Wednesday, December 15, 2010

Harmon on Policy Decisions

Colm Harmon has an article in the Times last week on changing the way policy decision are made in Ireland.

And Budget 2011 did make some bright moves – the changes in the transit taxes for air travel is framed like an experiment – change designed to have impact, reversible if it fails, embedded if it works. We need to get into the same thought-space on microeconomic policy on all domains.

Colm references the Travel Tax reduction in the budget. Basically, Minister Lenihan played the part of Solomon and instead of leaving the 10 euro flight tax as it was or abolishing it totally, he has reduced it to 3 euro for the next year when it will be reviewed. There is definitely a progression here over the usual way of doing policy, one that seems calculated to call the bluff of Ryanair in particular. Of course, as an experimental design, it is going to be a tricky one to look at. Macroeconomic conditions are changing rapidly and this is a once-off change. Worth talking through for the econometrically minded of the group.

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