The agreement to form the new coalition government between Fine Gael and Labour is based largely on consensus around taxation reform, The Sunday Times front page lead article reports.
The new government will:
- Introduce a property tax on family homes
- Freeze income taxes
- Review the Universal Social Charge
The Coalition will introduce a so-called ‘site valuation charge’, a euphemism for a property tax by any other name. The decision to broaden the tax base was taken as part of a determined effort not to increase taxes on employment.
The two sides have also agreed a compromise on the budget deficit – the target to meet the EU’s 3% guideline is now 2015 – Fine Gael had wanted 2014, while Labour believed 2016 was more realistic.
The parties had differed in their manifestos as to how best to meet the EU demands. Labour had proposed a 50-50 split between extra taxation and public spending cuts while Fine Gael wanted to raise only 28% of the necessary €9 billion over the next four years through tax increases.