Belfast Telegraph

Think tank warns Republic over budget deficit and tax base

By Josie Clarke

The Republic of Ireland's budget deficit remains too large and its public spending pressures are rising, a global think tank has warned.

In its latest assessment of the Republic, the Paris-based Organisation for Economic Cooperation and Development (OECD) said that the tax base must be broadened and more must be done to control health spending - although it did acknowledge that economic recovery is under way.

It welcomed the introduction of water charges in the Republic, but noted that they remain among the lowest in the OECD. Revenue from the property tax, the OECD said, is also low by international standards.

It also said more must be done to accelerate through the courts the resolution of non-performing home loans that require repossession.

The organisation said rising property prices pose risks, and advised more housing supply was needed and a more developed rental market, but it cautioned against giving any subsidies to first time buyers.

The Paris-based organisation also warned productivity growth had been falling for some time.

"Although Ireland's multinational sector thrived during the crisis, the domestic SME sector is still lagging behind despite the shift away from the low productivity construction sector."

The Republic's Finance Minister Michael Noonan said the survey acknowledges the significant progress that Ireland has made. "The survey provides a prescient analysis of the challenges now faced by Ireland and of the policies to address these in areas such as fiscal sustainability, financial stability, inclusive growth, productivity and environmental sustainability."

Belfast Telegraph

Popular

From Belfast Telegraph