The Government could cut income tax and the crippling Universal Social Charge (USC) every year for the next five years.
Minister for Finance Michael Noonan told the Dáil the Fine Gael/Labour coalition will have up to €1.5 billion to reduce tax and increase public spend in October's Budget. Mr Noonan said the Budget will be split 50:50, in tax reductions and spending increases, and this could be repeated for a number of years.
“Current indications are that a similar amount of space will be available in later years, while at the same time ensuring the achievement of a balanced budget before the end of the decade,” he said.
As he unveiled the Spring Statement, Mr Noonan confirmed it was his intention to reduce income tax every year until at least 2018.
The Minister for Finance said the Fine Gael/Labour coalition would introduce budgets every year out to 2020 aimed at expanding the economy – only if it is “deemed prudent and appropriate”.
Mr Noonan promised there would be no return to the boom and bust policies that caused the economic downturn.
Minister for Public Expenditure Brendan Howlin also revealed a plan to gradually unwind the pay cuts to public servants is underway.
“Given their value to the State, the unwinding of those measures will take time,” said Mr Howlin. “To do anything else would jeopardise the public finances again – something we will not do.”
But the Government’s Spring statement was attacked by the opposition as just a political stunt.
Fianna Fail’s Public Expenditure spokesman Seán Fleming said Labour and Fine Gael have used the House to launch an election campaign.
His colleague, finance spokesman Michael McGrath, said there is nothing new in the statement announced in the Dáil. “The Stability Programme Update is released every year and done so very quietly and sent to the European Commission,” said Mr McGrath. “There is a token meeting of the Oireachtas Finance Committee. As it happens, in the final year of the lifetime of this Government you have introduced a new initiative.
“We will make it a big set-piece in the Dáil and we will do everything we possible we can to make it about the economy and take away from the mess we have made elsewhere.”
Mr McGrath said the focus should be on dismantling the USC and tackling the mortgage arrears crisis.
Mr Noonan said the Government was “actively” considering a range of measures to strengthen the mortgage arrears framework. He confirmed he would meet the main six lenders to address the high interest rates charged to customers.
Fianna Fail’s Mr McGrath said this was a “weak” and “watery” promise and said leaks to the media had suggested Mr Noonan would come in banging his chest demanding answers.
Renua Ireland TD Lucinda Creighton said the statement was a list of scattered promises that offered no roadmap. "The rhetoric of a departure from the old Charlie McCreevy economics of 'When I have it, I'll spend it' contradicts the visionless tax-and-spend policies set out by the Government."
Mr Noonan said the number of people employed would reach two million by the end of next year and all the jobs lost in the crash will be restored by 2018.
He said 200,000 new jobs will also be created between 2015 and 2020 and said the young people who emigrated are coming back and will continue to do so.
Mr Noonan said all the money poured into Allied Irish Bank, Bank of Ireland and Permanent TSB will be fully recovered. He said this was opposite to the €34 billion that the Fianna Fáil and Green government had put into Anglo Irish Bank, which will never be restored.
Sinn Féin’s finance spokesman Pearse Doherty said you could smell an election around the corner.
He said this was a “damp squib” that meant nothing to the hundreds of thousands struggling to keep heads above water. “The Irish people are cute and they have learnt a lot of lessons in last few years. They know about false promises and they know when an election is in the air.”
Mr Howlin said the Spring statement was about recognising the point the country had reached in its recovery, and setting out the context for Budget 2016.
“As we prepare for Budget 2016 we will look to increase gross voted current expenditure by an additional €600 million to €750 million. This increase will allow Government to deal with underlying demographic pressures in key areas such as Social Protection, Education and Health. It will also allow us to target enhancements in key public services.”
Mr Howlin also stressed the importance of creating employment.
“Reducing unemployment remains the best route to recovery. It increases the tax base and allows investment in public services. By continuing to get people back to work we make our recovery sustainable.”
