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Friday, 12th April 2024
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Finance officials fear expectations Back  
Principal officers in the Department of Finance have reported that it will prove 'extremely difficult to persuade the social partners, interest groups and the public in general to accept a prudent fiscal stance.' They say 'the "Celtic Tiger" economy is already having a major effect on expectations in terms of income, taxation and expenditure policy and it is clear that, far from moderating, these pressures are likely to continue to grow.'

The senior officials’ report presented last June to the top management of the Deparment of Finance, was published this October. The report is titled ‘The Implications of EMU Membership for Various Aspects of Public Policy’.

With the Government committed to a 12.5% corporation tax rate, the officials warn that the scope for 'adjusting the yield upward' in corporation tax is limited, 'essentially arising through loophole closing measures only.' The stated intention of the Minister for Finance to identify 'compensatory sources of tax revenue' from the corporate sector 'will have to be given effect to the extent feasible'. The officials acknowledge that 'the cost of introducing the new single low rate of corporation tax will be eased by continued expansion in the corporate sector and by improved corporate profitability'.

The euro could lead to some tax reductions, as 'price and tax transparency across the Eurozone will restrict our scope to increase certain taxes where we are above the "norm" and even lead to pressure for levelling downwards'. Vehicle Registration Tax is alluded to in this context.

The officials in the group were Colm Breslin, Bob Bradshaw, Jim O'Brien, John O'Connell, Brendan Ryan, Michael Scanlan and Michael Conroy.

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