Lenihan not ruling out income tax rise

MINISTER FOR Finance Brian Lenihan has said he is not ruling out income tax increases in the future. He said current borrowing was “unsustainable in the medium term” and a radical re-evaluation of day-to-day expenditure would be ongoing.

Speaking on RTÉ radio yesterday, the Minister said he would be bringing proposals to the Government on a programme of “examination of public expenditure” this week.

Mr Lenihan said the decision to have an early Budget was a wise one because it had begun “the essential process of public understanding of the gravity of the position we are in, in financial terms”.

Some 10 per cent of public expenditure would be borrowed this year, he said, which was unsustainable.

He said he was not ruling out income tax increases and was waiting for a report from the Commission on Taxation that would outline how the income tax system could be reformed.

“The essential issue facing the Government is the need to reduce that overhang in public expenditure,” he said. “We can’t continue to borrow for day-to-day purposes . . . we have to adjust our expenditure to ensure that it corresponds to what we can afford, we don’t have any option on this.”

He also defended the differences in the Budget, presented in mid-October, and the Finance Bill presented to the Dáil last week. He said it was not radically altered.

“The Finance Bill worked out the detail of the budgetary decisions and the budgetary arithmetic . . . It stands up and stacks up . . . and there’s no dispute about that,” he said.

Mr Lenihan also said he was confident the Government would stay together in the face of difficult budgetary decisions in the future.

“We are focused on leading this country out of its current difficulties,” he said. “It’s a difficult, difficult focus but I’m confident we have the resilience . . . to pull ourselves out of the difficulties.”