Frontline last night had a number of talks on how to achieve this year's fiscal adjustment. Dan O'Brien makes some good points such as some of those listed below. Some of these are discussed on John McHale's irisheconomy post today. O'Brien doesn't mention some other potential sources of revenue generation and spending reduction such as rises in corporation tax (see Peter's post below), property taxation, water charges and so on. From the comments, you get again the sense that the potential for social consensus is being severely dented by public anger over banking bailouts.
- The need to question the emphasis on "broadening the tax net" to lower earners. The potential for making severe poverty traps in the context of a major recession needs more scrutiny here.
- The need to examine FAS expenditure. O'Brien focuses on the community employment schemes but, in reality, the wide range of FAS training programmes need more attention. It is not clear at all that they have any value in an economy which is experiencing such a massive demand slump.
- The need to examine further income levies on high-earners. This seems to me like a no-brainer for December.
- The need to prioritise expenditure taxes over income taxes, particularly income taxes on lower incomes.
- O'Brien also argues for adjustments to specific social welfare schemes.
- Adjustment of public sector pensions.
1 comment:
On FAS, it is not clear that they have any value at all. Which of their programs have been demonstrated, scientifically, to have a positive effect on an outcome of interest?
Conniffe et al look at FAS training in the 1990s (http://www.esr.ie/vol31_4/1Conniffe.pdf) & finds no effects of general training. Note that even if one found a positive effect that is not the same as passing a Cost-Benefit test.
Moreover one has to be sure, in studies using matching methods, that there is no selection on unobservables for which one needs very good data.
Alternatively one should do proper experiments.
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