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Teagasc PhD Walsh Fellowship Opportunity

Economic Modelling of Agricultural Land Markets

The objective of this project is two-fold. Newly available data on agricultural land structure and tenure in Ireland will be exploited to assess (i) the impact of new taxation measures on land mobility between farmers and (ii) the impact of land tenure and mobility on the economic performance of farm businesses. Specifically, economic modelling techniques will be used to examine the relationship between land fragmentation, tenure and farm productivity and efficiency. The effectiveness of recent tax incentives around long-term leasing of land will be explored and the impact of long-term leases on farm performance will be measured. Overall this project will contribute to a greater understanding of how the agricultural land market in Ireland operates, how policy measures can influence mobility and how land tenure impacts on the performance of the agricultural sector.

Requirements
The successful candidate should be highly self-motivated with an ability to work independently and be willing to undertake recommended coursework where necessary. Strong quantitative skills and good communication skills, both written and verbal, are essential requirements. Applicants should have a good primary degree (First or Second Class Honours) or M.Sc. in an appropriate discipline (Economics, statistics or related).

Award
The Ph.D. Fellowship is a joint research project between Teagasc, Rural Economy and Development Programme, Athenry Co. Galway and the Cork University Business School, University College Cork. The student will be work under the supervision of Prof. Thia Hennessy (UCC), Dr Robbie Butler (UCC) and Dr Emma Dillon (Teagasc).
The fellowship provides a stipend of €22,000 per year. University fees are paid by the student from the stipend which is tenable for 4 years.

Further Information/Applications
Prof. Thia Hennessy, Dean, Cork University Business, University College Cork. Phone +353 (0)21 490 2868 Email: thia.hennessy@ucc.ie
Dr. Emma Dillon, Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway. Phone +353 (0)91 845 294 Email: emma.dillon@teagasc.ie
Dr. Robbie Butler, Cork University Business, University College Cork.
Phone +353 (0)21 490 2434 Email: r.butler@ucc.ie

Application Procedure
Submit an electronic copy of Curriculum Vitae and a letter of interest simultaneously to: Prof. Thia Hennessy (thia.hennessy@ucc.ie) and Dr. Emma Dillon (emma.dillon@teagasc.ie).

Closing date 5pm Friday 17th of November 2017.

Muiris MacCarthaigh on Budget 2018

Guest post below from Muiris MacCarthaigh from Queen’s University Belfast:

Budget 2018 and a tale of two Departments

The budget to be published this Tuesday will be the first since 2010 to be prepared and delivered by a single Minister, Paschal Donohoe T.D., who holds both Finance and Public Expenditure and Reform portfolios.

As will be widely remembered by readers of this blog, following the 2011 general election the Department of Finance was essentially split in two, with that Department retaining control over taxation and reform of the financial services sector. (Indeed for a while consideration was given to renaming it the Department of Finance and Taxation). The ‘spending’ side of the Department was removed and combined with public service reform and industrial relations into the Department of Public Expenditure and Reform (DPER).  As well as providing for a significant reallocation of central government functions, and an organizational focus for administrative reform, DPER served the useful political purpose of allowing the Labour Party hold another central government portfolio.  This also gave it co-equal status with Fine Gael at the Economic Management Council or ‘War Cabinet’.

What is not widely appreciated is the enormity of the task faced by officials in the Department of Finance over the pre and post-election period to prepare for and then execute the process of creating the new Deparment, all in a matter of weeks. When beginning the research for my recently published book on DPER over the 2011-16 period, the sheer scale of this undertaking quickly stood out.  Led by a small group of officials, it involved trawling the Irish statute book for all primary and secondary legislation concerning the responsibilities of the Minister for Finance in law from 1922 onwards (as well as some pre-1922 treasury-related functions), before that Department could be disaggregated into two.

The range of responsibilities for which the Minister for Finance had a legal responsibility included such diverse issues as provisions for compensation applications arising from property damage during the 1921-23 Independence and Civil War period, to consenting on borrowings for capital investment for commercial state enterprises. All told, it resulted in a process involving the transfer of over 4000 specific legal functions originally assigned to the Minister of Finance.

In respect of Budgets, a number of interviewees for my study identified how the institutional split between revenue-raising and expenditure functions had created a useful ‘buffering’ effect on demands for increased expenditure by line Departments. Prior to DPER’s existence, the relevant section in the Department of Finance assessed new expenditure proposals from a line Department, and the merits of raising taxation or other forms of revenue to support the measure were also considered in that same Department. With the decoupling, appeals to DPER for extra resources fell largely on deaf ears as the Department and its Minister had no say in taxation matters.

