Plans to revamp health and childcare must mean higher taxes, TDs warned

HIGHER taxes loom if the State plans to expand its role in the health service and childcare, TDs will be warned today.

Prof Alan Barrett of the Economic and Social Research Institute (ESRI) is to make the remarks during an appearance at the Dáil’s probe into the response to the coronavirus pandemic.

Separately, as the number of people on the Covid-19 pandemic unemployment payment (PUP) falls below half a million, the Department of Social Protection will tell TDs that during the crisis it was getting online applications for various supports every 40 seconds.

Fianna Fáil, Fine Gael and the Green Party’s programme for government contains ambitious plans for increasing the State’s role in the health service and childcare as well as exploring the possibility of introducing a universal basic income.

Mr Barrett’s statement to TDs says much has been written about a possible expanded role for the State in these areas, but if it’s pursued it “will have to mean higher taxes”.

He says the precise source and structure of those taxes is “an open question”.

Mr Barrett also says it will be advisable for the State to borrow for investment under a stimulus package to help the recovery from the economic hit caused by the pandemic.

“With interest rates close to zero, such a course would help to reboot the economy while also tackling some of the infrastructural needs which are well understood,” he says.

Sebastian Barnes, the acting chairperson of the Irish Fiscal Advisory Council (IFAC), will tell TDs that severe austerity should be avoidable but that “any incoming government will have to take difficult decisions about competing spending and tax priorities”.

John McKeon, the secretary general of the Department of Social Protection, will say that his staff have processed more than 1.2 million claims from 730,000 people for various supports during the Covid-19 crisis.

Online applications were made on average once every 40 seconds. The department is likely to exceed its budget for 2020 by €10bn or more.

With many retail staff returning to work as coronavirus restrictions ease, there are now 498,700 people on the PUP, down 18,900 on the number paid last week.

There are also 225,600 people on standard jobseeker payments. In addition, 400,000 employees are being supported by the government’s temporary wage subsidy scheme (TWSS).

A total of 108,000 employees have closed their claims and returned to work.

Social Protection Minister Regina Doherty said there were approximately 600,000 receiving the PUP a few weeks ago.

“So some progress has been made but it is also clear that the return to a new normal will be gradual,” she said.

She said this was why the payment had been extended into August.