ESRI warns against cutting personal taxes in budget

There is no need for the Coalition to cut personal taxes in the budget next month because economic recovery is already secure, the Economic and Social Research Institute has said.

In its autumn economic commentary, the think-tank goes about clinically demolishing arguments for a give-away budget.

It also cautioned against the introduction of tax breaks to boost the construction of new homes. The report comes as Finance Minister Michael Noonan prepares to unveil an expansionary budget of up to €1.5bn, split between spending increases and tax cuts.

“There has been some suggestion that a reduction in personal taxation rates is needed to consolidate the recovery. However, the recent increase in personal expenditure undermines this notion,” the ESRI said.

With exports surging and consumers starting to spend, the ESRI predicts the economy will expand by up to 6% this year and by a further 4.5% in 2016.