IPAV PRESS RELEASE |
15th MAY 2006 |
TAX CUTS SHOULD BE
BASIS OF NEW NATIONAL DEVELOPMENT PLAN |
| A leading economist has called for tax cuts rather than more rounds of public spending in the new National Development Plan, now in preparation. |
| Trinity College economist Dr Sean Barrett told the Annual Conference of the Institute of Professional Auctioneers and Valuers in Adare, Co. Limerick that the huge progress made in Ireland since 1987 in employment and incomes was unmatched anywhere in the OECD countries. |
| “It was a market economy phenomenon fuelled by tax cuts which improved our intellectual competitiveness,” he said. “Since 2001, Ireland had seen a further spurt of economic growth over three times faster than the Euro zone. Tax cuts would reward the workers who had turned in this superb performance.” |
| Dr Barrett suggested a reduction in the standard rate of income tax to 18% and in the higher rate to 40% and said that tax bands should be annually adjusted to confine the top rate of tax to those well above average incomes. He supported the retention of the 12.5% corporate rate as a major ingredient in Ireland’s progress. He also proposed the simplification of personal and corporate taxes by cutting rates rather than designing complex tax avoidance schemes which reduced the effective tax rate on wealthy individuals with tax lawyers and accountants and led to wasteful tax-driven projects in the construction sector. |
| Dr Barrett said a second reason for cutting tax rates in Ireland was the low standard of public expenditure appraisal and the absence of a value for money culture over wide areas of the public service. |
| “As long as the Celtic Tiger fills up the Exchequer, the high spending departments will respond with wasteful projects to use up all the money. This problem is by no means confined to the health service. |
| “Ireland’s rapid growth is a market economy phenomenon and the smaller the state sector, the faster that growth will be. The high unemployment countries of Europe – Germany, France, Belgium and Italy all have higher government shares and higher government debt than Ireland. Let’s not go there!” |
| He also stated that Ireland had outperformed the Scandinavian countries by a factor of five in recent decades and that calls to imitate that model would not enhance incomes and employment in Ireland. |
| He added that Ireland has inherited a plethora of policies and agencies from the era of 17% unemployment and one million at work. These were utterly inappropriate with two million at work and 4% unemployment. A massive reduction in these agencies and schemes was required. |
| “The resources saved should be handed back in tax cuts because the market economy had solved most of the problems which these agencies and schemes were established to solve,” he said. |
| Ends |
| 19 June 2006 |
| For further information contact: |
| Fintan McNamara on 01 - 6785685 or |
| Tim Ryan Communications on 087 - 2471423 |