Tax Strategy Group Papers

Some insights into the official thinking concerning tax policies can be obtained by reading the papers produced by the Tax Strategy Group:  a new batch has just been released.

13 replies on “Tax Strategy Group Papers”

“In overall terms, therefore, the current working forecast is that the pace of growth will not exceed 1 per cent next year” , the economic framework for budget 09.

Whats concerning when one reads this is not htat they got it wrong (althou so badly wrong…) but no sense of planning anything other than the in-house forecast. It notable that the in-house forecast of 1% 2009 growth was fully 42% over the consensus forecast for 2009 reported in the paper. While the appendices do show several scenarios, they are unidimensional, showing revenues if various taxation changes occur. One hopes, without much confidence, that a two-dimensional scenario approach is now being used where tax changes are one dimension and economic growth (benign, usual, malign) scenarios are the other.

re: The Tribune on levies:

I dunno. I don’t see why there shouldn’t continue to be a per property levy on each unit built? The existing levy system could perhaps do with more flexibility – reductions for integrated civic amenities, based on size of properties (and so their footprint on existing amenities) and perhaps at a proportion of sales price. It could also include some element of escrow, so the developer has to pay as he goes along – preventing the current situation where councils are owed millions.

The problem, though, with this and any other scheme is that mucho wonga was raised by councils through the boom. And what did they do with it? They built shiny new offices for themselves, gave themselves payrises, bloated staffing levels and increased pay for councillors… until we decide on what councils are supposed to do and how much they need to do it, raising money is always going to be an arbitrary process.

On the general issue of zoning:
The problem with the current system is that you can’t object to your land being rezoned. You don’t even know about it until after the fact. Like everything else in Ireland, the planning process takes place in a secretive vacuum (unless you happen to be in the club…).

@Brian Lucey Are business rates (which provide ALL funding for local authorities) counted in the overall tax take?

Business rates dont provide all funding for LA’s. Think of your car tax and what George said

You guys are right to have an opinion about the new civic public offices that local authorities built for themselves. It should not go un-questioned. It is worth walking around the swords civic offices some time and asking oneself, was it really worth it? Architects of course, will tell you it was worth it. Frank McDonald will tell you it was worth it. It is hard to disagree with McDonald’s comment, it is a pleasure to go into Dublin city council atrium space and view a planning application.

Apparently the ‘client’ changed its philosophy between the time of the old Dublin civic office salt and pepper bunkers at wood quay and the newer linear building facing the Liffey which has the large atrium. I was in the new Vincents hospital building recently in Dublin, and it has a fine big atrium too. But lets be honest, a hospital, I definitely do not begrudge them an atrium. It is great for the sick and elderly to have a nice space like that in which they can meet their relations for tea etc.

Dublin civic offices has an atrium, and while it isn’t as well used as the Vincents hospital building it just about gets away with it. The do hold some public talks there etc. But when you get to Swords civic centre, you really begin to question the atrium. In fact, if you hang around the atrium at swords, the security guy starts asking you questions. Which raised the question – why did we build the atrium not to use it? Atriums in civic public offices are problematic, because they don’t get used enough. Then they have to be policed and they are no longer fun to be in.

The UCD building for business and commerce has a fine atrium, but it is not utilised very well as a space. Although it does unify together the occupants of the said buildling as a community of sorts. Visual connectivity across atriums and stairs has been used to good effect by Herman Hertzberger the dutch architect in schools in Holland where the pupils come from many different ethnic origins and are new arrivals in Europe. It helps to integrate the community in some way.

Nice atria work, where they are used to integrate the integrate the occupants of a building together as a kind of community. That happens in too limited an extent at wood quay. But I think it almost manages to work in the UCD commerce building. At swords it doesn’t work. At Limerick, and at Kildare I need to visit them. But I am not so encouraged it was necessary. James Hospital has a kind of day lighted atrium in one of its main buildings. I remember it being quite nice the last time I was there.

Of course, shopping centres have got wise to this, ever since Blanchardstown opened. But I am not so sure, why local civic offices felt they needed this. Like I say, where sick folk, shoppers or commerce students are concerned – yeah, it can work. But civic offices, I am still not convinced.

Actually, Dun Laoghaire Rathdown atrium space isn’t that bad. They hold proper exhibitions in there and it has a kind of a square, rather than an elongated rectangular shape, that lends at space at DLR to public use.

The Swords civic offices has a big long banana shaped atrium, and it simply isn’t a robust, public space which can be handed over to kids and parents for art exhibitions or the like. But I do think DLR space works pretty well.

You know, I am just glad that Bill Nowlan published that article in the sunday tribune yesterday. It takes a weight off of me, to think a decent debate about land tax or development tax is finally gaining some traction.

Now, land tax is really something the Irish economists should be involved with. NAMA is kind of like a battle lost. But Land tax is something where the economists should have a positive input. Nowlan is right to point out, that this land tax business is a horribly difficult thing to get right. Bull, Balchin and Kieve’s ‘Urban Land Economics’ has a great chapter about the post war introduction in Great Britain. Basically, the local authorities over there felt bad about intervening too much in the marketplace, and commanding land owners to sell them land at specified rates. The local authorities shied away from handling the money and the risk too, is my recollection from reading Bull, Balchin and Kieve.

It all came in with that great wave of euphoria for John Maynard Keynes after the war. The idea that we could plan the economy properly. Lets remember on this aniversary of the Berlin wall, that euphoria was present in the east also in another kind of way. I understand in post war Britain that the local authorities simply had not got the man power to make the schemes work. They could not compile a database of all the land values. Remember it was before the time of GPS, computers and so forth. It was still the era of the enigma machine etc. In fact, the British smashed the machine that Turing built during the war, in case the rest of the world would copy the British technology in computer science! Hah!

It must have been a hell-ish-ly brave thing to do in Great Britain though, given that feudalism has never really vanished from their system. I am getting into Dan O’Brien and constitutional stuff now I guess. Subjects versus citizens etc.

As I say, Bill Nowlan rightly points out the difficulty in implementation of this land taxation business. But that is what should make it such a challenge for Irish economists to do. I would love to rant off into a whole description of what Hernando De Soto had to say at Trinity recently, but I won’t. Land, capital, taxes, it doesn’t get any more basic in terms of economics than that. I think David Wetzel is probably right though. It doesn’t make sense to have transportation companies trying to make all their revenue from fairs and ticket sales. Then should be one of the first who gain from wealth captured by land. Wetzel always repeated to me, the wealth is captured the first time a red line is drawn on a map. Not when the train stations and lines open up.

In other words, if there is a disused railway like running up the western side of Ireland from Sligo to Ennis or whatever – that wealth gain has already acrued to whoever owned the land along its length. To tax land, in this manner, you would end up taking portions of the selling price away from those land owners. Yeah, that could be deemed unfair. But the other side of the coin, is a project like the western rail corridor might be able to fund itself. There is no hope it can ever fund itself through train fares alone. It is simply wrong to even try.

I am no expert in this, but in terms of transportation infrastructure, land tax is very important. To be honest though, it was Bill Nowlan in his article in the Sunday Tribune that I first realised that levies are a kind of tax on land. It is funny, I have been thinking about land tax for some time now. I have been dealing with planning applications with conditions and levies attached to developments. But somehow, in my innocence I never even put the two together. How dim-witted is that?

Comments are closed.