Small tax cuts on the cards
Exchequer figures for August showed the amount the Government collected in income taxes and excise duties again fell below target
However, the exchequer still generated almost €30.5bn from all tax receipts in the first eight months of the year, missing its target by a small amount. And a tax expert said the tax figures should pave the way for small cuts in income taxes for middle earners.
“What it likely all means is that most taxpayers will see only very modest tax cuts in this year’s budget,” said Grant Thornton tax partner Peter Vale.
“The expectation is that middle-income earners will be the biggest beneficiaries with little to suggest any cut to the top marginal income tax rate will be accommodated in this budget.”
In a pre-budget statement, the Irish Fiscal Advisory Council said Mr Donohoe has less room for tax cuts and spending increases than may appear because the carryover costs of commitments the Government made in the past will box him in.
Mr Donohoe will be safe from potential EU spending breaches if he sticks to an early summer plan for a package of €1.7bn in tax and spending measures, the watchdog said.
The full year costs of earlier tax cuts and pension increases, and the cost of the public sector pay deal, as well as the costs of an ageing and growing population, will mean the Government effectively has only €500m of the €1.7bn for new measures, if it is to adhere to the EU fiscal rules, the IFAC said.
IFAC chair Seamus Coffey said there was little sign of weaknesses in the overall tax revenues. And over a year after the referendum, Britain’s plans to leave the EU do not appear to be weighing to any significant amount on the Government’s revenues so far, he said.
Meanwhile, the exchequer figures showed government spending was “under control”, Davy Stockbrokers said.
