Government's budget reliance on corporation tax intake 'has echoes of the past'

The Government's budget reliance on corporation tax intake "has echoes of the past" and could cause another crash unless clear protections are put in place.

The Irish Fiscal Advisory Council chair Seamus Coffey issued the warning as he called for realistic budgets and said the economy is at risk of over-heating due to the spending promises being made.

At the latest Oireachtas budgetary oversight committee, Mr Coffey said he stands by a 2016 report in which he said Ireland's corporation tax rate intake - the majority of which is from multinationals - is sustainable until 2020.

However, he added the source of the income has been "clearly highlighted as a risk" as it could be significantly reduced overnight if foreign firms leave.

He added that the focus on corporation tax intake is similar to the stamp duty budgetary issues at the end of the Celtic Tiger. He told Fianna Fáil finance spokesperson Michael McGrath: "It has echoes of the past."

Asked at the same meeting by Sinn Féin finance spokesperson Pearse Doherty to comment on suggestions the Government's latest budget has breached sensible budgetary planning, Mr Coffey said ministers "didn't stick to the plan".

He said the "very large increase in spending for 2019" is a worry adding "we would like to see a budget that is credible... we'd like to see the Government set out a plan that's within range and prudent".

IFAC council member Martina Lawless said Ireland's GDP could drop by 4% in any Brexit scenario.

However, in the event of a feared no-Brexit deal, she said GDP could be hit by as much as 8%, saying "it's not unreasonable to suggest it would double the effect" on this country.

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