How Sensitive is Irish Income Tax Revenue to Underlying Economic Activity?


ESRI working papers represent un-refereed work-in-progress by researchers who are solely responsible for the content and any views expressed therein. Any comments on these papers will be welcome and should be sent to the author(s) by email. Papers may be downloaded for personal use only.

September 13, 2016 | ESRI Working Paper

Authors: Yota Deli , Derek Lambert , Martina Lawless , Kieran McQuinn , Edgar Morgenroth

In this paper we examine the elasticity of Irish income taxation revenue with respect to aggregate national output – both GDP and GNP. This enables us to estimate the sensitivity of this key taxation aggregate with respect to changes in economic activity. It also allows us to compare the elasticity of income taxation across other jurisdictions where similar estimates are available. Understanding the elasticity of the different taxation components vis-à-vis their underlying economic activity should enable policy-makers to place the public finances on a more sustainable footing and hence avoid the sharp booms and busts which has characterized Irish taxation receipts over the past 20 years.

© 2015 The Economic and Social Research Institute. All rights reserved. Website by JET Design