Richard Bruton (Dublin North Central, Fine Gael)
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Question 135: To ask the Minister for Finance the assumptions used by his Department in estimating the so-called tax buoyancy effects of tax and spending changes in 2009. [8921/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Adjustments in tax policy or expenditure 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 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.

Based on the latest information available at end-2008, the Addendum to the Irish Stability Programme Update published by the Department of Finance on 9 January forecast that €36,995 million would be received in tax revenue in 2009, a decrease of 9.25% on the amount received in 2008. This forecast was made using the assumption that reductions of up to €2 billion would be secured in expenditure this year. Consequently, the macroeconomic impact of reducing expenditure had been factored in to the estimate of tax buoyancy that underpinned the Department's forecast for 2009 tax revenue.

Richard Bruton (Dublin North Central, Fine Gael)
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Question 136: To ask the Minister for Finance the estimated average direct and indirect impact of €100 million investment in infrastructure on GDP, employment and taxation receipts. [8922/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The impact of any form of government spending on the economy crucially depends upon the nature of such spending. In this regard, spending money on investment is no different, and the economic impact of an additional €100 million on investment will be very much dependent upon the type of investment that is undertaken.

With this in mind, I would point out that €100 million represents in gross terms approximately 0.05% of GDP. However, it should be noted that the economic impact depends on the import content of production as well as construction price developments. The labour market effects of such activity will depend on the employment intensity of that activity, which of course will differ from project to project. For instance the purchase of land for €100 million as part of a bigger infrastructural development would have little or no employment content.

Consequently, it is not possible to give a broad rule of thumb other than to note that €100 million of gross infrastructural investment accounts for 0.05% of GDP.