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    Loving that property tax (Oct 9)

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    Taxes can serve all sorts of positive policy goals including redistribution through a tax on property, which constitutes three quarters of private wealth. by Michael Smith   Learning to love property tax requires a perspective on the purposes and types, of taxation. The purposes of taxation include financing government spending; and promotion of greater equality, reduction in the use of harmful goods and the protection of local enterprise. There are three main types of tax: on incomes, on consumption and on wealth. Particular taxes include income taxes, PRSI, consumption taxes like VAT, capital gains taxes, capital acquisition taxes, wealth taxes, property taxes, water taxes, corporation taxes, transaction taxes like stamp duty, excise duties like tobacco taxes, and pollution taxes. In Ireland there has for long been an unimaginative over-emphasis on income and consumption taxes. For example, despite the on-going high levels of unemployment, income tax in 2012 made up 42% of the total tax yield compared with 27% in 2006 at the height of the boom. This creates a problem since high rates of income tax tend to impede job creation. As a result, Budget 2013 introduced base-broadening measures which are considered to be less damaging to economic recovery and job creation than income-tax increases. This magazine believes in government spending to promote high quality of life, in the promotion of radically greater equality and in the reduction of pollution, especially greenhouse gas emissions. Taxes to those ends must be supported and we should all have a vision of where the tax burden should fall. There should be a balance of all the forms of taxes cited above, with no tax overwhelmingly pre-eminent. Capital gains and acquisition taxes, wealth taxes and pollution taxes should be far more widely deployed in a society where equality and sustainability are driving goals. All the other taxes should play strengthened roles, perhaps especially – since the abolition of domestic rates, wealth taxes. Wealth is as sure, indeed surer, an indicator of riches, as income.  As such it should be taxed scrupulously. Perhaps the primary reason for not so doing has been the ease of collection of income tax – at least from PAYE taxpayers. A property tax is an, admittedly somewhat imperfect, surrogate for a wealth tax. The main strategy to reduce the pressure on income tax in Budget 2013 was the introduction of the Local Property Tax which is expected to yield €250 million in 2013 and €500 million from 2014 onwards. €250 million is the equivalent of just a 1% increase in the standard rate of income tax. There is clearly therefore scope for increase. So when people talk about taxing wealth in this country, they are talking principally about taxing the homes that we live in. According to economist, Ronan Lyons, “In Ireland, as of 2006, deposits made up 10% of Irish wealth, equities a further 8%. Pension and investment funds – wealth holdings of unknown type but likely to be a mix of mainly equities and bonds – made up a further 11% of wealth. But it was property that was the overwhelming type of wealth in Ireland, making up 72% of all wealth. The vast bulk of this was residential property. And that picture is not likely to have changed substantially with so much of Irish equity wealth being invested in the banks, which are now all next to worthless. So when people talk about taxing wealth in this country, they are talking principally about taxing the homes that we live in. In second place comes taxing the deposits we have in the bank. Make sure to mention this to the next person who says ‘We don’t need a property tax, we need a wealth tax’”. Lyons himself argues that a property tax should take the form of a ‘land value tax’ on the unimproved component of land – encouraging owners of land to optimise its use, since they are paying tax as if they have already done so. If such a tax is linked to proper zoning and planning it can be used to steer high-quality, well-planned development, so improving quality of life. Economists note too that such a tax does not deter production, distort market mechanisms or otherwise create deadweight losses the way other taxes do. This is presumably why a commitment to such a version of the property tax was in the coalition’s programme for government. Difficulty in explaining the concept ie feeble-mindedness led to its supersession. Property taxes, such as the one now being imposed, that include the value of buildings on land are less efficient, since they are, in effect, a tax on the (desirable) investment in that property. Even so, they are less likely to affect people’s behaviour than income or employment taxes.  Almost any tax is better than income tax since that taxes the ‘good’ of work, not some ‘bad’ like underuse of land or pollution. Economists like property taxes since, in an efficient capital market the burden of property taxes is borne by owners of capital across the economy; and since capital owners tend to be richer, the tax is likely to be progressive. Furthermore property taxes are a stable source of revenue in a globalised world where firms and skilled people can easily move. They are also less prone to cyclical swings. US state and local governments have seen smaller recent declines in property taxes than in other forms of revenue, largely because the valuations on which tax assessments are based were adjusted more slowly and less dramatically than actual prices. Property taxes may even restrain housing booms by rendering it more expensive to buy homes for speculative purposes. According to publicpolicy.ie’s Jessica Worth, the following are some of the advantages of the  Local Property Tax being imposed in Ireland: *    The economic impact is expected to be relatively small since a recurrent tax on residential property is deemed much less distortionary than a tax on income or capital. *    It is a reliable, sustainable source of revenue. Revenue

