A trade union-linked economic think tank has suggested that Budget targets could be reached without having to make any cuts to Government spending.
The Nevin Economic Research Institute has said most of the adjustment could come instead from a doubling of the planned tax increases, targeted at high-income households.
In its latest Quarterly Economic Observer, it said the Budget adjustment should be done in a way that avoids causing damage to domestic demand.
The Nevin Institute said the Government’s plans for a €1.25 billion tax rise, and a €2.25 billion spending cut, will further delay recovery of the domestic economy.
It added that it will reduce employment by around 30,000 jobs.
The Institute urged the Government to boost the economy by not making these cuts, aside from a planned saving of €400m in efficiencies under the Croke Park Agreement.
The think tank also said the Government should restore the planned €500m cut in capital spending.
These measures, it argued, would result in 21,000 more jobs than the Government’s plans, saving on social welfare payments, and yielding additional tax revenue.
The quarterly report said €1 billion in extra taxes would be needed, additional to the Government’s planned tax rises.
These should be targeted at the top 20% of tax cases - those earning more than €100,000 a year - who would end up paying an average of €1,500 a year extra.
This would result in an adjustment of €2.7 billion, rather than the €3.5 billion planned by the Government.
The Nevin Institute said that the resulting economic growth would mean the State could meet the Troika target of a budget deficit of 7.5% next year.
