1985 tax revenue buoyancy estimate
O’Kennedy questioned the £58 million buoyancy estimate, comparing it with the previous year’s £15 million and arguing that the tax increases made the projection unreliable. Dukes said the estimate reflected the budget’s expected stimulatory effects on the economy and was closely examined and firmly based.
asked the Minister for Finance if he will give a breakdown of the figure of £58 million entered in the budget for tax revenue buoyancy in 1985.
Comment on this
The figure of £58 million comprises excise duties, £9 million, value-added tax, £13.4 million, income tax, £34 million, income levy, £0.8 million and youth employment levy, £0.8 million.
Comment on this
I am obliged to the Minister for giving me the figures in the form of an oral reply rather than in the form of a tabular statement. How does he justify a figure of £58 million in expected revenue buoyancy this year when last year the figure was more accurate at £15 million? What does the Minister expect to emerge from the budget to justify a buoyancy figure of £58 million which is far in excess of any buoyancy figure provided in any previous budget?
Comment on this
The basis for the figure is an analysis of the impact of the budget on the economy which, having taken account of the dynamic effects of the budgetary measures, gives a buoyancy figure of £58 million. I have examined this figure with the closest of attention.
Comment on this
Last year the Minister described the budget as being neutral. In other words it would not raise extra revenue. In that, he provided for a buoyancy figure of £15 million to balance the books. This year's budget has raised an extra £400 million in taxation over last year. How can the Minister put in a figure of £58 million and stand over it as being reliable and accurate?
Comment on this
The Deputy is quite right to point out that I characterised last year's budget as neutral in its overall effect on the economy. That is why the buoyancy figure was small. By contrast this year's budget will have a more stimulatory effect on the economy and that is one of the reasons for the difference in magnitude between this year's and last year's buoyancy figures.
Comment on this
——if a budget that proposes to increase tax revenue by 8 per cent when inflation is projected to increase by 6 per cent can be seen as so stimulatory as to give a buoyancy of £58 million. That is not a reasonable figure and it proves that the budget projections are not reliable.
Comment on this
It is not just comment but singularly ill-informed comment. The effect of the £58 million which I provided for in the budget derives from the effects of budgetary measures on the economy. As I have said before in the House, I examined the matter very closely and I find that figure perfectly solidly based.