The Taoiseach has said that while there will be tax cuts and a welfare package in the next budget, it is also important to reduce the country’s debt levels and build up an “anti-austerity fund” for the future.
Leo Varadkar was speaking at the Bloomberg New Economy Gateway Conference in Wicklow and was asked about how the Government will spend the record level of corporation tax revenue it is currently receiving.
Mr Varadkar highlighted the fact that the country’s €250 billion debt is quite high on a per capita basis and that if someone was running a household budget, they would not ignore the debts.
“Yes – we will reduce income taxes, yes – there will be a welfare package in the budget to help people with the cost of living particularly pensioners and people on social welfare and yes – we will invest more in capital infrastructure but it is also important that we set aside some of that windfall gain and pay down debt,” Mr Varadkar said.
“Sooner or later it will come to pass that revenues will fall, it might be three years, six years or ten years, but I don’t want a future government to be in the position we were back in 2011 when my party came to office,” he added.
“What we are not building up is a rainy-day fund, what we are building up is an anti-austerity fund so that when that day comes, when revenues fall off, we won’t have to cut pensions, we won’t have to increase income taxes, we won’t have to cut back on investment,” Mr Varadkar said.
The Taoiseach said energy supports are linked to energy prices and that they will not be withdrawn too quickly.
He said that while inflation is slowing, overall prices are not coming down.
The Government would continue to focus on areas it can have an influence on such as childcare, he added.
“When you see rises in the cost of living, it is not unreasonable for people to say they should see an increase in what they are paid, an increase in take home pay after tax, and that is something we can afford,” Mr Varadkar said.
Asked about Brexit, the Taoiseach said a future UK government may seek a closer relationship with the EU and that the door will always be open.
The Minister for Finance Michael McGrath also attended the Bloomberg New Economy Gateway Conference.
Speaking to reporters at the event, he said that the concept of a longer-term resilience fund is something they have been working on for a number of weeks and that he will be bringing proposals to the Government on the plan shortly.
“Because the surpluses are largely going to be sourced from revenues that are potentially quite volatile in nature, corporation tax revenues which may well be of a windfall nature, and given that we know there are real costs coming down the line given the changing demographics of the country, I think it does make sense to put funding away into a longer term fund, a reserve fund, a resilience fund which will be available to meet those costs into the future,” Mr McGrath said.