ESRI: Govt tinkering with taxes 'caused even greater austerity' during economic crisis

ESRI: Govt tinkering with taxes 'caused even greater austerity' during economic crisis

Income tax breaks before the economic crash eroded the Government's tax base and caused even greater austerity during the crisis, according to the Economic and Social Research Institute (ESRI).

A new study from the ESRI found that discretionary tax policy meant a relative reduction in revenue in the period up to 2008.

"In other words," it states, "if the tax system had been left unchanged during the 2000s, more revenue would have been automatically generated than was actually the case."

The Government was still increasing income tax credits as late as 2008, despite signs of economic trouble ahead.

Income tax is the State's largest individual source of tax revenue, accounting for more than 35% of the total.

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