IRELAND MAY reached the inclined point when it comes to the capability to lift up additional revenues through VAT augmentation, said Grant Thornton, tax experts.
In view of the exchequer figures, Peter Vale, tax partner in Grant Thornton expected to see a considerable increase in VAT receipts compared with the same period in 2011 as the top VAT rate which had augmented by 9.5 percent in real terms.
The figures do not show that to be the case. While, the tax hold is up on last year, the VAT returns will probably point out a drop in the retail sales as it compared to the same period last year.
Meanwhile, Grant Thornton questioned the suggestion made by the Irish Fiscal Advisory Council in which the extra €400 million in budget measures is necessary to meet the Ireland’s deficit targets.
It was also clearly said that they are making a development on righting the public finances. However, it is also essential to ask the decline in the general price level impact of these policies, and this is where the drop in consumer demand attestation in the VAT figures is a key pointer. Bloxham Stockbrokers also disagreed with the recommendations by the advisory council.
Chief economist Alan McQuaid warned against further asceticism as suggested by the council, while noting the tax receipts for encouraging the opening quarter.
“We certainly wouldn’t be advocating the Government implementing more fiscal austerity . . . More austerity than is absolutely necessary would in our view send the economy backwards instead of forwards, as required at this juncture.
“The responsibility then is to promote growth, not to dampen it.”