Dr. Stephen Kinsella:

I will pick up on two points. The great value of this committee is that it is strategic. It is able to think beyond the day to day and if I was going to advise it to do anything, it would be to be cognisant of three issues. The first is that these fiscal stress tests matter. For example, if half the country wakes up tomorrow and decides not to pay their property tax, it will have no impact on the budgetary surplus of the State because it amounts to less than €1 billion. If half of the corporations wake up tomorrow and decide not to pay corporation tax, we will not be able to afford to run the health system. It matters which taxes do not get paid and where the volatility is. Fiscal stress tests should be part of what this committee reports on. They are not difficult to do and the Parliamentary Budget Office, PBO, can do them. The committee has had the International Monetary Fund, IMF, before it. The IMF has developed methodology that is not difficult and that can be done with an Excel spreadsheet.

Second, it is important that we understand that corporation tax the one that is volatile now. Via the base erosion and profit sharing, BEPS, process, it looks like we will have a co-ordinated tax system in five years where we are forced to have our corporation tax go up from 12.5% to, let us say, 17% and that is true of everyone. We may end up flush with corporation tax revenue which is an upside risk. We still should not spend that massively because we do not understand the tax elasticity. We do not understand the responsiveness. If corporation tax that a small number of corporations pay is jacked up, we do not understand the impact that will have on their behaviours. We are going to be an interesting experimental case study for that but only to those studying us in the future. It is going to suck to do it in the present and politics is, of course, of the present.

The final issue relates to automatic stabilisers. The economic statement is two budgets. One is business as usual and the other means we allow automatic stabilisers do the job and go into deficit, which is grand except that Ireland has a poorly developed set of automatic stabilisers. We have unemployment assistance and jobseeker's allowance and so forth, as the committee will be aware. We do not have the kinds of stabilisers that kick in when unemployment reaches 7%, 8%, or 9%. We do not have, and have not designed, such policies. We all now know that it takes nine to 12 months to design one of these policies properly. If they are not ready to go before the crisis happens, it will take nine to 12 months to introduce them. This is a fundamental issue. These policies cannot be done right away. The committee knows better than anyone that the system takes a long time to do things even in a crisis. I urge the committee to think carefully about the sorts of automatic stabilisers that are out there. There is much new thinking about this topic. One particular stabiliser is an automatic offset for the motor tax. If it turns out that two thirds of new cars are electric vehicles, there is an automatic offset so the State's finances do not automatically get walloped in one way. During the crisis is absolutely the wrong time to develop these policies; now is the time to develop those policies before the economy starts overheating.