Exchequer returns are positive but focus of Budget 2020 must be on delivery of infrastructure and housing commitments

Following publication of the June Fiscal Monitor, Chambers Ireland calls on Government to ensure that Budget 2020 delivers on commitments for investment in infrastructure.

Speaking this evening Chambers Ireland Chief Executive Ian Talbot said, “While the economy is performing well, continued prosperity is by no means guaranteed. There are a number of economic headwinds which could stall our growth; a no-deal Brexit is a stronger possibility today than it was six months ago, the trade conflict between the US and China continues to escalate, and there are serious problems with the US’s preconditions for trade talks with the EU which could see these negotiations collapse.

Therefore, the continued growth of corporation tax receipts, which are 7.9% above profile, must be managed prudently. It is imperative that we make the best possible use of the Rainy Day Fund and put aside above profile tax receipts. In the context of G20 taxation discussions and the OECD’s BEPS 2.0 strategy, it’s quite likely that 2019 will be the last year where Ireland receives windfall corporation taxes. The strategic objective for Budget 2020, and the ones to follow, is that investment in infrastructure and housing must continue, so we can make up for the deficits in infrastructure and housing that arise from the ‘lost decade’ following the crash. Ensuring that we save surplus receipts will be a good strategy to mitigate against any future threats to economic growth and competitiveness.

Interestingly, excise receipts, which includes income from Carbon Tax on fuel, comes in at just under €2.9 billion in the first half of the year, which is nearly 5 per cent ahead of target. As part of our submission on Budget 2020, we are calling for the immediate ringfencing of carbon tax receipts for investment in green initiatives, including public transport, EV infrastructure, renewable energy and supports for SMEs to decarbonise. This will be a big part of how we can adapt to a low carbon economy and meet the targets set out in the Climate Action Plan.

The Government needs to act prudently and with foresight if our domestic economy is to support the sustainable, prosperous and equitable society we all want to share in.”