The Economic and Social Research Institute said today that the Minister for Finance should not rule out raising taxes in December's Budget to fund the high level of public spending next year.
At its pre-Budget conference, the institute said that increasing Government borrowing to fund investment in public infrastructure made sense in the short-term.
The conference also heard a warning that Ireland's high minimum wage could make some low skilled jobs uneconomic if the slowdown continues.
Speaking to RTE radio this morning, the ESRI's Dr Alan Barrett said Minister Cowen's options for 2008 were limited by commitments such as public service pay increases.
He said marginal increases in taxes in a range of areas are options which could be considered. Dr Barrett said it would not be a problem to borrow for a short period. He said there would be very little scope for additional spending but cutbacks were not necessary.
Professor Philip Lane of Trinity College says spending on investment and infrastructure should be kept up to help competitiveness, but restrictions are needed on current spending, particularly the public service pay bill.
