Government revenues in Ireland since the financial crisis

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

No 07/EL/15, Economic Letters from Central Bank of Ireland

Abstract: This letter 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. This assistance 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 gains from these sources be used to exclusively reduce public debt. Similar arguments could be made in relation to any future income receipts arising from either the IBRC related Special Portfolio and the expanded Asset Purchase Programme.

Date: 2015-05
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