Written Answers. - ESRI Economic Commentary.

Eamon Gilmore

Ceist:

65 Mr. Gilmore asked the Minister for Finance if he endorses the analysis contained in the ESRI's latest Quarterly Economic Commentary and particularly the conclusion that the spirit of Partnership 2000 should be maintained through continued moderate reductions in effective rates of direct taxation; and if he will make a statement on the matter. [19609/98]

I am aware of the ESRI's comments in this regard which I believe appeared in the April 1998 Quarterly Economic Commentary. I think that it is clear that social partnership has been a major factor in our economic success in recent years. It has provided moderate nominal pay increases combined with lower taxes and improved public services while also facilitating a major improvement in our public finances. It has contributed to low inflation, improved competitiveness, very strong growth in output and employment and higher living standards.

The 1999 budget will have as its primary objective the maintenance of low inflation and competitiveness. To this end, it will aim at providing the conditions for the successful continuation of social partnership and taxation will be an important element in this context. However, tax policy, while supporting the continuation of social partnership through reductions in the burden of income tax, must also have regard to overall macroeconomic conditions and I will be considering this in preparing my budget together with the comments of economic bodies such as the ESRI.