Further information on Geary Lecture and seminar by Tim Besley below. To reserve a place at either/both event(s) please email email@example.com and state clearly which event(s) you wish to attend.
Geary Lecture: Tim Besley
4pm Friday 19 October at ESRI
Making and Breaking Tax Systems: The Institutional Foundations of Fiscal Capacity
We have become accustomed to governments having the fiscal capacity to support revenue raising of more than 40% of GDP. But such levels of taxation were unheard of before the 20th century. This lecture will review some of the trends in taxation over the past one hundred years and how the tax systems were created which support the needs of modern governments. It will use this historical perspective to reflect on the challenges that need to be confronted in trying to build a centralized fiscal state in Europe.
Research Seminar, 1pm Friday 19 October, at ESRI
The Welfare Cost of Lawlessness: Evidence from Somali Piracy
This paper estimates the effect of piracy attacks on shipping costs using a unique data set on shipping contracts in the dry bulk market. We look at shipping routes whose shortest path exposes them to piracy attacks and find that the increase in attacks in 2008 lead to around a eight to twelve percent increase in shipping costs. We use this estimate to get a sense of the welfare loss imposed by piracy. Depending on what is included, we estimate that generating around 120 USD million of revenue for pirates in the Somalia area led to a welfare loss of anywhere between 0.9 and 3.3 USD billion. Even at the lower bound, therefore, piracy is an expensive way of making transfers.
This year’s Geary Lecture will be delivered by Tim Besley, Professor of Economics and Political Science, LSE. He will speak on
“Making and Breaking Tax Systems: Institutional Foundations of the Fiscal State”
Date: Friday 19th October
Venue: ESRI, Sir John Rogerson’s Quay
Attendance at the event is free but must be pre-booked. There are a limited number of places available and early booking is encouraged. To book a place, please send details of attendee’s name, organisation and contact telephone number by email to firstname.lastname@example.org
A conference paper provides evidence relevant to some key choices in the design of a new property tax. While the paper does not recommend a specific blueprint, it draws on evidence from other countries as to “what works” and analyses the impact of different forms of property tax on a nationally representative sample of households.
Ronan Lyons post yesterday contained three main comments on the paper. Because some of these appear to have drawn primarily on an Irish Independent report that contained inaccuracies, rather than on the paper itself, it seemed best to issue this as a new post.
1. The first comment is that “there should be no exemptions from a property tax, only deferrals”. The SWITCH model is set up to analyse policy choices. As I see it, the level of an income exemption limit is a choice variable, and in this context, zero would be Ronan’s preferred option. Our research found a range of positive values in evidence in many countries. For example, the UK Council Tax Benefit effectively exempts those with incomes close to minimum social security levels. In Northern Ireland, they have set a higher income limit than in the rest of the UK. In our analysis we report income distribution impacts for the zero case, and also for levels at the State Contributory Pension and State Pension+25%. Our work points out the implications of the different choices. Making such a choice is a matter for public debate and government decision. Our paper aims to inform that choice.
2. The second comment is that “a property tax should most certainly not be related back to income”. I’m not sure what he has in mind here but it is important not to misunderstand our analysis. Apart from income exemption limits and some marginal relief above this (necessary to prevent 100%+ tax rates), the property tax bill we consider is simply a flat percentage of market value. We analyse what the outcome is in terms of how the burden is spread across the income distribution – this depends on how, in practice, property values and incomes are related, as well as on the effects of exemption limit provisions. These are questions of legitimate interest for research and policy.
3. Thirdly, it is stated that our paper asserts that Ireland has “no database on site values”: This is not what we said – it reflects an inaccuracy in the Irish Independent’s report. What we said is that “to our knowledge, there is no data source which combines information on site characteristics (location and size) and household incomes, so that it is not possible to provide a clear picture of how a Site Value Tax relates to ability to pay or its impact on the distribution of income”. If there is such a source, we would be glad to hear of it.
SWITCH, the ESRI tax-benefit model has been used to analyse the distributional impact of the tax and welfare measures in the October 2008 and April 2009 budgets. Results show a significant gain for the lowest income quintile, with losses for other quintiles increasing with income. For details see here for the Irish Times article of Friday 10 April.