Institute calls for halt to cuts

12th July 2012

A trade union-supported think tank has proposed a halt to overall
spending cuts, an investment stimulus, and gradual growth-friendly
increases in revenue to reduce the public sector deficit. In its second
quarterly observer, published in June, The Nevin Economic Research
Institute (NERI) said these measures would leave Ireland close to
European norms of spending and taxation while avoiding further damage to
services, income supports and domestic demand.

NERI director Tom Healy called for a more gradual approach to fiscal
adjustment to help domestic demand recover and allow investment to have a
positive impact on employment and output. “Stimulus through investment
and holding to the current level of public spending could help restore
confidence and improve revenue buoyancy in the short term while taxes on
high-income and high-wealth households would begin to move Ireland
towards European norms of taxation,” he said.

NERI is an independent body financially supported by a number of
unions including IMPACT. Its second quarterly review makes the case for a
movement towards fiscal sustainability through a balance of measures
including:

  • The initiation of a targeted, frontloaded and timely investment
    stimulus drawing on a mix of public, private and European Investment
    Bank funds
  • No further cuts in the overall level of discretionary voted capital and current expenditure
  • A medium-term reduction in public expenditure associated with high
    levels of unemployment and an increase in revenue buoyancy through
    growth-enhancing measures over time
  • A closing of existing tax breaks and reliefs and a graduated and
    incremental increase in the average target tax-take for high-income
    households with the aim of reducing the government deficit to below 3%
    of GDP by 2017.

Download a copy of the second NERI Quarterly Observer HERE