Sir, – The Minister for Public Expenditure Paschal Donohoe has said that a reduction of VAT to 9 per cent could jeopardise any proposed cuts to income tax (Business, August 17th). These comments provide a valuable insight into the mindset of Government Ministers, and indeed our entire political system, in relation to taxation and spending policy.
In a normal democracy, the annual budgetary process involves a balancing act between spending increases on the one hand, and tax cuts or rises on the other.
In Ireland, however, the annual budget charade of recent years has involved spending increases being baked into the process as if handed down to us on tablets of stone, with changes to taxation being balanced not against spending, but against other tax changes.
This is why voters can be openly threatened that any cut to VAT to help small businesses could imperil cuts to their income tax, but massive spending increases of €6.9 billion will continue as planned.
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This same ruse occurred last year as the Government boasted of cutting income taxes by €1.5 billion while clawing almost every cent of it back with increased excuse duty on fuel of €709 million, extra carbon taxes of €125 million, and the increase in VAT of €563 million. Meanwhile, spending increases of €5 billion were jealously protected.
The 9 per cent VAT rate was originally introduced in 2020 at a time when our annual taxation revenue was €82 billion.
It is absolutely extraordinary that even though our overall tax take has risen to €102 billion in 2024, the Government has to force small businesses (and ultimately consumers) to pay more in VAT in order to keep pace with the grossly irresponsible spending commitments they have racked up over the last five years. – Yours, etc,
BARRY WALSH,
Clontarf,
Dublin 3.