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    Flown forever: Birds under threat

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    Flown forever Shirley Clerkin Long-distance bird migration  is down by nearly a quarter over the last 30 years ‘curlews are the Irish giant panda.  Their population has collapsed by 86% over the last thirty years, with 200 or fewer breeding pairs remainin’ The day is full of birds. Stitched –  moving – into the air, into hedges and woven into the weft of wetlands.   Hanging on to houses, grasping gutters and aerials, balancing on the wire.  Singing. Tweeting. Cooing. Whistling. Swooping. Diving. Gliding.  Ascending. Descending. Disappearing. The State of the World’s Birds, by the BirdLife International Partnership published in July is shocking reading.  Silent Scenery will be our certain future. The soundscape we have on loan from future generations rubbed out.  Birds are an integral part of our biodiversity, their fate heralds our fate.  The report compiled by 121 organisations finds that the status of the world’s birds is deteriorating, with species slipping ever faster towards extinction. One in eight of all bird species is considered threatened with global extinction. They are in effect dead birds flying.   A woman I know instructed her husband to hose a family of long distance migrant swallows, away from their house at every opportunity to stop them nesting.  They were dirtying her car. Such an ignorance of actions is, I suspect, more commonplace than some of the common birds. A poverty of thinking; knowing the price of everything and the value of nothing.     Swallows are without doubt one of my favourite birds. I monitor their return every year, worrying when it gets past their due date that they may not come at all.  When they swoop past my kitchen window on the April morning of their arrival, I feel swept up too. They are back. The swallows are back, I tell everyone.   Prelude, ninety seconds of perfect sound by still-effervescent Kate Bush, from her album Aerial, features wood pigeons cooing and a child in wonder pronouncing: The day is full of birds Sounds like they’re saying words By unravelling birdsong into lower, slower registers we can stroll through their songs, to hear notes so swiftly sung that their complicated compositions only become audible when played at a snail’s pace.  They have no words that we can understand and we, of course, are only half-thinking. But the numbers speak for themselves and are a preface to what is to come. There are 300 million fewer farmland birds in Europe now than in 1980.   57, out of 148, species of birds have declined across 25 European countries.   Long-distance migrants in Europe declined by 23% on average during these 30 years alone.     BirdWatch Ireland, Ireland’s largest conservation charity, recently drew an analogy. Globally threatened, curlews are the Irish giant panda. Confusingly, their numbers are artificially raised in the winter by migrants from other countries, but when these fly away, only a fragmented and threatened Irish population subsists.  This population has collapsed – by 86% over the last thirty years, with 200 or fewer breeding pairs remaining. Curlews have a melancholic and evocative voice at the best of times, crying across the reeds, wetlands and coasts.   Robbie Burns wrote that he had “never heard the loud solitary whistle of a curlew on a summer noon … without feeling an elevation of soul”.  However, these are now the worst of times.  WB Yeats begging “O Curlew, cry no more in the air” is an unintended prophecy. BirdWatch Irelandis calling on the government to take a range of actions for the conservation of curlews nesting in Ireland,  They include developing agri-environment measures and removing the species from the hunting list. Curlew: the word itself hugs your tongue when you say it, has a beak like a cobbler’s needle or crewel which can deeply probe the mud for small invertebrates.  While in Murphy Sheehy fabric shop in Dublin a few weeks ago, I came upon bird material that I just had to buy for my new frock.  The Ornithology Liberty Print was designed from sketches by Edwyn Collins, who is best known for fronting Scottish rock revivalists ‘Orange Juice’ and for his solo hit,  A Girl Like You. In 2005, Collins suffered a severe cerebral haemorrhage.  As part of his rehabilitation he drew a bird a day, each of which has been used in the printed fabric. Every drawn bird represents a daily recovery. I am stitching dunnocks, black-tailed godwits, barn-owls, teals, swallows and lots of other birds into my bird dress. There are no curlews drawn or printed. Maybe Collins experienced a sort of anticipatory illumination like Yeats suggested: “the arts lie dreaming of what is to come”.  If ecosystem potholes are not filled in and conservation measures don’t succeed, curlews will continue their dive to the realm of art and the dead zoo, echoes only, like other ghosts of gone birds. The days were full of birds.  

