DUBLIN – Ireland’s tax collections are beating targets and have put the country on course to achieve normal deficit levels after six years of austerity, the government announced Tuesday.
Finance Minister Michael Noonan said the unexpectedly healthy figures — deficit spending so far this year of 6.3 billion euros ($8.25 billion), 1.3 billion euros ($1.7 billion) less than original forecasts — meant that the next round of spending cuts and tax hikes in his 2015 budget “will be significantly less than forecast.”
The Department of Finance said reasons for Ireland’s rising income and declining deficit included a steady fall in unemployment to a five-year low of 11.5 per cent; growing income tax collections and declining welfare payouts; strong sales tax collections as consumer confidence recovers; and the government’s own accelerated repayment and preferential refinancing of its debts.
As part of Ireland’s 2010-2013 international bailout, European Union and International Monetary Fund officials required Ireland to set deficit-cutting targets through 2015 involving a rolling program of spending cuts and tax hikes. Ireland has exceeded all of its deficit targets so far and looks likely to beat the 2015 deficit goal of 2.9 per cent of GDP.
The official austerity goal for the 2015 budget, due to be unveiled Oct. 14, was to introduce another 2 billion euros’ worth of measures, including a deeply unpopular new tax on water. Many in Ireland’s coalition government now argue that this target would amount to overkill and cause unnecessary damage to Ireland’s fragile return to growth.
But Noonan stressed Tuesday that Ireland still was borrowing around 800 million euros ($1 billion) per month to fund government services, so more austerity was required, including the water charge. The first bills are being mailed this month to several hundred households, virtually none of which have water meters.
Online: Department of Finance, http://www.finance.gov.ie/