The Government will not go beyond its existing plans for spending between €1.2 billion and €1.5 billion more next year divided evenly between improved public services and tax cuts despite stronger-than-anticipated economic growth, Taoiseach Enda Kenny has stated.
Addressing the Government’s new national economic dialogue in Dublin Castle he said the Budget in October would make sure that work paid more than welfare.
He also said the Budget would reduce the number of working families in poverty.
Mr Kenny also signalled that the Government would seek to reduce universal social charge in the Budget.
The Government has invited about 140 representatives from the business community, trade unions, agricultural sector and community and voluntary groups to set out their view on their priorities for the Budget for 2016 as part of a two-day new national economic dialogue.
Mr Kenny said in its Spring economic statement, the Government had agreed a package of budget measures of between €1.2 billion and €1.5 billon for 2016, evenly divided between tax and spending measures.
“Despite a stronger than expected performance in tax receipts and the public finances since then, we remain committed to delivering a budget within these parameters. We are never going back to the ‘when we have it we spend it’ approach to budget management of previous governments.”
The Taoiseach also said the Government would re-double its efforts to support job creation.
“By next year, our objective is that there will be more Irish people returning to this country to take up employment than there will be leaving. By 2018, we aim to have replaced every job lost during the recession with new, more sustainable jobs.”
“And by 2019, we aim to have more people working in this country than ever before. In this way, our plan will bring the country back to full employment, and keep it there. Everyone who wants a job will be able to get a job.”
He pledged that the Government would protects the country’s 12.5 per cent rate of corporation tax and keep low the burden of taxation on business and jobs low.
He said the Government would “end the unfair tax treatment of the self-em ployed and small businesses, starting in the next Budget”.
Mr Kenny also promised to “continue to challenge out-dated practices and structures that impose excessive costs on business” and to invest in infrastructure to tackle emerging bottlenecks.
“We need to make sure that work pays, and that people at work are more fairly rewarded for their effort.
"After the Low Pay Commission makes its first recommendation on the minimum wage later this month, the Government will respond with a package of measures in the October Budget, including measures to protect jobs."
He said that combined with ongoing reforms to the welfare system, the Budget “will make sure that work pays more than welfare, and will reduce the number of working families in poverty”.
He said that in the Budget the Government would “ continue to reduce the burden of the universal social charge on working families”.
The Taoiseach said the universal social charge led to an unsustainable situation where middle income Irish workers faced among the highest marginal tax rates in all of the industrialised world.
“I believe it is wrong that the Government takes more than half of every extra euro in any pay increases for hundreds of thousands of low and middle income families in both the public and private sectors.”
“In 2016, we aim to bring to 500,000 the total number of low-income workers that we will have removed from the universal social charge net.”
“And following the income tax and universal social charge cuts introduced earlier this year, we will cut the 7 per cent rate of universal social charge to reduce the marginal tax rate on all those earning less than €70,000 per year to below 50 per cent.”
"By steadily reducing the high marginal tax rate in this way, we will not only put more cash in the pockets of working families, but we will also reinforce the economic recovery by encouraging higher participation in the workforce, particularly by women, and by making Ireland a more rewarding location in which to live, work and grow businesses, including for those Irish who left during the recession to work overseas."
Separately, in an interview on RTÉ’s Today with Seán O’Rourke programme, Mr Kenny said the coalition would not go down the road of election promises and put the country “in hock”.
He said a general election would be held in 2016 and he believed voters would focus on who will be best able to provide economic stability.
Back at the national economic dialogue, Minister for Finance Michael Noonan said the €1.2-€1.5 billion the Government has to play within the next Budget was “not the scope that’s in the Budget - it’s the margin of scope that’s in the Budget”.
He said the €1.2-1.5 billion “is the margin of space, but it’s a a narrow enough debate”.
“The last thing you want to see is you look at the next Budget...it’s the last Budget of a political cycle - people talk about election Budgets and so on - I’m not looking at it as the last Budget of a political cycle. I’m looking at it as the first Budget of a new business cycle,” he said.
“So if you think of it on that basis, it widens the debate and makes your inputs far more relevant. You can’t change a country in a Budget, but you can make a fair shot of changing society over five Budgets.”
