Jack Quann
Jack Quann

11.15 21 May 2021


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There will be no increase to income taxes to help plug gaps in other areas, Social Protection Heather Humphreys has said.

She was speaking after an ESRI report suggested that increases in taxes on income, consumption and property may be needed to fund future public spending.

The report said future spending pressures, combined with potential declines in corporation and motor taxes, mean that "significant future tax increases are likely to be needed" in the years ahead.

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But it said these should be avoided until the economy has recovered from the pandemic.

Minister Humphreys told Pat Kenny that State supports, such as the Pandemic Unemployment Payment, were the right thing to do to help people.

"Obviously we had to borrow significantly in order to pay these State supports to people, but thankfully we have been able to do so because our economy went into this pandemic in a very, very good economic condition.

"And that in itself is going to help us get out of it."

She said the Government was "going to have to make sensible decisions" to get back to a balanced budget between 2024 and 2025.

"But can I be clear: the Programme for Government does not include income tax increases.

"We expect the economy to grow, we're heading into a recovery and I don't believe that an increase in income tax is the way to go.

"But we will take the right decisions and we look at an economy that is expected to grow considerably.

"And I think that we can certainly look forward to a brighter future - but we're just not out of this emergency yet".

The ESRI report said increasing the standard and higher rates of income tax by one percentage point would raise almost €1bn per year - mostly from the highest-income third of households.

While raising the standard and reduced rates of VAT by one percentage point would raise €690m a year.

Economist and author of the report, Dr Barra Roantree, explained: "An aging population, commitments to future spending increases, and potential declines in both corporation and motor tax receipts made the need for significant future tax rises likely even before the pandemic.

"Increases in broad-based taxes on incomes, consumption and property may therefore be needed in the years ahead."

Main image: Minister for Social Protection Heather Humphreys arriving at Dublin Castle for a Cabinet meeting. Picture by: Sasko Lazarov / RollingNews.ie

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Corporation Tax Dr Barra Roantree Esri Report Heather Humphreys Income Tax Income Tax Increases Public Spending Spending Pressures Tax Increases

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