Large amounts of money being 'sucked out' of country is a concern, says Varadkar

ireland
Large Amounts Of Money Being 'Sucked Out' Of Country Is A Concern, Says Varadkar Large Amounts Of Money Being 'Sucked Out' Of Country Is A Concern, Says Varadkar
Leo Varadkar comments, © PA Wire/PA Images
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Vivienne Clarke

Tánaiste Leo Varadkar has warned that any support measures in Budget 2023 will have to be targeted to ensure that the “we don’t make the situation worse”.

“We don’t want to get into an inflationary spiral” he told Newstalk’s Pat Kenny show. The Budget will be able to introduce some immediate measures with others to come in January as this was a dynamic situation, he explained.

Every inflation crisis was different, in this situation the amount of money leaving the country was of concern, he said.

Large sums were being “sucked out” to pay for oil and gas and the rise in interest rates also meant that more money was being taken out of the economy, he warned.As the situation changed, the Government needed to respond to it, which was why the five per cent rule was being overruled so that the vulnerable could be supported.

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“We have to respond to the dynamic situation just like we did with Brexit and the pandemic.”

Corporate Tax

Mr Varadkar pointed out that one in four tax takes come from mostly large companies which was proof that low taxes bring in revenue. However, some of the money generated through Corporate Tax would have to be put aside, but only if there was a surplus. It did not make sense to put money away if the country needed to borrow money.

In response to criticism from the Opposition about how the cake was being divided up, Mr Varadkar said there was never any discussion about how the cake was baked “it’s all about how to divide it.”Sinn Féin policies would mean less money for housing. They were opposed to a trade deal with Canada and would expect the executives of large corporations to pay higher taxes, if that happened then those companies could go to other countries, he said.

Cost of living

Meanwhile, Minister for Finance Paschal Donohoe has said that he is very aware of the challenges facing people with the increased cost of living and will be implementing measures in Budget 2023 to address those challenges.

Speaking on both RTÉ radio’s Morning Ireland and Newstalk Breakfast, Mr Donohoe said that the Government’s aim was to get the balance right between supporting people and helping the economy grow.

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However, he cautioned that there needed to be recognition “we can’t do everything at the same time.”

Extra measures to help people are possible because the country’s finances had been well managed when the pandemic hit, he added. In his time as Minister for Finance challenges such as Brexit, the pandemic and now the war in Ukraine had to be faced.

While increased Corporate Tax meant there were more resources available, caution was also required because a change in even one multinational could have a huge impact, explained Mr Donohoe.

One euro in every €8 in the country was generated by 10 companies who now provided the second-largest tax take in the country. This could change very quickly at any time so the Government could not commit to measures funded by Corporate Tax, even for one off measures.

“One company making a decision could have an impact on thousands of millions. We’re doing our best to manage it”.

Specific measures

Mr Donohoe declined to outline specific measures, he said such decisions needed to be approved by Government and were still being discussed by Minister for Public Expenditure Michael McGrath and Minister for Social Protection Heather Humphreys.

He acknowledged families would face difficulties when their children were returning to school and said that consideration would be given to the possibility of additional help.

Mr Donohoe defended the 1.5 per cent increase in spending on top of the allowed five per cent, this was modest at a time when inflation had increased from two per cent to nine per cent, he said. “We’re not burning money in the face of inflation”.

Mr Donohoe said that closer to Budget Day there would be a better idea of what resources would be available to help the economy and society.

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