Political parties were warned on proposed tax cuts in manifstos

Department of Finance said cuts may have to be offset by other measures under new rules

 Derek Moran, Department of Finance secretary:  sent  pro-forma letters to Fine Gael, Fianna Fáil, Sinn Féin and Labour. Photograph: Aidan Crawley

Derek Moran, Department of Finance secretary: sent pro-forma letters to Fine Gael, Fianna Fáil, Sinn Féin and Labour. Photograph: Aidan Crawley

 

The Department of Finance adopted a firm line with political parties when costing manifestos before the election, warning them that proposed tax cuts may have to be offset by other measures under stringent new budget rules.

The warnings from the department’s secretary general Derek Moran were issued in pro-forma letters to Fine Gael, Fianna Fáil, Sinn Féin and Labour when returning costings to them on proposed tax policy options.

The parties were also told that the department should not be represented as endorsing any proposals costed.

The documents, which are largely technical, were published online yesterday as the Department of Public Expenditure published voluminous documents in which the parties sought to cost proposed spending plans.

“Until Ireland has reached its objective [under EU rules] of a balanced budget in structural terms we may not introduce discretionary revenue reductions over and above the available fiscal space permitted under the expenditure benchmark unless they are matched by other revenue increases or expenditure reductions,” the parties were told.

Fine Gael submitted a request for the full-year cost – €3.7 billion – of eliminating the universal social charge (USC), the core element of its campaign.

While a costing request was also made on a proposed childcare tax credit, the department replied that it was not possible to estimate the cost on the basis of Revenue data.

Fianna Fáil’s sought costings for capital gains tax cuts for entrepreneurs and to expand the operations of the Irish Fiscal Advisory Council.

Loss of revenue

Labour sought costings for a long list of tax proposals, including the elimination of the 3 per cent USC surcharge on non-PAYE income above €100,000.

Fine Gael also sought the breakdown of costs to ensure courthouses remain open through summer period.

It wanted a breakdown of major costs for a High Court, a District Court, and a Circuit Court operating 48 weeks a year, five days a week. The total pay and non-pay cost was €3.78 million, but no account has been taken of the possible additional judicial resources that would be required