Mr. Sebastian Barnes:

The Deputy has touched on an important issue, one that we spent a great deal of time considering in the report. It is an issue of consistency between the macroeconomic forecasts for compensation, namely, wages and the like, and what we see on the income tax side. I will ask Dr. Casey to speak in more detail in a moment. It is a difficult environment to predict taxes in because the unevenness in the economy means that some higher-wage sectors have continued to grow quickly in terms of employment and people have, on average, been getting wage increases. We then see the reverse of the coin in the more service-oriented sectors where wages tend to be lower, there has been a significant shortfall in employment and wage prospects have not been as good. The question is, when those two elements recover, to what level will that recovery take us.

We have been surprised by how robust income tax receipts have been. Perhaps Dr. Casey can provide a more succinct picture.