Tax cuts have been binned by Brexit, the Finance Minister admitted yesterday.
Paschal Donohue confirmed Ireland’s wealthiest would not benefit from his Budget next month.
He said he was preparing his fiscal strategy on the assumption the UK will crash out of the UK with no-deal.
The news will come as a bitter blow to Taoiseach Leo Varadkar, who has been promised to raise the higher income tax threshold.
Mr Donohoe declared there will be no tax cuts, full stop. He said: “I am not going to do that.
And he added any changes to the welfare model would be minimal – bad news for the poorest and most
vulnerable in our society.
The minister vowed to open his goodie bag in the New Year if the Brexit situation has settled.
He said: We have a well-managed economy. Our public finances have been placed on a sustainable trajectory and economic growth is steady, robust and broadly-based.
“Our labour market is exceptionally strong, with more people at work than ever before.
“However, while the economic situation is relatively healthy at present, there remain a number of significant risks to the outlook, including the increasing likelihood of a no-deal Brexit. A no-deal Brexit will have profound implications for Ireland on all levels. These include macroeconomic, trade and sectoral challenges, both immediately and in the longer term.
“A crucial policy response is to build up our capacity to respond to these challenges.
“This is why the Government is prioritising reducing public debt, establishing a Rainy Day Fund and avoiding pro-cyclical budgetary policies.
“While there are risks ahead there are also opportunities. Our goal is to position our economy to minimise these risks and to maximise the opportunities that lie ahead.
“Basing Budget 2020 on the assumption of a no-deal Brexit is sensible budgetary strategy and one that the Government intends to follow.”
The Irish Fiscal Advisory Council also released a budget advice paper.
One of their main recommendations is that the Government set up a special “prudent account” to house the bumper corporate taxes we are currently reaping.
They advise this because these bonanza payments should not be treated as regular income because they could suddenly dry up.
