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

This is unlike the €34 billion the Fianna Fáil-Green Party Government put into Anglo Irish Bank.

The forecasts for further budgets are contingent on continued sensible economic and budgetary policies being pursued. Prudent policies support growth and job creation and generate the taxes and the fiscal space for further investment in the economy. The scale of the fiscal space available in later years will be determined by the growth. If the wrong policies are pursued, the economy will not grow and the fiscal space will not materialise. Equally important to the size and scale of the budget plans is the type of measures introduced. As I have stated, lower taxes on income will support more jobs and higher taxes will cost tens of thousands of jobs. This is an economic fact.

In the early 2000s, our taxation system became over reliant on transaction and property related taxes. The revenues from the property boom were used to fund a narrowing tax base to an unsustainable level and to fund current expenditure. The use of tax expenditures in the early 2000s not only served to hollow out the tax base but led to an overheating of the economy. When the property bubble burst, the revenues dried up and the consequences have been eight years of tax increases and expenditure cuts. The response of the Government of the day in the first instance was to load new and additional taxes on work through the introduction of the income levy and the universal social charge.

We must never allow this to happen again and the base-broadening measures that have taken place have moved the tax base to a much more stable and growth friendly footing, reducing the reliance on transaction based taxes. The curtailment of tax expenditures, the introduction of the property tax and introduction of alternative funding mechanisms for vital public services such as Irish Water are all essential elements for stable public finances. The alternative policy choice in nearly all of these cases is to increase taxes on work, an alternative that can significantly impact on economic growth and jobs.

That is why I did not increase income tax or USC charges in my first three budgets. At the first available opportunity, in budget 2015, I used available resources to reduce income tax and the universal social charge. Not only does this put more money into people’s pockets but it boosts confidence and economic activity across the country.

The Department of Finance estimates, based on the ESRI economic model, that continuation of the programme of reducing tax on incomes introduced in 2015 for 2016, 2017 and 2018 would increase employment by approximately 1%. This is the equivalent of 20,000 jobs.

On the other hand, the same research shows that increases in taxes on work would not only result in the loss of the additional jobs, but would actually reduce growth and cost jobs over the next five years.

Unfortunately, the policies proposed by the Opposition will do exactly this. They will increases taxes, increase expenditure, increase debt, lower growth rates, reduce tax buoyancy and cost jobs. The policies of the Opposition will again cause the economy to spiral downwards. In fact, the principal domestic risk to Ireland's continued economic growth is the tax and spend policies of the Opposition.

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