Category Archives: Blogpost

Brexit(eer) Myths about Ireland

Its instructive,  and amusing in a “poke ’em with a stick” manner to see the brexiteers view of Ireland. Below are some of the favourite myths they propagate, or perhaps even believe, about Ireland.. Lets explore, and explode  Continue reading

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Irish Budget Theatre and the Ghost of 1977

Tuesday sees the budget, a by now largely meaningless piece of set piece theatre.  The old days when ministers were afraid to speak a word for fear of leaking have, thankfully, gone. Yet the setpiece remains, and it is a high point of the political year for the minister for finance to deliver the plans for the coming years.

Our political system favours strokes.  The death of Liam Cosgrave should remind us of the events of 40 years ago. Fianna Fail swept into power on the basis of a massive plan of tax cuts.  Domestic rates were abolished.  Admittedly domestic rates were a very crude mechanism for taxing property values, but they at least existed, and provided the basis for the funding of local council provided services.  40 years on we are still paying the price, politically socially and economically, for that decision.  First-time buyers grant or in economic terms a subsidy to property construction was introduced.  Across a wide range of other taxes, from personal to transport, rates were cut and bases were abolished. Fianna Fail swept into power.  Their successful appeal to the population set the template for Irish political life ever since.  While economically disastrous the 1977 program was politically triumphant, changing the landscape forevermore.

We persist in this country in believing our own myth that we are a uniquely highly taxed nation.  This is not the case.  In comparison with the countries in the northern tier of Europe  the Irish state takes a small percentage of the national wealth, individuals pay a small percentage of earnings, and corporations pay a small percentage of their earnings. We have no effective wealth tax.  Ireland is possibly unique in the western world in that it has hard-left Socialists, the solidarity party, who are against taxing the major form of wealth possessed by most people mainly residential property. Council after Council has reduced the residential property tax, rendering it a bit player in the extreme.  Solidarity, proclaiming to be socialists, have allied with the local populists (whether they are Fianna Fail or Fine Gael or Labour is irrelevant)  in cutting local property taxes and then demanding increased local services. It is entirely politically rational for them to do so.

Nobody likes paying taxes. But we have a political system which is absolutely incapable of telling the people that if they want the kind of services which they consistently demand, they have to pay to provide.  They can either pay at the point of use, a private provision; they can pay through deferred consumption in the form of loans, or they can pay through deferred consumption via taxation. There is no magic money tree.

The budget on Tuesday would be pretty predictable.There is an ambitious  and praiseworthy capital program, and this will be continued. There is an ongoing need to fund the activities of the state. We are earning enough and taxes to pay our way. But the legacy of crisis, and the legacy of the 1977 political earthquake, means that it is extremely unlikely that we will see anything bold or exciting.  We should not expect political vision from the government which was quite happy to yield up hundreds of millions of Euro through not collecting the taxes that are owed to us from multinationals. Whatever the ultimate outcome of the Apple tax case right now apple have a tax bill of €13 billion.  A large chunk of that no doubt will eventually be paid to other countries, if it is ever collected. Before that happens however we’re engaging in reverse Father Tedonomics –  money is not resting in  our account.  1% of €13 billion is €130 million.  That’s a good chunk of the available ”fiscal space”  which the government has to play with. As of its latest quarterly accounts Apple had in excess of 65 billion Euro in cash and short-term securities. They can quite easily pay this bill, Without blinking. There Is no question about them leaving Ireland should they eventually be forced to pay this money. The Irish government has gone to extraordinary lengths, even let us recall not collecting tax legally due to it, to stay on the side of apple.  €130 million, which the government has foregone, is approximately the same amount as is spent by local authorities on social housing. Fitting into a further year of homelessness as a crisis it’s good to know that the government can afford to forego this money.

The government almost certainly won’t announce on Tuesday that is going to collect this money due to it. That will instead spend an equivalent amount of money in ensuring that the optics of tax reduction are maintained.  There will be ritualistic denouncements of the government from the opposition, ritualistic muttering from the silent partners of Fianna Fail, and all sides will compete to demand more services but simultaneously demanding that the government is taking less resources to pay for it.  Continuing to feed the myth of Ireland as a high tax Society, commentator after commentator will breathlessly pore over the entrails of  of minor adjustments, The media will provide infographics showing how three euros here or €4 later will be added and subtracted to various hypothetical taxpayers, and the system will sludge on.  


