Mr. Sebastian Barnes:

I agree with the Deputy that one aspect of the programme for Government is the commitment to index the tax system. There are also commitments on income taxation. Income taxation is approximately one third of Exchequer tax returns. This means that raising taxes on a large part of revenue is being ruled out. There is also commitment on corporation tax rates. On the spending side, there is a commitment on maintaining social welfare rates.

A number of commitments have been made that reduce the margin for manoeuvre for the Government quite significantly as to how they address, on the one hand, the need to consolidate the public finances that is likely to exist in the third phase and, on the other hand, how to finance measures like Sláintecare. There are big questions on how this is going to be financed. The council does not have a view as to how that should happen but as my colleague, Professor McMahon, said the options are very simple. The options are to reduce spending in other areas, to increase the efficiency of spending or to increase taxation in other areas. However, as important options are being kept off the table, it is going to be very difficult to balance those things and to meet these new spending commitments around housing and health and at the same time maintain fiscal sustainability. The council has a concern that by making it more difficult the risks to fiscal sustainability have been increased because the temptation may well be to borrow more rather than to raise revenues or cut spending. When starting from a position of very high debt that is a risky strategy, so there are some concerns about that.