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Tax increases are in the cards, warned the Minister of Public Expenditure.
Michael McGrath has said some tax adjustments will be needed after the Irish Tax Advisory Council (IFAC) raised concerns about up to 8.5 billion euros in a permanent spending increase that was announced in the 2021 Budget.
While McGrath admitted that the public will see some tax increases in the coming years, he said the measures would not be as drastic as they were seen during the economic crisis.
“Some tax increases in different areas cannot be ruled out, but we are determined, in the first place, to achieve the recovery of the economy,” he said.
Mr. McGrath said he still supports the government’s program, which calls for increases in spending, but added that when it comes to each individual budget, he “will assess the circumstances.”
“We will assess the circumstances from time to time, but there are a variety of tax chiefs and a variety of possible revenue collection measures. But even the Tax Advisory Council itself recognizes that we will almost certainly be able to avoid the kind of austerity that we have seen in the last decade, because it is our assessment and I think it is shared by them, that most of the heavy lifting here can be done through economic recovery. And that is why we are making the right decision, “he told Newstalk Breakfast.
Mr. McGrath and Finance Minister Paschal Donohoe will release their multi-year budget projections in April, which they said will “show the way back to a broadly balanced budget.”
He acknowledged that Ifac was critical of the additional spending established in the 2021 Budget, but continued to defend the increases.
“I would strongly advocate for increased capital investment, this is the right time to invest, we can borrow at historically low interest rates essentially close to zero. And we are going to do the things that need to be done in this country,” he said.
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