Varadkar's crystal ball No tax hikes for 2021 says 'optimist' Leo Varadkar
Self-proclaimed optimist Leo Varadkar has said he believes the government will NOT be forced to raise taxes to pay for the cost of the Covid-19 crisis.
Despite announcing the largest ever spend in yesterday's €17.71 billion budget, the Tánaiste believes that there will not be a need for any income tax increases in 2021.
The Government admitted yesterday that it would be forced to borrow more than €40 billion between this year and next to meet the costs of the pandemic, to support jobs and to sustain the economy.
But Leo Varadkar says he believes that the Irish people won’t have to suffer huge tax hikes in order to pay back these vast sums of money.
“A lot of money is being borrowed, that’s right,” he told RTE's Morning Ireland.
“Over €20 billion this year and next year.
“If we can get the economy going again and get people back to work again then the cost of the PUP payment will fall and people will be paying income tax again.
“And other taxes will come in and we might be able to close that gap without increasing taxes.
“I think it is very possible, but it will depend on a lot of things over the next couple of months.
“It will depend on how the pandemic behaves, on Brexit and how quickly the economy bounces back.
“The budget is based on a pessimistic scenario, the pandemic going on for another year, no vaccine and Brexit going wrong.
“I am actually an optimist; I think 2021 is going to be a better year than 2020.
“I think it could actually be a good year and we could avoid tax increases; we may be able to.”
Leo believes that the key to the economy bouncing back is getting the public to spend the €10 billion or so that has been saved on deposit during lockdown.
And he hopes that in the run-up to Christmas, people will spend big and spend local.
“What is really interesting at the moment, and is very different to the last recession, is the amount of money being saved," he said.
“Nearly a third of money in Ireland, at the moment, is going into bank accounts.
“We would absolutely encourage people, especially in the run up to Christmas, to shop at home and to shop early to avoid crowds.
“And if you are shopping online please consider buying from an Irish supplier.
“The truth is that a huge amount of money is being saved because people can’t spend it.
“They can’t go on weekends away; they can’t go to restaurants or do things that they would otherwise like to do.
“I think when that money is released on the economy, we will see a bounce back.”