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

The Government's overarching fiscal policy for 2015 continues to be delivering a budget deficit below 3% of GDP. Delivering this target will take account of the improved performance of the economy and tax revenue.  A further factor is the impact of the European system of accounts, ESA, 2010 statistical changes introduced by the European Union.

Regarding taxes, cumulative tax revenue was up some €971 million, or 4.1%, on profile by the end of August.  A considerable part of this over-performance against profile will have a positive base effect on forecast 2015 tax revenues. The introduction of the ESA 2010 European statistical standard has led to the upward revision of the level of GDP in Ireland over a number of years. These impacts were first presented by the Central Statistics Office, CSO, in July 2014 and budget 2015 will be the first publication based on the new standard.

Overall, GDP in 2013 was revised upwards by €10.7 billion, or 6.5%, by the CSO, from €164.1 billion to €174.8 billion. The bulk of the upward revisions, €7 billion, relates to the inclusion of research and development as capital formation. However, other revisions, mainly relating to revised estimates for exports and the inclusion of illicit activity, have added about €3.7 billion. These revisions have had a small positive impact on growth rates in previous years. It is expected that the budgetary objective of a deficit of less than 3% of GDP can be achieved with a broadly neutral budget.

The Deputy will be aware that I have stated numerous times that I believe the income tax burden is currently too high in Ireland and that it needs to be reduced. I have also stated that, although it is my intention to alleviate the burden, I can only do so when the public finances allow it. With budget 2015 only two weeks away, I am not prepared to be drawn into speculation on specific budgetary measures at this time. However, I will say that, as part of the normal budgetary preparations, I am examining potential options for changes to the tax system as part of the overall budget package to be agreed by the Government.

Regarding progressivity, Ireland already has a very progressive income tax system in that those on higher incomes pay proportionately higher rates of tax on their incomes than those on lower incomes. It is an important feature of the tax system and one of the factors taken into account in the formulation of tax policy proposals.

The Deputies did not have to table Priority Questions as they could have received this information through written questions on the first day of this term.

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