This comes as Ministers, including the Minister for Finance Charlie McCreevy, and some Opposition politicians make the point that tax increases may have to be contemplated in the coming years if the demands for increased public services exceed key levels.
The panel concludes however that tax cuts will only be possible if spending demands are kept below certain levels. A consensus view suggests that little scope exists for public expenditure to increase by more than 5 per cent a year in the life of the next Government without the need for tax increases.
The panel, whose detailed comments are contained in the report on page 9 of this month’s issue, unanimously conclude that there is further scope for self financing tax cuts at least under some heads of taxation. They also conclude, unanimously, that there are no circumstances in the life of the next Government that see the prospect of tax increases being beneficial.
The panel includes the most eminent economists in Ireland’s financial services sector. They are: Eoin Fahy, senior economist, KBC Asset Management; Austin Hughes, chief economist, IIB Bank; Colin Hunt, chief economist and head of research, Goodbody Stockbrokers; Dr Dan McLaughlin, chief economist, Bank of Ireland; Alan Mc Quaid, chief economist, Bloxham Stockbrokers; Oliver Mangan, chief bond economist, AIB Group; Jim Power, chief economist, Friends First; and Dominic Sutton, chief economist, Investec Ireland.
The survey shows an unanimity of opinion about the causes and sources of growth in Ireland’s Celtic Tiger economy over the past ten years and of what will be needed if the victors in the June election are not to destroy the country’s economic wellbeing.
This fear is reflected in the view of one of the panelists, Austin Hughes of IIB Bank, - ‘the desolation this economy suffered through most of the 1980s should be a salutary lesson that it is far easier to get things badly wrong than to get them right. There are some worrying signs both in recent trends in the public finances and indeed in the early electioneering that many believe that a strong budgetary position and a strong economy are ours by divine right.
There was also clarity that resistance to tax harmonisation in the EU will be essential in the years ahead, despite fears amongst some of a weakening of resolve amongst some politicians and Government departments on the issue with one of the panelists, Jim Power of Friends First, saying that ‘if tax harmonisation is forced upon Ireland, then we can be pretty certain that harmonisation of Irish unemployment up to European levels will follow as sure as night follows day. By all means allow European taxes be harmonised down to Irish levels, but not the opposite. This should become a key issue for the next Government. It is a matter of national survival’. (Full report: Page 9). |
