Watchdog warns of using ‘windfall taxes’ to fund public services
Chartered Accountants Ireland revokes Sean FitzPatrick’s membership
Minister for Finance Paschal Donohoe: set out targets to run budget surpluses and reduce the State’s debt in the coming years. Photograph: Sam Boal/RollingNews.ie
Don’t spend it all at once, the Irish Fiscal Advisory Council (Ifac) warned the Government as the Department of Finance regaled us with tales of a record corporation tax take. Specifically, Ifac suggested that the State avoid using “windfall taxes” to fund public services similar to what happened during the boom.
The spending watchdog is blue in the face repeating this warning and, to date, the Government has repeatedly ignored it. But this time appears to be different with Minister for Finance Paschal Donohoe setting out targets to run budget surpluses and reduce the State’s debt in the coming years.
All of this comes in an effort to provide for the “clear and present danger” of a slump in corporation tax receipts, which have doubled since 2014 amid a massive transfer of assets here in the wake of a clampdown on multinational tax avoidance.
The controllers of the public purse are in an increasingly difficult situation as the economy reaches full capacity – as evidenced by the news that official jobless rate dropped to a 12-year low of 4.8 per cent in November. The Minister and his minions will have to take heat out of the economy at a time when constraints are increasingly becoming troublesome.
As is now customary, housing was on the agenda again this week as one of those constraints. Homebuyers are being forced to live further and further away from their place of work because of the price pressure in the capital’s property market. The banks’ lobby group, the Banking and Payments Federation of Ireland, said the average income of first-time buyers, coupled with the Central Bank’s mortgage lending restrictions, mean this cohort are being forced to live further away from where they work.
Those limits are not going to change, however, according to Central Bank governor Gabriel Makhlouf. Had the regulator not introduced the rules, Irish house prices could have been as much as 26 times higher, he said. “The mortgage measures are working,” Mr Makhlouf declared, and there is no prospect of them disappearing.
Hopefully that will bring to an end the litany of calls from vested interests and politicians to relax the rules. Because relaxing rules clearly hasn’t served us well in the past, as Makhlouf made clear. And, responding to comments from KBC’s group chief executive on the Central Bank’s investigation into the tracker mortgage scandal, the recently installed governor said the regulator “will continue to be annoying”.
It may not be to everybody’s liking, but annoying is probably a better trait than being asleep at the wheel.
Speedy Gonzalez award
One shrewd letter writer this week offered to nominate Chartered Accountants Ireland (CAI) for the Speedy Gonzalez award for finally taking former Anglo Irish Bank chairman Sean FitzPatrick to task for his pact actions.
In their defence, CAI was asked by the Director of Public Prosecutions (DPP) to hold off on various disciplinary hearings pending the outcome of a series of criminal trials resulting from Anglo’s collapse. That request was only withdrawn in August last year after the criminal conviction of former Anglo chief executive David Drumm.
Nevertheless, this has been a long time in the offing. On Monday, FitzPatrick had his membership of the accountancy body revoked and he was ordered to pay a fine of €25,000. Doubtless he won’t lose too much sleep over being kicked out of a body which, at the age of 71, is likely to be of little relevance to him.
The fine, however, will take its toll, FitzPatrick’s solicitor Michael Staines told the CAI’s disciplinary tribunal. Staines said the €25,000 – €5,000 more than FitzPatrick had originally offered – would put the former banker to “the pin of his collar” considering that his pension is his only asset.
Or maybe not. The banker is seeking planning permission for a two-storey, four-bedroom house at the back of his existing Greystones bolthole beside the local golf course. Success could make that a valuable plot.
Housing needs aside, FitzPatrick has, for a final time one imagines, been slapped on the wrist for his role in the financial crisis. Tribunal chairman and former judge Tom Burgess said that his actions represented a “wilful failure” to adhere to standards within Anglo. That failure involved the refinancing of some €122 million of personal loans so as to hide them from the bank’s auditors.
It is timely that FitzPatrick’s discipline came on the same week that the banking regulator promised to remain annoying. Maybe we will eventually move on from the ghosts of crashes past.
All go at Google
Google finds it hard to stay out of the headlines these days. The tech giant was this week reported to be in the run to expand its ever-broadening docklands footprint. Google is said to be closing on the purchase of the Treasury Building for about €120 million after more than two years of negotiations with its owners, a group that includes developers Johnny Ronan and Paddy McKillen, and a group of Davy clients.
And just in case you haven’t been paying attention for the past eight years, this would add to Google’s European headquarters on Barrow Street, the nearby Montevetro building and the entire Bolands Quay scheme (which it acquired for €300 million). The company is also in negotiations to rent all 202,000sq ft of space at the Sorting Office, which is being developed by Pat Crean’s Marlet.
The local news came in the week that company co-founders Larry Page and Sergey Brin announced that they are stepping down from executive roles at its parent company, Alphabet Inc. Though this will be of little consequence to anyone on the ground in Dublin, it is the start of a new beginning in tech. Not since Bill Gates stood aside from Microsoft in the Noughties have the founders of leading US tech companies chosen to hand over the reins.
It will be interesting to see what the next phase will bring.