Professor Alan Barrett:

We will assist the Chair by being succinct in our answers. I will just rattle through and if I leave anything out, my colleagues can pick it up. Deputy Boyd Barrett kicked off with the statement that he understands we have to be coy or cautious. To qualify that, we do not, like the fiscal council, agonise about what our mandate is or anything like that. The only reason we are ever coy is that we try to say things that are based on the research we have produced. It is not that there is some sort of mandate restriction on us. It is just that if we have not done the research, we are shy. Very often, one only wants to push the research findings so far.

Let me now talk about tax incentives in the context of housing and developers. We did a very specific piece of research on that and I will just give the committee the highlights. We were presented with a series of reasons as to why there was not a greater supply of housing coming along. Deputy Burton talked about financing restrictions and others discussed the cost of building. A number of scenarios were presented to us. We sat down and used the basic tools of economics to work out what certain tax measures would do. For example, we examined tax measures in the context of a lack of finance. In many of the scenarios, we showed that there would be very little effect on supply.

There would just be an increase in the profits and the money accruing to the builders. This would happen, not just in that particular tax expenditure but in a whole range of tax expenditures. That is what happens. We did the analysis. We certainly thought we did enough to point out that it was far from clear that one would get value for money in that particular route. We were quite strong on that and if it did not come through in the opening statement, apologies for that.

Tax expenditures in the pension area is a tricky one. I myself have tried to grapple with this. Let me say where the difficulty is. There is an argument that tax expenditures in the pension area is not so much a tax break but deferred taxation. At present, one does not pay the tax as it is going into the fund but one is taxed when taking the money out. There is the point that, typically, people are earning less by the time the money is coming out so that the average tax - I do not know whether that is the point Deputy Pearse Doherty was going to make - will be lower but I have never seen a good life-cycle analysis that gives us a sense of where the whole thing breaks down. I would like to see more on it. Certainly, it is an expensive tax expenditure. It is worth looking at but I am not sure about the simple notion that this is all going to the wealthier people. There is an element of truth in that but I think it is a little bit murkier. Also, it has been reduced in recent years and it is not as bad as it was. Kieran might want to pick up on any of the points.