ESRI warns against tax cuts in Budget

Monday 14 July 2014 19.10
John FitzGerald said the Government must continue to cut expenditure and increase taxes
John FitzGerald said the Government must continue to cut expenditure and increase taxes

The Economic and Social Research Institute has warned that tax cuts in the Budget would be premature.

It comes after Taoiseach Enda Kenny vowed to cut the top rate of income tax for low and middle-income earners.

Speaking on RTÉ's Morning Ireland, Professor John FitzGerald said the Government must continue to cut expenditure and increase taxes to the tune of €2 billion.

He said Ireland is beginning to see a turning point in the economy, but that it will be 2016 before any real room for manoeuvre in the public finances occurs.

Professor FitzGerald said there is a chance that figures may look better come September and allow for a reduction in the necessary cuts.

However, he said water charges will need to be raised further by future governments to make them pay adequately.

"The problem for the Government is they've got to actually take money out of the economy this year and if they want to have tax cuts they've got to take more out to leave room for it," Prof FitzGerald said.

"It's too early to talk about an end to cuts, hopefully by next year, then you will be reaching a situation where, if things are going well by 2016, the Government won't have to take cuts."