Oct 14, 2014 3:57 AM
Irish plan growth budget after 6 years' austerity
The Associated Press
DUBLIN (AP) The age of austerity is ending in Ireland after six years of grueling tax hikes and spending cuts.
Finance Minister Michael Noonan and Public Expenditure Minister Brendan Howlin are unveiling a 2015 budget Tuesday expected to contain around 1 billion euros ($1.3 billion) in income tax breaks and spending increases, ending a seven-budget run that slashed 30 billion euros from the economy.
The move follows Ireland's 2013 exit from an international bailout and unexpectedly strong economic growth this year driven by robust exports to Britain and the United States. This has made it much easier for Ireland to meet its deficit-reduction targets without more cutting.
It has been a stunning turnaround for Ireland, which in 2010 teetered on the brink of national bankruptcy after being overwhelmed by the cost of rescuing its banks. At the start of this year, Ireland remained committed to a European-International Monetary Fund plan that foresaw a further 2 billion-euro ($2.6 billion) dose of austerity in 2015, but Tuesday's budget represents a decisive break from that outdated blueprint.
"The budget today is the first one that I will be able to present that will not be reducing expenditure, so that is a milestone," Howlin said.
"All the hard work and sacrifice of the Irish people was for an objective, and we really have reached that objective today," he told reporters before Tuesday's Cabinet meeting to approve the budget. "But this is the start of recovery. We have to lay out, in the specific measures today, a budget that will sustain recovery."
Government leaders say Ireland should achieve a deficit target well below the EU limit of 3 percent of GDP in 2015 without net cuts. This would be the first time Ireland observes that ceiling since 2007.
Noonan also plans to announce reforms to controversial Irish corporate tax rules that allow U.S. multinationals to minimize taxes on overseas profits using a complex accounting maneuver called the "double Irish." It exploits differences in U.S. and Irish tax law to permit a globally active company to use two Irish-registered companies one of them located offshore to bank its non-American, non-Irish profits without paying tax.
Noonan's Finance Ministry said the loophole would be closed for new applicants in 2015 and for existing users by 2020.
Ireland, which hosts the European bases of hundreds of tech and pharmaceutical companies, has faced mounting criticism for its facilitation of global tax avoidance. The European Commission this year opened an investigation into alleged abuse of the "double Irish" by Apple, which in the 1990s and 2000s reported much of its non-U.S. profit through Irish subsidiaries.