Pearse Doherty (Donegal, Sinn Fein)
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28. To ask the Minister for Finance if he will rule out further tax cuts in budget 2018 in view of recent disappointing Exchequer returns and to ensure all fiscal space is directed towards maintaining and improving public services and investment in capital infrastructure; and if he will make a statement on the matter. [23359/17]

Michael Noonan (Limerick City, Fine Gael)
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The Programme for Partnership Government recognises the need to invest in public services and capital infrastructure, to meet increasing demographic demands, provide targeted expenditure increase for improvements focusing upon health, housing, education, disability, child care and development, and that capital investment in key physical and social infrastructure can support growth and continued job creation.

Hence the Programme for Partnership Government contains a commitment that budget measures will be introduced that will involve at least a 2:1 split between public spending and tax reductions. This commitment is also contained in the confidence and supply agreement with Fianna Fáil. However, the actual ratio of spending increases to tax reductions in Budget 2017 was over 3:1.

Furthermore, it is worth noting that gross voted expenditure in the year to date, while being managed within profile, has increased by 3% year-on-year and that gross voted capital expenditure has increased by 31% year-on-year to end April. This demonstrates the Governments on-going commitment to investing in public services and capital infrastructure.

The Programme for Partnership Government also contains a commitment to continue to phase out the USC as part of a wider medium-term income tax reform plan that keeps the tax base broad, reduces excessive tax rates for middle income earners, and limits the benefit for high earners. Reductions will be introduced on a fair basis with an emphasis on low and middle income earners and are designed to encourage and reward work. The commitment to introduce reductions in the USC on a fair basis with an emphasis on low and middle income earners is also referred to in the confidence and supply agreement.

The need to continually improve our competiveness and support continuing job creation is of upmost importance in the context of minimising any potential impact on the economy that may arise from the UK’s decision to leave the European Union.

Although tax revenue for the first four months of the year are slightly behind expectations, it will not impact on the fiscal space available for Budget 2018 as the fiscal rules provide for expenditure growth, net of discretionary revenue measures, to be based on the trend growth rate rather than revenue buoyancy, whether negative or positive.

Finally, I would remind the Deputy that decisions around Budget 2018 measures will not be made at this stage.  The Summer Economic Statement, due to be published next month, represents the start of the 2018 budgetary process and it will set out the broad parameters and constraints over the medium term.