Minister for Finance Paschal Donohoe has said it would be far better to preserve resources to deal with the possibility of a no-deal Brexit, rather than reducing taxes in Budget 2020.

Yesterday, Cabinet agreed to base Budget 2020 on the assumption that there will be a no-deal Brexit, with Mr Donohoe ruling out any reductions in personal taxation in the upcoming Budget.

Speaking on RTÉ’s Morning Ireland, Mr Donohoe said he would not make the mistake of cutting income tax rates now, only to have to increase them in the next Budget.

Mr Donohoe said there would be a social welfare package in next month’s Budget.

This, he said, would need to be carefully targeted and focused in order to protect the most vulnerable.

The minister said he was actively investigating how carbon tax could be increased and the different options in relation to it.

He added, however, that no decision had been made.

He said any changes to carbon tax will be about changing behaviour and not about raising revenue.

He said the issue of carbon tax will be discussed at the Fine Gael party think-in today. Mr Donohoe said it will not be possible to change behaviour without changing how carbon is priced. 

Mr Donohoe also said overruns last year were not acceptable and things will be done differently this year.

Furthermore he said plans were in place to address the issue of pay for Defence Forces.

It comes after President Michael D Higgins said yesterday that members of the Defence Forces should have incomes that are sufficient to provide for themselves and their families.

Meanwhile, Sinn Féin's Finance spokesperson Pearse Doherty said with a no-deal Brexit increasingly likely, Mr Donohoe should be setting the Budget "with those parameters in mind".

Also speaking on Morning Ireland, he said a rainy day fund was not enough, and instead, there should be a €2 billion Brexit stabilisation fund to support the sectors and regions that will be worst hit.

He said with or without a Brexit deal, a pot of money was needed to support certain sectors in Ireland once the UK leaves the EU.

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Donohoe rules out personal taxation cuts in Budget