Monday, May 21, 2007

Irish Electoral Campaign: Tax Cutters vs. Anti-Spenders

Interesting story on Ireland's electoral campaign. Ireland's boom have been driven by a combination of sound (low taxes, a budget surplus and favorable demographics) and unsound (high level of inflating from the ECB). While progress on the tax and spending front have largely stalled in the most recent years, politicians are now apparently competing in being the biggest tax cutters.

The incumbent government led by Bertie Ahern is promising that "The next step is to cut income taxes further and wipe out the country's national debt". Meanwhile, opposition parties are attacking the government for "wasteful spending". Of course, one can't rely on politicians keeping their promises, but it is nevertheless a good sign that the public debate is centered around the virtue of tax- and spending cuts. This makes it more likely that the tax- and spending cuts will actually happen.


Anonymous pinus said...

"The next step is to cut income taxes further and wipe out the country's national debt"

It is actually funny how contradictory this one sentence is. Given that Ireland's taxes are quite low and not very distortive, cutting taxes will spur the growth, but it is more than questionable that this will be enough to actually increase the total tax revenue (at least in the foreseeable future). But then, without reforming the spending side of the budget, he can't simultaneously decrease taxes AND wipe out the debt...

Unless of course.... Unlesss of course he wants to do something about the spending side as well! But then he should stress this in the first place, this would completely take the wind out of opposition's sails. In any case, the sentence shows how much its author thinks / doesn't thinks in terms of economics.

12:19 AM  

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