DUBLIN: The Government’s new economic plan will reserve between €1.2 billion and €1.4 billion for tax cuts and spending increases in the budget next October, its last before the general election.
Minister for Finance Michael Noonan wants funds available in future expansionary budgets to be divided equally between tax and spending measures.
Although the Cabinet has yet to sign off on the plan, such a policy would depart from the Coalition’s practice in a series of harsh “austerity” budgets in which spending was cut at a faster rate than tax was increased. In previous budgets, the Government settled on a 60:40 division between spending and tax measures.
The spring economic statement will be unveiled in the Dáil after a Cabinet meeting at which Minister for Public Expenditure Brendan Howlin will seek a formal mandate to enter pay talks with public sector unions.
The statement, which will set a five-year plan for the public finances, assumes the economy will expand this year by 4 per cent.
