Michael McGrath: Tax increases are on the cards

Michael McGrath: Tax increases are on the cards

Minister for Public Expenditure and Reform Michael McGrath. Photo: Julien Behal/PA Wire

Tax increases are on the cards, the Minister for Public Expenditure has warned.

Michael McGrath has said some adjustments to taxes will be needed after the Irish Fiscal Advisory Council (IFAC) raised concerns around up to €8.5bn in increased permanent spending which was announced in Budget 2021.

While Mr McGrath admitted that the public will see some increases to tax in the coming years, he said the measures would be nowhere near as drastic as were seen during the economic crash.

"You can't rule out some tax increases under different headings, but we are determined, first of all to bring about the recovery of the economy," he said.

Mr McGrath said he still stands over the programme for Government, which laid out increases in spending, but he added that when it comes to each individual budget, he will "assess the circumstances".

"We will assess the circumstances at each point in time, but there are a range of tax heads and a range of possible revenue raising measures. But even the Fiscal Advisory Council themselves, acknowledge that we will almost certainly be able to avoid the type of austerity that we've seen in the last decade, because it is our assessment and I think it is shared by them, that the bulk of the heavy lifting here can be done by economic recovery. And that's why we are making the right decision," he told Newstalk Breakfast.

Mr McGrath and Finance Minister Paschal Donohoe will publish their multi-annual budgetary projections in April which he said will "demonstrate the pathway back to a broadly balanced budget".

He acknowledged that Ifac was critical of extra expenditure laid out in Budget 2021, but went on to defend the increases.

About two-thirds of it actually is accounted for by the increase in capital investment and the increase in investment in our public health service.

"I would strongly defend the increase in capital investment, this is the right time to invest, we're able to borrow at historically low interest rates essentially close to zero. And we are going to get things done that need to be done in this country," he said.

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