Brian Hayes MEP today (Friday) said that the government should plan for a neutral budget this autumn, given the potential economic shocks on the horizon.
“It is time in Ireland to apply the precautionary principle and to explain to the public that after every period of growth comes a period of downturn. It is how we prepare for that downturn now that dictate our economic performance into the future.
“I believe the time is right to plan for a neutral budget this autumn. A budget that puts more money aside, limits growth in public spending and crucially tries to pay down debt. If things don’t work as bad this time next year, a more expansionary budget might be considered. But now is the time for precaution.
“We have several potential economic threats on the horizon: Brexit, political instability in Italy, the dangers of trade wars, rising energy prices and increasing political tensions in the Middle East.
“International financier, George Soros, gave a stark warning this week that we could be bracing ourselves for a new global financial crisis. This is coming from a man who has made his billions from studying the international markets, so his warnings should not be taken lightly.
“Irish corporate tax intake is also a source of risk in the current volatile international business climate. Corporation taxes have shown spectacular growth during the past four years, growing from €4 billion to more than €8 billion in 2017, contributing 16% of all taxes collected – sixteen times more than the residential property tax.
“The Chair of the Irish Fiscal Advisory Council, Seamus Coffey, was right to point out that Irish corporation tax has a narrow base with only 40% of the tax being paid by just ten companies.
“We need to take a series of measures to make economy resilient. During this period of buoyant revenues, we should aim to run a budget surplus. We should put significant resources into a rainy day fund as a shock absorber for any downturn.
“We also must continue the process of widening the tax base and reward work by targeted tax cuts, where it is due. In particular, the threshold for the higher rate of income tax needs to be raised above the average wage which now stands at just over €38,000. Nobody on the average wage should be paying the top rate of tax. Additionally, long-term capital spending on social and physical infrastructure, through the National Development Plan, must be a central part of our economy’s resilience into the future.”