Budget 2026, announced two days ago, made some sectors happy, especially those in the hospitality and hairdressing sector with the expected move to a 9% VAT rate.
But the Budget watchdog, the Irish Fiscal Advisory Council has questions on the budget, especially when it comes to the spending targets announced, and also the lack of long term planning.
The Council is also concerned that so much of the corporate tax yield is being spent as quick as it comes in.
Speaking on RTÉ's Morning Ireland, the Chair of the Irish Fiscal Advisory Council, Seamus Coffey, said the Government has estimated it will run a surplus of around €10 billion, which he said seems "pretty significant".
"But if you look to next year, the figures they included in the Budget they published this week, that surplus is set to reduce to €5 billion. This is at a time that the economy is performing strongly and we know that there's bumper corporation tax receipts, and the surplus is set to decline to €5 billion," he said.
"If you look at those corporation tax receipts - next year they project that they will be €34 billion. If you're collecting €34 billion and at the same time only running a surplus of €5 billion, that means that most of those corporation tax receipts are being used to fund ongoing expenditure."
Mr Coffey said the Government had indicated last year that spending in 2025 would be €105 billion.
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
"If you look at this week's Budget, which nominally was for 2026, we see that spending for 2025 has been increased to €109 billion. That's a €4 billion increase," he said.
"If that pattern was to be repeated for 2026, then that €5 billion surplus would be all but eliminated. In an economy performing very, very strongly with bumper corporation tax receipts, we'd do no better than balancing the books," he added.
Mr Coffey said the Budget was "quite disappointing" in that the fiscal forecasts go no longer than 2026.
He said that under EU rules, the Government was set to produce a five-year plan, and it had been suggested it would be published during the summer.
"That didn't happen," he added. "We possibly might have expected it to be published with the Budget, that didn't happen again. So in a sense we're kind of flying blind with what the Government's plan is for the public's finances over the next few years".
"There is no plan, not even is there a framework around which a plan might be based to set out the financing of Government services, of income supports, of capital projects, beyond the end of next year," he added.
