Wednesday 13 November 2019

Long-term budget plans show no scope for tax cuts, opposition politicians warn

Minister Paschal Donohoe. Photo: Photocall Ireland
Minister Paschal Donohoe. Photo: Photocall Ireland

Ed Carty

Opposition politicians have warned that the Government will have to bin any potential tax cuts.

As Paschal Donohoe, minister for finance and public expenditure and reform, outlined targets for spending and rainy day savings over the next four years both Sinn Fein and Labour rounded on him.

The minister's Summer Economic Statement set out ambitions for the Government to fund about €500m of projects next year but it did not go into specifics.

It also earmarked an additional spending package of €1.5bn in 2019, 2020 and 2021 and the setting up of a rainy day fund in 2019 which will take in €500m a year to cover a future economic crisis.

But Sinn Fein's finance spokesman Pearse Doherty claimed the long-term budget plans showed no scope for tax cuts.

"If you are raising your family in a hotel, it is raining today. If you or a loved one are waiting in pain for a medical procedure, it is raining today," he said.

"It is beyond belief that the Government would put this kind of money aside when we have such serious crises in our public services.

"And it shows that this government, nor one led by Fianna Fail, who have suggested that one billion euro should be put aside per year in this fund, can be trusted to fix these crises and deliver quality public services for all our people."

Labour leader Brendan Howlin said the economic statement promised little and would deliver even less.

And he predicted that the Government would shelve plans for tax cuts as it found money to meet the cost of the new public sector pay deal under the Lansdowne Road Agreement and pay for investment in education and health.

"It remains to be seen whether the figures published today will bear any resemblance to reality on budget day, but for now, the odds of this Government passing a budget at all seem slim," he said.

Read more: 'Economic growth of 3.75pc and 50,000 new jobs in 2018'

"Minister Donohoe is of course right to talk about the size of the overall budget. But in truth, unless he is willing to axe entire spending programmes, he won't find much in the way of savings in a system that has been stretched to breaking point over recent years."

Labour's finance spokeswoman and former tanaiste Joan Burton said: "The Summer Economic Statement had nothing to say on tax justice, nor does it go far enough on increasing capital expenditure.

"We can't take our recovery for granted and the only way we can ensure continued prosperity is investing in people, in services and in infrastructure."

Mr Donohoe declined to discuss any prospective infrastructure projects like Metro North or the M20 Cork to Limerick motorway.

As part of his statement, he said the Exchequer books would be balanced next year and that 55,000 jobs would be created next year.

Economic growth is being forecast at 3.7pc next year and 3.1pc in 2019 but the report warned that Brexit meant these projections were subject to "considerable uncertainty".

Mr Donohoe also claimed that seven out of 10 jobs lost in the years since the recession had been recouped.

"The economy is growing at a healthy pace and generating jobs-rich growth," he said.

"Indeed, we are now approaching a situation in which jobs are available for all those who want them.

"Now is the time to build on the gains of recent years, to improve the resilience of the economy and to address the capacity constraints that are emerging."

The Construction Industry Federation criticised Mr Donohoe's agenda and warned that deferring investment would slow economic growth over the next decade.

Director general Tom Parlon said: "If it's a good idea to invest in 2019 to improve the economy and address the housing issue, lack of broadband and creaking road and rail infrastructure, why not start today?"

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