Ibec said Government should aim for balanced budget without additional corporation tax receipts

Business group has recommended a budget day package of €3bn, with an additional €1.3bn in infrastructure spending

Ibec chief economist Gerard Brady said it was 'really important' in this budget, and other forthcoming budgets, that 'we set out a really strong framework for multi-annual funding of infrastructure'.

Business group Ibec has called for the Government to produce a balanced budget later this year, which does not rely on excess corporation tax receipts and makes investment in infrastructure its number one fiscal priority.

In its pre-budget submission, Ibec has recommended a budget day package of €3bn, with an additional €1.3bn in infrastructure spending under the National Development Plan.

Within this infrastructure spending, it is calling for an additional €250m to fund water and wastewater infrastructure.

To incentivise the building of apartments — of which there has been a significant falloff in recent years — Ibec is seeking a reduction on Vat on new-build apartments to 5%, as well as discontinuing levies on new-build apartments. This will cost €86m, according to the business group.

It is also calls for the Government to resource a single-entity to take on “the statutory powers of oversight, co-ordination and prioritisation of large infrastructure projects through the planning and consenting systems”.

On the tax side, it is seeking to index the top tax band to wage growth by increasing by €2,000, as well as adjustment to tax credits It is also calling for the introduction of a National Training Fund voucher scheme to engage more employers in workforce development.

Ibec chief economist Gerard Brady said if Irish corporation tax receipts per worker were on par with tax receipts in other globalised countries such as Switzerland and the Netherlands, then the Government would be running an underlying budget deficit of €5bn a year.

He said it was “really important” in this budget, and other forthcoming budgets, that “we set out a really strong framework for multi-annual funding of infrastructure”.

“That we make it very clear that above any other fiscal priority, that infrastructure takes the number one in that list, and that it is protected.. We need to be very clear on that to be able to get the capacity into the economy to deliver on major infrastructure projects,” he said.

Mr Brady said the budget must be framed in the context of the ongoing trade tensions and tax reforms in the US.

We need to make the right choices to safeguard our competitiveness and ability to attract and retain business."

The group’s pre-budget submission comes after US president Donald Trump announced he would implement a 30% tariff on EU goods entering the US from August 1, which could have a significant impact on the country’s exports.

Fergal O’Brien, executive director of lobbying and influence at Ibec, said this was a budget that was going to be “predominantly about the stress and pressure in our traded economy and the uncertainty that the potential global trade war continues to have on the economy”.

Mr O’Brien said the upcoming budget needed to be “sensible” and “prudent”, that moves the country back towards an “underlying balance” when excess corporation tax receipts are not accounted for.

On the issue of tariffs, Mr O’Brien said even the current US tariff rate of 10% was “materially hurting a lot of businesses” particularly in the food and drink sector of the economy.

Adding to the pressure on these businesses is the growing strength of the euro against the dollar, which is increasing export prices.