Irish budget will be "broadly neutral" - spending minister

DUBLIN (Reuters) - Ireland will be able to implement a "broadly neutral budget" for 2015 next month, Spending Minister Brendan Howlin said on Tuesday in the latest sign that the government's improving finances will allow it to ease up on further austerity measures.

Ireland originally planned tax hikes and spending cuts worth 2 billion euros (1.60 billion pounds) in the October budget. But after a string of positive economic data, Finance Minister Michael Noonan said last week that significantly less was now needed.

Instead Dublin is working on a budget that will deliver 1 billion euros of tax rises and spending cuts and will revisit the "conservative" figure at the end of the month, a source familiar with the budget talks told Reuters.

Some economists have said that if the momentum seen so far this year in taxation figures continues at the end of September, the adjustment could be left at the 500 million euros already announced through the planned introduction of water charges.

"Things have improved significantly since April and that's seen in both the taxation figures and the maintenance in the control of expenditure," Howlin told national broadcaster RTE.

"So yes, we won't have to make those adjustments, and I think it will be a broadly neutral budget."

Data last week showed that 1 billion euros or 4.1 percent more tax had been collected than expected so far this year, while spending remained broadly on target.

Ireland has taken 30 billion euros or close to 20 percent of annual output out of the economy in a seven-year austerity drive resulting from a financial crisis that pushed the country into an EU/IMF bailout it completed at the end of last year.

The government also wants to offer low and middle-income workers a tax break in October's budget and Noonan has said that he may have to raise taxes elsewhere in order to fund tax reliefs and make the required adjustment.

One minister dampened expectations for significant tax cuts and urged that they should not come at the cost of deeper cuts in services.

"Whatever tax package happens, it is going to be relatively modest, it might be an extra fiver (five euro) or tenner (10 euro) in your payslip every week and that would be very welcome," Health Minister Leo Varadkar told RTE.

"But I think people wouldn't like that to happen at the expense of health services and the services provided to those most in need in our society."

(Reporting by Padraic Halpin; Editing by Mark Trevelyan)