Mr Howlin said that up to 2008 the country was run on unreliable building industry Stock photo: Depositphotos

The Government has not learned the bitter lessons of the 2008 economic crash - and risks taking the country back into recession, Labour leader Brendan Howlin has warned.

In an empassioned Dáil speech former Public Expenditure Minister said that in 2008 the Fianna Fáil-led government had totally “hollowed out” Ireland’s income tax revenue through a series of tax breaks and tax cuts to buy elections.

Mr Howlin said that up to 2008 the country was run on unreliable building industry taxes and levies which suddenly disappeared in the building recession.

He said Ireland’s tax revenue dropped by 30pc in one year and there suddenly was not enough to pay nurses, teachers and gardaí.

The Labour leader said the Government’s “kites” being flown before the upcoming Budget suggested that property taxes will not be linked to property values in defiance of best international practice. Exemptions were being created in the tax system and the top 20pc of earners were likely to benefit from income tax cuts.

“There is a very real risk of repeating the mistakes of the past,” Mr Howlin said. He argued that the tax base needed to be strengthened to ensure decent sustainable public services.

Taoiseach Leo Varadkar agreed with Mr Howlin’s account of what happened in the crash of 2008 and said the Government was very conscious of the risks today.

But Mr Varadkar argued that Ireland’s tax base was now much broader with revenue from property tax, carbon and sugar taxes which was not there in 2008. He said the Government knew the risk of depending on “windfalls” from company taxes at present which might not be there in two to three years to fund ongoing spending commitments.

The Taoiseach said the Government would avoid another crash by keeping curbs on property prices, wage increases and public spending increases. But Mr Varadkar said income taxes had to be reduced – and rejected arguments that his party was targeting the 20pc of top earners.

Mr Varadkar said once students and pensioners were taken out of the reckoning the average worker earned €44,000 per year. He said that such people found a pay rise, an increment or overtime was hit with up to 50pc in taxes and that must change.

Online Editors