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Fiscal Policy

Fiscal Update

The February exchequer returns are available here; the statement also includes the announcement that further fiscal stabilisation measures will be announced later this month.

See also the Irish Times report.

2 replies on “Fiscal Update”

A March supplementary budget means that any revenue adjustments are unlikely to be in income tax (so the issue of rates and bands will still be a live one for months ahead). So what else can be done quickly:

A VAT increase might prevent the fall in consumer prices so feared by some.

Removal of the PRSI ceiling would certainly raise marginal tax rate on top incomes by almost 7 per cent (less I suppose for pre-1995 public servants).

Excises on fuels might be a temporary surrogate for the long-hoped for carbon tax–though the latter is unlikely to be introduced in such a hurry.

Property tax? Dream on.

I took a few minutes to compare the January with the February returns, and was surprised to find that what’s new in February is not what has been highlighted by in some of the news reports.

Thus, far from income tax holding up well, it is the only significant segment to have fallen further in February relative to the same month of the previous year.

Nevertheless, the cyclically sensitive taxes — CGT, Stamps, Corporation tax — that have crashed furthest in Jan-Feb 2009 relative to the same months of 2008. They fell 54% compared with 15% for the rest. This effect is becoming more pronounced — for the whole of 2008 relative to 2007 the two percentage falls were 36% and 6%.

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