Professor John FitzGerald:

On the issue of the excess profits, particularly those accruing to land and property, it would be great to do something about taxing them. The problem is that where too much money is chasing too few houses, the money may be taken off the property developers and given to the State - which is a good thing - but we would still have the household sector massively in debt and exposed and the banking system which is funding it exposed. Therefore, taxing the profits was not going to prevent a bubble. It might have meant that some of the benefits of the bubble would have accrued to the State rather than to private individuals, but to stop the bubble, we need to stop people buying houses. That is the only way to do it.

There are different ways of doing that. My preference for a tax on interest payments is that it would make it more difficult for people to take out large loans. They would not be able to fund them and would end up less indebted. However, if we increase stamp duty, which is the mechanism suggested by the Treasury, people might end up more indebted. I am not hung up on a particular mechanism, but we need some fiscal mechanism to take money out of the property market. Taxing the profits will not do that. It will transfer the benefits from private individuals to the State, which would be great, but will not prevent a bubble.