IBEC calls for Government to abandon further tax increases

The Irish Business and Employers Confederation (IBEC) has urged the Government to reconsider its plans for further tax increases in a bid to reach its €3.1bn Budget target.
 
However, the business body believes the Government’s review of public sector pay should continue to be a high priority.
 
The Government has outlined its ambition to reclaim €5.1bn more in tax hikes and spending cuts over the next two years; this is part of the state’s plan to reduce the nation’s deficit below three per cent of the value of the economy by 2015.
 
Deficit targets were met last year and are expected to be achieved again this year; if the Government sticks to its guns regarding its austerity plan, the deficit may be as low as 2.2 per cent of GDP in two years’ time.
 
However, IBEC’s chief economist, Fergal O’Brien, believes Ireland’s consumers and the overall economy have already been "taxed enough".
 
Within its latest quarterly forecast, IBEC insists the budgetary adjustment for 2013 should be less than the planned €3.1bn.
 
"We need to press ahead with reducing public sector expenditure, but taking more money out of the economy through tax hikes is the wrong way to go," said O’Brien.
 
"Fixing the public finances can only bring us so far; consumers need to see that the end is in sight before they will start spending again."
 
IBEC predicts GDP growth of 1.8 per cent in 2013. The key forecasts within its quarterly economic outlook include:

• GDP growth at 1.8 per cent in 2013

• Consumer spending to increase 0.2 per cent in 2013 and 0.7 per cent in 2014

• Economic investment to increase 7.1 per cent In 2013 and 13.3 per cent in 2014

• Unemployment to fall to 13.9 per cent in 2013 and to 13.3 per cent in 2014

• Inflation to increase by an average of 1.3 per cent in 2013 and 1.9 per cent in 2014

Image: joshgately (flickr)

Date published 8 May 2013 | Last updated 8 May 2013