Dáil Éireann Debate, Thursday - 15 June 2023
186. Deputy Pearse Doherty asked the Minister for Finance to clarify if the ‘net spending’ rule referenced in Stability Programme Update 2023 includes tax changes, for example, including any tax reducing measures within the quantum of spending; and if he will make a statement on the matter. [29022/23]
View answerAs the Deputy will be aware, Government first set out its medium-term framework for the public finances in the Summer Economic Statement in July 2021. This framework, which anchors net spending growth to the trend growth rate of the economy, set ‘core’ expenditure growth at 5 per cent over the period to 2025.
The spending rule is calibrated on the basis of ‘net’ spending i.e. spending net of discretionary taxation measures. Accordingly, the expenditure ceiling would be different – higher or lower – if the Government introduced discretionary tax changes.
This approach was calibrated to ensure that windfall revenues are not used to fund permanent expenditure commitments, while still allowing for continued investment in our public services and maintaining the very high levels of capital expenditure set out in the National Development Plan.
In the Summer Economic Statement 2022, in recognition of the far less benign inflationary environment, the spending rule was temporarily adapted to allow for a larger increase in expenditure as Government responded to the cost of living challenge.
Government will confirm the fiscal parameters for Budget 2024 in this year’s Summer Economic Statement, which will be published over the coming weeks.
