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On Friday, 3 December 2010 Fine Gael published a far-reaching Pre-Budget 2011 Plan to create jobs, stabilise the Exchequer and get Ireland back on track over the next four years.

Fine Gael aims to create 100,000 new jobs, achieve the 3% deficit target and the €15 billion worth of adjustments within the original four year timeframe. Job creation and fairness will be the over-riding principle, within the financial constraints.

The plan will be built around three pillars:
1. Limiting tax increases to one-quarter of the adjustment next year, and one-third of the adjustment over four years;
2. Radical public sector reform to end waste, inefficiency and duplication, starting with the political system;
3. A jobs and stimulus plan.

There is a better way, and a fairer way, than anything offered by the current failed Government. Fine Gael will make jobs and economic growth a precondition, not an aspiration. International experience shows clearly that cuts in spending are more effective at fixing deficits and are better for growth and jobs than tax increases. Confronting waste, inefficiency, duplication and redundancy in public spending should be the focus of Ireland’s budgetary adjustment.

Key proposals to tackle the deficit include:
Protecting pensions, including contributory and non-contributory old age pensions, those for widows, the blind, people with disabilities, and carers’ allowances, while collecting some extra tax from those with generous occupational pensions;
• No income tax increases in 2011 before recovery takes hold, and limiting income tax increases to half the levels proposed by Fianna Fáil over the entire four years;
• A much greater emphasis on closing tax loopholes for the rich, including suspending property-based tax reliefs and tightening the rules for tax exiles;
• A fairer approach to Fianna Fáil’s proposed annual property tax on the family home;
• Cutting tax relief on schemes offering pensions greater than €60,000, while protecting pensions tax relief for middle income families;
• 18,000 more voluntary redundancies in the public sector than the Government proposes;
• Targeting the €3 billion worth of annual social welfare fraud through the establishment of a single Payments and Entitlements system.

Fine Gael recognises the need to raise more revenues from property. But a residential property tax would unfairly hit the young generation already burned by the housing bubble. So we will increase the second home tax, cut Capital Acquisitions Tax thresholds and introduce a low Capital Gains Tax on the site values of primary residences. Alongside this, we will cut stamp duty for families trading up and down, and provide greater relief for working families in mortgage distress.

Fine Gael will strengthen significantly the reforms needed to cut business costs, to improve productivity, and to incentivise and facilitate people to acquire the skills needed to re-enter the workplace by:
• Replacing the minimum wage cut proposed by Government with a cut in the jobs’ tax to encourage people off welfare and into work;
• Accelerating capital allowances on business software investments to support a local high-tech industry;
• A €10 million one-off marketing budget for State agencies to restore Ireland’s battered business reputation across the globe;
• No change in either the standard or top rates of income tax, or the 12.5% rate of corporation tax;
• Abolish the travel tax subject to deals on re-opening routes with Ryanair and Aer Lingus;
• Abolish the lower 8.5% rate of employers’ PRSI on staff earning below €356 per week for at least three years to reduce employment costs;
• A 1.5% cut in the lower 13.5% VAT rate to re-direct consumer spending away from imports, and into labour-intensive services such as trades, restaurants, hotels and newspapers;
• Increase DIRT to 30% to encourage higher levels of household consumption;
• A pre-announcement that home insulation and other residential and commercial energy saving subsidies will terminate in 2013, leading to a bringing forward of demand in the intervening two years.
• Fine Gael’s job stimulus plan, New Era, will use streamlined and restructured semi-State companies to invest an additional €6-7 billion, over and above current plans, in investments in “next generation” energy, broadband, forestry and water infrastructure. In discussions with the IMF, Fine Gael has confirmed that funds from the National Pension Reserve Fund and proceeds from the sale of State assets remain available, under conditions to be agreed, to finance the NewERA stimulus plan.

The split between spending reductions and tax increases in the Government’s four year plan moves in the right direction but there is room for additional spending savings from public sector pay of at least €900 million by 2014. This will make room for targeted initiatives to support employment and economic activity by:
• Cutting the number of national politicians by 35%;
• Cutting the threshold for application of minimum 30% effective tax rate to €250,000 from €400,000 at present (with marginal relief from €125,000);
• Reducing the size of the public sector by 10% – just over 30,000;
• Reducing the size of the core civil service working in Government Departments by a third through the establishment of shared service operations;
• Implementing at least half of the McCarthy report recommendations, and 80% of the savings recommended by the Local Government Efficiency Review;
• Close FÁS and the HSE and abolish 145 quangos.
• Extending the period of the adjustment will only force Ireland to borrow more money and pay more back in interest, so we will aim to reach the targets within four years.

For an  in depth look at Fine Gael’s Budget and 4 Year plan please go to: