Can we shift the burden in the absence of an increase in taxation?

This is a link to the ICTU documentShifting the Burden. It contains ten points on why the current economic policies are deepening the recession. I broadly agree with the political sentiment but it fails to talk about one very important issue in the Irish case: the fact that we are in the Eurozone. This, in turn, means that any fiscal adjustment has to come from tax and spend (fiscal) policies. In the absence of a collective pay cut there are only two options a) leave the eurozone and devalue, b) raise direct taxes on income and capital (and close tax expenditures-breaks). ICTU understandably cannot argue for exiting the Euro because they, like every other economic actor in the Irish economy, fully support the eurozone and its monetary policies. Equally, ICTU are unlikely to argue for tax increases because it requires asking their members to reduce their net disposable income. This is a real problem for anyone arguing in favour of an investment strategy to balance austerity. You cannot have a social democratic fiscal policy in the absence of social democratic taxes. Our overall tax take is now equivalent to Romania and Estonia. This is not feasible for a modern economy.  The only real alternative is to argue in favour of a European wide fiscal plan that acts as a supporting revenue stream to monetary policy. The question in this regard is, can Europe design and deliver a collective coordinated strategy in the absence of a full political union? These are real questions we have to ask ourselves if we want to build a sustainable European econonmy.

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