The Labour Party has ruled out entering talks with Fine Gael And Fianna Fáil on forming a Government in the coming weeks.

Party leader Alan Kelly wrote to Leo Varadkar and Micheál Martin today, noting that there is “a gap, at present, between Labour’s vision for Ireland’s future and your own.”

He took particular aim at the decision to rule out increasing taxes to fund the recovery from the COVID-19 crisis.

“While it is your stated goal to achieve a ‘well resourced, properly functioning and responsive State,’ our view is that it is premature and unrealistic to rule out using taxation to achieve this,” he wrote.

“Such a stance does not match with the vision you outlined to us."

He said the framework document published by the two parties following their initial discussions included “ambitious policies such as universal healthcare, housing for all and a green new deal.”

“It is hard to see how we can rebuild and improve public services without some change in taxation and more extensive borrowing to maintain demand and capital investment in the economy until at least the end of 2021,” he wrote.

Taoiseach Leo Varadkar speaks to the media during a visit to the Civil Defence Dublin Branch on Wolfe Tone Quay. Picture by: Brian Lawless/PA Wire/PA Images

Speaking at Government Buildings this afternoon, Mr Varadkar suggested tax increase had not been ruled out – but said the next government would not be increasing income tax, USC or corporation tax.

Deputy Kelly said Labour is also concerned about a “lack of clear direction on the Covid-19 Pandemic Unemployment Payment.”

“Workers in affected sectors that have borne the brunt of the national effort to tackle Covid-19 cannot be left behind in the months to come,” he said.

"Surprise and disappointment"

Deputy Kelly also outlined his ‘surprise and disappointment’ that the two parties failed to address the 21 principles put forward by the Labour Party in its initial response to an invitation to talks.

“The failure to do this indicates a gap, at present, between Labour’s vision for Ireland’s future and your own,” he wrote.

He said he had recommended to his Parliamentary colleagues that the party should not take part in formal discussions on Government formation while talks are underway with the Green Party.

Government

He noted that there are currently four parties with more TDs in the Dáil than Labour.

“It was our united view that your talks with the Green Party should now be given the space and time to reach a conclusion as if successful, such a government would command a majority in the Dáil,” he said.

“Should your position change on the issues I outlined above, I would look forward to hearing from you.”

The letter comes just a day after the Social Democrats also ruled themselves out of the next government.