Taoiseach open to raising taxes as govt formation talks progress 'well'

Taoiseach open to raising taxes as govt formation talks progress 'well'

Taoiseach Leo Varadkar has left the door open on tax hikes in the next government as he said talks were on track with the Greens and Fianna Fáil to form a government by mid-June.

Speaking as Labour ruled out going into government formation talks, Mr Varadkar said he was "disappointed" Alan Kelly's party would not join the coalition effort:

He said talks with Fianna Fáil and the Greens were "going well".

He said: "I'm still confident it will be possible to negotiate a programme for government, ideally before the end of the month, and then put it to our various parties for ratification and be in a position to form a new government by the middle of June.

"But I don't think anyone can be under any illusions. It's not going to be an easy time to be in government. The economic consequences of this emergency are going to be very severe, in terms of jobs lost, in terms of businesses that won't reopen again.

"The impact on the public finances, we can borrow very cheaply now but it will be a foolish person to assume that will always be the case in the next five years. So it's not going to be an easy time to be in government."

Mr Varadkar said none of the three parties had ruled out tax increases.

He added: "It may be possible, or maybe it may be necessary at some point down the line, the taxes have to be increased and I know one tax that all three parties have agreed would be to increase the carbon tax."

Fine Gael favoured not increasing the 12.5% corporation tax, or increasing income tax or USC, he said, adding that incentives were needed for consumers to restart the economy

"This recession will turn into a depression. If we're in a position where we get back to cutting people's pay or cutting welfare, or increasing income taxes. we've been very firm about wanting to avoid that."

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