Thursday 19 September 2019

Delay uncertainty 'could scupper chances for a give-away Budget'

Finance Minister Paschal Donohoe. Photo: Gareth Chaney, Collins
Finance Minister Paschal Donohoe. Photo: Gareth Chaney, Collins
Cormac McQuinn

Cormac McQuinn

Finance Minister Paschal Donohoe has signalled that the prospect of tax cuts in the Budget is at risk if Brexit is delayed.

Mr Donohoe has been making Budget preparations for two different scenarios - an orderly Brexit and a crash-out of the UK from the EU.

His officials have been focused on the latter as fears have grown of a no-deal departure on October 31. Tax cuts and social welfare increases are threatened in such circumstances as the Government believes available funds will be needed to protect jobs in the industries expected to be worst hit by Brexit.

However, the renewed political turmoil in the UK has led to a third possible scenario - that Brexit will be delayed again. Mr Donohoe has said this would still result in a period of "severe uncertainty" and indicated that a Brexit extension would also scupper the chances of a give-away Budget.

He responded to developments in the House of Commons, saying it's an "important development" that many MPs have come out strongly against a no-deal Brexit.

The Government is assessing the situation and Mr Donohoe is set to make a formal recommendation to Cabinet on whether to deliver a no-deal scenario Budget within weeks.

Fine Gael has expressed ambitions for tax cuts for middle-income earners over a number of budgets but ministers have been reining in expectations given the Brexit situation.

Fianna Fáil leader Micheál Martin has warned that affordable housing, services for the elderly and children with special needs should be prioritised over tax cuts.

Mr Donohoe was asked about the prospect of tax cuts and a social welfare package on Newstalk Radio.

He said regardless of the circumstances the Government will ensure there are resources and support available to vulnerable people.

He said no decisions have been made in relation to tax changes, but added: "If we think we're going to be moving into a period of profound uncertainty then we will have to make a lot of resources... available to support those who might be at risk of losing their jobs or lower income.

"That... will mean there are other things we will not do."

It was put to him that the possibility of Brexit being delayed again doesn't help him in framing the Budget.

"In that scenario then I think what would be fair to say is that we could still be facing in to a period of really severe uncertainty," he said.

He will not allow a scenario in which tax cuts or social welfare increases are offered to people, only for them to be reversed.

"We don't have to go back too far into our economic history to see what happens when you tell the country 'we're going to do lots of things for you', and a budget later, or even six months later, you unwind all of that completely," he added.

He said the Government will "bring forward a Budget full of commitments that we believe we will be able to stand over".

He said one thing that will definitely be included in his measures is increased capital investment.

Irish Independent

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