Ireland's public finances are in strong surplus thanks to surging corporation and income taxes. However, experts warn that the next government must use this opportunity wisely to avoid future spending cuts and tax hikes.
The risk to the next coalition, if it does not pursue a prudent policy, is that it ends up having to cut spending and hike taxes in the second half of its term. Looking up: Minister for Finance Jack Chambers and Minister for Public Expenditure Paschal Donohoe report a strong outcome for the public finances in 2024. ( Photo: Sam Boal/Collins Photo)show that the budget remained in strong surplus as corporation and income taxes surged.
There are concerns about the long-term trends in these taxes and Ireland’s reliance on them, but for now revenues remain remarkably buoyant, helped last year by the Apple receipts. The next government needs to see that as an opportunity which cannot be wasted. In turn this requires two things to happen. The first is a new energy and efficiency in delivering major projects and improving public services. The second is a realistic framework for managing the public finances, based on ensuring that Ireland does not head for another boom to bust cycle. The political appetite for such a framework is questionable. Fiscal prudence is not a vote-winner, and it will be tempting to hope that the tax windfall will continue and to play down the risks. However, the incoming coalition -– likely to be comprised of Fianna Fáil, Fine Gael and a group of Independents – might consider the political dangers, too. The public finances are likely to remain strong this year at least and possibly into 2026. The potential impact of changes made by the Trump administration are more likely to hit from 2026 on – by which time the costs of combatting climate change and dealing with an ageing population will also be increasingly apparent.Ruben Amorim’s anger in Liverpool augurs well for Manchester United Power to the People: The Hot Press Years by Michael D Higgin
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