Wednesday, 27 June 2012

Invest and do no further harm

The Nevin Economic Research Institute will be publishing its second Quarterly Economic Observer later today. Click here to download the full document. Commenting on the report, NERI Director Tom Healy called for a more gradual approach to fiscal adjustment that allows space for domestic demand to recover as well for investment to have a positive impact on employment and output. He stated that a stimulus through investment and holding to the current level of public spending could help restore confidence and improve revenue buoyancy in the short term while taxes on high-income and high-wealth households would begin to move Ireland towards European norms of taxation.


Paul Hunt said...

Getting closer, but still not addressing the fundamental issue which is the imbalance between high 'point-of-use' charges (e.g., medical, legal and pharmacy fees, financial service fees and charges and utility and service prices (such as gas and electricity - which include a 'financing tax' - with steep water and local service charges on their way) - all of which are regressive - and relatively low levels of taxation with considerable 'tax expenditures' on a narrow tax base.

A major re-balancing is required, but on both sides of the fence, both to release and generate funds for badly required investment.

The one-eyed approach to tax and spend is understandable, but it is totally deficient.

Tom Healy said...

@Paul There is much that we can agree on here. Fiscal policy and levels of spending and tax is only one part of a much broader policy shift. Such a shift needs to address reform of both public and private sectors, banking and redistribution of income and wealth. The State has a key role in facilitating all of this but it is only one actor among others. The key message at least for today is 'do no further harm'.