Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

We are maintaining the same fiscal space as we announced in the budget. The fiscal space is €1.2 billion but there has been a strong carryover effect from the budgetary decisions of last October. These amount to approximately €500 million on the expenditure side and in the region of €175 million to €180 million on the tax side. When we put the two together, that reduces the fiscal space to somewhere around €500 million to €550 million. It is very narrow. Built into the expenditure side in the carryover is money for employing extra teachers, nurses and so on. One would need to see for what the money is allocated to see what level of activity is already built in for 2018. We will recalculate the fiscal space around mid-June. I would be hoping we will recalculate it somewhat in an upward direction but I would expect it to be reasonably modest. In normal circumstances, a growing economy with a growth rate moving from 3.5% on budget day to 4.3%, which is the latest forecast from the chief economist and his team, should generate a certain buoyancy in taxation for 2017 and 2018.

That said, it does not, in itself, make a big difference in the context of the fiscal space. We can increase the fiscal space by bringing in new tax measures or by increasing existing taxes. However, that is a discussion we would have to have in a different space. If we were to go down that road, we would have to be very conscious of our obligations under the confidence-and-supply arrangement and ensure that Fianna Fáil was taken into confidence and that we reached an agreement before we would go that way. I would be reluctant to raise any taxes but to give Deputy Calleary the full picture, the fiscal space can be increased by additional taxes. It is narrow and tight but what it really means is that when everything else is paid for, that is already committed, there is about €550 million or so at present. We will recalibrate that in June and we will have a better idea then but I would not expect a dramatic change.