Michael Noonan (Limerick City, Fine Gael)

I do not propose to accept the amendment. However, I fully support the principal of ex ante and ex post economic impact assessments – including cost benefit analysis – in formulating and evaluating tax policy. I am opposing the amendment on a number of grounds. The main reason is the underlying principle of proportionality in cost benefit analysis. The level of resources invested in carrying out the analysis should be commensurate with the scale of the expenditure involved. For instance, the 2005 capital appraisal guidelines recommends full CBA analysis only for projects exceeding €30 million. Four measures contained in the budget exceed this threshold – the review of universal social charge, legacy property reliefs, mortgage interest relief and stamp duty measures. The review of the universal social charge and the legacy property reliefs were subject to a full economic impact assessment. The reports of both have been published. The economic impact assessment of the legacy property reliefs involved a full public consultation so as to take the views of all interested parties, as well as the publication of two reports, including an interim consultation report, an economic model and substantial data and analysis. This was a transparent and comprehensive process in line with best international practice for policy evaluation.

Each year, as part of the tax strategy group process, a paper on tax expenditures outlining any major changes is produced, discussed and subsequently published. The stamp duty measure was also considered as part of a tax strategy group paper on property tax. Mortgage interest relief was examined by my officials in the wider context of mortgage debt generally.

Every year, the costings for all policy changes are set out in section 1 of the summary of budget measures. The taxation annexes to the summary provide examples of the changes on different categories of income earners in substantial detail. While the costs associated with the legacy property reliefs and review of universal social charge certainly justified a major economic impact assessment, many of the tax expenditures in the Bill are not of sufficient significance in terms of cost to make the completion of such studies cost effective. Therefore, it would not be of benefit to commit time and scarce resources on such an exercise.

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