Potential Tax Cuts Delay Due to Global Trade War Risks
Dublin: Finance Minister Paschal Donohoe has warned that planned tax cuts may need to be postponed due to the threat of a global trade dispute between the US and the EU. Economic models from the Department of Finance and the Economic and Social Research Institute (ESRI) indicate that such a conflict could lead to higher prices, slower economic growth, and fewer job opportunities, with 50,000 to 80,000 jobs potentially affected over the next five years.
While Fine Gael had pledged to reduce income tax rates and increase the threshold for the higher tax bracket, the Programme for Government states that tax adjustments would be contingent on economic stability. In the event of a downturn, proposed tax changes could be deferred to safeguard public finances.
Speaking on RTÉ Radio One, Minister Donohoe clarified that rather than implementing spending cuts, the government would likely slow the pace of expenditure growth, particularly in capital investment to support national competitiveness. He emphasised that during an economic shock, maintaining the tax base would be a priority to sustain investment in housing, public services, and financial stability.
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