Michael McGrath (Cork South Central, Fianna Fail)

Yes. The Minister also confirmed in that reply that such a projection takes no account whatsoever of any reduction in demand brought about by an increase in VAT. The Minister has many economists at his disposal in the Department of Finance. Surely one of them told him that if he increased prices, demand would reduce. A basic economic principle is price elasticity of demand. I am not going to exaggerate and say that this will result in a negative yield. Of course it will not. However, I do not believe this 2% increase in VAT will result in an additional €670 million to the Exchequer. I am shocked that the Department of Finance has allowed that to get through.

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