The Financial Crisis in Ireland and Government Revenues

Rónán Hickey and Diarmaid Smyth
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Rónán Hickey: Central Bank of Ireland
Diarmaid Smyth: Central Bank of Ireland

Quarterly Bulletin Articles, 2015, 60-71

Abstract: This paper examines trends in government revenues during and after the financial crisis. On taxation, it highlights the strong increase in income tax receipts in recent years. Relying on stable sources of revenue — rather than cyclically sensitive ones — appears desirable from a public finance perspective and reduces a key vulnerability that developed in Ireland in the mid-2000s. There has also been a sharp increase in non-tax revenues since the crisis, partly due to measures introduced by the Government to assist the financial sector. Managing the transition to lower, more normal, non-tax revenues will be a challenge. This financial support has significantly added to the public debt ratio, the high level of which remains a key vulnerability for the economy. Accordingly there would appear to be a strong case that unexpected or windfall gains from these sources be used to exclusively reduce public debt.

Date: 2015-10
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Persistent link: https://EconPapers.repec.org/RePEc:cbi:qtbart:y:2015:m:10:p:60-71

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