The quality of engagements between DPER and other Departments were also deemed to have taken a step change by virtue of the economic evaluations provided for them by the IGEES.  Additionally, the strong relationship between Ministers Howlin and Noonan were consistently referred to as being vital to the Irish crisis response, including budgetary coherence, and by proxy to the stability of the government as a whole.

At the launch of my book, Minister Donohoe identified that the Taoiseach had been keen to maintain the two Departments when announcing his Cabinet following his election in June. Whether this was to preserve the integrity of DPER’s reform agenda, to place coordination of fiscal and budgetary policy in one Minister, or to avoid accusations of a return to pre-crisis arrangements for government departments is hard to say. As is how long DPER will continue to operate as a separate Deparment .The economic crisis may be a decade old, but its effects on budgetary policy and the organisation of Irish government continue to be felt.

Dr Muiris MacCarthaigh is Senior Lecturer in Politics and Public Administration at Queen’s University Belfast. His new book, Public Sector Reform in Ireland: Countering Crisis, has just been published by Palgrave.

What could the UK say on the border before getting to the second stage?

You sometimes hear the British say that they can’t make progress on the border before getting to the second stage of talks. While superficially plausible, the claim strikes me as disingenuous: there are surely several things that they could say right now that would make a lot of difference. For example, they could pledge that

  1. The United Kingdom will remain in an equivalent of the customs union and the single market, if that is required in order to avoid a hard border
  2. Northern Ireland will remain in an equivalent of the customs union and the single market, if that is required in order to avoid a hard border
  3. They will change their red lines regarding the nature of their exit from the EU and their future relationship with it, if that is required in order to avoid a hard border

As I think about it though, perhaps the key thing they should say is that (a) they accept that a customs union is defined as a group of countries surrounded by a common external tariff barrier and border; (b) that in addition, the European Single Market has always been and needs to be protected by an external border of some sort in order to maintain its product standards and so forth; (c) that they accept that Ireland will remain a full member of the EU, and hence of its customs union and single market; and (d) that there will therefore continue to be a border between Ireland and all third countries or regions not belonging to the European Single Market and a customs union with the EU.

None of these points is a matter of opinion, or subject to negotiation. (1) to (3) are a matter of fact or definition, and (4) is a logical consequence of (1)-(3). And it is very difficult to accept that you are negotiating with someone in good faith if they refuse to accept that black is not white and that 2 + 2 = 4. Right now the UK seems to most outsiders to be talking out of both corners of its mouth, claiming it doesn’t want an Irish border, while preparing to do things that will require one. How can you negotiate seriously with such a country?

If the UK were to accept (1) through (4), publicly, then its claim to want to avoid a hard border in Ireland — including any physical infrastructure, something that Mrs May very helpfully added in Florence — would sound rather different. (Right now, it sounds like hypocritical posturing.) Publicly accepting (1) through (4), and saying that they were willing to do whatever it takes to avoid a hard border, involving any sort of physical infrastructure, would mark a big step forward in my opinion. And it doesn’t seem like a lot to ask for.

 

Conference on Exchange Traded Funds

The Central Bank of Ireland will be hosting a Conference entitled “ETFs – Stability and Growth” on 29 November 2017 in the Convention Centre Dublin.

Are ETFs still the safe, simple, transparent product they are understood to be? Is the ETF structure appropriate for any type of product? Should there be limits? What impact do ETFs have on their underlying market and what liquidity concerns are relevant and valid in an ETF context?

Participation is free of charge and you can register your interest in attending by emailing ETF@centralbank.ie

Final details will be available on our website.

We look forward to seeing you and to engaging in a frank and open discussion on ETFs!

Europe, Ireland, and taxes

The recent German election reminded us that we should never get too excited when a European Commission President, or even a French President, makes a speech about the future of Europe. Ultimately, that future will depend on the decisions of 27 democratically elected governments, including our own, and that will probably continue to slow moves towards deeper integration.

Nonetheless, here are some scattered thoughts on the tax issue, since it is in the news these days. The good news is that Ireland doesn’t have to do anything on taxes that it doesn’t want to. On the other hand, it might be prudent for us to have more to say on the issue than “No, no, no”. If we don’t get pro-actively involved in these (and other) debates, we can hardly blame others for setting the political agenda.

I take it that the core Irish interest is maintaining the right to set our own corporate profits tax rate (and other internal taxes, perhaps, such as labour taxes). If so, then as others have said, it surely makes sense to focus on that core interest and not facilitate schemes that help companies pay less than that — and the good news is that we have been moving in this direction in recent years, notably via the OECD, something that is not sufficiently appreciated by the foreign press. But we and the rest of the world clearly need to do a lot more.

