Brian Hayes expects Fine Gael-Fianna Fáil compromise on tax

Both parties know they are fighting over ‘peanuts’ in budget, says MEP

Brian Hayes MEP said “ultimately there will be a deal on tax” as both Fianna Fáil and Fine Gael want the budget to go through. Photograph: Alan Betson

Brian Hayes MEP said “ultimately there will be a deal on tax” as both Fianna Fáil and Fine Gael want the budget to go through. Photograph: Alan Betson

 

Fine Gael MEP Brian Hayes said on Wednesday he expects his party’s disagreement with Fianna Fáil over the universal social charge (USC) and income tax to be resolved before Budget 2018 is outlined next month.

Fianna Fáil is insisting the Government stick to terms of its confidence-and-supply arrangement with Fine Gael and tackle the USC charge by cutting the middle rate from 5 per cent to 4.5 per cent. However, Minister for Finance Paschal Donohoe is focusing on widening tax bands to provide some relief for people on middle incomes.

Speaking at The Irish Times/PwC Pre-Budget 2018 Tax Summit in Dublin, Mr Hayes, a former minister of state with the Department of Finance, said “ultimately there will be a deal on tax” as both Fianna Fáil and Fine Gael want the budget to go through. He said Mr Donohoe and Fianna Fáil finance spokesman Michael McGrath are due to discuss the matter later this week and that a compromise will ultimately be reached.

The Government currently expects to have €300 million to play with in the upcoming budget, with one-third of this earmarked for tax cuts and the remainder for spending.

Political consensus

Fine Gael and Fianna Fáil “both know that the space is minimal if we’re talking about a budget of €50-€60 billion and we’re fighting over €300 million,” Mr Hayes said. “It’s peanuts.”

Fianna Fáil finance spokesman Michael McGrath said to the summit that Ireland’s main parties need to work on achieving a “political consensus” on various budgetary matters. “There’s been a deficit in our country and our politics over many decades – a lack of proper long-term planning, whether it be in the areas of pension policy, capital investment, enterprise policy and, certainly, in the area of education,” Mr McGrath said.

Meanwhile, Mr Hayes dismissed as “daft” the notion of Ireland appointing a Brexit minister, as most other EU states won’t have a counterpart and would only be interested in speaking to the Taoiseach or Minister for Finance on Brexit-related matters. Brexit planning “should always be in the Taoiseach’s department, in my view”, he said.

Mr Hayes also said the Government “could probably be a bit more ambitious” in terms of money being set aside in a so-called rainy day fund from 2019.

The Government aims initially to put €500 million a year into the fund, half the level outlined by former minister for finance Michael Noonan last year.