No significant tax increases in December, hints Noonan

THE Government will resist imposing significant tax increases in December’s Budget, Finance Minister Michael Noonan implied in an address to the accounting profession yesterday.

Addressing the Leinster Society of Chartered Accountants, Mr Noonan said that Government is: “Acutely aware that tax rates, in some areas, are already high and significant increases would be harmful to economic activity.

“Our overall approach, on the revenue side, therefore, will involve a broadening of the tax base while maintaining rates as low as possible.”

On the subject of the potential fiscal adjustment for next year, Mr Noonan repeated the key target of getting the budget deficit down to 8.6% of GDP next year. “The importance of adhering to our targets cannot be overstated,” he remarked.

Last week, Mr Noonan said that if the target can be achieved through a €3.6bn adjustment then it will, but if the adjustment needs to be higher, it will only be a marginal increase.

In his speech yesterday, the minister outlined as the four main challenges facing the Irish economy: restoring sustainable economic growth; getting people back to work; continuing the bank restructuring process and putting the public finances on a sustainable path.

He told the luncheon meeting that market sentiment towards Ireland has improved, “with a clear de-coupling from other programme countries, evident since the summer”.

“While sentiment is not yet consistent with a return to market-based funding, we’re moving in the right direction. Of course, we cannot — and we will not — be complacent,” he said.

The minister also touched on the former Anglo Irish Bank (now part of the Irish Bank Resolution Corporation along with Irish Nationwide), saying that a re-engineering of its promissory notes over 30 years at “more favourable rates” would lead to a “serious reduction” in the country’s debt burden. It was reported yesterday that Anglo is close to finalising the sale of the first part of its $9.2bn US-based loan book.

Mr Noonan also reiterated that Ireland’s 12.5% corporation tax for multinational firms is “here to stay”.

Prior to yesterday’s event, the minister described the new EU economic agreement as “a quantum leap towards a solution to the debt crisis”. He welcomed the fact that the recapitalisation programme for the continent’s banks — as part of the wide-reaching deal — outlined by the European Banking Authority, shows that the Irish banks will not need any more state aid.