The International Monetary Fund has told the Government it should increase revenue from income tax, VAT and local property tax to reduce reliance on corporation tax paid by multinationals.
It has also warned the Government that it needs to minimise spending overruns after Ireland’s expenditure has exceeded Budget ceilings over recent years and it has said the Coalition needs to closely manage day-to-day spending.
The Washington-based organisation part-funded a €67 billion bailout loan to Ireland in 2010 following the financial collapse.
In a report today, the IMF has called on the Government to ensure it uses its medium term spending framework acts as a “binding mechanism on spending ceilings”.
It said Ireland should introduce structural reforms to address the housing shortage, enhance energy security and prepare for AI transformation.
The IMF also said the Government should ensure that financial supports to help consumers with rising costs should be “temporary” and “targeted”.
It said the domestic economy is projected to grow at 2.5% this year and next down, from an estimated 5% last year.
“Private consumption is expected to slow down due to weaker employment and real income growth,” it added.
Minister for Finance Simon Harris said he noted and shared the IMF’s “assessment of external risks, notably the reversal of globalisation, the ongoing disruption caused by regional conflicts, domestic capacity constraints, and the uncertainty in relation to corporation tax receipts.”
Minister for Public Expenditure Jack Chambers said he was focused on removing barriers to the delivery of infrastructure and said he wanted to ensure it would “support housing delivery alongside maintaining and strengthening the competitiveness of our economy.”
