–Don’t See Explicit Pressure on Ireland to Raise Corp Tax Rate
PHILADELPHIA (MNI) – Bank of Ireland Gov. Patrick Honohan said the
Irish government faced a collapse of tax revenue due to the amount of
taxes linked to property, and that is politically difficult to
replace.
“The fiscal crisis has been driven partly by an autonomous surge in
the share of government spending GDP in 2004 but more spectacularly by a
remarkable collapse in tax Revenue in 2008 and 2009,” Honohan said in
response to a question following a speech on the crisis at the
Philadelphia Federal Reserve Bank.
“While tax revenue has shrunk in many countries during the recent
economic downturn, the revenue collapse in Ireland has been much more
pronounced” due to the “systemic shift over the years” away from value
added tax and personal income tax.
Honohan calls these “stable and reliable sources” It relied more on
capital gains taxes and corporate taxes that are “cyclically
sensitive.”
Ireland has to replace these lost revenues, he said. “It’s not so
easy politically, but it has to be done.”
However, when asked whether Ireland would resist pressure from
Europe to raise the corporate tax rate, he said, “I don’t actually see
that pressure being made explicit any time.”
** Market News International **
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