Cliff Taylor: Investment plan removes option of tax cuts
Vital infrastructure can bolster economy but delivery will be a huge challenge
Computer-generated image Metro North: investment spending lets the economy grow more quickly by increasing its productive capacity.
Minister for Finance Paschal Donohoe: with big increases in State investment spending planned for 2019 and 2020, further tax cuts and more day-to-day spending may push the economy into overheating. Photograph: Clodagh Kilcoyne
Choices, choices. The rows are now starting about what projects are in and out of the Government’s new investment plan. We can expect much more entertainment here in the weeks ahead. Some of these debates will be important – like whether the Dublin metro plan is the right way to go. And some will be purely political and be about who “wins” and “loses”, though of course this will not be the way they are presented.
But underlying this whole strategy is a choice – and a really big one. We are committing ourselves to spend more – a lot more – on capital investment projects and so we will have less cash elsewhere. This will mean not cutting the overall tax burden and settling for slower increases in day-to-day spending. In other words, this Government is placing its political bets on the capital plan.