The effect of the COVID-19 pandemic on consumption and indirect tax in Ireland

Abstract

The mission of the Economic and Social Research Institute is to advance evidencebased policymaking that supports economic sustainability and social progress in Ireland. ESRI researchers apply the highest standards of academic excellence to challenges facing policymakers, focusing on 12 areas of critical importance to 21st Century Ireland. The Institute was founded in 1960 by a group of senior civil servants led by Dr T. K. Whitaker, who identified the need for independent and in-depth research analysis to provide a robust evidence base for policymaking in Ireland. Since then, the Institute has remained committed to independent research and its work is free of any expressed ideology or political position. The Institute publishes all research reaching the appropriate academic standard, irrespective of its findings or who funds the research. The quality of its research output is guaranteed by a rigorous peer review process. ESRI researchers are experts in their fields and are committed to producing work that meets the highest academic standards and practices. The work of the Institute is disseminated widely in books, journal articles and reports. ESRI publications are available to download, free of charge, from its website. Additionally, ESRI staff communicate research findings at regular conferences and seminars. The ESRI is a company limited by guarantee, answerable to its members and governed by a Council, comprising 14 members who represent a cross-section of ESRI members from academia, civil services, state agencies, businesses and civil society. The Institute receives an annual grant-in-aid from the Department of Public Expenditure and Reform to support the scientific and public interest elements of the Institute's activities; the grant accounted for an average of 30 per cent of the Institute's income over the lifetime of the last Research Strategy. The remaining funding comes from research programmes supported by government departments and agencies, public bodies and competitive research programmes.

Assessing the impacts of COVID-19 on the Irish property market: An overview of the issues

“…Moving beyond the short term it is possible that the Irish housing market may experience a significant increase in demand when the pandemic is brought under control. Coffey et al (2020b) show that as a result of the heightened uncertainty and the administrative closures which limited the ability of consumers to spend, consumption this year is likely to be significantly lower than previous years. Combined with the PUP and TWSS which have offset a significant decrease in income there is likely to be a large increase in savings this year.…”

“…* June only contains data up to the 18th of the month. Coffey et al (2020b) looked at how COVID-19 would impact on affordability in the rental sector in the short term. The paper focused on households which were not in receipt of rental supports such as the Housing Assistance Payment (HAP) or Rent Supplement.…”

Exploring the short-run implications of the COVID-19 pandemic on affordability in the Irish private rental market

“…One notable feature of the retail sales data is the variation across items in the scale of the decline. This has been documented in Coffey et al (2020), who explore changes to household consumption at a granular level following the onset of the pandemic. The major declines have occurred in expenditure related to furniture, lighting, clothing and motor fuels, which are all down close to or above 80 per cent year-on-year in April.…”

“…To explore whether this is the case for non-supported private renters, we undertake an exercise which is similar to Coffey et al (2020), and map changes to expenditure as evidenced by the CSO retail sales data and the Central Bank of Ireland credit and debit-card data to the minimum essential standard of living (MESL) expenditure data. Our aim is to explore the extent to which these pandemic-specific consumption changes may have mitigated the housing affordability pressures of households by reducing their outgoings and creating space to absorb income shocks and continue making rental payments.…”

“…24 It cannot therefore be expected that households would keep expenditure at the reduced levels for anything other than the severe public health crisis phase of the pandemic. 25 This is due to the fact that the reductions in spending due to the public health restrictions (as outlined by Coffey et al, 2020) push consumption below what is needed for normal societal function (such as childcare, transport etc) and these will immediately return as the economic and society reopens.…”