Wrong side of the Laffer curve?:)

I missed it out in my last blog, but Monday's fiscal figures have been interesting as well, as they have led to premature jubilation, with many declaring that the fiscal weakening is over. It is true that non-interest expenditures increased less than in previous months. But here's my words of wisdom on this rather noisy series: Don't let the monthly figures fool you. If there ain't no fixing, it will come back with a vengeance. I am no fiscal expert, but I can tell you that unless we see some corrective measures, the worsening in budget figures will pick up again in the coming months.

But what really took my attention in the May central government figures was the tax cut-related numbers: Auto sales rose by 16% in April-May, but tax revenues were down 31%. In a similar fashion, white good sales fell 5.6% yoy, but revenues were down 46%. These figures make me wonder whether we were on the wrong side of the Laffer curve after all:) Of course, I am just joking: Even if the concept held in the real world, the tax cuts were large enough to take you from the right side of the inflection point to the way left, to the point, where tax revenues would be much less. Anyway, getting more revenues was not point in this program, getting consumption rolling was. While I am not sure how effective its toned down version (the newly announced rates) will be effective going forward, the program has definitely been relatively successful, making me proud of one of my rare moments of support of the government- see my Hurriyet column, when I took on the issue just before the program had been officially announced.