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Thursday 2 October 2014

Tax cuts pledged for workers - but 'no giveaways'

Published 04/09/2014 | 02:30

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Public Expenditure and Reform Minister Brendan Howlin said yesterday the Government wasn't ready for a giveaway budget
Public Expenditure and Reform Minister Brendan Howlin said yesterday the Government wasn't ready for a giveaway budget

THE two ministers responsible for national finances have pledged to ease taxes for low and middle-income workers in the next Budget - but both Michael Noonan and Brendan Howlin insist they will not "buy" the next election.

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The Finance Minister and Public Expenditure Minister were both very cautious as they welcomed statistics which show a continuing growth in jobs and strong tax returns.

It is now clear that €2bn will not have to be cut in the Budget, due in just over five weeks' time.

But Mr Noonan said tax cuts would only be approved in areas where they might stimulate economic growth - and there might even be tax increases in some areas to compensate.

"There is a lot of success now but the success is directly due to the programmes followed of the last three years," he said.

"The success now is not an accident of nature or an act of God. It is a direct consequences of the policies pursued and they were the right policies.

"I don't think I'll have to increase taxes very much in the budget. Brendan Howlin won't have to cut expenditure much further.

"But if we are going to give additional relief beyond the adjustment that we are making that might require extra taxes."

"It is not that there won't be tax relief in the Budget, but we may have to pay for it with taxes elsewhere," he said.

Mr Noonan added: "We have to be prudent. We have had a boom and bust economy all my life."

Meanwhile, speaking after the first Cabinet meeting of the new political year, Labour's Mr Howlin struck a cautious note.

While welcoming the fact that heavy spending cutbacks will not now be necessary in the Budget, to be published on October 14, he said that the Government was not ready for a giveaway Budget - and "not in a giving-back stage."

But Mr Howlin also signalled that the Government will try to incentivise people to go out to work.

"We are all conscious of the fact that people who are going out to work, want to be certain that work pays. That there is a significant pocketing of the efforts that they make by getting up in the morning and working hard," Mr Howlin said.

Mr Howlin said public sector pay cuts must remain in place until the end of next year, until a new deal will be negotiated to replace the so-called Haddington Road arrangement.

"The Haddington Road is an agreement into 2016, and that will be honoured, I am confident, by all sides up to 2016.

"Our primary objective is to sustain what we have achieved to date, nurture our recovery, and we are not going to put our recovery at risk in any shape or form."

Mr Noonan, of Fine Gael, also said there could be no question of a giveaway Budget targeted at winning voters in the next general election, which is due at latest in spring 2016.

However he said he would like to see a phased system of tax cuts, possibly over three to four years which take things beyond the next general election.

"I'm not going to introduce tax breaks as some kind of way of attracting public support or votes," he told RTE's 'Today with Sean O'Rourke'.

The Finance Minister added that tax cuts would have to stimulate economic growth and jobs - and may have to be offset by increases in other forms of taxation.

"The rule I have been following is if a particular tax break will further grow the economy and further grow jobs, then I will consider it and do everything I can to deliver it," Mr Noonan said.

Mr Noonan said his recovery from a cancer scare is progressing well.

"I am fit and well again. I was with my consultant in St Luke's last week," he told RTE.

"He told me all my scans are clear, there is no incidence of cancer anywhere else in my system," he said.

Mr Noonan added that he intends to stand in the next general election as long health permits.

Irish Independent

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