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    Gurdgiev on Healthcare. Jokers burning money

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    Public sector not reforming or cutting – as taxes rise Health service inflation second highest in EU   ‘spending on health has shrunk by just 128 million euro over the last two years’.   ‘Between December 2005 and mid-2012, cumulative Irish consumer price inflation (CPI)  was 9.5%. Health CPI was 21.4%’   With an early Budget looming, the circus of  ‘austerity is overbaked’ politics has rolled into town. The Labour and the FG backbenchers are out in force trying desperately to salvage what little popular support they still might command on the streets. Not to be ever outdone, Fianna Fail, freshly again converted to the Church of Socialistas has been unleashing torrents of social consciousness. Things are getting so hot on the backlash speaking circuit that Siptu was able to net even Jack O’Connor a gig. Their star performer was last seen thundering at the MacGill Summer School a potent brew of outlandishly misinformed comparisons of European and American policies for dealing with the Great Recession and calls on for an end to ‘human-rights-violating’ austerity.   The problem is that, once you come down from the highs of this Keynesian Lollapalooza, you’re still in Ireland where the Government continues to run an insolvent state with spending less than revenue and where society needs bigger and more effective expenditures. The fiscal mess we are in has nothing to do with the lack of economic growth and everything to do with the policy institutions that the current Government inherited from the decades of political clientelism presided over by its predecessors.   Let us look at some numbers.   In the first six months (H1) of 2013, the Irish State’s current expenditure was 27.12 billion euro, just  352 million euro shy of the level in H1 of 2012, and 3.2 billion euro more than we spent in H1 of 2011. Meanwhile, tax revenues rose from 15.3 billion euro in H1 2011 to  17.6 billion euro in H1 this year. Crunching  ‘austerity’ based on ‘savage cuts’, five years in, still looks more like a tax squeeze and slippery spending re-allocation from one programme to another.   Meanwhile, Department of Health spending is now running at 6.539 billion for H1 2013, down on EUR 6.754 billion for H1 2011 – a whopping reduction of EUR215 million. Remember too that 2011-2012 increases in the cost of beds charged to the private insurers (ie to ordinary insurance patients) have more than offset the above reductions in spending. Net current (ex-capital) spending on health has shrunk by just 128 million euro over the last two years.  Register that, dear Village reader.   The Department of Health is a great example to consider when dealing with the failure of our reforms. It is the quintessential ‘frontline’ service, of the type we all are willing to pay for. Yet, it is also a symbolic dividing line between the poor (allegedly having no access to the services) and the rich (allegedly all those who hold health insurance and as ‘private’ patients clog public wards). Healthcare was also the epicentre of endless rounds of reforms over decades, including the decades of rapid economic growth. And it is one of the two largest departments, with a budget only slightly smaller than the 6.545 billion euro spent in H1 2013 by the Department of Social Protection.   For all this spending, 35% of Irish households have to purchase private insurance to obtain any meaningful level of health services. For those who think insurance a luxury, the Irish Government is considering making health insurance obligatory.   Meanwhile, basic healthcare is shambolic. While emergencies get reasonably decent attention, Ireland ranks at or below the European average in treatment of most chronic diseases, before we control for differences in population demographics. Our primary care and access to specialist consultants is pathetic – apart from hospital emergency rooms  and intensive care units. Despite the fastest rise in healthcare expenditure per capita 1997-2007 in the entire EU27, according to the EU itself, Irish increases have made only “a modest contribution to [improved mortality], substantially less than one third of the total, and possibly only a few percentage points”.   In reality, of course, Irish healthcare is run for the benefit of Irish healthcare staff. The 2005-2007 pay bill for the HSE stood at an average 50.7% of the entire HSE non-capital budget. In 2009 it was 50.1%. In 2010, Irish salaries (excluding other income) for medical specialists were the highest in the EU, with the second highest paid (in the Netherlands) coming at a discount of roughly 25% on  their Irish counterparts. These salaries were not inclusive of Irish specialists’ earnings from private patients.   According to the EU’s 2012 assessment, 33% of Irish people find access to hospitals unaffordable (the 8th highest in the EU) and the same percentage find access to a GP to be out of their financial reach (the 4th highest in the EU), while 53% claim that they cannot afford medical or surgical specialists (the 8th highest in the EU).   This is hardly surprising. Between December 2005 and mid-2012, cumulative Irish consumer price inflation (CPI)  was 9.5%. Health CPI over the same period was 21.4% – more than double the rate of overall inflation. Of  EU15 states, Ireland and Holland were the only states where health costs rose faster than general inflation in the last 7 years. 2005-2011 inflation ran at 47.3% in hospital services (state-controlled charges), followed by 28.6% for dental services , 23.5 % for out-patient services and 21.3% for doctors’ fees. This inflation added to the already high cost base of 2005.   Extraordinarily, from 2005 through mid-2012 Ireland had the lowest rate of inflation in the EU15, while our health services inflation was the second highest after the Netherlands.   Austerity, it seems, has been a boom-time for healthcare costs. Or put differently, while the rest of the world defines efficiency-improving reforms as changes in delivery of services that reduce the cost of services while maintaining or improving, in Ireland

