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Dublin: 3°C Thursday 26 November 2020

Michael Noonan says that Ibec's budget sums "are at best a guesstimate"

The employers’ group says that now is the time to give consumers a break from austerity.

FINANCE MINISTER MICHAEL Noonan has said that calls to cut just €200 million from the 2015 budget from employers’ group Ibec are “at best a guesstimate”.

Speaking before a meeting of European finance ministers in Brussels this morning, Minister Noonan said that the lobby is “ahead of the facts” with its call to reduce the amount to be cut.

They may turn out to be right but as I say, it’s a guesstimate. There isn’t enough data in yet for me to talk about it.

Budget call

This morning Ibec said that just 10% of a proposed €2 billion in cuts is needed in this year’s Budget.

Ibec also says that tax bands should be expanded and the higher rate of tax cut.

The group says said that the latest growth figures mean a net adjustment of €200 million will be enough on budget day, far below the planned €2 billion.

This would reduce the budget deficit to 2.7% next year, comfortably under the 3% limit, they said.

In its Budget 2015 submission, published today, the group calls for €300 million worth of income tax reductions, a €100 million reduction in consumer taxes and the abolition of the pensions levy. It said the budget must focus on reducing tax rates and boosting investment across the economy.

Ibec CEO Danny McCoy said: “We have an opportunity to put fresh momentum behind Ireland’s recovery. Now is the time to draw a line under the period of painful austerity. It was necessary, but the economy has entered a new phase.

This needs to be reflected in the budget. We have a chance to give consumers a break, put money back into peoples’ pockets and kick start personal, commercial and public investment.

“If we get it right, we can look forward to strong growth in the months and years ahead. This will result in thousands of new jobs.”

Ibec believes the government should:

  • Increase the entry point to the marginal tax rate from €32,800 to €34,800
  • Reduce the marginal tax rate from 52% to 51%
  • Reform the universal social charge so self-employed and PAYE workers are treated the same
  • Reverse recent alcohol excise increases
  • Continue the reduced 9% VAT rate for the hospitality sector
  • Drop the pensions levy, as had been promised

Italian job

Noonan said that he expects there to be more wiggle room for countries to achieve tight fiscal targets in a growth-friendly manner under the Italian presidency of the EU, although he doesn’t consider any dramatic move to be likely.

“There seems to be a move towards flexiblity in the recent interpretations…I think that could contribute to the common purpose across Europe.”

He said that he was “mystified” by reports that the German Bundestag finance committee had found that Ireland had no concrete plan for recovery after an official visit to Dublin recently.

He said that in his meeting with the German parliamentarians “most of the ground was common ground”.

Updated 16.12

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