The Government has been warned of industrial chaos if it fails to honour its PPF tax commitments in the December Budget. The warning comes after forecasts that the Exchequer surplus is likely to be at least £1 billion less than expected.
The warning came from the President of the Congress of Trade Unions, Senator Joe O'Toole, with SIPTU President, Des Geraghty, also warning that failure to deliver tax cuts could undermine economic confidence. However, the employers' organisation, IBEC, said that not all tax reductions should be delivered to those on lower incomes.
IBEC Director General Turlough O'Sullivan said that the Exchequer figures were not a cause for alarm and more modest growth rates are "not a problem". He warned, however, that the most worrying aspect was the level of current Government spending, which was increasing at a rate six times faster than revenue growth.
Mr O'Sullivan said that a continuation of this trend would plunge the economy back into a 1980s style crisis. He said that money should not be thrown at problems such as health when more far reaching reforms were necessary. Mr O'Sullivan said that some further "prudent" tax relief was possible in the next Budget and called for a significant reduction in employers' PRSI.
Taoiseach Bertie Ahern said that the Government would have to reflect on the fact that revenues are not going to be as high as expected. Mr Ahern said that the reality of the world is that there is a global slow down.
However, he added that Ireland's growth rate at 7% is far ahead of some of the biggest countries in the world. Mr Ahern also said that Ireland is in poll position and it is a question of managing ourselves to remain there.
The Taoiseach questioned Ireland's ability to continue growth at four times the rate of the rest of the world. He added that while Ireland is affected by the economic downturn Ireland's experience is "nothing like the chills of economic downturn being experienced by other countries".
