DUBLIN: The European Commission has warned the Irish Government against over-reliance on “uncertain and volatile” corporate tax revenues.
The Commission has released its analysis of Ireland’s 2017 draft Budget. Ireland is subject to the preventative arm of the Stability and Growth Pact and is expected to ensure sufficient progress towards its medium-term budgetary objective (MTO) of a structural deficit of 0.5 percent of GDP.
Ireland’s Draft Budgetary Plan (DBP), submitted to the Commission on October 17, projects a general government deficit of 0.9 percent of GDP in 2016. This figure is slightly lower than the 1.1 percent predicted in the 2016 Stability Programme.
The Commission noted that, as in 2015, higher than expected corporate tax receipts will partly offset spending increases in 2016. However, it cautioned that “the uncertain and volatile nature of this source of government revenue would recommend a more prudent management of fiscal policy.”
It said the Government should “use windfalls to accelerate deficit and debt reduction.”
