Taoiseach Enda Kenny yesterday raised the prospect of further tax cuts in October's budget as Ireland continues its bid to secure more flexibility from Brussels on the interpretation of fiscal rules.
Speaking at the end of a two-day EU summit, Mr Kenny said Irish officials were working with the European Commission to find ways of interpreting EU budget rules that would reflect the real economic profile of the country.
“You don’t want an interpretation of the rule that doesn’t reflect the growing economic strength of the country,” the Taoiseach said, adding that he had outlined Ireland’s strong economic performance to EU leaders during yesterday morning’s session which focused on economic governance issues.
Reduce taxation
Referring to October’s budget he said: “Hopefully we can continue to reduce the taxation burden so that people next year will continue to see another modest increase in their take-home pay. We accept the rules of the European Commission, but the fact that we’re in a very different position than we were four years ago, how best can we interpret the rules with the commission.”
Last week, Minister for Finance Michael Noonan pressed for more flexibility for countries such as Ireland in the interpretation of budget rules during a eurogroup meeting in Brussels, following the European Commission's decision to grant France two more years to reach its deficit targets. In particular, the Government is disputing the economic growth and data projections being used in calculating Ireland's debt and deficit targets.
The need for member states to proceed with structural reforms was emphasised by European Central Bank president Mario Draghi during yesterday's summit. He noted that Europe's recent strong performance was mainly due to external factors such as low interest rates, oil prices and the depreciating euro.
With Greece continuing to occupy minds in Brussels, Ireland's experience of substituting proposed troika measures with its own alternatives during the bailout was cited a number of times, Mr Kenny said. German chancellor Angela Merkel also highlighted Ireland's troika experience in her post-summit press conference, as she outlined how Greece could take "ownership" of political reforms as negotiations continue between Athens and its international lenders.
Mr Kenny said he had spoken to Greek prime minister Alexis Tsipras yesterday, outlining Ireland’s strategy of substituting bailout measures with its own reforms.
“Where a proposal was put on the table by the troika, in some cases Ireland made a different proposition. The outstanding example was the reduction of VAT from 13.5 per cent. That was paid for by the imposition of a pension levy, but that stabilised the industry and created 30,000 new jobs,” the Taoiseach said. “I mentioned to Mr Tsipras that, within the framework that now exists, Greece is getting time and space to make its own recommendations about what’s best in its interests within that framework.”
Mr Kenny was among those who strongly criticised the strategy of the Greek government on Thursday.
Threats
“There’s a difference between political argument and disagreement and threats of releasing jihadists and terrorists in
Europe
. That’s not acceptable,” he said, referring to recent comments by the Greek foreign and defence ministers.
Mr Tsipras is due to visit Berlin on Monday for talks with Dr Merkel as he committed to submitting a new list of reform measures to international lenders “within days”, following a three-hour meeting on the fringes of the EU summit, which finished in the early hours of Friday morning.
Dr Merkel said Greece must stick to “every paragraph” of the February 20th agreement on extending the Greek bailout, though equivalent reforms would also be considered.