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    PAC ignores Docklands conflicts of interests

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    PAC doing a Mahon/Dunlop – in Docklands The Public Accounts Committee ignores dozens of other schemes and the position of Treasury Holding, in its focus on the Glass Bottle debacle By Michael Smith     As the Public Accounts Committee allegedly gets stuck in to Docklands, I am struck how – in the same way as the Mahon Tribunal was too lazily dependent on evidence from Frank Dunlop, the PAC, like the Comptroller and Auditor General whose report it is considering,  is unduly focused on the Glass Bottle Site where it seems the conflicts of interest were much better handled than elsewhere…though the commercial decisions were not.  But there was far more afoot in Docklands.   In April 2007 I submitted a  complaint  to the Standards in Public Office Commission (SIPO) based largely on information secured through a Freedom of Information Request from the Dublin Docklands Development Authority [“DDDA”] by the defunct Centre for Public Inquiry and from newspaper articles.  The complaint primarily  concerned conflicts of interests of then Members of the Board (Directors) of the DDDA. These Directors were Lar Bradshaw, Chairman of the DDDA and Sean FitzPatrick.   Bradshaw had been chairman of the DDDA since 1997 and was re-appointed in 2002. FitzPatrick had served as a Director since 1999 and had been Senior Independent Director, with a role in helping with ethical issues, since 2001.  FitzPatrick didn’t like it.  In June 2007 he made a speech to a business lunch hosted by a research company called Experian.  He told his compliant audience: “among the most insidious aspects of our current regulatory environment is the apparent presumption of guilt on the part of entrepreneurs and business people generally.  The whole structure seems to be geared towards something akin to an annual proof of innocence statement.  This is corporate McCarthyism and we shouldn’t tolerate it… We should ask ourselves if it is fair or equitable to allow almost any allegations, however wild and unsubstantiated, against any other citizen with seeming impunity”.  So Matt Cooper invited FitzPatrick on his radio show to find out what on earth he could have been on about.  In Who Really Runs Ireland Cooper writes “He  wouldn’t  give examples despite my repeated requests.  He wouldn’t name any victims of this ‘corporate McCarthyism’… Having raised the hare he wouldn’t chase it, as angry text messages from listeners stressed”.  Cooper continues: “At the time I didn’t realise what had upset FitzPatrick so much… I learned subsequently that only a month before his speech and interview he had been the  subject of a complaint to SIPO.  Legitimate questions had been raised by a member of the public about conflicts of interest.  He had to explain himself to SIPO or, as he would have put it, to prove to them that he was innocent”.   FitzPatrick and Bradshaw served on the DDDA at a time when a great number of schemes in Docklands was being financed by their bank.  But they also both took part in discussions on numerous occasions on planning schemes and their certification  under section 25 of the Docklands  Act 1997, for schemes which the  bank of which they were both major shareholders and Directors (Mr FitzPatrick being chairman), was financing.  That bank was Anglo-Irish Bank. The future of Docklands seemed to be largely in the hands of under fifteen development companies.  It was clear that Anglo-Irish Bank was lending money to a considerable number, perhaps a majority, of them. In itself that was extraordinary and a cause of concern. Mr FitzPatrick and Mr Bradshaw seemed to engender an atmosphere that was conducive to facilitating the interests of the development sector, including those of some clients of theirs.  They clearly had conflicts of interest which hung like clouds over the whole operation of the DDDA Board. That much was clear well before Anglo became a coda for dishonesty, incompetence and intrigue. The question was if these conflicts of interest were illegal or are otherwise actionable.  I asked the Commission to consider the, necessarily incomplete, evidence presented and to investigate.   Another DDDA board member, Donall Curtin, is married to Ms Anne O’Donoghue who was  Associate Director, Anglo Irish Bank Private Banking. Planning Schemes The Grand Canal Dock Planning Scheme 2000, and the North Lotts Planning Scheme 2002 gave the DDDA its statutory planning powers and were similar to an outline planning permission for extensive areas on the north and south side respectively. Any development proposal submitted under Section 25 of the DDDA Act which complied with the Planning Scheme was exempted development for the purposes of the Principal Planning Act.  I requested that the Commission investigate any decisions to amend or review the planning schemes and the reasons for these amendments or reviews particularly regarding the North Lotts Planning Scheme.  I requested the Standards Commission to investigate whether the appropriate declarations had been made and whether Mr Bradshaw and Mr FitzPatrick absented themselves from meetings where required. Review of the planning schemes could obviously significantly benefit Anglo Irish Bank and the developers of schemes it is funding. Scheme DD167 Minutes concerning one of the most controversial schemes in this category, DD167 (967 apartments, office, retail), were eventually put on its file.  They show prolonged and intense debate about social housing and height.  While one Director (Donal Curtin) declared an interest, Mr FitzPatrick does not appear to have, though there were four fraught meetings in 2002-3 of which he attended two. In particular at meetings of 13 Nov and 5 Dec 2002 Mr FitzPatrick was present  for discussions on these matters which did not lead to a conclusion but which pushed in the socially-segregative direction that Treasury Holdings through its Director, Mr Richard Barrett, were suggesting.  Mr FitzPatrick did not absent himself. It is possible that he made declarations in some other manner but this is not clear from the minutes. At a meeting on 9 Jan 2003  (from which Mr FitzPatrick was absent) the developers appeared to get their way: a paper to the board from Peter

