Editorial: 'Government needs to plan now for end of Tax bonanza'
Common sense has been documented in all manner of ways. The fact it requires so many definitions and explanations suggests it can't really be all that common, after all. According to Byron R Pulsifer, it is the exercise of applying experiential learning to a situation heretofore inexperienced in order to establish an action or behaviour that leads to satisfactory conclusion.
If you used such a guideline in assessing the Government's management of recent golden windfalls that have fallen into its lap, little has been learned.
You would also conclude the expectation of a satisfactory conclusion should be tempered.
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Analysis from the Irish Fiscal Advisory Council (IFAC) makes an even stronger case for caution.
The watchdog has barked before only to have its warnings ignored, but today's report that the halcyon, high-rolling days of billions flowing into the State coffers could be coming to an end ought to command attention.
If the possible loss of an eye-watering €6bn corporate revenue is not sufficient to induce caution, one has to wonder what is. Prudence, they say, is the footprint of wisdom, but there have been few traces of it if you follow Government tracks in recent years. Now, with an election in his thoughts, Taoiseach Leo Varadkar's head will be spinning with the possibilities and potential poll bounces tax cuts could deliver. But the IFAC could scarcely be clearer: we have been over-spending and if we continue to do so based on unreliable income streams, we are sure to pay very dearly for the extravagance.
According to council chief Seamus Coffey: "Any money that has been coming in has been committed to fiscal measures either on the spending side or on the tax side." Our over-reliance on corporate tax has already been identified as our economic Achilles heel in several forecasts. And it is not only unwise, it is unsustainable.
For, as Mr Coffey also noted, such revenues were €5.4bn more than forecast by the government in 2015 when it set out its medium-term budget plans - well in excess of European Union averages. We know such a bonanza will not go on and we must therefore plan accordingly.
Austrian economist F A Hayek wrote: "Our faith in freedom does not rest on the foreseeable results in particular circumstances but on the belief that it will, on balance, release more forces for the good than for the bad."
But the Government has surely been riding its luck in this regard. Too many circumstances are now unforeseeable and the balance is far from secure. There are sufficient indications to suggest a significant correction or disruption is coming and ought to be prepared for.
Three years ago, Paul Krugman coined the phrase "leprechaun economics" after our economy grew by a massive 26pc in a year.
This was more than three times faster than first thought. Surely Marx's observation of how history repeats itself - "the first as tragedy, then as farce" - has hung in the air for long enough?