Budget wish lists point to a Peter Pan economic outlook

With Budget 2023 on the horizon, a raft of submissions are being made to the Government by various groups proposing all sorts of tax and spending measures.

It’s bad enough that political parties engage in populist politics, proposing rafts of tax reliefs, incentives and handouts without any serious effort to explain how they will be paid for or what other State-provided services we will have to do without.

One of the big blockbuster pre-budget submissions landed this week, compiled by PwC — a major lobbyist in the State — and the Family Business Network. It includes no less than 50 proposed measures that will carry a cost to the State, and barely a single suggestion for how any of them will be paid for.

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Some of the proposals would certainly be welcome but others appear simply to be part of a cyclical mantra.

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Take VAT. The submission proposes that the reduced 9 per cent rate on hospitality be extended to the end of 2024.

Hospitality has been living off the 9 per cent rate for most of the past decade. It was first introduced in 2011 in the teeth of the post-2008 crash recession but became politically impossible to remove until the end of 2018 by which time the sector was running at all-time highs. Reintroduced just 18 months later after Covid hit, it has already been extended twice since and is now due to expire at the end of February.

The pitch to have the reduced rate extended for a further 22 months comes as the Irish Tourism Industry Confederation, no less, is taking some in the hospitality sector to task over “eye-watering” and “excessive” pricing.

Similarly, there is the call for a halving of employers’ PRSI “for an initial 12-month period” to provide for the standard business expense of increasing salaries.

Ireland already has one of the lowest rates of social insurance in the EU and a recent landmark report on the sustainability of the State pension scheme has accepted that any solution will involve an increase in PRSI, not a reduction.

Cutting PRSI now only makes grasping that nettle even more difficult, especially — as the example of VAT on hospitality shows — temporary tax reliefs in Ireland tend to be anything but.