NCB Stockbroker Research Says Irish Economy Not To Blame For Falling Tax Revenues

by Robert Lee, Tax-News.com, London

26 November 2001

NCB Stockbrokers has published research that indicates the Irish government's declining tax revenues are not the result of an economic slowdown but are largely due to tax cuts in the last Budget.

According to NCB's senior economist, Eunan King who detailed his research in the Fixed Income Weekly, a model based on information from the Revenue Commissioners shows that the budget tax cuts lowered the average tax paid by each taxpayer by more than 6 per cent this year which resulted in a 3 per cent decline overall in tax revenue.

He wrote: 'Against this background, it is not clear why the Department of Finance estimated an 8 per cent increase for income tax this year.'

Mr King added that 'if there were no tax cuts in the budget, the model suggests tax revenues would rise 18 per cent next year, based on an average rise in incomes of 8 per cent. But even a 10 per cent increase in tax bands and allowances would keep average tax rates broadly unchanged and provide an 11 per cent growth in revenues.'

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