Commission economist urges State to use windfall to cut debt
The European Commission has added its weight to calls for the State to use any windfall tax revenues to cut debts, on the same day that the Irish Fiscal Advisory Council (IFAC) issued a report criticising the Government's budget management.
Carlos Martínez Mongay, the deputy director-general of economic and financial affairs at the European Commission, told a conference in Dublin yesterday that the State also needed to crack down on the use of its tax system by companies to facilitate what he called "aggressive tax planning".
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While the Commission's assessment of the Irish economy and of measures to reduce debt was generally positive, Mr Mongay said the country was vulnerable to sudden shocks from the global economy. He cautioned that its overdependence on a small number of companies currently paying record amounts of taxes meant that finances needed to be shored up.
"Given the downside risks of some sources of Government revenue, we consider that the Government should use any windfall revenues in order to accelerate the reduction of the general Government debt ratio," he told a conference organised by the Institute of International and European Affairs.
The report issued by IFAC recommended that any windfall revenues from company tax payments be put in a "prudence account" and not used to shore up day-to-day budget spending.