Why Ireland needs a social service tax

"When I have money, I spend it. When I don't, I don't." These are the words of one minister of finance during the Celtic Tiger boom, illustrating the lack of prudence in his political philosophy.

The single biggest failing of Irish economic policy during Ireland's boom years was throwing out the painful lessons of the late 1980s and 1990s, that Ireland is a small open economy that needs prudential fiscal policy.

This post looks at expenditure and taxation, and asks whether, looking to the future, we can start looking at taxes as prices for social services. This blog draws on my work with Ronan Lyons in the book Next Generation Ireland.

Spending went mad

During the boom, public sector expenditure grew far too rapidly, as the chart below shows quite clearly.

Read more here.