One of the economic issues not being addressed agressively by the political parties is the emotional and psychological effect of the recession. Even people with money are afraid to spend, which is reducing business activity, which is costing jobs, which cuts tax revenue and expands welfare bills. What’s more is that we are in a tricky situation where even if we could afford to give people a tax cut, the likelihood is that they would save most of it as opposed to pump it back into the economy.
What we need to consider is spending which gets into the economy, and into labour intensive industries. Perhaps we should consider (and it will have to be funded by cuts elsewhere) giving every taxpayer a €400-€500 tax credit to spend on home repair and improvement, or holidaying in Ireland, or in restaurants, in a single large payment. In other words, to be spent on something that they would not normally have spent money on in these times. Send in your receipt, get your tax rebate.
Now, I have to declare an interest here: I work in the construction and RMI industry, so I’d benefit from such a proposal. But I still reckon that the reasoning is sound. Our exports are going fine, but our indigenous service industry is tanking, and an action like this would at least inject cash into sectors of our business that would not automatically be spent on imports. Just a thought.