Irish Fiscal Advisory Council watchdog to step up warning

Its document, the Fiscal Assessment Report for 2019, will take note of the way Finance Minister Paschal Donohoe plugged large spending overruns this year, which ought to have been covered by making savings elsewhere across government spending “because a one-off receipt can’t plug expenditure that arises every year”, Ifac chair Seamus Coffey told the Irish Examiner.

The economy continues to perform very strongly. There is no case for fiscal stimulus now and given the risks on the horizon we should be building buffers for the likely slowdown in the economy given Brexit, US policy and other factors,” he said.

Asked if the Government had ignored Ifac’s advice against spending one-off receipts, Mr Coffey said: “We identified overruns early in the year and the advice was that it should be absorbed through savings elsewhere. This clearly didn’t happen. And the overall level of expenditure was higher than originally set out.” He said the corporation tax receipts were a one-off and had “clearly been identified as a one-off”.

IFAC’s new report — its next formal assessment of Minister Donohoe’s 2019 budget — is being prepared for publication and will highlight the use by the Government of a one-off surge in revenues through early payments of corporate tax liabilities by large companies, payments the exchequer has yet to receive.

Days before this month’s budget, Minister Donohoe said he would use €700m of €1bn in future corporate tax revenues to plug a hole in the health budget this year.

It will be in line with what we said before the budget — caution should be used in the use of those corporation tax receipts. We are likely to echo a similar line when we come to the report in a few weeks’ time,” Mr Coffey said.

“The one-off was about 2018. Our assessment will primarily be about 2019,” he said, adding the exchequer had yet to get the additional €1bn in corporate taxes.