A Major Economic Crisis

Topics: Tax, Real estate, Economics Pages: 19 (6950 words) Published: December 18, 2012
Ireland had a major economic crisis happened started in 2008 until 2011 this is because this country are falling into recession for the first time since 1980’s. The government of Irish officially announced it was recession in September 2008. This announcement leads to sharp rise in unemployment in the following months. In January 2009 is the highest month that record number of people claiming unemployment benefit it rose to 326000 people.

Before the crisis happen in Ireland, Ireland is the country that impose standard rate of corporation tax is among the lowest in the world at 12.5%.The Irish tax system is primarily in place to pay for current expenditure programs, such as universal free education (including third level), taxpayer funded healthcare, social welfare payments such as old age pensions and unemployment benefit and public capital expenditure, such as the National Development Plan. When the crisis happen revenue of the country low, the government have to bear high of expenditure to solve the problem government have to increase to tax rate. Tax rate is one of the incomes of government. The tax rate imposes by Irish government from the lowers in the world 12.5% to normal rate 20%. Spending is greater than revenue because of higher compensation of government employees, social benefit, interest on the public debt, subsidies and gross fixed capital formation. Ireland also exposed to problem of property bubble. The residential and commercial property markets went into a severe slump with both sales and property values collapsing. The property developers are currently suffering from substantial over-supply of property, much still unsold. Many Irish property developers speculated billions of Euros in overvalued land parcels such as in the urban Brownfield and Greenfield sites. Ireland entered into an economic depression in 2009. In the first quarter in 2009, GDP was down 8.5% from the same quarter the previous year is 12%.

Ireland is the country that impose the agriculture has been transformed into the country that focusing on service and high-tech industries and dependent on trade, industry and investment. In the year 2008, Ireland has wealthiest GDP per capita among the Organization Economic Co-operation Development (OECD) and European Union (EU). At that time Ireland have the best quality of life in the world because of Ireland have the high nation income. The 1995 to 2000, Ireland has high growth income of the country in this period many country call Ireland is the “Celtic Tiger”, it is reference to the “tiger economic” of East Asia. With high growth in economic came high level of inflation, particularly in Dublin the price of goods are considerably higher than elsewhere in the country especially in the property market. The rate of inflation in July 2008 was running at 4.4% according to CPI and the actually dropped slightly from the previous month.

Ireland had high trade barriers such as high tariffs and a policy import substitution. Many of the Europe country enjoy growth of economic include Ireland but they also suffered economic stagnation because of economic nationalism among the country. In the year of 1958 many country support free trade, foreign investment and growth than fiscal restraint as prime objective of economic management.

In the 1970 the population increased by 15% and national income at annual rate of about 4%. The employment increased by around 1% per year but the state sector is too large rather than the increased of employment. It leads to the budget deficit and public and public debt increased. In 1987, the government if Irish “Fianna Fail” reduced public spending, cut taxes and promoted competition. The effect of that many foreign companies invest in Ireland. The companies that invest in Ireland is Intel, Microsoft and Google. Impact of the investment it lead to growth and economic income and GDP per capita in the OECD...
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