## Ireland: Selected Issues

_IMF Staff Country Reports, June 17, 2019_

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**Canonical URL:** [Ireland: Selected Issues](https://www.imf.org/en/publications/cr/issues/2019/06/14/ireland-selected-issues-46995)

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## Bibliographic details
- Published: June 17, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498319904.002

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### Summary of findings
- Personal income in Ireland is taxed under two distinct schemes.
- Changes in Ireland’s personal income taxation have been procyclical and created vulnerabilities to public finances.
- The reduction in personal income taxes during the boom has been broad based, albeit more for low-income taxpayers.
- With somewhat shrinking corporate profits during the crisis, personal income taxation was increased.
- The reformed income tax would reduce the vulnerability of public finances to interplay of corporate (CIT) revenues and reduce procyclicality.
- A robust, stable income tax system performs a stabilizing role over the business cycle.
- Additional CIT revenues during booms could be saved as buffers to be used for smoothing downturns or to reduce the still high public debt.
- Post-2014, income taxes have been reduced again, fueling the recovery in domestic demand.
- The Income Tax could be further amended to enhance incentives to work, while safeguarding the progressivity of the system.

### Analysis of cyclicality and fiscal vulnerabilities
- Procyclical changes in personal income taxation amplified fiscal vulnerabilities through interaction with corporate income tax (CIT) cycles.
- Broad-based tax cuts during booms disproportionately benefited low-income taxpayers.
- During the crisis, shrinking corporate profits coincided with higher reliance on personal income taxation.

### Effects of reforms
- The reformed income tax is projected to:
  - Reduce vulnerability of public finances to CIT revenue swings.
  - Reduce the procyclicality of tax revenues.
  - Provide a more stable fiscal anchor over the business cycle.

### Policy recommendations
- Maintain a robust, stable income tax system to perform a stabilizing role over the business cycle.
- Save additional CIT revenues accrued during booms as buffers to smooth downturns or to reduce public debt.
- Consider further amendments to the Income Tax to:
  - Enhance incentives to work.
  - Safeguard the progressivity of the tax system.

### Key statistics and publication note
- Pages: 25
- Volume: 2019
- Issue: 165
- DOI: https://doi.org/10.5089/9781498319904.002
- Stock No: 1IRLEA2019002
- ISBN: 9781498319904
- ISSN: 1934-7685

*International Monetary Fund. European Dept. "Ireland: Selected Issues", IMF Staff Country Reports 2019, 165 (2019).*

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## Content in this bundle

- **Ireland: Selected Issues; IMF Country Report No. 19/165; May 30, 2019**
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_Source: https://www.imf.org/en/publications/cr/issues/2019/06/14/ireland-selected-issues-46995_