1 The Challenge of Tax Reform and Expanding the Tax Base Geary Lecture – 2009

Roy Geary spent his career using applied economic analysis to tackle important questions in public policy. I am deeply honoured to join the list of previous Geary lecturers who have celebrated the memory of such an important contributor to global economic policymaking. Roy Geary was devoted to finding ways for the techniques of economics and other social sciences to make the world a better place by addressing key policy questions. Were he alive today, Geary would find a plethora of issues to tackle- the economic challenges facing the world economy today are greater than at any time in at least a generation. My topic today is the design of tax policy, and in particular the role of so-called "tax expenditures " in income tax systems. It is a topic that is important not just in Ireland today but in many other nations- including the United States. I shall begin by talking about the revenue imperative, the challenge that policy-makers around the world will face as they struggle to raise revenue to rebuild public treasuries in the aftermath of the recent economic crisis. I will illustrate the importance of thinking about economic considerations, such as taxpayer behavioural response, in designing tax policy. I will then share with you some of my experiences as a member of the Presidential Tax Reform Panel that was commissioned in the United States in 2005.. I will conclude by discussing the perennial challenge of broadening the tax base and by suggesting institutional structures which may help avoid raising revenue from a narrow tax base with very high rates and high distortions