Dr. Tom McDonnell:

As Mr. Gibbons cited earlier, estimates of employment creation from the Department of Finance were that it was 8,000, but that was at the cost of billions. I think the figures that were cited put us into hundreds of thousands of euro per job created. That is very bad bang for your buck and we should remember the jobs themselves are very low-paid jobs. It is not that there would be zero employment created but just that is was not worth it for the amount we paid and we might have gone down a better direction with enterprise supports. We are not saying do not support enterprise; we are saying support enterprise in different ways. That is what we meant by that.

On the criteria for tax expenditures, that is a really good question and there is enormous literature about that. Generally, the idea is that tax expenditure is by and large the same as public spending, with a few exceptions. First, it is non-transparent. We often do not know how much it costs because it is tax revenue we did not get as opposed to public spending we spent. It tends to be regressive because it tends to benefit the people who would pay the taxes in the first place. It tends to be distortive because we are interfering in the market, in a way. We are distorting the market in favour of a particular sector, individual or whatever it might be. The Commission on Taxation and Welfare I was on, the ones before it and the ones internationally have always said to minimise the use of tax expenditures and that if we want to give tax advantage to reduce taxes overall by just reducing the rate. In other words, do not have tax breaks, just have lower rates. If we get rid of all our tax breaks, we can have lower rates or we can use the money for public spending. By and large, we should only use tax expenditures where there is a market failure and where that failure cannot be resolved through public spending or some kind of regulatory reform. The classic area where tax expenditure is justified is where the market will structurally underproduce something because it is inherent to that good itself. A classic example used by economists is knowledge and that is why economists are generally in favour of tax breaks to do with research and development, provided they are designed properly, but not to do with housing, a VAT cut for a particular sector or whatever it might be. That would be the way to think about these things. They are never costless. We know much of the 2008 crisis was caused by the unwise use of tax breaks that caused the boom. The Senator also asked, I think, about-----