Framework for a Pact for Stabilisation, Social Solidarity and Economic Renewal
3. Stabilising the Public Finances
The Government and Social Partners are agreed on the necessity to progressively reduce the level of Exchequer borrowing over the next five years in order to reduce the General Government Deficit to below 3% by 2013 through an appropriate combination of expenditure and taxation adjustments.
The adjustment to be achieved through reductions in expenditure will be based on the following criteria:
- ensuring a fair and equitable spread of the burden of adjustment
- maximising the level of sustainable employment
- solidarity with those now losing their jobs
- maintaining high-priority public investments
- careful forward priority planning
- increased efficiency, effectiveness and a focus on outcomes
The scale of the necessary adjustment requires scrutiny of all areas of public expenditure including agreeing measures on how to constrain growth in public sector pay and pension costs.
(Don't hold your breath - when we get to these in a second, you'll see that there is scarcely any change in Government's traditional modus operandi on public expenditure...)
The adjustment to be achieved through further taxation measures will be informed by the following principles:
- Changes to be fair and equitable with a higher proportion falling on higher incomes while minimising distortionary effects between different forms of tax
- Support the productive sector of the economy to keep Ireland competitive
- Ensuring that tax expenditures are fully evidence-based
- Broaden the tax base and make changes that are straight forward, easily understood and easy to administer
- Additional progressive tax measures consistent with the social solidarity approach
Additionally, given the urgency of the situation and the role that taxation will have to play in bringing stability back to the public finances, the Government is asking the Commission on Taxation to identify appropriate options to raise tax revenue and to complete its report by September 2009.
(So, recap – general taxes will go up, new taxes will be thought up and then there will be more progressive tax measures. And in return, the over-worked civil servicemen and underpaid ministers are going to give us ‘evidence’. And compassion.)
Stay tuned for more...