The focus of next month’s budget will be on housing, health, making work pay and ensuring Ireland is ‘Brexit-ready’, Taoiseach Enda Kenny told business leaders in Dublin on Thursday.
“We need to make the right decisions to continue to rebuild the Irish economy, help people back to work, and invest in vital public services,” Mr Kenny told an event organised by employers group Ibec.
Mr Kenny said the budget deficit was set to be under 1 per cent in 2016 with the Government’s plan to eliminate it altogether by 2018.
He said the budget adjustment of €1 billion would be two-thirds on additional public spending and a third on tax reductions.
Additional funding would be allocated into priority areas such as housing, transport, health, education and flood defences, informed by the outcome of the mid-term review of the capital plan to be undertaken in the first half of 2017.
The Taoiseach said new tax-related measures were under consideration to support entrepreneurs and innovation.
He said the Government would continue to support the reduced 9 per cent VAT rate for the tourism and hospitality sector provided “prices remain competitive”.
‘Fight fair’
And he said our 12.5 per cent corporation tax rate remains a “cornerstone” of Irish industrial policy and would not change.
“Ireland fights vigorously for mobile foreign direct investment, but we fight fair. Governments over the years have made clear, as this Government has, that Ireland did not and does not do deals with corporates, large or small.”
On Brexit, Mr Kenny said the challenges for Ireland were as “complicated as they are unprecedented”.
“Our priorities for the negotiations relate to the economy and trade, to Northern Ireland and the peace process, to the common travel area and to the future of the European Union itself,” he said, adding that the Government had put a comprehensive contingency framework in place to deal with the key issues.
At the same event, Ibec's new president Anne Heraty said the budget needs to be "Brexit-proofed" with business taxes brought into line with the United Kingdom.
“This should include a radical reform of our entrepreneurs’ capital gains tax regime, along with improvements to our incentives for investment, innovation and up-skilling in SMEs,” she said.
Ms Heraty, the cofounder and chief executive of listed Irish recruiter CPL Resources, also flagged the need to keep labour costs in line with competitor economies, and to avoid pushing up already high overheads in areas such as energy, insurance and legal fees.
On international taxation, Ms Heraty said the Government was right to appeal the European Commission’s recent ruling on Apple’s tax affairs in Ireland.
“All businesses need as much certainty as possible in their trading environments, including the fundamentals of the taxation regime,” she said.
