TAOISEACH BRIAN Cowen has confirmed that tax increases are inevitable in the Government’s four-year plan to narrow the gap between revenue and spending.
Mr Cowen said yesterday a hike in taxation would be one of three ways the Coalition would attempt to close the €18.5 billion gap between public spending and tax revenue.
He identified tax hikes, spending cuts and growth as the three ways in which the gap could be dealt with.
He warned the present situation was not sustainable and the underlying deficit of 11.75 per cent of GDP had to be cut to 3 per cent by 2014 if Irish people wanted to continue to manage our own affairs.
The Taoiseach said the public finances had to be put into order and international investors convinced Ireland was determined to deal with its fiscal problems in a forthright way.
“That’s terribly important for the country, for us continuing here to be managers of our own affairs and making sure that we’re taking responsibility for the decisions that have to be taken as a nation in the circumstances we find ourselves in.”
Mr Cowen would not be drawn on speculation about a cut to child benefit for higher earners, as was recently proposed by the British government. “It really is idle for me to speculate in respect of any of those areas until Cabinet considers the situation and then comes to its decisions,” he told reporters in Dublin yesterday.
Fine Gael finance spokesman Michael Noonan said last night the role of the Opposition in restoring the economy was becoming critical because the Government was in its dying days.
Mr Noonan added that the Government’s original €3 billion target for next year’s adjustment was no longer sufficient.
He said Fine Gael would be prepared to accept strong budget targets but would not necessarily accept the measures put forward by the Government to achieve them.
“There are different ways of arriving at the same targets,” said Mr Noonan, who added Fine Gael accepted those targets would have to be more rigorous than earlier envisaged. “The Government is playing its last cards but we must be totally responsible in our approach,” he said.
Labour finance spokeswoman Joan Burton said her party had always acted responsibly in its approach to the national finances and had supported the commitment by the Government with the EU to cut the deficit to 3 per cent by 2014.
“We did so voluntarily and without having to be asked. We produced a set of budget proposals last year consistent with the achievement of this target and we will do so again this year,” said Ms Burton.
She added Labour had received no credit for this positive approach from Fianna Fáil, and the Taoiseach and Minister for Finance had repeatedly told people at home and abroad the Opposition had opposed everything.
Sinn Féin spokesman on finance Arthur Morgan yesterday welcomed the offer by the Minister for Finance to give official figures to Opposition parties in advance of the publication of the Government’s four-year budget strategy next month.
“I accept this offer of open disclosure of figures and I look forward to sitting down with the department,” he added.