'Nobody has any idea how long Government will last'
Published 22/06/2016 | 02:30
Finance Minister Michael Noonan has said "nobody has any idea" how long the new Government will last.
As he reaffirmed plans to abolish the much-hated Universal Social Charges by 2021, Mr Noonan said he was proceeding on the basis the Government will survive at least three years.
"Nobody has any idea how long this Government will last. The agreement with Fianna Fáil is that we will review the position after passing the third budget so I'm planning on working towards three budgets.
"Everybody knows it's a minority Government. Everybody knows it's the first time since the foundation of the State that we've tried to govern with a minority Government," he said.
"I'm not in the prediction business. All I'll say is that as long as we're here, we're going to manage the situation prudently."
Asked whether, like Taoiseach Enda Kenny, he intends to continue in office until the next election, Mr Noonan replied: "I've signed on for Government so we'll see what happens."
He said that unlike his early years as minister, the Department of Finance now has money to do "better for health, better for education, better for law and order, better for childcare".
The country's budgets will be balanced from 2018 and after that €1bn will be put into a 'Rainy Day Fund' every year. "We're redirecting policy after coming through the correction phase. After getting the economy running strongly we're going to use the fruits of growth now to repair the services that were damaged.
"That's why there's greater emphasis now on spending and investment than there was," Mr Noonan said at the launch of the 'Summer Economic Statement'.
Asked how long he expects the Government will last, he replied: "How long the journey will last is a matter of predication. We're not going to be put off by the uncertainty of the prospects ahead. We're not going to be a 'do nothing government'. We're going to assume that it's going to last and we'll make decisions on that basis." Despite this, he indicated that the Fine Gael-led Government intends to make the USC disappear from payslips by 2022.
Workers with a salary of around €70,000 upwards will be subjected to a "solidarity levy" to ensure low and middle-income earners gain most, he said. Mr Noonan said the actual detail of USC cuts would have to be discussed, but it will be the "main tax target" in next October's Budget.
"It's a programme that will go on for four or five years and will eventually result in the elimination of a tax that was introduced as an emergency tax," he said.
He noted that political parties varied on what constitutes a high-earner but he hopes to find a consensus. A budget will not be able to pass through the Dáil unless Fine Gael reaches agreement with Fianna Fáil.
The economic statement also recommits to introducing a PRSI scheme for the self-employed and increasing the Earned Income Tax Credit for the self-employed to match the PAYE tax credit by 2018.
The existing PAYE tax credit for high earners will be removed "to further enhance the progressivity of the income tax system", it says.
And extra revenue is to be raised "by increasing taxation on measures that promote healthier lifestyles".
Reacting to the tax package, Fianna Fáil's finance spokesman Michael McGrath said: "It is our view that the €330m available for tax measures in 2017 should be targeted to benefit low and middle-income earners.
"Given the impact of non-indexation of tax bands and credits as proposed in the document this effectively amounts to a neutral tax package."
However, the Labour Party's Joan Burton described the tax measures as having a "built-in bonus for the better-off". She urged Mr Noonan to start any solidarity levy introduced to claw back USC cuts at €70,000.