Irish Think-Tank Urges Tax Increases

by Jason Gorringe, Tax-News.com, London

24 April 2002

The Irish government has this week faced criticism from all sides over runaway spending.

The Economic and Social Research Institute (ESRI), a governmental think-tank, warned that current spending levels are a recipe for disaster, just 24 hours after the Irish Business and Employers' Confederation (IBEC) criticised a 22% growth in spending during a period in which government income grew by just 3.5%.

However, although the diagnosis of the situation by the two organisations is the same, the solutions proposed are very different. The ESRI on Monday recommended tax increases and new spending curbs to protect the Republic's finances, while Turlough O'Sullivan, IBEC's Director General, warned against tax hikes, stressing the importance of a business-friendly tax regime in Ireland.

'Higher taxes would very quickly erode the jobs-friendly environment patiently built up in this month,' he warned at the launch of IBEC's pre-election strategy document, 'Enterprise policy in a Competitive Economy'. The IBEC chief recommended that growth be allowed to re-emerge by controlling day-to-day spending.

All of this comes amid speculation over the possible election date. Following a peacetime record of 5 years in power, the government is expected to name the date on Thursday. Political commentators have suggested that mid-May is a likely choice.

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