Ibec chief dismisses economics of MEP Ming

The head of the country’s biggest business body has dismissed the economic policies of new MEP, Luke ‘Ming’ Flanagan.

Danny McCoy was emphasising the importance of cutting taxes in order to increase government revenue. He said that by lowering taxes, the increased activity in the economy would more than make up for any loss in exchequer revenue.

“The tax cuts are to deliver more tax revenue — cut the taxes to increase the revenue. It won’t go down well in Roscommon with Flanagan ‘Ming the Merciless’ territory, but that is exactly what we are talking about — cut the taxes and increase the revenue, that comes from the increase in activity, that’s the simple message from this,” he said.

Ibec believe the time for austerity has passed and that the economy has moved into a new phase of the recovery where there needs to be tax cuts and investment in infrastructure to gear the country up for growth.

Mr McCoy said that he had already spoken to members of Cabinet on the €2bn in savings required by the troika plan.

Mr McCoy said economic projections that Ibec have carried out show the growth in the economy will naturally deliver that €2bn in extra tax revenue with out any action taken by the Government.

“The €2bn will be delivered by the buoyancy that is already in the economy. GDP is €170bn; the economy this year by Ibec prediction in volume is going to grow 3%, and when you put on the price of another 1%, it will grow about 4% in money terms.

“So 4% of €170bn is €6.8bn. The Government gets 30% of that by changing nothing. So over €2bn will be delivered by what we already know is going through the economy at the halfway point of the year, and that will carry on into 2015 when the budget will be framed. So the €2bn shouldn’t be in conversation. The austerity piece is over.”

Ireland has become the most progressive tax regime in the OECD, with the higher tax bands increasing. Mr McCoy said that while gross incomes look vastly different, Ireland has one of the fairest regimes when net income is examined.

“One of the single biggest issues emerging is unrealistic wage expectations beginning to develop. This is understandable considering the pressures that are on people from wage cuts and tax rises.

“In order to insure that growth is not choked off by excessive wage demands, we need to consider how to insure that tax cuts that are coming, and will be accelerated by the results of the election, that they are used in a productive way and reward people at work.”

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