Irish Accountancy Profession Calls For Early Budget

by Robert Lee, Tax-News.com, London

02 March 2009

The Consultative Committee of Accountancy Bodies – Ireland (CCAB-I), the umbrella group of the state’s largest accountancy bodies, has called for an early budget to tackle the serious decline in the economic situation.

“No-one welcomes increased taxation or public service cuts and CCAB-I does not make this call for an immediate budget lightly," the group noted in a statement issued on March 2. The statement continued:

"The CCAB-I position is that a full budget is required to deal with both income and expenditure measures. These must be applied on principles which will drive our recovery through a focus on innovation and technology, sustain the tax yield and allow for prudent planning.”

“The basis of the October 2008 budget was an expected tax take of some EUR41bn for 2009. In his speech, the Prime Minister stated that the maximum amount now expected from taxes is EUR37bn. At this stage it is clear that current expenditure cuts being introduced will not match the decline in tax revenue. Indeed the EUR37bn tax estimate may be optimistic."

“Income tax will be the most important single source of tax for the government this year as there is not enough activity in the economy to sustain yields from the capital and indirect taxes. However income tax too is being eroded because of redundancies, the public services pension levy, and the salary reductions being applied across the private sector.”

"The pace of our economic decline, though far from unique in an international context, means that the October 2008 Budget is not appropriate to cope with our current circumstances. Both the areas of public income and public expenditure must now be rebalanced with immediate effect if we are not to wipe out in one year all the hard earned gains and progress of the past decade. We need new measures to have effect from April 2009 for the remainder of the year. Otherwise business will continue to stagnate and the public sector will find it increasingly difficult to pay its bills.”

“Every business in the country is being forced to revise its income sources and cost structures with painful consequences. The government must now do likewise. What is needed is completely revised budgeting for all non front line public service expenditure. Ireland can no longer afford to operate on cost structures established during economic prosperity.”

“Ireland should take counsel from, but not simply copy, the past and present recovery strategies of other countries where the social understandings regarding how the lower paid are taxed and how public expenditure is financed differ from Ireland.”

CCAB-I's statement concluded:

“Immediate budget measures should not prejudice the important work of the Commission on Taxation as it devises our longer term strategy."

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