Several Government minsters attempted to deny they were trying to “buy the election” in the wake of the European Commission’s heavy criticisms of last October’s budget.
The Government was accused of engaging in “disgraceful auction politics” in the Dáil after yesterday’s Irish Examiner revealed the EU Commission has concluded that the Government is putting the recovery at risk by political budgeting.
During Leaders’ Questions in the Dáil, Social Democrats TD Stephen Donnelly criticised Tánaiste Joan Burton and the Government’s decision to expand spending in the budget by more than €3.3bn, at a time when the economy was already growing strongly.
“The report states that recent fiscal policy decisions are influenced by the current political context, which is the upcoming election and the disgraceful auction politics we are seeing from the Government,” said Mr Donnelly.
The Co Wicklow TD highlighted the report’s concerns saying the erosion of the tax base by the Government is a “damning indictment” and is a tactic “straight out of the Fianna Fáil playbook”.
“What is worse is that the Government parties are only warming up,” he said. “The Fine Gael-Labour Party election promise to eliminate universal social charge will cut the revenue base annually by €4bn to €5bn.
“This, of course, is to be paid for by what the report describes as strong but generally volatile corporate taxes.
“Given that the Government is eroding the tax base and the safety nets have all been used up, when the next economic shock hits — from China or elsewhere, as it will at some point — we will be much more vulnerable than we were in 2008.
“How can the Tánaiste be so irresponsible with Ireland’s finances and Ireland’s future? How can she so blindly repeat Fianna Fáil’s mistakes, which she decried and which led to the crash in 2008?”
Responding to Mr Donnelly, Ms Burton defended the Government’s handling of the economy, saying the commission report expressly praised the progress made by the Irish economy.
“All such reports have issues to raise and want to look forward to risks in the future, which is reasonable and prudential,” said Ms Burton. “I have no issue with that and we have those conversations with the review group on an ongoing basis. There is no problem with that.
“However, these comments in the executive summary recognise that Ireland has achieved a remarkable turnaround and it is the job of the Government to ensure the recovery that has been made to date is not only sustained but grown and that it extends to every single part of the country, so every family and individual benefits.”
Jobs Minister Richard Bruton refuted the Commission’s statement that unstable and temporary tax incomes were being used to make permanent tax cuts.
“I don’t think it is true that we are using volatile taxes,” he said. “The Revenue Commissioners have clearly said that our corporate tax revenue, which has been very strong this year, is based on substance and is sustainable. We are managing a very prudent approach and that’s in sharp contrast may I add to previous government who approached elections with a 20% increase in spending.
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