Irish Employers Warn Over Gap Between Tax And Spending

by Jason Gorringe, Tax-News.com, London

28 May 2002

In the May issue of its 'Economic Trends' newsletter on Friday, the Irish Business and Employers Confederation (IBEC) warned over the stability of public finances in the Republic.

Although IBEC says that it is difficult to judge the exact state of government finances due to timing differences in spending and tax revenues: 'There is enough concern going into 2003 to suggest a serious underlying gap between revenue and expenditure is developing'.

The Confederation stated last week that the ROI's new government must urgently come to grips with the issues now facing the Irish economy, the roots of which can paradoxically be found in the jurisdiction's prolonged economic success during the 1990s.

Speaking on Friday, following the release of the 'Economic Trends' report, IBEC's Chief Economist, David Croughan explained the challenges facing the government:

'Ireland has had a very good run over the last number of years - in many respects the successes we have experienced were almost unavoidable, as we lived through a golden age of high growth,' he said. However, Mr Croughan added that: 'IBEC has consistently warned that the seeds of economic mismanagement, whether in the public or private sector, are always sewn in good times as a more relaxed approach to cost controls is taken when revenue growth is strong or orders are booming.'

The May edition of the IBEC newsletter suggests that the three main priorities for the newly-elected government are to reduce inflation, rein in government spending, and ensure that the referendum on the Nice Treaty is carried.

'Ireland's successfully transformed economy owes much to the benefits derived from membership of the European Union,' the business and employers group observed, continuing: 'Ireland's high reputation in the EU has slipped and is in danger of slipping further if a second Nice referendum is lost.'

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