O’Dea denies tax increases are ‘inevitable’

The Government today denied Opposition accusations of "inevitable" tax increases to cover increased public expenditure.

In a heated debate on RTÉ radio, the Minister of State at the Department of Finance, Mr Willie O’Dea, clashed repeatedly with Labour’s finance spokesman, Mr Pat Rabbitte, over current Government spending.

Mr Rabbitte insisted further cuts and tax increases were "inevitable" because current expenditure was running at 21 per cent, far outstripping Government Budget predictions of a 14.5 per cent rise for the year.

"This can only mean that further additional savage cuts are on the way for the remaining four months of the year," he said.

But Mr O’Dea said: "You’re going to see policy implemented to bring expenditure in at 14.5 per cent as was promised in the Budget," he said, adding the Government will do "whatever it takes" to achieve this.

"We all know that economic forecasting is a pretty hazardous business, particularly in these times of great international uncertainty," he said in defence of the Minister for Finance, Mr McCreevy.

He said the projection for annual inflation of 4.2 per cent at the start of year now looks like being 4.5 per cent. Growth is projected at 3 per cent of GDP, down from 3.5 per cent, which means a tax shortfall of around €500 million, "less than the Department of Health spends on postal services and telephones". There would be a "slight surplus" by the end of the year, Mr O'Dea claimed.

But Mr Rabbitte insisted the Government had misled the public in the lead-up to last May’s General Election and that there was no provision for a €7.7 billion investment in the public health system as promised. "Rather, there is a provision for cuts," he said.

He also accused them of deliberately misleading the electorate and setting out to buy votes for the 18 months prior the election. "The Department of Finance is now disowning the promises made by the Government parties before the election further exposing that they were a sham".

"If the Government deceived the electorate prior to the electorate, then it had a lot of accessories in that deception," Mr O’Dea said.

Fine Gael and Labour parties knew the Budget figures when they were preparing their pre-election manifestos, so their pledges were based on "equally unsound foundations", he said.