In an unexpected announcement, the Minister for Finance, Mr McCreevy, said yesterday that Budget 2002 would not be presented until December 5th, 2001. It had been expected in September or October following the decision last year to align the income tax and calendar years from 2002. The Department had indicated an autumn date would be required to enable the implementation of Budget taxation and social welfare changes on January 1st, 2002. These changes will now be delayed until late February. Economists were surprised by both the timing and content of the announcement. Davy chief economist Mr Jim O'Leary said he was driven to the conclusion that the main criteria for the December date must be political.
If the main criteria for deciding the date had been administrative, it would indicate that the Budget would be at least four to six weeks earlier than the December date to allow for the introduction of the Finance Bill, he explained. A Department spokesman said an autumn Budget was considered. He said the main problem was that this would be too early to have reliable tax and expenditure figures for 2001 and the margin of error in framing the new Budget would be too large.
Social welfare recipients will receive their new rates of payment from mid-February. At the same time, they will receive a lump-sum payment to cover arrears owed due to the delay in payments. Budget 2002 tax changes will come into effect around the end of February and once-off correction payments will be made to cover arrears arising from January 1st, 2002.
In a statement, Mr McCreevy said there were "a number of complicating once-off factors in relation to the implementation of Budget 2002". However, the Department of Finance has been aware of these once-off factors since before Budget 2001.
Commenting on the announcement, Friends First chief investment strategist Mr Jim Power said: "When, last December, the Minister indicated an October 2001 Budget he was aware of the issues involved for implementation in January 2002. But perhaps he could have underestimated their administrative significance.
"On the other hand, by waiting as long as possible to hold the Budget, the Government will have more evidence of slower growth in the economy and will therefore be in a stronger position to introduce another expansionary/election winning Budget. "Furthermore, assuming an election is not held this year, an expansionary Budget in December would be fresher in the minds of the electorate in spring 2002."
