Oireachtas Joint and Select Committees

Wednesday, 22 September 2021

Committee on Budgetary Oversight

Pre-Budget 2022 Scrutiny: Irish Fiscal Advisory Council

Photo of Gerald NashGerald Nash (Louth, Labour) | Oireachtas source

The €2 billion figure has become received wisdom and it has not been challenged by anyone. That concerns me because we have not factored in any potential gains which may accrue from a marginally higher rate of corporate tax being applied. What I am hearing from Mr. Barnes is that IFAC has not done that assessment either. It may not have had the material available to allow it to arrive at a figure and I also appreciate there is no real clarity because we are not at the end of this process yet. That is my understanding of what Mr. Barnes is saying.

I have another question regarding tax. I do not believe any responsible person could stand over the ongoing feasibility of the three-card trick, as I have described it, where we can continue to invest in current and capital expenditure and cut taxes and not expect some difficult consequences to arise in that regard. That is the kind of stance Ministers had set themselves against, at least until recent articulations of Government policy. The Government has now stated it will continue to borrow and spend and invest in current and capital expenditure while cutting taxes at the same time. I am glad Mr. Barnes has drawn attention to that issue.

The presentation from IFAC and its style suggests it is advising the Government essentially to ditch its plan for tax cuts because it is not prudent if it intends to do all the other things it is politically committed to doing. Is that the message that is being repeated here? In the context of the spectrum of options and the information available, is IFAC advising the Government to avoid engaging in cutting tax at this sensitive time in our recovery?


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