Sunday 22 January 2017

Recovery is under way but it's too soon for income tax cuts

Published 15/04/2014 | 02:30

Minister for Finance Michael Noonan and Brendan Howlin Minister for Expenditure and Public Reform on budget day. Photo: Frank McGrath.
Minister for Finance Michael Noonan and Brendan Howlin Minister for Expenditure and Public Reform on budget day. Photo: Frank McGrath.

It is by now obvious that the Government intends to cut income taxes during the upcoming Budget. This is a mistake. Given how uncertain the international economic situation is, the State's finances are not sufficiently robust to absorb shocks from abroad.

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The Government should not listen to upbeat forecasts in making its decisions on tax policy, nor should electoral concerns weigh too heavily. There is still time for a giveaway Budget before the next election, and forecasts have been wrong, and badly wrong, before.

The Government took power in February 2011. It has two Budgets left. The Budget for 2015 should focus on prudently consolidating the recovery.

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