Cowen to budget with spending cuts rather than raised taxes

TAX rises are unlikely in December’s budget with Taoiseach Brian Cowen admitting his government will focus on spending cuts rather than further levies on workers to fill a €4 billion hole in the public finances.

He also signalled that a major overhaul of the taxation system as recommended in a report by the Commission on Taxation will happen in the longer term.

Property tax and water charges are among the recommendations in the 550-page report, which Mr Cowen said will be implemented over the coming years.

He said: “We’ve had two budgets during this fiscal year which have seen impositions of personal taxation and pension levies on workers and on taxpayers generally. At a time when the economy is fragile we need to be mindful of the impact of a raising of the taxation burden on labour would have at this time.”

Mr Cowen said in December’s budget that “the preponderance would be on the expenditure side rather than the taxation side”, meaning the introduction of a number of unpopular cuts in health, education and social welfare spending which would further erode the popularity of his Fianna Fáil party which stands at 17% in opinion polls.

“There’s a long-term focus to how you would redesign our tax system in a way that would still reward enterprise, provide equity and fairness in the system and transparency and ensure it provides a sustainable level of income in the exchequer for the provision of public and other services that the people require,” said Mr Cowen.

He said all issues are being considered from the so-called Bord Snip report by economist Colm McCarthy recommending areas where the Government should cut spending.

Speaking in Dublin yesterday, he was responding to comments by Minister for Arts, Sports and Tourism, Martin Cullen who said he disagreed fundamentally with some aspects on the McCarthy report which recommends scrapping his department.

“Culture is really at the centre of what we are going to do going forward and is the biggest growth area in spite of the economic downturn,” said Mr Cullen.

The Taoiseach said he recognised the intrinsic value of culture to society and its importance to the economy. “Ministers have been indicating the areas where they believe a contribution can be made, and we have to provide it within a sustainable budgetary framework,” he said.