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Irish Budget Watchdog Warns On Tax And Spending

by Jason Gorringe, Tax-News.com, London

05 September 2017


The Irish Fiscal Advisory Council (IFAC) has said the Government should stick to its existing spending and tax plans and avoid using any unexpected increases in tax revenues to fund permanent budgetary measures.

In its pre-Budget statement, IFAC noted that the Finance Department estimates that it will have around EUR1.7bn (USD2bn) of "fiscal space" available for tax and spending measures in 2018. However, the cost of previously announced measures and the yet-to-be approved public sector pay deal reduces the scope for new initiatives by approximately EUR500m.

IFAC said that "it would be conducive to prudent economic and budgetary management for Budget 2018 to stick to existing spending and tax plans within the available gross fiscal space."

IFAC added that had unexpectedly high corporation tax receipts and interest savings been used for deficit reduction purposes, rather than for within-year spending increases in 2015 and 2016, the Government would have been able to balance the budget in 2016, two years earlier than is now projected. It argued that Budget 2018 should avoid similar mistakes and that if additional spending is required, it should be funded by tax increases or the re-allocation of existing funds.

TAGS: tax | Ireland | interest | fiscal policy | public sector | budget | corporation tax | tax rates | revenue statistics | tax reform

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