The State’s fiscal watchdog has said that the Government’s management of the public finances points to “poor planning and budgeting”.
The Irish Fiscal Advisory Council was commenting after the coalition published its Summer Economic Statement which outlines how much will be spent next year.
This year’s expenditure overruns are likely to carry into 2027, the council said.
“If this is not reflected in spending estimates for 2026 before Budget Day, further spending overruns next year are almost inevitable,” it said.
It has estimated that spending will be €850m above the Government’s estimates for this year.
It added that while the Government is planning on spending increases of €7 billion, much of this will be absorbed by the rising cost of providing public services.
It added: “A growing and ageing population means more demand for services like healthcare and pensions. No official estimates of these costs were given.”
However, other business groups have given the Summer Economic Statement a cautious welcome.
Ibec’s chief economist and Head of National Policy Gerard Brady said: “Whilst much of the focus will be on the size of the headline package, the shape of what is announced is just as important.”
“In this context, the scale of the tax package outlined at €1.5 billion is not much more than would be needed to index the tax system for wage growth and avoid effective increases in income tax in 2027,” he said.
Mr Brady added: “It will need to be targeted at key pain areas such as the entry point to the top rate of tax if it is to have a material impact for workers.”
Tax Partner at Grant Thornton Ireland Peter Vale said the clearest message in the Summer Economic Statement is that Budget 2027 should be about making work pay.
“That is the right priority at a time when employees, families and employers are all dealing with higher living costs, wage pressures and intense competition for talent,” Mr Vale said.
“The €1.5 billion tax package should be used in a focused way. It should help workers retain more of their earnings, prevent inflation and pay increases from pushing people into higher effective tax rates, and support labour force participation.
“That means looking at income tax bands, credits, USC and the wider interaction between tax policy, childcare affordability and the cost of working,” he added.
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Chambers Ireland urged Government to prioritise a budget that reduces the cost pressures facing businesses and focuses on faster delivery of the infrastructure.
Chief Executive Ian Talbot said that fiscal prudence and strategic investment must go hand-in-hand.
Daryl Hanberry, who is a Tax and Legal partner in Deloitte Ireland, called for a €6,000 income tax band increase over the next three years.
“While current expenditure does need to be curbed, Ireland must continue to invest and spend on capital projects,” Mr Hanberry said.
Head of Wealth Management for Cantor Fitzgerald Ireland Irving Byrne said that after being overlooked in Budget 2026, renewed commitment to review income tax bands is a much-needed step in supporting the financial goals of thousands of hard-working people.
