IRELAND WOULD BE better off creating its own fiscal rules to rein in spending instead of relying on the EU\u2019s framework, which gives the government too much leeway, according to the Irish Fiscal Advisory Council (Ifac).\u00a0\u00a0<\/p>\n
The fiscal watchdog issues a statement outlining issues and recommendations before the budget announcement every year. Last year it expressed concern about high levels of government spending and this year\u2019s statement is no different.\u00a0<\/p>\n
In its pre-budget submission, Ifac said the EU rules \u2013 which use GDP to determine spending, debt and deficit limits \u2013 are \u201cnot appropriate\u201d for Ireland because of the country\u2019s heavy reliance on risky corporate tax receipts.\u00a0<\/p>\n
Essentially, assessing the health of the public finances using GDP does not make sense because so much revenue comes from a small number of multinational corporations, which gives a skewed picture of the \u201creal\u201d economy.<\/p>\n
Corporation tax receipts currently make up 23% of total government revenue.\u00a0<\/p>\n
According to the EU rules, a government deficit is considered excessive if it is higher than 3% of GDP, and a\u00a0government\u2019s debt is considered excessive if it is higher than 60% of GDP.<\/p>\n
In its Spring Economic Statement, the Department of Finance forecast a deficit of \u20ac1.2 billion for 2026 compared to a surplus of \u20ac7.1 billion last year. In the first quarter of this year, the government recorded a surplus of \u20ac0.8 billion.\u00a0<\/p>\n