The Minister for Finance has confirmed that there is up to €1.5billion “wriggle room” available for tax cuts and spending increases in the upcoming October budget.
Speaking ahead of Tuesday's spring statement to the Dáil, Michael Noonan said the money will be divided equally between expenditure and tax measures.
According to Mr Noonan, the Government needs to give people money back and confirmed their will be reductions in personal taxes, USC and income taxes.
However warning against trying to “buy an election” he insisted the Government must be prudent so the country never returns to the “boom and bust” model.
“Under the new European rules even if you have it you can’t always spend it, so we will have some fiscal space and it will be somewhere between €1billion and €1.5bn, but that will be divided equally between expenditure measures and tax measures,” he revealed.
“We are constrained then with the new European fiscal rules. It’s no longer a case of ‘if I have it I will spend it’ as Charlie McCreevy would say. That was bad economics even though it might have been good politics at the time.”
According to the Minister for Finance the economy is growing very strongly, with a growth of 4.8 per cent last year.
“We are predicting an average of growth of 3.25 per cent from now until 2020 and obviously that generates quite a lot of additional tax ‘buoyancy’ as they call it,” he said.
“We need to give people back money in their personal taxes, USC, and income tax. We need to reduce those. We will continue as we did last year on another phase of reduction in the next budget, but there are expenditure requirements as well because many of the services didn’t have sufficient funds so we will hope to make progress on them.”
Buying votes
Insisting the spring statement is not about buying votes in the next general election Mr Noonan said:
“But we have to be prudent, we have to ensure that we never again return to the boom and bust model.
“There is no point in trying to buy an election and going bust the year after the election. What we are talking about now is a very detailed economic paper mapping out the growth potential of the economy from now until 2020 and the manner in which the Government will use those resources.”
Mr Noonan made his comments in Limerick where he visited the Regeneron plant in Raheen.
The biopharmaceutical company, which is located on one the sites of the old Dell manufacturing unit, has hired 150 full time staff at its new facility, its first facility outside the United States.
The $300 million investment in the production facility within an 11.88 hectare site at Raheen Business Park, is on track to commence operations in 2016.
In addition to the 150 full-time staff in place already, the site is expected to see employment rise to over 300 people including scientists, engineers, technicians and administrative personnel.
Some 1,200 construction personnel have worked on-site over the past year.
Mr Noonan said Ireland’s economic recovery has been led by export companies such as Regeneron, which has already become a major part of the local economy.
"Regeneron's investment is a massive boost for Limerick and for the biopharmaceutical sector in Ireland. We are delighted to welcome a leading biopharma company, operating at the cutting-edge of science and innovation, to Raheen," he said.
“With 150 full-time employees in place, over a third of which are from Limerick or studied in this city, Regeneron has already become a major part of the local economy.
“We look forward to seeing Regeneron continue to grow and thrive in the years ahead.”