speculators through rent allowances paid to landlords by tenants. Rent control linked to the house purchase price, not its current market value, would help protect tenants, especially those in Dublin, who have seen rents spiral upwards over the last two years.

An increase in capital gains tax on speculators who own multiple dwellings would encourage them to take advantage of their windfall asset value increase and they would sell the house before the tax is implemented. This would have two effects on the housing market in Dublin.

One would be to free up much needed houses in the South Dublin and other council areas. It would also help deflate housing prices. The rent control proposal would amplify these effects.

Thousands of first-time buyers in Ireland find that among the hidden costs of auctioneers and solicitors' fees there is an added sting in the tail of a requirement to pay stamp duty. This can add thousands of pounds to the purchase price and mortgage repayments of many Irish families.

Other tax measures


Tax relief on personal donations to domestic charities.
Allow charities to reclaim VAT.
Reform of inheritance tax to ensure that those inheriting homes from close relatives are exempt. Beneficiaries should include children and partners in relationships where the couple were not legally married.
Government support at European Union and United Nations level for the idea of the `Tobin Tax', a tax on international financial speculation with revenue to be used to promote development in the poorer regions of the world.

Agriculture - development not dependency


Sinn Féin proposes that this year's budget must address itself to both the immediate serious difficulties faced by Irish farmers as well as taking further steps to ensure the long term economic future of rural communities.

Sinn Féin proposes:

Extension of the Rural Renewal Scheme to all disadvantaged rural areas.
Major investment in the Rural Development Fund as proposed in the White Paper on Rural Development. This would evaluate the extent of rural poverty and initiate action to tackle it.
A scheme of low interest rate loans for farm improvement and investment to encourage young farmers to stay on the land.
A Rural Housing Strategy, including a renovation grant for those who wish to refurbish/rebuild derelict dwellings.
A comprehensive review of both the Irish Government and EU subsidy schemes for farmers. The levels of direct payments to farmers have increased by 132% since 1992. Much of the funding flows disproportionately to the larger farmers, leaving the majority of farmers behind.
Special Financial Rescue Measure for pig farmers in the border counties.

Social Welfare - moving out of poverty


Sinn Féin believes that the current social welfare payment levels are clearly inadequate to sustain an individual in adequate living conditions. The 1999 Budget finally implemented the 1986 Commission on Social Welfare recommendations for the minimum level of payments. But these recommendations have long been overtaken by the growth in the economy. Between 1994 and 1998 social welfare increased by 16% compared to a 22% growth in average income. The gap between those dependent on welfare and those in full-time employment has widened. Sinn Féin proposes:

Substantial across-the-board increases in all social welfare payments to levels that will allow individuals to live with dignity in conditions that will create the possibilities for greater economic participation in society.
Basic social welfare payments to be set at 50% of average incomes.
Increase in Child Benefit of at least £20 per child per month.
Increase Qualified (formerly Adult Dependent) Payments to 70% of personal rates. Increase to £90 per week the allowable earning for a Qualified Adult.
Health for all, not health for wealth


Sinn Féin proposes:

Comprehensive review of training, staff organisation, working practices and pay in the health services to end the inequality between well-paid consultants who operate profitably in both public and private practice, and the hard-pressed staff of public hospitals who do most of the health care work.
Major increase in health spending in the Budget designed to eliminate waiting lists.
The progressive reform of the health care system and extension of the medical card scheme to achieve an Irish National Health Service to provide free care and medication for all who need it.
Supporting the most disadvantaged


The rights and needs of people with disabilities and their carers must be a government priority.

Financial support for the 50,000 full-time carers through the increase of Carer's Allowance to £110 per week.
Two-year initiative to provide the necessary places for over 3000 people with mental handicap/intellectual disability who require services.
An Independent Living Fund for people with disabilities with a start-up £12.6 million in year 2000. Direct payments to people with disabilities and their Personal Assistants.
Increased and secured financial support for those providing services, including day resource centres and personal assistance services to people with disabilities. End of dependence on CE schemes for such work.
Introduction of Cost of Disability Living Allowance as recommended by the Commission for the Status of People with Disabilities.
Increase in Mobility Allowance to £40 per week.

Caring for Children


Sinn Féin fully supports the call of the Childcare 2000 Campaign for a Childcare Strategy which values equally all children and parents, ensures the provision of quality regulated childcare services and prioritises the needs of children and families experiencing disadvantage and social exclusion. We need to establish a State-assisted and state-wide Childcare Service, in urban and rural areas, in tandem with existing service-providers such as the Border Counties Childcare Network.

Pending a comprehensive Childcare Strategy and the establishment of a Childcare Service, the Budget must include immediate action to redress the woefully inadequate provisions for childcare in this State. It must:

Increase Child Benefit by at least £20 per child per month as a vital measure to assist families with their childcare needs. This approach is preferable to childcare-related tax breaks which will disproportionately benefit the higher earners.
Provide funding to assist existing childcare providers to meet the standards set out in the Childcare (Pre-School Services) Regulations 1996.
Target special funding for childcare services in disadvantaged communities.