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    CORRECTIONS AND CLARIFICATIONS Apology and clarification: Mark Dearey

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      Article on Louth Planning:   Mark Dearey was not a member of Louth County Council in 2007 and so did not vote, indeed could not have voted,  for the Carnbeg material contravention mentioned in our  News section  article which focused on payments made to appellants who withdrew their appeals from An Bord Pleanála, “Nearly €1 million paid for planning appeal withdrawal’ (Village, Aug-Sept 2013, p 36).  Village apologises to Councillor Dearey and wholeheartedly accepts his  assertion that he is fit to seek public office and that there is no question mark over his probity in planning matters

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    Philip Chevron is dead. The legacy of Irish punk band, The Radiators From Space:

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      By Michael Mary Murphy ‘The Radiators hold the distinctive accolade of being the first ‘punk’ group to land a song in national Pop Charts ‘ ‘’Ghostown’ was a piece of work that was so far ahead of its time that it soared over the heads of the knuckle-dragging doppelgangers that constituted the unimaginative mass of the second wave of punk rockers’ Punk rock’s current mainstream cultural acceptance is far from the dreams or desires of most early punks. The snotty music genre took a surprising route from the margins to the established. The journey left many casualties: often the most innovative and imaginative. The Radiators From Space were Ireland’s first band wholeheartedly to embrace the attitudinal adjustment required by the new musical movement. They were cruelly chewed up and spat out by an industry that demanded conformity, capital and consumer-friendly product and denigrated sincerity, skill and substance. Yet if the Radiators From Space were victims, finally defeated by a succession of caprices and foes, they leave an under-appreciated yet influential legacy. The Radiators hold the distinctive accolade worldwide of being the first ‘punk’ group to land a song, ‘Television Screen’, in national Pop Charts. And managed that feat in a country where punk received a particularly savage reception. Terence Brown described the choice facing artists following Irish independence: “nourish the dominant essentialist ideology of the state” or “define artistic identity in terms of opposition and dissent”. By the 1970s he argued that the former involved “evasion and sentimentality”. The Radiators From Space’ début single confronted the “man in the shiny suit saying: get them off the streets and into the schools”. In doing so they challenged the Irish authorities. And condemnation of them was often  savage. Publicity is the steroid of the music industry. It gives the habitual user almost superhuman strength. Even one dose can grant an advantage over rivals. And in 1976 the Radiators From Space went in search of that compulsive fix. To get the attention they desired and, as far as I’m concerned, deserved, the band submitted a letter from a ‘concerned mother’ to the Sunday World.  