LEO U-TURN ON TAX CUTS
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TAOISEACH Leo Varadkar is backtracking on promised tax cuts of up to €1billion.
This year saw a rough breakdown of the €3billion available in Budget 2018 of twoto-one in favour of public spending over tax cuts.
This was a crucial condition of the new confidence and supply agreement that saw Fianna Fail agree to support the Fine Gael-led Government from opposition – and it was expected the same ratio prioritising investment in public infrastructure would be maintained next time.
But Mr Varadkar has now thrown some doubt on this after he told political reporters in the Taoiseach’s traditional Christmas chat that he couldn’t guarantee the same level of tax cuts.
He said: “There is always enormous political pressure on governments, understandably so, to provide more resources for public services provide more infrastructure and lower peoples taxes and increase welfare but we will have to give consideration to all when we are heading into the Budget.
“Just because there is a certain amount we can use, would it be prudent to do that?”
The Taoiseach added the Government was not willing to go on a “if we have it, we’ll spend it” spree.
This was the motto of former Finance Minister Charlie Mccreevey, who was in charge of the purse strings during some of the boom years.
Mr Varadkar said: “Maybe the kind of things we should be looking at are more around reform, partially around pensions, so perhaps putting some money aside for the future pension liabilities that are definitely going to arise.”
He was asked if this meant a €1billion in tax cuts is not certain. The Taoiseach replied: “It’s not certain no, but the focus
YESTERDAY
Mr Varadkar
in terms of tax will be similar to what it was last year. The focus will be on that structural tax issue we have in Ireland whereby people on very modest incomes or middle incomes pay the higher rate.
“Taxes can be about two things – putting money back in people’s pockets which we want to do but they can also be about reform and I think that is one areas where it is not just about giving people money back, it’s about structural reform.
“People hit the higher rate of tax much earlier than they do in other countries and that is a problem because employers do have to factor that into their decisions. As things stand we can afford to do both [another Universal Social Charge, reduction and other tax reforms] but whether it is prudent to do so is a different question.”
People hit the higher rate much earlier than in other countries leo varadkar