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Ireland's Tax Expenditure System: International Comparisons and a Reform Agenda

Blue Paper Abstract

Tax Expenditures, also known as tax incentives or tax breaks, represent an infrequently explored and little understood area of Irish public policy. Despite this, they account for more than €11 billion per annum in exchequer revenue forgone – equivalent to over 5.5% of GDP and more than one-fifth of total tax revenue (2006 figures).

The study examines the current tax expenditure regime in Ireland and highlights the role that tax expenditures should play in the Budgetary adjustment planned for late 2010 and in subsequent years. The paper reviews the nature and scale of Ireland's tax expenditure system in a national and international context. It then considers their impact, advantages, limitations and consequences. Finally the paper outlines a series of reforms to tax expenditures; reforms which if implemented would yield the exchequer considerable savings and establish a more appropriate and better administered tax expenditure system.

This paper was launched by Mr Frank Daly, Chairman of the National Asset Management Agency (NAMA) on Tuesday 30 November 2010.

About the Authors

Dr Micheál Collins is a lecturer at the Department of Economics, Trinity College Dublin. Mary Walsh is a Chartered Accountant. Both are former members of the Commission on Taxation.

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Last updated 27 November 2012 .