Dáil Éireann Debate, Thursday - 30 September 2010
170 Deputy Michael Noonan asked the Minister for Finance the tax buoyancy effect of investment in infrastructure if the buoyancy is standard across different capital investments; and if he will make a statement on the matter. [34400/10]
View answerAs regards capital expenditure, the Government published Infrastructure Investment Priorities for 2010 — 2016 in July 2010. The core rationale for the current investment in public infrastructure is to create the framework conditions to facilitate a return to growth and thereby support sustainable job creation into the longer term. This can be achieved through capital investment in infrastructure which bolsters the economy's productive capacity such as the road network, the water services infrastructure, broadband provision and educational facilities among many more areas.
Adjustments in expenditure, capital or current, and tax policy, have an impact on the economy in that they can result in changes in consumption and investment patterns leading to changes in tax revenues. Tax buoyancy is mainly a function of the marginal propensity to consume and generally changes in policy are assumed to lead to a buoyancy factor in the range of 20 to 30 per cent. A buoyancy factor in the lower range is generally thought appropriate in terms of capital expenditure.
