A LEADING local economist has expressed concern that this year’s Budget will leave Ireland’s state finances “exposed” if there were to be another recession.
Speaking at a Budget briefing held by PriceWaterhouse Coopers in conjunction with the Limerick Chamber, Dr Stephen Kinsella, Murroe, also said the Budget does not help those people who cannot work through no fault of their own.
He described Finance Minister Michael Noonan’s speech as a “masterclass in backslapping”, and said that because the government’s policies are so reliant on income tax, it could cause problems in the future.
Speaking at the event in the Castletroy Park hotel, Dr Kinsella said: “From where the government is getting its finances, most of it is coming from income tax. That is going to happen for years to come. This is a problem, as it means if we have another employment shock, then what is going to happen to our state finances? It is a key strategic weakness of the Irish fiscal stamp”.
The economist, who is based at the University of Limerick’s Kemmy Business School said the government should, while the economy is improving, look to restrict spending, or spend on capital projects.
Instead, he added: “They will be giving it all away. If anything, this budget process proves nothing is learnt for long. The abolition of the Universal Social Charge is probably going to destabilise the country’s finances further”.
There has been criticism of Budget 2016 from Ireland’s SME sector.
Comparisons have been made with the British government, which allowed start-up firms to apply for their own tax breaks.
However, in this country, money has been given to Enterprise Ireland, and companies have to approach this semi-state for support.
For large employers, Mr Noonan once again gave a commitment to freeze Ireland’s 12.5% Corporation Tax rate, a move welcomed by Limerick Chamber chief executive Dr James Ring.
He said the Chamber will “closely monitor” the impact the 50c increase in the minimum wage, and the impact it will have on the local economy. Fearshave been raised that due to increased labour costs, it could put small firms under pressure. For more, see Business Leader in Leader2