Surge in taxes from self-employed ‘to lead to Paschal’s Budget Day bonanza’
PASCHAL Donohoe may be poised to play Santa Claus rather than Scrooge in Budget 2018, if growing expectations of a major tax take from the self-employed bear fruit.
The Finance Minister has played down expectations on what the Government will be able to do in Budget 2018
But fiscal experts say Mr Donohoe may have a Budget Day nest egg thanks to a surge in self-employed income. The Finance Minister has been at pains to impress upon his Ministers that he has little or no money for tax cuts or spending increases.
However, one senior fiscal expert told the Irish Mail on Sunday: ‘The proof of the pudding will be in October and all the ingredients are there for a pleasant surprise where Paschal will produce a big wad of unexpected cash.’
A senior figure in the world of tax accountancy noted: ‘There is a belief in certain quarters that there will be a significant surge.
‘Revenue from the selfemployed could be this year’s equivalent of the corporation tax bubble.’
They said: ‘One key factor behind this is the increase in self-employment in 2016.’
The second factor they said was ‘that the self-employed pay tax a year in arrears. Last year’s modest prosperity will only come into play this year’.
Experts noted that ‘the figure could be between €300m and €500m, depending on the outturn for the selfemployed’.
Commenting on the figures Labour’s finance spokesperson Joan Burton said: ‘Increases in the number of self-employed are a Finance Minister’s dream. It is cash straight into the Exchequer kitty.’ As Mr Donohoe faces into his first budget Ms Burton said: ‘It significantly enhances his chances of playing Santa Claus’.
Current fiscal rules mean the Finance Minister cannot spend the money directly on tax cuts. However, the extra cash would be useful in solving a lot of immediate problems. One minister said: ‘He could spend it on the Christmas bonus, the water bill refund and on flooding.’
However, they warned: ‘If there is a few hundred million knocking around, Paschal will want to keep this as a secret little nest egg. He won’t want his greedy cabinet colleagues finding out about it or they will all want some.’
A Department of Finance source warned that any extra money arising out of selfemployed tax returns ‘would be down to buoyancy and would have no impact on fiscal space under the current fiscal rules’.