Published as a column in Irish Examiner, 9/10/17

4 layers of complexity in Northern Ireland after Brexit

Lots and lots of commentators seem to be confused about Northern Ireland. No surprise there. The confusion seems to be around the post Brexit space. Again, no surprise there, its a mess wrapped in a confusion inside a conundrum. But, let’s parse it. The problem is what to do with the border when it is no longer internal but becomes an external EU frontier.  Continue reading

More on Funding Universities

A few weeks ago I blogged on the % of state funding given to UCD and TCD. I have now updated it, below the fold. TL: DR – the state is no longer the largest funder,  and isn’t providing even half the funds.  I think the pictures speak for themselves Continue reading

A-fisking we shall go – Ray Kinsella Edition

So Ray Kinsella has an op-ed in the Irish Times today advocating Irexit.  It’s full of tropes and assertions. Newspapers need to do some basic fact checking. This is the political economy equivalent of a oped calling for the repeal of gravity. My views on Irexit are wll known – see here, here, here. Irexit is proposed by the pale, male, aged, conservatives (I score 2.5, or 3 so I can say that) . It has nothing to do with economics, and  in my reading is all to do with a desire to get us back to the good old days of homogeneous Catholic poor but proud Ireland.

So, a-fisking we will go. Ray in Italics.  Continue reading

Greenways bring huge benefits so why don’t we have more?

As summer 2017 draws to a close it is useful to consider the impact of tourism on the Irish economy. More particularly we can sometimes draw lessons and analogies from the the tourism sector to the wider economy. 

The proposed South Kerry Greenway, a cycle track along the bed of the old great southern and western railway from Killarney to Cahersiveen provides an excellent example of the good and bad of Irish economic planning

 

Despite importance of tourism in Ireland there are relatively few published academic studies of its impact. Typically this is done by estimatin of a multiplier. This shows the impact of a marginal euro on the economy when that euro is spent in a sector. Two types are calculated – direct and indirect, the indirect also accounting for the increase in demand and consumption from the injection generated by the first.

 

Department of tourism estimates that upwards of €8 billion in revenue is generated from the tourism sector, and that something of the order of 200,000 jobs are dependent upon it. Such a large sector should really have a large amounts of research pertaining to its impact. Such research is has been produced tends to, at least in recent years focus on issues around sustainability, or on willingness to pay for more environmentally friendly products. Part of the difficulty as the tourism sector is diffuse; the high-end golfers who common jetting in played links courses of the West Coast are very distinctly different market from the European hiking and bicycling tourists. We do have some estimates of the impact : a 2014 comparative study put the direct multiplier for hotels and restaurants at 1.4, which would suggest a total impact of perhaps 2 or 3: a 2014 studysuggests that walking tourism generates approx. 12 jobs and €500 extra per 1000 walkers

 

For considerable number of the existing, or planned, greenways there does economic impact analysis. However, while not implying that these are in anyway suspect in their  methodology, these are not peer reviewed. They are not independent. Independent external analysis should always be preferred to analysis from within a project.  That said, these economic impact analysis to suggest a very considerable return from greenways. This mirror is evidence from other countries, where in general slow tourism has a higher economic impact in the longer run then alternative forms. Irish local authorities are at best moderate to poor in their analysis of the economic impact of tourism.

 The Kerry Greenway has been planned for sometime but has been blocked for yet another year by a small number of objectors. I may perhaps be biased, coming from the southern end of this proposed we make, that is little doubt in my mind last a walking and cycle track along Dingle Bay into the heart of iveragh would rank with one of the most spectacular tourist experiences anywhere in the world. People will pay good money to engage in slow tourism. Unfashionable though it may be I would suggest that is is far more beneficia to the environment, To the people, and to the tourists themselves, to slowly take in the sights than to hurtle around the Ring of Kerry in an air-conditioned bus.  

 

Meanwhile even existing greenways having difficulty. The great Southern Trail, which runs from Rathkeal to Abeyfeal has a long-standing plan for extension both northwards towards Limerick and Southport towards Tralee. The northward extension has however been veryrecently stalled, with three way lack of joined up planning between Irish rail, national roads authority and the proposed Greenway extension.  Little work appears to have progressed on in The subsequent extension, nor on the extension to Fenit. There are great plans for greenways around the country but these do not link up.

 What would an ambitious national greenway plan look like? Recognizing that such slow sustainable tourism has a strong impact, it is one we should seek. It would base itself around the remains of the once extremely extensive railway sector in Ireland. This will require CPO of land and property, to either renew the railbeds or where that is impossible to circumvent blockages; it would have a plan to place a cycle/walking only path the entire length of the Wild Atlantic Way; It would be nationally delivered as the evidence is that local authorities are ill prepared for such initiatives and local micro objections can stall plans for years;  it would ensure that gravel or asphalt are laid on the banks of all canals; it would ensure that there are regular, 10k spaced, facilities for families; it would link with thePilgrim Paths initiative and with local food groups. This is all very low key stuff and not terribly exciting but has far greater potential to ensure a vibrant rural year round tourist industry and thus rural development than some of the present initiatives.

An Irish Examiner column