Month: September 2009

Dutch Courage

Apparently Zoe Group’s request for examinership is all about the public interest. The Irish Times reports:

The public interest is “at the forefront” of the bid for court protection by key companies in Liam Carroll’s troubled Zoe property group, the High Court was told today as it reserved to Thursday its ruling on their unprecedented second application for examinership.

Urging the court to appoint Ray Jackson examiner, Bill Shipsey SC said the interests of the wider community had never been “so much to the fore” in any application for court protection although there was no one arguing the public interest in this case except the companies themselves.

It was of “enormous signficance” the vast majority of the group’s banker creditors either supported or did not object to protection and Dutch-owned ACC Bank only got “Dutch courage” to oppose protection after the High Court rejected the first bid for examinership, he said.

Words temporarily fail me. But I’d be interested in your thoughts.

ECB, NAMA Bonds and the Irish Banks as Issuers of Sovereign Debt

Listening to Richard Downes question Richard Bruton on Morning Ireland earlier today (“The ECB are funding NAMA at a rate of 1.5%”) I am now convinced that very few of even our smartest journalists understand the basic mechanics of how the funding of NAMA will operate or where the ECB fits in. So here goes.

Continue reading “ECB, NAMA Bonds and the Irish Banks as Issuers of Sovereign Debt”

Commission on Taxation: Carbon tax

The report of the Commission on Taxation can be downloaded: http://www.commissionontaxation.ie/Report.html

This thread is on their proposals for a carbon tax. Others will open threads on other aspects of the Commission on Taxation.

The Commission on Taxation proposes a carbon tax. Here are some crucial elements:

Level: Roughly equal to the CO2 permit price in the EU Emissions Trading Scheme (€15.24/tCO2 today)

Scope: Non-ETS CO2 only

Revenue: Earmarked

On the level of the tax, with the carbon tax equal to the permit price, we reduce carbon dioxide emissions at the lowest possible cost. This is good. At the same time, the level of the tax is set by the market rather than by some politician. This is good too. There is the worrying suggestion of a floor to the tax, but this is fine as long as that floor is set low.

Scope: CO2 in the ETS is exempted as it should. Taxing CO2 in the ETS would be double regulation, and every tonne of CO2 reduced in Ireland would be emitted elsewhere in Europe. Non-CO2 greenhouse gas emissions are exempted too. This is the only pragmatic way forward at the moment, although economic theory strongly recommends that this exemption should be phased out at the earliest opportunity.

Revenue: The Commission on Taxation got it wrong here. They recommend that tax breaks for energy efficient capital be continued, and that companies in a voluntary agreement on energy efficiency. The tax break is double regulation. The Accelerated Capital Allowance on energy efficient equipment should be abolished. The voluntary agreements on energy efficiency should also be abandoned. Voluntary agreements are a weak policy instrument. The CoT essentially allows industry to choose between two regulatory regimes.

By the same token, the CoT does NOT recommend that other energy subsidies be abolished — particularly the Greener and Warmer Homes. Again, this is double regulation, unnecessarily increasing the cost of emission reduction and introducing distortions and opportunities for rent seeking. This is an opportunity missed.

The CoT does recommend that VAT on energy-efficient goods be lowered. This is triple regulation!

Public Intellectuals and the Crisis

See this article in today’s Irish Independent.

Lucey: The Immorality and Unfairness of Nama

Brian Lucey has a new article on NAMA. While the article is partially a response to Alan Ahearne’s column of Saturday, I think it is useful that it also focuses on the core issue of the fairness of the proposed approach to pricing the assets to be transferred.