Noonan signals possible income tax cut in Budget
Minister criticises unnamed troika 'technocrats' as Ireland leaves bailout
Income tax may be cut in the next budget for “certain groups”, Minister for Finance Michael Noonan has said.
As the bailout draws to a close this weekend, the Minister has also criticised unnamed troika “technocrats” for their lack of political nous during the rescue.
Interviewed today by The Irish Times, he also said the uncompromising approach of former European Central Bank chief Jean-Claude Trichet made his job as Minister more difficult. Mr Trichet’s successor, Mario Draghi, was not as “ideological”, he said.
The end of the bailout will marked in Dublin today a by a succession of Ministerial presentations for international media. Taoiseach Enda Kenny briefed EU diplomats yesterday on the exit strategy.
Citing positive tax returns in November and the general improvement in the economy, Mr Noonan said the possibility of a tax cut in 2015 or 2016 may be emerging. Any such move would be cast as an effort to boost job creation.
“The creation of extra jobs is the absolute priority of the government and if – when we have the resources – reducing income tax for certain groups in the economy creates extra jobs or sustains jobs, then we will do it,” he said.
Asked if that could be done by 2015, he said the Government was prepared to vary tax policy even when it had no resources.
“So it’s a possibility in 2015 and in 2016 and it’s something we certainly would like to do. It depends on the availability of resources.”
Citing the VAT cut for the tourism and other sectors during the course of the bailout, he said taxes were raised elsewhere to pay for that initiative.
However, he would not elaborate on the scope or extent of any income tax cut.
“I don’t see reducing income tax as a return to auction politics. I think auction politics have given us the boom-and- bust cycle and have destroyed so many lives in this country we should never go back there.
“But I see a reduction in taxes on income as a policy instrument that helps the growth in jobs and consequently the growth in the economy.
“So if there were resources available, I would see that as a viable policy instrument.”
No political expertise
Mr Noonan said “some” troika officials exercised no political expertise in their stewardship of the Irish programme.
“Most of the people who were involved in the background of the troika were very smart, very competent technocratic people but they weren’t very good at politics.
“And what I mean by politics is the ability to take a programme forward and keep the support of the people in doing it. And unless you have a troika programme [that] has a buy-in from the people, it just doesn’t work.”
In a separate interview, former International Monetary Fund mission chief to Ireland Ashoka Mody criticised Dublin for not pushing the EU powers to ease fiscal retrenchment to spur economic growth. Now retired from the IMF, Mr Mody said Irish leaders “bought into some of that suffering”. He believes, however, that the Government was not helpless.
“If Ireland said: ‘You know, we really need to do this because we think it is an economically sensible thing to do,’ what exactly was the alternate position of the European authorities? Would they have said: ‘In that case we are going to let you sink?’”
Mr Noonan insisted he had no worries about Ireland’s banks in a pan-European stress test next year.
“I mean, people say things but they’re saying without any evidence. They’re saying all sorts of stuff every day of the week, and most of what was said over the last three years by ‘experts’, in quotation marks, turned out to be incorrect.”