asked the Minister for Finance the detailed basis of calculation for the buoyancy of the growth rates for revenue for 1978 from (a) income tax (b) corporation tax and (c) value added tax, indicating how these calculations relate to the Government's projection of a 7 per cent inflation rate and a 7 per cent growth rate in 1978.
Written Answers. - Revenue Buoyancy.
241.
The techniques used for the calculation of the growth rates for revenue generally in 1978 were no different from those used in other recent years.
The Department of Finance prepares periodically forecasts of the main macro-economic aggregates which take account of current and prospective economic trends in Ireland and abroad and of changes, when they occur, in Government economic policy. The macro-economic forecasts so prepared for 1978 took full account of the stimulus given by the public expenditure and taxation proposals announced in my recent budget and indicated a growth of about 7 per cent in the volume of GNP and an increase of 7 per cent in consumer prices at end-1978.
Revenue buoyancy depends on the level and composition of economic growth. Standard econometric techniques, adjusted where necessary in the light of information on relevant behavioural phenomena. were used to derive revenue buoyancy estimates, including those for PAYE income tax and for value-added tax, from the main aggregates in the macro-economic forecasts. The estimates of revenue from corporation tax and from income tax on the profits and earnings of self-employed persons did not, of course, depend on the economic conditions expected in 1978 as these forms of taxation relate to the profits of earlier years.