It expressed shocked at what her daughter witnessed at a Radiators’ gig. Needless to say, the letter was printed and a newshound was dispatched in search of the truth. He reported back on the band in an article that seemed to magnify every Irish mother’s nightmare. The paper described the band yelling outlandish statements: “Christian Brothers, Christian muggers”, they had shouted at their punk audience. Outrageous! In Ireland who would dare publicly question the religious order that maintained a stranglehold on Irish education? When the band told the reporter that they didn’t take drugs, he ended the article with the rejoinder: “who needs drugs when your brains are already scrambled”. The music magazine Spotlight declared they wouldn’t pay any attention to the band. The double ironies were that Spotlight had valiantly served the gimmick-crazy world of showbands and that the journalist was in a band called The Establishment. By the end of 1977 then Minister for Justice Patrick Cooney, in staking his claim (unsuccessfully) to one of the first elected seats in the European Parliament, touted the benefits of the European project.  It would protect, he said in the Seanad, Western Civilisation from the scourge of decadence. He cited types of decadence threatening Christian values: violence on television; violence in literature; pornography. But the first form of decadence he listed was punk rock. But even when commentators weren’t castigating the punks they were contributing to a confused representation of the youth movement. The Sunday World, when it emerged in the mid-1970s, actually  represented itself as a voice for modern Ireland. It was brash, brazen, colourful and crude and had a trendy priest as a columnist. The cleric in question, Father Brian D’Arcy also wrote the music reviews for religious magazines and, in his writings, unlikely lads such as The Sex Pistols, Black Sabbath and The Rolling Stones received the diocesan seal of approval. Such respectability may have set their causes back by decades. When Father D’Arcy applied his typewriter to punk it spelt out sympathy. They had something to say, according to him, even if they were misguided. He listed their hates: love, hippies, authority and dogs! Having spent the best part of thirty-five years searching for any evidence that punks hated dogs I’m ready to abandon the search. The very idea of a Catholic priest assessing the musical youth of the time is another reminder of the power of the Church. In late 1976, as reports about the punk movement spread, the Sunday World published remarks from a cleric in Wales. His words were fire and brimstone: God will forgive murders but he won’t forgive punks. The rhetoric appears ridiculous now. Yet at the time statements like this informed the public perception of punk. If the Radiators were going to escape the stifling atmosphere of late 1970s Ireland they’d need the assistance of the English media. Sounds magazine made their debut ‘Single of the Week’ yet signalled how the Irish were still seen as a joke:  “Irish punks? Will it start “One, tree, faw, two”. The NME.’s Tony Parsons (who later became a successful author in the ‘chick lit by-and-for men’ genre) greeted the band poised with poisoned pen. His put-down was a classic misinterpretation of Irish reality. To him the Radiators: “will never make political statements but will always get kids dancing”. He completely missed the point of the band’s début single ‘Television Screen’. It was a landmark in Irish culture: a vitriolic musical statement of defiance from a country where silence and shame reigned.  Anyone familiar with the dreadful, unspeakable and unconscionable child-abuse perpetrated by pillars of the Irish State or the homogeneousness and ubiquitousness of the cultural policies of the Fianna Fáil government knows that Ireland was a land of bowed heads. The time will come when people will wonder why popular music was mute during the dark times.  Popular music is often

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