Dáil Éireann Debate, Thursday - 23 May 2024
153. Deputy Rose Conway-Walsh asked the Minister for Finance the methodology for calculating tax revenue projections in the Stability Programme Update, making particular reference to whether tax revenue projections are carried out on a no-policy change basis, or if it is assuming adjustments to credits and bands in line with inflation; and if he will make a statement on the matter. [23424/24]
View answerMy Department’s projections for taxation revenue are driven by the relevant macroeconomic indicators: for example, forecasts of income tax are related to labour market variables such as wage growth. The projections also account for other factors that can impact on receipts, such as once-off factors, specialist judgement, and policy measures.
My Department periodically reviews its methodology for forecasting tax revenue, most recently in 2019 with the publication of the Tax Forecasting Methodological Review. This report provides a comprehensive overview of the Department’s approach to tax forecasting and can be found at the below link.
www.gov.ie/en/publication/76468a-tax-forecasting-methodological-review-2019/
The Stability Programme Update is a no-policy-change document and the policy measures reflected in the tax revenue forecasts are, accordingly, in line with Budget 2024.
As in the last number of years, the projections also incorporate an indicative tax package each year from 2025 in the order of €1.1 billion as outlined in Government’s medium term budgetary strategy set out in the Summer Economic Statement 2023.
It should be emphasised that this is a technical assumption: Government will set out the parameters for Budget 2025, including the size of any tax package, in the upcoming Summer Economic Statement.
