'No belief ' 3% deficit target will be met
IRISH TAXATION INSTITUTE DEBATE:BEHIND CLOSED doors, “I don’t think anyone believes” Ireland is going to reach a target of a 3 per cent deficit by 2014, economics professor Karl Whelan told a meeting organised by the Irish Taxation Institute in Kildare St, Dublin, last night.
He said he believed people should focus on the upcoming budget and getting the public finances on the right path. Otherwise Ireland might not be able to return to the bond markets and the International Monetary Fund would introduce a four-year plan for the economy that would be worse than the worst imaginings of the secretary general of the Ictu, David Begg.
Mr Begg, Prof Whelan, William Slattery of State Street Ireland, and Feargal O’Rourke of PricewaterhouseCoopers spoke to the meeting which was chaired by journalist Olivia O’Leary.
Mr O’Rourke and Prof Whelan said they agreed with the European Commissioner Olli Rehn that Ireland’s days as a low tax economy were gone. Mr Slattery said he thought there was an agenda in Europe to push Ireland towards higher taxes but the Government must retain the 12.5 per cent corporation tax rate. Mr O’Rourke said he thought it was inevitable that there would be more than €1 billion extra in taxes raised next year.
On efficiencies in the public service, Prof Whelan said there was no need for any more reports. He believed the Government was not serious about the matter.
All speakers believed a property tax would be a good idea though Mr Slattery said people should not underestimate the fragility of the property and banking sectors. None of the panellists thought a property tax would be introduced without cross-party political consensus but none thought there was any reason a property tax could not be introduced quickly if the Government wanted to.
Mr O’Rourke said he used to have frequent conversations with former RTÉ economics editor George Lee about the need for a property tax, but these conversations changed when Mr Lee became a politician.
Mr Begg accepted that Ireland was “under taxed” when compared with other countries. Many years ago he had wanted Ireland to adopt a Nordic model of high taxes and high quality public services; now Ireland was going to get high taxes for all the wrong reasons.
Prof Whelan said the best development would be if the different parties came up with their plans for dealing with the deficit and an election was held prior to the budget. Mr O’Rourke agreed.
Prof Whelan said stamp duty could be abolished and it could be announced that a property tax was to be introduced in a year’s time, with special arrangements for those who had paid stamp duty over the past decade. Such a move could prompt activity in the property market. Mr Slattery questioned how tax relief for private sector pensions could be reduced when public sector workers continued to have pensions the private sector could only dream of.