The End of the Rainbow

Caoimhe recently pointed to an article by Tom Friedman in the New York Times about the Irish economy:

Ireland’s advice is very simple: Make high school and college education free; make your corporate taxes low, simple and transparent; actively seek out global companies; open your economy to competition; speak English; keep your fiscal house in order; and build a consensus around the whole package with labor and management – then hang in there, because there will be bumps in the road – and you, too, can become one of the richest countries in Europe.

And not only that the front page of the Irish Times today had more news about the Irish economy:

Current expenditure is modestly below target for the first six months of the year. The surplus on day-to- day expenditure corresponds to a planned surplus of €4,092 million for the year as a whole. Net current expenditure is 8 per cent up on the same period of 2004, compared with a projected increase of 11 per cent for the full year.

The shortfall in capital expenditure is more stark. The Government predicted on Budget day that capital expenditure would exceed corresponding revenues by €7,080 million. But capital expenditure was 13 per cent below target for the first half of the year, contributing to a relatively lower mid-year deficit.

Reform of capital spending rules now permit some money left unspent in 2004 to be carried forward and when this is accounted for capital expenditure increased by 2 per cent. But this is still considerably below the increase of over 12 per cent targeted for the full year as a whole. This contributes significantly to the better than expected headline Exchequer result.

Tax revenue, at €17,239 million, is €320 million ahead of target as strong performance under the VAT, excise duty and stamp duties offset disappointing out-turns for income taxes and corporation tax.

According to department officials, growth in demand for cars as well as stronger revenue from tobacco sales were the reasons VAT and excise duty revenues came in ahead of target.

Income tax receipts were as expected but were lower than for the same period of 2004. Corporation tax receipts were lower on both a year-on-year comparison and when compared with budgetary projections.