But that’s not what I wanted to write about, since others have done so. Here are some further scattered thoughts on taxes, in the hope of sparking debate.

  1. If a US firm sets up an Irish branch and makes something physical which is sold abroad, we wouldn’t object, and nor should we, if that something were hypothetically to be subjected to local sales taxes in France (say). What matters to us, and the firm, is that the profits arising from this sale are taxed in Ireland. Does it not follow that we should be relaxed about, and probably even actively encourage, a situation where if (say) Amazon.fr sells something in France that would (hypothetically speaking) normally be subject to French sales tax, that transaction is taxed accordingly? There were moves in that direction in 2015, but if more is needed to ensure a level playing field as between the online giants and local retailers, why would we object? In the US, Amazon customers are now paying state sales taxes in several states. The two key principles ought to be that (1) there be no discrimination between online and high street retailers, and no discrimination against US online companies; and (2) that we keep clear the distinctions between sales or revenue taxes, on the one hand, and profits taxes on the other. If Amazon and the rest paid taxes on their French sales revenues, in France, similar to what was paid by French online and high street retailers, might this not defuse a huge amount of political tension? And would that not be good for Ireland?
  2. Now, that previous paragraph used the US language of sales taxes since I think that the US is a good point of reference in these debates. But in Europe we don’t have sales taxes: we have VAT. The current VAT regime is unfit for purpose: it leads directly to tens of billions of euros worth of fraud every year, perpetrated by organised crime (real criminals, not fancy lawyers and accountants). The sums involved are very large, even relative to the moneys lost to multinational tax avoidance strategies. The Irish government agrees that the VAT regime should be overhauled, and so do other governments, such as the French one. This is a first order important issue for the EU. Might it not make sense to consider whether and how to reform the taxation of cross-border e-commerce, within the context of such a broader reform? I don’t see that why Ireland would object to that, and once again, anything that emerged from such reforms that reduced the impression that the online giants are not paying their fair share would lessen the pressure on Ireland to increase the 12.5% tax rate.
  3. Some Europe-wide taxes would surely be in Ireland’s interest. In particular: I’m not a fan of EMU, but since we’re in it we have an interest in making it work as well as possible. We would have saved many billions of euros during the crash if EMU had been a proper monetary union, involving a proper banking union — so anything that moves EMU in a US-style-monetary-union direction, with a common bank deposit guarantee, and a common fiscal backstop, should be welcomed by us. Especially if our financial sector is going to grow because of Brexit. But bank deposit guarantees and fiscal backstops will require common financing, presumably by the Eurozone taxing the financial sector somehow. That would be good for us, not bad for us.
  4. More speculatively: I and many others more eminent than myself have argued that if you really want a monetary union, some sort of fiscal smoothing mechanism would help it function better. If we hadn’t had to impose quite so much fiscal austerity on the economy at the worst possible point in the economic cycle, that would surely have been a good thing for us. Now, I don’t think that such a fiscal smoothing mechanism is on the cards at all, but if it were, it would require some sort of common tax base that would then finance transfers of some sort to countries in difficulty (by reinsuring their unemployment benefit systems, or whatever). Perhaps a common corporate tax might form one part of that common tax base. (I would be keen on an energy tax, since we need it for environmental reasons anyway, its revenues would be pro-cyclical, and it could finance infrastructural projects related to the energy transition that are badly needed.)  But that common corporate tax wouldn’t mean that state corporate taxes would have to be harmonized, any more than the federal corporate profits tax rate in the US means that state corporate taxes there are harmonized. Indeed, I guess that once a common “federal” tax was in place, political pressure to harmonize state taxes would be difficult to sustain.
  5. As I said before, that last argument is extremely hypothetical, since I don’t think we have any hope of achieving a fiscal union in the Eurozone. (Nor do I think that the Euro is inevitably going to last forever.) But let me make a further point in that regard. There is indeed a logical argument to the effect that monetary union means that you need some sort of Eurozone-wide tax base (but only in the context of a proper US-style fiscal system for smoothing regional shocks). But there is no logical argument that I can think of that says that monetary union requires that state-level taxes be harmonized. This is an important distinction which policy-makers in France, Ireland, and elsewhere should remember.

In conclusion, my suggestion is that by making such logical distinctions, and by being clear about what are our core interests, versus those that are merely peripheral, we may be able to avoid being perceived as the DUP of European fiscal policy.