Low personal and corporate taxes were a "winning formula" to which the Government would remain committed, the Minister for Finance, Mr Cowen, has said.Ahead of next week's spending estimates for 2005, he also underlined the Government's commitment to continued high levels of infrastructure spending.
Reforms and reductions in personal taxes have promoted wage moderation and increased labour force participation, Mr Cowen told a meeting of the IBEC Midland region in Tullamore.
He also reiterated that the Government will maintain the 12.5 per cent corporation tax rate. The Irish Congress of Trade Unions has recently called for an increase in this rate and for a consideration of the appropriate overall level of taxation to pay for public services.
However, Mr Cowen said that low taxes had contributed to higher living standards and the maintenance of a low level of unemployment during the recent worldwide downturn. He added: "Let me be clear that the Government will not be changing a winning formula."
On spending issues, Mr Cowen said inadequate infrastructural investment might fund higher living standards today, "but at the expense of economic growth and consumption in the future". Continued improvements in infrastructure were essential to continue attracting leading edge companies. Next week's estimates are expected to confirm that capital spending will continue as outlined in five-year programmes unveiled last year, with further increases possible on Budget day.
Also yesterday, Mr Cowen launched a report on the case for social finance in Ireland. This type of finance is repayable loan funding to community enterprises and local organisations for infrastructure and services within communities.
The report, by a steering committee with representation for financial and local development sectors and Government departments, argues that with some Government support, social finance can become an additional source of development capital to the community and enterprise sector.
The report proposes that the Irish League of Credit Unions take a lead role in developing policy and strategy in the area.
