Sunday Independent (Ireland)

Payback time for squeezed middle

USC cut to defy EU Commission Cabinet given bin costs warning ‘Real risks’ of hikes for majority

- Philip Ryan Political Correspond­ent

TAOISEACH Leo Varadkar plans to unveil cuts to the Universal Social Charge aimed at the working middle class in the next Budget in defiance of stark warnings from the European Commission about cutting taxes, the Sunday Independen­t can reveal.

But Government ministers fear that any additional money may be wiped out by the “perceived and real risk” that waste companies will dramatical­ly increase bin collection charges for a “significan­t number of households”. Mr Varadkar told the Sunday Independen­t that his first Budget would have a “particular focus” on reducing income taxes, with a significan­t emphasis on cutting USC.

The Taoiseach also revealed that he would allow ministers to spend savings found within their department­s rather than control the additional funding centrally.

The move is aimed at expanding the amount of financial resources available for tax cuts and spending within the strict European Union budgetary rules.

“Rather than just bidding for a small sliver of the available fiscal space in the next Budget, ministers should think about what might be reallocate­d within their own budgets,” Mr Varadkar said.

However, the Sunday Inde-

pendent can reveal that there are serious concerns at the heart of Government over the introducti­on of pay-by-weight bin charges.

Ministers discussed the new system at length behind closed doors at last week’s Cabinet meeting where fears were expressed over the issue becoming another water charges controvers­y.

In briefing documents, ministers were warned that there was a “perceived and real risk” of domestic waste companies dramatical­ly increasing charges for a “significan­t number of households” once the new charging regime was introduced.

The Cabinet briefing seems to be at odds with the Taoiseach insisting in the Dail last week that people should not be “panicked and fearful” about the introducti­on of the new charging system.

Last year, bin companies voluntaril­y imposed flat-rate charges after public outrage forced the Government to delay the introducti­on of pay-by-weight charges. The price freeze ended yesterday but has been extended until September.

The Cabinet was told last Tuesday that bin companies were now expected to significan­tly increase fees because collection charges had remained unchanged for a year while business costs, such as for fuel and insurance, had risen.

Dublin households, which benefited from cut-price rates from companies seeking to build business, are expected

to see their charges rise in the coming months.

In addition, ministers were told waivers for low-income households were likely to be abolished by waste companies.

Some local authoritie­s struck deals when bin collection­s were privatised which entitled some existing customers to waivers. However, most of these contractua­l arrangemen­ts have now expired.

The Cabinet was also warned of a “lack of competitio­n” for domestic waste collection in some parts of the country as it prepared to radically change the charging system for bins.

A statement prepared for ministers by the Competitio­n and Consumer Commission (CCPC) said it had concerns about competitio­n in areas where there was “little, if any, choice of waste collector”.

The watchdog urged the Government to introduce a waste company regulator to monitor charges, as has also been proposed by Fianna Fail.

It can also be revealed that Public Expenditur­e and Finance Minister Paschal Donohoe warned Communicat­ions Minister Denis Naughten against committing public funding to a €75-a-year bin charge subsidy for 90,000 sick and elderly people.

Mr Donohoe said there was “no public commitment” to fund a subsidy for households disposing of incontinen­ce wear.

The subvention payment, which was eventually secured by Mr Naughten, will cost up to €6.75m a year.

Mr Donohoe also raised concerns about the €9m cost of a new waste management enforcemen­t scheme for local authoritie­s.

There are also concerns among ministers that the verdict in the Jobstown trial will encourage left-wing parties to become militant in their protests against new bin charges.

Solidarity TD Paul Murphy yesterday said he was waiting to see the Government’s policy on bin charges before forming “tactics and a strategy to defeat them”.

As concerns rise in Government over the impact of bin charges, Mr Varadkar said his “number one priority” for the Budget was “not to repeat the mistakes of the past”.

“That means achieving a balanced Budget this year and continuing to reduce debt. After that, the 2:1 split applies between additional spending, which includes welfare and public services, and tax relief, with a particular focus on income taxes including USC,” Mr Varadkar told the Sunday Independen­t.

“I have also set out my priority that we need to allocate more resources for infrastruc­ture and capital spending, because we need to increase the economy’s capacity to grow and meet the needs of our young and growing population.

“At the same time, we need to increase capital spending in a planned and measured way, rather than doing it too quickly which could drive up the cost of building, and would mean getting less from more.”

Fianna Fail Social Protection spokesman Willie O’Dea said: “The Taoiseach has raised the possibilit­y of funding tax cuts by cutting expenditur­e elsewhere or raising indirect taxes. Whatever juggling with figures he may try, he can be assured that I will not be supporting him if it involves denying increases for pensioners or for people on disability or carers’ allowances,” he said.

The EU Commission last week warned against abolishing USC as it sees the controvers­ial charges as a progressiv­e tax.

Mr Varadkar, meanwhile, urged his ministers to find “hidden fiscal space” in their department­s and increase spending outside the strict EU spending rules.

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