Noonan denies budget framed for election
Finance Minister Michael Noonan denied that Budget 2015 was designed for electoral purposes but indicated that his strategy to change the income tax system needs three years to implement.
Yesterdayâs budget marked âthe first instalmentâ of that reform, which will see âmost of the benefitsâ directed at middle-income families, he said.
âAlthough we canât announce the individual items for next year â and hopefully, if we win the election, the year after that â the mix of policy levers will be something similar and the objectives will be the same: To target the squeezed middle and to be fair to the people at the bottom.â
Mr Noonan said the plan was âall about securing the recovery, all about job creation â every piece of itâ. !
He said: âWe also wanted to be fair to low income people. But you canât give relief to a lot of low income people because they donât pay income tax.â
Poorer groups will instead benefit from changes to the Universal Social Charge. The point at which they start paying the charge was raised from just over âŹ10,000 to âŹ12,000 in yesterdayâs budget, removing 80,000 people from paying the charge.
Mr Noonan said it was a âcodologyâ to suggest that income tax changes were disproportionately beneficial to higher earners.
âPeople who have more money take home more money. If you have âŹ70,000, you have a bigger take-home pay than if you are âŹ35,000. And you are paying a lot more tax,â said Mr Noonan.
The country is on course to return to a budget surplus â taking in more money than it spends on services â in 2018, marking an end of borrowing for the day-to-day running of the country, he said.
Mr Noonan denied that the tax cuts and spending increases â worth over âŹ1bn â were aimed at buying the next election.
He said his plans were âwell within the rangeâ of reducing the deficit of 3% of GDP.
âA lot of people got stuck in a rut about the bailout and the troika and all the rest of it. We are no longer in a programme and we are no longer bound by their rules,â he said.
âAn excessive deficit would be 3% of GDP and this budget brings it in to 2.7%. We get advice from some unidentified spokes-man in the [European] Commission. Why donât they give the advice to France and Italy? If they really want to be brave. We are totally compliant.â
Public Expenditure Minister Brendan Howlin echoed this, saying there was no point cutting more than what was required.
âWe have a social economy as well as everything else. And people who have had seven years of difficult decisions imposed on them need some relief,â he said at a joint press conference last night.
âUnless you subscribe to the old British navy maxim that you keep flogging until morale improves, we need to give some relief to people in a modest targeted way.â
Mr Noonan said in his budget speech that, in the post-austerity era, the Coalition would not bring the country back to the âboom-and-bustâ policies of the past. Instead, it would proceed with âprudence and cautionâ and build âa better future with a new economic modelâ, he said.