45126-Invest. Qual-No111

Investment in Quality2000 and Quarterly National Accounts (Q4, 2001). Until 1997 loans bythe ICC and ACC Banks were included in the Sectoral EconomicInvestment part of the Public Capital Programme. For this reason thisTable shows slightly different time periods than the correspondingcurrent expenditure Table to achieve consistency. Investment byEircom/Telecom Éireann was included in the PCP until the privatisationof Eircom in 2000. This investment has been excluded from the 1998figures to achieve consistency for the 1998–2000 period. The healthfigures from 1997 include investment funded by Health Boards fromproperty disposals. The increases for roads and transport in 2001 are notshown due to changes in classification of these items.RevenueIt was noted above that the tax share in GNP has been remarkablystable over the past decade, although the years 2001 and 2002 aresignificant exceptions in this respect. The question arises as to howthis stability was achieved, given the substantial income tax cutsthat have occurred. This aspect of the tax system is discussed in theReport of the Tax Forecasting Methodology Group of theDepartment of Finance (1998). This report pointed out that there is atendency for the tax share of GNP to increase in the absence ofpolicy changes. The corporation tax base is particularly sensitive togrowth in GDP and, if that is faster than GNP growth, in theabsence of policy changes, corporate taxes tend to grow faster thanGDP. The VAT base could also be expected to grow by more thanGNP growth as higher VAT rates apply to high income elasticitygoods (i.e., goods whose consumption rises are more thanproportionately in line with income). The income tax system isprogressive, so income tax will increase faster than GNP in theabsence of policy changes.The total tax share in GNP in the year 2000 was 30.8 per cent,approximately the same as the 1991 share (after excluding MotorVehicle Levies from the 1991 total for comparability, as these arenow paid direct to Local Authorities). The income tax share fell by1.8 percentage points over this period. The most buoyant tax basewas corporation tax; its share of GNP more than doubled from 2.2per cent in 1991 to 4.4 per cent in 2000. This was the single biggestcontribution to maintaining the total tax share of GNP despite the192